2016
A N N U A L R E P O R T
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016
CORPORATE DIRECTORY
INTERNET ADDRESS
www.magnis.com.au
EMAIL ADDRESS
info@magnis.com.au
SHARE REGISTER
Link Market Services
Tower 4, 727 Collins Street
Docklands VIC 3008 Australia
Tel 1300 554 474
Fax +61 3 9287 0303
AUDITORS
BDO East Coast Partnership,
Level 11, 1 Margaret Street
Sydney NSW 2000 Australia
Tel +61 2 9251 4100
BANKERS
National Australia Bank Ltd
Level 3, 255 George Street
Sydney NSW 2000 Australia
Tel +61 2 9237 9958
STOCK EXCHANGE LISTING/ASX
Magnis Resources Limited shares
(code MNS) are listed on the
Australian Securities Exchange.
Magnis also has listed options
(code MNSO) with an exercise price of
9.533 cents expiring 31 May 2017.
ABN 26 115 111 763
DIRECTORS
F Poullas
(Chairman)
J C Jooste-Jacobs
(Non-Executive Director)
P Tsegas
(Non-Executive Director)
C Johnstone
(Non-Executive Director)
L Eldridge
(Executive Director)
CHIEF EXECUTIVE OFFICER
F Houllis
COMPANY SECRETARY
D N Richardson
FINANCIAL CONTROLLER
P C Tju
REGISTERED OFFICE
Suite 4.03, 1 Alfred Street
Sydney NSW 2000 Australia
Tel +61 2 8397 9888
Fax +61 2 8397 9801
TANZANIA OFFICE
No 4, Zambia Rd, Oyster Bay
Dar es Salaam, Tanzania
Tel +255 225 500 023
PAGE 2
THE COMPANY
Contents
The Company
Corporate directory
The company
Annual general meeting
Chairman’s statement
Review of operations
Directors’ report
Auditor’s independence
declaration
Corporate governance
statement
Statement of profit or loss and
other comprehensive income
2
3
3
4
6
18
30
31
39
Statement of financial position 40
Statement of changes in equity 41
Statement of cash flows
Notes to the financial
statements
Directors’ declaration
Independent auditor’s report
Additional shareholder
information
42
43
63
64
68
Magnis is an Australian based
company in the business of exploring
for, developing, and ultimately
mining natural flake graphite for
use in various industries including
in particular, batteries for storing
electrical energy.
The flagship project is the Nachu
Graphite Project located in south east
Tanzania, circa 220km from the sea
port town of Mtwara. The excellent
purity levels shown at the metallurgical
testing stages combined with the good
proportion of super jumbo, jumbo
and large flake natural graphite make
the Project very unique and demands
premium prices in the market.
Extensive battery testing has occurred
in the past year on the Nachu graphite
and outstanding results have been
achieved to date with potential
end users extremely interested in
further examining the qualities and
performance of the Nachu graphite
to be used in the anode for
lithium-ion batteries.
A recent Bankable-Feasibility Study
(BFS) conducted shows the post-tax
Net Present Value of Nachu to be
US$1.69B. Further details of the BFS
were released to the ASX on
31 March 2016 and are mentioned
in this Annual Report.
A Special Mining Licence and
necessary environmental permits
were issued to Magnis during the
reporting period to allow the Company
to focus on finalising substantial
offtake agreements and to commit
to project finance and commence the
construction of a processing plant
and mining facilities. Infrastructure
agreements for power and port access
have also been reached.
The Company is well supported by
an experienced board and
management team with specific skills
in the project development, from the
exploration phase through to mining
and production.
Annual General Meeting
The 2016 Annual General Meeting of
the members of Magnis Resources
Limited will be held at The York
Conference and Function Centre,
Level 2, 99 York Street, Sydney
NSW 2000 on Friday 21 October
2016 at 10:00am. A formal notice of
meeting and proxy form will be mailed
separately to all shareholders.
Light refreshments will be served at
the conclusion of the meeting.
PAGE 3
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 CHAIRMAN’S STATEMENT
Dear Shareholders,
The progress made in the pre-
development phases for the Nachu
Graphite Project in Tanzania during
the 2015/2016 Financial Year
has been outstanding and this is
following a significant milestone
year for the previous reporting
period. The Company goes from
strength to strength and the Board
and Management have been
on a steep learning curve in the
graphite space, particularly in the
research and development area that
graphite attributes in the lithium-ion
battery industry. This is a crucial
requirement where the majority of
Nachu graphite feedstock will be
targeted at supplying for the rapidly
advancing technology world.
Looking back on some of the major
achievements made in the past year,
the notables were:
1. Bankable Feasibility Study was
released and delivered on time.
Project economics confirm Nachu
as being a robust, high returning
graphite project with a premium
quality product.
2. Updated Mineral Resource released
for Nachu containing 174Mt at
5.4% Graphitic Carbon (Cg) at 3%
Cg cut-off grade. 71% or 124 Mt
classified as Measured or Indicated
Resources and the Mineral
Resource now contains over 9.3Mt
of contained graphite, an increase
of over 14%.
3. Outstanding results achieved from
the Nachu Graphite when used in
the performance of testing lithium-
ion batteries which exceeds the
performance of synthetic graphite.
Purity levels are exceptionally high
with the natural flake graphite
that the Nachu deposit contains.
Spherical Coated Graphite at
99.99% TGC purity was achieved
without the use of environmentally
unsafe chemicals and the added
benefit of no chemical treatment
is a substantial cost saving in the
end product and also greater yields
(i.e lower feedstock required to
produce anode quality graphite).
4. Infrastructure agreements for
power and ports were signed in
recent months in preparation for
future construction and operation
of the Nachu Graphite Project.
5. The Non-Core Uranium Assets that
the Company held were divested
and demerged thus unlocking the
value of these assets into another
company. Eligible shareholders
were given an in-specie distribution
in the newly created company. This
allows Magnis to have a clear focus
on graphite and also creates more
cordial opportunities to discuss
business with potential end users
of lithium-ion batteries that need
to be aware of environmental
and social media issues and
dealing with companies that are
environmentally conscious.
I want to take this opportunity to
thank the Board members for their
continuing efforts. During December
last year, Mr Stephen Hunt resigned
from the Board to pursue other
opportunities and I thank him for
his efforts in assisting the Company
for many years. Mr Colin (Cobb)
Johnstone and Mr Len Eldridge were
appointed to the Board in May this
year adding a wealth of skill and
experience with major mining and
finance companies respectively and I
welcome Cobb and Len to the Board
and look forward to their significant
contributions to Magnis during this
very exciting period. Overall, our
Board remains very hands on and a
testament as to why the Company is
in a strong position.
Our management team both locally
and overseas have done a superb job,
especially with all the metallurgical
testwork, permitting work and
community work overseas along
with financial reporting, governance
and conducting investment related
presentations to financial and capital
markets. An authentication of this is
the recent inclusion of Magnis into the
S&P/ASX 300 Index (just six months
earlier we were included into the All
Ordinaries Index for the first time) and
this shows the Company has certainly
come a long way in such a short
period with the focus on our Nachu
Graphite Project.
PAGE 4
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 Working with the Tanzanian
Government and the local
community once again has provided
productive relationships and we
look forward to building on these
with recent approvals in attaining an
Environmental Certificate for Nachu,
our Special Mining Licence
approval and the two key
infrastructure agreements.
We also thank the ongoing support of
our faithful shareholders, especially
the holders of the listed options that
converted and exercised their options
to Magnis shares. This provided
valuable capital to the Company
and resulted in minimal share equity
raisings for the past reporting period
compared to recent years.
The year ahead, particularly in the
lithium-ion battery sector that is
expected to be determined with the
growth in electric vehicle and power
storage markets, looks very exciting
for Magnis and we are well positioned
to take advantage of opportunities
such as supplying these markets with
a high quality graphite product.
Chairman,
Frank Poullas
PAGE 5
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016CHAIRMAN’S STATEMENT REVIEW OF OPERATIONS
The Nachu Graphite Project based
in the south-east of Tanzania,
continues to develop with key
achievements and progress made in
the past financial year.
This review of operations will
highlight some of these and is to be
preceded by some graphite industry
related developments, particularly
around the use of lithium-ion
batteries in the electric vehicle
(EV) and power storage market for
households and businesses.
Graphite Industry
Developments
◆◆ China continues to the be major
supplier to the world for graphite
with around 70% of total natural
supply, but is also a net importer
with growing consumption needs in
their industry. Given environmental
concerns, consistency issues
and marginal economics on the
majority of their lower quality
natural graphite mines, some
operations are being shut down or
consolidated and further closures
to Chinese graphite mines
are expected.
◆◆ While supply out of China is
slowing, demand is growing
strongly through new technology
from significant end users. In
addition to this, end users are
seeking greater diversity of supply.
◆◆ The global graphite market
currently is ~2.2 mtpa and
approximately 50% comprises
natural graphite (flake and
PAGE 6
◆◆ There is a global movement
towards the adoption of cleaner
energy technology via means such
as transport and energy storage.
◆◆ Western world and Chinese
investment is strong in battery
‘mega-factories’ and this will
increase competition for raw
materials such as graphite, lithium
and cobalt. Most mega-factory
capacity forecasts have been
largely representative of current
EV visibility only and this is just the
beginning given the possibilities
with energy storage.
amorphous sources) with the key
producers China, India and Brazil.
Synthetic graphite made from
petroleum coke makes up the
remainder and is energy intensive
and hence expensive and not
environmentally friendly although
total graphite content levels are
high. The demand for natural
graphite is expected to increase
rapidly with the new technology
advancements and the natural-for-
synthetic displacement potential is
very high
◆◆ The key graphite end uses are
battery anodes (high growth
market), expandable graphite (high
growth), composites, refractory and
foundry, steel markets, gaskets,
seals, brake linings and lubricants.
Significant investment underway in the battery supply chain. Source: Deutsche Bank, May 2016
MAGNIS RESOURCES LIMITED ANNUAL REPORT 201605010015020025030020132014201520162017201820192020FoxconnBoston PowerGuoxuanCurrent capacityOptimum NanoShandong WinabatteryCATLTeslaChina AviationLG chemZhejiang Tianneng powerBYDSamsung SDIBAK Battery Co.China - OthersMegafactories capacity (GWh) The Volkswagen strategy highlights
the structural shift towards electrical
vehicles with a target of 20%-25%
of group sales in 2025 that implies
annual sales of between 2m-3m EVs.
To support this strategy, the fleet
requirements of ~150Gwh by 2025
equates to ~165ktpa anode material
or ~165ktpa spherical graphite. Based
on current Chinese flake yields into
spherical graphite of 30-40%, this
would equate to ~470ktpa of natural
graphite showing what possible
demand presents itself in the industry.
As the Nachu Graphite Project
progresses, the Board is focused on
the growth of the Company to support
the expected growth in the graphite or
battery powered industries and be a
key member of the supply chain.
PAGE 7
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016REVIEW OF OPERATIONS NACHU GRAPHITE PROJECT
(MAGNIS 100%), TANZANIA
The Nachu Project is located near
Ruangwa, in Southern Tanzania
and approximately 220km to the
Tanzanian port of Mtwara.
In the past 12 months to 30 June
2016 an extensive programme was
undertaken. Flowing from this,
the Company achieved the
following milestones:
Nachu Updated Mineral
Resource Estimate and
Ore Reserve Estimate
On 1 February 2016, Magnis declared
an updated Mineral Resource Estimate
for the Nachu Graphite Project. The
global Mineral Resource Estimate
comprises 174 Million Tonnes (Mt) at
an estimated grade of 5.4% Graphitic
Carbon (Cg) and is reported in
accordance with the 2012 Edition of
the Australasian Code for Reporting of
Exploration Results, Mineral Resources
and Ore Reserves (JORC Code, 2012).
The Nachu Project represents one of
the largest Mineral Resources of large
flake graphite in the world. The Block
F Mineral Resource (59.5 Mt in the
Measured Mineral Resource category
and 39.3 Mt in the Indicated Mineral
Resource category) is the primary
orebody assessed in the BFS for
initial production.
The Mineral Resource is split into 5
deposits (Block B, D, F, FS & J) with the
mineralisation hosted predominantly
in graphitic schist. All deposits have
mineralisation at or near surface. The
orientation of the Mineral Resource
modelling follows the generally
shallowly dipping limbs of the open-
folding within the deposit.
The updated Nachu Graphite Project
Mineral Resource Estimate was
carried out by independent mining
consultancy AMC Consultants
Pty Ltd (AMC).
The Ore Reserve estimated by Orelogy
is inclusive of the F and FS Blocks
solely. The total Proved and Probable
Ore Reserve comprises 76 Mt at 4.8%
Cg for 3.6 million tonnes of contained
graphite (Table 2).
This Ore Reserve provides sufficient
material for an initial operating life of
approximately 15 years. This comprises
approximately 11.7 years at 240,000
tpa nameplate concentrate output
after which lower grade ore stockpiles
are processed for another 3.5 years at
an average concentrate output rate of
160,000 tpa.
There is strong potential for extension
of operating life at or near nameplate
capacity (240,000 tpa) with further
conversion of high grade Mineral
Resources into future mine
planning scenarios.
B
D
F
FSL
J
Total
Block
Tonnage Grade Tonnage Grade Tonnage Grade Tonnage Grade Tonnage Grade Tonnage Grade
Mt
%Cg
Mt
%Cg
Measured
Oxide
Primary
Indicated
Inferred
Oxide
0.2
Primary
6.6
Oxide
0.1
Primary
0.8
6.5
6.3
5
5
0.7
19.5
Sub Total
7.6
6.1
20.2
5.9
5.9
5.9
Table 1: Nachu Graphite Project Mineral Resource Estimate 2016
Mt
1.7
57.8
1.3
38
1.7
22.5
123.1
%Cg
4.9
4.6
5.4
5.1
5
5.2
4.9
Mt
0.2
3.8
0.2
5.0
0.01
1.0
10.2
%Cg
Mt
%Cg
5.2
5.6
5.4
5.1
3.2
3.5
5.1
0.7
9
8.3
8.1
0.04
10.1
3.2
10.2
12.9
8.6
Mt
1.9
61.6
2.4
58.6
2.6
47
174
%Cg
4.9
4.7
6.3
5.7
5.3
5.8
5.4
Notes:
1. Cut-off of 3% graphitic carbon
2. Rounding may result in differences in
total and average grades.
