Annual Report
for the year ended 31 December
2020
www.hillgroveresources.com.au
Hillgrove Resources Limited ACN 004 297 116
CORPORATE DIRECTORY
Corporate and
Registered Office
5-7 King William Road,
Unley S.A. 5061, Australia
Tel: + 61 8 7070 1698
Kanmantoo Copper Mine
Eclair Mine Road
Kanmantoo S.A. 5252, Australia
Tel: + 61 8 8538 6800
Share Registry
Boardroom Pty Limited
Level 7, 207 Kent Street
Sydney N.S.W. 2000, Australia
Tel: + 61 2 9290 9600
Fax: + 61 2 9279 0664
Bankers
Westpac Banking Corporation
31 Willoughby Road
Crows Nest N.S.W. 2065, Australia
Auditors
PricewaterhouseCoopers
70 Franklin Street
Adelaide S.A. 5000, Australia
Web Site
www.hillgroveresources.com.au
General Enquiries
Info@hillgroveresources.com.au
CONTENTS
Chairman and Managing
Director’s Statement
Hillgrove Projects
Mineral Resource, Ore Reserve
& Exploration Target
Sustainability: Environment,
Safety and Community
Financial Report
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
1
2
6
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Chairman and Managing Director’s Statement
Dear Shareholders,
2020 marked a year of transition
for Hillgrove as the Company
completed processing the remaining
low-grade ore stockpiles, placed
the Kanmantoo site to care and
maintenance, and pivoted the
business strategy from pumped
hydro energy storage (PHES)
towards the development of the
Kanmantoo Underground.
Safety is a fundamental
consideration to everything we do
at Hillgrove. It is pleasing to note
that safety continues to improve,
with 2020 resulting in the lowest
number of injuries since operations
commenced in late 2011 despite
the material change in activities,
including the decommissioning of
fixed plant and demobilisation of
heavy earth moving equipment.
The processing of stockpiles was
completed in March 2020. A
total of 1,855 tonnes of copper
and 776 oz of gold was produced
from the stockpiles in 2020 at a
C1 cost of $US2.52/lb. This was
either in line with or better than the
production and costs guidance
for the second consecutive year.
Prior to equipment demobilising
in March, a further 45 hectares of
native vegetation was planted as
part of the progressive rehabilitation
program, effectively covering all of
the available areas not required for
the underground development.
The cessation of processing resulted
in the workforce downsizing from 55
people at the start of the year to 8.8
full time equivalent employees by
year end. A focus on cost reduction
also resulted in the successful
withdrawal from Indonesia,
renegotiating key contracts,
shrinking the Board from 4 to 2
non-executive directors and
reducing board fees.
Mr Derek Carter
Independent Non-Executive
Chairman
Mr Lachlan Wallace
Chief Executive Officer and
Managing Director
The termination of the PHES agreement in February 2020 enabled the
Company to advance the Kanmantoo Underground without the time or
technical restrictions associated with the PHES project. A drilling program
that commenced in March confirmed depth extensions of the mineralisation
at grades and widths that support underground mining, and resulted in the
announcement of a maiden underground Mineral Resource Estimates (MRE)
for West Kavanagh and Nugent, and an update to the Kavanagh MRE which
increased the total estimated Cu metal in the Resources below the open pits
by 110% from 16.2k tonnes to 34.4k tonnes of copper.
Following the substantial MRE increase, a successful placement and
oversubscribed rights issue was initiated in December and concluded in
early 2021, raising $10.9M which enables drilling to further increase the
Kanmantoo Underground MRE and advance the feasibility assessment
studies. The strong investor support from existing shareholders and
institutional investors for the Kanmantoo Underground supports the Board’s
view that the Kanmantoo Underground is well positioned to take advantage
of the strong commodity prices with regulatory approval to commence
operations received in 2020, the key infrastructure in place and being well
maintained for quick restart, and a relatively short time and low-cost capital
development ahead of first ore production.
We would also like to take this opportunity to recognise John Gooding,
Phil Baker and Tony Breuer who resigned from the Board during the
year. On behalf of the Hillgrove Resources Board, we thank them for their
contribution to the Company during their respective tenures and wish them
well in the future.
Mr Derek Carter
Chairman
Mr Lachlan Wallace
Managing Director
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Hillgrove Projects
KANMANTOO COPPER
MINE OPEN PIT
OPERATIONS
Hillgrove’s flagship project is the
Kanmantoo Copper Mine in South
Australia, located 55 kilometres from
Adelaide. The site is in an enviable position,
being close to road, rail, power, water, port
facilities and enjoying access to a large pool
of specialised contractors and potential
employees. The exploration and mining
lease is scattered with historical copper
and base metal operations and includes the
former Kanmantoo Copper Mine, a medium
sized copper mine that operated from 1971
to 1976 as an open pit and underground
operation. Hillgrove Resources re-opened
the mining operations in 2011 and operated
a copper-gold mine until 2020.
The location of the Kanmantoo Copper
Mine offers many operational and
logistical advantages, with a main highway
passing close to the project and being
approximately 90km by road to Port
Adelaide, permitting the trucking of copper
concentrate. The mine site is connected to
the electricity grid and has access to mains
and recycled water. Due to Kanmantoo’s
location close to the outer-Adelaide regional
centres of Mt Barker and Murray Bridge,
there is no requirement to provide fly in/fly
out facilities.
Production for the 2020 year was 1,885
tonnes of copper in concentrate and 776
ounces of gold in concentrate.
The Company completed processing of
the stockpiled open pit ore in March 2020,
on time and without injury. As a result, the
number of full time equivalent employees
was reduced from 55 at the beginning
of the year to 8.8 at the end of the year.
The remaining employees are focussed
on the development of the Kanmanto
Underground Project (Underground),
rehabilitation in order to reduce future
liabilities, and care and maintenance of
the existing processing plant in order to
enable a rapid low-cost restart should the
Underground operation proceed.
GUIDANCE
The Company’s actual performance against its 2020 guidance is summarised in
the table below. Copper production was in line with 2020 guidance, while gold
production and C1 costs were better than guidance.
CY20
2020 Guidance
Copper produced
1,650 to 2,150 tonnes
Gold produced
450 to 700 ounces
Actuals
1,855 tonnes
776 ounces
C1 costs
US$2.55 to US$2.75 per lb
US$2.52 per lb
EXPLORATION AND DEVELOPMENT SUMMARY
Whilst the focus during the year was on the Kanmantoo Underground
development, the Company continues to advance the near mine and regional
exploration areas.
KANMANTOO UNDERGROUND DEVELOPMENT
With the completion of mining and processing of the Giant open pit, the Company
is advancing a number of opportunities for organic growth around the Kanmantoo
infrastructure, with a focus on the down-dip extensions of the copper-gold lodes
previously mined within the Giant and Nugent open pits. Hillgrove is executing
a staged strategy for the evaluation of the Underground opportunity, which is
designed to efficiently drill test the dominant Cu-Au lodes to confirm depth, width
and grade continuity.
The Stage 1 drilling undertaken in the difficult COVID-19 pandemic circumstances
of 2020 was aimed at confirming that the key Cu-Au lodes of Kavanagh and
Nugent extend at least 150m below the extent of the respective pits with adequate
grade and width to support underground mining. A total of 14 diamond drill holes
were drilled with the highlights from this drilling1 including:
Central and East Kavanagh
½ KTDD190_W2 20.3m @ 2.07% Cu, 0.67 g/t Au, 7.0 g/t Ag from
½ KTDD197
Nugent
½ KTDD192
½ KTDD194
½ KTDD195
West Kavanagh
½ KTDD189
490.0m downhole
20.65m @ 2.01% Cu, 0.42 g/t Au, 6.0g/t Ag from
326.6m downhole
10m @ 1.43% Cu, 0.46 g/t Au, 1.6 g/t Ag from
295m downhole
6.0m @ 1.13% Cu, 1.86 g/t Au, 1.9 g/t Ag from
281m downhole
11m @ 1.15% Cu, 0.58 g/t Au, 2.9 g/t Ag from
301m downhole
16.7m @ 1.27% Cu, 0.08 g/t Au, 2.7 g/t Ag from
496m downhole
1
Intersections at a 0.6% Cu cut-off grade over a minimum of 3m horizontal width.
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Hillgrove Projects (cont.)
KANMANTOO UNDERGROUND DEVELOPMENT (cont.)
These drill holes demonstrate that the mineralisation extends for
at least 150m below the extent of the respective pits and led to
the release of a maiden Mineral Resource Estimate (MRE) for West
Kavanagh and Nugent, and an updated MRE for the Kavanagh Zone
during the December 2020 Quarter2. The highlights of the 2020 MRE
include:
½ A 110% increase in the total estimated Cu metal from 16.2k tonnes
to 34.4k tonnes of copper in the Resources below the open pits
within 12 months.
½ The copper and gold grades of the resource estimates continue to
support the Company’s investigations of the economic viability for
an underground operation at Kanmantoo.
½ The resource estimates only cover a portion of the Nugent, the
West Kavanagh, and Kavanagh areas and there is considerable
opportunity to increase the resources with further drilling on these
and adjacent mineralised lodes.
½ The resource estimates are all constrained by the extent of the
drilling and not by the geology, in both the along strike and dip
directions.
Following the capital raise in December 2020, the 2021
Kanmantoo drilling program commenced in January
2021, focussing initially on the Kavanagh lodes. The
drilling program seeks to expand the Underground
MRE and infill drill to improve the geological and
engineering confidence such that an initial Ore
Reserve Estimate may be prepared. The aim is to
define sufficient Ore Reserves to support the capital
investment required to develop the Underground
mining areas.
If an Underground operation is developed, cash flows
from the Underground operation will enable the drill
testing of the proximal Cu-Au lodes which were mined
within the open pits (for example North Kavanagh,
Spitfire, SW Kavanagh as shown in the figure below).
These lodes have the potential to significantly uplift
the value of the Underground operation for relatively
low incremental capital cost as they would potentially
utilise the development infrastructure from the main
Kavanagh lodes.
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6114400mN
6114800mN
6115200mN
Final Nugent Open Pit
Final Giant Open Pit
1200mRL
NorthKavanagh
Open
1000mRL
Kavanagh
MRE
800mRL
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Kavanagh
Open
600mRL
West Kavanagh
Open
Nugent
MRE
Nugent
Open
SW Kavanagh
Open
West Kavanagh
MRE
Blast Holes > 2% Cu
0
200
metres
Kanmantoo MRE & Drill Targets
Sectional View Looking West of 2019-2020 MREs
2
Refer ASX announcement of 7 December 2020.
Hillgrove Projects (cont.)
NEAR MINE
EXPLORATION
The Company continues to advance the
exploration of its Cu-Au targets within
10 kms of the Kanmantoo processing
plant. These include the previously
announced3 Stella and North West
Kanmantoo geochemical and geophysical
targets.
6120000mN
316000mE
NORTH WEST
320000mE
ain
m
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ctu
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Str
MineAlteration
Corridor
6116000mN
ain
m
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ctu
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Str
6112000mN
KANMANTOO
STELLA
Old Cu-Au shafts
0
NORTH
2
kilometres
Kanmantoo Airmagnetics
& Structural Trends
Plan View of the Location of Projects Within 10km of Kanmantoo Copper Mine
Stella
The 2019 3D MT (magneto-telluric)
geophysical survey has identified the
Stella zone as a coincident magnetic high,
conductivity high and gravity low target
commencing at around 200m below
surface. Nearby drilling has intersected
a 60m wide zone of chlorite-pyrrhotite-
garnet alteration with attendant Cu-Au
mineralisation (ASX release of
29 April 2019).
This target is now ready for drill testing.
North West
Mapping and sampling has identified a
2.4km long zone of Cu-Au anomalism
coincident with a strong magnetic
high and broad widths of iron-oxide
alteration and iron-oxide brecciation at
surface, within 4.5kms of the Kanmantoo
processing plant.
The rock chip sampling, where possible,
across the North-West Kanmantoo area
has identified mineralisation with a strong
magmatic association including:
½ Rock chip samples to 2.2 g/t Au,
0.1% Cu (not the same sample).
½ Elevated Mo, Bi, Co, Sn, U, La.
The area has not previously been drilled
by Hillgrove or its predecessors.
3
ASX release of 29 April 2019 Cu-Au and Cu-Mo zones uncovered by exploration
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Hillgrove Projects (cont.)
REGIONAL EXPLORATION
South East Delamerian
The Regional area comprises 5,652 sq kms of exploration
licences in the south-east of South Australia, within the
Delamerian Orogen. In a recent publication by the Geological
Survey of South Australia4, the Survey notes the similarities
between the Delamerian Orogen tectonic setting and its high-
level granitic to dioritic intrusives in South Australia, with the
geology of the large Porphyry Cu-Mo-Au deposits in south-east
China (e.g. Dexing, 9.7Mt of Cu metal, 265 t Au).
These observations support Hillgrove’s exploration activities in
this Orogen.
Kanappa Copper-Gold Exploration
Hillgrove has previously reported the results of the diamond
drilling at Kanappa that intersected copper-gold mineralisation
within a skarn mineralising system. Kanappa is approximately
65 kms by road from the Kanmantoo operation.
The petrology work on a suite of samples from all drill holes by
internationally respected alteration petrologist, Dr Roger Taylor,
has clearly identified the mineralisation as an overprinting Cu-Au
rich skarn with attendant alteration stages including garnet-
pyroxene, amphibole-magnetite, and copper and iron sulphides.
A review of the whole rock geochemistry of the monzonites
intersected by the drill holes shows that the magmatic system
is classified as a Volcanic Arc Granite and classified within the
Loucks (2014) porphyry fertility field.
These drill results confirm the Company’s view that the Kanappa
area is prospective for large scale magmatic related copper-
gold mineral deposits and further work is continuing in the area.
Mt Rhine Copper-Gold Exploration
The Company had previously identified two significant zones
of copper-gold at Mt Rhine through a systematic soil and rock
chip sampling program. In 2018, the stronger copper-gold
zone was covered with a program of ground magnetics and
pole-dipole IP which indicated a 1.7km long anomaly for drill
targeting.
Field inspection of the copper-gold and conductivity anomaly
has located a series of carbonate Cu-Fe skarns over a strike
length of 1km. These have never been drilled and present as a
large scale Cu-Au magmatic target similar to the Kanappa style
mineralisation.
The Mt Rhine Project is 80kms via existing roads from the
Kanmantoo processing plant and 12kms north of the Kanappa
copper-gold project.
PUMPED HYDRO ENERGY STORAGE
PROJECT
In February 2020, Hillgrove announced that Hillgrove and
AGL have mutually agreed to terminate the PHES Project
Agreement and associated project documents and effect a
clean break without any further obligations on either party.
The termination of the agreement enabled Hillgrove to
advance the Kavanagh Underground project.
Hillgrove may seek to promote the PHES in the future as
a post mining land use at Kanmantoo as the Kanmantoo
PHES project remains competitive due to the difference in
elevation between the base of the pit and an upper reservoir,
its proximity to the South Australian Electricity Interconnector,
water availability, its land holding on surrounding properties,
and the South Australian electricity market requirements.
Hillgrove also believe the rationale for large energy storage
solutions remains sound as Australia tackles climate change
through energy policy.
INDONESIAN PROJECTS
In October 2020, Hillgrove successfully withdrew from
Indonesia, through the sale of its Indonesian subsidiaries
PT Akram Resources and PT Fathi Resources. With the
carrying value of these assets being fully impaired in 2015, the
transaction resulted in an improvement of the balance sheet
(through a reduction in liabilities) of $2.2M.
4 Mesa Journal 93, 2020, p47-53
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Mineral Resource, Ore Reserve & Exploration Target
MINERAL RESOURCES FOR KANMANTOO
As at 31 December 2020
On 7 December 2020, the Company released an updated Mineral Resource Estimate for the first of its underground opportunities
on a portion of the deeper Kavanagh mineralisation beneath the Giant Open Pit. The Mineral Resource Estimate does not include
any Ore Reserve and is estimated at a cut-off grade and geologic continuity suitable for eventual underground studies for its
exploitation.
The Table below summarises the Mineral Resource Estimate (“MRE”) for the Kavanagh, West Kavanagh and Nugent underground
areas at 0.8% Cu cut-off grade.
MINERAL RESOURCE ESTIMATE FOR THE KANMANTOO UNDERGROUND AREA
Mine
Kavanagh
West Kavanagh
Nugent
Totals
JORC 2012
Classification
Indicated
Inferred
Sub-Total
Indicated
Inferred
Sub-Total
Indicated
Inferred
Sub-Total
Indicated
Inferred
Total
Tonnage
(kt)
583
560
1,143
105
300
406
202
457
659
890
1,318
2,208
Cu
(%)
1.97
1.7
1.83
1.42
1.1
1.18
1.40
1.3
1.32
1.77
1.4
1.56
Au
(g/t)
0.24
0.2
0.24
0.06
0.06
0.06
0.47
0.7
0.61
0.27
0.4
0.32
Ag
(g/t)
6.0
5
5.6
2.0
2.0
2.0
3.2
2.7
2.8
4.9
3.5
4.1
Cu Metal
(kt)
11.5
9
20.9
1.5
3
4.8
2.8
6
8.7
15.8
19
34.4
The information in this report that relates to the Mineral Resources on the Kavanagh underground project were initially reported
by the Company to ASX on 7 December 2020. The Company confirms that it is not aware of any new information or data that
materially affects the information included in the original market announcement and that all material assumptions and technical
parameters underpinning the estimate in the relevant market announcement continue to apply and have not materially changed.
The Company confirms that the form and context in which the Competent Person’s findings are presented have not been
materially modified from the original market announcement.
