ABN 42 000 837 472
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2021
Annual Report
Front cover: Akara staff July 2021
Some of Akara’s valued
employees at the Chatree
Gold Mine, July 2021.
www.kingsgate.com.au
1
Contents
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Contents
Chairman’s Review ......................................................
Operations Report
Chatree Gold Mine ............................................................
Projects Report
Nueva Esperanza ..............................................................
Ore Reserves and Mineral Resources ..........................
Competent Persons Statement ....................................
2
4
6
8
9
Exploration, Mining and Special Prospecting Licences .. 10
Directors’ Report ........................................................... 16
Remuneration Report ......................................................... 22
Auditor’s Independence Declaration ............................. 30
Financial Statements
Consolidated Statement of Profit or
Loss and Other Comprehensive Income ........................... 32
Consolidated Statement of Financial Position ..................... 33
Consolidated Statement of Changes in Equity .................. 34
Consolidated Statement of Cash Flows ............................. 35
Notes to the Financial Statements ............................... 36
Directors’ Declaration .................................................. 64
Independent Auditor’s Report ........................................ 65
Shareholder Information ............................................... 72
Corporate Information ................................................... 73
2
Chairman’s Review
Chairman’s Review
Just like the rest of the world
the activities of your Company
have been severely affected
by reactions to the pandemic
terrorising the world over the
past two years.
The limitations to travel have clearly made it
more difficult for us in the resolution of the
futures of our two projects. However, whilst the
benefits of lockdowns and the forced wearing
of masks are, at best, debatable, the turning of
our free democratic societies into virtual police
states is the most alarming. It clearly shows how
close we are at any time to authoritarianism and
totalitarianism. The best observation I’ve seen
from this crisis is that “1984” was supposed to
be a warning not a guidebook.
The one bright spot however, was that on
23 September, 2021 we released the following
update to the market as we are finally putting
the closure of Chatree behind us, and we stand
together on the brink of what could be a new
golden era for your Company:
Thailand Update
Kingsgate Consolidated Limited (“Kingsgate”
or the “Company”) is pleased to announce
that negotiations between the Company and
the Royal Thai Government are now entering
the final stages. Kingsgate has also been
advised that the arbitral tribunal is now ready
to issue the award after a lengthy period of
deliberations.
In this regard, Kingsgate and the Thai
Government have jointly requested that
the arbitral tribunal hold the award until
31 October 2021, to allow the parties a
short extension to conclude their settlement
negotiations.
As referenced in the ASX release dated
18 February 2021 titled “TAFTA Update”,
Kingsgate has been negotiating with the Thai
Government with a view to a settlement in
which certain steps will be taken, including
(but not limited to):
〉 the grant of all operating licences and permit
applications required to re-start and operate
the Chatree Gold Mine;
〉
〉
〉
〉
〉
the renewal/approval of key exploration
licence applications to enable access to
previously unavailable but highly prospective
areas;
the establishment of improved processes
around expediting approvals of mining leases
and mine plans;
the issuance of Board of Investment incen-
tives in relation to royalty and tax relief for
the re-start and continuance of operations;
the ability to access development funding (if
required) for plant refurbishment/expansion;
the examination by Kingsgate of the feasi-
bility of developing a local Thai gold refinery
with international accreditation;
〉 support from the Thai Government for the
potential listing of Akara Resources on the
Thai Stock Exchange, which if implemented
would give Thai investors the opportunity
to participate in the re-invigorated gold
industry;
〉
〉
〉
〉
the successful resolution of all outstanding
local legal issues;
the examination by Kingsgate of options for
the construction of a renewable energy plant
at the Chatree Gold Mine;
the establishment of a local COVID-19
vaccination hub by Kingsgate to ensure
the health of Chatree employees and local
communities; and
the re-instatement of previous commitments
by Kingsgate to continue supporting local
communities through various education,
health, and infrastructure programs.
Kingsgate can further advise that the
Metallurgical Processing Licence (“MPL”)
is now available for the Company to activate
subject to payment of the relevant processing
fees.
As reported in the Kingsgate Reserve and
Resource Statement dated 2 September
2020 (See ASX release titled “Kingsgate
Mineral Resources and Ore Reserves 2020”) the
re-instatement of the MPL would equate to the
ability to exploit Chatree’s Mineral Resources
which were estimated at 3.4 million ounces of
gold and 29 million ounces of silver, and the
re-instatement of Chatree’s Mineral Reserves
of approximately 900,000 ounces of gold, and
eight million ounces of silver which were based
on a US$1,200 per ounce gold price.
In addition, Kingsgate commissioned an
independent Life of Mine Plan (“LOM”) based
on Chatree’s Mineral Resources. This LOM at a
gold price of US$1,700 an ounce indicated the
potential for a mining inventory (not yet to
JORC standards) of more than double the current
reserves, and involves a major expansion of the
existing pits.
As previously advised in the June Quarterly
Activities Report dated 29 July 2021, Kingsgate
has also undertaken independent CAPEX studies
to ascertain the refurbishment of the plant and
re-start costs of Chatree. These studies indicate
that, in the current market conditions, it would
be feasible to re-start the mine, subject to the
Thai Government completing the actions outlined
above.
With the future operating certainty and
exploration upside that could flow from a
settlement on these terms, a successful re-start
of the Chatree Gold Mine combined with the
sustained rise in both the gold and silver prices
could give Kingsgate significant optionality with
the asset, and a path forward which may include
continuing operations, selling the asset or listing
Akara Resources on the Thai Stock Exchange.
www.kingsgate.com.au
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Chairman’s Review
of living. When the populace realise all this it will
certainly be interesting.
The real takeout from both the COVID and
climate change fiascos is to be very wary when
anyone proclaims “follow the science” or “listen
to the experts”.
In the meantime, we will continue to work to
achieve the best possible results from Chatree
and Nueva Esperanza for all our shareholders.
I would like to especially thank my fellow
Directors and staff right across the Kingsgate
group who have worked diligently, and often
over and above the call to keep the lights on
and get us where we are today. I also want to
sincerely thank our shareholders for sticking
with us over the past few years. We know it
hasn’t been easy but I feel the rewards of your
patience are about to be reaped.
Ross Smyth-Kirk OAM
Executive Chairman
Kingsgate Consolidated Limited
While there can be no guarantee that a
negotiated settlement will be reached,
Kingsgate is comforted by its recent
engagement with the Thai Government, and
Kingsgate maintains it has excellent prospects
of a successful arbitral outcome if these negotia-
tions do not successfully conclude.
Kingsgate also appreciates that the period
since the Chatree Gold Mine was closed and
up until now has been frustrating at times for
shareholders, and the Company would like to
sincerely thank shareholders for their ongoing
patience and support as we approach the final
stages of the international dispute resolution
process.
The Company would also like to state that at
every turn, setback, and difficulty experienced
over the last five years it has found a way
forward without resorting to capital raisings
or increasing debt, again in the interests of
shareholders.
As a result of the Company’s exercise of its
legal rights under the Thailand-Australia Free
Trade Agreement, there is now the prospect of
a negotiated outcome and a real opportunity to
re-start the Chatree Gold Mine in the near term
which will provide significant economic benefits
to both the local and national Thai economies.
(Please note that Kingsgate and Akara
Resources are subject to all applicable Thai
Government mining laws and regulations as part
of the negotiated settlement).
Nueva Esperanza – Chile
Kingsgate would also like to advise that work
continues negotiating a Binding Agreement
with TDG Gold Corp (TXSV:TDG) for the sale
of Nueva Esperanza an advanced gold-silver
exploration and development project, located
in the Maricunga Belt of the Atacama Region
of Northern Chile. The process is taking longer
than anticipated in part due to the impact of
COVID-19 and the cross jurisdictional nature
of the transaction between Australia, Chile
and Canada.
By the time you, as a shareholder, read this
Report, there is every chance that both of these
issues will be somewhat resolved, and clearly
we will be able to update shareholders of their
status at the Annual General Meeting.
Investors entrusting their savings to investment
managers are fully entitled to expect that their
managers will attempt to achieve the best
returns that they can from their investments.
This basic and obvious fact seems to have
become passé in our “woke” new world.
Instead, with seeming encouragement,
unelected international investors and, especially,
union dominated superannuation funds are
using pure blackmail to enforce their particular
view of the world on companies, thereby
undermining the integrity of our free enterprise
society —and that’s without mentioning
collusion.
This is interesting bearing in mind that the cause
they are advocating — the “climate change”
cult — is based on an unprovable hypothesis
bloated by guesses about the future made by
people who have been wrong for at least the last
40 years. Sadly some commentators even seem
to be encouraging the introduction of so called
“carbon tariffs” by people like the hypercritical
European Union.
If the cause is so wonderful, why do so many lies
need to be told on the way (e.g. the imaginary
jobs created by the use of subsidised renew-
ables, the increased severity and frequency of
weather events, etc.)? The current obsession
with “net zero by 2050” is, at best, a pipe
dream. What should be honed in on is what is
the real cost of this exercise in wishful thinking,
which no one wants to admit but is known to
involve trillions of dollars. The other ignored fact
is that for a country like Australia the inevitable
consequence will be a lowering of the standard
4
Operations Report
Operations
Report
Chatree
Gold Mine
Thailand
Summary
Akara Resources Public Company Limited
(“Akara”), a subsidiary of Kingsgate, ceased
operating the Chatree Gold Mine on
31 December 2016 in accordance with the
closure order by the Thai Government. Chatree
was placed on Care and Maintenance effective
1 January 2017. Approximately 31 full time staff
remain at the Chatree Gold Mine to manage the
ongoing Care and Maintenance
and rehabilitation works.
Chatree Closure Remedies
The arbitral hearings under the Thailand –
Australia Free Trade Agreement (“TAFTA”) that
relate to the Thai Government’s premature
closure of the Chatree Gold Mine in 2016, were
heard in full in Singapore, from 3 to 12 February
2020. As previously stated the TAFTA Tribunal
has ordered that the proceedings are to be kept
confidential, except where disclosure is required
to fulfil a legal duty.
While Kingsgate appreciates it is frustrating
for shareholders that more than 18 months has
elapsed since those arbitral hearings, Kingsgate
has always maintained that it has various
strategies to restore the value of Chatree for
shareholders which includes a negotiated
settlement.
In September 2020, Kingsgate was delighted to
announce that its subsidiary, Akara Resources,
was granted permission by the Thai Government
to sell the high value gold and silver “sludge,”
that was secured at the Chatree Gold Mine, to a
refinery to be processed into doré.
www.kingsgate.com.au
landholders, providing environmental bonding to
cover any reclamation works is not a licence to
conduct mining activities. Akara was particularly
pleased to report that a large number of
residents located near Chatree expressed their
support for the approval of the SPLs.
In light of these positive developments the
following options remain available to the
Company:
〉 Continue to seek and enforce a cash award
against the Thai Government if Kingsgate
is successful in its claim. As previously
stated, while Kingsgate can’t guarantee
this will happen, the Board maintains that
the Company has excellent prospects for a
successful outcome; and
〉 Agree to a negotiated settlement. Kingsgate
has previously advised that it has been
negotiating with the Thai Government in
“good faith” in parallel to the TAFTA decision
to ensure that the Company has multiple
options to restore the value of the Chatree
Gold Mine for shareholders. As outlined in the
“TAFTA Update” release in February this year
(See ASX:KCN release titled “TAFTA Update”
dated 18 February 2021), there are a number
of issues that Kingsgate would need to have
guaranteed by the Thai Government for this
to occur. These include but are not limited to:
〉 tenure around key licences and permits;
〉 investment and taxation incentives;
〉 access to significant exploration areas;
and
〉 the right to freely enjoy the asset without
any further obstruction.
The sludge refers to material cleaned from the
tanks and processing plant following the closure
of the Chatree Gold Mine on 31 December 2016,
and has always been, and acknowledged to be,
the property of Akara Resources.
Akara Resources agreed terms with a Thai
refinery to process the sludge pursuant to new
legislation requiring Thai gold to be refined in
Thailand. The sludge was processed in three
separate shipments to de-risk the process.
In November 2020, another positive move
from the Thai Government resulted in Akara
Resources being issued 44 special mineral
prospecting licences (SPLs) over 397,226 rais
of land in Chon Daen and Wang Pong Districts,
in the Phetchabun Province.
The term of the SPLs is for a period of five years
until October 2025. The issuance of these SPLs
which is subject to all relevant Thai mining
laws including obtaining permission from
5
Operations Report
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The upside of a negotiated settlement is
reinforced by the sustained performance of
both the gold and silver prices, the relative
accessibility of stockpiled ore at Chatree and the
refurbishment costs of the existing plant and
infrastructure which an independent CAPEX study
suggests many may be significantly lower than
first anticipated. While there can be no guarantee
that this will occur, if a negotiated settlement is
reached, the Company believes it has a number of
avenues to pursue going forward.
(At the time of printing this report, Kingsgate
has entered the final stages of successfully
concluding a negotiated settlement with the
Kingdom of Thailand, please refer to ASK:KCN
released titled “Thailand Update” dated
23 September 2021 for further information.)
Response to the Coronavirus
Kingsgate acknowledges the unprec-
edented impact the Coronavirus pandemic
is having on both global communities and
economies alike. In response, Kingsgate
has rolled out a Coronavirus Response Plan
across all employees in its group including
staff in Australia, Thailand, and Chile.
These measures include implementing best
practice safety/social distancing measures
at various work sites, working from home
where possible, following the advice of
local health authorities and keeping open
communication channels to stay up to
date with the latest developments and
updated health advice.
This includes the application of quarantining
measures and seeking medical assistance for
those staff who may be exhibiting symptoms
consistent with Coronavirus.
In addition to taking precautionary measures
to ensure the safety of Company employees,
Akara’s Community Relations Department has
donated Personal Protection Equipment gowns
on several occasions to local health authorities
as well as providing other in-kind support.
Overhead crane inspection by electrician Khun Thawatchai Premjit at the Chatree processing plant.Mechanical engineer Khun Wisanu Aamsard, in front of the ongoing rehabilitation at tailings storage facility TSF#1.
6
Projects Report
Projects
Report
Nueva Esperanza
Gold/Silver
Chile
Summary
Nueva Esperanza is an advanced gold-silver
exploration and development project, located
in the Maricunga Belt of the Atacama Region
of Northern Chile. Nueva Esperanza’s Mineral
Resources inclusive of Ore Reserves remain
unchanged from 30 June 2017, and are
estimated at 0.30 million ounces of gold and
47.8 million ounces of silver (17.1 Mt at 0.5 g/t
Au and 87 g/t Ag).
In June 2021, Kingsgate signed a Letter of
Intent for the sale of Nueva Esperanza to TSXV
listed TDG Gold Corp (“TDG”). The transaction
is subject to the parties entering into a legally
binding agreement, as well as certain conditions
being met.
www.kingsgate.com.au
These conditions include board approval, due
diligence, and completion by TDG of a financing
of at least C$35 million. TDG is in the process of
completing this financing, however, there can be
no guarantee that the transaction will proceed.
The total deal is a combination of cash and
equity, that will both strengthen Kingsgate’s
balance sheet, and importantly retain ongoing
exposure to the gold and silver markets. The key
details of the deal are as follows:
〉 C$25 million cash payable to Kingsgate upon
completion of the transaction1;
〉 Kingsgate will be issued 14.0% of TDG’s
outstanding common shares calculated on
a post-closing basis (inclusive of any shares
issued in a concurrent financing and with an
option to increase the holding up to 19.9%);
〉 C$6.25 million is payable to Kingsgate within
three months of completion of a Definitive
Feasibility Study;
〉 a payment of C$5 million or 10 million TDG
shares at their discretion to be issued at the
point of a construction decision;
〉 a payment of C$5 million or 10 million in TDG
shares at their discretion at the one-year
production anniversary;
〉 a payment of C$8.75 million at the two-year
production anniversary; and
〉 Kingsgate will have a representative on the
TDG board.
1
Subject to balance sheet adjustments, which are
normal under a transaction of this type.
7
Projects Report
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About TDG
TDG is a major holder of mineral claims and
mining leases in the historical Toodoggone
Production Corridor of north-central British
Columbia, Canada, with over 23,000 hectares
of brownfield and greenfield exploration
opportunities under direct ownership or earn-in
agreement.
TDG’s flagship projects are the former
producing, high-grade gold-silver Shasta, Baker
and Mets mines which are all road accessible,
produced intermittently between 1981–2012,
and have over 65,000 metres of historical
drilling. In 2021, TDG proposes to advance
the projects through compilation of historical
data, new geological mapping, geochemical
and geophysical surveys, and drill testing of
the known mineralisation occurrences and their
extensions. For more information see: TSXV:TDG
or www.tdggold.com.
Transaction details
Under the terms of the proposed transaction
TDG will acquire all of the shares in Kingsgate’s
Chilean subsidiary Laguna Resources Chile
Limitada. Completion of the proposed
acquisition would be subject to a number of
conditions precedent, including completion of
satisfactory due diligence, the negotiation and
settlement of a binding definitive agreement,
and receipt of regulatory approvals.
8
Ore Reserves and Mineral Resources
Ore Reserves and Mineral Resources
as at 30 June 2021
Chatree and Nueva Esperanza Ore Reserves
Grade
Contained Metal
Source
Chatree
Nueva Esperanza
Total
Category
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Tonnes
(Million)
Gold
(g/t)
Silver
(g/t)
–
–
–
–
17.1
17.1
–
17.1
17.1
–
–
–
–
0.5
0.5
–
0.5
0.5
–
–
–
–
87
87
–
87
87
Gold
(M oz)
–
–
–
–
0.30
0.30
–
0.30
0.30
Chatree and Nueva Esperanza Mineral Resources (inclusive of Ore Reserves)
Grade
Contained Metal
Tonnes
(Million)
73.2
49.8
40.6
163.6
1.6
27.2
10.6
39.4
74.8
77.0
51.2
203.0
Gold
(g/t)
0.69
0.64
0.59
0.65
0.01
0.46
0.30
0.39
0.68
0.58
0.53
0.60
Silver
(g/t)
6.20
5.58
4.50
5.59
93
73
43
66
8.06
29.4
12.5
17.3
Gold
(M oz)
1.63
1.02
0.77
3.42
0.0005
0.40
0.09
0.49
1.63
1.42
0.86
3.91
Source
Chatree
Nueva Esperanza
Total
Category
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
www.kingsgate.com.au
Silver
(M oz)
–
–
–
–
47.8
47.8
–
47.8
47.8
Silver
(M oz)
14.6
8.9
5.9
29.4
4.8
63.8
14.8
83.4
19.4
72.7
20.7
112.8
www.kingsgate.com.au 9
Ore Reserves and Mineral Resources
Notes to the Ore Reserves and Mineral Resources Tables on page 8:
(1)
Rounding of figures causes some numbers to not add correctly.
(2)
(3)
(4)
Nueva Esperanza metallurgical recoveries: 80% Au and 84% Ag estimated from
test work by Kingsgate.
Chatree metallurgical recoveries: 83.3% Au and 38.7% Ag based on metallurgical test
work and plant performance.
Cut-off grades for Resources are: Chatree 0.30 g/t Au, Nueva Esperanza 0.5g/t AuEq60
(assuming metal prices of USD1,200/oz Au, USD19.00/oz Ag and metallurgical recoveries
as per (2) above.
(5)
(6)
Nueva Esperanza Ore Reserves are based on a floating cut-off grade method. In this
method each Resource block is subjected to a series of estimates to generate revenue
and cost fields that are used to determine a breakeven cut-off grade.
Please refer to ASX: KCN release published 14 April 2016 titled, “Nueva Esperanza
Pre-Feasibility Study Confirms Kingsgate Growth Strategy” for details on Mineral
Resources, Ore Reserves and JORC 2012 Table 1.
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Chatree Ore Reserves (assuming Metallurgical Licence granted)
The table below shows what the Chatree Reserves would be if a Metallurgical Licence was granted in the future.
Source
Chatree
Category
Proved
Probable
Total
Grade
Contained Metal
Tonnes
(Million)
26.1
9.3
35.4
Gold
(g/t)
0.77
0.80
0.78
Silver
(g/t)
6.70
7.04
6.79
Gold
(M oz)
0.65
0.24
0.89
Silver
(M oz)
6.2
2.1
8.3
Notes to the Chatree Ore Reserves Table above:
(1)
For the material in the table above to become a JORC 2012 Ore Reserve, the Thai
Department of Primary Industries and Mines would need to grant the Chatree Gold Mine a
Metallurgical Licence.