PAGE 8
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016
Material
Proved
Ore
Probable
HG
MG
LG
Total
HG
MG
LG
Total
fresh
fresh
fresh
fresh
fresh
fresh
Total Proved + Probable
Waste
MW
Other
Total
Total Ore & Waste
fresh
oxide
fresh
oxide
fresh
F - All Stages
F5
Total
Quantity
MT
Grade
%Cg
Quantity
MT
Grade
%Cg
Quantity
MT
Grade
%Cg
21.9
11.7
13.4
47
13.4
3.7
4.4
21.5
68.5
18.1
15.9
66.9
101
15.9
153.5
5.4
4.3
3.5
4.6
5.9
4.3
3.5
5.1
4.8
2.5
-
-
-
-
-
3.3
0.2
0
3.5
3.5
0.8
0
4.3
7.8
0.6
3.1
10.8
14.5
3.1
19.3
5.6
3.6
0
5.5
5.2
3.7
0
4.9
5.2
2.6
-
-
-
-
-
25.2
11.9
13.4
50.5
16.9
4.5
4.4
25.7
76.3
18.7
19
77.8
115.5
19
172.7
5.4
4.3
3.5
4.6
5.7
4.2
3.5
5.1
4.8
2.5
-
-
-
-
-
Stripping Ratio
1.5
1.9
1.5
Table 2: Nachu Graphite Project Ore Reserve Estimate by Block
3D view of Block F deposit looking northwest with corresponding section line
PAGE 9
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NACHU GRAPHITE PROJECT NACHU GRAPHITE PROJECT
(MAGNIS 100%), TANZANIA
Note: near-section drillholes holes projected to
plane and may affect the appearance of model
alignment.
Cross section A-A’ looking North within Block F,
showing modelled mineralisation with downhole
grades highlighted.
Bankable Feasibility
Study (BFS) finalised
On 31 March 2016, Magnis released
the results of the BFS for the Nachu
Graphite Project.
The BFS highlights the exceptional
economic returns and low technical
risk and characterised strongly by the
high quality size, purity and crystal
structure of the contained graphite
flake in the Nachu deposit.
Sedgman assumed the lead role in the
BFS which was prepared with input
from a wide range of independent
local and overseas technical experts
including Orelogy, Digby Wells,
Logiman, AMC, Knight Piesold, MTL
consultants, AMML Laboratories and
Pells Sullivan Meynink. The feasibility
study was completed to “Bankable”
standards with an accuracy of +/- 10%.
Environmental studies were done to
“IFC” Standards.
The BFS delivers a post-tax NPV10%
of US$1.69b and an internal rate of
return (IRR) of 98%. Capital payback
is projected within 14 months of
first production.
A maiden Proved and Probable
graphite Ore Reserve was declared
on the Block F and FS orebodies
totalling 76 million tonnes at 4.79%
Cg for 3.6 million tonnes of contained
graphite. This Ore Reserve provides
sufficient material to support an initial
15 year operating life. The BFS is
based on a 5.0Mtpa processing plant
with a nameplate output capacity of
240,000tpa of graphite concentrate.
The unique crystal structure and
low impurities in the Nachu graphite
mineralisation allow production of
a premium product suite with an
average concentrate purity of over
98% TGC. Approximately 41% of this
product will be high value Super
PAGE 10
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 Jumbo (+500 microns) and Jumbo
(+300 microns) flake concentrate
products at a purity of 97-98% TGC.
The remaining 59% will be a sub-300
micron concentrate product at an
exceptional purity of 99.2% TGC.
This is firmly targeted at the rapidly
growing lithium-ion battery sector.
The basket price estimate of
US$2,350/t was constructed using
pricing from Industrial Minerals,
Benchmark Minerals and end-users,
with good consistency across all
sources. As demonstrated through
metallurgical and end-user testing,
the graphite concentrate produced
from Nachu is unique due to its high
purity, abundance of large flake and
superior performance in high growth
applications. The ability to achieve
high purity without chemical treatment
leads to a premium price product with
a significantly reduced environmental
footprint. These properties along with
its crystalline nature make it a viable
alternative to synthetic graphite in
numerous applications including
lithium-ion batteries.
Pre-production capital for the Nachu
Graphite Project is estimated at
US$269 million (including an 11%
contingency). Operating costs over
the first five years of production are
forecast to be US$502 per product
tonne free on board (FOB) from the
port of Mtwara (ex royalties), and the
life-of-mine forecast is US$559/t.
All necessary infrastructure has
been identified, and any required
construction incorporated in the BFS
planning, including roads, water and
grid power sourcing.
Dodoma and a 120MW gas turbine
plant in Dar es Salaam.
Power Supply
Agreement
The Company entered into a power
supply agreement in Tanzania with
leading US-based power engineering
and construction group Symbion
Power LLC (“Symbion”). Under the
terms of the agreement, Symbion
will provide a total power solution for
Nachu by developing and operating
a dedicated 30MW gas fired power
station, associated substations and
a 132KV transmission line to connect
Nachu to the main power grid.
The Tanzania Electric Supply
Company (TANESCO) has given its
in principal approval for Symbion
& Magnis to proceed with the
development.
Magnis will now undertake further
detailed work and complete an
Environmental Impact Assessment
for the power project. Upon
demonstrating the technical, economic
and environmental feasibility of the
power project, thereafter Symbion
will be responsible for funding,
developing and building the electricity
infrastructure and Nachu will be the
offtaker of the power.
Symbion has extensive experience
operating power plants and
constructing transmission lines
in Tanzania and elsewhere in the
world, including a 50MW diesel plant
at Arusha, a 55MW diesel plant at
The Nachu BFS estimates for capital
and operating costs relating to power
were constructed on the basis of such
a third party build-own-operate grid
power supply solution. Study work
completed by an Australian Electrical
Engineering Consultant provided an
indicative power price of between
US$0.08 to US$0.10 per kwh for
on-grid power. This represents a
significant saving compared to other
power options such as diesel or heavy
fuel oil power generation.
Tanzanian Ports
Authority Agreement
The Company received a Letter of
Intent (LOI) from the Tanzania Ports
Authority (TPA) allowing progress
to the next phase of acquiring a
long term lease at the export port
of Mtwara.
The LOI envisages the allocation of
25,000 square metres of land in a
prime location adjacent to the main
wharf and berth of Mtwara Port. The
proposed lease area is the Company’s
preferred location for concentrate
storage facilities.
Under the terms of the LOI, the
Company has been granted a six
month period to finalise its application
and execute a long term lease
agreement with the TPA.
The port of Mtwara has an existing
export capacity of 400,000 metric
PAGE 11
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NACHU GRAPHITE PROJECT NACHU GRAPHITE PROJECT
(MAGNIS 100%), TANZANIA
tonnes and currently less than half of
this capacity is being utilised.
Having access to an established,
high quality port facility with existing
capacity is expected to deliver
significant cost and operational
benefits for Nachu. The port provides
a readily defined and accessible export
route to market and also the ability
to create an efficient consumables
and equipment supply chain, both
through the construction and
operating phases.
Nachu Spherical
Graphite and Battery
Testing
downstream chemical purification
which is currently involved in
the production of the majority of
purified spherical graphite. The
opportunity to produce coated anode
graphite through a lower cost and
environmental footprint has Magnis
well placed to provide a compelling
choice for sustainable industries using
lithium-ion batteries.
Outstanding Lithium-ion Battery
Anode Results
The Company released the results of
lithium-ion battery tests that occurred
earlier this year for Nachu anode
product (>99.95% coated spherical
graphite) that returned the following:
99.99% TGC coated spherical graphite
achieved without chemical purification
◆◆ Tap density = 1.21 g/cc
◆◆ Compressed density = 1.75 g/cc
◆◆ BET = 1.908 m2/g
◆◆ Total Ash < 0.05 %
◆◆ First cycle efficiency = 95%
◆◆ First charge capacity = 354 mAh/g
These results see the Nachu anode
product compare favourably with the
leading Chinese natural and synthetic
graphite anode products currently in
the market place.
The results further demonstrate the
ability of Magnis to produce battery
grade anode material from Nachu
graphite feedstock, without the use
of chemicals and toxic acids and
solely utilising existing commercial
scale technology. This is an important
milestone for Magnis in its discussion
with potential customers as it
illustrates the viability of a greener and
lower cost supply chain for graphite
anodes in lithium-ion batteries.
The use of existing technology and
commercial facilities is also highly
significant in that it delivers replicable
results that could be scaled up quickly
at low cost in North America and other
geographic regions in close proximity
to a range of different end users.
Exceptionally high purity 99.99% total
graphite content (TGC) material has
been achieved in the production of
coated anode graphite for lithium-
ion batteries. The production of the
anode graphite from concentrate,
involved a two-step process whereby
the graphite flake concentrate was
firstly converted to uncoated spherical
graphite at 99.8% TGC, without the use
of chemical purification. The uncoated
spherical graphite was then subjected
to a thermal coating process, which
further purified the graphite in the
process of making the final coated
anode product.
The elimination of chemical
purification in the production of
spherical graphite means that graphite
concentrate feedstock from Nachu
can bypass the additional cost,
risk and environmental impact of
PAGE 12
Location of the full area intended for encompassing the proposed Nachu Graphite Storage Facility Area
adjacent to the port of Mtwara facilities
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 Nachu Graphite Anode with Silicon
Delivers Outstanding Lithium-ion
Performance
The Company released battery
performance results on 29 June 2016
obtained through blending Nachu
natural graphite with silicon additive.
The tests were conducted as part of
Magnis’ ongoing research and product
development program. The addition
of silicon to graphite anodes has been
identified as a key area of innovation
by potential customers looking to
deliver the next generation of high
performance in lithium-ion batteries.
Nachu coated spherical graphite
anode with 10% silicon delivered first
cycle charge capacity >580 mAh/g,
165% of the energy density compared
to best performing commercial
graphite anode and a cycle efficiency
of 99.8% after the third cycle.
Initial testing has highlighted:
i) First charge capacity of 587+
mAh/g, a 65% improvement over
the energy density of ~355mAh/g
for current industry standard
graphite anode;
ii) A first cycle efficiency of >86%; and
iii) Greater than 98% capacity retention
after 38 cycles
The 65% increase in anode capacity
translates to approximately 20%-30%
additional mileage for an electric
vehicle without any change in
battery size.
The results further demonstrate the
flexibility and potential of the Nachu
project to be a leading long term
supplier into the dynamic lithium-ion
battery market.
To receive the grant of the SML, the
Company’s application was initially
assessed by the MEM and then
recommended to the Mining Advisory
Board (MAB) for its endorsement.
Environmental
Certificate Granted
In August 2015, the Company
announced that the Nachu Graphite
Project had been issued with an
Environmental Certificate by the
National Environment Management
Council (NEMC) of Tanzania.
The issue of the Environmental
Certificate was based on the
Environmental Impact Study (EIS)
submitted to NEMC by the Company’s
consultants, MTL Consulting
of Tanzania and Digby Wells
Environmental of South Africa.
Special Mining Licence
Issued
On 8 September 2015, the Company
announced that a Special Mining
Licence (SML) SML 550/2015 for
the Nachu Graphite Project had been
granted by the Ministry of Energy and
Minerals (MEM) of Tanzania.
The granting of the SML is a key
approval for the Project and allows
the Company to move forward with
finalising funding arrangements for
further development. The SML was
granted to Uranex Tanzania Ltd,
the 100% owned Tanzanian subsidiary
of Magnis.
A SML is a superior licence to a Mining
Licence (ML) as it encompasses
projects with an investment over
US$100 million. The Company
applied for the SML in preference to a
standard ML for the following reasons:
1. A SML allows for a larger area to
be approved than a ML. A ML is
restricted to an area of 10 km2.
Magnis has been granted an area
of approximately 30km2.
2. A SML grants tenure for the
period of the development or for a
maximum period of 25 years. A ML
only allows for a 10 year period.
3. A SML is supplemented with a
Mineral Development Agreement
(MDA).
The Company reached agreement
with the Tanzanian Government in
October 2015 on the terms of an
MDA over a ten year period.
There are a number commercial
matters covered by the MDA and key
terms include the following:
(a) A 5% free carried shareholding in
the Nachu Graphite Project (NGP)
for the Government of Tanzania;
(b) An option for the Government
to purchase an additional 10% of
the NGP at ‘fair market value’ as
determined by an internationally
recognised valuer;
PAGE 13
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NACHU GRAPHITE PROJECT NACHU GRAPHITE PROJECT
(MAGNIS 100%), TANZANIA
(c) Fiscal stability which ensures all
taxation, royalties and duties are
fixed for the term of the MDA;
(d) A tax rate of 30% and a 3%
production royalty;
(e) Provisions that prevent any form of
nationalisation of the NGP.
Offtake Discussion
and Project Finance
Discussions remain advanced with
potential offtake, processing partners
and end users from South Korea,
Japan, North America and Europe.
Finance discussions for potential
project finance for the Nachu Graphite
Project remain active and would
be expected to be advanced further
once some western word offtakes
are in place.
The Company signed an MOU with
South Korean industry leader POSCO
E&C in October last year outlining
the basis for co-operation on the
procurement of funding
and construction of the Nachu
Graphite Project.
Divestment of
Non-Core Assets with
Uranium Demerger
Magnis divested the Company’s
non-core uranium assets. This
action provided an opportunity to
unlock additional value for Magnis
shareholders whilst also allowing
a primary focus on the development
of the world class Nachu
Graphite Project.
The Board proposed that a resolution
be put forward to shareholders at
a General Meeting (GM) on 5 April
2016 to approve the demerger of the
uranium assets into another vehicle,
with all shares received by Magnis
as consideration being distributed
to shareholders via an in-specie
distribution. The resolution was
passed at the GM and subsequently
the uranium assets have been
demerged into Uranium Africa Limited
(UAL), which is a public, unlisted
company. For every one Magnis share
held on the Record Date of 8 April
2016, 0.52828 shares in UAL were
allocated as the in-specie distribution.
Full workings and calculations were
announced to the ASX on 13 April
2016 and UAL holding statements
were sent to shareholders by the
share registry on 18 April 2016.