The 2020 Mineral Resource Estimate for the Nugent, West Kavanagh and Kavanagh underground area is based upon information
compiled by Mr Peter Rolley, who is a Member of The Australian Institute of Geoscientists. Mr Rolley is a full-time employee
of Hillgrove Resources Limited and has sufficient experience relevant to the styles of mineralisation and type of deposit under
consideration to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (JORC Code)’. Mr Rolley has consented to the inclusion in the release
of the matters based on their information in the form and context in which it appears.
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Mineral Resource, Ore Reserve & Exploration Target (cont.)
STATEMENT OF ORE
RESERVES
As at 31 March 2020
STATEMENT OF EXPLORATION TARGETS
As at 31 December 2020
The Kanmantoo Exploration Target was reported on 23 February 2021. These
Exploration Targets are all located within Hillgrove’s Kanmantoo Mining Lease and
are all extensions of along strike or down dip Cu-Au lodes mined by the
Company’s open pits or intersected by diamond drilling undertaken by Hillgrove.
In summary, Hillgrove has approximated an Exploration Target for the Kanmantoo
Mine Lease area of between eight and sixteen million tonnes with a target grade of
between 1.0% and 2.0% Cu and 0.2 g/t to 0.4 g/t Au. The Exploration Target is in
addition to the Mineral Resource Estimate.
Kanmantoo Exploration Target By Zone
Zone
Coopers
North Kavanagh
Kavanagh
West Kavanagh
South-West Kavanagh
Spitfire
Nugent
Paringa
Emily Star
TOTAL
Maximum
RL Depth
Tonnage
Range
Metres
Mt
Grade
Range
Cu%
Grade
Range
Au g/t
600
600
400
400
600
600
600
900
900
0.1 - 0.3
0.1 - 0.7
2.0 - 3.5
1.0 - 2.0
0.8 - 1.0
0.4 - 0.7
1.5 - 2.5
0.5 - 1.5
2.0 - 4.5
1.5 – 2.0
0.4 – 0.8
1.5 – 2.0
0.4 – 0.8
1.0 – 2.0
0.2 – 0.4
0.8 – 1.5
0.02 – 0.05
1.8 – 2.2
0.1 – 0.4
1.5 – 2.0
0.8 - 1.5
1.1 - 2.2
1.2 - 2.2
1.5 - 3.0
0.2 - 0.6
0.1 - 0.2
0.1 - 0.3
8 - 16
1.0 – 2.0
0.2 – 0.4
The information that relates to Exploration Target and Exploration Results was first
reported by the Company to the ASX on 23 February 2021 and is based on and
fairly represents information and supporting documentation compiled by Peter
Rolley, a Competent Person, a full time employee of Hillgrove Resources Limited,
and a member of the Australian Institute of Geoscientists. Mr Rolley has sufficient
experience that is relevant to the style of mineralisation and type of deposit under
consideration and to the activity being undertaken to qualify as a Competent
Person as defined in the 2012 edition of the ‘Australian Code for Reporting
Exploration Results, Mineral Resources and Ore Reserves’. Mr Rolley consents to
the inclusion in the report of the matters based on his information in the form and
context in which it appears.
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As a result of the cessation of open pit
mining operations at Kanmantoo in May
2019 resulting from the depletion of all Ore
Reserves within the Giant Open Pit, and
the completion of milling of all stockpiles
in March 2020, there is no longer an Ore
Reserve reported for the Kanmantoo
District.
The information in this release that relates
to the Ore Reserve is prepared by a
Competent Person in accordance with the
JORC Code 2012. Further information
on the Kanmantoo Ore Reserves is
available in the Hillgrove Updated Ore
Reserve Estimate released to the ASX on
18 October 2016. Hillgrove Resources
confirms that it is not aware of any new
information or data that materially affects
the information included in that market
announcement and in the case of estimates
of Ore Reserves for open pit mining that
all material assumptions and technical
parameters underpinning the estimates
in the relevant market announcement
continue to apply and have not materially
changed except for open pit mining and
processing depletion. Hillgrove Resources
confirms that the form and context in
which the findings of the Competent
Person Lachlan Wallace in relation to the
Ore Reserve estimates are presented,
have not been materially modified from
the original market announcement apart
from mining and processing depletion. Mr
Wallace (MAusIMM) is a full-time employee
of Hillgrove Resources Limited. Mr Wallace
has sufficient experience that is relevant
to the style of mineralisation and type of
deposit under consideration and to the
activity being undertaken to qualify as a
Competent Person as defined in the 2012
edition of the ‘Australian Code for Reporting
Exploration Results, Mineral Resources and
Ore Reserves’. Mr Wallace consents to the
inclusion in this report of the matters based
on their information in the form and context
in which it appears.
Sustainability: Environment, Safety and Community
We continue to produce and harvest
native seed as well as conduct wild
seed collection to ensure there are
sufficient propagules to enable this
important work.
Strategic community engagement
continues utilising the long established
Community Engagement Plan. Regular
reviews and modifications to the plan
continue to ensure engagement of
the community remains effective and
productive.
We remain pro-active in meeting the
ongoing challenges and impacts of
our site through the use of real-time
monitoring and alert systems focused
on dust prevention. There is however
always room for improvement and as
such we utilise working groups made up
of community and committee members
and regulators to drive actions and ideas
to improve performance.
Hillgrove’s Sustainability and Work Health & Safety Policies provide a strong, ethical
foundation for our approach to health, safety, environment and community (HSEC)
responsibilities. Supporting these policies, Hillgrove has implemented an Integrated
Risk Management System (Kan-do) across our operations. The system incorporates
a prioritised risk based approach and continual improvement framework, ensuring
our HSEC policy objectives and legislative compliance are achieved.
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To reduce the risks as low as reasonably practicable, the Kan-do system provides
the appropriate safe systems of work, clearly outlined responsibilities and
accountabilities, and a strong audit framework. Hillgrove has identified its Principal
HSEC risks and implemented the appropriate control measures.
The Kan-do system is driven by effective leadership, the acceptance of individual
responsibility and the promotion of a risk aware culture across its operations.
Prudent and environmentally responsible
operational management at Kanmantoo has helped
reduce our overall rehabilitation expenditure, while
building our reputation with the community as a
good neighbour and an ethical mining operator.
Progressive rehabilitation of the site continued in
2020, including shaping and seeding of additional
areas of the site including the Integrated Waste
Landform (IWL) – comprised of our waste rock and
the tailings storage facility, and the backfilled Emily
pit. The wetter than average weather conditions
experienced in 2020 assisted in advancing the
growth of vegetation on these seeded areas. The
only disturbed areas on the site required to be
rehabilitated that remain unseeded are: the top of
the Tailings Storage Facility (TSF), rock stockpiles
required for future TSF expansion and mine closure,
site access roads and the processing plant area.
The establishment of high quality native vegetation
on adjacent land is assisting us to return up to 10
hectares of high quality rehabilitated land to the
community for every hectare of native vegetation we
have disturbed. The establishment of this vegetation
has been integrated into a “Community Master
Plan” to ensure the presence of the mine delivers
real benefit to the impacted community and the
natural environment.
Financial Report
Contents
Directors’ Report
Remuneration Report (audited)
Auditor’s Independence Declaration
Consolidated statement of profit or loss and
other comprehensive income
Consolidated balance sheet
Consolidated statement of
changes in equity
Consolidated statement of cash flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
10
17
28
29
30
31
32
33
55
56
63
These financial statements are the consolidated financial statements for
the consolidated entity consisting of Hillgrove Resources Limited and
its subsidiaries. The financial statements are presented in the Australian
currency.
Hillgrove Resources Limited is a company limited by shares,
incorporated and domiciled in Australia. Its registered office and
principal place of business is:
Hillgrove Resources Limited
Ground Floor, 5-7 King William Road,
Unley, South Australia 5061
The financial statements were authorised for issue by the Directors on
26 February 2021. The Directors have the power to amend and reissue
the financial statements.
Through the use of the internet, we have ensured that our corporate
reporting is timely and complete. All press releases, financial reports
and other information are available at our Investors’ Centre on our
website www.hillgroveresources.com.au
for the year ended 31 December
2020
Directors’ Report
The Directors present their report on the consolidated entity (referred to hereafter as “the Group”) consisting of
Hillgrove Resources Limited (Hillgrove or the Company) and the entities it controlled during the 12 months ended
31 December 2020.
PRINCIPAL ACTIVITIES
Hillgrove is an Australian mining company listed on the Australian Securities Exchange (ASX: HGO) and focused on the
development of the Kanmantoo Underground Copper Mine in South Australia and mineral exploration in the south-east of South
Australia. The Kanmantoo Copper Mine is located less than 55 kilometres from Adelaide in South Australia.
DIRECTORS AND OFFICERS
The Directors and Officers of the Company during the whole of the financial year and up to the date of this report are:
Name/Qualifications
Experience and Special Responsibilities
Mr Derek Carter
Qualifications
Experience
Independent Non-Executive Chairman / Chairman Nomination and Remuneration
Committees
BSc, MSc, FAusIMM
Derek has over 40 years’ experience in exploration and mining geology and management.
He held senior positions in Burmine Ltd and the Shell Group of Companies where he was
responsible for discovering the Los Santos tungsten deposit in Spain, before founding
Minotaur Gold NL in 1993. He resigned as Chairman of Minotaur Exploration Ltd in November
2016. Derek was awarded AMEC’s Prospector of the Year Award (jointly) in 2003 for the
discovery of the Prominent Hill copper-gold deposit, the AusIMM President’s Award and is a
Centenary Medallist. Derek is currently the Chairman of Petratherm Limited (ASX: PTR).
Derek is a member of the Audit and Risk Committee.
Appointed 24 April 2020.
Mr Murray Boyte
Non-Executive Director / Chairman Audit and Risk and Treasury Committees
Qualifications
Experience
BCA, CA, MAICD
Murray joined the Board in May 2019, as a Non-Executive Director replacing Maurice Loomes.
Murray has over 35 years’ experience in merchant banking and finance, undertaking company
reconstructions, mergers and acquisitions in Australia, New Zealand, North America and Hong
Kong. Murray holds a Bachelor of Commerce and Administration from the Victoria University
in Wellington and is a member of the Australian Institute of Company Directors, the Institute of
Directors of New Zealand and Chartered Accountants Australia & New Zealand. In addition,
Murray has held executive positions and directorships in the transport, horticulture, finance
service, investment, health services and property industries. Murray is currently the Chairman
of Eureka Group Holdings (ASX: EGH) and National Tyre & Wheel Limited (ASX: NTD).
Murray is a member of the Remuneration and Nomination Committees.
Appointed 10 May 2019.
Mr Lachlan Wallace
Chief Executive Officer and Managing Director
Qualifications
Experience
BEng (Mining Hons), MSc (Mineral & Energy Economics), MBA, MAusIMM, GAICD
Since joining Hillgrove in 2012, Lachlan held various operational roles at the Kanmantoo
Copper Mine including General Manager before becoming the Chief Executive Officer and
Managing Director in 2019. Previously, Lachlan was responsible for Stemcor’s global mining
assets, developing their iron ore and manganese portfolio in India and nickel project in
Indonesia at a time when Stemcor’s annual turnover exceeded £6Bn. In addition, Lachlan
chaired a JV between Stemcor and an Indonesian partner to facilitate thermal coal trade
flows ex-Indonesia. Lachlan has held technical, managerial and consulting roles in Africa and
Australia, including Anglo Gold Ashanti’s Siguiri gold project in Guinea, the Lumwana copper
mine in Zambia, and the Savage River iron ore mine in Tasmania.
Lachlan is a member of the Treasury Committee.
Appointed 24 May 2019.
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Directors’ Report (cont.)
DIRECTORS AND OFFICERS (CONT.)
Mr Joe Sutanto
Chief Commercial Officer & Company Secretary
Qualifications
Experience
BCom, MBA, CPA
Joe joined Hillgrove in 2011 and has held a number of roles within the finance team, which
spanned commercial and planning to financial control before becoming the Chief Commercial
Officer and Company Secretary in 2020. Prior to Hillgrove, Joe held a number of roles which
included as a corporate finance executive at PwC Corporate Finance, commodities trader at
Glencore, and as an auditor at KPMG. A CPA qualified accountant, Joe completed his MBA at
HKUST and London Business School.
Joe is a member of the Treasury Committee.
Appointed 10 July 2020.
Retired Directors and Officers
Mr John Gooding
Independent Non-Executive Chairman / Chairman Nomination and
Remuneration Committees
Resigned 24 April 2020.
Mr Philip Baker
Independent Non-Executive Director / Chairman Audit and Risk and
Treasury Committees
Resigned 20 May 2020.
Mr Antony (Tony) Breuer
Independent Non-Executive Director
Resigned 24 April 2020.
Mr Paul Kiley
Chief Financial Officer & Company Secretary
Resigned 10 July 2020.
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Directors’ Meetings
The number of Directors’ meetings and number of meetings attended by each of the Directors of the Company during the twelve
month period are:
Meetings Held
Board
Remuneration
Committee
Audit
Committee
Nomination
Committee
Director
Mr D Carter
Mr M Boyte
Mr L Wallace
Mr J E Gooding
Mr P Baker
Mr A Breuer
A
12
18
18
6
7
6
B
12
18
18
6
7
6
A
4
6
6
2
2
2
B
4
6
6
2
2
2
A
2
4
4
2
3
2
B
2
4
4
2
3
2
A
-
2
-
2
2
2
B
-
2
-
2
2
2
Treasury
Committee
A
B
-
-
-
-
-
-
-
-
-
-
-
-
A – Number of meetings held during the Directors time in office
B – Number of meetings attended
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Directors’ Report (cont.)
RESULTS
Revenue from ordinary activities
Profit / (Loss) from ordinary activities after tax attributable to the owners of
Hillgrove Resources Limited
Profit / (Loss) for the period attributable to the owners of Hillgrove Resources
Limited
CY20
$20.2m
($5.9m)
($5.9m)
CY19
$113.5m
($10.0m)
($10.0m)
For the year ended 31 December 2020, the net loss after tax was $5.9 million compared to a net loss after tax of $10.0 million for
the year ended 31 December 2019.
The underlying EBITDA for the year was a loss of $3.7 million compared to an EBITDA of $12.1 million for 2019. The lower level of
EBITDA profitability compared to the previous year was a result of the Company’s transition from a producer (with the processing
of low grade stockpiles) to an explorer and developer in March 2020.
As a result of the costs associated with exploration and development along with site optionality costs such as care and
maintenance as well as rehabilitation, the closing cash balance decreased from $9.3 million at the end of 2019 to $5.6 million at
the end of 2020.
Income Statement Overview
Copper revenue
Gold revenue
Silver revenue
Less: Treatment and refining costs
NET REVENUE FROM SALE OF CONCENTRATE
Mining costs
Pre-strip and deferral
Processing costs
Transport and shipping costs
Other direct costs
Care and maintenance costs
Inventory movements
Royalties
Corporate costs
TOTAL COSTS
Gain on sale of Indonesian operations
Other income
EBITDA
Depreciation and amortisation
Exploration and project costs written off
EBIT
Net interest and financing charges
Income tax benefit/(expense)
NET PROFIT AFTER TAX
12 mths to Dec 2020
12 mths to Dec 2019
$ million
19.6
1.7
0.4
(1.5)
20.2
-
-
(6.5)
(1.5)
(2.3)
(1.3)
(9.2)
(0.9)
(4.2)
$ million
116.1
6.3
2.0
(10.9)
113.5
(21.2)
(7.9)
(31.4)
(7.0)
(4.4)
-
(20.9)
(5.4)
(4.9)
(25.9)
(103.1)
1.9
0.1
(3.7)
(1.9)
(0.1)
(5.7)
(0.2)
-
(5.9)
-
1.7
12.1
(14.7)
(3.0)
(5.6)
(0.7)
(3.7)
(10.0)
Change
$ million
(96.5)
(4.6)
(1.6)
9.4
(93.3)
21.2
7.9
24.9
5.5
2.1
(1.3)
11.7
4.5
0.7
77.2
1.9
(1.6)
(15.8)
12.8
2.9
(0.1)
0.5
3.7
4.1
Revenue for the year was from the sale of 4,056dmt of copper concentrate containing 1,885 copper tonnes (for the year to
31 December 2019: 59,172dmt and 13,073 copper tonnes).
Total costs were $25.9 million compared to $103.1 million for the previous year. The significant reduction in costs were a result of
the completion of stockpiles processing.
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Directors’ Report (cont.)
RESULTS (Cont.)
Cash Flow Overview
Net cash inflows from operating activities
Net cash used in investing activities
Net cash inflows/ (outflows) from financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at the end of the year
Operating Activities Cash Flow
12 mths to Dec 2020
12 mths to Dec 2019
$ million
$ million
(3.0)
(2.7)
2.0
(3.7)
5.6
21.8
(5.4)
(9.5)
6.9
9.3
Change
$ million
(24.8)
2.7
11.5
(10.6)
(3.7)
Cash received in the course of operations amounted to $20.2 million and relates to the sale of copper concentrate during 2020
together with the receipt of trade receivables from 2019.
Cash payments in the course of operations totalled $23.2 million and include payments for copper concentrate production,
corporate and administration costs and the costs relating to care and maintenance activities.
With the completion of processing operations in March 2020, direct comparison between 2019 and 2020 cashflows would
provide little benefit and has not been provided.
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Trade creditors and other payables are on normal commercial terms.
Investing Activities Cash Flow
Net cash outflow from investing activities was $2.7 million compared to an outflow of $5.4 million in the previous corresponding
period. Of the $2.7 million, $2.0 million related to underground expansion works, which are classified as mine development
(2019: $2.0 million). Expenditure on regional exploration licences amounted to $0.7 million (2019: $0.9 million).