(2)
The information in the table above is not currently an Ore Reserve under JORC
reporting requirements.
Competent Persons Statement
The information relating to Nueva Esperanza Ore
Reserves is extracted from an ASX announcement
by Kingsgate titled “Nueva Esperanza Pre-Feasibility
Study” published 14 April 2016. The information
relating to Nueva Esperanza Mineral Resources is
extracted from an ASX announcement by Kingsgate
titled “Nueva Esperanza Mineral Resource Update”
published 14 April 2016.
Previous announcements referred to in this report
are available to view on Kingsgate’s public website
(www.kingsgate.com.au). 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 in the case of
estimates of Mineral Resources or Ore Reserves that
all material assumptions and technical parameters
underpinning the estimates in the relevant market
announcements 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 altered
from the original announcements.
The information in this report that relates to the Nueva
Esperanza and Chatree Mineral Resources is based on
information compiled by Ron James, who
is a consultant geologist to the Kingsgate Group.
Ron James is a member of The Australasian Institute of
Mining and Metallurgy, and qualifies as a Competent
Person. Mr James 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 “Australasian Code
for Reporting of Mineral Resources and Ore Reserves.”
Mr James has consented to the public reporting of
these statements and the inclusion of the material in
the form and context in which it appears.
10
Exploration, Mining and Special Prospecting Licences
Exploration, Mining and
Special Prospecting Licences
held by Kingsgate and/or its subsidiaries as at 30 June 2021
Chatree, Thailand
Mining Leases, Mining Lease Applications and Special Prospecting Licence applications for Akara Resources Public Company Limited as at June 2021.
Mining licences
No.
ML/MLA
Province
Issue Date
Expiry Date
Rai
Application Date
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
26917/15804
26922/15805
26921/15806
26920/15807
26923/15808
32529/15809
32530/15810
32531/15811
32532/15812
MLA 2/2554 (25528/14714)
MLA 1/2562 (26910/15365)
MLA 2/2562 (26911/15366)
MLA 3/2562 (26912/15367)
MLA 4/2562 (25618/15368)
MLA 6/2556
MLA 1/2559
MLA 2/2559
Phichit
Phichit
Phichit
Phichit
Phichit
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phichit
Phichit
Phichit
Phetchabun
Phetchabun
Phichit
Phichit
21/7/2008
21/7/2008
21/7/2008
21/7/2008
21/7/2008
21/7/2008
21/7/2008
21/7/2008
21/7/2008
–
19/6/2000
19/6/2000
19/6/2000
19/6/2000
–
–
–
20/7/2028
20/7/2028
20/7/2028
20/7/2028
20/7/2028
20/7/2028
20/7/2028
20/7/2028
20/7/2028
–
18/6/2020
18/6/2020
18/6/2020
18/6/2020
–
–
–
252–3–06
283–1–65
275–2–54
293–2–02
204–1–26
283–1–49
299–1–60
279–1–79
294–1–28
93–1–77
297–0–84
275–1–81
294–0–37
299–1–92
58–0–0
194–2–36
51–0–28
–
–
–
–
–
–
–
–
–
20/01/2011
13/12/2019
13/12/2019
13/12/2019
11/12/2019
16/07/2013
25/03/2016
25/03/2016
www.kingsgate.com.au Exploration, Mining and Special Prospecting Licences
11
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10 year SummaryKingsgate Consolidated Limited ‐ Quarterly Report for the three months ended 30 June 2021 Page 12 June Quarter Review Kilometres Chatree Gold Mine, Thailand 44 SPLs Granted in November 2020
12
Exploration, Mining and Special Prospecting Licences
Special prospecting licence applications
Province
Area (Rai)
No.
Chantaburi
Chantaburi
Chantaburi
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Lop Buri
Phichit
Phichit
Phichit
Phichit
Phichit
Phichit
Phichit
Phichit
Phichit
Phichit
Phichit
Phichit
Phichit
Phichit
Phichit
9,320
5,360
9,290
9,923
9,967
10,000
8,504
10,000
6,711
9,597
9,255
9,347
9,426
9,493
10,000
7,948
10,000
10,000
10,000
10,000
9,812
10,000
10,000
10,000
9,850
9,375
9,440
9,900
8,725
10,000
10,000
10,000
10,000
10,000
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
App No
13/2554
14/2554
15/2554
16/2554
1/2550
2/2550
10/2554
11/2554
12/2554
13/2554
14/2554
15/2554
16/2554
17/2554
18/2554
19/2554
20/2554
21/2554
22/2554
23/2554
24/2554
25/2554
26/2554
27/2554
1/2549
4/2554
5/2554
6/2554
7/2554
8/2554
9/2554
10/2554
Province
Area (Rai)
Phichit
Phichit
Phichit
Phichit
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Phitsanulok
Rayong
Saraburi
Saraburi
Saraburi
Saraburi
Saraburi
Saraburi
Saraburi
Total (Rai):
Total (Km2):
9,500
10,000
9,500
9,760
130
1,050
2,170
8,695
1,300
9,868
9,909
8,973
10,000
9,460
10,000
9,635
10,000
10,000
10,000
10,000
4,072
3,869
9,393
8,700
7,300
9,381
9,500
9,460
7,106
9,656
9,921
10,000
579,551
927.28
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
App No
6/2555
8/2549
9/2549
2/2550
3/2550
4/2550
5/2550
6/2550
7/2550
8/2550
9/2550
10/2550
11/2550
12/2550
13/2550
14/2550
15/2550
16/2550
1/2551
1/2549
1/2550
2/2550
3/2550
4/2550
3/2554
4/2554
5/2554
6/2554
7/2554
8/2554
9/2554
10/2554
11/2554
12/2554
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Exploration, Mining and Special Prospecting Licences
13
Special prospecting licences
No.
ML/MLA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
3/2563
4/2563
5/2563
6/2563
7/2563
8/2563
9/2563
10/2563
11/2563
12/2563
13/2563
14/2563
15/2563
16/2563
17/2563
18/2563
19/2563
20/2563
21/2563
22/2563
23/2563
24/2563
25/2563
26/2563
27/2563
28/2563
29/2563
30/2563
31/2563
32/2563
33/2563
34/2563
35/2563
36/2563
37/2563
38/2563
39/2563
40/2563
41/2563
42/2563
43/2563
44/2563
45/2563
46/2563
Province
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Phetchabun
Issue Date
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
26/10/2563
Expiry Date
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
25/10/2568
Rai
9,375
9,672
9,107
7,382
9,798
9,501
10,000
10,000
10,000
10,000
9,009
9,997
9,716
9,858
9,599
8,916
9,069
9,375
10,000
10,000
10,000
9,976
10,000
10,000
6,238
9,375
8,125
10,000
8,750
9,588
8,709
10,000
8,750
9,005
2,112
9,352
9,604
10,000
10,000
10,000
8,900
7,985
9,350
1,034
Total (Rai):
Total (Km2):
397,227
635.5632
continuedu
14
Exploration, Mining and Special Prospecting Licences
Nueva Esperanza, Chile
Tenements for Laguna Resources Chile Limitada, (a wholly owned subsidiary of Kingsgate Consolidated Limited) as at June 2021.
Nueva Esperanza Project
ID
1
2
3
4
5
6
7
8
9
10
11
12
13
14
ID File
Name
Owner
Area (Ha)
Observation
03102-1192-3
03102-1151-6
03102-3646-2
03102-1193-1
03102-2897-7
03102-2894-K
03102-2895-8
03102-2896-6
03102-1169-5
03102-1296-2
03102-2998-9
03102-2999-7
03102-2318-2
03102-1152-4
CANARIAS 1/414
FLOR 1/20
NEGRA 1/1003
PASCUA 1/328
PASCUA I 1/20
PASCUA II 1/30
PASCUA III 1/30
PASCUA IV 1/20
PEÑA 1/181
ROBINSON 1/14
REEMPLAZO A 1/10
REEMPLAZO B 1/5
NEGRA 1/1003
NEGRA 1/1003
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
1066
100
4545
1131
200
300
300
200
905
94
10
5
100
370
9326
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Tenements in progress no measure
ID
15
16
3
4
ID File
V-2513-2019
V-2571-2019
V-2512-2019
V-2570-2019
Name
GATON 1B
CRISTAL 54B
GASTON 1 1/40
CRISTAL 54A 1/40
Owner
Area (Ha)
Observation
LRC
LRC
LRC
LRC
200
200
200
200
In Progress
In Progress
In Progress
In Progress
www.kingsgate.com.au
Exploration, Mining and Special Prospecting Licences
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Tenements in progress no measure
ID
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
ID File
Name
Owner
Area (Ha)
Observation
03201C776-3
03201C777-1
03201C778-K
03201C779-8
03201C780-1
03201C781-K
03201C782-8
03201C783-6
03201C784-4
03201C785-2
03201C786-0
03201C787-9
03201C788-7
03201C790-9
03201C791-7
S/R
S/R
S/R
S/R
S/R
S/R
S/R
PACITA 1A 1/40
PACITA 2A 1/40
PACITA 3A 1/40
PACITA 4A 1/40
PACITA 5A 1/40
PACITA 6A 1/40
PACITA 7A 1/40
PACITA 8A 1/40
PACITA 9A 1/40
PACITA 10A 1/40
PACITA 11A 1/40
PACITA 12A 1/40
PACITA 13A 1/40
PACITA 14A 1/40
PACITA 16A 1/40
PACITA 17A 1/40
PACITA 6C
PACITA 19C
PACITA 20C
PACITA 21C
PACITA 22C
PACITA 23C
PACITA 24C
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
LRC
200
200
200
200
200
100
200
200
200
200
200
200
200
100
144
80
200
200
300
200
200
200
200
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
Constituted
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16
Directors’
Report
Your Directors’ present their
report on the Group consisting of
Kingsgate Consolidated Limited
and the entities it controlled at
the end of, or during the year
ended 30 June 2021.
Directors
The following persons were Directors of
Kingsgate Consolidated Limited during the year
ended 30 June 2021 and up to the date of this
report, except where noted otherwise:
〉 Ross Smyth-Kirk
〉 Peter Alexander
〉 Peter Warren
Non-Executive Director
Non-Executive Director
Executive Chairman
Principal activities
The principal activities of Kingsgate
Consolidated Limited during the year were the
progression of its claim with respect to the
arbitral proceedings against the Kingdom of
Thailand under the Thailand-Australia Free Trade
Agreement. This is in conjunction with Kingsgate
continuing its rehabilitation obligations and
maintaining and keeping the project in good
standing. Work also continued on a process to
unlock the value of the Nueva Esperanza Gold/
Silver Project (“Nueva Esperanza”) in Chile.
Dividends
〉 No final dividend was declared for the year
ended 30 June 2020 (30 June 2019: nil).
〉 No interim dividend was declared for the year
ended 30 June 2021 (30 June 2020: nil).
Review of operations
and results
Operational Performance
Kingsgate is a gold and silver mining,
development and exploration company based in
Sydney, Australia. Kingsgate owns the Chatree
Gold Mine (“Chatree”) in Thailand. In addition,
the Company has an advanced development
project, Nueva Esperanza, in the highly
prospective Maricunga Gold/Silver Belt in Chile.
Chatree
Akara Resources Public Company Limited
(“Akara”), a subsidiary of Kingsgate, ceased
operating the Chatree Gold Mine on 31 December
2016 in accordance with the closure order by
the Thai Government. Chatree was placed on
Care and Maintenance effective 1 January 2017.
Approximately 31 full time staff remain at the
Chatree Gold Mine to manage the ongoing care
and maintenance and rehabilitation works.
In September 2020, Kingsgate announced that,
Akara, was granted permission by the Thai
Government to process by a local Thai refinery
the high value gold and silver “sludge,” that was
secured at the Chatree Gold Mine.
The sludge refers to material cleaned from the
tanks and processing plant following the closure
of the Chatree Gold Mine on 31 December 2016,
and has always been, and acknowledged to be,
the property of Akara Resources.
Akara Resources agreed terms with a Thai
refinery to process the sludge pursuant to new
legislation requiring Thai gold to be refined in
Thailand. The sludge was processed in three
separate shipments to de-risk the process
and subsequently sold for total gold and silver
revenue of $12.3 million.
Chatree Closure Remedies
The arbitral hearings under the Thailand-Australia
Free Trade Agreement (“TAFTA”) that relate to
the Thai Government’s premature closure of
the Chatree Gold Mine in 2016, were heard in
full in Singapore, from 3 to 12 February 2020.
As previously stated, the TAFTA Tribunal has
ordered that the proceedings are to be kept
confidential, except where disclosure is required
to fulfil a legal duty.
While Kingsgate appreciates it has been
frustrating for shareholders that more than
18 months has elapsed since those arbitral
hearings, Kingsgate has always maintained that
it has various strategies to restore the value
of Chatree for shareholders which includes a
negotiated settlement.
Kingsgate has previously advised that it has
been negotiating with the Thai Government in
“good faith” in parallel to the TAFTA decision to
ensure that the Company has multiple options
to restore the value of the Chatree Gold Mine for
shareholders.
Negotiations between the Company and the
Royal Thai Government are now entering the
final stages. Kingsgate has been advised that the
arbitral tribunal is now ready to issue the award
after a lengthy period of deliberations.
In this regard, Kingsgate and the Thai
Government have jointly requested that the
arbitral tribunal hold the award until 31 October
2021, to allow the parties a short extension to
conclude their settlement negotiations.
As referenced in the ASX release dated
18 February 2021, titled “TAFTA Update”,
Kingsgate has been negotiating with the
Thai Government with a view to a settlement
in which certain steps will be taken, including
(but not limited to):
Directors’ Reportwww.kingsgate.com.au 17
〉 the grant of all operating licences and permit
applications required to re-start and operate
the Chatree Gold Mine;
〉 the renewal/approval of key exploration
licence applications to enable access to
previously unavailable but highly prospective
areas;
〉 the establishment of improved processes
around expediting approvals of mining leases
and mine plans;
〉 the issuance of Board of Investment incen-
tives in relation to royalty and tax relief for
the re-start and continuance of operations;
〉 the ability to access development funding (if
required) for plant refurbishment/expansion;
〉 the examination by Kingsgate of the feasi-
bility of developing a local Thai gold refinery
with international accreditation;
〉 support from the Thai Government for the
potential listing of Akara Resources on the
Thai Stock Exchange, which if implemented
would give Thai investors the opportunity
to participate in the re-invigorated gold
industry;
〉 the successful resolution of all outstanding
local legal issues;
〉 the examination by Kingsgate of options for
the construction of a renewable energy plant
at Chatree;
〉 the establishment of a local COVID-19
vaccination hub by Kingsgate to ensure
the health of Chatree employees and local
communities; and
〉 the re-instatement of previous commitments
by Kingsgate to continue supporting local
communities through various education,
health, and infrastructure programs.
With the future operating certainty and explo-
ration upside that could flow from a settlement on
these terms, a successful re-start of the Chatree
Gold Mine combined with the sustained rise in
both the gold and silver prices and the relative
accessibility of stockpiled ore at Chatree could
give Kingsgate significant optionality with the
asset and a path forward which may include
continuing operations, selling the asset or listing
Akara on the Thai Stock Exchange.
In November 2020, another positive move from
the Thai Government resulted in Akara being
issued 44 special mineral prospecting licences
(SPLs) over 397,226 rais of land in Chon Daen
and Wang Pong Districts, in the Phetchabun
Province.
The term of the SPLs is for a period of five years
until October 2025. The issuance of these SPLs
which is subject to all relevant Thai mining
laws including obtaining permission from
landholders, providing environmental bonding
to cover any reclamation works is not a licence
to conduct mining activities.
Nueva Esperanza
Nueva Esperanza is an advanced gold-silver
exploration and development project, located
in the Maricunga Belt of the Atacama Region
of Northern Chile. Nueva Esperanza’s Mineral
Resources inclusive of Ore Reserves remain
unchanged from 30 June 2017 and are estimated
at 0.30 million ounces of gold and 47.8 million
ounces of silver (17.1Mt at 0.5g/t Au and 87g/t
Ag). See ASX:KCN released titled “Kingsgate
Mineral Resources and Ore Reserves 2020”
dated 2 September 2020.
In June 2021, Kingsgate signed a Letter of Intent
for the sale of Nueva Esperanza to TSXV listed
TDG Gold Corp (“TDG”). The consideration for
the transaction is a combination of cash and
shares as follows:
〉 C$25 million cash payable to Kingsgate upon
completion of the transaction1;
〉 Kingsgate will be issued 14.0% of TDG’s
outstanding common shares calculated on
a post-closing basis (inclusive of any shares
issued in a concurrent financing and with an
option to increase the holding up to 19.9%);
〉 C$6.25 million is payable to Kingsgate within
three months of completion of a Definitive
Feasibility;
〉 a payment of C$5 million or 10 million TDG
shares at their discretion to be issued at the
point of a construction decision;
〉 a payment of C$5 million or 10 million in TDG
shares at their discretion at the one-year
production anniversary;
〉 a payment of C$8.75 million at the two-year
production anniversary; and
〉 Kingsgate will have a representative on the
TDG board.
The transaction is subject to the parties entering
into a legally binding agreement, as well as certain
conditions being met. These conditions include
board approval, due diligence, and completion by
TDG of a financing of at least C$35 million. TDG
is in the process of completing this financing,
however, there can be no guarantee that the
transaction will proceed.
Financing
At the end of June 2021, Kingsgate’s Group
Cash totalled A$9.98 million. This does not
include $916,000 of refundable bank guarantees
relating to rehabilitation obligation in respect of
the 44 SPLs granted to Akara Resources during
the year.
1.
Subject to balance sheet adjustments, which are normal under a transaction of this type.
continuedu
Directors’ ReportDirectors' Report 18
Financial results
Net (loss)/profit after tax ($’000)
EBITDA ($’000)
Dividends paid (Cash & DRP) ($’000)
Share price 30 June ($)
Basic (loss)/earnings per share (Cents)
Diluted (loss)/earnings per share (Cents)
Going concern and material uncertainty
The financial statements have been prepared on
a going concern basis, which indicates conti-
nuity of business activities and the realisation of
assets and settlement of liabilities in the normal
course of business.
At 30 June 2021, the Group had $9,984,000
of available cash and has no cash generating
operations. The Group currently does not
have sufficient cash available to fully repay the
preference share liability of $11,046,000 which
if exercised by the preference shareholder is
repayable at the earliest on 30 July 2022. The
continued viability of the Group and its ability to
continue as a going concern and meet its debts
and commitments as they fall due is dependent
on the Group being successful in:
1. arbitral hearings under the Thailand-Australia
Free Trade Agreement (“TAFTA”) that relate
to the Thai Government’s premature closure
of the Chatree Gold Mine in 2016, or other
suitable negotiated settlement of this
matter with the Thai Government
(“Chatree Closure Remedies”), and/or
2. the sale of the Group’s Nueva Esperanza
exploration project (“Nueva Esperanza
Sale”), and/or
3. extending the term of the exercise date of the
preferences shares should that be required
(“Extending Date of Preference Shares”).
These matters are discussed further below.
2021
(8,877)
(7,415)
–
0.84
(4.00)
(4.00)
2020
(24,244)
(22,782)
–
0.40
(10.84)
(10.84)
2019
8,375
15,958
–
0.26
3.70
3.70
2018
(76,722)
(71,706)
–
0.28
(34.26)
(34.26)
2017
7,088
63,042
–
0.20
3.17
3.17
The Group has been negotiating with the
Thai Government with a view to a settlement
that could lead to a successful re-start of the
Chatree Gold Mine and provide the Group with
significant optionality with the asset which may
include continuing operations, selling the asset
or listing Akara on the Thai Stock Exchange.
Nueva Esperanza Sale
In June 2021, Kingsgate signed a Letter of Intent
for the sale of Nueva Esperanza to TSXV listed
TDG Gold Corp (“TDG”). The consideration for
the transaction is a combination of cash and
equity (refer Note 3 iii for the details of the offer).