PAGE 14
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 SIGNIFICANT EVENTS
AFTER THE REPORTING DATE
S&P / ASX 300
Inclusion
Magnis was recently included into
the S&P/ASX 300 Index. Prior to
this, March 2016 saw the Company
included into the All Ordinaries
Index for the very first time thus
the Company has certainly made
significant progress in such a short
period with the focus on the Nachu
Graphite Project.
PAGE 15
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 COMPETENT PERSONS STATEMENT
All information with respect to
geology, assay results, results
interpretation or resource statements
of the Nachu and Ruangwa tenements
have been extracted from ASX
announcements made by the
Company during 2015 and 2016 as
listed below, and which are available
to view at www.magnis.com.au. The
Company confirms that it is not
aware of any new information or data
subsequent to those announcements
that materially affects the information
included in this document and
that all material assumptions and
technical parameters underpinning
the estimates continue to apply and
have not materially changed. The
Company also confirms that the form
and context in which the Competent
Person’s findings are presented have
not been materially altered.
Previous related ASX announcements
include: 15 December 2015; Nachu
Graphite Project Update (B Laws,
Exploration Manager Magnis
Resources Ltd), 1 February 2016;
Nachu Graphite Project Updated
Mineral Resource (A Proudman, AMC
Consultants and B Laws, Exploration
Manager Magnis Resources Ltd),
31 March 2016; Nachu Graphite
Bankable Feasibility Study Finalised
(C Moormann, Orelogy Consulting Pty
Ltd, A Proudman, AMC Consultants
and B Laws, Exploration Manager
Magnis Resources Ltd), 29 April
2016; Quarterly Activities Report (C
Moormann, Orelogy Consulting Pty
Ltd, A Proudman, AMC Consultants
and B Laws, Exploration Manager
Magnis Resources Ltd)
The information in this report that
relates to Ore Reserves is based
on information reviewed or work
undertaken by Mr Carel Moormann,
a Competent Person who is a Fellow
of The Australasian Institute of
Mining and Metallurgy. Mr Moormann
is a Principal Mining Consultant
employed by Orelogy Consulting
Pty Ltd. Mr Moormann has sufficient
experience which is relevant to the
style of mineralisation and type of
deposit under consideration and to
the preparation of mining studies to
qualify as a Competent Person as
defined in the 2012 Edition of the
‘Australasian Code for Reporting of
Exploration Results, Mineral Resources
and Ore Reserves’. Mr Moormann
consents to the inclusion in the
report of the matters based on his
information in the form and context in
which it appears.
The information in this report that
relates to the Mineral Resources
is based on information compiled
by Mr A Proudman, a Competent
Person who is a Fellow and Chartered
Professional Geology of the Australian
Institute of Mining and Metallurgy.
Mr Proudman is employed by AMC
Consultants Pty Ltd. Mr Proudman
has no financial interests in Magnis
Resources Limited and is independent
of the company. Mr Proudman 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 Exploration Results,
Mineral Resources and Ore Reserves’.
Mr A Proudman consents to the
inclusion in the report of the matters
based on his information in the form
and context in which it appears.
Mr Laws is a full time employee of
Magnis Resources Limited and has
sufficient experience which is relevant
to the style of mineralisation and type
of deposit under consideration and to
the activity which he is undertaking
to qualify as a Competent Person
as defined by the 2012 Edition of
the Australasian Code for reporting
of Exploration Results. Mr Laws, a
Competent Person who is a registered
Member of the Australasian Institute
of Mining & Metallurgy, consents
to the inclusion in the report of the
matters based on his information
in the form and context in which
it appears.
PAGE 16
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 MINERAL TENEMENTS
Schedule of Mineral Tenements
Tenement Number
Project/Tenement Name
Locality
Group Ownership %
PL7377/2011
PL8697/2012
PL8696/2012
SML550/2015
PL9017/2013
PL8076/2012
PL8418/2012
PL9018/2013
*tenements have expired or surrendered in July 2016
Ruangwa
Rutamba North
Lihehe East
SML Nachu
Issuna
Mkuju 1
Ilongo North
Manyoni East
Tanzania
Tanzania
Tanzania
Tanzania
Tanzania
Tanzania
Tanzania
Tanzania
100
100
100
100
100*
100*
100*
100*
PAGE 17
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 DIRECTORS’ REPORT
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the
‘consolidated entity’) consisting of Magnis Resources Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the entities it
controlled at the end of, or during, the year ended 30 June 2016.
DIRECTORS
The following persons were directors of Magnis Resources Limited during the whole of the financial year and up to the date of this report,
unless otherwise stated:
Frank Poullas (Chairman)
Appointed 10 September 2010 (Director), 29 August 2014 (Chairman)
Frank is an information technology consultant and in his personal capacity, a professional investor specialising in the graphite and
uranium sectors. For the last ten years he has been involved in various ventures increasing shareholder value in both these sectors.
Frank has a significant number of share and option holdings in the Company.
Current and former directorships of listed companies in last three years:
None
Special responsibilities
He was the Chairman of Sustainability Committee from 1 July 2015 to 31 December 2015. Frank is a member of the Audit, Sustainability
and Remuneration Committees.
Johann C Jooste-Jacobs (Non-Executive Director)
B.Acc, MBL, FCA, FAICD
Appointed 27 August 2010
Johann has more than 35 years experience in the resource sector where he has managed established companies, acquisitions,
expansions and start-up mining operations in Australia, South Africa and Indonesia. He is currently Executive Chairman of King Island
Scheelite Limited and a Non-Executive Director of Australian Zircon NL. Johann is a Fellow member of both the Institute of Chartered
Accountants and the Institute of Company Directors of Australia.
Current and former directorships of listed companies in last three years:
King Island Scheelite Limited (ASX:KIS)
Australian Zircon NL (ASX:AZC)
TW Holdings Limited (ASX:TWH) (Resigned 18 November 2014)
Special responsibilities
He is Chairman of the Audit Committee and became Chairman of the Remuneration Committee from 14 December 2015 to 30 June 2016.
Peter Tsegas (Non-Executive Director)
Appointed 16 June 2015
Peter has over 16 years of experience in Tanzania where he has been a resident for the past 11 years. He has worked to engage both the
private and government sectors on a number of projects and was Managing Director of Tancoal Energy Ltd which he successfully took
from an exploration company through to a JV with the Tanzanian government and then into production.
Current and former directorships of listed companies in last three years:
None
Special responsibilities
He became Chairman of the Sustainability Committee from 1 January 2016 and was appointed to the Audit Committee on 11 March 2016.
Colin (Cobb) Johnstone (Non-Executive Director)
Appointed 27 May 2016
Cobb is a mining engineer with extensive experience building and operating mines in Africa, Australia, Asia and South America. He held
the position of Chief Operating Officer for African copper miner Equinox Minerals until its acquisition by Barrick Gold in mid-2011, and
Chief Operating Officer for China-focussed gold miner Sino Gold Mining until its acquisition by Eldorado in late 2009. Mr Johnstone’s
distinguished career spans more than 30 years and he has served as General Manager of some of Australia’s largest mines including the
Kalgoorlie Super Pit in Western Australia, Olympic Dam in South Australia and Northparkes in New South Wales.
Current and former directorships of listed companies in last three years:
Evolution Mining Limited (ASX:EVN)
Reed Resources Limited (ASX:RDR) (Retired as Director on 30 September 2013 ). Reed Resources changed its name to Neometals
(ASX:NMT) as of 18 December 2014
Metallum Limited (ASX:MNE) (Resigned 15 October 2015)
PAGE 18
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 Special responsibilities
Appointed to the Remuneration Committee on 1 June 2016.
Len Eldridge (Executive Director)
Appointed 27 May 2016
Len is a mining finance professional with a diverse commercial skillset. Previous roles he has held include Head of Investor Relations at
Equinox Minerals, Head of Business Development and Investor Relations at Mount Gibson Iron, Associate Director and Senior Mining
Analyst at Macquarie Group and Senior Resources Analyst at leading Australian institutional fund manager, JCP Investment Partners. Mr
Eldridge is currently a principal of Fivemark Partners, a strategic financial, business development and investor relations advisory business.
Current and former directorships of listed companies in last three years:
None
Special responsibilities
None
Stephen B Hunt (Non-Executive Director)
B.Bus (Marketing)
Appointed 27 August 2010. Resigned 14 December 2015
Stephen gained over 16 years minerals marketing experience with BHP. In addition, Stephen has been a Director of Australian Zircon NL
and more recently has been a Director of his own minerals trading business, Standout Enterprises Ltd, as well as iron ore producer, IMX
Resources Ltd.
Current and former directorships of listed companies in last three years:
IMX Resources Limited (ASX:IXR) (Resigned 22 August 2014). IMX Resources changed its name to Indiana Resources (ASX:IDA)
as of 22 June 2016
Volt Resources (ASX:VRC)
Special responsibilities
Stephen was Chairman of the Remuneration Committee and a member of the Audit Committees until his resignation from Magnis on 14
December 2015.
COMPANY SECRETARY
Doug Richardson (Company Secretary)
B.Com (Economics & Finance), Grad Dip. Applied Finance & Investment
Appointed 14 January 2015
Doug Richardson has over 20 years experience in the financial services and resources sectors. His experience has included investment
research, analytics and client advising for various organisations including GIO Asset Management, The Australian Prudential Regulation
Authority, Suncorp and Philo Capital Advisers.
DIRECTORS’ INTERESTS
As at the date of this report, the interests (directly or indirectly held) of the Directors in the shares and options of the Company were:
Director
Frank Poullas
Johann C Jooste-Jacobs
Colin (Cobb) Johnstone
Peter Tsegas
Len Eldridge
Ordinary Shares
Options over Ordinary Shares
9,484,361
5,172,857
116,666
20,000
16,000
4,640,500
362,857
-
750,000
1,000,000
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
The principal activity of the Group during the year was prospecting, exploration and pre-development for graphite on its 100% owned
Nachu Project in Tanzania. There was no significant change in the nature of that activity during the year.
DIVIDENDS
No dividends have been paid during the year (2015: $NIL). The Directors do not recommend the payment of a dividend for this
financial year.
PAGE 19
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT CORPORATE INFORMATION
Magnis Resources Limited is a Company limited by shares that is incorporated and domiciled in Australia. The shares and options are
listed on the Australian Securities Exchange (“ASX”) under the ASX codes MNS and MNSO respectively.
Unlisted options issued to Directors beneficially via the Company’s employee option trust scheme are included in the option aggregate.
Details of shares or interests issued during and after the end of the financial year as a result of exercise of an option are:
Issuing entity
Number of shares
issued
Magnis Resources Limited
108,042,598
Class of
shares
Ordinary
Total amount paid
for shares
Amount unpaid on
shares
$11,393125
$nil
EMPLOYEES
Magnis Resources Limited had six employees as at 30 June 2016 (2015: five employees).
Category of employee
Total
Gender
All Employees and Board
Senior Executives
Board
SUSTAINABILITY
Male
Female
11
5
5
10
5
5
1
-
-
At Magnis, the environmental, safety and social aspects of our projects are treated as core considerations. Communities and
governments are consulted prior to exploration and project development activities taking place and the communication is open and
respectful. Protecting the environment is a central deliberation in project planning and environmental performance is regarded as critical
throughout the project lifecycle. Magnis is committed to using the highest international benchmarks appropriate for project development
in addition to satisfying regulatory requirements.
Sustainability highlights during the past year include the following:
» Magnis continued with the key components of compliance with the Tanzanian regulatory approvals process and in accordance with
international benchmarks.
» Stakeholder consultation during the past year has included considerable engagement at the district, regional and national levels as well
as extensive consultation with local communities. Magnis has an excellent track record on stakeholder engagement and as a result has
developed positive relationships with governments and local communities.
» In the area of Occupational Health and Safety, Magnis actively promotes active employee participation in continuous improvement
processes. Through employee training and engagement in this area Magnis has achieved an improved standard of safety. Over
the past year Magnis has had no serious incidents or near misses, with only one minor first aid treatable injury, however continuous
improvement in minimising the risk to employee safety remains a key focus as we move towards construction and mining.
» In the area of Corporate Social Responsibility (CSR), the Magnis Community Partnership Program (MCPP) is ongoing. Of note
construction materials have been donated to the villages of Matambarale, Mihewe, Namikulo and Chunyu, for a variety of school and
medical clinic building projects. Through the MCPP Magnis contributes various inputs from time and planning skills to materials and
equipment for community development programs in areas such as cultural awareness, education, agriculture, environment, sport and
health.
» The Company, besides its dedication to supply books for the upgrade of school standards to the local community as part of our CSR,
assisted the needy secondary and high school students by paying school fees, uniforms, travel costs, etc to enable them to join and
proceed with studies. Other areas of support were community road repairs, a HIV Program, health insurance to households, floods
disasters, etc.
» Magnis also contributes to the economic and social development of our host communities in other ways. Our presence benefits
local populations by creating direct employment (exploration activities) and indirect economic benefits through the provision of food,
accommodation and other supplies.
» In Tanzania, Magnis has been actively engaged in providing valuable practical training to build the broader skill base within the mining
industry. Magnis has successfully and is currently hosting geology students from the Universities of Dar es Salaam and the University
of Dodoma in order to provide exploration experience and technical training in their final year of studies.
During the past financial year, Magnis was issued with an Environmental Certificate by the National Environmental Management Council
(NEMC) of Tanzania. The granting of the Environmental Certificate was based on the Environmental Impact Study (EIS) submitted to
NEMC by the Company’s consultants, MTL Consulting of Tanzania and Digby Wells Environmental of South Africa.
PAGE 20
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT The aim of the Company was to complete the EIS to International Finance Corporation Standards so that it would conform to necessary
permitting and funding requirements for the Nachu Graphite Project. This Environmental Certificate was an essential component for the
granting in September 2015 of a Special Mining Licence in Tanzania.
To achieve this, the Company had both the Tanzanian and international consultants conduct the Environmental and Social Impact
Assessment (ESIA) which formed the basis for the EIS. MTL Consulting is a very experienced consultancy in Tanzania who has worked
on many projects in the country and Digby Wells Environmental has a wide range of international experience. Their efforts combined to
produce a thorough study and assessment.
Meetings continued with the main village committees at Nachu to outline the process of potential mine and processing plant construction
and the benefit to local employment and economic growth. These meetings included the Magnis Chief Operations Officer, the Geology
team and our Community Liaison Officer.