Financing Activities Cash Flow
In 2020 there was a net cash inflow of $2.0 million from financing activities. Net receipts of $2.2m relating to Tranche 1 of the
capital raising were offset by payments totalling $0.2 million for the repayment of leases. The net cash outflow of $9.5 million in
2019 was largely driven by the payment of a dividend to shareholders.
Balance Sheet Overview
12 mths to Dec 2020
12 mths to Dec 2019
$ million
$ million
Change
$ million
Cash
Receivables
Inventories
Property, Plant & Equipment
Exploration
Total Assets
Trade Payables
Provisions
Borrowings
Employee Benefits
Deferred Income
Total Liabilities
Net Assets / Equity
5.6
0.8
1.8
24.4
3.2
35.9
1.1
10.5
-
1.0
-
12.7
23.2
9.3
3.1
12.1
24.2
2.6
51.3
8.6
12.3
0.3
3.3
0.5
25.0
26.3
(3.7)
(2.3)
(10.3)
0.2
0.6
(15.4)
7.5
1.8
0.3
2.3
0.5
12.3
(3.1)
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Directors’ Report (cont.)
RESULTS (Cont.)
Total assets decreased by $15.4 million to $35.9 million, largely
as a result of the decrease in inventories. This was due to the
processing of the low grade stockpiled ore as well as the sale
of copper concentrate on hand.
Total liabilities decreased by $12.3 million to $12.7 million.
This decrease was largely due to the pay down of trade
creditors and employee benefits, both driven by the completion
of processing of stockpiled ore (ie pay down of creditors
related to processing and employee benefits of processing
staff). In addition to this, provisions decreased as a result of
rehabilitation works completed during the year.
OPERATING REVIEW
Production for the year was 1,885 tonnes of copper in
concentrate and 776 ounces of gold in concentrate.
Completion of processing the stockpiled ore occurred in March
2020, on time and without injury. As a result, the number of
employees was reduced from 55 at the beginning of the year
to a full-time equivalent of 8.8 at the end of the year. The
remaining employees are focussed on the development of the
Kanmantoo Underground Project (Underground), rehabilitation
in order to reduce future liabilities, and care and maintenance
of the existing processing plant in order to enable a rapid low-
cost restart for the Underground.
OUTLOOK AND FUTURE
DEVELOPMENTS
The focus of the Company will predominantly be directed
towards further advancing the Underground project, with the
key steps to be undertaken as follows:
½ Expansion of the Underground Resource;
½ Infill drill to improve the geological confidence such that
an initial Ore Reserve Estimate may be prepared for the
Underground;
½ Drill test depth extensions;
½ Completion of a feasibility study; and
½ Reach a final investment decision.
Subject to a positive final investment decision, assess
the optimal financing structure for the development of the
Underground.
In addition to the activities related to the Underground, the
Company will also continue to explore and evaluate its near
mine as well as regional prospects.
GUIDANCE
The Company’s actual performance against its 2020 guidance
is summarised in the table below. Copper production was in
line with 2020 guidance, while gold production and C1 costs
were better than guidance.
CY20
2020 Guidance
Actuals
Copper produced
1,650 to
2,150 tonnes
1,855 tonnes
Gold produced
450 to 700 ounces
776 ounces
C1 costs
US$2.55 to
US$2.75 per lb
US$2.52 per lb
CAPITAL RAISINGS
On 17 December 2020, the Company announced a combined
equity raising of up to $10.9 million at $0.031 per share. The
raising consisted of the following:
½ Placement Tranche 1 – the issue of 76,209,676 new fully
paid ordinary shares pursuant to the Company’s available
placement capacity under ASX Listing Rules 7.1 raising
gross proceeds of $2.4 million (before transaction costs of
$0.2 million);
½ Placement Tranche 2 – subject to shareholder approval,
the issue of 185,080,646 new fully paid ordinary shares to
raise $5.7 million; and
½ Entitlement Offer – non underwritten non-renounceable
offer to raise gross proceeds of up to $2.8 million through
the issue of approximately 90.1 million shares.
Proceeds from Placement Tranche 1 was received in the
current period.
IMPACT OF COVID-19
ON OPERATIONS
With the outbreak of COVID-19 in the first quarter of 2020,
the Company implemented controls such that there was no
material impact to stockpile processing operations, which was
completed in March 2020. It did however, impact Kanmantoo
Underground exploration and development activities, with the
suspension of drilling and ground works for approximately two
months. These activities recommenced in June 2020.
As the impact of COVID-19 continues to evolve, the Directors
cannot reasonably estimate the effects that the COVID-19
pandemic could have on future periods. There is uncertainty
about the length and potential impact of any resultant
disturbance. As a result, we are unable to estimate the
potential impact on the Group’s future operations as at the
date of these Financial Statements.
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Directors’ Report (cont.)
IMPACT OF COVID-19
ON OPERATIONS (cont.)
During the year ended 31 December 2020 the group received
government assistance through JobKeeper of $583,800 which
was treated as a reduction in expenses and $100,000 COVID
Cash Boost which has been recognised as other income.
DIVIDENDS
There were no dividends paid during the current period.
SIGNIFICANT CHANGES IN
THE STATE OF AFFAIRS
Other than those matters listed in this report there have been
no significant changes in the affairs of the Group during the
period.
EVENTS SUBSEQUENT TO
BALANCE DATE
Subsequent to year end, the Company completed and
received the funds from the capital raising that was
contemplated in the announcement of 17 December 2020.
Whilst the Placement Tranche 1 was completed in the current
period, the following was completed subsequent to the
balance date:
½ Placement Tranche 2 – shareholder approval for the issue
of 185,080,646 new fully paid ordinary shares to raise
gross proceeds of $5.7 million; and
½ Entitlement Offer – the non underwritten non-renounceable
offer closed oversubscribed, with $3.4m of subscriptions.
As there were applications for more shortfall shares than
what was available under the Top Up Facility, it was
necessary for the Company to scale back applications.
The entitlement offer raised gross proceeds of $2.8 million
through the issue of 90,090,541 shares.
LIKELY DEVELOPMENTS
AND EXPECTED RESULTS OF
OPERATIONS
Likely developments in the operations of the group in the short
to medium term will largely be focussed on the exploration and
development potential of Hillgrove’s tenements. For further
details on each of these, refer to the review of operations
section of this report.
ENVIRONMENTAL REGULATION
Closure of an operation brings with it potential significant
financial, environment, and social impacts. Recognising this, a
closure management plan for Kanmantoo has been prepared,
which includes long term monitoring to verify that controls are
effective and standards are maintained.
The consolidated entity engages appropriately experienced
contractors and consultants to advise on and ensure
compliance with environmental regulations in respect of its
exploration and development activities. There have been no
reports of material breaches of environmental regulations in the
financial period and at the date of this report.
INDEMNIFICATION AND INSURANCE
OF OFFICERS
Officers’ Indemnity
Article 7.3(a) of the Company’s Constitution provides that “To
the extent permitted by law, the Company must indemnify
each Relevant Officer against: (i) a Liability of that person; and
(ii) Legal Costs of that person”. The Company indemnifies every
Officer against any liability or costs and expenses incurred by
the person in his or her capacity as Officer of the Company:
½ in defending any proceedings, whether civil or criminal,
in which judgement is given in favour of the person or in
which the person is acquitted, or
½ in connection with an application, in relation to such
proceedings, in which the Court grants relief to the person
under the Corporations Law.
Indemnity of Auditors
Hillgrove Resources Limited has agreed to indemnify their
auditors, PricewaterhouseCoopers, to the extent permitted by
law, against any claim by a third party arising from Hillgrove
Resources Limited’s breach of their agreement. The indemnity
stipulates that Hillgrove Resources Limited will meet the full
amount of any such liabilities including a reasonable amount of
legal costs.
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INDEMNIFICATION AND INSURANCE OF OFFICERS (cont.)
Directors’ and Officers’ Insurance
During the financial year, the Company paid a premium
in respect of a contract for directors’ and officers’ liability
insurance. It is a condition of this Policy that each Insured
and/or any persons at their direction or on their behalf shall
not disclose the existence of any Coverage Section, its Limits
of Liability, the nature of the liability indemnified, or the
premium payable.
The Board is committed to following ASX Corporate
Governance Council Corporate Governance Principles and
Recommendations. The Company adopts these best practice
recommendations in its policies and procedures where it is
appropriate to do so, given the size and type of Company and
its operations.
The Board has a process of reviewing all policies and corporate
governance processes. Charters are reviewed and updated
periodically. These charters provide the framework and roles
of respective committees for the appointment of Non-Executive
Directors to undertake specific responsibilities on behalf of
the Board.
Details of the corporate governance policies adopted by the
Company and referred to in this statement are available on the
Company’s website at www.hillgroveresources.com.au.
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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 Company, or to intervene in any proceedings to which
the Company is a party, for the purpose of taking responsibility
on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf
of the Company with leave of the Court under section 237 of
the Corporations Act 2001.
Non-Audit Services
The Company may decide to employ the auditor on
assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the Company and/or
the consolidated entity are important. Details of the amounts
paid or payable to the auditor (PricewaterhouseCoopers) for
audit and non-audit services provided during the period are set
out in Note 7 (e).
The Audit and Risk Committee has considered the position
and is satisfied that the provision of the non-audit services
is compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001. The
Directors are satisfied that the provision of non-audit services
by the auditor did not compromise the auditor independence
requirements of the Corporations Act 2001.
None of the services provided undermine the general principles
relating to auditor independence as set out in Professional
Statement F1, including reviewing or auditing the auditor’s own
work, acting in a management or decision-making capacity for
the Company, acting as advocate for the Company or jointly
sharing economic risk and rewards. A copy of the Auditors’
Independence Declaration as required under section 307C of
the Corporations Act 2001 is set out on page 28.
Directors’ Report (cont.)
REMUNERATION REPORT (AUDITED)
The Directors of Hillgrove Resources and its Consolidated Entities present the
Remuneration Report for the Company for the year ended 31 December 2020,
which forms part of the director’s report and has been audited in accordance with
section 308 (3C) of the Corporations Act 2001.
1.0 Key Management Personnel
Key management personnel comprise the Non-Executive Directors, the Executive
Director and Executives (KMP). Details of the KMP are set out in the table below.
Non-Executive
Directors
Mr D Carter
Mr M Boyte
(Non-independent)
Executive Directors
Mr L Wallace
Change in 2020
Financial Year
Part Year
Appointed
24 April 2020
Full Year
Title (At Year End)
Chairman
Chairman Nomination Committee
Chairman Remuneration Committee
Member Audit and Risk Committee
Director
Chairman Audit and Risk Committee
Chairman Treasury Committee
Member Nomination Committee
Member Remuneration Committee
CEO and Managing Director
Member Treasury Committee
Full Year
KMP Departures During the 2020 Financial Year
Non-Executive
Directors
Mr J Gooding
Mr P Baker
Mr T Breuer
KMP Executives
Mr P Kiley
Title (Prior to Departure)
Chairman
Chairman Nomination Committee
Chairman Remuneration Committee
Member Audit and Risk Committee
Director
Member Nomination Committee
Member Remuneration Committee
Chairman Audit and Risk Committee
Chairman Treasury Committee
Director
Member Nomination Committee
Member Remuneration Committee
Member Audit and Risk Committee
Chief Financial Officer and
Company Secretary
Member Treasury Committee
Mr G Norris (1)
General Manager, Kanmantoo
Change in 2020
Financial Year
Part Year
Resigned
24 April 2020
Part Year
Resigned
20 May 2020
Part Year
Resigned
24 April 2020
Part Year
Resigned
10 July 2020
Part Year
Until 31 May 2020
1 Mr Norris remains an employee with Hillgrove Resources however following completion
of ore processing and transition to care and maintenance, his role is no longer regarded
as KMP.
2.0 Role of the Board
and the Remuneration
Committee
The Board is responsible for the
Company’s remuneration strategy
and policy. Consistent with this
responsibility, the Board has
established a Remuneration Committee
which is chaired by an Independent
Non-Executive Director.
The role of the Remuneration
Committee is set out in its Charter and
in summary is to:
½ Review and approve the Company’s
remuneration strategy and policy;
½ Consider and propose to the
Board the remuneration of the
CEO and consider and approve
the remuneration of all designated
senior executives;
½ Review and approve Hillgrove
Resources’ short term incentive
(STI) and long term incentive (LTI)
schemes, including amounts,
terms and offer processes and
procedures;
½ Determine and approve equity
awards in accordance with policy
and shareholder approvals,
including testing of vesting and
termination provisions; and
½ Review and make
recommendations to the Board
regarding remuneration of non-
executive directors.
Further information on the
Remuneration Committee’s role,
responsibilities and membership is
contained in the Company’s website
www.hillgroveresources.com.au.
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Directors’ Report (cont.)
REMUNERATION REPORT (AUDITED) (cont.)
2.1 Remuneration and
Benefits Policy
The Company’s approach to
remuneration is outlined in the
Remuneration and Benefits
Policy and is based on providing
competitive rewards that
motivate talented employees to
deliver superior results.
Details
In the year ending 31 December 2020, the Committee engaged remuneration advisors
Egan Associates and received advice relating to future remuneration levels, in particular
to future LTI plans.
No remuneration recommendations, as defined under section 300A (1) (h) of the
Corporations Act 2001 were made by remuneration advisors during the year ended
31 December 2020.
3.0 Non-Executive Director Remuneration
Elements
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The Remuneration and Benefits
policy aims to:
½ Align employee remuneration
to the principles and
measurement of Total
Shareholder Return (TSR);
½ Present progressive incentive
structures to encourage
outstanding performance,
and hence improved TSR;
and
½ Mitigate the business
risks associated with poor
performance, market
movements and employee
turnover.
The Remuneration Committee
Charter and Remuneration and
Benefits Policy can be viewed in
the Company’s website
www.hillgroveresources.com.au.
2.2 Use of
Remuneration
Consultants
The Remuneration Committee is
briefed by management however,
makes all decision free of
influence of management.
Further to the management
briefings, to assist in its decision
making, the Committee
may, from time to time, seek
independent advice from
remuneration consultants, and
in so doing will directly engage
with the consultant without
management involvement.
Aggregate Board
and Committee Fees
The total amount of fees paid to non-executive directors in the year
ended 31 December 2020 is within the aggregate amount approved
by shareholders at the AGM in 2009 of $450,000 a year. The
individual amounts paid to directors have decreased during the year.
Board/Committee
Fees Per Annum
Board Chairman Fee
Board NED Base Fee
$120,000
$75,000
Post-Employment
Benefits
Superannuation
Details
Superannuation contributions are made at a rate of 9.5% of base fee
(but only up to the Government’s prescribed maximum contributions
limit) which satisfies the Company’s statutory superannuation
contributions. Contributions are included in the total fee.
Other Benefits
Details
Equity Instruments
Non-Executive Directors do not receive any performance related
remuneration or performance rights.
Other fees/benefits
No payments were made to Non-Executive Directors during the
2020 financial year for extra services or special exertions. Directors
are entitled to be reimbursed for approved Company related
expenditure e.g. flights and expenses to attend Board meetings.
4.0 Executive Remuneration
4.1 Executive KMP remuneration framework
Hillgrove Resources’ executive remuneration strategy is designed to attract, retain and
motivate a highly qualified and experienced group of Executives.
4.2 Total Fixed Remuneration
Total Fixed Remuneration (TFR) includes all remuneration and benefits paid to an
Executive KMP calculated on a Total Employment Cost (TEC) basis and includes
base salary and superannuation benefits paid in line with the prevailing statutory
Superannuation Guarantee legislation.
4.3 Remuneration Composition Mix and Timing of Receipt
The Company endeavours to provide an appropriate and competitive mix of
remuneration components balanced between fixed and ‘at risk’. The broad remuneration
composition mix of the Company’s Executive KMP can be illustrated as follows:
Remuneration Mix (Actual) CY 2020
Position
CEO/MD
Senior Executives (KMP)
TFR (Cash)
STI (Cash)
LTI (Equity)
100%
100%
Up to 50% of TFR
Up to 50% of TFR
Up to 50% of TFR
Up to 50% of TFR
Note KMPs are classified as Executives for the purposes of remuneration disclosures
under the Corporations Act.
Directors’ Report (cont.)
REMUNERATION REPORT (AUDITED) (cont.)
The three complementary components of Executive KMP remuneration are ‘earned’ over multiple time ranges.
This is illustrated in the following chart.
YEAR 1
August
2020
TFR
Performance measured
(one year)
January
2020
TFR
STI
LTI
YEAR 2
December
2020
December
2021
Performance measured
(1 years & 5 months)
STI
performance
period starts and
new TFR effective
LTI
performance
period starts
STI
performance
period ends
LTI
performance
period ends
4.4 Variable ‘At Risk’ Remuneration
As set out in Section 4.3, variable remuneration forms a portion of the CEO/MD and other Executive KMP remuneration. Apart
from being market competitive, the purpose of variable remuneration is to direct Executive’s behaviours towards maximising
Hillgrove Resources’ value and return value to shareholders, by targeting short, medium and long term performance
measures. The key aspects are summarised below.
4.4.1 Short Term Incentives (STI)
STI Program
Purpose
Performance Target Areas
Rewarding Performance
The STI arrangements are designed to reward executives for the achievement against annual
performance targets set by the Board at the beginning of the performance period. The STI program
is reviewed annually by the Remuneration Committee and approved by the Board.
All STI awards to the CEO/MD and other KMP are approved by the Remuneration Committee and
the Board.
The key performance objectives of the Company vary by level but are currently directed to achieving
ambitious targets, complemented by the achievement of individual performance goals and
Company performance.