The transaction is subject to the parties entering
into a legally binding agreement, as well as certain
conditions being met. These conditions include
board approval, due diligence, and completion by
TDG of a financing of at least C$35,000,000. TDG
is in the process of completing this financing.
Extending Date of Preference Shares
Dependant on the timeframe to successfully
complete the above two matters, in the
event the preference share repayment right
is exercised, discussions will be held with the
preference shareholder for extending the earliest
potential date of conversion of this instrument
to beyond 30 July 2022.
As a result of these matters, there is a material
uncertainty that may cast significant doubt
on the Group’s ability to continue as a going
concern and, therefore, that it may be unable
to realise its assets and discharge its liabilities
in the normal course of business. However, the
directors believe that a combination of these
matters will be implemented and, accordingly,
have prepared the financial report on a going
concern basis. Accordingly no adjustments
have been made to the financial report relating
to the recoverability and classification of
the asset carrying amounts or the amounts
and classification of liabilities that might be
necessary should the Group not continue as a
going concern.
The attached financial report for the year
ended 30 June 2021 contains an independent
auditor’s report which includes an emphasis of
matter paragraph in regard to the existence of
a material uncertainty that may cast significant
doubt about the Group’s ability to continue as a
going concern. For further information, refer to
Note 1 (a) to the financial report.
Chatree Closure Remedies
The arbitral hearings under the TAFTA took
place in Singapore in February 2020. The Group
has been advised that the arbitral tribunal is
now ready to issue the award after a lengthy
period of deliberations. The Group and the
Thai Government have jointly requested that
the arbitral tribunal holds the award until 31
October 2021, to allow the parties a short
extension to conclude their settlement
negotiations.
Directors’ Reportwww.kingsgate.com.au 19
Material business risks
The material business risks that may have an
impact on the operating and financial prospects
of the Group are:
Mineral resources and ore reserves
Ore reserves and mineral resources are
estimates. These estimates are substantially
based on interpretations of geological data
obtained from drill holes and other sampling
techniques. Actual mineralisation or geological
conditions may be different from those predicted
and as a consequence there is a risk that any
part, or all of the mineral resources, will not be
converted into reserves.
Market price fluctuations of gold and silver as
well as increased production and capital costs,
may render ore reserves unprofitable to develop
at a particular site for periods of time.
Mining risks and insurance risks
These risks and hazards could result in
significant costs or delays that could have a
material adverse impact on the Group’s financial
performance and position.
The Group maintains insurance to cover some
of these risks and hazards at levels that are
believed to be appropriate for the circumstances
surrounding each identified risk. However,
there remains the possibility that the level of
insurance may not provide sufficient coverage
for losses related to specific loss events.
Reliance on contractors
Some aspects of Kingsgate’s activities are
conducted by contractors. As a result, the
Group’s business performance is impacted
upon by the availability and performance of
contractors and the associated risks.
Maintaining title
The Group’s activities are subject to obtaining
and maintaining the necessary titles, authorisa-
tions, permits and licences, and associated land
access arrangements with the local community,
which authorise those activities under the
relevant law (“Authorisations”). There can
be no guarantee that the Group will be able
to successfully obtain and maintain relevant
Authorisations to support its activities, or
that renewal of existing Authorisations will
be granted in a timely manner or on terms
acceptable to the Group.
Authorisations held by or granted to the Group
may also be subject to challenge by third parties
which, if successful, could impact on Kingsgate’s
exploration, development and/or mining activities.
Management and the Board regularly review the
risk portfolio of the business and the effectiveness
of the Group’s management of those risks.
Political, economic, social
and security risks
Kingsgate’s activities are subject to the
political, economic, social and other risks and
uncertainties in the jurisdictions in which those
activities are undertaken.
As evidenced by the decision by the Thai
Government that the Chatree Gold Mine must
cease operation by 31 December 2016, there
can be no certainty as to what changes, if any,
will be made to relevant laws in the jurisdictions
where the Company has current interests, or
other jurisdictions where the Company may have
interest in the future, or the impact that relevant
changes may have on Kingsgate’s ability to own
and operate its mining and related interests
and to otherwise conduct its business in those
jurisdictions.
Environmental, health and safety
regulations
The Group’s activities are subject to extensive
laws and regulations. Delays in obtaining,
or failure to obtain government permits and
approvals may adversely affect the Group.
Measures have been implemented in line with
COVID-19 guidelines. There has been no direct
adverse impact on the Group from COVID-19.
Community relations
The Group has established community relations
functions that have developed a community
engagement framework, including a set of
principles, policies and procedures designed to
provide a structured and consistent approach to
community activities.
A failure to appropriately manage local
community stakeholder expectations may lead
to disruptions in the Group’s activities.
Risk management
The Group manage the risks listed above, and
other day-to-day risks through an established
management framework. The Group has policies
in place to manage risk in the areas of health
and safety, environment and equal employment
opportunity.
Significant change in the state of affairs
There were no significant changes in the state
of affairs of the Group that occurred during the
financial year not otherwise disclosed in this
report or the consolidated financial statements.
Matters subsequent to the
end of the financial year
No matter or circumstance has arisen since 30
June 2021 that has significantly affected, or may
significantly affect:
〉 the Group’s operations in future financial
periods;
〉 the results of those operations in future
financial periods; or
〉 the Group’s state of affairs in future financial
periods.
Likely developments and
expected results
Kingsgate continues to prosecute its claim
under the Thailand-Australia Free Trade
Agreement (“TAFTA”) as it remains committed
to negotiations with the Thai Government for
both restitution of the Chatree Gold Mine and
associated compensation.
On 2 November 2017, Kingsgate commenced
arbitral proceedings against the Kingdom of
Thailand under TAFTA, in order to recover the
substantial losses that it has suffered, and
continues to suffer, as a result of the unlawful
expropriation of the Chatree Mine by the Thai
Government.
The arbitral hearings took place between 3 to
12 February 2020, in Singapore, and have been
completed in full.
Negotiations between the Company and the
Royal Thai Government are now entering the
final stage. Kingsgate has also been advised that
the arbitral tribunal is now ready to issue the
award after a lengthy period of deliberations.
In this regard, Kingsgate and the Thai
Government have jointly requested that the
arbitral tribunal hold the award until 31 October
2021, to allow the parties a short extension to
conclude their settlement negotiations.
continuedu
Directors’ ReportDirectors' Report 20
As referenced in the ASX release dated
18 February 2021, titled “TAFTA Update”,
Kingsgate has been negotiating with the
Thai Government with a view to a settlement
in which certain steps will be taken, including
(but not limited to):
〉 the grant of all operating licences and permit
applications required to re-start and operate
the Chatree Gold Mine;
〉 the renewal/approval of key exploration
licence applications to enable access to
previously unavailable but highly prospective
areas;
〉 the establishment of improved processes
around expediting approvals of mining leases
and mine plans;
〉 the issuance of Board of Investment incen-
tives in relation to royalty and tax relief for
the re-start and continuance of operations;
〉 the ability to access development funding (if
required) for plant refurbishment/expansion;
〉 the examination by Kingsgate of the feasi-
bility of developing a local Thai gold refinery
with international accreditation;
〉 support from the Thai Government for the
potential listing of Akara Resources on the
Thai Stock Exchange, which if implemented
would give Thai investors the opportunity
to participate in the re-invigorated gold
industry;
〉 the successful resolution of all outstanding
local legal issues;
〉 the examination by Kingsgate of options for
the construction of a renewable energy plant
at Chatree;
〉 the establishment of a local COVID-19
vaccination hub by Kingsgate to ensure
the health of Chatree employees and local
communities; and
〉 the re-instatement of previous commitments
by Kingsgate to continue supporting local
communities through various education,
health, and infrastructure programs.
In addition the Metallurgical Processing
Licence (“MPL”) is now available for the
Company to activate subject to payment of the
relevant processing fees.
As reported in the Kingsgate Reserve and
Resource Statement dated 2 September 2020
(See ASX release titled “Kingsgate Mineral
Resources and Ore Reserves 2020”) the
re-instatement of the MPL would equate to the
ability to exploit Chatree’s Mineral Resources
which were estimated at 3.4 million ounces of
gold and 29 million ounces of silver, and the
re-instatement of Chatree’s Mineral Reserves
of approximately 900,000 ounces of gold and 8
million ounces of silver which were based on a
US$1,200 per ounce gold price.
In addition, Kingsgate commissioned an
independent Life of Mine Plan (“LOM”) based
on Chatree’s Mineral Resources. This LOM at a
gold price of US$1,700 an ounce indicated the
potential for a mining inventory (not yet to JORC
standards) of more than double the current
reserves, and involves a major expansion of the
existing pits.
As previously advised in the June Quarterly
Activities Report dated 29 July 2021, Kingsgate
has also undertaken independent CAPEX studies
to ascertain the refurbishment of the plant and
re-start costs of Chatree. These studies indicate
that, in the current market conditions, it will be
feasible to re-start the mine, subject to the Thai
Government completing the actions outlined
above.
With the future operating certainty and
exploration upside that could flow from a
settlement on these terms, a successful re-start
of the Chatree Gold Mine combined with the
sustained rise in both the gold and silver prices
could give Kingsgate significant optionality with
the asset and a path forward which may include
continuing operations, selling the asset or listing
Akara Resources on the Thai Stock Exchange.
While there can be no guarantee that a
negotiated settlement will be reached,
Kingsgate is comforted by its recent
engagement with the Thai Government, and
Kingsgate maintains it has excellent prospects
of a successful arbitral outcome if these negotia-
tions do not successfully conclude.
Environmental laws
The Group is subject to various environmental
laws in respect to its activities in Thailand
and Chile. For the year ended 30 June 2021,
the Group has operated within all applicable
environmental laws and regulations.
Directors’ Reportwww.kingsgate.com.au 21
Directors’ meetings
The number of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 30 June 2021, and the number
of meetings attended by each Director were:
Directors
Ross Smyth-Kirk
Peter Alexander
Peter Warren
Board
Meetings
A
4
4
4
B
4
4
4
Meetings of Committees
Audit
Nomination
Remuneration1
A
2
2
2
B
2
2
2
A
1
1
1
B
1
1
1
A
–
–
–
B
–
–
–
A
B
1
Number of meetings attended.
Number of meetings held during the time the Director held office or was a member of the committee during the year.
No remuneration committee meetings were convened during the year.
Information on Directors/Company Secretary
Ross Smyth-Kirk OAM
B Com, CPA, F Fin
Peter Alexander
Ass. Appl. Geol
Executive Chairman
Ross Smyth-Kirk was a founding Director of
the former leading investment management
company, Clayton Robard Management Limited
and has had extensive experience over a number
of years in investment management including a
close involvement with the minerals and mining
sectors. He has been a Director of a number of
companies over the past 41 years in Australia
and the United Kingdom. Mr Smyth-Kirk is a
former Chairman of the Australian Jockey Club
Limited. He is Chairman of Kingsgate’s wholly
owned subsidiary, Akara Resources Public
Company Limited. He is a Life Member of the
Australian Turf Club Limited and in the Australia
Day Honours List this year he was awarded an
Order of Australia Medal (OAM) for services to
business and the wider community.
Responsibilities
Chairman of the Board, member of the Audit
Committee, Chairman of the Nomination and
Remuneration Committees.
Non-Executive Director
Peter Alexander has had 48 years’ experience
in the Australian and offshore mining and
exploration industry. He was Managing Director
of Dominion Mining Limited for 10 years prior
to his retirement in January 2008. Mr Alexander
was appointed a Non-Executive Director of
Dominion Mining Limited in February 2008 and
resigned on 21 February 2011. Mr Alexander
was a Non-Executive Director of ASX listed
Doray Minerals Limited prior to the merger
with Silver Lake Resources where he served
as a Non-Executive Director until mid-August
2021. He has previously been Non-Executive
Chairman of Doray Minerals Limited and ASX
listed Caravel Minerals.
Responsibilities
Member of the Audit, Nomination and
Remuneration Committees.
Peter Warren
B Com, CPA
Non-Executive Director
Peter Warren was Chief Financial Officer and
Company Secretary of Kingsgate Consolidated
Limited for six years up until his retirement in
2011. He is a CPA of over 46 years standing,
with an extensive involvement in the resources
industry. He was Company Secretary and Chief
Financial Officer for Equatorial Mining Limited
and of the Australian subsidiaries of the Swiss
based Alusuisse Group and has held various
financial and accounting positions for Peabody
Resources and Hamersley Iron. Mr Warren is a
Director of Kingsgate’s wholly owned subsidiary,
Akara Resources Public Company Limited.
Responsibilities
Chairman of the Audit Committee and
member of the Nomination and Remuneration
Committees.
Ross Coyle
BA, FCPA, FGIA
Company Secretary
Ross Coyle is a CPA with over 39 years’ experience
in the resources sector. He joined Kingsgate in
March 2011 and was reappointed on a contractual
and temporary basis as Company Secretary on
24 December 2018, having previously served in
this office from September 2011 to November
2014 and December 2015 to August 2018.
continuedu
Directors’ ReportDirectors' Report 22
Remuneration Report
Introduction
This Remuneration Report forms part of the
Directors’ Report. It outlines the Remuneration
Policy and framework applied by the Company
as well as details of the remuneration paid to
Key Management Personnel (“KMP”). KMP are
defined as those persons having the authority
and responsibility for planning, directing and
controlling the activities of the Company,
directly or indirectly, including Directors and
Executive Management.
The information provided in this report has
been prepared in accordance with s300A and
audited as required by section 308 (3c) of the
Corporations Act 2001.
The objective of the Company’s remuneration
philosophy is to ensure that Directors and
Executives are remunerated fairly and respon-
sibly at a level that is competitive, reasonable
and appropriate, in order to attract and retain
suitably skilled and experienced people.
Remuneration policy
The Remuneration Policy remains unchanged
from last financial year. The Remuneration Policy
has been designed to align the interests of
shareholders, Directors, and employees. This is
achieved by setting a framework to:
〉 help ensure an applicable balance of
fixed and at-risk remuneration, with the
at-risk component linking incentive and
performance measures to both Group and
individual performance;
〉 provide an appropriate reward for Directors
and Executive Management to manage and
lead the business successfully and to drive
strong, long-term growth in line with the
Company’s strategy and business objectives;
〉 encourage executives to strive for superior
performance;
〉 facilitate transparency and fairness in
executive remuneration policy and practices;
〉 be competitive and cost effective in the
current employment market; and
〉 contribute to appropriate attraction and
retention strategies for Directors and
executives.
In consultation with external remuneration
consultants, the Group has structured an
executive remuneration framework that is
market competitive and aligned with to the
business strategy of the organisation.
The framework is intended to provide a mix of
fixed and variable remuneration, with a blend of
short and long-term incentives as appropriate.
As executives gain seniority within the Group,
the balance of this mix shifts to a higher
proportion of “at risk” rewards.
Remuneration governance
Role of the Remuneration Committee
The Remuneration Committee is a committee
of the Board and has responsibility for setting
policy for determining the nature and amount of
emoluments of Board members and Executives.
The Committee makes recommendations to the
Board concerning:
〉 Non-Executive Director fees;
〉 remuneration level of Executive Directors
and other KMP;
〉 the executive remuneration framework and
operation of the incentive plan;
〉 key performance indicators and performance
hurdles for the executive team; and
〉 the engagement of specialist external
consultants to design or validate method-
ology used by the Company to remunerate
Directors and employees.
In forming its recommendations the Committee
takes into consideration the Group’s stage of
development, remuneration in the industry
and performance. The Corporate Governance
Statement provides further information on the
role of this committee.
Remuneration consultants
The Group engages the services of independent
and specialist remuneration consultants from
time to time. Under the Corporations Act 2001,
remuneration consultants must be engaged by
the Non-Executive Directors and reporting of
any remuneration recommendations must be
made directly to the Remuneration Committee.
The Remuneration Committee engaged the
services of Godfrey Remuneration Group Pty
Ltd in the 2013/2014 financial year to review
its remuneration practice revisions and to
provide further validation in respect of both the
executive short-term and long-term incentive
plan design methodology and standards. These
recommendations covered the remuneration of
the Group’s Non-Executive Directors and KMP.
Godfrey Remuneration Group Pty Ltd confirmed
that the recommendations from that review
were made free from undue influence by
members of the Group’s KMP.
The following arrangements were implemented
by the Remuneration Committee to ensure that
the remuneration recommendations were free
from undue influence:
〉 Godfrey Remuneration Group Pty Ltd was
engaged by, and reported directly to, the
Chair of the Remuneration Committee.
The agreement for the provision of
remuneration consulting services was
executed by the Chair of the Remuneration
Committee under delegated authority on
behalf of the Board; and
〉 any remuneration recommendations by
Godfrey Remuneration Group Pty Ltd
were made directly to the Chair of the
Remuneration Committee.
As a consequence, the Board is satisfied that
the recommendations contained in the report
were made free from undue influence from any
members of the Group’s KMP at the time this
review was completed.
Executive director and key
management personnel
remuneration
The executive pay and reward framework is
comprised of three components:
〉 fixed remuneration including
superannuation;
〉 short-term performance incentives; and
〉 long-term incentives through participation
in the Kingsgate Employee Share Option
Plan (“ESOP”).
Fixed remuneration
Total fixed remuneration (“TFR”) is structured
as a total employment cost package, including
base pay and superannuation. Base pay may
be delivered as a mix of cash, statutory and
salary sacrificed superannuation, and prescribed
non-financial benefits at the Executive’s
discretion.
Executives are offered a competitive base pay.
Base pay for executives is reviewed annually
to ensure their pay is competitive with the
market. An executive’s pay is also reviewed
on promotion. The Group has an Executive
Chairman, but does not have a Chief Executive
Officer or other Key Management Personnel.
Directors’ Reportwww.kingsgate.com.au 23
The following summarises the performance of the Group over the last five years:
Revenue (‘000s)
Net (loss)/profit after income tax (‘000s)
EBITDA (‘000s)
Share price at year end ($/share)
Dividends paid (cent/share)
KMP short term employee benefits (‘000s)
* see page 26 for table outlining the short term employee benefits.
2021
2020
2019
2018
2017
–
(8,877)
(7,415)
0.84
Nil
*559
–
(24,244)
(22,782)
0.40
Nil
*328
–
8,375
15,958
0.26
Nil
*901
–
(76,722)
(71,706)
0.28
Nil
1,604
176,119
7,088
63,042
0.20
Nil
2,099
Short-Term Incentives
Linking current financial year earnings of executives to their performance and the performance of the Group is the key objective of our Short-Term Incentive
(“STI”) Plan. The Remuneration Committee set key performance measures and indicators for the individual executives on an annual basis that reinforce the
Group’s business plan and targets for the year.
The Board has discretion to issue cash bonuses to employees for individual performance outside the STI Plan.
The structure of the STI Plan remains unchanged since 30 June 2016 and its key features are outlined in the table below:
What is the STI Plan and
who participates?
The STI Plan is a potential annual reward for eligible Executive Key Management Personnel for achievement of predetermined
individual Key Performance Indicators (“KPIs”) aligned to the achievement of business objectives for the assessment period (financial
year commencing 1 July).
How much can the
executives earn under
the STI Plan?
Is there Board discretion
in the payment of an STI
benefit?
Threshold – represents the minimum acceptable level of performance that needs to be achieved before any Individual Award would be
payable in relation to that Performance Measure.
Managing Director/CEO – up to 15% of TFR. COO & CFO – up to 12.5% of TFR. Other KMP – up to 10% of TFR.
Target – represents a challenging but achievable level of performance relative to past and otherwise expected achievements. It will
normally be the budget level for financial and other quantitative performance objectives.
Managing Director/CEO – up to 30% of TFR. COO & CFO – up to 25% of TFR. Other KMP – up to 20% of TFR.
Stretch (Maximum) – represents a clearly outstanding level of performance which is evident to all as a very high level of achievement.
Managing Director/CEO – up to 60% of TFR. COO & CFO – up to 50% of TFR. Other KMP – up to 40% of TFR.
(TFR – Total Fixed Remuneration)
Yes, the plan provides for Board discretion in the approval of STI outcomes.
What are the performance
conditions?
For KMP between 70%–80% of potential STI weighting (dependent upon role) is assessed against specific predetermined KPIs by
role with 20%–30% being based on company performance indicators.