As part of the community resettlement process for the project development, a valuation of assets for all Project Affected Peoples (PAP)
has commenced. The valuation is being conducted by an independent valuation company in accordance with Tanzanian legislation.
While there are some 575 PAP, most comprise small acreage farmers with only an estimated 58 residences requiring relocation. The
estimated cost for the resettlement will be based on a strong understanding of the assets in the affected area and the fair value for land
access compensation.
CORPORATE
Directors Movements
Mr Stephen Hunt resigned from his position of Non-Executive Director on 14 December 2015.
Mr Colin (Cobb) Johnstone was appointed as a Non-Executive Director on 27 May 2016.
Mr Len Eldridge was appointed as an Executive Director on 27 May 2016.
Placements
A placement to sophisticated investors was announced on 12 February 2016. The placement raised $3 million at a price of 35c per share.
On 12 October 2015 a placement to sophisticated and institutional investors from Australia and overseas was announced. The amount
raised was $4 million at 40c per share.
Both placements were undertaken to provide working capital and to fast track pre-development of the Nachu Graphite Project.
Company Staffing
No key staffing appointments were made for the Company during the past twelve months.
DIVESTMENT OF NON CORE ASSETS
The Company divested non-core uranium assets in April 2016 via a demerger and in-specie distribution of shares in a new company,
Uranium Africa Limited (UAL). The Board was of the opinion that the Company share price attributed minimal value to its non-core assets
and shareholders would gain more value through a demerger of the assets into another vehicle with all shares received by the Company
as consideration, being distributed to shareholders via an in-specie distribution.
Following an Extraordinary General Meeting (EGM) held on 5 April 2016 and the announced results of the resolution vote to approve the
demerger of uranium assets, an allotment of UAL fully paid ordinary unlisted shares, pursuant to the EGM was completed.
For every one Magnis Resources Limited (ASX:MNS) share held on the Record Date of 8 April 2016, 0.52828 shares in UAL were
allocated as the in-specie distribution.# Fractional shares were rounded down to the nearest whole share. As per the timetable
mentioned in section 2.2 of the Notice of EGM released on 26 February 2016, the completion of the demerger including the in-specie
distribution of UAL shares to shareholders was on 15 April 2016 and holding statements were sent to shareholders by the share registry
on 18 April 2016.
OPERATING RESULTS FOR THE YEAR
The Group incurred an operating loss after tax of $12,026,781 (2015: $13,244,576). Refer to Note 1 of the financial statements for
accounting policies used. Summarised segment operating results are as follows:
Australia
East Africa
2016
Income $
Results $
739,416
56
(12,259,525)
(7,241,142)
# To calculate the MNS/UAL in-specie distribution ratio, the 200,000,000 UAL shares on issue as per the disclosure in the Notice of Extraordinary Meet-
ing and Short Form Prospectus were divided by the number of shares in MNS on issue at the record date. (200,000,000/378,589,995) = 0.52828
PAGE 21
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT Intersegment elimination
Income and losses before tax
2016
Income $
(573,389)
166,083
Results $
7,473,886
(12,026,781)
The Group continued its focus on exploration and evaluation in Tanzania. Exploration costs for the year amounted to $7,793,472 (2015:
$8,890,495). This substantial evaluation expenditure was spent at the Nachu Graphite Project for Bankable Feasibility Study.
REVIEW OF FINANCIAL CONDITION
Liquidity and Capital Resources
The statement of cash flows shows an increase in cash and cash equivalents for the year ended 30 June 2016 of $4,391,398 (2015:
$1,835,340 decrease). During the year the Group raised $7,000,000 (2015: 9,565,446) before costs from a share placement and
$9,697,156 (2015: $394,526) from options exercised. At year end the Group has liquid funds of $7,208,404 (2015: $2,817,006) available for
future operational use and has no borrowings (2015: $NIL).
Going concern
In light of the circumstances disclosed in note 1 of the Financial Report, the auditor has included an emphasis of matter in their
audit report.
Shares and Options Issues
During the year the Company raised funds from equity as follows:
» $7,000,000 (2015: $9,565,446) from a share placement of 18,571,429 (2015: 44,052,294) ordinary fully paid shares.
» $9,697,156 (2015: $394,526) from the exercise of options then subsequent issue of 95,806,548 (2015: 8,070,255)
ordinary fully paid shares.
Capital Expenditure
Capital expenditure on property, plant and equipment during the year was $55,998 (2015: $60,940).
GROUP PERFORMANCE
Consolidated loss after tax
12,026,781
13,244,576
5,177,375
4,912,364
11,757,348
2016
2015
2014
2013
2012
Shareholder Returns
Basic loss per share (cents)
Diluted loss per share (cents)
RISK MANAGEMENT
2016
3.42
3.42
2015
4.22
4.22
The Board is responsible for ensuring that risks are identified on a timely basis and that the Group’s activities manage the risks identified
by the Board.
The Group believes that it is crucial for all Board members to be a part of this process. The Board has not established a separate risk
management committee but reviewed the major risks to the business with management and has the following processes in place to
monitor it:
» The Board has undertaken strategic reviews of its activities and conveyed to management and shareholders its objectives.
» The Board approved operating budgets and at its meetings, monitors actual expenditure to budget.
» The Board reviews sovereign, operating and environmental risks with management and from time to time external consultants provide
reports on its practices.
» The Board assesses political and sovereign risks relating to its international assets by monitoring local media and politics. Group
representatives liaise with all levels of Government to maintain awareness as to matters that may affect the Company.
The Directors have identified risks associated with our business. Inherently, exploration is a risky undertaking that often provides
substantial rewards to investors whenever success is achieved. This is the foremost risk that the Board endeavours to mitigate through
its strategic identification of potential mineralisation targets and oversight of management subsequently conducting the respective
exploration programmes. The Board is very aware of the financial risks associated with the exploration industry. The Group presently
PAGE 22
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT accesses funds through the capital markets in order to fund its future business needs. The capital markets are subject to prevailing
economic conditions so the Directors are attuned to raising funds to meet future needs when circumstances permit.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The Company divested non-core uranium assets in April 2016 via a demerger and in-specie distribution of shares in a new company,
Uranium Africa Limited (UAL).
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group’s exploration activities, both in Australia and overseas, are subject to environmental regulations and guidelines operating in
the licence areas. Failure to meet environmental conditions attaching to the group’s mineral tenements could lead to forfeiture of the
tenements. No environmental breaches have occurred or have been notified by any government agencies during the year ended
30 June 2016.
DIRECTORS MEETINGS
The number of Directors meetings held (including meetings of committees of Directors) and the number of meetings attended by each of
the Directors of the Company during the financial year are:
Number of meetings attended:
J C Jooste-Jacobs
S B Hunt
F Poullas
P Tsegas
C Johnstone
L Eldridge
Directors
Meeting
Audit
Committee
Remuneration
Committee
Sustainability
Committee
A
6
2
6
6
1
1
B
6
2
6
6
1
1
A
2
1
2
-
*
*
B
2
1
2
-
*
*
A
-
-
-
*
-
*
B
-
-
-
*
-
*
A
*
*
-
-
*
*
B
*
*
-
-
*
*
Notes
A Number of meetings attended.
B Number of meetings held during the year whilst the director held office.
* Not a member of the relevant committee.
The Audit Committee comprised J C Jooste-Jacobs (Chairman), F Poullas, and S B Hunt and P Tsegas. The Remuneration Committee comprised S B Hunt,
J C Jooste-Jacobs (Chairman) and F Poullas and C Johnstone. The Sustainability Committee comprised of P. Tsegas (Chairman), F. Poullas, R J Chittenden
(Chief Operations Officer).
S B Hunt resigned as a Director of the Company on 14 December 2015.
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for Directors and executives.
REMUNERATION POLICY
The Board recognises that the performance of the Group depends upon the quality of its Directors and executives. To achieve its
operating and financial activities the Group must attract, motivate and retain highly skilled Directors and executives.
The Group’s policy for determining the nature and amount of emoluments of Board members and executives of the Company is
assessed annually at the end of each calendar year and are set by reference to the mineral exploration industry market place. The
Remuneration Committee submits its recommendation to the Board for its consideration.
All remuneration paid to Directors and executives is valued at the cost to the Group and expensed.
The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time, commitment and
responsibilities based on recommendations from the Remuneration Committee. The Board determines payments to the Non-Executive
Directors and reviews their remuneration annually, based on market practice, duties and accountability. Furthermore, the Remuneration
Committee ensures its remuneration recommendations are free from undue influence either by or to whom its recommendations may
relate through the establishment of on an agreed set of protocols previously set by McDonald & Partners, committee members and Key
Management Personnel. Having followed these protocols, the Board is satisfied that no such undue influence was exerted upon the
Committee.
The current maximum aggregate of Non-Executive Directors fees payable is $400,000; having been approved by members on 14
November 2008. Presently, Non-Executive Directors receive annual fees of between $50,000 to $65,000 and the Non-Executive
Chairman $100,000. An additional $5,000 per annum is paid to Directors who act as Chairman of Committees. Superannuation is based
on each individual Director’s service agreement.
Any increase in the maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by
PAGE 23
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT shareholders at the annual general meeting. Fees for Non-Executive Directors are not linked to the performance of the group.
To align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Company.
DIRECTOR AND OTHER EXECUTIVES DETAILS
Listed on pages 18 and 19 of the Directors Report are persons who acted as a director of the Company during or since the end of the
financial year.
For the purposes of this report, Key Management Personnel (KMP) of the Group are those persons having authority and responsibility for
planning directing and controlling the major activities of the Company and the Group, directly or indirectly, including any Director (whether
executive or otherwise) of the Company, and senior or key management. In addition to the Directors, the following were KMP during the
financial year:
Dr Frank Houllis – Chief Executive Officer
Rod Chittenden – Head of Operations
PERFORMANCE BASED REMUNERATION
The Group currently has no performance based remuneration component built into the Chief Executives’ remuneration package.
Bonuses may be payable at the Board’s discretion following the annual performance review. The Company does not have policies
regarding risk management of flexible components of remuneration packages.
COMPANY PERFORMANCE, SHAREHOLDER WEALTH AND DIRECTORS AND EXECUTIVES
REMUNERATION
In accordance with the remuneration policy noted above, the Group includes the following principles in its remuneration framework:
» Competitive rewards are set to attract high calibre executives;
» Executive rewards are linked to shareholder value.
For executives the Group’s policy is to position total employment costs within a peer group determined by the remuneration consultants.
The Remuneration Committee did rely on previous reports of the consultant for determining remuneration during the period. The mix of
fixed and variable components of employment costs is derived from data assessing market rate labour costs by position.
There are no financial measures that are included in the assessment but the Remuneration Committee considers the growth in market
capitalisation an important parameter. For non-financial measures a range of factors are considered; market position, relationship with
a range of stakeholders, risk management, leadership and team contribution.
SHARE OPTION PLAN
Magnis Resources Limited operates an ownership-based scheme for Directors and Employees of the consolidated entity.
In accordance with the provisions of the plan, shares and options are held on behalf of Plan Participants by the Trustee of the Uranex
Option Share Trust (“UOST”).
During the financial year NIL shares (2015:405,236), and 750,000 options (2015: 6,900,000) on varying terms and conditions were
allotted to the Trust under the share scheme.
Performance Income as a proportion of total compensation
The Company’s performance as measured by the ordinary shares, share price for the opening and closing of the financial year was
$0.24 and $0.975 respectively (306% increase). Also the company has listed options, option price for the opening and closing of the
financial year was $0.155 and $0.875 respectively (465% increase). New capital of $16.7 million was raised during the financial year to
conduct exploration and evaluation activities in Southern Tanzania and provide working capital.
750,000 options issued to Employees were not tailored to performance targets because exploration company inherent assets are highly
variable in value and are, in effect, unknown until exploration has been completed. As asset values are the key to corporate growth, it is
not feasible in these circumstances to set up a fair performance measure.
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreement.
Remuneration agreements are set out below:
Dr Frank Houllis - Chief Executive Officer
» No agreement expiry date;
» Remuneration is $286,000 per annum plus statutory superannuation guarantee;
» The agreement and the employment created by it may be terminated by either Magnis Resources Limited or Dr Houllis giving the other
party 12 months’ notice. The agreement also includes a 6 month ‘non-compete’ clause for Dr Houllis; and
» The agreement is subject to annual review.
PAGE 24
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT Rodney Chittenden – Head of Operations
» No agreement expiry date;
» Remuneration is $260,000 per annum plus statutory superannuation guarantee prior to March 16. Remuneration was adjusted to
$225,714 per annum plus statutory superannuation guarantee in Australia and base salary USD$24,000 per annum plus statutory
superannuation guarantee in Tanzania;
» The agreement and the employment created by it may be terminated by either Magnis Resources Limited or Mr Chittenden giving the
other party 1 month’ notice. The agreement also includes a 6 month ‘non-compete’ clause for Mr Chittenden; and
» The agreement is subject to annual review.
Table 1: Remuneration for the year ended 30 June 2016
Salary & Fees
$
Cash
Bonuses
$
Termination
Benefits^
$
Post
Employment
Benefits^ $
Share Based
Payments
options# $
Non Executive Directors
F Poullas*
J C Jooste-Jacobs
P Tsegas*
C Johnstone (appointed 27 May 2016)
S B Hunt (resigned 14 Dec 15)*
Executive Directors
100,000
56,250
52,500
5,417
24,063
L Eldridge (appointed 27 May 2016)*
12,500
-
-
-
-
-
-
Key management personnel
F Houllis
R J Chittenden
286,000
255,986
792,716
10,000
20,000
30,000
-
-
-
-
-
-
-
-
9,500
5,344
-
-
(4,895) 1
(4,895) 2
64,913 3
-
2,286
(4,895) 4
-
27,170
25,262
69,562
-
-
-
* Fees paid to related entities.
^
Includes superannuation and movements in employee entitlements.
# Share based payments consist of shares, options and rights issued.
~ Other than where indicated, no remuneration was performance based.
1 Represents ($4,895) unvested right options.
2 Represents ($4,895) unvested right options.
3 Represents $64,913 worth of vested options
4 Represents ($4,895) unvested right options.
Table 2: Remuneration for the year ended 30 June 2015
Salary & Fees
$
Cash
Bonuses
$
Termination
Benefits
$
Post
Employment
Benefits^ $
Share Based
Payments
options# $
50,228
942,506
Non Executive Directors
F Poullas*
J C Jooste-Jacobs
S B Hunt*
P Tsegas
P Sarantzouklis (resigned 23 August 14)
Key management personnel
F Houllis!