The Board adopted a Balanced Scorecard approach to determine 2020 STI performance. The
Balanced Scorecard measures performance against the Company’s internal goals and published
key market guidance metrics each year and includes safety, production, cost control, financial
performance and growth measures.
The Balanced Scorecard also includes an individual performance component which is a subjective
assessment that gives the ability to recognise individuals that have performed above expectations
to deliver value for shareholders.
A threshold and target is set for each STI outcome. Specific targets are not provided in detail due to
commercial sensitivity.
Validation of performance against the Balanced Scorecard measures set for the CEO/MD and
KMPs involves a review calculation and recommendation by the CEO, reviewed and approved by
the Remuneration Committee with final Board sign-off.
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Directors’ Report (cont.)
REMUNERATION REPORT (AUDITED) (cont.)
4.4.2 Performance Based Remuneration Granted and Forfeited During the Year
The following table shows how much of the STI cash bonus was awarded and how much was forfeited for each KMP.
KMP
Mr L Wallace
Mr P Kiley (1)
Mr G Norris
2019 Performance
2020 Performance
Opportunity ($)
Awarded (%)
Forfeited (%)
Opportunity ($)
Awarded (%)
Forfeited (%)
210,000
204,300
150,000
30%
25%
30%
70%
75%
70%
210,000
N/A
62,500 (2)
56%
N/A
36%
44%
N/A
64%
(1) Mr Kiley resigned on 10 July 2020.
(2) Apportioned for the period Mr Norris was a KMP.
Board approval for the STI related to the 2019 performance occurred in February 2020, with payment made in March 2020.
Board approval and payment for the STI related to the 2020 performance occurred in January 2021.
4.4.3 Long Term Incentives (LTI) Plans
The LTI provides an annual opportunity for executives and key staff to receive an equity award that is intended to align a
significant portion of an executive’s overall remuneration to shareholder value over the longer term. All LTI awards remain at
risk and subject to clawback (forfeiture or lapse) until vesting and must meet or exceed relative TSR performance hurdles over
the vesting period, along with other performance criteria.
Following the termination of the agreement with AGL Energy Limited (AGL) to sell the pumped hydro energy storage project
in February 2020, and pivoting the business strategy towards the development of the Kanmantoo Underground, the Board
decided that the cash based Key Employees Plan (KEP) granted in July 2019 was no longer an appropriate LTI scheme for
the revised business strategy. As such, the cash based KEP was replaced with the Option & Performance Rights Plan in
August 2020 (2019 OPRP), which enables the Company to focus the Company’s cash resources towards the exploration and
development activities associated with the Kanmantoo Underground.
Details of the 2019 OPRP along with the cessation of the KEP are outlined in more detail below.
Cessation of KEP
When the KEP was implemented in 2019, the Company was focussed on completing the Kanmantoo open pit, processing
the remaining stockpiles, and monetising the pumped hydro energy storge opportunity which had been sold to AGL. The KEP
was designed to align Executive remuneration with delivering these outcomes.
During 2019, drilling was undertaken which culminated in the maiden underground mineral resource estimate for Kanmantoo
and demonstrated the potential value of underground mining at Kanmantoo. In addition, the agreement with AGL was
terminated and the Company commenced a 5.3km drilling program aimed at evaluating the depth extensions for the
underground. The successful drill program increased the estimated copper metal by 110% and demonstrated that the
mineralisation continued for at least 150m below the open pit.
Additional funds that were raised in late 2020 are expected to complete the drilling program and studies to enable an
investment decision towards the end of 2021, which in turn will require additional funds to be raised around the same time
as when the cash based KEP would have vested. The Board determined that it was not in the best interest of Shareholders,
the Kanmantoo Underground, or the Company to be obliged to potentially make a significant cash-based incentive payment
to employees during the exploration or development phase of the Kanmantoo Underground and successfully negotiated with
eligible employees to replace the KEP with the 2019 OPRP.
The replacement of the KEP with the 2019 OPRP in respect of the Managing Director is subject to approval by Shareholders
at the upcoming Annual General Meeting. Given the KEP has or is expected to be replaced in respect of the Managing
Director, further details of this plan has not been disclosed. The 2019 annual report includes a summary of the key terms of
the KEP plan.
The details of the 2019 OPRP that replaced the KEP are explained below.
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Directors’ Report (cont.)
REMUNERATION REPORT (AUDITED) (cont.)
OPRP Status
5,620,219 performance rights relating to the 2019 OPRP are on issue. The 2019 OPRP for Mr Wallace has not been issued
and will be put forward at the upcoming Annual General Meeting.
During 2020, 0% of the OPRP performance rights granted in 2018 vested and as such no shares were issued to employees.
2019 OPRP Description
The KEP granted in July 2019 was replaced with the 2019 OPRP in August 2020. The 2019 OPRP consists of both
Performance Rights and a cash incentive.
Long Term Incentives (2019 OPRP)
Purpose
Award
Grant Date
Vest Date
To retain key executives and align their remuneration with shareholder value.
Under the LTI, executives and key staff are offered performance rights (to acquire ordinary shares of
Hillgrove Resources Limited) and a cash incentive.
10 August 2020.
31 December 2021.
Service Period
1 June 2019 to 31 December 2021.
Performance Hurdles
and Vesting Schedule
Award grants are subject to the Company’s Total Shareholder Return (TSR) ranked against the S&P/ASX
Small Resources Index as follows:
Ranking of TSR Against S&P/ASX Small Resources Index (17 Months)
Performance
Below the 50th percentile
at the 50th percentile
% of equity to vest
0%
50% vest
Between the 50th to 75th percentile
2% vesting on a straight line interpolation for each percentile
ranking above the 50th percentile
At or above 75th percentile
100% vest
Performance rights vest as shares if the time restrictions and relevant performance hurdle are met. Special
provisions, in accordance with company policies, may apply in the event of termination of employment or a
change of control.
If the TSR performance hurdle is not met at the vesting date, performance rights lapse, subject to Board
discretion.
Exercise Price
Exercise price of nil in the event performance hurdles are met.
Voting Rights
LTI Allocation
There are no voting rights attached to performance rights.
The size of individual LTI grants for the CEO/MD and other KMPs is determined in accordance with the
Board approved remuneration strategy mix. See Section 4.3.
The target LTI dollar value for each executive is then converted into a number of performance rights
equivalent to 55% of target LTI dollar value based on a valuation methodology determined at the grant date,
as follows:
Performance right allocation = 55% x LTI dollar value determined / Hillgrove Resources share price at grant
date.
A cash incentive is also allocated as follows:
Cash incentive = 9 ÷ 11 x Number of Performance Rights that vest x Share Price using 15-day Volume
Weighted Average Price (VWAP) at Vesting Date.
Review of Future LTI Plans
The Board has engaged remuneration consultants Egan Associates to conduct an independent review of future LTI plans.
This will be used by the Board in connection with a proposal for future LTI plans at the upcoming Annual General Meeting.
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Directors’ Report (cont.)
REMUNERATION REPORT (AUDITED) (cont.)
4.4.4 Hedging and Margin Lending Prohibition
Under the Company’s Share Trading Policy and in accordance with the Corporations Act 2001, equity granted under the
Company’s equity incentive schemes must remain at risk until vested, or exercised. It is a specific condition of the policy
that no schemes are entered into, by an individual or their associates, that specifically protects the unvested value of shares,
options or performance rights allocated.
The Company, as required under the ASX Listing Rules, has a formal policy outlining how and when employees may deal in
Hillgrove Resources securities.
Hillgrove Resources Limited’s Share Trading Policy is available on the Company’s website www.hillgroveresources.com.au.
4.5 Relationship Between Performance and Executive KMP Remuneration
4.5.1 Hillgrove Resources Financial Performance (31 December 2016 to 31 December 2020)
Sales Revenue ($M)
Underlying EBITDA ($M)
Reported net profit / (loss) ($M)
Return on equity (ROE) % (2)
Basic earnings per share (EPS) (cents)
Diluted EPS (cents)
Dividends paid (cents per share)
Share price as at 31 December (cents)
12 Months to 31 Dec
2016
113.1
22.2
(109.1) (3)
2017 restated
113.3 (1)
16.2
(14.1)
2018
180.1
44.3
29.5
2019
113.5
12.1
(10.0)
2020
20.4
(3.7)
(5.9)
(144.3%) (3)
(88.3%)
101.7%
(28.4%)
(24.0%)
(57.8) (3)
(57.8) (3)
0
4
(4.8)
(4.8)
0
9
5.1
4.9
0
9
(1.7)
(1.7)
1.5
6
(1.0)
(1.0)
0
3.2
Total shareholder return (TSR) % (Annual)
(75.0%)
125.0%
0% (4)
(16.7%) (5)
(46.7%)
(1) Restatement for changes in accounting policies.
(2) Based on average total equity.
(3)
Includes impairment charge of $68.5m.
(4) Share price as at 31 December was 9c in 2017 and 2018, which results in a 0% TSR.
(5) Hillgrove’s TSR performance includes the $0.015 dividend.
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Directors’ Report (cont.)
REMUNERATION REPORT (AUDITED) (cont.)
4.6 KMP Remuneration Tables – Audited
Short-term
Long-term
Fixed Remuneration
Salary and
Fees
Non-
monetary
benefits
Super-
annuation
Benefits
Termination
Benefits
Long Service
Leave
Total
74,745
-
68,493
44,169
43,555
136,986
30,254
77,626
21,777
68,493
-
-
-
-
-
-
-
-
-
-
N/A
N/A
24,675
238,824
351,949
395,000
368,953
-
-
-
-
-
N/A
N/A
165,803
395,000
534,756
203,603
383,681
114,583
163,547
318,186
547,228
952,010
1,433,933
-
-
-
-
-
-
-
-
-
-
-
7,101
-
6,507
4,196
4,138
13,014
2,874
7,374
2,069
6,507
N/A
2,344
22,689
33,435
24,997
29,484
N/A
7,500
24,997
36,984
13,269
24,998
10,416
15,067
23,685
40,065
71,371
110,484
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
N/A
N/A
-
-
-
-
-
N/A
496,574
-
-
-
-
9,875
25,662
N/A
21,693
9,875
81,846
-
75,000
48,365
47,693
150,000
33,128
85,000
23,846
75,000
N/A
27,019
261,513
385,384
429,872
424,099
N/A
691,570
429,872
496,574
47,355
1,155,669
111,186
-
-
-
111,186
-
111,186
496,574
-
-
-
13,447
-
13,447
328,058
408,679
124,999
192,061
453,057
600,740
9,875
1,144,442
60,802
2,101,793
Non-Executive Directors
Mr D Carter (1)
Mr M Boyte (2)
Mr J Gooding (3)
Mr P Baker (4)
Mr A Breuer (5)
Mr M Loomes (6)
Total
Executive Directors
Mr L Wallace
Mr S McClare (7)
Total
Year
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
Other Key Management Personnel
Mr P Kiley (8)
Mr G Norris (9)
Total
Total
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
(1) Mr D Carter was appointed on 24 April 2020.
(2) Mr M Boyte was appointed on 10 May 2019.
(3) Mr J Gooding resigned on 24 April 2020.
(4) Mr P Baker resigned on 20 May 2020.
(5) Mr A Breuer resigned on 24 April 2020.
(6) Mr M Loomes resigned on 10 May 2019.
(7) Mr S McClare resigned on 2 May 2019.
(8) Mr P Kiley resigned on 10 July 2020.
(9) The table shows the period Mr G Norris was a part of the KMP (23 May 2019 to 31 May 2020).
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Directors’ Report (cont.)
REMUNERATION REPORT (AUDITED) (cont.)
4.6 KMP Remuneration Tables – Audited (cont.)
Variable Remuneration
Total
Proportion of Total
Remuneration
Year
Short-Term
Long-Term
Total
Fixed and
Variable
Fixed
%
Variable
%
Non-Executive Directors
Mr D Carter
Mr M Boyte
Mr J Gooding
Mr P Baker
Mr A Breuer
Mr M Loomes
Total
Executive Directors
Mr L Wallace
Mr S McClare
Total
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
Other Key Management Personnel
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
180,180(10)
133,334(13)
52,500
117,966(11)
-
-
313,514
170,466
-
89,381
101,184(11)(12)
190,565
180,180
141,881
133,334
219,150
313,514
361,031
Mr P Kiley
Mr G Norris
Total
Total
CY20
CY19
CY20
CY19
CY20
CY19
CY20
CY19
51,075
97,213(13)
51,075
142,929(11)
67,218(10)
53,080(13)
37,500
71,106(11)
118,293
88,575
298,473
230,456
150,293
214,035
283,627
433,185
148,288
194,004
120,298
108,606
268,586
302,610
582,100
663,641
81,846
100%
-
-
75,000
48,365
47,693
150,000
33,128
85,000
23,846
75,000
-
27,019
261,513
385,384
743,386
594,565
-
882,135
743,386
1,476,700
476,346
602,683
245,297
300,667
721,643
903,350
1,726,542
2,765,434
100%
100%
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
58%
71%
-
78%
58%
76%
69%
68%
51%
64%
63%
67%
66%
76%
(10) Includes payments related to 2019 and 2020 performance, please refer to section 4.4.2 for further details.
(11) Includes the value of forfeited 2017 performance rights.
(12) Includes the value of 2018 performance rights forfeited on termination.
(13) Includes the value of forfeited 2018 performance rights.
0%
-
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
42%
29%
-
22%
42%
24%
31%
32%
49%
36%
37%
33%
34%
24%
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Directors’ Report (cont.)
REMUNERATION REPORT (AUDITED) (cont.)
5.0 Equity plan disclosures
5.1 Employee Share Schemes (ESS) Operated By the Group
Plan Details
Type of Instruments
Details
Purpose
Employee share plan and
share issues
General Employee Share Plan
(GESP)
Hillgrove Resources Option
and Performance Rights Plan
Option and Performance
Rights Plan (OPRP)
Refer 4.4.3
To incentivise and align part of employee
remuneration to shareholder value
To provide equity and cash incentive
subject to meeting predetermined service
and performance conditions.
5.2 Analysis of Share-Based Payments Granted as Remuneration to KMP
Details of the vesting profile of the performance rights granted as remuneration to each Key Management Personnel, and the
movements during the period are set out below:
KMP
Mr L Wallace
TOTAL
Former KMP
Mr S McClare
TOTAL
Mr P Kiley
TOTAL
Mr G Norris
TOTAL
Balance
Held at
31/12/19
Grant
Date
Aug 20
Granted (1)
-
3,121,622 (3)
Jun 18
1,900,000
-
1,900,000
3,121,622
Number
Vested
% Vested
Number
Forfeited
%
Forfeited
Balance
held at
31/12/20 (2)
-
-
-
0%
0%
-
0%
3,121,622
1,900,000
100%
-
1,900,000
3,121,622
Jun 18
1,608,755
1,608,755
N/A
-
Aug 20
-
3,032,432
Jun 18
2,300,000
2,300,000
-
-
Aug 20
-
2,229,730
Jun 18
1,350,000
1,350,000
-
-
N/A
N/A
-
-
-
-
-
-
-
0%
0%
0%
0%
N/A
N/A
-
1,731,442
57%
2,300,000
100%
2,300,000
N/A (4)
-
N/A (5)
-
-
-
0%
N/A (6)
1,350,000
100%
1,350,000
-
-
(1) Relates to the conversion of the 2019 Key Employees Plan to
(4) Mr S McClare resigned on 2 May 2019.
Option & Performance Rights Plan in August 2020.
(2) None of these rights are exercisable and have not vested.
(5) Mr P Kiley resigned on 10 July 2020.
(6) Mr G Norris was no longer a member of the KMP from
(3) Subject to Shareholder approval at the Annual General
1 June 2020.
Meeting in 2021.
5.3 Exercise of Performance Rights Granted as Remuneration
During the financial year, there were no shares issued on the exercise of performance rights, which were previously granted as
part of remuneration.
5.4 Value of Performance Rights Granted and on Foot to Executive KMP as at
31 December 2020
KMP
Grant
Date
Number
Granted
Vesting
Date
Face Value
per right (1)
Fair
Value (2)
Intrinsic
Value (3)
Total Fair
Value
Mr L Wallace
Aug 20
3,121,622
Dec 21
$0.032
$0.030
$99,892
$93,649
(1) The Face Value is the closing share price on 31 December 2020.
(2) The Fair Value at grant date (10 August 2020) has been based on a valuation in accordance with accounting standard AASB 2 “Share
Based Payments”. The fair values are used for accounting purposes only.
(3)
Intrinsic value is the difference between the Face Value ($0.032) and the exercise price ($0.00).
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Directors’ Report (cont.)
REMUNERATION REPORT (AUDITED) (cont.)
5.5 Movement In Equity Held
The movement during the reporting period in the number of ordinary shares of Hillgrove Resources Limited held, directly,
indirectly or beneficially, by each specified Director and executive KMP, including their personally-related entities:
Held as at 31/12/19
Exercise of Rights
Net Other Changes Held as at 31/12/20
Directors
Mr D Carter
Mr M Boyte
Mr L Wallace
Former Directors
Mr J Gooding
Mr P Barker
Mr A Breuer
Former KMP
Mr P Kiley
Mr G Norris
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
-
-
12,205,197
94,444
667.626
20,166,800
6,027,666
5,287,019
(1) Resigned during 2020 and as such, no longer a current Director or KMP.
(2) Mr G Norris was no longer a member of the KMP from 1 June 2020.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,205,197
N/A (1)
N/A (1)
N/A (1)
N/A (1)
N/A (2)
6.0 Service Contracts and Employment Agreements
The Company does not enter into service contracts for KMP Executives. The following sets out details of the employment
contract for the Executive KMP as at 31 December 2020.