How are performance
targets set and assessed?
Individual performance targets are set by the identification of key achievements required by role in order to meet business objectives
determined for the upcoming assessment period in advance. The criteria for KMP are recommended by the Managing Director/CEO
for sign off by the Remuneration Committee and in the case of the Managing Director/CEO, are recommended by the Chairman by
sign off by the Remuneration Committee.
The relative achievement at the end of the financial period is determined by the above authorities with final sign off by the
Remuneration Committee after confirmation of financial results and individual/company performance against established criteria.
The Remuneration Committee is responsible for assessing whether the KPIs are met. To assist in this assessment, the Committee
receives detailed reports on performance from management which are verified by independent remuneration consultants if required.
The Committee has the discretion to adjust STIs in light of unexpected or unintended circumstances.
How is the STI delivered?
STIs are paid in cash after the conclusion of the assessment period and confirmation of financial results/individual performance and
subject to tax in accordance with prevailing Australian taxation laws. The STIs are then in effect paid and expensed in the financial
year subsequent to the measurement year.
What happens in the event
of cessation of employment?
Executives are required to be employed for the full 12 months of the assessment period before they are eligible to be considered to
receive benefits from the STI Plan.
continuedu
Directors’ ReportDirectors' Report 24
Long-Term Incentives
The objectives of the LTI Plan are to retain key executives and to align an at-risk component of certain executives’ remuneration with shareholder returns.
The previously operating Kingsgate Long-Term Incentive (“LTI”) plan, also referred to as the Executive Rights Plan, has been terminated. All outstanding
Performance Rights and Deferred Rights vested on 1 July 2016 and the Performance Rights subsequently lapsed. The Executive Rights Plan was replaced
by the Kingsgate Employee Share Option Plan (“ESOP”). The rules and terms and conditions of the ESOP have been independently reviewed.
Under the terms of the ESOP long-term incentives can be provided to certain employees through the issue of options to acquire Kingsgate shares.
Options are issued to employees to provide incentives for employees to deliver long-term shareholder returns.
No executive was the recipient of options during the 2021 financial year.
Key features of the ESOP LTI Plan are outlined in the following table:
What is the LTI Plan
and who participates?
Kingsgate executives and other eligible employees can be granted options to acquire Kingsgate Consolidated Limited fully paid
shares. In granting the options the Board takes into account such matters as the position of the eligible person, the role they play in
the Company, their current level of fixed remuneration, the nature of the terms of employment and the contribution they make to the
Group.
What are the
performance and
vesting conditions?
The period over which the options vest is at the discretion of the Board though in general it is 1–3 years. The executive and eligible
employee must still be employed by the Company at vesting date.
Is there a cost to
participate?
The options may at the discretion of the Board be issued for nil consideration and are granted in accordance with performance
guidelines established by the Remuneration Committee and approved by the Board.
What happens in the
event of bonus shares,
rights issues or other
capital reconstructions?
If between the grant date and the date of conversion of options into shares there are bonus shares, rights issues or other capital
reconstructions that affect the value of Kingsgate Consolidated shares, the Board may, subject to the ASX Listing Rules make
adjustments to the number of rights and/or the vesting entitlements to ensure that holders of rights are neither advantaged or
disadvantaged by those changes.
Directors and Key Management Personnel
Except where noted, the named persons held their current positions for the whole of the year and up to the date of this report.
Chairman
Ross Smyth-Kirk
Executive Chairman
Non-Executive Directors
Peter Alexander
Non-Executive Director
Peter Warren
Non-Executive Director
Changes since the end of the reporting period
There were no changes to Directors and Key Management Personnel since the end of the reporting period.
Directors’ Reportwww.kingsgate.com.au 25
Contract terms of the Executive Directors and Key Management Personnel
Remuneration and other key terms of employment for the Senior Executives are summarised in the following table.
Name
Term of
agreement
Fixed annual remuneration
including superannuation
Notice period by
Executive
Notice period by
the Company2
Ross Smyth-Kirk
Open
FY 20211
$157,680
FY 20201
$157,680
N/A3
N/A3
1
2
3
Amount shown are annual salaries as at year end or date ceased employment with the Group.
Notice period by the Company in respect of benefits payable in the event of an early termination only.
Temporary role as Executive Chairman. Role reverts to Non-Executive Chairman at the discretion of the Board.
Fixed annual remuneration, inclusive of the required superannuation contribution amount is reviewed annually by the Board following the end of the financial year.
Non-Executive Directors Fees
Non-Executive Directors are paid fixed fees for their services to the Company plus statutory superannuation contributions the Company is required by law to
make on their behalf. Those fees are inclusive of any salary-sacrificed contribution to superannuation that a Non-Executive Director wishes to make.
The level of Non-Executive Directors fees is set so as to attract the best candidates for the Board while maintaining a level commensurate with boards of similar
size and type. The Board may also seek the advice of independent remuneration consultants, including survey data, to ensure Non-Executive Directors’ fees and
payments are consistent with the current market.
Non-Executive Directors’ base fees inclusive of committee membership but not including statutory superannuation are outlined as follows. Note that from
the period 1 October 2013, all Non-Executive Directors fees were voluntarily reduced by 10% and this reduction is still in place as at the date of this report.
Non-executive Directors remuneration excluding superannuation
1
On an annualised basis for all Directors.
Financial
year ended
30 June 20211
$
Financial
year ended
30 June 20201
$
180,000
180,000
180,000
180,000
The aggregate remuneration of Non-Executive Directors is set by shareholders in general meeting in accordance with the Constitution of the Company, with
individual Non-Executive Directors remuneration determined by the Board within the aggregate total. The aggregate amount of Non-Executive Directors’
fees approved by shareholders on 13 November 2008 is $1,000,000.
Non-Executive Directors do not receive any additional fees for serving on committees of the Company.
There are no retirement allowances for Non-Executive Directors.
continuedu
Directors’ ReportDirectors' Report 26
Additional Statutory Disclosures
Details of remuneration
Details of the nature and amount of each major element of the remuneration of the Directors and the Group Key Management Personnel are set out in the
following tables:
Short-term benefits
Post-employment
benefits
Cash bonus
Non-monetary
benefits1
Superannuation
Year ended 30 June 2021
Name
Non-Executive Directors
Peter Alexander
Peter Warren
Cash salary
and fees
$
90,000
90,000
Sub-total Non-Executive Directors Compensation
180,000
$
–
–
–
Executive Chairman
Ross Smyth-Kirk
Paid by Company
Paid by Subsidiary
Sub-total Executive Chairman Compensation
TOTAL
1
Non-monetary benefits relate primarily to car parking.
144,000
83,391
227,391
407,391
150,000
–
150,000
150,000
$
$
–
–
–
1,302
–
1,302
1,302
8,550
8,550
17,100
13,680
–
13,680
30,780
Year ended 30 June 2020
Name
Non-Executive Directors
Peter Alexander
Peter Warren
Sub-total Non-Executive Directors Compensation
Executive Chairman
Ross Smyth-Kirk
TOTAL
Cash salary
and fees
$
90,000
90,000
180,000
144,000
324,000
1
Non-monetary benefits relate primarily to car parking.
Short-term benefits
Post-employment
benefits
Cash bonus
Non-monetary
benefits1
Superannuation
$
–
–
–
–
–
$
$
–
–
–
3,660
3,660
8,550
8,550
17,100
13,680
30,780
Total
$
98,550
98,550
197,100
308,982
83,391
392,373
589,473
Total
$
98,550
98,550
197,100
161,340
358,440
Directors’ Reportwww.kingsgate.com.au The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Executive Director
Ross Smyth-Kirk
Share Holdings 2021
Executive Chairman
Ross Smyth-Kirk
Non-Executive Directors
Peter Alexander
Peter Warren
Fixed remuneration
2021
STI/cash bonus
2021
At risk – LTI
2021
62%
38%
–
Balance at
start of year
Other changes
during the year
Balance at
year end
5,076,725
46,487
200,000
–
–
–
5,076,725
46,487
200,000
Loans to Directors
There were no loans made to Directors or other Key Management Personnel at any time during the year.
27
continuedu
Directors’ ReportDirectors' Report 28
Insurance of officers
During the financial year, the Group paid premiums to insure Directors and Officers of the Group. The contracts include a prohibition on disclosure of the
premium paid and nature of the liabilities covered under the policy.
Directors’ interest in contracts
No material contracts involving Directors’ interests were entered into since the end of the previous financial year or existed at the end of the financial year.
Non-audit services
Details of amounts paid or payable to the auditor for non-audit services provided during the year are detailed in Note 28: Auditors’ Remuneration. The Directors
are satisfied that the provision of non-audit services during the period by the auditor is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001.
The Directors are of the opinion that the services disclosed in Note 28: Auditors’ Remuneration to the financial statements do not compromise the external
auditor’s independence, based on the Auditors’ representations and advice received from the Audit Committee, for the following reasons:
〉 all non-audit services have been reviewed to ensure they do not impact the integrity and objectivity of the auditor; and
〉 none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for
Professional Accountants issued by the Accounting Professional and Ethical Standards Board, 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 risks and rewards.
A copy of the Auditor’s Independence Declaration as required under section 307c of the Corporations Act 2001 is set out on page 30.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that
instrument, amounts in the Directors’ Report and Financial Report are rounded to the nearest thousand dollars except where otherwise indicated.
Auditors
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of Directors.
Ross Smyth-Kirk OAM
Director
Sydney
30 September 2021
Directors’ Reportwww.kingsgate.com.au t
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Khun Nampeung Kabkhuntod
Administration Supervisor at the Chatree
Gold Mine – also known as the “Big Boss”.
30
Auditor’s Independence Declaration
Auditor’s
Independence
Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Kingsgate Consolidated Limited for the year ended 30 June 2021, 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 Kingsgate Consolidated Limited and the entities it controlled during
the period.
Auditor’s Independence Declaration
As lead auditor for the audit of Kingsgate Consolidated Limited for the year ended 30 June 2021, 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
Sydney
30 September 2021
Marc Upcroft
Partner
PricewaterhouseCoopers
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 Kingsgate Consolidated Limited and the entities it controlled during
the period.
Marc Upcroft
Partner
PricewaterhouseCoopers
Sydney
30 September 2021
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
www.kingsgate.com.au
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Financial Statements
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2021
Sales revenue
Costs of sales
Gross profit
Exploration expenses
Care and maintenance expenses
Corporate and administration expenses
Other income and expenses
Foreign exchange (losses)/gain
Loss before finance costs and income tax
Finance income
Finance costs
Net finance costs
Loss before income tax
Income tax expense
Loss after income tax
Other comprehensive income
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations (net of tax)
Total other comprehensive income/(loss) for the year
Total comprehensive loss for the year
Loss attributable to:
Owners of Kingsgate Consolidated Limited
Total comprehensive loss attributable to:
Owners of Kingsgate Consolidated Limited
Earnings per share
Basic and diluted loss per share
Note
5a
5b
5c
5d
5e
6
17a
2021
$’000
12,339
(1,629)
10,710
(4,267)
(1,724)
(8,489)
118
(3,875)
(7,527)
36
(1,386)
(1,350)
(8,877)
-
(8,877)
4,867
4,867
2020
$’000
–
–
–
(4,765)
(2,150)
(16,309)
76
152
(22,996)
281
(1,529)
(1,248)
(24,244)
–
(24,244)
(139)
(139)
(4,010)
(24,383)
(8,877)
(24,244)
(4,010)
(24,383)
29
Cents
(4.00)
Cents
(10.84)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
www.kingsgate.com.au
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Consolidated Statement
of Financial Position
As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Receivables
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Exploration, evaluation and development
Other assets
Total non-current assets
TOTAL ASSETS
Liabilities
Current liabilities
Payables
Lease liability
Provisions
Total current liabilities
Non-current liabilities
Payables
Lease liability
Borrowings
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
33
Financial Statements
Note
2021
$’000
2020
$’000
7
8
9
10
11
12
9
13
11
15
13
11
14
15
16
17a
17b
9,984
1,023
571
11,578
51
104
23,464
9,490
33,109
44,687
3,067
83
249
3,399
6,723
20
11,046
15,197
32,986
36,385
8,302
15,569
294
372
16,235
90
190
25,649
9,382
35,311
51,546
4,726
86
190
5,002
4,363
103
12,520
17,246
34,232
39,234
12,312
675,919
62,390
(730,007)
675,919
57,523
(721,130)
8,302
12,312
34
Financial Statements
Consolidated Statement
of Changes in Equity
For the year ended 30 June 2021
Balance at 1 July 2019
Loss after income tax
Total other comprehensive income for the year
Total comprehensive income/(loss) for the year
Transaction with owners in their capacity as owners:
Payments for share buy-backs
Payments for share buy-back expenses
Total transaction with owners
Balance at 30 June 2020
Balance at 1 July 2020
Loss after income tax
Total other comprehensive income for the year
Total comprehensive income/(loss) for the year
Balance at 30 June 2021
Contributed
equity
$’000
677,761
–
–
Reserves
$’000
57,662
–
(139)
Accumulated
losses
$’000
Total equity
$’000
(696,886)
(24,244)
–
38,537
(24,244)
(139)
–
(139)
(24,244)
(24,383)
(1,833)
(9)
(1,842)
–
–
–
–
–
–
675,919
57,523
(721,130)
675,919
–
–
–
57,523
–
4,867
4,867
(721,130)
(8,877)
–
(8,877)
675,919
62,390
(730,007)
(1,833)
(9)
(1,842)
12,312
12,312
(8,877)
4,867
(4,010)
8,302
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
www.kingsgate.com.au
www.kingsgate.com.au
Consolidated Statement
of Cash Flows
For the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs paid
Net cash outflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payment of deposits
Refund of deposits
Net cash outflow from investing activities
Cash flows from financing activities
Payment of lease liability
Payments for share buy-backs
Payments for share buy-back expenses
Net cash outflow from financing activities
Net decrease in cash held
Cash at the beginning of the year
Effects of exchange rate on cash and cash equivalents
Cash at the end of the year
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
35
Financial Statements
Note
2021
$’000
2020
$’000
23
12,458
(15,190)
36
(1,726)
(4,422)
(3)
(1,402)
247
(1,158)
(86)
–
–
(86)
(5,666)
15,569
81
9,984
–
(23,570)
281
(1,148)
(24,437)
(2)
(2)
–
(4)
(89)
(1,833)
(9)
(1,931)
(26,372)
42,137
(196)
15,569
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Notes to the
Financial Statements
for the year ended 30 June 2021
The Financial Report of Kingsgate Consolidated
Limited (Kingsgate or the “Company”) for the
year ended 30 June 2021 was authorised for issue
in accordance with a resolution of Directors on
30 September 2021.
Kingsgate is a Company limited by shares incor-
porated in Australia whose shares are publicly
traded on the Australian Securities Exchange
using the ASX code KCN. The consolidated
financial statements of the Company as at and
for the year ended 30 June 2021 comprise the
Company and its subsidiaries (together referred
to as the “Group” and individually as “group
entities”). A description of the nature of the
Group’s operations and its principal activities
is included in the Directors’ Report.
1. Basis of preparation
These general purpose financial statements have
been prepared in accordance with the Australian
Accounting Standards, other authoritative
pronouncements of the Australian Accounting
Standards Board and the Corporations Act
2001. The Company is a for-profit entity for the
purpose of preparing the financial statements.
a.
Going concern and material
uncertainty
The financial statements have been prepared on
a going concern basis, which indicates conti-
nuity of business activities and the realisation of
assets and settlement of liabilities in the normal
course of business.
At 30 June 2021, the Group had $9,984,000
of available cash and has no cash generating
operations. The Group currently does not
have sufficient cash available to fully repay the
preference share liability of $11,046,000 which
if exercised by the preference shareholder is
repayable at the earliest on 30 July 2022. The
continued viability of the Group and its ability to
continue as a going concern and meet its debts
and commitments as they fall due is dependent
on the Group being successful in:
1. arbitral hearings under the Thailand-Australia
Free Trade Agreement (“TAFTA”) that relate
to the Thai Government’s premature closure
of the Chatree Gold Mine in 2016, or other
suitable negotiated settlement of this
matter with the Thai Government (“Chatree
Closure Remedies”), and/or
The Group has been negotiating with the
Thai Government with a view to a settlement
that could lead to a successful re-start of the
Chatree Gold Mine and provide the Group with
significant optionality with the asset which may
include continuing operations, selling the asset
or listing Akara on the Thai Stock Exchange.
2. the sale of the Group’s Nueva Esperanza
exploration project (“Nueva Esperanza
Sale”), and/or
3. extending the term of the exercise date
of the preferences shares should that be
required (“Extending Date of Preference
Shares”).
These matters are discussed further below.
As a result of these matters, there is a material
uncertainty that may cast significant doubt
on the Group’s ability to continue as a going
concern and, therefore, that it may be unable
to realise its assets and discharge its liabilities
in the normal course of business. However, the
directors believe that a combination of these
matters will be implemented and, accordingly,
have prepared the financial report on a going
concern basis. Accordingly no adjustments
have been made to the financial report relating
to the recoverability and classification of
the asset carrying amounts or the amounts
and classification of liabilities that might be
necessary should the Group not continue as a
going concern.
Chatree Closure Remedies
The arbitral hearings under the TAFTA took
place in Singapore in February 2020. The Group
has been advised that the arbitral tribunal is
now ready to issue the award after a lengthy
period of deliberations. The Group and the
Thai Government have jointly requested that
the arbitral tribunal holds the award until 31
October 2021, to allow the parties a short
extension to conclude their settlement
negotiations.
Nueva Esperanza Sale
In June 2021, Kingsgate signed a Letter of Intent
for the sale of Nueva Esperanza to TSXV listed
TDG Gold Corp (“TDG”). The consideration for
the transaction is a combination of cash and
equity (refer Note 3 iii for the details of the
offer).
The transaction is subject to the parties
entering into a legally binding agreement, as
well as certain conditions being met. These
conditions include board approval, due diligence,
and completion by TDG of a financing of at
least C$35,000,000. TDG is in the process of
completing this financing.
Extending Date of Preference Shares
Dependant on the timeframe to successfully
complete the above two matters, in the
event the preference share repayment right
is exercised, discussions will be held with the
preference shareholder for extending the earliest
potential date of conversion of this instrument
to beyond 30 July 2022.
b. Compliance with IFRS
The financial statements comply with
International Financial Reporting Standards
(“IFRS”) adopted by the International
Accounting Standards Board (“IASB”).
c. Historical cost convention
The financial statements have been prepared
under the historical cost convention, as
modified by the revaluation of available-for-sale
financial assets and financial instruments
(including derivative instruments) at fair value
through profit or loss. Comparative information
is reclassified where appropriate to enhance
comparability or in conformity with revised
standards and interpretations.
Notes to the Financial Statementswww.kingsgate.com.au 37
d.
Functional and presentation
currency
The financial statements of the Group entities
are measured using the currency of the
primary economic environment in which the
entity operates (“the functional currency”).
The consolidated statements are presented
in Australian dollars, which is the Company’s
functional currency and presentation currency.
e. Rounding of amounts
The Company is of a kind referred to in
ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191 and in
accordance with that instrument, amounts in
the Directors’ Report and Financial Report are
rounded to the nearest thousand dollars except
where otherwise indicated.
f. 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 3.
g. New and amended standards
Certain new accounting standards and
interpretations have been published that are not
mandatory for 30 June 2021 reporting periods
and have not been early adopted by the Group.
These standards are not expected to have a
material impact on the financial statements.
2. Significant accounting
policies
The principal accounting policies adopted in the
preparation of the financial statements are set
out below. These policies have been consistently
applied to all the years presented.
a. Principles of consolidation
(i)
Business combinations
Business combinations are accounted for using
the acquisition method as at the acquisition
date, which is the date on which control is
transferred to the Group. Control is the power
to govern the financial and operating policies
of an entity so as to obtain benefits from its
activities. In assessing control, the Group takes
into consideration potential voting rights that
currently are exercisable.
The consideration transferred for the acquisition
of a subsidiary comprises the fair value of the
assets transferred, the liabilities incurred and
the equity interests issued by the Group. The
consideration transferred does not include
amounts related to the settlement of a
pre-existing relationship. Such amounts are
generally recognised in profit or loss.