R J Chittenden
92,663
55,000
55,000
2,197
16,304
242,177
260,000
-
-
20,000
-
-
7,500
-
723,341
27,500
-
-
-
-
-
-
-
-
8,803
5,225
5,225
-
10,8855
10,8856
10,8857
-
1,549
(45,260)8
(27,407)
23,006
24,700
68,508
189,2259
461,908
43,50010
328,200
220,120
1,039,469
* Fees paid to related entities.
^
Includes superannuation and movements in employee
entitlements.
# Share based payments consist of shares, options and rights
issued.
Other than where indicated, no remuneration was performance
based.
Dr Frank Houllis started on 27 August 2014.
~
!
5 Represents ($12,500) unvested rights, $20,698 vested rights and $2,687 rights
6 Represents ($12,500) unvested rights, $20,698 vested rights and $2,687 rights
7 Represents ($12,500) unvested rights, $20,698 vested rights and $2,687 rights
8 Represents ($45,260) unvested right options
9 Represents $189,225 options
10 Represents $43,500 options
PAGE 25
Total~ $
104,605
56,699
117,413
5,417
21,454
12,500
323,170
301,248
Total~ $
112,351
71,110
91,110
2,197
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT Compensation options granted and vested
During the financial year, the following share-based payments were awarded, vested or lapsed:
Table 1: Options
Options Issued
Grant Date and
Vesting Date
Expiry Date
Grant Date
Fair Value $
Number
Aug-15
Nov-15
Nov-15
Nov-15
May-16
May-16
Jun-16
Apr-16
Apr-16
Jun-11
Jun-13
Nov-13
May-14
Jan-15
Jun-13
Feb-15
03-Feb-18
0.0936
3,000,000*
Nov-15
06-Nov-18
0.1004
1,000,000*
Nov-15
06-Nov-18
0.1255
1,000,000*
Nov-15
30-Nov-17
0.1095
1,500,000*
May-16
30-Nov-17
0.239
1,500,000*
May-16
30-Nov-17
0.1539
1,000,000*
Jun-16
23-Feb-18
0.4472
1,500,000*
Mar-16
06-Nov-18
Mar-16
06-Nov-18
19-Nov-15
14-Jun-16
0.0977
0.0754
375,000
375,000
0.305
1,500,000
0.0178
750,000
17-Nov-16
0.0327
250,000*
31-May-17
30-Jan-18
0.0518
300,000*
0.058
600,000*
14-Jun-16
0.0226
750,000
Jun-11
Jun-13
Nov-13
May-14
Jan-15
Jun-13
Original
Exercise
Price of
Option $
0.3
0.5
0.4
0.4
0.4
0.6
0.5
0.35
0.45
0.175
0.15
0.18
0.20
0.35
0.10
Modified
Exercise
Price of
Option! $
0.29533
0.49533
0.39533
0.39533
unchanged
unchanged
unchanged
unchanged
unchanged
unchanged
0.14533
0.17533
0.19533
0.34533
0.09533
Fair Value
Expense
under
AASB 2 $
280,800
100,400
125,500
164,250
358,500
153,900
670,800
36,638
28,275
457,500
13,350
8,175
15,540
34,800
16,950
*Non Director or KMP Options.
! Adjustment to the exercise price due to the ASX Listing Rule 7.22.3 following the demerger of Uranium Assets
Table 2: Rights
Rights Issued
Grant Date
Expiry Date
Grant Date
Fair Value $
Number
Fair Value Expense under AASB 2 $
Sep-13
3-Sep-13
31-Dec-15
0.0125
1,500,000
18,750
ADDITIONAL INFORMATION
The earnings of the consolidated entity for the five years to 30 June 2016 are summarised below:
Shares Issued
2016
$
2015
$
2014
$
2013
$
2012
$
(Loss) after income tax
(12,026,781)
(13,244,576)
(5,177,375)
(4,912,364)
(11,757,348)
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Shares Issued
Share price at financial year end ($)
Total dividends declared (cents per share)
Basic loss per share (cents per share)
2016
$
0.975
-
3.42
2015
$
0.24
-
4.22
2014
$
0.16
-
1.98
2013
$
0.049
-
2.32
2012
$
0.14
-
6.27
PAGE 26
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT ADDITIONAL DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL
Shareholding
The number of shares in the company held during the financial year by each director and other members of key management personnel
of the consolidated entity, including their personally related parties, is set out below:
Ordinary Shares
F Poullas
J C Jooste-Jacobs
P Tsegas
C Johnstone!
S B Hunt (resigned 14 Dec 2015)*
L Eldridge!
F Houllis
R J Chittenden
Balance at
the start of
the year
7,642,215
4,350,169
-
116,666
3,367,538
-
56,727
900,167
16,433,482
Granted
Additions Disposals/other
1,828,711
-
1,060,000
(237,312)
20,000
-
-
-
Balance at
the end of
the year
9,470,926
5,172,857
20,000
116,666
500,000
(315,000)
3,552,538
-
-
-
(45,381)
-
11,346
1,600,167
(1,450,000)
1,050,334
5,008,878
(2,047,693)
19,394,667
-
-
-
-
-
-
-
-
-
* at time of resignation as Director.
Option holding
! opening balance as at 27 May 2016
The number options over ordinary shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Options over ordinary shares
F Poullas
J C Jooste-Jacobs
P Tsegas
C Johnstone!
S B Hunt (resigned 14 Dec 2015)*
L Eldridge!
F Houllis
R J Chittenden
Balance at
the start of
the year
5,560,500
1,372,857
-
-
850,000
1,000,000
2,278,486
2,350,167
13,412,010
Granted
Additions/
Disposals
Exercised
Balance at
the end of
the year#
-
-
750,000
-
-
-
-
-
(125,000)
(795,000)
4,640,500
50,000
(1,060,000)
-
-
-
-
362,857
750,000
-
(16,913)
(500,000)
333,087
-
-
-
-
-
(1,600,167)
(3,955,167)
1,000,000
2,278,486
750,000
10,114,930
750,000
(91,913)
* at time of resignation as Director.
! opening balance as at 27 May 2016
# all options vest immediately and are exercisable at anytime
Right holding
The number of rights to shares in the company tied to seven tranches of performance hurdles held during the financial year by each
director is set out below:
Rights over ordinary shares
F Poullas
J C Jooste-Jacobs
P Tsegas
C Johnstone!
Balance at
the start of
the year
500,000
500,000
-
-
S B Hunt (resigned 14 Dec 2015)*
500,000
L Eldridge!
F Houllis
R J Chittenden
-
-
-
1,500,000
Granted
-
-
-
-
-
-
-
-
-
* at time of resignation as Director.
! opening balance as at 27 May 2016
Lapsed
(500,000)
(500,000)
-
-
(500,000)
-
-
(1,500,000)
Balance at
the end of
the year
-
-
-
-
-
-
-
-
-
PAGE 27
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIES
During or since the financial year, no Director of the Company has received or become entitled to receive a benefit, other than a benefit
included in the aggregate amount of emoluments received or due and receivable by the Directors shown in the consolidated accounts,
by reason of a contract entered into by the Company or an entity that the Company controlled or a body corporate that was related to the
Company when the contract was made or when the Director received, or became entitled to receive, the benefit with:
» a Director, or
» a firm of which a Director is a member, or
» an entity in which a Director has substantial financial interest except the usual professional fees for their services paid by the
Company to:
Identity of
Related Party
Nature of Relationship
Type of Transaction
Strong Solutions
Pty Limited
Frank Poullas is a related party of
Strong Solutions Pty Limited and a
director of Magnis Resources Limited
Consulting Fees
and PP&E purchases
Minerals and Metal
Marketing
Stephen Hunt is a related party of
Minerals and Metal marketing and a
director of Magnis Resources Limited
Fivemark Capital
Len Eldridge is a related party of
Fivemark Capital and a Director of
Magnis Resources Limited
Consulting Fees
Consulting Fees and
Share based payment
Peter Tsegas
Peter Tsegas is a Director of Magnis
Resources Ltd
Consulting Fees
Terms &
Conditions of
Transaction
Aggregate Amount
2016 $
2015 $
Normal
commercial
terms
Normal
commercial
terms
Normal
commercial
terms
Normal
commercial
terms
327,817
159,765
32,946
63,000
184,634
56,494
-
-
2015 REMUNERATION REPORT
The Remuneration Report received positive shareholder support from members (95%) at the 2015 Annual General Meeting.
This concludes the remuneration report, which has been audited
SHARES UNDER OPTION OR ISSUED ON EXERCISE OF OPTIONS
Details of unissued shares or interests under option as at 30 June 2016 in Magnis Resources Limited are:
Number of Ordinary
Shares under Option
Class of Shares
Original Exercise Price of
Option $
Modified Exercise Price of
Option! $
Expiry Date of Option
125,000
500,000
750,000
750,000
1,500,000
1,500,000
1,000,000
3,500,000
3,000,000
1,500,000
1,000,000
1,000,000
375,000
375,000
117,672,741
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
0.18
0.29
0.225
0.3
0.4
0.4
0.6
0.35
0.3
0.5
0.5
0.4
0.35
0.45
0.1
0.17533
0.28533
0.22033
0.29533
0.39533
unchanged
unchanged
0.34533
0.29533
unchanged
0.49533
0.39533
unchanged
unchanged
0.09533
17-Nov-16
31-Mar-17
17-Nov-17
17-Nov-17
30-Nov-17
30-Nov-17
30-Nov-17
30-Jan-18
3-Feb-18
23-Feb-18
6-Nov-18
6-Nov-18
6-Nov-18
6-Nov-18
31-May-17
! Adjustment to the exercise price due to the ASX Listing Rule 7.22.3 following the demerger of Uranium Assets
PAGE 28
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue of the
Company or of any other body corporate or registered scheme. No voting rights attached to the options.
There were 95,806,548 (2015:2,070,255) shares issued during the 2016 financial year as a result of exercising of options.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has not agreed to indemnify all the directors and executive officers for any breach of laws by the Company for which they
may be held personally liable. The agreement provides for the Company to pay liabilities or legal expenses to the extent permitted by law.
During or since the financial year, the Company has paid premiums insuring all the Directors of Magnis Resources Limited against costs
incurred in defending proceedings for conduct other than:
(a) a wilful breach of duty;
(b) a contravention of sections 182 or 183 of the Corporations Act 2001,
as permitted by section 199B of the Corporations Act 2001.
The total amount of insurance contract premiums paid is confidential under the terms of the insurance policy.
INDEMNIFICATION AND INSURANCE OF AUDITOR
To the extent permitted by law, the Company has agreed to indemnify its auditors, BDO East Coast Partnership, as part of the terms of
its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been
made to indemnify BDO East Coast Partnership during or since the financial year.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
Company, or to intervene in any proceedings to which the Company is party for the purpose of taking responsibility on behalf of the
Company for all or part of those proceedings.
SUBSEQUENT EVENTS
No other matter or circumstance has arisen since 30 June 2016, which has significantly affected, or may significantly affect the operations
of the Group, the result of those operations or the state of the affairs of the Group in subsequent years.
NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are
outlined below:
» Taxation services –Australia & Tanzania $157,831.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on
the auditor’s behalf), 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 as disclosed in note 20 to the financial statements do not compromise the external
auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
» all non-audit services have been reviewed & approved to ensure that 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 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.
ROUNDING OF AMOUNTS
The company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191,
dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the directors’ report and the financial statements
are rounded off to the nearest dollar, unless otherwise indicated.
AUDITOR INDEPENDENCE
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 30.
Signed in accordance with a resolution of the Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
F Poullas
Non - Executive Chairman
Sydney, 16 September 2016
PAGE 29
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
(cid:55)(cid:72)(cid:79)(cid:29)(cid:3)(cid:14)(cid:25)(cid:20)(cid:3)(cid:21)(cid:3)(cid:28)(cid:21)(cid:24)(cid:20)(cid:3)(cid:23)(cid:20)(cid:19)(cid:19)(cid:3)
(cid:41)(cid:68)(cid:91)(cid:29)(cid:3)(cid:14)(cid:25)(cid:20)(cid:3)(cid:21)(cid:3)(cid:28)(cid:21)(cid:23)(cid:19)(cid:3)(cid:28)(cid:27)(cid:21)(cid:20)(cid:3)
(cid:90)(cid:90)(cid:90)(cid:17)(cid:69)(cid:71)(cid:82)(cid:17)(cid:70)(cid:82)(cid:80)(cid:17)(cid:68)(cid:88)(cid:3)
(cid:3)
(cid:47)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:20)(cid:20)(cid:15)(cid:3)(cid:20)(cid:3)(cid:48)(cid:68)(cid:85)(cid:74)(cid:68)(cid:85)(cid:72)(cid:87)(cid:3)(cid:54)(cid:87)(cid:3)(cid:3)
(cid:54)(cid:92)(cid:71)(cid:81)(cid:72)(cid:92)(cid:3)(cid:49)(cid:54)(cid:58)(cid:3)(cid:21)(cid:19)(cid:19)(cid:19)(cid:3)
(cid:3)(cid:3)
(cid:36)(cid:88)(cid:86)(cid:87)(cid:85)(cid:68)(cid:79)(cid:76)(cid:68)(cid:3)
(cid:3)
(cid:3)(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:39)(cid:40)(cid:38)(cid:47)(cid:36)(cid:53)(cid:36)(cid:55)(cid:44)(cid:50)(cid:49)(cid:3)(cid:50)(cid:41)(cid:3)(cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:38)(cid:40)(cid:3)(cid:37)(cid:60)(cid:3)(cid:42)(cid:36)(cid:53)(cid:40)(cid:55)(cid:43)(cid:3)(cid:41)(cid:40)(cid:58)(cid:3)(cid:55)(cid:50)(cid:3)(cid:55)(cid:43)(cid:40)(cid:3)(cid:39)(cid:44)(cid:53)(cid:40)(cid:38)(cid:55)(cid:50)(cid:53)(cid:54)(cid:3)(cid:50)(cid:41)(cid:3)(cid:48)(cid:36)(cid:42)(cid:49)(cid:44)(cid:54)(cid:3)(cid:53)(cid:40)(cid:54)(cid:50)(cid:56)(cid:53)(cid:38)(cid:40)(cid:54)(cid:3)
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(cid:3)
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PAGE 30
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 AUDITOR’S INDEPENDENCE DECLARATION
CORPORATE GOVERNANCE STATEMENT
The Company is committed to the pursuit of creating value for shareholders, while at the same meeting shareholders’ expectations of
sound corporate governance practices. As with all its business activities, the Company is proactive in respect of corporate governance
and puts in place those arrangements which it considers are in the best interests of shareholders, and consistent with its responsibilities
to other stakeholders.