Employee
Position
Commencement
Fixed Remuneration
Short-term Incentive
Long-term Incentive
Contract Length
Mr LA Wallace
Chief Executive Officer and Managing Director
24 May 2019
$420,000 p.a. reviewed periodically
Up to 50% of fixed remuneration
Up to 50% of fixed remuneration
Indefinite
Notice periods for resignation or termination
6 months
Redundancy Benefit
National Employment Standards and Group Redundancy Policy
Death or Total and Permanent Disability Benefit No specific benefit
Change of Control
No effect
Termination for serious misconduct
No notice required, remuneration to the day less advance payments and return
of Company property.
Statutory entitlements
Post-Employment restraints
No payment of STI/LTI
All leave and benefits due per National Employment Standards
For 6 months: must not recruit employees or make adverse comments or
actions by either party
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Directors’ Report (cont.)
CORPORATE GOVERNANCE STATEMENT
The Company’s Board is committed to achieving the highest standards of corporate governance.
The Company’s Corporate Governance Statement for the year ended 31 December 2020 may be accessed from the
Company’s website at www.hillgroveresources.com.au/Corporate-Governance.
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 the financial
statements are rounded off to the nearest hundred thousand dollars, unless otherwise indicated.
AUDITORS INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 28.
Signed in accordance with a resolution of the Directors:
Dated at Adelaide on 26 February 2021
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Mr Derek Carter
Chairman
Mr Lachlan Wallace
Managing Director
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Auditor’s Independence Declaration
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PricewaterhouseCoopers, ABN 52 780 433 757 Level 11, 70 Franklin Street, ADELAIDE SA 5000, GPO Box 418, ADELAIDE SA 5001 T: +61 8 8218 7000, F: +61 8 8218 7999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. Auditor’s Independence Declaration As lead auditor for the audit of Hillgrove Resources Limited for the year ended 31 December 2020, I declare that to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Hillgrove Resources Limited and the entities it controlled during the period. Andrew Forman Adelaide Partner PricewaterhouseCoopers 26 February 2021
Consolidated Statement of
Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2020
31 Dec 2020
31 Dec 2019
Note
$’000
$’000
Continuing operations
Concentrate revenue
Other income
Expenses
Interest and finance charges
Impairment charges
(Loss) before income tax
Income tax (expense) / benefit
Loss from continuing operations
Profit / (loss) from discontinued operations
Loss for the period
Comprehensive income
Items that may be reclassified to profit or loss:
Exchange difference on translation of discontinued operation
Total comprehensive income for the period attributable
to equity holders of Hillgrove Resources Limited
Earnings per share for profit from continuing operations
attributable to the ordinary equity holders of the Company:
Basic earnings per share
Diluted earnings per share
Earnings per share for profit attributable to the
ordinary equity holders of the Company:
Basic earnings per share
Diluted earnings per share
5
6
7(a)
7(b)
7(c)
9
8
10
10
10
10
20,248
124
(27,624)
(167)
(51)
(7,470)
-
(7,470)
1,525
(5,945)
177
(5,768)
113,537
1,703
(117,017)
(788)
(3,048)
(5,613)
(3,685)
(9,298)
(729)
(10,027)
-
(10,027)
Cents
Cents
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(1.3)
(1.3)
(1.0)
(1.0)
(1.6)
(1.6)
(1.7)
(1.7)
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The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with
the notes to the consolidated financial statements set out on pages 33 to 54.
Consolidated Balance Sheet
As at 31 December 2020
31 Dec 2020
31 Dec 2019
Note
$’000
$’000
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Non-current assets
Inventories
Property, plant and equipment
Exploration and evaluation expenditure
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Total assets
Current liabilities
Trade and other payables
Provisions
Lease liabilities
Employee benefits payable
Deferred income
Non-current liabilities
Provisions
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
11
12
13
13
14
15
16
17
18
19
20
21
22
23
24
5,601
832
50
6,483
1,782
24,390
3,236
29,408
35,891
1,122
775
-
1,035
-
2,932
9,736
9,736
12,668
23,223
9,329
3,075
10,182
22,586
1,899
24,163
2,616
28,678
51,264
8,640
4,132
253
3,322
479
16,826
8,140
8,140
24,966
26,298
236,550
27,755
(241,082)
23,223
234,322
27,113
(235,137)
26,298
The Consolidated Balance Sheet is to be read in conjunction with
the notes to the consolidated financial statements set out on pages 33 to 54.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
Contributed
equity
Note
$’000
Reserves
$’000
Accumulated
losses
Total equity
$’000
$’000
Balance 1 January 2019
234,327
34,986
(225,110)
44,203
(10,027)
(10,027)
Profit/(Loss) for the period
Other comprehensive income
Transactions with owners:
Options exercised
Dividend paid
Share-based compensation
Balance 31 December 2019
Profit/(Loss) for the period
Other comprehensive income
Transactions with owners:
Contributions of equity, net of transaction
costs
Share-based compensation
Balance 31 December 2020
22
3
33
22
33
-
-
(5)
-
-
234,322
-
-
2,228
-
236,550
-
-
-
(8,784)
911
27,113
-
177
-
465
-
-
-
-
(235,137)
(5,945)
-
-
-
27,755
(241,082)
-
(5)
(8,784)
911
26,298
(5,945)
177
2,228
465
23,223
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The Consolidated Statement of Changes in Equity is to be read in conjunction with
the notes to the consolidated financial statements set out on pages 33 to 54.
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Consolidated Statement of Cash Flows
For the year ended 31 December 2020
31 Dec 2020
31 Dec 2019
Note
$’000
$’000
Cash flows from operating activities
Cash receipts in the course of operations (inclusive of GST)
Cash payments in the course of operations (inclusive of GST)
Net cash (used) / generated by operating activities
28
Cash flows from investing activities
Payments for exploration and evaluation expenditure
Payments for property, plant and equipment
Proceeds on disposal of plant and equipment
Payment on disposal of Indonesian subsidiaries
Net cash used in investing activities
Cash flows from financing activities
Dividends paid
Proceeds from issue of shares (net of transaction costs)
Repayment of borrowings
Repayment of leases
Interest received
Interest paid
Net cash from/(used) in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of financial period
Cash and cash equivalents at the end of the financial period
11
20,211
(23,211)
(3,000)
(687)
(2,346)
348
(91)
(2,776)
-
2,251
-
(206)
3
-
2,048
(3,728)
9,329
5,601
116,772
(94,957)
21,815
(950)
(4,574)
96
-
(5,428)
(8,784)
-
(430)
(225)
4
(76)
(9,509)
6,878
2,451
9,329
The Consolidated Statement of Cash Flows is to be read in conjunction with
the notes to the consolidated financial statements set out on pages 33 to 54.
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Notes to the consolidated Financial Statements for the year ended 31 December 2020
1. STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation
of these consolidated financial statements are set out below.
Where an accounting policy is specific to one note, the policy
is described in the note to which it relates. The financial
statements are for the consolidated entity consisting of
Hillgrove Resources Limited and its subsidiaries.
(a) Basis of preparation
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards,
Interpretations and other authoritative pronouncements
of the Australian Accounting Standards Board and the
Corporations Act 2001. The financial statements comprise
the consolidated financial statements of the Group. For the
purposes of preparing the consolidated financial statements,
Hillgrove Resources Limited is a for-profit entity.
(i) Working capital
The consolidated financial statements have been prepared
on a going concern basis, which assumes the Group will
be able to realise its assets and discharge its liabilities in the
normal course of business. Cash generating activities from
the processing of copper ore ceased during 2020, however,
based on projected cashflows, the directors consider that
cash on hand at the date of the report plus cash generated
from the capital raise will be sufficient for the Group to cover
forecast expenditure for the next twelve months including its
ongoing rehabilitation and compliance requirements and to
meet expenditure commitments under exploration leases.
(ii) Compliance with International Financial
Reporting Standards
Compliance with Australian Accounting Standards ensures
that the consolidated financial statements and notes of
Hillgrove Resources Limited comply with International
Financial Reporting Standards (IFRSs).
(iii) Historical cost convention
These financial statements have been prepared under the
historical cost convention, as modified when necessary by
the revaluation of certain financial assets and liabilities to fair
value through other comprehensive income or through profit
or loss.
(iv) Critical accounting estimates
The preparation of financial statements requires the use
of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of
applying the Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements are disclosed in Note 2.
(b) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(‘the functional currency’). The consolidated financial
statements are presented in Australian dollars, which is
Hillgrove Resources Limited’s functional and presentation
currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions and
from the translation at year end exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognised in the profit or loss, except when deferred in
equity as qualifying cash flow hedges and qualifying net
investment hedges.
For the purpose of presenting consolidated financial
statements, the assets and liabilities of Hillgrove Resources
Limited’s foreign operations are translated into Australian
dollars using exchange rates prevailing at the end of the
reporting period. Income and expense items are translated at
the average exchange rates for the period, unless exchange
rates fluctuated significantly during that period, in which case
the exchange rates at the dates of the transactions are used.
Exchange rate differences arising, if any, are recognised in
other comprehensive income and accumulated in equity
(attributed to non-controlling interests as appropriate).
(c) Impairment of assets
The carrying value of property, plant and equipment is
assessed for impairment whenever there is an indicator that
the asset may be impaired. Determining whether property,
plant and equipment is impaired requires an estimation of
the recoverable value of the Cash Generating Unit (“CGU”)
to which property, plant and equipment has been allocated.
Impairment is recognised when the carrying amount exceeds
the recoverable amount.
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Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
1. STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (cont.)
In its impairment assessment, the Company determined
the recoverable amount based on a fair value less cost of
disposal (“FVLCOD”) calculation. The FVLCOD assessment
was undertaken using a discounted cash flow approach.
Cash flow projections are based on the CGU’s life of mine
plan. In assessing the FVLCOD, the estimated future post-
tax cash flows are discounted to their present value using
a post-tax discount rate that reflects the current market
assessment of the time value of money and business risk.
The valuation is considered to be level 3 in the fair value
hierarchy due to unobservable inputs used in the valuation.
Assets that have undergone an impairment charge are
reviewed for possible reversal of the impairment at each
reporting date.
The specific methods and assumptions used to estimate
the discounted future cash flows of the Group’s CGU
are outlined in more detail in Note 2 “Critical accounting
estimates and judgements”.
(d) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is
recognised as part of the cost of acquisition of the asset or
as part of the expense.
Receivables and payables are stated inclusive of the amount
of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is
included with other receivables or payables in the balance
sheet.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the
taxation authority, are presented as operating cash flows.
(e) Government grants
The Group was eligible for the Australian Government’s
JobKeeper wage subsidy scheme. Receipts from the
JobKeeper Program are accounted for as government grants
under AASB 120 Accounting for Government Grants and
Disclosures of Government Assistance.
Government grants are recognised where there is reasonable
assurance that the grant will be received, and all attached
conditions will be complied with. Where the grant relates
to an expense item, it is recognised as a reduction of the
expense to which it relates. Where the grant relates to
capitalised expenses, it is recognised as a reduction to the
carrying amount of the related asset.
(f) Rounding of amounts
The Company is a company of the 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 the financial statements are rounded off to
the nearest thousand dollars, unless otherwise indicated.
(g) Standards and interpretations in issue
(i) Mandatory standards adopted in the current
reporting period
The Group has adopted all of the new and revised Standards
and Interpretations issued by the Australian Accounting
Standards Board that are relevant to its operations and
effective for the current annual reporting period. The adoption
of these mandatory standards has not had a significant
impact on the Group’s accounting policies or the amounts
reported during the year.
(ii) Early adoption of standards
There are no standards on issue that are expected to have a
material impact on the group in the current or future reporting
periods.
2. CRITICAL ACCOUNTING
ESTIMATES AND JUDGEMENTS
The Group makes estimates and assumptions concerning
the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. Estimates
and judgements are continually evaluated and are based on
historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities are discussed below:
(a) Recoverability of non-current assets
The Group has a single Cash Generating Unit (CGU) being the
Kanmantoo copper mine. The estimates of discounted future
cash flows for the Kanmantoo CGU are based on significant
assumptions including:
½ Estimates of the quantities of resources and exploration
targets and the timing of access to those resources and
exploration targets;
½ Future production levels based on plant throughput and
recoveries;
½ Future copper, gold and silver prices based on spot
pricing;
½ Future exchange rates for the Australian dollar to US dollar
based on spot prices;
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Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
2. CRITICAL ACCOUNTING
ESTIMATES AND JUDGEMENTS
(cont.)
½ Future operating costs of production, capital expenditure
and rehabilitation expenditure; and
½ The discount rate most appropriate to the CGU.
½ The timing and amounts to be received from the sale of
processing equipment and land following completion of
mining and processing activities.
Annual assessments of the discounted future cash flows
for the Kanmantoo CGU have resulted in no adjustments to
the carrying values. Separate to the CGU there have been
impairments of carrying values of some exploration assets.
The ultimate recoupment of costs capitalised and carried
forward for exploration and evaluation activities is dependent
on successful development and commercial exploitation, or
sale of the respective areas.
(b) Restoration, rehabilitation and
environmental obligations
Provision is made for the costs of decommissioning and
site rehabilitation costs when the related environmental
disturbance takes place. Provisions are recognised at the
net present value of future expected costs as outlined in
Notes 17 and 21.
The provision represents management’s best estimate of
the costs that will be incurred, but significant judgement is
required as many of these costs will not crystallise until the
end of the life of the mine.
3. DIVIDENDS
Franked dividend paid for
2019: 1.5 cents per share
Amount of franking credits
available to shareholders for
subsequent financial years
31 Dec 2020
31 Dec 2019
$’000
$’000
-
8,784
17,556
17,556
4. FINANCIAL REPORTING BY
SEGMENT
Through its ownership of the Kanmantoo copper mine, the
Group has one operating segment being in the resources
industry, in Australia. The Group also had exploration
tenement interests overseas which were sold during the year
as part of the sale of the Indonesian subsidiaries.
These tenements were previously fully written down, incurring
minimal care and maintenance costs and were therefore
considered to be immaterial, not requiring separate segment
disclosure. The Indonesian business has been disclosed as
discontinued in Note 8.
5. CONCENTRATE REVENUE
31 Dec 2020
31 Dec 2019
$’000
19,643
1,796
393
(1,584)
$’000
116,152
6,325
2,011
(10,951)
Copper in concentrate
Gold in concentrate
Silver in concentrate
Treatment and refining
deductions
Concentrate revenue
20,248
113,537
Revenue is measured at the fair value of the consideration
received or receivable.
The group sells copper concentrate under an offtake
contract and the Group trades using CIF terms (i.e. Seller’s
cost, insurance and freight) for vessel chartering. Under
AASB 15, the Company has three performance obligations
relating to the sale of concentrate which include delivery and
transfer of title of concentrate at the port of loading, loading
of concentrate onto the ship and transporting the shipment
to the port of destination. The transaction price applied to
the delivery of concentrate to the port is the value of the
concentrate delivered adjusted for treatment and refining
charges. The transaction price allocated to the final two
performance obligations are cost of loading and chartering a
vessel for shipment to destination at cost recovery.
The price can be declared as either one of: one month before
the month of shipment or synthetically spread adjusted to
five months after the month of arrival at the discharge port.
The group has recognised the following assets and liabilities
related to contracts with customers:
31 Dec 2020
31 Dec 2019
$’000
-
-
$’000
(479)
479
Deferred income
(contract liability)
Trade and other receivables
(contract asset)
During 2020, the performance obligations relating to the
group’s final shipment of copper concentrate were satisfied
and all associated revenues received.
H
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G
R
O
V
E
R
E
S
O
U
R
C
E
S
I
I
L
M
T
E
D
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
0
P
a
g
e
3
5
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
6. OTHER INCOME
(b) Interest and finance charges
Interest
Grant income
PHES project
Other – services provided to
third parties
Other – government
cashflow boost
Total other income
31 Dec 2020
31 Dec 2019
$’000
13
-
-
11
100
124
$’000
12
275
1,000
416
-
1,703
7. EXPENSES
Profit or loss before income tax includes the following
expenses:
(a) Expenses per profit or loss
31 Dec 2020
31 Dec 2019
Note
(i)
(ii)
(iii)
(iv)
Costs of production
Depreciation and
amortisation
Inventory movement
Cost of goods sold
Government royalties
Corporate and other
costs
Care and
maintenance costs
Rehabilitation
adjustment
(Gain) / Loss on sale
of fixed assets
Foreign exchange
loss / (gain)
Total Expenses per
Profit or Loss
$’000
10,564
1,891
9,211
21,666
907
3,777
1,335
(166)
(92)
197
$’000
72,583
14,664
20,859
108,106
5,388
4,216
-
(702)
(47)
56
27,624
117,017
D
E
T
M
L
I
I
S
E
C
R
U
O
S
E
R
E
V
O
R
G
L
L
I
H
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
6
3
e
g
a
P
31 Dec 2020
31 Dec 2019
Note
$’000
$’000
Discount on unwind
of rehabilitation
provision
Borrowing costs,
bank fees and
charges
Interest on
borrowings
Other interest
payable
Total Interest and
finance charges
(i)
109
257
6
-
52
167
6
3
522
788
(i) Includes interest charged on sales proceeds received in
advance of ship loading. The cost is netted-off against revenue
as it is received and therefore is not dislcosed as a financing
activity cashflow in the Statement of Cashflows.
(c) Impairment charges
31 Dec 2020
31 Dec 2019
Note
$’000
Exploration assets
PHES project costs
(i)
(ii)
51
-
51
$’000
232
2,816
3,048
(i) Expenditure on exploration areas of interest where the
prospect of recoupment of costs capitalised through
successful development and commercial exploitation is no
longer considered likely, is charged to the profit or loss as an
impairment charge.