Costs related to the acquisition other than
those associated with the issue of debt or equity
securities, that the Group incurs in connection
with a business combination are expensed as
incurred. Any contingent consideration payable
is recognised at fair value at the acquisition date.
Acquisitions of non-controlling interests are
accounted for as transactions with owners
in their capacity as owners and therefore
no goodwill is recognised as a result of such
transactions. The non-controlling interest
in the acquiree is based on the fair value of
the acquiree’s net identifiable assets. The
adjustments to non-controlling interests are
based on the proportionate amount of the net
assets of the subsidiary. The acquisition of an
asset or group of assets that is not a business
is accounted for by allocating the cost of the
transaction to the net identifiable assets and
liabilities acquired based on their fair values.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group.
The Group controls an entity when the group
is exposed to, or has rights to, variable returns
from its involvement with the entity and has
the ability to affect those returns through its
power to direct the activities of the entity. The
financial statements of subsidiaries are included
in the consolidated financial statements from the
date that control commences until the date that
control ceases.
The accounting policies of subsidiaries have been
changed when necessary to align them with the
policies adopted by the Group. Losses applicable
to the non-controlling interests in a subsidiary
are allocated to the non-controlling interests
even if doing so causes the non-controlling
interests to have a deficit balance.
Intra-group balances and transactions, and
any unrealised gains arising from intra-group
transactions are eliminated in preparing the
consolidated financial statements. Unrealised
losses are also eliminated unless the transaction
provides evidence of the impairment of the asset
transferred.
b. Foreign currency translation
(i)
Transactions and balances
Foreign currency transactions are translated
into the respective functional currencies of the
Group entities at exchange rates on 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
they are deferred in equity as qualifying cash
flow hedges and qualifying net investment
hedges or, are attributable to part of the net
investment in a foreign operation.
Translation differences on assets and liabilities
carried at fair value are reported as part of the
fair value gain or loss. Translation differences
on non-monetary assets and liabilities such as
equities held at fair value through profit or loss
are recognised in profit or loss as part of the
fair value gain or loss. Translation differences
on non-monetary assets are included in the fair
value reserve in equity.
Exchange gains and losses which arise on
balances between Group entities are taken to
the foreign currency translation reserve where
the intra-group balances are in substance part
of the Group’s net investment. Where as a
result of a change in circumstances, a previously
designated intra-group balance is intended to be
settled in the foreseeable future, the intra-group
balance is no longer regarded as part of net
investment. The exchange differences for such
balance previously taken directly to the foreign
currency translation reserves are recognised in
the profit or loss.
(ii)
Foreign operations
The results and financial position of all the
Group entities (none of which has the currency
of a hyperinflationary economy) that have
a functional currency different from the
presentation currency are translated into the
presentation currency as follows:
〉 the assets and liabilities of the foreign
operations, including goodwill and fair value
adjustments arising on acquisition, are
translated at the year-end exchange rate;
〉 the income and expenses of foreign opera-
tions are translated at average exchange
rates (unless this is not a reasonable approxi-
mation of the cumulative effect of the rate
prevailing on the transaction dates, in which
case income and expenses are translated at
the dates of the transactions); and
〉 foreign currency differences are recognised in
other comprehensive income, and presented
in the foreign currency translation reserve.
continuedu
Notes to the Financial StatementsNotes to the Financial Statements 38
c. Revenue
The Group recognises revenue related to the
transfer of goods or services when control of the
goods or services passes to the customer.
Additional income tax expenses that arise from
the distribution of cash dividends are recognised
at the same time that the liability to pay the
related dividend is recognised.
Income tax
d.
Income tax expense comprises current and
deferred tax. Current tax and deferred tax is
recognised in profit or loss except to the extent
that it relates to a business combination, or
items recognised directly in equity or in other
comprehensive income.
Current tax is expected tax payable or receivable
on the taxable income or loss for the year using
tax rates enacted or substantively enacted at
the reporting date, and any adjustment to tax
payable in respect of previous years. Deferred
tax is provided using the liability method,
providing for temporary differences between
the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts
used for taxation purposes. The amount of
deferred tax provided is based on the expected
manner of realisation or settlement of the
carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at
the reporting date.
A deferred tax asset is recognised for unused
tax losses, tax credits and deductible temporary
differences, to the extent that it is probable
that future taxable profits will be available
against which they can be utilised. Deferred tax
assets are reviewed at each reporting date and
are reduced to the extent that it is no longer
probable that the related tax benefit will be
realised.
Deferred tax is not recognised for:
〉 temporary differences on the initial recog-
nition of assets or liabilities in a transaction
that is not a business combination and that
affects neither accounting nor taxable profit
or loss;
〉 temporary differences related to invest-
ments in subsidiaries where the Company is
able to control the timing of the reversal of
the temporary differences and it is probable
that they will not reverse in the foreseeable
future; and
〉 taxable temporary differences arising on the
initial recognition of goodwill.
Deferred tax assets and liabilities are offset
if there is a legally enforceable right to offset
current tax liabilities and assets and, they relate
to income taxes levied by the same tax authority
on the same taxable entity.
Tax consolidation
The Company and its wholly owned Australian
resident entities formed a tax-consolidation
group with effect from 1 July 2003 and are
therefore taxed as a single entity from that date.
The head entity within the tax-consolidation
group is Kingsgate Consolidated Limited.
Current tax expense or benefit, deferred tax
assets and deferred tax liabilities arising from
temporary differences of the members of the
tax-consolidation group are recognised in the
separate financial statements of the members
of the tax-consolidation group using the
“standalone taxpayer” approach by reference to
the carrying amounts in the separate financial
statements of each entity and the tax values
applying under tax consolidation.
Current tax assets or liabilities and deferred tax
assets arising from unused tax losses assumed
by the head entity from the subsidiaries in the
tax-consolidation group, are recognised as
amounts receivable or payable to other entities
in the tax-consolidation group in conjunction
with any tax funding agreement amounts.
The Company recognises deferred tax
assets arising from unused tax losses of the
tax-consolidation group to the extent that it
is probable that future taxable profits of the
tax-consolidation group will be available against
which the asset can be utilised.
Tax funding and sharing agreements
The members of the tax-consolidation group
have entered into a funding agreement that
sets out the funding obligations of members
of the tax-consolidation group in respect of tax
amounts. The tax funding arrangements require
payments to or from the head entity and any
deferred tax asset assumed by the head entity,
resulting in the head entity recognising an
intra-group receivable or payable in the separate
financial statements of the members of the
tax-consolidation group equal in amount to the
tax liability or asset assumed. The intra-group
receivables or payables are at call.
The head entity recognises the assumed current
tax amounts as current tax liabilities or assets
adding to its own current tax amounts, since
they are also due to or from the same taxation
authority. The current tax liabilities or assets
are equivalent to the tax balances generated
by external transactions entered into by the
tax-consolidated group.
The amounts receivable or payable under the
tax funding agreement are due upon receipt of
the funding advice from the head entity, which
is issued as soon as practicable after the end
of each financial year. The head entity may also
require payment of interim funding amounts to
assist with its obligations to pay tax instalments.
The members of the tax-consolidation group have
also entered into a tax sharing agreement. The tax
sharing agreement provides for the determination
of the allocation of income tax liabilities between
the entities should the head entity default on its
tax payment obligations. No amounts have been
recognised in the consolidated financial state-
ments in respect of this agreement as payment of
any amounts under the tax sharing agreement is
considered remote.
Uncertain tax position
An uncertain tax treatment is any tax treatment
applied by the Group where there is uncertainty
over whether that treatment will be accepted
by the tax authority. The Group is required to
determine the uncertainty over income tax
treatment by addressing the following:
〉 the Group determines whether uncertain tax
treatments should be considered separately,
or together as a group, depending on which
approach better predicts the resolution of
the uncertainty;
〉 the Group determines if it is probable that
the tax authorities will accept the uncertain
tax treatment; and if it is not probable that
the uncertain tax treatment will be accepted,
the Group reflects the effect of the uncer-
tainty in its income tax accounting in the
period in which that determination is made
(for example, by recognising an additional
tax liability or applying a higher tax rate);
〉 the Group measures the tax uncertainty
based on the most likely amount or expected
value, depending on whichever method
better predicts the resolution of the
uncertainty.
Based on the assessment completed by the
Group, there is no material tax uncertainty that
requires a tax liability to be recognised or that
requires a different tax rate to be applied.
e. Leases
Where the Group has entered into a lease contract
for the right to control the use of an asset over
the lease term, the present value of future lease
commitments is recognised as a liability on the
balance sheet at commencement date, with the
corresponding asset recognised as a right-of-use
asset.
Notes to the Financial Statementswww.kingsgate.com.au 39
The lease liability represents the present value of
the expected future lease payments, discounted
at the consolidated entity’s average incremental
borrowing rate.
The right of use assets are classified as leases of
property and are carried at cost less accumulated
depreciation and impairment loss. The assets are
amortised on a straight line basis over the shorter
of the asset’s useful life and the lease term.
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.
Impairment of assets
f.
Assets other than goodwill and indefinite life
intangible assets are tested for impairment
whenever events or changes in circumstances
indicate that the carrying amount may not be
recoverable. An impairment loss is recognised
for the amount by which the assets carrying
amount exceeds it recoverable amount. The
recoverable amount is the higher of an asset’s
fair value in use. For the purposes of assessing
impairment, assets are grouped at the lowest
levels for which there are separately identifiable
cash inflows which are largely independent of
the cash inflows from other assets or groups
of assets (cash-generating units). Non-financial
assets other than goodwill that suffered
impairment are reviewed for possible reversal of
the impairment at each reporting date.
g. Cash and cash equivalents
Cash and cash equivalents includes cash
on hand, deposits held at call with financial
institutions, other short-term, highly liquid
investments with original maturities of three
months or less that are readily convertible to
known amounts of cash and which are subject
to an insignificant risk of changes in value, and
bank overdrafts. Bank overdrafts are shown
within borrowings in current liabilities in the
statement of financial position.
h. Trade and other receivables
Trade and other receivables are recognised
initially at fair value and subsequently measured
at amortised cost using the effective interest
method, less provision for impairment. Receivables
are due for settlement no more than 90 days from
the date of recognition.
Collectability of trade and other receivables is
reviewed on an ongoing basis. The Group applies
the AASB 9 simplified approach to measuring
expected credit losses which uses a lifetime
expected loss allowance for all trade and other
receivables.
The amount of the impairment loss is recognised
in the income statement within other expenses.
When a trade and other receivable for which
an impairment allowance had been recognised
becomes uncollectible in a subsequent period,
it is written off against the allowance account.
Subsequent recoveries of amounts previously
written off are credited against other expenses
in the income statement.
Inventories
i.
Raw materials and stores, work in progress
and finished goods (including gold bullion), are
stated at the lower of cost and net realisable
value. Cost comprises direct materials, direct
labour and an appropriate proportion of variable
and fixed overhead expenditure, the latter being
allocated on the basis of normal operating
capacity. Costs are assigned to individual
items of inventory on the basis of weighted
average costs. Costs of purchased inventory
are determined after deducting rebates and
discounts. Net realisable value is the estimated
selling price in the ordinary course of business
less the estimated costs of completion and the
estimated costs necessary to make the sale.
Stockpiles represent ore that has been extracted
and is available for further processing. If there
is significant uncertainty as to whether the
stockpiled ore will be processed it is expensed
as incurred. Where the future processing of
this ore can be predicted with confidence, e.g.
because it exceeds the mine’s cut-off grade, it
is valued at the lower of cost and net realisable
value. If the ore will not be processed within
the 12 months after the reporting date, it is
included within non-current assets. Work in
progress inventory includes ore stockpiles and
other partly processed material. Quantities are
assessed primarily through surveys and assays,
and truck counts.
j. Non-derivative financial assets
Loans and receivables
Loans and receivables are non-derivative
financial assets with fixed or determinable
payments that are not quoted in an active
market. They are included in current assets,
except for those with maturities greater than
12 months after the reporting date which are
classified as non-current assets.
Loans and receivables are measured at
amortised cost using the effective interest
method, less any impairment losses.
k. Derivative financial instruments
Derivative financial instruments are used by the
Group to protect against the Group’s Australian
dollar gold price risk exposures. The Group does
not apply hedge accounting and accordingly
all fair value movements on derivative financial
instruments are recognised in the profit or loss.
Derivative financial instruments are stated at
fair value on the date a derivative contract is
entered into and are subsequently remeasured
to their fair value at each reporting date. The
resulting gain or loss is recognised in the income
statement immediately.
l. Property, plant and equipment
Property, plant and equipment are stated at
historical cost less depreciation. Historical cost
includes expenditure that is directly attributable
to the acquisition of the items.
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 the income statement during the reporting
period in which they are incurred.
Depreciation
Depreciation and amortisation of mine
buildings, plant, machinery and equipment is
provided over the assessed life of the relevant
mine or asset, whichever is the shorter.
Depreciation and amortisation is determined on
a units-of-production basis over the estimated
recoverable reserves from the related area.
In some circumstances, where conversion
of resources into reserves is expected, some
elements of resources may be included. For mine
plant, machinery and equipment, which have an
expected economic life shorter than the life of
the mine, a straight line basis is adopted.
The expected useful lives are as follows:
〉 mine buildings – the shorter of applicable
mine life and 25 years;
〉 plant, machinery and equipment – the
shorter of applicable mine life and 3–15 years
depending on the nature of the asset.
The estimated recoverable reserves and life of
each mine and the remaining useful life of each
class of asset are reassessed at least annually.
Where there is a change in the reserves during
the period, depreciation and amortisation rates
are adjusted prospectively from the beginning of
the reporting period.
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 40
l. Property, plant and equipment continued
Major spares purchased specifically for a
particular plant are capitalised and depreciated on
the same basis as the plant to which they relate.
Impairment
An asset’s carrying amount is written down
immediately to its recoverable amount if the
asset’s carrying amount is greater than its
estimated recoverable amount (Note 2f).
Derecognition
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from
the continued use of the asset.
Any gain or loss arising on derecognition of the
asset (calculated as the difference between the
net disposal proceeds and the carrying amount
of the item) is included in the profit or loss in the
period the item is derecognised.
m. Deferred stripping costs
As part of its mining operations, the Group
incurs stripping (waste removal) costs both
during the development phase and production
phase of its operations.
Stripping costs incurred during the production
phase are generally considered to create
two benefits, being either the production of
inventory in the period or improved access to
the ore to be mined in the future. Where the
benefits are realised in the form of inventory
produced in the period, the production stripping
costs are accounted for as part of the cost of
producing those inventories. Where production
stripping costs are incurred and the benefit is
improved access to the ore to be mined in the
future, the costs are recognised as a non-current
asset, referred to as a “production stripping
asset”, if the following criteria are all met:
〉 future economic benefits (being improved
access to the ore body) associated with the
stripping activity are probable;
〉 the component of the ore body for which
access has been improved can be accurately
identified; and
〉 the costs associated with the stripping
activity associated with that component can
be reliably measured.
The amount of stripping costs deferred is based
on the ratio obtained by dividing the volume
of waste mined by the volume of ore mined for
each component of the mine. Stripping costs
incurred in the period are deferred to the extent
that the actual current period waste to ore ratio
exceeds the life of component expected waste
to ore (“life of component”) ratio.
A component is defined as a specific volume of
the ore body that is made more accessible by
the stripping activity. An identified component
of the ore body is typically a subset of the total
ore body of the mine. It is considered that each
mine may have several components, which are
identified based on the mine plan. The mine
plans and therefore the identification of specific
components will vary between mines as a result
of both the geological characteristics and location
of the ore body. The financial considerations
of the mining operations may also impact the
identification and designation of a component.
The identification of components is necessary
for both the measurement of costs at the
initial recognition of the production stripping
asset, and the subsequent depreciation of the
production stripping asset.
The life of component ratio is a function of an
individual mine’s design and therefore changes
to that design will generally result in changes
to the ratio. Changes in other technical or
economic parameters that impact reserves will
also have an impact on the life of component
ratio even if they do not affect the mine’s
design. Changes to the life of component ratio
are accounted for prospectively from the date
of change.
The production stripping asset is initially
measured at cost, which is the accumulation of
costs directly incurred to perform the stripping
activity that improves access to the identified
component of ore. If incidental operations are
occurring at the same time as the production
stripping activity, but are not necessary for the
production stripping activity to continue as
planned, these costs are not included in the
cost of the stripping activity asset.
The production stripping asset is amortised
over the expected useful life of the identified
component of the ore body that is made
more accessible by the activity, on a units of
production basis. Economically recoverable
reserves are used to determine the expected
useful life of the identified component of the
ore body. The production stripping asset is then
carried at cost less accumulated amortisation
and any impairment losses.
The production stripping asset is included in
“Exploration, Evaluation and Development”.
These costs form part of the total investment
in the relevant cash generating unit to which
they relate, which is reviewed for impairment
in accordance with the Group’s impairment
accounting policy (Note 2f).
n.
Exploration, evaluation and
feasibility expenditure
Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred
by, or on behalf of the Group is accumulated
separately for each area of interest. Such
expenditure comprises direct costs and depre-
ciation and does not include general overheads
or administrative expenditure not having a
specific nexus with a particular area of interest.
Exploration expenditure for each area of interest
is carried forward as an asset provided the rights
to tenure of the area of interest are current and
one of the following conditions is met:
〉 the exploration and evaluation expenditures
are expected to be recouped through
successful development and exploitation
of the area of interest, or alternatively by
its sale; or
〉 exploration and evaluation activities in the
area of interest have not at the reporting
date reached a stage which permits a
reasonable assessment of the existence
or otherwise of economically recoverable
reserves, and active and significant opera-
tions in, or in relation to, the area of interest
are continuing.
Exploration expenditure is written off when
it fails to meet at least one of the conditions
outlined above or an area of interest is
abandoned. The carrying value of exploration
and evaluation assets is assessed in accordance
with AASB 6 Exploration for and Evaluation of
Mineral Resources and the Group’s impairment
policy (Note 2f).
Feasibility expenditure
Feasibility expenditure represents costs related
to the preparation and completion of a feasi-
bility study to enable a development decision
to be made in relation to an area of interest and
capitalised as incurred.
At the commencement of production; all
past exploration, evaluation and feasibility
expenditure in respect of an area of interest
that has been capitalised is transferred to mine
properties where it is amortised over the life
of the area of interest to which it relates on a
unit-of-production basis.
o. Mine properties
Mine properties represents the accumulated
exploration, evaluation, land and development
expenditure incurred by or on behalf of the
Group in relation to areas of interest in which
mining of a mineral resource has commenced.
Notes to the Financial Statementswww.kingsgate.com.au 41
When further development expenditure
is incurred in respect of a mine property
after commencement of production, such
expenditure is carried forward as part of the
mine property only when substantial future
economic benefits are thereby established.
Otherwise, such expenditure is classified as part
of the cost of production.
Amortisation of costs is provided on the units-
of-production method with separate calculations
being made for each component. The units-of-
production basis results in an amortisation charge
proportional to the depletion of the estimated
recoverable reserves. In some circumstances,
where conversion of resources into reserves is
expected, some elements of resources may be
included. Development and land expenditure
still to be incurred in relation to the current recov-
erable reserves are included in the amortisation
calculation. Where the life of the assets is shorter
than the mine life, their costs are amortised based
on the useful life of the assets.
The estimated recoverable reserves and life of
each mine and the remaining useful life of each
class of asset are reassessed at least annually.
Where there is a change in the reserves during a
six month period, depreciation and amortisation
rates are adjusted prospectively from the
beginning of that reporting period.
p. Trade and other payables
Trade and other payables represent liabilities for
goods and services provided to the Group prior
to the end of the financial year which are unpaid.
The amounts are unsecured and are usually paid
within 30 days of recognition.
q. Borrowings
Borrowings are initially recognised at fair value,
net of transaction costs incurred. Borrowings
are subsequently measured at amortised cost.
Any difference between the proceeds (net of
transaction costs) and the redemption amount
is recognised in the profit or loss over the period
of the borrowings using the effective interest
method. Fees paid on the establishment of loan
facilities are recognised as transaction costs to
the extent that it is probable that some or all of
the facility will be drawn down. In this case, the
fee is deferred until the drawdown occurs. To the
extent there is no evidence that it is probable
that some or all of the facility will be drawn
down, the fee is capitalised and amortised over
the period of the facility to which it relates.