THE BOARD OF DIRECTORS
The Board determines the corporate governance arrangements of the Company.
This statement discloses the Company’s adoption of the Corporate Governance Principles and Recommendations (3rd edition) (the
“Principles”) released by the Australian Securities Exchange Corporate Governance Council in March 2014, effective 1 July 2014. The
Principles can be viewed at www.asx.com.au. The Principles are not prescriptive; however, listed entities (including the Company) are
required to disclose the extent of their compliance with the Principles, and to explain why they have not adopted a Principle (the ‘if not,
why not’ approach). The Principles have operated throughout the year unless otherwise indicated.
The table at the end of this statement provides cross references between the disclosures and statements in this Corporate Governance
Statement and the relevant Principles
ROLE OF THE BOARD
The Directors must act in the best interest of the Company and in general are responsible for, and have the authority to determine, all
matters relating to the policies, management and operations of the Company.
The Board’s responsibilities, in summary, include:
» providing strategic direction and reviewing and approving corporate strategic initiatives;
» overseeing and monitoring organisational performance and the achievement of the Company’s strategic goals and objectives;
» appointing, monitoring the performance of, and, if necessary, removing the Managing Director;
» ratifying the appointment or removal, and contributing to the performance assessment of the members of the
senior management team;
» planning for Board and executive succession;
» ensuring there are effective management processes in place and approving major corporate initiatives;
» adopting an annual budget and monitoring management and financial performance and plans;
» monitoring the adequacy, appropriateness and operation of internal controls;
» identifying significant business risks and reviewing how they are managed;
» considering and approving the Company’s Annual Financial Report and the interim financial and activities reports;
» enhancing and protecting the reputation of the Company;
» reporting to, and communicating with, shareholders; and
» setting business standards and standards for social and ethical practices.
Day to day management of the Company and implementation of Board policies and strategies has been formally delegated to senior
executives and management. It is the responsibility of the Board to oversee the activities of management in executing delegated tasks. In
particular, the Board has delegated management responsibility for:
» delivering key objectives and milestones in accordance with market expectation as are set by the Company;
» developing project budgets for capital and operating expenditure for Board review and if appropriate, approval;
» developing and maintaining an effective risk management framework and keeping the Board and the market fully informed about risk;
» the prudent management of the Company’s cash reserves in accordance with the approved annual operating budget;
» regulatory compliance across all jurisdictions in which the Company undertakes business covering amongst other things health and
safety, tax, accounting and company reporting.
COMPOSITION OF THE BOARD
The entire Board comprises four non-executive Directors and one executive Director with a broad range of skills, expertise and
experience, and all of whom add value to the operation of the Board. The Board comprises a majority of independent Directors (four out
of five), while the Non Executive Chairman is a significant shareholder.
PAGE 31
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 The independence of Directors is important to the Board. Independence is determined by objective criteria acknowledged as being
desirable to protect investor interests and optimise value to investors. The Board regularly assesses the independence of its Directors.
In determining the status of a Director, the Company considers that a Director is independent when he or she is independent of
management and free of any business or other relationship (for example a significant shareholding) that could materially interfere with,
or could reasonably be perceived to interfere with the exercise of unfettered and independent judgement. The Company’s criteria for
assessing independence are in line with standards set by the Principles.
The appointment and removal of Directors is governed by Company’s constitution. Under the Constitution the Board must comprise of
a minimum of three Directors. Given the Board is majority Non Executive, and by a significant majority independent, the Board does not
maintain a Nomination Committee, and is itself responsible for selecting and approving its own candidates to fill any casual vacancies
that may arise on the Board from time to time. Directors who have been appointed to fill casual vacancies must offer themselves for re-
election at the next annual general meeting of the Company. In addition, at each annual general meeting, at least one Director must be a
candidate for re-election and no Director shall serve more than three years without being a candidate for re-election.
In making decisions regarding the appointment of Directors, the Board assesses the appropriate mix of skills, experience and expertise
required by the Board and assesses the extent to which the required skills and experience are represented on the Board. When a vacancy
exists, the Board determines the selection criteria based on the skills deemed necessary. The Board identifies potential candidates, and
if appropriate, will utilise an external consultant to assist in identifying potential candidates. The Board then appoints the most suitable
candidate.
The Board will undertake appropriate background checks and screening checks prior to nominating a Director for election by
shareholders and provides to shareholders all material information in its possession concerning the Director standing for election or
re-election in the explanatory notes to accompany the notice of meeting. New Directors will participate in an induction program to assist
them to understand the Company’s business and the particular issues it faces.
The Board collectively has the right to seek independent professional advice as it sees fit. Each Director individually has the right to seek
independent professional advice, subject to the approval of the Chairman. All Directors have direct access to the Company Secretary.
Directors also have complete access to the senior management team. In addition to regular reports by senior management to the Board
meetings, Directors may seek briefings from senior management on specific matters and are entitled to request additional information at
any time when they consider it appropriate.
BOARD COMMITTEES
The Board generally operates as a whole across the range of its responsibilities but, to increase its effectiveness, uses committees where
closer attention to particular matters is required given the nature and scale of the Company’s operations.
The Board maintains three Board Committees covering Remuneration, Audit, and Sustainability. Details regarding the number of Board
meeting and committee meetings held during the year and the attendance of each member is set out in the 2016 Annual Report.
Remuneration Committee
The Remuneration Committee comprised three Non-Executive Directors, which during the reporting period comprised Mr. S B Hunt
(Chairman), Mr. J C Jooste-Jacobs and Mr. F Poullas. Mr. S B Hunt resigned as Director of the Company on 14 December 2015. Mr.
C Johnstone was appointed to the Remuneration Committee on 1 June 2016. Mr. J C Jooste-Jacobs was appointed Chairman of the
Remuneration Committee on 1 January 2016.
The Remuneration Committee advises the Board on remuneration and incentive policies and practices. It makes specific
recommendations on remuneration packages and other terms of employment for senior executives and Non Executive and Executive
Directors.
Any increase in the maximum remuneration of Non Executive and Executive Directors is the subject of shareholder resolution in
accordance with the Company’s constitution, the Corporations Act and the ASX Listing Rules, as applicable. The apportionment of Non
Executive and Executive Director remuneration within that maximum will be made by the Board having regard to the inputs and value to
the Company of the respective contributions by each Non Executive and Executive Director.
The Board may award additional remuneration to Non Executive and Executive Directors called upon to perform extra services or
undertake special duties on behalf of the Company.
Audit Committee
The Audit Committee also comprised three Non Executive Directors which for the reporting period comprised Mr. J C Jooste-Jacobs
(Chairman), Mr. F Poullas, and Mr. S B Hunt and Mr. P Tsegas. Mr. S B Hunt resigned as Director of the Company on 14 December 2015.
Mr. P Tsegas was appointed to the Audit Committee on 11 March 2016.
The main responsibilities of the Audit Committee are to:
» review and report to the Board on the periodic reports and financial statements;
» provide assurance to the Board that it is receiving adequate, timely and reliable information;
PAGE 32
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016CORPORATE GOVERNANCE STATEMENT » assist the Board in reviewing effectiveness of the Company’s internal control environment covering;
» compliance with applicable laws and regulations;
» reliability of financial reporting; and
» liaise with the external auditors and ensure that the annual audit and half-year review are conducted in an efficient manner.
The Audit Committee reviews the performance of the external auditors on an annual basis. A representative of the committee meets with
them during the year to discuss the external audit plan, any significant problems that may arise, and to review the fees proposed for the
audit work to be performed.
Any written matters raised by the auditors are discussed and dealt with at full board meetings. The auditors, by request, may attend audit
committee meetings and board meetings to discuss any matter that they believe warrants attention by the Board. The auditors also
attend shareholder meetings of the Company.
Sustainability Committee
The Sustainability Committee members for the reporting period comprised Mr. F Poullas, Mr. R J Chittenden (Head of Operations) and Mr.
P Tsegas. Mr. F Poullas was Chairman from 1 July 2015 to 31 December 2015 and Mr. P Tsegas was appointed Chairman from 1 January
2016 when he was appointed to the Sustainability Committee. The main responsibility of the Sustainability Committee is to be satisfied
that effective measures, systems and controls, are in place in relation to:
» environmental, community, occupational health and safety, radiation protection and other sustainability issues that have material
strategic and business implications;
» significant safety, health and environmental incidents;
» reporting by the Company should accord with the Global Reporting Initiative guidelines; and
» the integrity of the Company and the ethical standards of the Directors and the employees, are maintained to the highest levels.
PERFORMANCE EVALUATION AND REMUNERATION
Performance Evaluation
In prior reporting periods, the Board has not undertaken any level of formal performance evaluation of Directors. At an informal level
however, the Chairman frequently consults in each reporting period with the other Directors seeking guidance on ways in which the
Board as a whole, as well as each individual Director, can improve its contribution and performance to the execution by the Board of its
responsibilities.
It is proposed that a performance review will be annual and will involve all Directors completing a questionnaire including allowance for
additional comments or raising any issues relating to the Board’s or a Committee’s operation. The results of the review will be compiled
by the Chairman and discussed with Board members as a whole at an appropriate Board meeting. The purpose of the review is to
assess the strengths and weaknesses of the Board and Committees, and identify areas that might be improved. The findings of the
performance review will be considered by the Board and continue to be taken into account in identifying and nominating new candidates
for appointment as Director, and in planning and conducting Board and committee matters. Directors are able to raise concerns regarding
an individual Director’s performance with the Chairman at any time during the year.
The performance of the Chief Executive Officer (CEO) is reviewed by the Board on a periodic basis. The Chairman co-ordinates the
comments of all directors to provide a written assessment to the CEO.
The performance of the Company’s senior executives is reviewed by the Chief Executive Officer as part of the annual remuneration
review process and reported to the Remuneration Committee. The reviews usually take place in July/August of each year. Further details
regarding the remuneration review process are set out in the Remuneration Report.
Director and Executive Remuneration
Remuneration levels are competitively set to attract and retain appropriately qualified and experienced personnel. Performance, duties
and responsibilities, market comparison and independent advice are all considered as part of the remuneration process. The total
remuneration paid to Directors and key management personnel for the reporting period is set out in the Remuneration Report.
Directors’ fees are reviewed annually and are benchmarked against fees paid to Directors of similar organisations. Directors are not
provided with retirement benefits other than statutory superannuation and do not participate in employee incentive schemes although
are issued share based payment options as is set out in the Directors Report of the Annual Report.
To ensure that the Company’s senior executives properly perform their duties, the following procedures are in place:
» performance is formally assessed twice each year as part of the Company’s formal employee performance review process; the full
year achievement review takes place in June at the end of the financial year;
» all senior management were assessed in terms of their achievement of agreed KPI’s (both financial and non-financial) for the period;
PAGE 33
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016CORPORATE GOVERNANCE STATEMENT » there is a strong link between the outcomes of this performance review process and the subsequent remuneration review as outlined
in the Remuneration Report; and,
» senior management are provided with access to continuing education to update and enhance their skills and knowledge.
RISK MANAGEMENT AND INTERNAL CONTROLS
The Company has a formalised risk management framework encompassing market, financial, liquidity and corporate governance risk.
The identification and effective management of risk, including calculated risk taking is viewed as an essential part of the Company’s
approach to creating long term shareholder value. Compliance with risk management policies is monitored by the Board.
GOVERNANCE POLICIES
Integrity, ethical standards and compliance
The Company is committed to being a good corporate citizen within all jurisdictions that it undertakes its business activities, and the
Board has undertaken to ensure that the Company implements:
» practices necessary to maintain confidence in the company’s integrity;
» practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; and,
» responsibility and accountability of individuals for reporting and investigating reports of unethical practices.
While the Company has not as yet adopted a Code of Conduct for its Directors and employees, it has delegated the responsibility of
maintaining corporate integrity and ethical behaviour to the Sustainability Committee. That Committee seeks to set the standards for
dealing ethically with employees, investors, customers, regulatory bodies and the financial and wider community, and the responsibility
and accountability of individuals for reporting and investigating reports of unethical behaviour.
Directors are provided with Board reports in advance of Board meetings which contain sufficient information to enable informed
discussion of all agenda items.
The Board has the responsibility for the integrity of the Company’s financial reporting. To assist the Board in fulfilling its responsibility, the
processes discussed below have been adopted with a view to ensuring that the Company’s financial reporting is a truthful and factual
presentation of the Company’s financial performance and position.
Dealing in Securities
The Company has in place a formal Security Trading Policy which regulates the manner in which Directors and staff involved in the
management of the Company can deal in Company securities. It requires that they conduct their personal investment activities in a
manner that is lawful and avoids conflicts between their own interests and those of the Company and contains all contents suggested in
the ASX Corporate Governance Principles and Recommendations.
The policy specifies trading blackouts as the periods during which trading securities cannot occur. Trading is always prohibited if the
relevant person is in possession of non-public price sensitive information regarding the Company. A copy of the current Security Trading
Policy is available on the Company’s website.
Diversity
The Company recognises the value contributed by employing people with varying skills, cultural backgrounds, ethnicity and experience
and believes its diverse workforce is the key to its continued growth, improved productivity and performance.
The Company actively values and embraces the diversity of its employees and is committed to creating an inclusive workplace where
everyone is treated equally and fairly and where discrimination, harassment and inequity is not tolerated. The Company is committed to
fostering diversity at all levels. However, no measurable objectives were set during the reporting period.
The Company’s gender diversification targets were generally not met during the year owing to unfavourable fiscal circumstances for our
industry that resulted in workforce numbers remaining relatively the same, which precluded any increased employment opportunities,
however an additional female accountant was appointed to the employment team in June.