(ii) Costs accumulated in connection with the PHES project
development by AGL were impaired at 31 December 2019 due
to mutual agreement to terminate the contract by both parties
in February 2020.
(d) Other required disclosures
31 Dec 2020
31 Dec 2019
$’000
$’000
4,256
19,023
587
911
(i) Costs of production represent costs for mining, processing,
transport of concentrate to port, and site overheads.
Employee benefits (excluding
share-based payments)
(ii) Corporate and other costs reflect the costs incurred in running
the corporate head office.
Share based payments
(see Note 33)
(iii) During the period of care and maintenance, depreciation of the
processing plant has ceased based on the assumption that the
activities performed during the period of care and maintenance
will preserve the current value of these assets. Costs incurred
in relation to care and maintenance have been expensed.
(iv) The decrease in the required rehabilitation provision has been
fully expensed as the associated rehabilitation asset in Mine
Development has been written down to nil in prior reporting
periods.
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
7. EXPENSES (cont.)
(e) Assurance services
The following fees were paid or payable for services provided
by the auditor of the parent entity, its related practices and
non-related audit firms:
31 Dec 2020
31 Dec 2019
$
$
(i) Audit Services
Fees paid to
PricewaterhouseCoopers:
Audit and review of financial
reports and other audit
work under the Corporations
Act 2001
Fees paid to other firms:
Crowe Horwath Singapore
(ii) Taxation Services
Services by
PricewaterhouseCoopers:
149,928
226,355
-
149,928
19,900
246,255
Tax advice
6,171
24,299
Services by other firms:
Crowe Horwath Singapore
3,812
9,983
-
24,299
8. DISCONTINUED OPERATIONS
(a) Description
In October 2020, Hillgrove successfully withdrew from
Indonesia, through the sale of its Indonesian subsidiaries, PT
Akram Resources and PT Fathi Resources. With the carrying
value of these assets being fully impaired in 2015, the
transaction resulted in an improvement of the balance sheet
(through a reduction in liabilities) of $2.2 million.
(b) Financial performance
31 Dec 2020
31 Dec 2019
Expenses
Loss before income tax
Income tax expense
Loss after income tax of
discontinued operation
Gain on sale of subsidiaries
after income tax (see (d)
below)
Profit from discontinued
operation
Exchange differences on
translation of discontinued
operations
Total comprehensive income
from discontinued operations
$’000
(373)
(373)
-
(373)
1,898
1,525
$’000
(729)
(729)
-
(729)
-
(729)
177
-
1,702
(729)
(c) Cashflow information
There was no consideration received on the sale of the
subsidiaries. A negotiated payment of US$60,000 was
made in full settlement of the outstanding liabilities of
the companies which subsequently allowed the accrued
balances of $2.2 million to be reversed.
(d) Details of the sale of the subsidiaries
Consideration received/(paid)
Carrying amount of net liability sold
Reclassification of foreign currency
translation reserve
Gain on sale
$’000
(91)
2,166
2,075
(177)
1,898
H
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L
G
R
O
V
E
R
E
S
O
U
R
C
E
S
I
I
L
M
T
E
D
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
0
P
a
g
e
3
7
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
9. INCOME TAX
(a) Income tax expense
Income tax expense
comprises:
- Current tax expense
- Deferred tax expense /
(benefit)
Income tax expense / (benefit)
(b) Numerical
reconciliation
of income tax
expense to prima
facie tax payable
Profit/(loss) from continuing
operations before income tax
expense/(benefit)
Tax at the Australian tax rate
of 30%
Tax effect of amounts
which are not deductible in
calculating taxable income:
- Share based payments
- Non-deductible expenses
- Non-assessable income
- (Profit)/Losses from non-
resident foreign operations
- Tax temporary differences
not recognised
Income tax expense
(c) Amounts recognised
directly in equity
Deferred tax – (credited)/
debited directly in equity
D
E
T
M
L
I
I
S
E
C
R
U
O
S
E
R
E
V
O
R
G
L
L
I
H
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
8
3
e
g
a
P
31 Dec 2020
31 Dec 2019
$’000
$’000
An exception is made for certain temporary differences
arising from the initial recognition of an asset or a
liability. No deferred tax asset or liability is recognised
in relation to these temporary differences if they arose
in a transaction, other than a business combination,
that at the time of the transaction did not affect either
accounting profit or taxable profit or loss.
-
-
-
-
3,685
3,685
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authority.
(iii) Deferred tax assets are recognised for deductible
(5,945)
(6,342)
(1,783)
(1,903)
176
-
-
(458)
2,065
-
-
273
10
(172)
225
5,252
3,685
-
temporary differences and unused tax losses only if it
is probable future taxable amounts will be available to
utilise those temporary differences and losses. Unused
tax losses and offsets for which no deferred tax asset
has been recognised are approximately $230.6 million
(tax benefit at the Australian tax rate of 30%: $69.2
million). In addition, the total value of unrecognised
deductible temporary differences is $59.4 million (tax
benefit at the Australian tax rate of 30%: $17.8 million)
of which the unrecognised deductible temporary
difference on plant and equipment is approximately
$44.8 million (tax benefit at the Australian tax rate of
30%: $13.4 million).
(e) Tax consolidation legislation
The income tax expense or revenue for the period is the tax
payable on the current period’s taxable income based on
the national income tax rate for each jurisdiction adjusted
by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets
and liabilities and their carrying amounts in the financial
statements, and to unused tax losses. The Group’s liability
for current tax is calculated using tax rates that have been
enacted or substantively enacted by the end of the reporting
period. Current and deferred tax balances attributable to
amounts recognised directly in equity are also recognised
directly in equity.
Hillgrove Resources Limited and its wholly-owned Australian
controlled entities have implemented the tax consolidation
legislation. The head entity, Hillgrove Resources Limited, and
the controlled entities in the tax consolidated group account
for their own current and deferred tax amounts.
(d) Deferred Tax
(i)
No deferred tax assets or liabilities have been
recognised.
(ii)
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to
apply when the assets are recovered or liabilities are
settled, based on those tax rates which are enacted or
substantively enacted for each jurisdiction. The relevant
tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to
measure the deferred tax asset or liability.
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
9. INCOME TAX (cont.)
These tax amounts are measured as if each entity in the tax
consolidated group continues to be a stand-alone taxpayer
in its own right. The entities in the tax-consolidated group
entered into a tax sharing agreement and a tax funding
agreement. On adoption of the legislation, the entities in the
tax consolidated group entered into a tax sharing agreement
which, in the opinion of the Directors, limits the joint and
several liability of the wholly owned entities in the case of
a default by the head entity. The entities have also entered
a tax funding agreement under which the wholly-owned
entities fully compensate the head entity for any current
tax payable assumed and are compensated by the head
entity for any current tax receivable and deferred tax assets
relating to unused tax losses or unused tax credits that are
transferred to it under the tax consolidation legislation.
10. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company, excluding any
costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding
during the year, adjusted for bonus elements in ordinary
shares issued during the year.
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account the after income tax effect of interest and other
financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed
to have been issued for no consideration in relation to dilutive
potential ordinary shares. Where there is a loss after tax,
diluted earnings per share is equivalent to basic earnings per
share.
Classification of securities as ordinary shares
Ordinary shares have been classified as ordinary shares and
included in basic earnings per share.
Classification of securities as potential shares
Outstanding performance rights have been classified as
potential ordinary shares and included in diluted earnings
per share.
(a) Weighted average number of shares
used as the denominator
Weighted average number
of ordinary shares used
in calculating basic and
dilutive EPS
31 Dec 2020
31 Dec 2019
Number
Number
586,213,187
581,988,390
(b) Reconciliation of earnings used in
calculating earnings per share
31 Dec 2020
31 Dec 2019
$’000
$’000
(i) Basic earnings
(Loss) attributable to the
ordinary equity holders of the
Company:
From continuing operations
(7,470)
(9,298)
From discontinued
operations
(ii) Diluted earnings
(Loss) attributable to the
ordinary equity holders of
the Company
1,525
(5,945)
(729)
(10,027)
From continuing operations
(7,470)
(9,298)
From discontinued
operations
1,525
(5,945)
(729)
(10,027)
(c) Basic earnings per share
From continuing operations
attributable to the ordinary
equity holders of the
Company
From discontinued operations
Total basic earnings per share
attributable to the ordinary
equity holders of the company
31 Dec 2020
31 Dec 2019
Cents
Cents
(1.3)
0.3
(1.6)
(0.1)
(1.0)
(1.7)
(d) Diluted earnings per share
31 Dec 2020
31 Dec 2019
Cents
Cents
From continuing operations
attributable to the ordinary
equity holders of the
Company
From discontinued operations
Total diluted earnings per
share attributable to the
ordinary equity holders of the
company
(1.3)
0.3
(1.6)
(0.1)
(1.0)
(1.7)
H
I
L
L
G
R
O
V
E
R
E
S
O
U
R
C
E
S
I
I
L
M
T
E
D
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
0
P
a
g
e
3
9
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
11. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Restricted cash
31 Dec 2020
31 Dec 2019
$’000
5,042
559
5,601
$’000
8,971
358
9,329
The group holds trade receivables with the objective to
collect the contractual cash flows and therefore measures
them subsequently at amortised cost using the effective
interest method. Details about the group’s impairment
policies and the calculation of the loss allowance are
provided in note 25(c).
13. INVENTORIES
Cash and cash equivalents include cash on hand, deposits
held at call with financial institutions, other short-term and
highly liquid investments that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value.
Current Assets
Concentrates
Restricted cash cannot be accessed without consent and
comprises deposits to cash back environmental bonds and
office rental security deposits.
Run-of-mine (ROM) stockpile
Stores and consumables
Total current inventory
31 Dec 2020
31 Dec 2019
$’000
$’000
-
-
50
50
1,976
7,313
893
10,182
12. TRADE AND OTHER
RECEIVABLES
Trade receivables
Prepayments
Other receivables
GST receivable
31 Dec 2020
31 Dec 2019
$’000
-
385
404
43
832
$’000
1,135
1,230
424
286
3,075
Trade receivables are for concentrate sales and the Group
has a single customer under the terms of an offtake
agreement. Sales are denominated in US dollars. Revenue is
recognised in accordance with the policy described in Note 5
using spot exchange rates on the date of the sale, with trade
receivables subsequently being translated at the exchange
rate applicable on the date when settled. Unsettled balances
at period end are revalued using the appropriate end of
period exchange rate.
First progress payment is received three business days
after concentrate is delivered to port in minimum tonnage
lots. First provisional payment covering 95% of the value
is received three business days after ship loading. Second
provisional payment for the remaining 5% is received 45 days
after ship loading. Refer to note 5 for additional information.
Prepayments include contract assets recognised under
AASB 15 of $Nil (CY19: $479,000).
Non-Current Assets
Stores inventory
Total non-current inventory
1,782
1,782
1,899
1,899
Inventory is recognised at the lower of cost and net realisable
value.
The cost of inventory is determined using the allocation of
costs between production and development activities. Costs
and activities are monitored at each stage of the production
process and allocated to physical units.
Net realisable value is based on the estimated amount
expected to be received when the inventory is completely
processed and sold. The estimation of net realisable value of
inventories involves judgements about the quantity of metal
that can be recovered, future commodity prices, production
costs and selling costs.
Due to the processing plant entering a phase of care
and maintenance, an assessment has been made of the
estimated cost or net realisable value of stores inventory
which is unlikely to be consumed in the next financial year
but still has future economic value in conjunction with the
plant itself. This has been reclassified to non-current stores
inventory.
D
E
T
M
L
I
I
S
E
C
R
U
O
S
E
R
E
V
O
R
G
L
L
I
H
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
0
4
e
g
a
P
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
The straight line method of depreciation to allocate cost,
net of residual values, is used for all remaining assets over
estimated useful lives between 3-10 years from inception.
The duration reflects the specific nature of the assets.
Freehold land is not depreciated. The assets’ residual values
and useful lives are reviewed, and adjusted if appropriate,
at each reporting date. During the period of care and
maintenance, depreciation of the processing plant ceased.
Refer to note 7 (a) (iii) for further information.
Mine development includes development costs related to the
Kanmantoo mine.
In accordance with the Group’s accounting policies, regular
impairment testing is carried out to ensure assets are not
carried at more than their recoverable amount. The fair
value less cost of disposal (FVLCOD) methodology is used
to estimate the recoverable amount, rather than the value
in use method as FVLCOD is considered more appropriate
given the cessation of open pit operations and the intent to
develop the underground project.
The impairment calculations were performed using a
discount rate of 12.53% (2019 12.03%).
No impairment charges were taken against the Group’s
Kanmantoo assets in the current year.
14. PROPERTY, PLANT AND
EQUIPMENT
Land and buildings
At cost
Accumulated depreciation
Plant and equipment
At cost
Accumulated depreciation and
impairment
Motor vehicles
At cost
Accumulated depreciation
Mine development
At cost
Accumulated depreciation and
impairment
Total property, plant and
equipment
31 Dec 2020
31 Dec 2019
$’000
$’000
5,277
(379)
4,898
5,524
(379)
5,145
73,490
73,370
(59,817)
13,673
(59,621)
13,749
477
(399)
78
763
(640)
123
165,451
163,313
(159,710)
(158,167)
5,741
5,146
24,390
24,163
All property, plant and equipment is stated at historical cost
less accumulated depreciation and accumulated impairment
losses. Historical cost includes expenditure that is directly
attributable to the acquisition of the items and costs incurred
in bringing assets into use. Subsequent costs are included
in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as
a separate asset is derecognised when replaced. All other
repairs and maintenance are charged to profit or loss during
the reporting period in which they are incurred. The units of
production basis is used when depreciating mine specific
assets which results in a depreciation charge proportional
to the depletion of the forecast remaining life of mine
production. Changes in factors such as estimates of proven
and probable reserves that affect the unit of production
calculations are applied on a prospective basis.
H
I
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L
G
R
O
V
E
R
E
S
O
U
R
C
E
S
I
I
L
M
T
E
D
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
0
P
a
g
e
4
1
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
14. PROPERTY, PLANT AND
15. EXPLORATION AND
EQUIPMENT (cont.)
Reconciliations of the carrying amounts for each class of
asset are set out below:
31 Dec 2020
31 Dec 2019
$’000
$’000
EVALUATION EXPENDITURE
The Group accumulates certain costs associated with
exploration activities on specific areas of interest where
the Group has rights of tenure and where exploration and
evaluation activities in the area of interest have not reached a
stage that permits a reasonable assessment of the existence
of economically recoverable reserves.
Land and buildings
Carrying amount at beginning
of period
Disposals
Depreciation
Carrying amount at end of
period
Plant and equipment
Carrying amount at beginning
of period
Additions
Disposals
Depreciation
Carrying amount at end of
period
Motor vehicles
Carrying amount at beginning
of period
Additions
Disposals
Depreciation
Carrying amount at end of
period
Mine development
Carrying amount at beginning
of period
Additions
Depreciation
(Decrease) / Increase provision
for rehabilitation
Carrying amount at end of
period
D
E
T
M
L
I
I
S
E
C
R
U
O
S
E
R
E
V
O
R
G
L
L
I
H
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
2
4
e
g
a
P
5,145
(247)
-
5,145
-
-
Expenditure on exploration areas of interest where the
prospect of recoupment of costs capitalised through
successful development and commercial exploitation is no
longer considered likely, is charged to the profit or loss as an
impairment charge.
4,898
5,145
13,749
15,152
179
-
(255)
106
-
(1,509)
Exploration and evaluation
expenditure
Carrying at beginning of period
Additions
Impairment loss
31 Dec 2020
31 Dec 2019
$’000
$’000
3,236
2,616
671
(51)
2,616
2,034
814
(232)
13,673
13,749
Carrying amount at end of
period
3,236
2,616
16. TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
31 Dec 2020
31 Dec 2019
$’000
218
904
1,122
$’000
2,608
6,032
8,640
Information about the Group’s exposure to liquidity risk is
provided in Note 25(d).
123
-
(18)
(27)
78
520
-
(39)
(358)
123
5,146
2,138
15,286
2,488
(1,543)
(12,399)
-
(229)
5,741
5,146
Total property, plant and
equipment
24,390
24,163
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
17. PROVISIONS – CURRENT
18. LEASE LIABILITIES
31 Dec 2020
31 Dec 2019
31 Dec 2020
31 Dec 2019
Rehabilitation provision
Make good provision
Unsettled ship provision
Movement in provisions
Carrying value at the beginning
of the period
Payments charged against
provisions:
$’000
775
-
-
775
$’000
3,588
420
124
4,132
4,132
3,277
Rehabilitation provision
(1,159)
(2,200)
Make good provision
Unsettled ship provision
Increase / (reduce) provision
recognised:
Make good provision
Unsettled ship provision
Transfer from / (to) non-
current provisions:
Rehabilitation provision
Balance at end of period
(244)
(124)
(176)
-
(1,654)
775
(402)
(528)
273
124
3,588
4,132
The rehabilitation provision is based on estimates for
tenements held and refers to the measures and actions
required to repair land disturbed by exploration and mining
activities. The current balance is in respect of the Kanmantoo
mine and Comet Vale tenement.
Lease liabilities
Total lease liabilities
$’000
-
-
$’000
253
253
Assets and liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net
present value of; fixed payments (including in-substance
fixed payments), less any lease incentives receivable, variable
lease payments, amounts expected to be payable under
residual value guarantees, the exercise price of a purchase
option, and payments of penalties for terminating the lease,
if the lease term reflects the group exercising that option.