Preference shares which are mandatorily
redeemable on a specific date are classified as
liabilities. The dividends on these preference shares
are recognised in the profit or loss as finance costs.
Borrowings are removed from the statement of
financial position when the obligation specified
in the contract is discharged, cancelled or
expired. The difference between the carrying
amount of a financial liability that has been
extinguished or transferred to another party and
the consideration paid, including any non-cash
assets transferred or liabilities assumed, is
recognised in other income or finance costs.
Borrowings are classified as current liabilities
unless the Group has an unconditional right
to defer settlement of the liability for at least
twelve months after the reporting date.
r. Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of
qualifying assets are added to the cost of
those assets, until such time as the assets are
substantially ready for their intended use.
Where the funds used to finance a qualifying
asset form part of general borrowings, the
amount capitalised is calculated using a weighted
average of rates applicable to the relevant
borrowings during the period. Where funds
borrowed are directly attributable to a qualifying
asset, the amount capitalised represents the
borrowing costs specific to those borrowings.
period based on current legal and other
requirements and technology, discounted where
material using national government bond rates
at the reporting date with terms to maturity and
currencies that match, as closely as possible, the
estimated future cash outflows.
Where there is a change in the expected
restoration, rehabilitation or decommissioning
costs, an adjustment is recoded against the
carrying value of the provision and any related
restoration asset, and the effects are recognised
in the income statement on a prospective basis
over the remaining life of the operation.
The unwinding of the effect of discounting on
the rehabilitation provision is included within
finance costs in the income statement.
Costs incurred that relate to an existing condition
caused by past operations, but do not have a
future economic benefit are expensed as incurred.
u. Employee benefits
All other borrowing costs are recognised as
expenses in the period in which they are incurred.
(i)
Wages and salaries, annual leave
and sick leave
s. Provisions
Provisions for legal claims are recognised when
the Group has a present legal or constructive
obligation as a result of past events, it is
probable that an outflow of resources will be
required to settle the obligation and the amount
has been reliably estimated. Provisions are not
recognised for future operating losses.
Where there are a number of similar obligations,
the likelihood that an outflow will be required
in settlement is determined by considering the
class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow
with respect to any one item included in the
same class of obligations may be small.
Provisions are measured at the present value of
management’s best estimate of the expenditure
required to settle the present obligation at
the reporting date. The discount rate used to
determine the present value reflects current
market assessments of the time value of money
and the risks specific to the liability. The increase
in the provision due to the passage of time is
recognised as finance costs.
t.
Restoration and rehabilitation
provision
The estimated costs of decommissioning and
removing an asset and restoring the site are
included in the cost of the asset at the date the
obligation first arises and to the extent that it is
first recognised as a provision. This restoration
asset is subsequently amortised on a units-of-
production basis.
The corresponding provision of an amount
equivalent to the restoration asset created is
reviewed at the end of each reporting period.
The provision is measured at the best estimate
of present obligation at the end of the reporting
Liabilities for wages and salaries (including
non-monetary benefits and annual leave)
expected to be settled within 12 months of
the reporting date are recognised in provisions
for employee benefits in respect of employees’
services up to the reporting date and are
measured at the amounts expected to be paid
when the liabilities are settled. Liabilities for sick
leave are recognised when the leave is taken and
are measured at the rates paid or payable.
(ii)
Long service leave and severance pay
The liability for long service leave and severance
pay is recognised in the provision for employee
benefits and measured as the present value
of expected future payments to be made in
respect of services provided by employees up
to the reporting date. Consideration is given
to the expected future wage and salary levels,
experience of employee departures and periods
of service. Expected future payments are
discounted using market yields at the reporting
date on corporate bonds with terms to maturity
and currency that match, as closely as possible,
the estimated future cash outflows.
The obligations are presented as current
liabilities in the balance sheet if the entity
does not have an unconditional right to defer
settlement for at least twelve months after the
reporting period, regardless of when the actual
settlement is expected to occur.
(iii) Cash bonuses
Cash bonuses are expensed in the income
statement at reporting date.
A liability is recognised for the amount expected
to be paid if the Group has a present legal or
constructive obligation to pay this amount as a
result of past service provided by the Directors
or employees and the obligation can be
estimated reliably.
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 42
u. Employee benefits continued
(iv) Retirement benefit obligations
Defined Contribution plan
Contributions to defined contribution superan-
nuation plans are recognised as an expense in
the income statement as they become payable.
Defined benefit plan
The Company’s Thai subsidiary, Akara Resources
Public Company Limited, have a defined benefit
plan which is the amount of pension benefit that
an employee will receive on retirement, usually
dependent on one or more factors such as age,
years of service and compensation.
Retirement benefit
Under labour laws applicable in Thailand,
employees completing 120 days of service are
entitled to severance pay on termination or
retrenchment without cause or upon retirement
age of 60. The severance pay will be at the rate
according to number of years of service as
stipulated in the Labour Law which is currently
at a maximum rate of 400 days of final salary.
The liability recognised in the statement of
financial position in respect of defined benefit
pension plans is the present value of the
defined benefit obligation at the end of the
reporting period, together with adjustments for
unrecognised past-service costs. The defined
benefit obligation is calculated annually using
the projected unit credit method. The present
value of the defined benefit obligation is
determined by discounting the estimated future
cash outflows using market yield of government
bonds that are denominated in the currency in
which the benefits will be paid, and that have
terms to maturity approximating to the terms of
the related pension liability.
(v) Share-based payment transactions
The Group provides benefits to employees
(including Directors) in the form of share-based
payments, whereby employees render services
in exchange for shares or rights over shares
(“equity settled transactions”).
The fair value of these equity settled transac-
tions is recognised as an employee benefit
expense with a corresponding increase in equity.
The fair value is measured at grant date and
recognised over the period during which the
employees become unconditionally entitled.
The fair value at grant date is determined using
a pricing model that takes into account the
exercise price, the term, the share price at the
grant date, the expected price volatility of the
underlying share, the expected dividend yield
and the risk free interest rate.
Upon the exercise of the equity settled reward,
the related balance of the share-based payments
reserve is transferred to share capital.
v. Dividends
Dividends are recognised as a liability in the
period in which they are declared.
w. Earnings per share
(i)
Basic earnings per share
Basic earnings per share is calculated by dividing:
〉 the profit attributable to owners of the
Company, excluding any costs of servicing
equity other than ordinary shares; and
〉 by the weighted average number of ordinary
shares outstanding during the financial year,
adjusted for bonus elements in ordinary
shares issued during the year and excluding
treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjust 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
〉 by the weighted average number of
additional ordinary shares that would have
been outstanding assuming the conversion
of all dilutive potential ordinary shares.
x. Contributed equity
Issued ordinary share capital is classified as
equity and is recognised at the fair value of
the consideration received by the Group.
Incremental costs directly attributable to the
issue of shares and share options are recognised
as a deduction, net of tax from the proceeds.
y. 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 statement of
financial position.
Cash flows are presented on a gross basis.
The GST components of the cash flows arising
from investing or financing activities which are
recoverable from, or payable to the taxation
authority, are presented as operating cash flows.
Commitments and contingencies are disclosed
net of the amount of GST recoverable from, or
payable to, the taxation authority.
z. Operating and segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision maker. The chief
operating decision maker, who is responsible for
allocating resources and assessing performance
of the operating segments, has been identified
as the Board of Directors.
Segment results that are reported to the Board
of Directors include items directly attributable
to a segment as well as those that can be
allocated on a reasonable basis. The operating
segments are disclosed in Note 4.
aa. New accounting standards
and interpretations
The Group has not elected to early adopt any
new standards, amendments or interpretations
that are issued but are not yet effective. Certain
new accounting standards and interpretations
have been published that are not mandatory for
30 June 2021 reporting periods and have not yet
been applied in the financial statements.
bb. Parent entity financial information
The financial information for the parent entity
Kingsgate Consolidated Limited, disclosed in
Note 30 has been prepared on the same basis
as the consolidated financial statements except
as set out below:
Investments in subsidiaries
Investments in subsidiaries are accounted for at
cost in the financial statements of Kingsgate.
Share-based payments
The issue by the Company of equity instru-
ments to extinguish liabilities of a subsidiary
undertaking in the Group is treated as a capital
contribution to that subsidiary undertaking.
cc. Rounding of amounts
The Company is of a kind referred to in ASIC
Legislative Instrument 2016/191, relating to
the ‘rounding off’ of amounts in the financial
statements. Amounts in the financial state-
ments have been rounded off in accordance with
the instrument to the nearest thousand dollars,
or in certain cases, the nearest dollar.
Notes to the Financial Statementswww.kingsgate.com.au 3. Critical accounting
estimates, assumptions
and judgements
Estimates and judgements are continually
evaluated and are based on historical experience
and other factors, including expectation of
future events that may have a financial impact
on the Group and that are believed to be
reasonable under the circumstances. The Group
makes estimates and assumptions concerning
the future. Actual results may differ from these
estimates under different assumptions and
conditions. The estimates and assumptions that
could materially affect the financial position and
results are discussed below:
(i)
Uncertainty in relation to Chatree
Gold Mine assets and liabilities
As noted in the Directors’ Report, following
a decision made by the Thai Government,
the Chatree Gold Mine ceased operations on
31 December 2016 when it was placed on Care
and Maintenance effective 1 January 2017.
The Group commenced arbitral proceedings
against the Kingdom of Thailand under the
Thailand-Australia Free Trade Agreement in order
to be compensated for the losses it has incurred
as a result of the expropriation of the Chatree
Gold Mine by the Thai Government.
In preparing the consolidated financial state-
ments of the Group all mine related assets of the
Chatree Gold Mine have been written down to
nil value (an impairment charge of $227,564,000
was recorded against the Group’s carrying value
of Chatree Gold Mine assets in the year ended
30 June 2016).
In respect of rehabilitation liabilities, during the
financial year ending 30 June 2017, the Group
revised its previous estimates and reduced its
total rehabilitation liability to $14,955,000.
This was based on management’s rehabilitation
plan which is a revision from the initial plan
submitted to the Thai Authorities in 2007.
Management still believes the revised plan will
be commercially viable, cost effective and will
meet all obligations in the context of the early
mine closure that has been imposed on the
Group with the overall objective to leave the site
in a safe and stable condition that is consistent
with the surrounding physical environment,
be of benefit to the local community, and not
require significant ongoing maintenance.
The future of the Chatree Gold Mine remains
unclear and there is a significant uncertainty
around the carrying values of assets and
liabilities. The ultimate impact on the Group’s
financial position will depend on the sale of
plant and equipment and non-strategic land and
property and outcomes from discussions with
the Thai Government, including:
〉 agreeing on a rehabilitation plan, costing
and timing in the context of the early mine
closure;
〉 potential re-opening of the mine if permitted
by the Thai Government; and
〉 pursuing available legal and other avenues
for compensation including action for
damages against the Thai Government.
The Group has considered the status of its discus-
sions with the Thai Government and the status
of its legal process against the Thai Government
and has concluded that the position adopted
for financial reporting purposes and described
above reflects a prudent approach in respect
of its assets and liabilities including potential
contingent assets and liabilities. At balance sheet
date, the Group has considered that it was not
appropriate to record a reversal of any impairment
previously recognised.
(ii) Restoration and rehabilitation
provision
Significant estimates and assumptions are
required in determining the provision for mine
rehabilitation as there are many transactions
and other factors that will affect the ultimate
liability payable to rehabilitate the mine sites.
Factors that will affect this liability include
changes in technology, changes in regulations,
price increases, changes in timing of cash flows
which are based on life of mine plans and changes
in discount rates. When these factors change or
become known in the future, such differences will
impact the mine rehabilitation provision in the
period in which they change or become known.
As noted above, the provision that has been
recorded by the Group is based on a rehabilitation
plan which is a revision from the initial plan
submitted to the Thai Authorities in 2007. This
plan takes into account the premature closure of
the mine by the Thai Government. Considering
the Group’s current legal dispute with the Thai
Government, the Group has not been able to have
meaningful discussions with the relevant Thai
Authorities to determine if the restoration plan
prepared by the Group will be approved.
The restoration plan and estimated costs cannot
effectively be finalised until after the Group’s legal
dispute with the Thai Government is settled.
(iii) Impairment of non-current
assets – exploration, evaluation
and development assets Nueva
Esperanza
At 30 June 2019, the recoverable amount of the
Nueva Esperanza Gold/Silver Project CGU was
determined to be $27,509,000 resulting in an
impairment loss of $33,436,000. Significant
judgements and assumptions were required in
making estimates of the recoverable amounts.
The Group has assessed if impairment indicators
existed as at 30 June 2021 and determined that
it was not necessary to formally estimate the
recoverable amount of the CGU as no indication
of an impairment loss was identified as a result
of that assessment, in accordance with the
Group’s accounting policy.
43
The Group also assessed whether changes
in estimates used to determine the asset’s
recoverable amount since the last impairment
loss was recognised, existed as at 30 June 2021
and whether such changes in estimates would
require reversal of impairment. The Group
determined that no such changes in estimates
were identified.
In reaching these conclusions, the Group
considered both external and internal factors
relevant to the CGU, including but not limited to:
〉 Kingsgate announced on 30 June 2021 that
it has signed a non-binding Letter of Intent
(“LOI”) with TSXV listed TDG Gold Corp
(“TDG”) outlining terms for the acquisition
of the Company’s Nueva Esperanza advanced
gold-silver exploration and development
project, located in the Maricunga Belt of
the Atacama Region of Northern Chile.
The consideration for the transaction is a
combination of cash and shares as follows:
〉 C$25 million cash payable to Kingsgate
upon completion of the transaction1;
〉 Kingsgate will be issued 14.0% of TDG’s
outstanding common shares calculated
on a post-closing basis (inclusive of any
shares issued in a concurrent financing
and with an option to increase the
holding up to 19.9%);
〉 C$6.25 million is payable to Kingsgate
within three months of completion of
a Definitive Feasibility Study;
〉 a payment of C$5 million or 10 million
TDG shares at their discretion to be
issued at the point of a construction
decision;
〉 a payment of C$5 million or 10 million
in TDG shares at their discretion at the
one-year production anniversary;
〉 a payment of C$8.75 million at the
two-year production anniversary;
Subject to balance sheet adjustments, which are
normal under a transaction of this type.
1
〉 Kingsgate’s market capitalisation;
〉 unsolicited expressions of interest received
to date to invest in the project;
〉 updates to the project including the
five-year extension to the water rights and
the approval of the Environmental Impact
Assessment (“RCA-64/20”); and
〉 the sustained high gold and silver prices
Although, the Group notes that the sale of
Nueva Esperanza Gold/Silver Project based
on the LOI with TDG indicates an aggregate
consideration exceeding the current net carrying
value of the project assets and liabilities, there is
no guarantee that this transaction will proceed.
On that basis, the Directors have deemed that
it would be prudent not to increase the carrying
value of the project.
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 44
4. Segment information
The Group’s operating segments are based on the internal management reports that are reviewed and used by the Board of Directors (chief operating
decision maker). The operating segments represent the Group’s mine under care and maintenance and project and include the following:
〉 Chatree Gold Mine, Thailand; and
〉 Nueva Esperanza Gold/Silver Project, Chile.
Information regarding the results of each reportable segment is included as follows:
2021
External sales revenue
Other income/(expense)
Total segment income
Segment EBITDA
Depreciation and amortisation
Segment result
Finance income
Finance costs
Net finance costs
Loss before tax
Other segment information
Segment assets
Segment liabilities
Net assets/(liabilities)
1
includes foreign exchange loss of $3,875,000 for the Group.
2020
Other income/(expense)
Total segment income
Segment EBITDA
Depreciation and amortisation
Segment result
Finance income
Finance costs
Net finance costs
Loss before tax
Other segment information
Segment assets
Segment liabilities
Net assets/(liabilities)
1
includes foreign exchange gain of $152,000 for the Group.
Care and
Maintenance
Chatree
$’000
Nueva
Esperanza
$’000
Corporate
$’000
12,339
69
12,408
7,271
–
7,271
–
(1)
(1)
(4,167)
(101)
(4,268)
–
50
50
(10,519)1
(11)
(10,530)
Total
$’000
12,339
118
12,457
(7,415)
(112)
(7,527)
36
(1,386)
(1,350)
(8,877)
2,523
(27,346)
(24,823)
31,054
(8,067)
22,987
11,110
(972)
10,138
44,687
(36,385)
8,302
24
24
(2,732)
(55)
(2,787)
(54)
(54)
(4,692)
(127)
(4,819)
106
106
76
76
(15,358)1
(32)
(22,782)
(214)
(15,390)
(22,996)
281
(1,529)
(1,248)
(24,244)
51,546
(39,234)
12,312
2,406
(31,368)
(28,962)
34,039
(6,281)
27,758
15,101
(1,585)
13,516
Notes to the Financial Statementswww.kingsgate.com.au 5. Revenue and expenses
a. Sales revenue
Gold sales
Silver sales
Total sales revenue
b. Cost of sales
Royalties
Refining and transportation costs
Total cost of sales
c. Corporate and administration expenses
Administration
Statutory and professional fees
Depreciation
Total corporate and administration expenses
d. Other income and expenses
Net loss on sale of fixed assets
Other revenue
Total other income and expenses
e. Finance costs
Interest and finance charges
Total finance costs
f. Depreciation and amortisation
Property, plant and equipment
Right-of-use assets
Total depreciation and amortisation expenses
Included in:
Care and maintenance expenses
Corporate depreciation
g. Employee benefits expenses
Included in:
Care and maintenance expenses
Corporate and administration expenses
Total employee benefits expenses
h. Other items
Short-term and low value lease expenses
Total other items
45
2021
$’000
2020
$’000
11,290
1,049
12,339
1,576
53
1,629
4,299
4,078
112
8,489
(1)
119
118
1,386
1,386
26
86
112
–
112
697
1,726
2,423
286
286
–
–
–
–
–
–
5,439
10,711
159
16,309
(44)
120
76
1,529
1,529
125
89
214
55
159
1,073
1,954
3,027
230
230
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 46
5. Revenue and expenses continued
i. Settlement of Political Risk Insurance claim
In March 2019, Kingsgate settled a Political Risk Insurance claim against Zurich Insurance Australia Ltd, and other named insurers. The settlement consisted of:
〉 A cash payment of US$55,000,000 (A$76,319,000) received in April 2019;
〉 A requirement for the Insurers to contribute up to US$3,500,000 of future costs towards the Australia Thailand Free Trade Agreement (TAFTA)
Arbitration. During this financial year, the Insurers agreed to contribute another $750,000. The Insurers funding contribution will be paid on a pro-rata
basis with Kingsgate; and
〉 A sharing arrangement between Kingsgate and the Insurers for future distributions of TAFTA Claim proceeds. The Insurers are only entitled to the amount
of their original financial contribution including interest – Kingsgate keeps any TAFTA Claim proceeds in excess of that contribution. The insurers will be
repaid either from the proceeds received from the arbitral ruling, the proceeds received from a potential sale of the Chatree Gold Project or from surplus
operating cash flow if the Chatree Gold Project is restarted.
Legal expenditure amounting to $613,000 (2020: 1,321,000) have been recorded in the statement of profit and loss and other comprehensive income during
the year ended 30 June 2021.
6. Income tax
a)
Income tax expense
Current tax
Deferred tax
Total income tax expense
Deferred tax expense included in income tax expense comprises:
Decrease/(increase) in deferred tax assets
(Decrease)/increase in deferred tax liabilities
Deferred tax
b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss before income tax
Tax at Australian rate of 30%
Tax effect of amounts not deductible/assessable in calculating taxable income
Non-deductible expenses
Non-assessable unrealised foreign exchange gain
Non-deductible interest expense to preference shareholders
Non-assessable other revenue
Tax losses not brought to account
Income tax expense
c) Tax recognised in other comprehensive income
Foreign exchange losses recognised directly in foreign currency translation reserves
Total tax recognised in other comprehensive income
d) Deferred tax liabilities offset
Deferred tax assets amounting to $9,235,000 (2020: $17,535,000) have been offset against deferred tax liabilities.