Health, safety and environment
The Company has continued its emphasis on health and safety in the workplace with the aim of ensuring that people achieve outcomes
in a safe manner, thereby contributing to operational effectiveness and business sustainability. The Company has an occupational health
and safety plan and a management system in place. The Company’s safety performance is reported regularly to the Board to assist the
Board in monitoring compliance with the Company’s policy and the relevant regulatory requirements.
During the reporting period there were no reported environmental incidents and no Lost Time Injuries (LTI’s).
PAGE 34
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016CORPORATE GOVERNANCE STATEMENT CONTINUOUS DISCLOSURE AND COMMUNICATIONS WITH SHAREHOLDERS
The Company is committed to providing relevant and timely information to its shareholders and to the broader market, in accordance with
its obligations under the ASX continuous disclosure regime.
The Board complies with the following processes to ensure that information is communicated to shareholders and the wider market:
» the Company’s website is updated regularly with business activity information and is linked to all announcements published on the
ASX www.magnis.com.au;
» the Annual Report is distributed to eligible shareholders. The Board ensures that the Annual Report includes relevant information
about the operations of the group during the year, changes in the state of affairs of the group and details of future developments, in
addition to other disclosures required by Corporations Act 2001;
» quarterly reports and half-yearly financial statements are lodged with the ASX and copies are sent to any shareholder upon request;
» any proposed major changes in the group which may impact on the share ownership rights would be submitted to a vote of
shareholders;
» the Board ensures that the continuous disclosure requirements of the ASX are fully complied with, ensuring that shareholders are kept
informed on significant events affecting the group; and
» investor roadshows are held periodically throughout Australia and internationally. Where they contain new information, investor and
roadshow presentations are released to the ASX and included on the Company’s website.
CONTINUOUS REVIEW OF CORPORATE GOVERNANCE
Directors consider, on an ongoing basis, how management information is presented to them and whether such information is sufficient
to enable them to discharge their duties as Directors of the Company. Such information must be sufficient from time to time in light of
changing circumstances and economic conditions. The Directors recognise that mineral exploration is an inherently risky business and
that operational strategies adopted should, notwithstanding, be directed towards improving or maintaining the net worth of the Company.
ASX Principle
Principle 1: Lay solid foundation for management and oversight
1.1
1.2
1.3
1.4
1.5
A listed entity should disclose:
(a) the respective roles and responsibilities of its Board and management; and,
(b) those matters expressly reserved to the Board and those delegated to management.
A listed entity should:
(a) undertake appropriate checks before appointing a person, or putting forward to security holders a
candidate for election, as a Director; and,
(b) provide security holders with all material information in its possession relevant to a decision on
whether or not to elect or re-elect a Director.
A listed entity should have a written agreement with each Director and senior executive setting out the
terms of their appointment.
The Company Secretary of a listed entity should be accountable directly to the Board, through the Chair,
on all matters to do with the proper functioning of the Board.
A listed entity should:
(a) have a diversity policy which includes requirements for the Board or a relevant committee of the
Board to set measurable objectives for achieving gender diversity and to assess annually both the
objectives and the entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and,
(c) disclose as at the end of each reporting period the measurable objectives for achieving gender
diversity set by the Board or a relevant Committee of the Board in accordance with the entity’s
diversity policy and its progress towards achieving them, and either:
the respective proportions of men and women on the Board, in senior executive positions and across
the whole organisation (including how the entity has defined “senior executive” for these purposes);
or
(1)
(2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most
recent “Gender Equality Indicators”, as defined in and published under that Act.
Compliance
Comply
Comply
Comply
Comply
Does not comply. Refer to
“Diversity” in the Corporate
Governance Statement
1.6
A listed entity should:
(a) have and disclose a process for periodically evaluating the performance of the Board, its committees
Comply
and individual Directors; and
(b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in
the reporting period in accordance with that process.
PAGE 35
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016CORPORATE GOVERNANCE STATEMENT ASX Principle
1.7
A listed entity should:
(a) have and disclose a process for periodically evaluating the performance of its senior executives; and,
(b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in
the reporting period in accordance with that process.
Compliance
Comply
Principle 2: Structure the Board to add value
2.1
The Board of a listed entity should:
(a) have a nomination committee which:
has at least three members, a majority of whom are independent Directors; and
(1)
(2) is chaired by an independent Director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the number of times the committee met throughout the
period and the individual attendances of the members at those meetings; or
(b) if it does not have the nomination committee, disclose that fact and the processes it employs to
address board succession issues and to ensure that the board has the appropriate balance of
skills, knowledge, experience, independence and diversity to enable it to discharge its duties and
responsibilities effectively.
2.2 A listed entity should have and disclose a Board skills matrix setting out the mix of skills and diversity
that the Board currently has or is looking to achieve in its membership.
2.3 A listed entity should disclose:
(a) the names of the Directors considered by the Board to be independent Directors;
(b) if a Director has an interest, position, association or relationship of the type described in Box 2.3 but
the Board is of the opinion that it does not compromise the independence of the Director, the nature
of the interest, position, association or relationship in question and an explanation of why the Board
is of that opinion; and
(c) the length of service of each Director.
2.4 A majority of the Board of a listed entity should be independent Directors.
2.5
The chair of the Board of a listed entity should be an independent Director and, in particular, should not
be the same person as the CEO of the entity.
Does not comply. Refer
to “Composition of the
Board” in the Corporate
Governance Statement.
Does not Comply. The
Board intends however to
implement a skills matrix to
achieve this principle..
Comply
Comply
Does not comply. The
Chairman is a Non-
Executive Director and a
significant shareholder.
However, three of the other
four Directors are Non
Executive and independent.
The Chairman is not the
same person as the CEO of
the Company.
2.6 A listed entity should have a program for inducting new Directors and provide appropriate professional
Comply
development opportunities for Directors to develop and maintain the skills and knowledge needed to
perform their role as Directors effectively.
Principle 3: Act ethically and responsibly
A listed entity should:
(a) have a code of conduct for its Directors, senior executives and employees; and
(b) disclose that code or a summary of it.
Does not comply.
However, the Sustainability
Committee has been
delegated the task of
monitoring and ensuring
the integrity of the Directors
and employees and their
ethical behaviour.
PAGE 36
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016CORPORATE GOVERNANCE STATEMENT ASX Principle
Principle 4: Safeguard integrity in corporate reporting
4.1
The Board of a listed entity should:
(a) have an Audit Committee which:
(1)
has at least three members, all of whom are non-executive Directors and a majority of whom are
independent Directors; and
(2) is chaired by an independent Director, who is not the chair of the Board,
and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and experience of the members of the committee; and
(5) in relation to each reporting period, the number of times the committee met throughout the period
and the individual attendances of the members at those meetings.
4.2
The Board of a listed entity should, before it approves the entity’s financial statements for a financial
period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the
entity have been properly maintained and that the financial statements comply with the appropriate
accounting standards and give a true and fair view of the financial position and performance of the
entity and that the opinion has been formed on the basis of a sound system of risk management and
internal control which is operating effectively.
Compliance
Comply
Comply
4.3 A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available
Comply
to answer questions from security holders relevant to the audit.
Principle 5: Make timely and balanced disclosure
5.1
A listed entity should:
(a) have a written policy for complying with its continuous disclosure obligations under the Listing
Rules; and,
(b) disclose that policy or a summary of it.
Principle 6: Respect the rights of security holders
6.1
A listed entity should provide information about itself and its governance to investors via its website.
6.2 A listed entity should design and implement an investor relations program to facilitate effective two-way
communication with investors.
6.3 A listed entity should disclose the policies and processes it has in place to facilitate and encourage
participation at meetings of security holders.
6.4 A listed entity should give security holders the option to receive communications from, and send
communications to, the entity and its security registry electronically.
Principle 7: Recognise and manage risk
7.1
The Board of a listed entity should:
(a) have a committee or committees to oversee risk, each of which:
(1) has at least three members, a majority of whom are independent Directors; and
(2) is chaired by an independent Director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the number of times the committee met throughout the
period and the individual attendances of the members at those meetings;
7.2
The Board or a committee of the Board should:
(a) review the entity’s risk management framework at least annually to satisfy itself that it continues to
be sound; and
(b) disclose, in relation to each reporting period, whether such a review has taken place.
7.3 A listed entity should disclose:
(a) if it has an internal audit function, how the function is structured and what role it performs; or
(b) if it does not have an internal audit function, that fact and the processes it employs for evaluating
and continually improving the effectiveness of its risk management and internal control processes.
Comply
Comply
Comply
Comply
Comply
Does not comply. Currently
risk and risk mitigation is
managed by the Board as
a whole.
Comply
Comply
PAGE 37
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016CORPORATE GOVERNANCE STATEMENT ASX Principle
7.4 A listed entity should disclose whether it has any material exposure to economic, environmental and
social sustainability risks and, if it does, how it manages or intends to manage those risks.
Principle 8: Remunerate fairly and responsibly
8.1
The Board of a listed entity should:
(a) have a remuneration committee which:
(1) has at least three members, a majority of whom are independent Directors; and
(2) is chaired by an independent Director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the number of times the committee met throughout the
period and the individual attendances of the members at those meetings.
Compliance
Comply
Comply
8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of non-
Comply
executive Directors and the remuneration of executive Directors and other senior executives.
8.3 A listed entity which has an equity-based remuneration scheme should:
(a) have a policy on whether participants are permitted to enter into transactions (whether through the
use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and
(b) disclose that policy or a summary of it.
Does not comply. The
current Remuneration Policy
that is disclosed in the
Annual Report document
does not cover the areas
of use of derivatives or
otherwise, however the
Remuneration Committee
will look at possibly
implementing changes in
this area.
All references are to sections of this Corporate Governance Statement unless otherwise stated.
PAGE 38
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016CORPORATE GOVERNANCE STATEMENT STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
YEAR ENDED 30 JUNE 2016
Income
Interest received
R&D Grant
Other revenue
Total income
Expenditure
Administration expenses
Depreciation expense
Employee benefits expense
Legal and consulting expenses
Foreign exchange loss
Share based payment to non-employees
Exploration and evaluation expenses
Total expenditure
Gain from demerger activities
(Loss) before income tax expense
Income tax expense
Net (loss) for the year from continuing operations
Other comprehensive income/(loss)
Items that may be subsequently reclassified to profit or loss
Foreign currency translation
Other comprehensive income / (loss) for the year, net of tax
Total comprehensive income / (loss) for the year, net of tax
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Notes
2016 $
2015 $
Consolidated
27,346
129,996
8,741
166,083
59,347
-
17,483
76,830
1,515,443
1,060,266
33,889
1,097,912
1,439,724
322,174
107,128
1,423,138
1,162,842
394,537
26(a)
1,737,150
283,000
7,793,472
8,890,495
13,939,764
13,321,406
1,746,900
-
(12,026,781)
(13,244,576)
-
-
(12,026,781)
(13,244,576)
301,020
301,020
568,957
568,957
(11,725,761)
(12,675,619)
3.42
3.42
4.22
4.22
13
5
21
21
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
PAGE 39
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 STATEMENT OF FINANCIAL POSITION
YEAR ENDED 30 JUNE 2016
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non current assets
Other receivables
Property, plant & equipment
Total non current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non current liabilities
Provisions
Total non current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated Profits/(Losses)
Total equity
Notes
2016 $
2015 $
Consolidated
6, 16(b)
7,208,404
2,817,006
7
8
9
10
11
11
12(a)
15
212,101
263,754
7,420,505
3,080,760
67,391
92,057
159,448
50,000
69,545
119,545
7,579,953
3,200,305
544,417
150,854
695,271
721,972
193,848
915,820
19,675
19,675
56,871
56,871
714,946
972,691
6,865,007
2,227,614
87,476,445
72,137,802
7,134,673
6,490,695
(87,746,111)
(76,400,883)
6,865,007
2,227,614
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
PAGE 40
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 JUNE 2016
Notes
Issued
Capital $
Options $
Share Based
Payment
Reserves $
Foreign
Currency
Translation
Reserve $
Accumulated
(Losses) $
Total
Equity $
At 1 July 2015
70,162,879
1,974,923
1,892,579
4,598,116
(76,400,883)
2,227,614
Loss for the period
Other comprehensive income/(loss)
Total comprehensive income/(loss)
for the year
Transactions with owners in their
capacity as owners
Contributions of equity, net of
transaction costs
Share based payments
Demerger distribution
-
-
-
16,342,678
-
(1,766,900)
26
13
Reclassification from reserve
762,865
-
-
-
-
-
-
-
-
-
-
-
1,787,376
-
(1,444,418)
-
(12,026,781)
(12,026,781)
301,020
-
301,020
301,020
(12,026,781)
(11,725,761)
-
-
-
-
-
-
-
16,342,678
1,787,376
(1,766,900)
681,553
-
At 30 June 2016
85,501,522
1,974,923
2,235,537
4,899,136
(87,746,111)
6,865,007
Notes
Issued
Capital $
Options $
Share Based
Payment
Reserves $
Foreign
Currency
Translation
Reserve $
Accumulated
(Losses) $
Total
Equity $
At 1 July 2014
60,731,047
1,974,923
1,337,579
4,029,159
(63,156,307)
4,916,401
Loss for the period
Other comprehensive income/(loss)
Total comprehensive income/(loss)
for the year
Transactions with owners in their
capacity as owners
Contributions of equity, net of
transaction costs
-
-
-
9,431,832
Share based payments
16
-
-
-
-
-
-
-
-
-
-
555,000
-
(13,244,576)
(13,244,576)
568,957
-
568,957
568,957
(13,244,576)
(12,675,619)
-
-
-
-
9,431,832
555,000
At 30 June 2015
70,162,879
1,974,923
1,892,579
4,598,116
(76,400,883)
2,227,614
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
PAGE 41
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 STATEMENT OF CASH FLOWS
YEAR ENDED 30 JUNE 2016
Cash flows from operating activities
Payments to suppliers and employees
Payment of exploration expenditure
Interest received
R&D grant
Other receipts
Notes
2016 $
2015 $
Consolidated
(4,037,716)
(3,268,768)
(8,001,926)
(8,040,873)
27,394
129,996
8,741
60,537
-
17,483
Net cash from/(used in) operating activities
16(a)
(11,873,511)
(11,231,621)
Cash flows from investing activities
Acquisition of property, plant & equipment
Payment of initial contribution to Uranium Africa Ltd
Net cash flows (used in) investing activities
Cash flows from financing activities
Proceeds from issues/sale of ordinary shares and options
Capital raising expenses
Net cash flows from /(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Net foreign exchange differences
Add opening cash and cash equivalents
Closing cash and cash equivalents
(55,998)
(60,940)
(20,000)
-
(75,998)
(60,940)
16,697,155
(355,533)
9,959,971
(528,140)
16,341,621
9,431,831
4,392,112
(1,860,729)
(714)
25,389
2,817,006
4,652,346
16(b)
7,208,404
2,817,006
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
PAGE 42
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial report are set out below. The financial report covers the
consolidated group of Magnis Resources Limited and controlled entities (“the Group”). Magnis Resources Limited is a company, limited by
shares, incorporated in Australia whose shares are publicly traded on Australian Securities Exchange (“ASX”).