Lease payments to be made under reasonably certain
extension options are also included in the measurement of
the liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
the Group’s incremental borrowing rate is used, being
the rate that the Group would have to pay to borrow the
funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with
similar terms, security and conditions. Lease payments are
allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period so as to
produce a constant periodic rate of interest on the remaining
balance of the liability for each period.
Right-of-use assets are measured at cost comprising; the
amount of the initial measurement of lease liability, any
lease payments made at or before the commencement date
less any lease incentives received, any initial direct costs,
and restoration costs. Right-of-use assets are depreciated
over the shorter of the asset’s useful life and the lease term
on a straight-line basis. If the Group is reasonably certain
to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Payments associated with new short-term leases of
equipment and vehicles and all leases of low-value assets
are to be recognised on a straight-line basis as an expense
in profit or loss.
As at 31 December 2019, the Group was a lessee under
finance leases for 12 motor vehicles. As these were due to
expire in mid 2020, management treated these contracts
as exempt from AASB 16. At 31 December 2020 these
leases had expired. The Group has no other material lease
obligations that require the disclosure of “lease liabilities” and
“right-to-use” assets under AASB 16.
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D
A
N
N
U
A
L
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E
P
O
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T
2
0
2
0
P
a
g
e
4
3
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
19. EMPLOYEE BENEFITS
PAYABLE – CURRENT
Employee benefits payable
31 Dec 2020
31 Dec 2019
$’000
1,035
$’000
3,322
The current provision for employee benefits includes accrued
annual leave, long service leave, bonuses and other accrued
remuneration.
The entire amount of employee benefits payable of $1.0
million (2019: $3.3 million) is presented as current since
the Group does not have an unconditional right to defer
settlement for any of these obligations. However, based on
past experience the Group does not expect all employees
to take the full amount of accrued leave or require payment
within the next 12 months.
31 Dec 2020
31 Dec 2019
$’000
$’000
Leave obligations expected to
settle after 12 months
123
276
20. DEFERRED INCOME
Deferred revenue (contract
liability)
31 Dec 2020
31 Dec 2019
$’000
$’000
-
-
479
479
Deferred revenue relates to the delivery of concentrate to
the local port and transfer of title being completed, however
loading of concentrate onto vessels and the shipping
of concentrate to the destination port had not yet been
performed. Refer to Note 5 for additional information.
21. PROVISIONS – NON-CURRENT
Rehabilitation provision
Movement in provisions
Carrying value at the beginning
of the period
Discount on unwind of
rehabilitation provision
Transfer (to)/from current
provisions
(Reduce)/increase provision
recognised
Balance at end of period
31 Dec 2020
31 Dec 2019
$’000
9,736
$’000
8,140
8,140
12,402
109
257
1,654
(3,588)
(167)
9,736
(931)
8,140
The rehabilitation provision is based on estimates for
tenements held and refers to the measures and actions
required to remediate land disturbed by exploration and
mining activities. Close down and restoration costs include
the dismantling and demolition of infrastructure and the
removal of residual materials and remediation of disturbed
areas. Close down and restoration costs are provided for in
the accounting period when the obligation arising from the
related disturbance occurs, whether this occurs during mine
development or during the production phase, based on the
net present value of estimated future costs.
The costs are estimated on the basis of a closure plan. The
cost estimates are calculated annually during the life of the
operation to reflect known developments and are subject
to formal review at regular intervals. The amortisation or
‘unwinding’ of the discount applied in establishing the net
present value of provisions is charged to the statement of
profit or loss and shown as a financial cost.
Included in the rehabilitation provision is a payment of
approximately $1.7 million to the Native Vegetation Fund.
With permission from the State Government, the Group has
delayed the timing of this payment and, whilst the intention
is for the payment to be made at a later date, it should
be noted that non-payment would increase the Group’s
rehabilitation provision by approximately $1.5 million. This
circumstance is not expected to eventuate.
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L
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0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
4
4
e
g
a
P
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
22. CONTRIBUTED EQUITY
Share capital
Issued and paid up capital for 661,798,194 fully paid shares
(31 December 2019: 585,588,518)
Ordinary Shares Issued – movements during the period
31 Dec 2020
31 Dec 2019
$’000
$’000
236,550
234,322
31 Dec 2020
31 Dec 2019
31 Dec 2020
31 Dec 2019
Opening balance
No. of shares
No. of shares
585,588,518
577,477,118
Employee option schemes / issues
-
8,111,400
Capital Raise
Less – transaction costs
Balance at end of period
76,209,676
-
-
-
$’000
234,322
-
2,362
(134)
$’000
234,327
-
-
(5)
661,798,194
585,588,518
236,550
234,322
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown
in equity as a deduction, net of tax, from the proceeds.
Terms and conditions
Holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at shareholders
meetings. In the event of winding up the Company, ordinary shareholders rank after all other shareholders and creditors and
are fully entitled to any net proceeds of liquidation.
Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so it can provide
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the
cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets.
Capital Raise
On 17 December 2020, the Company announced a combined equity raising of up to $10.9 million at $0.031 per share. The raising
was to be undertaken through the following:
½ Placement Tranche 1 – the issue of 76,209,676 new fully paid ordinary shares pursuant to the Company’s available
placement capacity under ASX Listing Rules 7.1 raising ~$2.4 million;
½ Placement Tranche 2 – subject to shareholder approval, the issue of 185,080,646 new fully paid ordinary shares to raise
~$5.7 million; and
½ Entitlement Offer – non underwritten non-renounceable offer to raise gross proceeds of up to ~$2.8 million through the
issue of approximately 90.1 million shares.
Proceeds from Placement Tranche 1 was received in the current period.
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S
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D
A
N
N
U
A
L
R
E
P
O
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T
2
0
2
0
P
a
g
e
4
5
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
23. RESERVES
24. ACCUMULATED LOSSES
31 Dec 2020
31 Dec 2019
$’000
$’000
31 Dec 2020
31 Dec 2019
$’000
$’000
At beginning of the period
(235,137)
(225,110)
5,673
22,082
-
27,755
5,208
22,082
(177)
27,113
Net loss (not carried forward
to profit reserve)
Accumulated losses at end
of the period
(5,945)
(10,027)
(241,082)
(235,137)
Employee share options
reserve
Profit reserve
Foreign currency translation
Movements:
Employee share options
reserve
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V
O
R
G
L
L
I
H
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
6
4
e
g
a
P
Opening balance
5,208
4,297
Share based compensation
expense
Closing balance
Profit reserve
Opening balance
Transfer of current year profit
Dividend paid
Closing balance
Foreign currency translation
465
5,673
911
5,208
22,082
30,866
-
-
22,082
-
(8,784)
22,082
Opening balance
(177)
(177)
Reclassified to profit and loss
on disposal of discontinued
operations
Closing balance
177
-
-
(177)
Nature and purpose of reserves
Employee share option reserve
(i)
The employee share option reserve is used to recognise the
fair value of share performance rights issued to employees.
(ii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign
controlled entity are recognised in Other Comprehensive
Income as described in Note 1(b)(ii) and accumulated in
the foreign currency translation reserve within equity. The
cumulative amount has been reclassified to profit or loss as
the investment has been disposed of.
(iii) Profit reserve
The profit reserve is used to accumulate distributable profits,
preserving the characteristics of profit by not appropriating
against prior year accumulated losses. The reserve can be
used to pay taxable dividends.
25. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks:
market risk, credit risk and liquidity risk. The Group’s overall
risk management program focuses on the unpredictability
of financial markets and seeks to minimise potential adverse
effects on the financial performance of the Group. Risk
management is carried out by senior management under
direction of the Board of Directors. The Board provides
principles for overall risk management, as well as policies
covering specific areas.
(a) Market risk
(i)
exchange risk management
Copper and Gold – Commodity price and foreign
The Group has exposure to copper and gold commodity
prices arising from sales contracts that commit the Group to
supply copper concentrate in 2020. The prices for copper
concentrate supplied under these contracts is determined at
the time of delivery with respect to the price of copper, gold
and silver which is quoted in US dollars. The copper price
component represents approximately 95% of the copper
concentrate sales value and gold represents about 5%.
As at 31 December 2020, all fixed price contracts had been
delivered into, and there were no fixed price arrangements in
place at 31 December 2020.
(b) Foreign exchange risk
The Group sells copper concentrate and sales invoices are
denominated in US$.
The current fixed pricing arrangements on a ship by ship
basis with Freepoint include conversion from US$ into A$ to
the extent of the aggregate of the early drawdown values for
each ship. Provisional and final invoicing is settled at spot
foreign exchange rates.
At 31 December 2020, the Group has no US$-denominated
trade receivables (31 December 2019: US$749,281). The
table below details the Group’s foreign exchange sensitivity
on its net USD-denominated trade receivables and final
invoice ship provisions:
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
25. FINANCIAL RISK MANAGEMENT (CONT.)
Impact on profit or loss
31 December 2020
31 December 2019
$’000 Increase
$’000 Decrease
$’000 Increase
$’000 Decrease
Impact of 10% increase/decrease in A$/US$ exchange
rate on US$ denominated trade receivables
-
-
(97)
107
The Group and parent entity also hold a bank account denominated in US$ which had a carrying value of $NIL at
31 December 2020 (31 December 2019: $866,645).
(c) Credit risk
Credit risk is managed on a group basis. Credit risk can arise from cash and cash equivalents, deposits with banks and
financial institutions, derivative financial instruments and receivables. The Group holds its cash with Westpac Banking
Corporation and Commonwealth Bank of Australia which are considered to be appropriate financial institutions.
The Group has trade receivables of $NIL (31 December 2019: $1,135,058). The maximum exposure to credit risk at the
reporting date is the carrying amount of the financial assets. The group applies the AASB 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets. Applying
the principles of the expected credit loss model and historical recovery rates, the Consolidated entity has not recognised a
provision against trade receivables and contract assets.
Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. Indicators that
there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan
with the group, and a failure to make contractual payments.
GST refunds are receivable from a government agency and are deemed to have no significant credit risk.
For banks, financial institutions and third party debtors, management assesses the credit quality of the counterparty, taking
into account its financial position, past experience and other relevant factors.
(d) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close out market positions. Liquidity risk is
managed on a Group basis. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities.
The Group monitors its cash flow on a regular basis to ensure adequate funds are in place to maintain uninterrupted
production and to meet its payment obligations when they fall due. The Group and the parent entity had no undrawn
borrowing facilities at the reporting date.
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the
reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash
flows and includes future interest on borrowings.
Less than
1 year
1 to 2 year(s)
2 to 3 years
3 to 4 years
4 to 5 years
More than
5 years
31 December 2020 $’000
Trade and other payables
Total
31 December 2019 $’000
Trade and other payables
Lease liabilities
Total
1,122
1,122
8,640
253
8,893
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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E
R
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S
O
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C
E
S
I
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D
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
0
P
a
g
e
4
7
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
26. SUBSIDIARIES
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Hillgrove Resources Limited
(the “parent entity”) as at 31 December 2020 and the results of all subsidiaries for the period then ended. Hillgrove Resources
Limited and its subsidiaries together are referred to in this financial report as the Group. Subsidiaries are all entities controlled
by the Group. Control is achieved when the Group has power over the investee, is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to use its power to affect its returns.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. Cost is measured as
the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange. Transaction costs
are expensed as incurred, except if related to the issue of debt or equity securities. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Profit or loss
and each component of other comprehensive income are attributed to owners of Hillgrove Resources Limited and to the non-
controlling interests where applicable.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The proportion of ownership interest is equal to the proportion of voting power held. The consolidated financial statements
incorporate the assets, liabilities and results of the following subsidiaries:
Name of controlled entity
Hillgrove Copper Pty Ltd
Hillgrove Copper Holdings Pty Ltd
Hillgrove Exploration Pty Ltd
Hillgrove Mining Pty Ltd
Hillgrove Operations Pty Ltd
Hillgrove Wheal Ellen Pty Ltd
Kanmantoo Properties Pty Ltd
Mt Torrens Properties Pty Ltd
SA Mining Resources Pty Ltd
Hillgrove Indonesia Pty Ltd
Hillgrove Singapore Holdings Pte Ltd
Hillgrove Singapore No 2 Pte Ltd
Hillgrove Singapore No 3 Pte Ltd
Hillgrove Singapore No 4 Pte Ltd
PT Akram Resources
PT Fathi Resources
PT Hillgrove Indonesia
Country of
incorporation
Class of share
Equity holding
31 Dec 2020 (%)
Equity holding
31 Dec 2019 (%)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Singapore
Singapore
Singapore
Indonesia
Indonesia
Indonesia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
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
80
80
100
100
80
80
100
There were no transactions with non-controlling interests during the period.
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L
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I
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0
2
0
2
T
R
O
P
E
R
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A
U
N
N
A
8
4
e
g
a
P
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
27. COMMITMENTS
(a) Non-cancellable commitments
Future commitments not provided for in the financial statements and payable:
Within one year
One to five years
31 Dec 2020
31 Dec 2019
$’000
30
13
43
$’000
22
-
22
The Group has no material lease obligations that require the disclosure of “lease liabilities” and “right-to-use” assets under
AASB 16.
(b) Exploration expenditure commitments
In order to maintain current rights of tenure to exploration tenements, the Group is required to perform exploration work to
meet the minimum expenditure requirements under the various exploration licences which are held. These obligations are
expected to be fulfilled in the normal course of operations. Mining interests may be relinquished or joint ventured to reduce
this amount. The SA State Government has the authority to defer, waive or amend the minimum expenditure requirements.
Eligible exploration expenditure includes an appropriate allocation of overhead costs.
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S
Within one year
One to five years
31 Dec 2020
31 Dec 2019
$’000
1,010
1,106
2,116
$’000
1,365
1,965
3,330
(c) Capital commitments
At 31 December 2020 there were no contracted capital commitments (31 December 2019: Nil).
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A
N
N
U
A
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P
O
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T
2
0
2
0
P
a
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e
4
9
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
28. NOTES TO THE STATEMENT OF CASH FLOWS
(a) Reconciliation of cash
For the purposes of the statement of cash flows, cash includes cash on hand and at bank and short term deposits at call.
Cash as at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the
Balance Sheet as set out in Note 11.
(b) Reconciliation of operating profit after income tax to net cash provided by
operating activities
Operating profit/(loss) after income tax
Add/(less) items classified as investing/financing activities
Net (gain)/loss on sale of fixed assets
Net interest expense
Lease payments
Payment on disposal of Indonesian subsidiaries
Add/(less) non-cash items
Depreciation and amortisation
Impairment asset write downs
Employee share options
Discount on unwind of rehabilitation provision
Deferred income amortisation
Rehabilitation adjustment
Changes in operating assets and liabilities
Increase / (decrease) in deferred revenue
(Increase) / decrease in receivables, prepayments and inventories
Increase / (decrease) in trade creditors and accruals
(Increase) / decrease in net deferred tax assets
Increase / (decrease) in provisions and employee benefits
(Increase) / decrease in deferred mining costs
Net cash generated by operating activities
31 Dec 2020
31 Dec 2019
$’000
(5,945)
$’000
(10,027)
(92)
58
206
91
1,891
51
587
109
-
(166)
(479)
12,492
(7,812)
-
(3,991)
-
(3,000)
(47)
531
225
-
14,664
3,048
911
257
(275)
(702)
(687)
23,881
(18,140)
3,685
(3,414)
7,905
21,815
(c) Net debt reconciliation
This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.
Cash and cash equivalents
Borrowings – repayable within one year
Borrowings – repayable after one year
Net funds / (debt)
31 Dec 2020
31 Dec 2019
$’000
5,601
-
-
5,601
$’000
9,329
(253)
-
9,076
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S
E
C
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U
O
S
E
R
E
V
O
R
G
L
L
I
H
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
0
5
e
g
a
P
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
28. NOTES TO THE STATEMENT OF CASH FLOWS (cont.)
Reconciliation of movement of liabilities to cash flows arising from financing activities
Other Assets
Liabilities from Financing activities
Cash &
Bank
Liquid
Investments
Leases
due within
1 year
Leases
due after
1 year
Borrowings
due within
1 year
Borrowings
due after
1 year
Total
Net debt as at 1 January 2019
Cash flows
Other non-cash movements
Net funds/(debt) as at
31 December 2019
Cash flows
Other non-cash movements
Net funds/(debt) as at
31 December 2020
2,451
6,878
-
9,329
(3,728)
-
5,601
-
-
-
-
-
-
-
(333)
225
(145)
(253)
206
47
-
(145)
-
145
-
-
-
-
(503)
506
(3)
-
-
-
-
-
-
-
-
-
-
-
1,470
7,609
(3)
9,076
(3,522)
47
5,601
Non-cash movements represent accrued interest, repayment timing movements between current and non-current
and revaluations.
29. KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Cash bonus
Termination payments
Share based payments
31 Dec 2020
31 Dec 2019
$
952,010
81,246
298,473
111,186
283,627
$
1,433,933
171,286
230,456
496,574
433,185
1,726,542
2,765,434
Further detail regarding key management personnel compensation can be found in the Remuneration Report.
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S
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E
D
A
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A
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O
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T
2
0
2
0
P
a
g
e
5
1
Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
30. RELATED PARTY
TRANSACTIONS
(a) Parent entities
The parent entity within the Group is Hillgrove Resources
Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 26.
(c) Key management personnel
Disclosures relating to key management personnel are set
out in Note 29.
(d) Related parties
Loans to controlled entities are eliminated on consolidation.
31. EVENTS AFTER THE
REPORTING PERIOD
Subsequent to year end, the Company completed and
received the funds from the capital raising that was
contemplated in the announcement of 17 December 2020.