2021
$’000
2020
$’000
–
–
–
8,300
(8,300)
–
(8,877)
(2,663)
624
(2,653)
414
(15)
4,293
–
–
–
–
–
–
(1,550)
1,550
–
(24,244)
(7,273)
3,230
(387)
459
(15)
3,986
–
–
–
Notes to the Financial Statementswww.kingsgate.com.au 47
2021
$’000
2020
$’000
327,239
16,618
343,857
100,194
317,528
12,161
329,689
96,8541
e) Unrecognised deferred tax assets and tax liabilities
Tax losses – Australian entities
Tax losses – other entities
Subtotal
Unrecognised deferred tax assets
1
Amount excludes potential deductible temporary differences in respect of Akara relating to impairment charge recognised in previous year. It is not probable that there will
be sufficient future assessable income available against which this deferred tax asset could be utilised.
f) Tax consolidation group
Kingsgate Consolidated Limited and its wholly owned Australian subsidiary have implemented the tax consolidation legislation as of 1 July 2003.
The accounting policy in relation to this legislation is set out in Note 2d.
On adoption of the tax consolidation legislation, the entities in the tax-consolidation group entered into a tax sharing agreement which, in the opinion of
the Directors, limits the joint and several liabilities of the wholly owned entities in the case of default by the head entity, Kingsgate Consolidated Limited.
The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate Kingsgate for any current tax payable
assumed and are compensated for any current tax receivable and deferred assets relating to the unused tax losses or unused tax credits that are transferred
to Kingsgate under the tax legislation. The funding amounts are determined by reference to the amounts recognised in the wholly owned entities’ financial
statements.
The amount receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as
practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax
instalments.
g)
Recognised deferred tax assets
and liabilities
Deferred tax assets/(liabilities)
Employee benefits
Unrealised exchange losses/(gains)
Other items
Financial assets
Tax losses
Total deferred tax assets/(liabilities)
Set off tax
Net deferred tax assets/(liabilities)
Deferred tax assets/(liabilities) expected to be recovered
within 12 months
Deferred tax assets/(liabilities) expected to be recovered
after more than 12 months
Total deferred tax assets/(liabilities)
Assets
Liabilities
Net
2021
$’000
50
4,171
150
321
4,543
9,235
(9,235)
–
–
9,235
9,235
2020
$’000
47
8,249
98
321
8,820
17,535
(17,535)
–
–
2021
$’000
–
(9,235)
–
–
–
(9,235)
9,235
–
–
2020
$’000
–
(17,535)
–
–
–
(17,535)
17,535
–
–
17,535
17,535
(9,235)
(9,235)
(17,535)
(17,535)
2021
$’000
50
(5,064)
150
321
4,543
–
–
–
–
–
–
2020
$’000
47
(9,286)
98
321
8,820
–
–
–
–
–
–
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 48
6. Income tax continued
h) Movement in deferred tax balances
2021
Deferred tax assets/(liabilities):
Employee benefits
Unrealised exchange losses
Other items
Financial assets
Tax losses
Net deferred tax assets/(liabilities)
2020
Deferred tax assets/(liabilities):
Employee benefits
Unrealised exchange losses
Other items
Financial assets
Tax losses
Net deferred tax assets/(liabilities)
7. Cash and cash equivalents
Cash on hand
Deposits at call
Total cash and cash equivalents
Balance at
1 July
$’000
Recognised in
profit or loss
$’000
Balance at
30 June
$’000
47
(9,286)
98
321
8,820
–
54
(8,508)
491
321
7,642
–
3
4,222
52
–
(4,277)
–
(7)
(778)
(393)
–
1,178
–
2021
$’000
8
9,976
9,984
50
(5,064)
150
321
4,543
–
47
(9,286)
98
321
8,820
–
2020
$’000
8
15,561
15,569
Cash on hand
Deposits at call
Risk exposure
These are petty cash balances held by
subsidiaries.
These deposits are at call, interest bearing and
may be accessed daily.
The Group’s exposure to interest rate risk and
a sensitivity analysis for financial assets and
liabilities are disclosed in Note 26.
8. Receivables
Current
Legal fees receivable in respect of the Political Risk Insurance claim
Other debtors
Total receivables – current
Other debtors
Other debtors relate to GST/VAT receivables.
Risk exposure
The Group’s exposure to credit and currency risks are disclosed in Note 26.
2021
$’000
825
198
1,023
2020
$’000
–
294
294
Notes to the Financial Statementswww.kingsgate.com.au 49
2021
$’000
2020
$’000
365
206
571
8,133
1,357
9,490
359
13
372
8,879
503
9,382
9. Other assets
Current
Prepayments
Other deposits
Total other assets – current
Non-current
Prepayments
Other deposits
Total other assets – non-current
Prepayments
Non-current prepayments include prepaid royalties and water rights in respect of the Nueva Esperanza Gold/Silver Project in Chile.
10. Property, plant and equipment
At 1 July
Cost
Accumulated depreciation and amortisation
Accumulated impairment
Net book amount
Year ended 30 June
Opening net book amount
Additions
Disposals
Depreciation and amortisation expense
Foreign currency differences
Closing net book amount
At 30 June
Cost
Accumulated depreciation and amortisation
Accumulated impairment
Net book amount
11. Right-of-use assets and lease liabilities
Amounts recognised in the consolidated statement of financial position:
Right-of-use assets
Property
Lease liabilities
Current
Non-current
2021
$’000
2020
$’000
299,166
(114,816)
(184,260)
296,346
(111,341)
(184,260)
90
745
90
3
(1)
(26)
(15)
51
745
2
(557)
(125)
25
90
264,194
(79,883)
(184,260)
299,166
(114,816)
(184,260)
51
90
2021
$’000
2020
$’000
104
83
20
190
86
103
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 50
11. Right-of-use assets and lease liabilities continued
Future lease payments in relation to lease liabilities as at year end are as follows:
Within one year
Later than one year but not later than five years
Depreciation of right-of-use assets:
2021
$’000
2020
$’000
89
22
89
111
The depreciation and amortisation disclosed in the consolidated statement of profit or loss includes the following
amount for right-of-use assets:
Property (Note 5f)
86
89
12. Exploration, evaluation and development
Exploration &
evaluation
$’000
Feasibility
expenditure
$’000
Mine
properties
$’000
Total
$’000
At 30 June 2019
Cost
Accumulated depreciation and amortisation
Accumulated impairment
Net book amount
Year ended 30 June 2020
Opening net book amount
Foreign currency exchange differences
Closing net book amount
At 30 June 2020
Cost
Accumulated depreciation and amortisation
Accumulated impairment
Net book amount
Year ended 30 June 2021
Opening net book amount
Foreign currency exchange differences
Closing net book amount
At 30 June 2021
Cost
Accumulated depreciation and amortisation
Accumulated impairment
Net book amount
39,991
–
(39,991)
87,449
–
(63,091)
404,898
(114,066)
(289,871)
532,338
(114,066)
(392,953)
–
24,358
961
25,319
–
–
–
24,358
320
24,678
961
10
971
25,319
330
25,649
39,991
–
(39,991)
87,769
–
(63,091)
409,046
(118,204)
(289,871)
536,806
(118,204)
(392,953)
–
24,678
971
25,649
–
–
–
39,991
–
(39,991)
–
24,678
(2,071)
22,607
85,698
–
(63,091)
22,607
971
(114)
857
25,649
(2,185)
23,464
361,150
(70,422)
(289,871)
486,839
(70,422)
(392,953)
857
23,464
Notes to the Financial Statementswww.kingsgate.com.au 13. Payables
Current
Trade payables
Other payables and accruals
Total payables – current
Non-current
Other payables
Total payables – non-current
51
2021
$’000
2020
$’000
565
2,502
3,067
6,723
6,723
1,469
3,257
4,726
4,363
4,363
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 26.
The Group is to required pay Anglo American US$2,000,000 per year in advance pre-production royalties related to the Nueva Esperanza Gold/Silver Project.
The Group also has an obligation to pay US$64,800 per month to Anglo American for water rights. During the financial year, the Group has finalised an
agreement with Anglo American relating to the deferral of 65% of the fees for both the water rights and project royalty payments which are due from June
2020 until December 2021. These balances are repayable from January 2022 to July 2025. These deferred balances are also repayable immediately under
certain conditions including the sale of the Nueva Esperanza Gold/Silver Project. Included in non-current other payable is also a US$3,000,000 contigent
consideration for the Nueva Esperanza Gold/Silver Project which is due 24 months after the start of commercial operation.
14. Borrowings
Non-current
Preference shares in controlled entity
Total borrowings – non-current
Preference shares in controlled entity
2021
$’000
2020
$’000
11,046
11,046
12,520
12,520
Terms and conditions of outstanding preference shares in controlled entity were as follows:
Currency
Interest rate
Financial year
of maturity
Face value
$’000
Carrying
amount
$’000
Preference shares in controlled entity
Thai baht
12%
n/a
11,046
11,046
The terms of the preference shares were amended in June 2018 through a change made to the Shareholders Agreement of Akara Resources Public Company
Limited resulting in the preference shares being repayable at the earliest on 30 July 2022.
For more information about the Group’s exposure to interest rate and liquidity risk, see Note 26.
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 52
15. Provisions
Current
Employee benefits
Total provisions – current
Non-current
Employee benefits
Restoration and rehabilitation
Total provisions – non-current
Movements in the restoration and rehabilitation provision:
Restoration and rehabilitation
At the beginning of the financial year
Foreign currency exchange differences
At the end of the financial year
16. Contributed equity
Opening balance
Payments for share buy-backs
Payments for share buy-back expenses
Closing balance
17. Reserves and accumulated losses
(a) Reserves
Foreign currency translation reserve
Share-based payment reserve
General reserve
Total reserves
Movements:
Foreign currency translation reserve
At the beginning of the financial year
Exchange differences on translation of foreign controlled entities (net of tax)
At the end of the financial year
Share-based payment reserve
At the beginning of the financial year
Share-based payment expense
At the end of the financial year
General reserve
At the beginning of the financial year
Net change
At the end of the financial year
Note
2u, 22
2u, 22
2t
2021
Shares
2020
Shares
221,853,852
–
–
226,225,940
(4,372,088)
–
221,853,852
221,853,852
2021
$’000
249
249
242
14,955
15,197
16,938
(1,983)
14,955
2021
$’000
675,919
–
–
675,919
2021
$’000
56,589
9,142
(3,341)
62,390
51,722
4,867
56,589
9,142
–
9,142
(3,341)
–
(3,341)
2020
$’000
190
190
308
16,938
17,246
16,766
172
16,938
2020
$’000
677,761
(1,833)
(9)
675,919
2020
$’000
51,722
9,142
(3,341)
57,523
51,861
(139)
51,722
9,142
–
9,142
(3,341)
–
(3,341)
Notes to the Financial Statementswww.kingsgate.com.au 53
Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve, as described in Note 2b.
Share-based payment reserve
The share-based payment reserve is used to recognise the fair value of deferred rights, performance rights and options issued but not exercised.
General reserve
The general reserve represents changes in equity as a result of changes in non-controlling interests and revaluation of employee benefit obligations recog-
nised in other comprehensive income in prior periods.
(b) Accumulated losses
At the beginning of the year
Net loss attributable to members of Kingsgate Consolidated Limited
At the end of the financial year
18. Commitments for expenditure
Short-term and low value leases
Within one year
Total short-term and low value leases
2021
$’000
2020
$’000
(721,130)
(8,877)
(696,886)
(24,244)
(730,007)
(721,130)
2021
$’000
2020
$’000
21
21
24
24
In addition to the table above, the Group is also to pay Anglo American US$2,000,000 per year in advance pre-production royalties related to the Nueva
Esperanza Gold/Silver Project. The Group also has an obligation to pay US$64,800 per month to Anglo American for water rights. The water rights have been
extended to December 2024.
19. Controlled entities
Entity
Parent Entity
Kingsgate Consolidated Limited
Subsidiaries
Dominion Mining Limited
Gawler Gold Mining Pty Ltd
Kingsgate Treasury Pty Ltd
Kingsgate Capital Pty Ltd
Kingsgate Chile NL
Laguna Exploration Pty Ltd
Akara Resources Public Company Limited
Issara Mining Limited
Suan Sak Patana Ltd
Phar Mai Exploration Ltd
Richaphum Mining Ltd
Phar Lap Ltd
Phar Rong Ltd
Asia Gold Ltd
Laguna Resources Chile Ltda
Minera Kingsgate Limitada
Equity holding
Country of
Incorporation
Class of
shares
2021
%
2020
%
Australia
Australia
Australia
Australia
Australia
Australia
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Mauritius
Chile
Chile
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
100
100
100
100
100
100
100
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 54
20. Dividends
No final dividend was declared for the year ended 30 June 2020 (30 June 2019: nil).
No interim dividend was declared for the year ended 30 June 2021 (30 June 2020: nil).
21. Related parties
Transaction with related parties
Information on remuneration of Directors and Key Management Personnel is disclosed in Note 27 and the Remuneration Report.
Controlling entity
The ultimate parent entity of the Group is Kingsgate Consolidated Limited.
22. Employee benefits
Employee benefits and related on-costs liabilities
Provision for employment benefits – current
Provision for employee benefits – non-current
Total employee provisions
2021
$’000
2020
$’000
249
242
491
190
308
498
Superannuation
The Group makes contributions on behalf of employees to externally managed defined contribution superannuation funds. Contributions are based on
percentages of employee wages and salaries and include any salary-sacrifice amounts. Contributions to defined contribution plans for 2021 were $127,000
(2020: $133,000).
23. Reconciliation of loss after income tax to net cash flow
from operating activities
Loss for the year
Depreciation and amortisation
Net loss on sale of fixed assets
Net exchange differences
Change in operating assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in prepayments
Increase/(decrease) in creditors
Increase/(decrease) in provisions
Net cash outflow from operating activities
Net (debt)/cash and cash equivalents reconciliation
Cash and cash equivalents
Borrowings – repayable within one year
Borrowings – repayable after one year
Net (debt)/cash and cash equivalents
Cash and cash equivalents
Gross debt – fixed interest rates
Gross debt – nil interest rates
Net (debt)/cash and cash equivalents
2021
$’000
(8,877)
112
1
3,845
(739)
(6)
1,217
25
2020
$’000
(24,244)
214
44
(1,737)
1,245
(84)
(143)
268
(4,422)
(24,437)
9,984
(83)
(11,066)
(1,165)
9,984
(11,046)
(103)
(1,165)
15,569
(86)
(12,623)
2,860
15,569
(12,520)
(189)
2,860
Notes to the Financial Statementswww.kingsgate.com.au 55
Net cash and cash equivalents/(debt) as at 30 June 2019
Cash flows
Foreign exchange adjustments
Other non-cash movements
Net cash and cash equivalents/(debt) as at 30 June 2020
Cash flows
Foreign exchange adjustments
Other non-cash movements
Net cash and cash equivalents/(debt) as at 30 June 2021
Preference shares
in controlled
entity due
after 1 year
Lease liabilities
due within
1 year
Lease liabilities
due after
1 year
$’000
$’000
$’000
(12,392)
–
(128)
–
(12,520)
–
1,474
–
(11,046)
(591)
89
–
416
(86)
86
–
(83)
(83)
–
–
–
(103)
(103)
–
–
83
(20)
Cash
$’000
42,137
(26,372)
(196)
–
15,569
(5,666)
81
–
9,984
Total
$’000
29,154
(26,283)
(324)
313
2,860
(5,580)
1,555
–
(1,165)
24. Events occurring after reporting date
No matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect:
〉 the Group’s operations in future financial periods;
〉 the results of those operations in future financial periods; or
〉 the Group’s state of affairs in future financial periods
25. Contingent assets and liabilities
The Group had no contingent assets or liabilities at 30 June 2021 that is required to be reported. At the time of preparing this financial report some
companies included in the Group are parties to pending legal proceedings. The Directors have determined that the possibility of any outflow in settlement
resulting from these proceedings is remote.
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu
56
26. Financial risk management and instruments
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk, fair value risk and interest rate risk),
credit risk and liquidity risk.
At this point, the Directors believe that it is in the interest of shareholders to expose the Group to foreign currency risk and interest rate risk. Therefore,
the Group does not employ any derivative hedging of foreign currency or interest rate risks. The Directors and management monitors these risks, in
particular market forecasts of future movements in foreign currency and, if it is to be believed to be in the best interests of shareholders, will implement
risk management strategies to minimise potential adverse effects on the financial performance of the Group.
The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk,
and investment of excess liquidity. Risk management is carried out by the senior executive team.
The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Receivables
Other deposits
Total financial assets
Financial liabilities
Payables
Borrowings
Lease liabilities
Total financial liabilities
Market risk
Foreign exchange risk
2021
$’000
2020
$’000
9,984
1,023
1,563
12,570
(9,790)
(11,046)
(103)
(20,939)
15,569
294
516
16,379
(9,089)
(12,520)
(189)
(21,798)
The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures, primarily with respect to the US dollar and
Thai baht and as discussed earlier, no financial instruments are employed to mitigate the exposed risks. This is the Group’s current policy and it is reviewed
regularly including forecast movements in these currencies by management and the Board. Foreign exchange risk arises from future commercial transactions
and recognised assets and liabilities denominated in a currency that is not the functional currency of the relevant group entity. Currently foreign exchange
risks arise primarily from:
〉 cash balances in US dollars;
〉 receivables denominated in US dollars for Australian entities; and
〉 payables denominated in Australian dollars for Thailand entities.
The functional currency of the Thai subsidiaries is Thai baht. The functional currency of the Chilean subsidiaries is the US dollar. The Company’s functional
currency is Australian dollar.
Notes to the Financial Statementswww.kingsgate.com.au 57
The Group’s exposure to US dollar and Thai baht foreign currency risk arises mainly from balances receivable and payable between Group companies which
are not considered to form part of the related investment balance in the entities. The unrealised foreign exchange gain/loss on these balances is therefore
recorded in the statement of profit or loss of the Group. At the reporting date, expressed in Australian dollars these balances were as follows:
USD 2021
$’000
THB 2021
$’000
Total 2021
$’000
USD 2020
$’000
THB 2020
$’000
Total 2020
$’000
Cash and cash equivalents
Receivables
Payables
Total exposure to foreign currency risk
15
124,282
(126,420)
(2,123)
–
74,542
(74,542)
15
198,824
(200,962)
158
132,856
(134,313)
–
70,269
(70,269)
158
203,125
(204,582)
–
(2,123)
(1,299)
–
(1,299)
One cent weakened in Australian dollar against the US dollar
One cent strengthened in Australian dollar against the US dollar
One cent weakened in Australian dollar against the Thai baht
One cent strengthened in Australian dollar against the Thai baht
Impact on post tax loss
Impact on other
comprehensive income
2021
$’000
1,255
(1,231)
703
(704)
2020
$’000
1,342
(1,315)
726
(725)
2021
$’000
1,255
(1,231)
898
(895)
2020
$’000
1,342
(1,315)
947
(942)
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 58
26. Financial risk management and instruments continued
Interest rate risk
The Group’s exposure to interest rate risk for classes of financial assets and financial liabilities, at 30 June 2021 and 30 June 2020 are set out as follows:
Fixed interest rate maturing in
Floating
interest rate
$’000
1 year or less
$’000
1–2 years
$’000
2–5 years
$’000
Non-interest
bearing
$’000
Total
$’000
2021
Financial assets
Cash and cash equivalents
Receivables
Other deposits
Total financial assets
Financial liabilities
Payables
Borrowings
Lease liabilities
Total financial liabilities
9,976
–
1,370
11,346
–
–
–
–
Net financial assets/(liabilities)
11,346
2020
Financial assets
Cash and cash equivalents
Receivables
Other deposits
Total financial assets
Financial liabilities
Payables
Borrowings
Lease liabilities
Total financial liabilities
15,561
–
516
16,077
–
–
–
–
Net financial assets/(liabilities)
16,077
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(11,046)
–
(11,046)
(11,046)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(12,520)
–
(12,520)
(12,520)
8
1,023
193
1,224
(9,790)
–
(103)
(9,893)
(8,669)
8
294
–
302
(9,089)
–
(189)
(9,278)
(8,976)
9,984
1,023
1,563
12,570
(9,790)
(11,046)
(103)
(20,939)
(8,369)
15,569
294
516
16,379
(9,089)
(12,520)
(189)
(21,798)
(5,419)
Credit risk
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including,
outstanding receivables and committed transactions.