Whilst the Placement Tranche 1 was completed in the
current period, the following was completed subsequent to
the balance date:
½ Placement Tranche 2 – shareholder approval for the
issue of 185,080,646 new fully paid ordinary shares to
raise ~$5.7 million; and
½ Entitlement Offer – the non underwritten
non-renounceable offer closed oversubscribed, with
$3.4m of subscriptions. As there were applications for
more shortfall shares than what was available under
the Top Up Facility, it was necessary for the Company
to scale back applications. The entitlement offer raised
gross proceeds of $2.8 million through the issue of
90,090,541 shares.
32. CONTINGENT LIABILITIES
Guarantees
31 Dec 2020
31 Dec 2019
$’000
$’000
Electranet performance
bond to support the build,
own, operate and maintain
agreement for installation of
transmission infrastructure at
the Kanmantoo site
Security bonds on rental
properties
338
16
354
333
16
349
The consolidated entity has obligations to restore land
disturbed under exploration and mining licences. The
maximum obligation to the South Australian Government
in respect of the Kanmantoo copper mine has been
assessed at a value of $9.2 million and is secured by the SA
Government on a first ranking basis against the assets of the
consolidated entity.
Included in the rehabilitation provision is a payment of
approximately $1.7 million to the Native Vegetation Fund.
With permission from the State Government, the Group has
delayed the timing of this payment and, whilst the intention
is for the payment to be made at a later date, it should
be noted that non-payment would increase the Group’s
rehabilitation provision by approximately $1.5 million. This
circumstance is not expected to eventuate.
The Directors are of the opinion that further provisions are
not required in respect of these matters, as it is not probable
that a future sacrifice of economic benefits will be required or
the amount is not capable of reliable measurement.
The consolidated entity had no other contingent liabilities at
31 December 2020.
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Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
33. SHARE-BASED PAYMENTS
Following the termination of the agreement with AGL Energy Limited (AGL) to sell the pumped hydro energy storage project
in February 2020, and pivoting the business strategy towards the development of the Kanmantoo Underground, the Board
decided that the cash based Key Employees Plan (KEP) granted in July 2019 was no longer an appropriate LTI scheme for
the revised business strategy. As such, the cash based KEP was replaced with the Option & Performance Rights Plan in
August 2020 (2019 OPRP), which enables the Company to divert cash-based remuneration towards the exploration and
development activities associated with the Kanmantoo Underground.
Please refer to section 4.4.3 of the Remuneration Report for the LTI schemes currently in place.
Movements in performance rights during the year
31 December 2020
31 December 2019
Number of
performance rights
Weighted average
exercise price ($)
Number of
performance rights
Weighted average
exercise price ($)
Balance at beginning of year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Balance at end of year
Exercisable at end of year
18,875,000
10,473,282
(3,622,687)
-
(13,983,755)
11,741,840
-
-
-
-
-
-
-
-
31,165,000
-
(4,178,600)
(8,111,400)
-
18,875,000
-
-
-
-
-
-
-
-
Performance rights outstanding at the end of the year
At the end of the year there are 11,741,840 performance rights outstanding that have been offered under the 2019 OPRP and
milestone based hurdles. The exercise price of these performance rights is Nil (31 December 2019: Nil), and the weighted
average remaining contractual life at the end of the period was 0.89 years (31 December 2019: 0.41 years).
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit
expense were as follows:
Performance rights issued under the OPRP
Equity based
Cash based
31 Dec 2020
31 Dec 2019
$’000
$’000
465
122
587
911
-
911
The expense arising from the 2018 Rights was determined using an adjusted form of the Black Scholes Model. A third party
valuation was performed on the 2019 rights using a Monte Carlo simulation approach. Key inputs in the valuations were:
Grant date
Expiration date
Share price at grant date
Risk free rate
Expected price volatility
Dividend yield
Carrying amount of liability included in employee benefits payable
2019 Rights
10 Aug 2020
31 Dec 2021
$0.044
0.15%
67%
0%
$121,592
2018 Rights
1 Jun 2018
31 July 2020
$0.093
1.85%
29%
0%
-
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Notes to the consolidated Financial Statements for the year ended 31 December 2020 (cont.)
34. PARENT ENTITY INFORMATION
The financial information for the parent entity, Hillgrove
Resources Limited, has been prepared on the same basis
as the consolidated financial statements, except as set out
below.
Investments in subsidiaries and associates are accounted
for at cost in the financial statements of Hillgrove Resources
Limited. Dividends received from associates are recognised
in the parent entity’s profit or loss, rather than being
deducted from the carrying amount of these investments.
Set out below is the supplementary information about the
parent entity.
Parent
31 Dec 2020
31 Dec 2019
$’000
(4,525)
(4,525)
5,755
16,222
1,216
1,216
15,006
$’000
(5,671)
(5,671)
1,101
17,467
629
629
16,838
236,550
12,539
234,322
12,074
Profit / (loss) after income tax
Total comprehensive income
Balance Sheet
Total current assets
Total assets
Total current liabilities
Total liabilities
Net assets
Shareholder’s Equity
Contributed equity
Reserves
Accumulated losses
(234,083)
(229,558)
Total equity
15,006
16,838
Significant accounting policies
The accounting policies of the parent entity are consistent
with those of the consolidated entity, disclosed throughout
the report and notes. Investments in subsidiaries are
accounted for at cost, less any impairment.
Contingent liabilities
Security bond on rental
properties
31 Dec 2020
31 Dec 2019
$’000
$’000
16
16
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Directors’ Declaration
In the Directors’ opinion:
(a)
the financial statements and notes set out on pages 29 to 54 are in accordance with the Corporations Act 2001,
including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
giving a true and fair view of the consolidated entity’s financial position as at 31 December 2020 and of its
performance for the financial period ended on that date; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
Note 1(a) confirms that the 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 Chief Executive Officer and Chief Financial Officer required by
section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Dated at Adelaide on 26 February 2021
Mr Derek Carter
Chairman
Mr Lachlan Wallace
Managing Director
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Independent Auditor’s Report to the Members of Hillgrove Resources Limited
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PricewaterhouseCoopers, ABN 52 780 433 757 Level 11, 70 Franklin Street, ADELAIDE SA 5000, GPO Box 418, ADELAIDE SA 5001 T: +61 8 8218 7000, F: +61 8 8218 7999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. Independent auditor’s report To the members of Hillgrove Resources Limited Report on the audit of the financial report Our opinion In our opinion: The accompanying financial report of Hillgrove Resources Limited (the Company) and its controlled entities (together the Group) is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group's financial position as at 31 December 2020 and of its financial performance for the year then ended (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. What we have audited The Group financial report comprises: • the consolidated balance sheet as at 31 December 2020 • the consolidated statement of changes in equity for the year then ended • the consolidated statement of cash flows for the year then ended • the consolidated statement of profit or loss and other comprehensive income for the year then ended • the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information • the directors’ declaration. 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence 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 & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Independent Auditor’s Report to the Members of Hillgrove Resources Limited (cont.)
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2 Our audit approach An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates. Materiality Audit scope • For the purpose of our audit we used overall Group materiality of $359,000, which represents approximately 1% of the Group’s total assets. • We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole. • We chose Group total assets because, in our view, it is a benchmark against which the performance of the Group is most commonly measured. • We utilised a 1% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds. • Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events. • The Group’s accounting records are held and managed at the Kanmantoo site and the corporate head office, located in Adelaide. • The Kanmantoo operation was the focus of the audit as it was the Group’s only operating site during 2020. The Group has overseas subsidiaries in Indonesia and Singapore which were not operating during 2020. We have performed limited audit procedures over these subsidiaries. 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 for the current period. The key audit 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. Further, any commentary on the outcomes of a particular audit procedure is made in that context. We communicated the key audit matters to the Audit and Risk Committee.
Independent Auditor’s Report to the Members of Hillgrove Resources Limited (cont.)
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3 Key audit matter How our audit addressed the key audit matter Basis of preparation of the financial report (Refer to note 1(a)(i)) As described in Note 1 (a)(i) to the financial report, the financial statements have been prepared by the Group on a going concern basis, which contemplates that the Group will continue to meet its commitments, realise its assets and settle its liabilities in the normal course of business. Assessing the appropriateness of the Group’s basis of preparation for the financial report was a key audit matter due to its importance to the financial report and the level of judgement involved with respect to the Group forecasting future cash flows for a period of at least 12 months from the date of the financial report (cash flow forecasts). In assessing the appropriateness of the Group’s going concern basis of preparation for the financial report, we performed the following procedures amongst others: • Evaluated the appropriateness of the Group's assessment of their ability to continue as a going concern, including whether the assessment is appropriate given the nature of the Group, the period covered is at least 12 months from the date of our auditor’s report and relevant information of which we are aware as a result of the audit has been included. • Enquired of management and the board of directors as to their knowledge of events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. • Evaluated the Group’s plans for future actions and whether these are feasible in the circumstances. This included consideration of the impacts of post balance date events, in particular the capital raising finalised on 16 February 2021, to ensure these were appropriately included in the cashflow forecasts. • Evaluated selected data and assumptions used in the Group’s cash flow forecasts for at least 12 months from the date of signing the auditor’s report. • Considered the liquidity of existing assets on the consolidated balance sheet as at 31 December 2020. • Requested written representations from management and the board of directors regarding their plans for future action and the feasibility of these plans. • Evaluated whether, in view of the requirements of Australian Accounting Standards, the financial report provides adequate disclosures.
Independent Auditor’s Report to the Members of Hillgrove Resources Limited (cont.)
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4 Key audit matter How our audit addressed the key audit matter Carrying value of assets of Kanmantoo cash generating unit (Refer to note 14) The Group’s assessment of the carrying value of the Kanmantoo cash generating unit (‘CGU’) was considered a key audit matter due to the financial significance of property, plant and equipment ($24.4 million) and the judgemental assumptions included in the Group’s discounted cash flow models for the Kanmantoo mine, particularly: • resources and exploration targets; • processing volumes; • ore production; • long term copper prices; • foreign exchange rates; • operating costs; • capital costs; • discount rate; and • expected proceeds from sale of property, plant & equipment and land. We performed the following procedures, amongst others: • Assessed the appropriateness of the CGU identification in accordance with the requirements of Australian Accounting Standards. • Evaluated the Group’s ability to forecast future results by comparing budgets with reported actual results for the previous financial year. • Tested the mathematical accuracy, on a sample basis, of the discounted cash flow model. • Assessed the completeness of cash flows included within the model based on our understanding of operations from the audit. • Evaluated the Group’s plans for the Kanmantoo mine and considered whether these are feasible. This included: o an assessment of resources and exploration targets; o an assessment of the competence of the Group’s expert; and o written representations from management and the board of directors regarding their plans for the Kanmantoo mine. • Assessed the reasonableness of the forecast ore processing volumes by comparing these volumes to historical processing levels. • Assessed the reasonableness of the forecast ore production by comparing this to historical recovery levels. • Compared copper pricing data used to independent industry forecasts. • Compared foreign exchange rates to current market information. • Assessed the reasonableness of forecast operating costs by comparing these to historical costs incurred. • Assessed the reasonableness of forecast capital costs by
Independent Auditor’s Report to the Members of Hillgrove Resources Limited (cont.)
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5 Key audit matter How our audit addressed the key audit matter comparing these to external cost estimates. • Evaluated the sensitivity of the CGU recoverable amount to changes in the discount rate by varying the discount rate used in the discounted cash flow model. • Assessed the timing and amounts to be received from the sale of property, plant & equipment and land following expected completion of mining and processing activities by comparing these amounts to external valuation reports. This included an assessment of the competence of the external firms who prepared the valuations; • Evaluated the adequacy of disclosures made in the financial report, including those regarding key assumptions, in light of the requirements of Australian Accounting Standards. Rehabilitation provision (Refer to notes 17 and 21) As a result of its mining and processing operations, the Group is obligated to restore and rehabilitate the environment disturbed by these operations. Rehabilitation activities are governed by a combination of legislative requirements and Group policies. At 31 December 2020 the consolidated balance sheet included provisions for such obligations of $10.5m. This was a key audit matter due to the judgement applied by the Group in assessing the nature and extent of the rehabilitation work to be performed, estimating the future cost and timing of performing this work and applying assumptions such as the discount rate and inflation to future cash outflows associated with rehabilitation activities. We performed the following procedures, amongst others: • Compared the actual rehabilitation costs incurred against the Group’s forecasts to check that rehabilitation estimates take into account current experience. • Assessed the nature, timing and extent of rehabilitation work to be performed by inspecting mine and rehabilitation plans. • Tested the mathematical accuracy, on a sample basis, of the Group’s rehabilitation estimate. • Assessed the completeness of cash flows based on our understanding of the Group’s rehabilitation obligations. • Evaluated the method, significant assumptions and data used to develop the estimates. • Evaluated the appropriateness of discount rates and inflation rates utilised in calculating the closing provision by comparing them to current market information. • Evaluated the adequacy of disclosures made in the financial statements, in light of the requirements of Australian Accounting Standards.
Independent Auditor’s Report to the Members of Hillgrove Resources Limited (cont.)
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1
6 Other information The directors are responsible for the other information. The other information comprises the information included in the annual report for the year ended 31 December 2020 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 accordingly we do not express any form of assurance conclusion thereon. 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 on the other information that we obtained prior to the date of this auditor’s report, 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 Company 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 ability of the Group 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 the financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor's report.
Independent Auditor’s Report to the Members of Hillgrove Resources Limited (cont.)
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7 Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 17 to 26 of the directors’ report for the year ended 31 December 2020. In our opinion, the remuneration report of Hillgrove Resources Limited for the year ended 31 December 2020 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers Andrew Forman Adelaide Partner 26 February 2021
Shareholder Information
Shareholder Information for Listed Public Companies
The following additional information is required by the Australia Securities
Exchange Limited in respect of listed public companies only.
As at the reporting date the most recent Shareholder information available for
disclosure is as follows:
(a) Voting rights and classes of equity securities
As at 16 February 2021, the Company has 936,969,381 listed fully paid ordinary
shares. Each fully paid share carries on a poll one vote.
The company also has 8,620,219 unquoted performance rights on issue which are
held by 5 holders which do not carry voting rights.
(b) Unmarketable parcels
The number of shareholdings holding less than a marketable parcel of ordinary
shares was 2,049 as at 16 February 2021.
(c) Distribution schedule of Fully Paid Ordinary Shares
as at 16 February 2021
Size of holding
Number of shareholders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
448
1,183
346
821
407
3,205
(d) Securities exchange listing
Quotation has been granted for all the ordinary shares of the Company on
all Member Exchanges of the Australian Securities Exchange Limited.
The ASX code is HGO.
(e) Company Secretary
Mr Joe Sutanto is the Company Secretary.
(f) On-market buy-back
There is no current on-market buy-back.
(g) Substantial shareholders as at 16 February 2021
An extract of the Company’s register of Substantial Shareholders (who hold 5.0%
or more of the issued capital) in accordance with Form 604 Notices is set out
below:
Name
Ariadne Australia Limited
Munro Family Super Fund
Issued capital
19.5%
6.7%
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Shareholder Information (cont.)
Twenty largest listed shareholders
The twenty largest shareholders hold 61.6% of the total ordinary shares issued.
The 20 largest shareholdings as at 16 February 2021 are listed below:
Shareholder
1
Portfolio Services Pty Ltd
2 Mr Raymond Edward Munro
3
4
5
6
7
8
9
Bell Potter Nominees Pty Ltd
J P Morgan Nominees Australia
BNP Paribas Nominees Pty Ltd
Portfolio Services Pty Ltd
Portfolio Services Pty Ltd
Portfolio Services Pty Ltd
UBS Nominees Pty Ltd
10 Citicorp Nominees Pty Ltd
11 Portfolio Services Pty Ltd
12 Proco Pty Ltd
13 Proco Pty Ltd
14 Mr Antony Gordon Breuer
15 National Nominees Pty Ltd
16 HSBC Custody Nominees
17 Sighet Pty Limited
18 Cosell Pty Limited
19 Mr Lachlan Wallace
20 Mr Malcolm Neil Nichols
No. of ordinary
shares held
% of issued
shares
74,812,355
59,750,000
55,329,826
53,961,405
48,755,990
42,337,067
32,258,065
30,961,163
29,635,336
28,334,404
17,546,894
16,500,000
16,300,000
15,577,134
11,995,052
9,551,081
8,588,144
8,400,000
8,214,458
8,163,115
8.0%
6.4%
5.9%
5.8%
5.2%
4.5%
3.4%
3.3%
3.2%
3.0%
1.9%
1.8%
1.7%
1.7%
1.3%
1.0%
0.9%
0.9%
0.9%
0.9%
(h)
Interests in mining tenements
576,971,489
61.6%
Tenement
ML 6345
ML 6436
EML 6340
EL 6526
EL 6174
EL 6175
EL 6176
EL 6207
EL 6208
EL 6294
EL 6397
ML 755
Location
Percentage
Kanmantoo, South Australia
Kanmantoo, South Australia
Kanmantoo, South Australia
Kanmantoo, South Australia
Coomandook, South Australia
Coonalpyn, South Australia
Wheal Ellen, South Australia
Tintinara, South Australia
Carcuma, South Australia
Wynarka, South Australia
Laffer, South Australia
Armidale, New South Wales
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(i) Other information
Hillgrove Resources Limited, incorporated and domiciled in Australia,
is a publicly listed Company limited by shares.
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HILLGROVE RESOURCES LIMITED
ACN 004 297 116
Adelaide Office
Ground Floor
5-7 King William Road
Unley, SA 5061
Australia
P.O. Box 372
Unley, SA 5061
Australia
T: +61 8 7070 1698
E: info@hillgroveresources.com.au
T: +61 8 7070 1698
E: info@hillgroveresources.com.au
W: www.hillgroveresources.com.au