The Group has no significant concentrations of credit risk.
Notes to the Financial Statementswww.kingsgate.com.au 59
The maximum exposure to credit risk is represented by the carrying value of the Group’s financial assets in the statement of financial position. The maximum
exposure to credit risk at reporting date was:
Cash and cash equivalents
Receivables
Other deposits
Total exposure to credit risk at year end
2021
$’000
9,984
1,023
1,563
12,570
2020
$’000
15,569
294
516
16,379
Liquidity risk
The Group’s liquidity requirements are based upon cash flow forecasts. Liquidity management, including debt/equity management, is carried out under
policies approved by the Board and forecast material liquidity changes are discussed at Board meetings. The following table analyses the Company’s financial
assets and liabilities into relevant maturity groupings based on the remaining period at the reporting date. The amounts disclosed are the contractual
undiscounted cash flows. The borrowings of the Group are repayable on demand, however the contractual amounts for borrowings also include the interests
that are expected to be repaid until the repayment of these debts based on the cash flow forecast prepared by the Group.
2021
Payables
Borrowings
Lease liabilities
Total financial liabilities
2020
Payables
Borrowings
Lease liabilities
Total financial liabilities
Carrying
amount
$’000
1 year
or less
$’000
1–2 years
$’000
2–5 years
$’000
Total
$’000
9,790
11,046
103
20,939
9,089
12,520
189
21,798
3,067
1,324
83
4,474
4,726
1,499
89
6,314
1,2951
11,140
20
12,455
–
1,499
89
1,588
5,4281
-
-
9,790
12,464
103
5,428
22,357
4,3631
12,617
22
17,002
9,089
15,615
200
24,904
1
Related to pre-production royalties and water rights payable in respect of the Nueva Esperanza Gold/Silver Project in Chile and the contingent consideration (refer Note 13).
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 60
27. Key management personnel disclosures
Executive Chairman
Ross Smyth-Kirk
Executive Chairman
Non-Executive Directors
Peter Alexander
Non-Executive Director
Peter Warren
Non-Executive Director
Key Management Personnel compensation
Short-term employee benefits
Post-employment benefits
Total Key Management Personnel compensation
28. Auditors’ remuneration
Audit and other assurance services
PricewaterhouseCoopers Australian Firm
Audit and review of the financial reports
Related Practices of PricewaterhouseCoopers Australian Firm
Audit and review of the financial statements
Total remuneration for audit services
Other services
PricewaterhouseCoopers Australian Firm
Other services
Total remuneration for non-audit related services
Taxation services
PricewaterhouseCoopers Australian Firm
Tax compliance services
Related practices of PricewaterhouseCoopers Australian Firm
Tax compliance services
Tax investigation services
Total remuneration for tax related services
2021
$
558,693
30,780
2020
$
327,660
30,780
589,473
358,440
2021
$
2020
$
279,000
244,500
61,845
340,845
57,672
302,172
–
–
60,500
60,500
12,000
23,422
33,820
11,775
57,595
33,972
–
57,394
Notes to the Financial Statementswww.kingsgate.com.au 61
2021
Cents
(4.00)
2020
Cents
(10.84)
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
$’000
$’000
(8,877)
(24,244)
Number
Number
221,853,852
–
223,755,358
–
221,853,852
223,755,358
29. Earnings per share
Basic and diluted loss per share
Net loss used to calculate basic and diluted earnings per share
Weighted average number of ordinary shares used as the denominator: basic
Adjustment for dilutive effect
Weighted average number of ordinary shares used as the denominator: diluted
30. Parent entity financial information
As at, and throughout the financial year ending 30 June 2021, the parent entity of the Group was Kingsgate Consolidated Limited.
Summary of financial information
Results of parent entity
Loss for the year
Other comprehensive loss
Total comprehensive losses
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising:
Issued capital
Reserve
Accumulated losses
Total equity
2021
$’000
(6,214)
–
(6,214)
11,049
38,561
80,140
80,163
2020
$’000
(27,346)
–
(27,346)
15,029
42,544
77,898
77,932
675,919
8,763
(726,284)
675,919
8,763
(720,070)
(41,602)
(35,388)
Contingent liabilities of the parent entity
There are cross guarantees given by Kingsgate Consolidated Limited, Dominion Mining Limited and Gawler Gold Mining Pty Ltd as described in Note 31. No
liability was recognised by the parent entity or the Group in relation to this guarantee, as the fair value of the guarantees is immaterial.
As at 30 June 2021, the parent entity had no contractual commitments for the acquisition of property, plant or equipment.
Notes to the Financial Statementscontinuedu
62
Notes to the Financial Statements
31. Deed of cross guarantee
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, the wholly owned subsidiaries listed below are relieved from the Corporations
Act 2001 requirements for preparation, audit and lodgement of financial reports, and Directors’ Reports.
It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee (“Deed”). The effect of the Deed is
that the Company guarantees to each creditor payment in full of any debt in the event of the winding up of any of the subsidiaries under certain provisions
of the Corporations Act 2001. If a winding up occurs under other provisions of the Corporations Act 2001, the Company will only be liable in the event that after
six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event that the Company is wound up.
The subsidiaries subject to the Deed are:
〉 Dominion Mining Limited; and
〉 Gawler Gold Mining Pty Ltd.
The above companies represent a ‘closed group’ for the purpose of the Class Order, and as there are no other parties to the Deed of Cross Guarantee that are
controlled by Kingsgate Consolidated Limited, they also represent the ‘extended closed group’.
A consolidated statement of profit or loss and other comprehensive income, a summary of movements in consolidated accumulated losses, and consolidated
statement of financial position, comprising the Company and controlled entities which are a party to the Deed, after eliminating all transactions between
parties to the Deed of Cross Guarantee, is set out as follows:
Statement of profit or loss and other comprehensive income
Corporate and administration expenses
Other income and expenses
Foreign exchange (loss)/gain
Intercompany loan forgiveness/(write-off)
Loss before financial costs and income tax
Finance income
Finance costs
Net finance costs
Loss before income tax
Income tax expense
Loss after income tax
Total comprehensive loss for the year
Loss attributable to:
Owners of Kingsgate Consolidated Limited
Total comprehensive loss attributable to:
Owners of Kingsgate Consolidated Limited
Summary of movements in consolidated retained earnings
Accumulated losses
At the beginning of the financial year
Loss for the year
At end of the financial year
2021
$’000
(4,331)
6,048
(13,816)
5,855
(6,244)
34
(5)
29
(6,215)
–
(6,215)
(6,215)
2020
$’000
(12,564)
5,975
2,588
(23,621)
(27,622)
278
(4)
274
(27,348)
–
(27,348)
(27,348)
(6,215)
(27,348)
(6,215)
(27,348)
(720,066)
(6,215)
(692,718)
(27,348)
(726,281)
(720,066)
www.kingsgate.com.au Statement of financial position
ASSETS
Current assets
Cash and cash equivalents
Receivables
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Investment in subsidiaries
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Payables
Provisions
Total current liabilities
Non-current liabilities
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET LIABILITIES
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
63
Notes to the Financial Statements
2021
$’000
2020
$’000
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
9,793
900
364
11,057
14,529
161
349
15,039
3
27,509
27,512
38,569
79,979
166
80,145
23
23
6
27,509
27,515
42,554
77,780
124
77,904
34
34
80,168
77,938
(41,599)
(35,384)
675,919
8,763
(726,281)
675,919
8,763
(720,066)
(41,599)
(35,384)
64
Directors’ Declaration
Directors’
Declaration
In the Directors’ opinion:
a)
the financial statements and notes that are set out on pages 32 to 63 and the Remuneration
Report in the Directors’ Report, are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
performance for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards, the Corporation Regulations 2001 and
other mandatory professional reporting requirements.
there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the
extended closed group identified in Note 31 will be able to meet any obligations or liabilities to
which they are, or may become, subject by virtue of the Deed of Cross Guarantee described in
Note 31.
b)
c)
Note 1 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 required by section 295A of the Corporations Act 2001
from the Executive Chairman and Company Secretary for the financial year ended 30 June 2021.
This declaration is made in accordance with a resolution of the Directors.
Ross Smyth-Kirk OAM
Director
Dated at Sydney on 30 September 2021
On behalf of the Board
www.kingsgate.com.au 65
Independent Auditor’s Report
Independent auditor’s report
To the members of Kingsgate Consolidated Limited
Independent
Auditor’s Report
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Kingsgate Consolidated 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 30 June 2021 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
t
r
o
p
e
R
s
’
r
o
t
i
d
u
A
t
n
e
d
n
e
p
e
d
n
I
Independent auditor’s report
What we have audited
The Group financial report comprises:
To the members of Kingsgate Consolidated Limited
•
Report on the audit of the financial report
•
the consolidated statement of financial position as at 30 June 2021
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of changes in equity for the year then ended
Our opinion
•
•
In our opinion:
•
The accompanying financial report of Kingsgate Consolidated Limited (the Company) and its
controlled entities (together the Group) is in accordance with the Corporations Act 2001, including:
•
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
(a) giving a true and fair view of the Group's financial position as at 30 June 2021 and of its
financial performance for the year then ended
Basis for opinion
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
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
What we have audited
report section of our report.
The Group financial report comprises:
the consolidated statement of financial position as at 30 June 2021
•
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
•
our opinion.
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of changes in equity for the year then ended
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.
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.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
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.
continuedu
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Independent auditor’s report
To the members of Kingsgate Consolidated Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Kingsgate Consolidated 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 30 June 2021 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 statement of financial position as at 30 June 2021
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
•
•
•
•
66
•
•
Independent Auditor’s Report
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.
Material uncertainty related to going concern
We draw attention to Note 1 (a) in the financial report, which indicates that the Group does not have
any cash generating activities and does not have sufficient cash available to fully repay the preference
PricewaterhouseCoopers, ABN 52 780 433 757
share liability of $11 million which, if exercised by the preference shareholder is repayable at the
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
earliest on 30 July 2022. As a result, the Group is dependent on (i) the outcome of Chatree Closure
Remedies process, through the arbitral hearings under the Thai-Australia Free Trade Agreement or
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
other negotiated settlement with the Thai Government, and/or (ii) the finalisation of the sale of Nueva
Esperanza to support its future cash flows, and/or (iii) extending the term of the exercise date of the
preferences shares should that be required. These conditions, along with other matters set forth in
Note 1 (a), indicate that a material uncertainty exists that may cast significant doubt on the Group’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Liability limited by a scheme approved under Professional Standards Legislation.
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.
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Independent Auditor’s Report
Materiality
Audit scope
Key audit matters
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• Amongst other relevant
topics, we communicated
the following key audit
matters to the Board of
Directors:
−− Carrying amount of
assets and liabilities
associated with the
Chatree Gold Mine
−− Impairment indicator
assessment of
exploration and
evaluation assets Nueva
Esperanza Gold/Silver
Project
•
These are further described
in the Key audit matters
section of our report, except
for the matter which is
described in the material
uncertainty related to
going concern section.
•
For the purpose of our audit we
used overall Group materiality
of $0.4 million, 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 the Group's total
assets because, in our view, it is
the benchmark which best
reflects the expected
requirements of users of the
Group's financial statements.
• We chose total assets as the
materiality benchmark rather
than a profit measure given the
closure of the Chatree Gold
Mine and the Group's focus on
the possible sale of the Nueva
Esperanza Gold/Silver Project.
• 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 Australian engagement
team directed the
involvement of the Thai
component audit team, which
performed specified audit
procedures on the financial
information of Akara
Resources Public Company
Limited.
The component auditor in
Chile, operating under
instructions, also performed
specified audit procedures
over the Group's Chilean
operations' financial
information.
The Australian engagement
team determined the required
level of involvement in the
work performed by the Thai
and Chilean component audit
teams, in order to be satisfied
that sufficient appropriate
audit evidence had been
obtained for our opinion on
the Group financial
statements as a whole.
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.
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matter(s) described below to be the key audit matters to be communicated in our
report.
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Independent Auditor’s Report
Key audit matter
Carrying amount of assets and liabilities
associated with the Chatree Gold Mine
(Refer to note 1 (a), 3 (i) and 3 (ii))
The Group's Chatree Gold Mine in Thailand was
placed on care and maintenance due to a decision
made by the Thai Government to cease all gold
mining activities in Thailand by 31 December 2016.
Except for some assets that may be realised
independently of re-opening the mine, all assets of the
Chatree Gold Mine have been impaired to a nil value.
At that time, the Group also revised the Chatree Gold
Mine’s restoration and rehabilitation liability to
reflect the premature closure of the mine. The total
rehabilitation liability, amounting to $14.9 million at
30 June 2021 is based on management's
rehabilitation plan which is a revision from the initial
plan submitted to the Thai Authorities in 2007.
The Group commenced arbitral proceedings against
the Kingdom of Thailand under the Thailand-
Australia Free Trade Agreement in order to be
compensated for the losses it has incurred as a result
of the expropriation of the Chatree Gold Mine by the
Thai Government.
The carrying amount of assets and liabilities of the
Chatree Gold Mine and associated disclosures were
considered to be a key audit matter because there
remains significant uncertainty in respect of the rights
and obligations of the Group in relation to the mine
and the magnitude of a potential reversal of
impairment, changes in the rehabilitation liability and
potential recognition of contingent assets on the
financial statements.
How our audit addressed the key audit
matter
We updated our understanding in respect of the
situation regarding the Chatree Gold Mine by making
enquiries of management and the directors as to their
knowledge and understanding of the situation and by
reading selected material correspondence on this
matter which included key elements of the legal claim
lodged by the Group against the Thai Government.
We assessed the adequacy of the overall accounting
position adopted by the Group at 30 June 2021 as
described in Notes 3 (i) and 3 (ii) in respect of the
carrying amount of assets and liabilities and evaluated
the adequacy of the disclosures in light of the
requirements of the Australian Accounting Standards.
In respect of the carrying amount of the assets
associated with the Chatree Gold Mine, we:
•
•
assessed the Group’s judgement as to whether the
circumstances that led to the previously
recognised impairment charge have changed and
whether a reversal of this impairment should be
recognised; and
assessed if other assets which have been
recognised at their short-term realisable value
have a carrying amount based on supportable
assumptions.
In respect of the carrying amount of the liabilities
associated with the Chatree Gold Mine, we:
•
assessed the Group’s restoration and
rehabilitation plans prepared in the context of the
premature closure of the mine and the overall
accounting position adopted by the Group at year
end in respect of the Chatree Gold Mine’s
obligations.
We considered the status of the legal claims of the
Group against the Thai Government in light of the
requirement to disclose contingent assets and
liabilities in the financial statements in accordance
with Australian Accounting Standards.
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69
Independent Auditor’s Report
Key audit matter
Impairment indicator assessment of
exploration and evaluation assets Nueva
Esperanza Gold/Silver Project
(Refer to note 1 (a) and 3 (iii))
The impairment indicator assessment of the
exploration and evaluation assets for the Nueva
Esperanza Gold/Silver Project was a key audit matter
given the significance of the carrying value of this
CGU ($23.0 million as at 30 June 2021, the largest
non-current asset in the balance sheet) and given the
impairment charge recorded in the 2019 financial
year ($33.4 million).
The impairment indicator (and the potential reversal
of impairment) assessment is also subject to
significant judgements by the Group as described in
the Note 3 (iii) to the financial statements.
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How our audit addressed the key audit
matter
We considered the Group’s impairment indicator
assessment for the Nueva Esperanza Gold/Silver
Project and its conclusion that no impairment
indicators, nor indicators for impairment loss reversal
existed at balance sheet date.
In respect of the impairment indicator assessment,
we:
•
•
•
•
evaluated if the Group identified and considered
the relevant internal and external factors in its
assessment;
obtained and discussed with management and
the directors offer for the acquisition of the
project and the status of any discussions with the
bidder;
obtained and reviewed evidence around recent
developments for the Project; and
considered the Groups’ market capitalisation at
balance sheet date compared with the net assets
of the Group.
We evaluated the adequacy of the disclosures made in
Note 3 (iii), including those regarding the key internal
and external factors considered in light of the
requirements of Australian Accounting Standards.
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 30 June 2021, but does not include the
financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other
information we obtained included the Corporate Information and the Directors' report (including the
remuneration report). We expect the remaining other information to be made available to us after the
date of this auditor's report.
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon.
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70
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.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our
professional judgement to determine the appropriate action to take.
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.
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71
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Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 22 to 27 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the remuneration report of Kingsgate Consolidated Limited for the year ended 30 June
2021 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
Marc Upcroft
Partner
Sydney
30 September 2021
72
Shareholder Information
Shareholder
Information
As at 17 September 2021
Distribution of equity securities
Size of Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 +
Total
20 largest shareholders
Below are the 20 largest shareholders of quoted ordinary shares
Shareholder
Citicorp Nominees Pty Limited
Zero Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd (Clearstream)
BNP Paribas Nominees Pty Ltd (Retail)
BNP Paribas Nominees Pty Ltd
HSBC Custody Nominees (Australia)
Arinya Investments Pty Ltd
J P Morgan Nominees Australia Pty Limited
BNP Paribas Nominees Pty Ltd (Six)
Brispot Nominees Pty Ltd
Clawson Holdings Pty Ltd
Investec Australia Limited
Andrew Lenox Hewitt
Ian Gillespie-Jones
Jay Evan Dale Hughes
Wyong Rugby League Club Ltd
Philip Storr
Merrill Lynch (Australia) Nominees Pty Limited
Elizabeth Aprieska
HSBC Custody Nominees (Australia) Limited
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Voting rights – Ordinary shares
Number of
shareholders
of fully paid
ordinary shares
3,892
2,398
806
1,226
262
8,584
Number of
shares
16,503,887
11,809,859
11,076,688
8,970,274
6,324,843
5,111,095
4,996,944
3,547,133
3,503,695
3,280,847
2,850,623
2,641,003
2,350,000
2,010,009
2,000,000
1,610,000
1,600,000
1,598,181
1,412,590
1,366,504
Percentage
7.46
5.34
5.00
4.05
2.86
2.31
2.26
1.60
1.58
1.48
1.29
1.19
1.06
0.91
0.90
0.73
0.72
0.72
0.64
0.62
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
www.kingsgate.com.au Corporate
Information
Kingsgate Consolidated Limited
ABN 42 000 837 472
73
Corporate Information
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Thailand Office
Akara Resources Public Company Limited
No. 99 Moo 9, Tambon Khao Chet Luk
Amphur Thap Khlo
Phichit 66230
Thailand
Tel:
Fax:
+66 56 614 500
+66 56 614 190
Chile Office
Laguna Resources Chile Ltda
Av. Apoquindo 4700, oficina 602
Las Condes, Santiago
Chile
Tel:
+56 2 3245 8650
Share Registry
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Australia
Postal address:
Locked Bag A14
Sydney South NSW 1235
Australia
+61 1300 554 474
+61 2 9287 0303
Tel:
Fax:
Email: registrars@linkmarketservices.com.au
Web: www.linkmarketservices.com.au
Auditor
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay
Barangaroo NSW 2000
Australia
Tel:
Fax:
+61 2 8266 0000
+61 2 8266 9999
Directors
〉 Ross Smyth-Kirk Executive Chairman
〉 Peter Alexander Non-Executive Director
〉 Peter Warren
Non-Executive Director
Company Secretary
〉 Ross Coyle
Stock Exchange Listing
Kingsgate Consolidated Limited is a company
limited by shares, listed on the Australian
Securities Exchange (ASX) under the code KCN.
The Company’s shares also trade in the United
States of America over-the-counter (OTC) as an
American Depository Receipt (ADR) under the
code OTC: KSKGY.
Registered Office and
Principal Business Address
Kingsgate Consolidated Limited
Suite 2, Level 23, 20 Bond Street
Sydney NSW 2000
Australia
+61 2 8256 4800
Tel:
Email:
info@kingsgate.com.au
Web: www.kingsgate.com.au
Design & Production > APM Graphics Management > 1800 806 930
Suite 2, Level 23
20 Bond Street
Sydney NSW 2000
Australia
+61 2 8256 4800
Tel:
Email:
info@kingsgate.com.au
Web: www.kingsgate.com.au