The following is a summary of the material accounting policies adopted by the consolidated Group in the preparation of the financial
report. The accounting policies have been consistently applied to all years presented, unless otherwise stated.
Basis of preparation
The financial report is a general purpose financial report for a ‘for-profit’ entity that has been prepared in accordance with Australian
Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act
2001. The financial report has been prepared on an accruals basis under the historical cost convention, as modified by the revaluation of
selected non current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.
The financial report is prepared in Australian dollars.
Going concern
The Group is involved in the exploration and evaluation of mineral tenements. Further expenditure will be required upon these tenements
to ascertain whether they contain economically recoverable reserves.
For the year ended 30 June 2016 the Group reported a net loss of $12,026,781 (2015: $13,244,576) and net operating cash outflows of
$11,873,511 (2015: $11,231,621). The operating cash outflows have been funded by cash inflows from equity raisings of $16,697,155 (2015:
$9,959,971) during the year. As at 30 June 2016 the Group had net current assets of $ 6,725,234 (2015: $2,164,941) including cash reserves
of $7,208,404 (2015: $2,817,006).
The balance of these cash reserves may not be sufficient to meet the Group’s planned expenditure and evaluation budget, including
exploration activities, evaluation, operating and administrative expenditure, for the 12 months to 30 June 2017. The Group has exploration
and evaluation commitments over the next 12 months totalling $767,351 and additional planned expenditure. In order to fully implement
its exploration strategy, the Group will require additional funds.
Notwithstanding the above, the financial statements have been prepared on a going concern basis which contemplates the continuity of
normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.
To continue as a going concern, the Group requires additional funding to be secured from sources including but not limited to:
» A further equity capital raising including the exercise of options;
» The potential farm out of participating interests in the Group’s tenements; and / or
» The generation of sufficient funds from operating activities including the successful development of the existing tenements.
Having carefully assessed the uncertainties relating to the likelihood of securing additional funding, the Group’s ability to effectively
manage their expenditures and cash flows from operations and the opportunity to farm out participating interests in existing permits, the
Directors believe that the Group will continue to operate as a going concern for the foreseeable future. Therefore, the Directors consider it
appropriate to prepare the financial statements on a going concern basis.
In the event that the assumptions underpinning the basis of preparation do not occur as anticipated, there is material uncertainty that
may cast significant doubt whether the Group will continue to operate as a going concern. If the Group is unable to continue as a going
concern it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts
different to those stated in the financial statements.
No adjustments have been made to the financial report relating to the recoverability and classification of the asset carrying amounts or
the classification of liabilities that might be necessary should the Group not continue as a going concern.
Compliance with IFRS
The financial report of the Group complies with Australian Accounting Standards and International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board.
The financial statements were authorised for issue by the directors on 16 September 2016.
New accounting standards and interpretations
(i) Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year.
(ii) Accounting Standards and Interpretations issued but not yet effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and have not
PAGE 43
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 been adopted by the Group for the annual reporting period ending 30 June 2016 are outlined in the table below:
Standard/Interpretation
AASB 9 Financial Instruments
AASB 15 Revenue from Contracts with Customers
AASB 16 Leases
AASB 2015-2 Amendments to Australian
Accounting Standards –
Disclosure Initiative:
Amendments to AASB 101
AASB 2016-2 Amendments to Australian Accounting
Standards – Disclosure Initiative:
Amendments to AASB 107
Effective for the
annual reporting
period beginning on
Expected to be
initially applied in the
financial year ending
January 1, 2018
June 30, 2019
January 1, 2018
June 30, 2019
January 1, 2019
June 30, 2020
January 1, 2016
June 30, 2017
January 1, 2017
June 30, 2018
The Directors have not yet assessed whether the above amendments and interpretations will have a material impact on the financial
report of the Group in the year or period of initial application.
Principles of consolidation
The consolidated financial statements are those of the consolidated entity, comprising Magnis Resources Limited (the parent entity),
special purpose entities and all entities which Magnis Resources Limited controlled from time to time during the year and at reporting
date. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee
A list of controlled entities and special purpose entities is contained in note 25.
Specifically, the Group controls an investee if and only if the Group has:
» Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
» Exposure, or rights, to variable returns from its involvement with the investee, and
» The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
» The contractual arrangement with the other vote holders of the investee
» Rights arising from other contractual arrangements
» The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of
the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when
the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year
are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control
the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in the noncontrolling interests having a deficit balance. When necessary,
adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting
policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses
control over a subsidiary, it:
» De-recognises the assets (including goodwill) and liabilities of the subsidiary
» De-recognises the carrying amount of any non-controlling interests
» De-recognises the cumulative translation differences recorded in equity
» Recognises the fair value of the consideration received
PAGE 44
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 » Recognises the fair value of any investment retained
» Recognises any surplus or deficit in profit or loss
» Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as appropriate, as
would be required if the Group had directly disposed of the related assets or liabilities
Subsidiaries are recorded as a component of other revenues in the separate income statement of the parent entity, and do not impact
the recorded cost of the investment. Upon receipt of dividend payments from subsidiaries, the parent will assess whether any indicators
of impairment of the carrying value of the investment in the subsidiary exist. Where such indicators exist, to the extent that the carrying
value of the investment exceeds its recoverable amount, an impairment loss is recognised.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses
control over a subsidiary, it:
» Derecognises the assets (including goodwill) and liabilities of the subsidiary
» Derecognises the carrying amount of any non-controlling interest
» Derecognises the cumulative translation differences recorded in equity
» Recognises the fair value of the consideration received
» Recognises the fair value of any investment retained
» Recognises any surplus or deficit in profit or loss
» Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained
earnings, as appropriate
Segment reporting
An operating segment is a distinguishable component of the entity that is engaged in providing products or services that are subject to
risks and returns that are different to those of other operating segments.
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However, an operating segment
that does not meet the quantitative criteria is still reported separately where information about the segment would be useful to users of
the financial statements.
Property, plant and equipment
Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and
impairment losses.
The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs and an appropriate
proportion of fixed and variable overheads. 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. All other repairs and maintenance are charged to profit and loss during the financial period in which
they are incurred.
Depreciation
Depreciation is provided on plant and equipment, motor vehicles, office equipment, furniture and fittings, and is calculated on a straight
line basis, commencing from the time the asset is first used, so as to write off the net costs of each asset over the expected useful life.
The following useful lives are used in the calculation of depreciation;
» Plant & equipment
» Vehicles
2 to 5 years
2 to 5 years
» Office equipment, furniture & fittings
2 to 20 years
Both asset residual value and useful life are reviewed, and adjusted if appropriate, at each reporting date.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
Impairment of assets
At each reporting date, the Group reviews the carrying values of its property, plant & equipment assets to determine whether there is any
indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the
asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value
over its recoverable amount is expensed to profit or loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
PAGE 45
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 Exploration and evaluation costs
Exploration and evaluation expenditure is expensed directly to profit and loss when incurred.
Operating leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an
assessment of whether the fulfilment of the arrangement is dependent on the use a specific asset or assets and the arrangement
conveys a right to use the asset.
Leases under which the lessor retains substantially all of the risks and benefits of ownership of the asset are classified as operating
leases. Operating lease payments are recognised in profit or loss on a straight-line basis over the lease term.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and
benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such
risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present
value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance
costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset’s useful life or over the shorter of the asset’s useful life and
the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.
Income tax
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences, except:
» where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
» when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the
timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in
the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax
losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the
carry-forward of unused tax assets and unused tax losses can be used, except:
» where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and
» when the deductible temporary differences is associated with investments in subsidiaries, associates or interests in joint ventures, in
which case a deferred tax asset is only recognised to the extent that it is probable that the temporary differences will reverse in the
foreseeable future and taxable profit will be available against which the temporary differences can be applied.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or
the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of financial position.
Tax consolidated group
Company and its wholly owned Australian subsidiaries have elected to form a tax consolidated group from 1 July 2015, with Magnis
Resources Limited being the head entity within that group. These entities are taxed as a single entity.
Goods and services tax (GST and/or VAT)
Revenues, expenses and assets are recognised net of the amount of GST/VAT except:
» where the GST/VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the
GST/VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
» receivables and payables are stated with the amount of GST/VAT included.
The net amount of GST/VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
statement of financial position.
PAGE 46
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 Cash flows are included in the Statement of Cash Flows on a gross basis and the GST/VAT component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST/VAT recoverable from, or payable to, the taxation authority.
Withholding tax and other indirect taxes are incurred on amounts of VAT recoverable from, or payable to, the taxation authority.
Foreign currency translation
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which
that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and
presentation currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are re-translated at the year-end exchange rate. Non-monetary items measured at historical cost
continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the
exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss.
Financial statements of foreign operations
The financial results and position of foreign operations whose functional currency is not Australian dollars, the Group’s presentation
currency, are translated as follows:
» assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
» income and expenses are translated at average exchange rates for each month during the period.
Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation
reserve in other comprehensive income. These differences are recognised in the statement of comprehensive income in the period in
which the operation is disposed.
Trade and other receivables
Trade receivables, which generally have 30-60 day terms, are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method, less an allowance for impairment.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are uncollectible are written off when identified. An
impairment provision is recognised where there is objective evidence that the Group will not be able to collect the receivable. Financial
difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective evidence of impairment. The
amount of the impairment loss is the receivable carrying amount compared to the present value of estimated cash flows, discounted at
the original effective interest rate.
Accounts payable
Trade and other payables are recognised when the Group becomes obliged to make further payments resulting from the purchase of
goods and services and are measured at amortised cost using the effective interest method, less any impairment losses.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation.
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. If the effect of the time value of money is material, provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific
to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs.
Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These
benefits include wages and salaries, annual leave, and long service leave when it is probable that settlement will be required.
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve
months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid
when the liability is settled including related on-costs, such as workers compensation and payroll tax. Non accumulating non monetary
benefits, such as medical care, cars or subsidised goods and services, are expensed based on the net marginal cost to the Group as the
benefits are taken by the employees.
PAGE 47
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 Share based payment transactions
The Group provides benefits to employees (including directors) of, and consultants to, the Group in the form of share-based payment
transactions, whereby services are rendered in exchange for shares or rights over shares (‘equity-settled transactions’).
The cost of equity-settled transactions is measured by reference to the fair value at the date at which they are granted. The fair value
of options and performance rights with market based performance criteria is determined by an external valuer using a binomial option
pricing model. The fair value of performance plan rights with non-market performance criteria is determined by reference to the
Company’s share price at date of grant.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the recipient becomes fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to
which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors, based on the best available
information at reporting date will ultimately vest. No adjustment is made for the likelihood of market conditions being met as the effect
of these conditions is included in determination of fair value at grant date. The charge or credit for the period represents the movement
in cumulative expense recognised as at the beginning and end of the period. Where awards vest immediately, the expense is also
recognised in profit or loss.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.
Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms had not been modified.
In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the
date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as
a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original
award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.
Revenue recognition
Interest revenue is recognised as interest accrues using the effective interest method.
Rental revenue is accounted for on a straight line basis over the lease term. Contingent rental revenue is recognised as income in the
periods in which it is earned.
Contributed equity
Ordinary shares are classified as equity. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as
a reduction of the share proceeds received.
Earnings per share (EPS)
Basic earnings per share
Basic EPS is calculated as the profit (loss) attributable to equity holders of the Company, excluding any costs of servicing equity other
than ordinary shares, divided by the weighted average number of ordinary shares outstanding during the financial year, adjusted for any
bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted EPS adjusts the figures used in the determination of basic EPS to take into account the after income tax effect of interest and
other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have
been issued for no consideration in relation to dilutive potential ordinary shares.
Cash and cash equivalents
For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial
institutions, other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to
insignificant risk of changes in value, and bank overdrafts. Where applicable, bank overdrafts are shown within borrowings in current
liabilities on the statement of financial position.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based
on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date; and assumes that the transaction will take place either: in the principle market; or in the absence of a principal
market, in the most advantageous market.
PAGE 48
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act
in their economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation
techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are determined
based on a reassessment of the lowest level input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or
when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is
a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification
of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.
Restatement of comparatives
When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation for the current
financial year.
2. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the
reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets,
liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical
experience and on other various factors, including expectations of future events, management believes to be reasonable under the
circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements,
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
(refer to the respective notes) within the next financial year are discussed below.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees and directors by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value of share options is determined by an external valuer using a binomial
option pricing model that uses the assumptions detailed in note 26(f).
Indirect tax receivables and liabilities
The Group is subject to indirect taxes in Australia and the jurisdiction where it has foreign operations. Significant judgement is required
in determining the amounts recorded as receivables for recovery of such taxes and payables for payment of such taxes. The Group
is subject to an audit by a tax authority in a jurisdiction in which it operates. The tax authority is disputing the quantum of goods and
services tax receivable and withholding taxes payable. Discussions with the relevant tax authority are ongoing. The Group recognises
liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The Group has adequately recorded
receivables and payables for the amounts it believes will ultimately be payable. Where the final outcome of any matters is different from
amounts recorded, such differences will impact the indirect tax receivables or provision in the period in which such determination is made.
3. SEGMENT INFORMATION
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the executive management
team (chief operating decision maker) in assessing performance and in determining the allocation of resources.
The operating segments are identified by management based on the manner in which the exploration expenditure is allocated to the
geographical region. Discrete financial information about each of these operating segments is reported to the executive management
team on at least a monthly basis.
The reportable segments are based on aggregated operating segments determined by the exploration expenditure, as these are the
source of the Group’s major risks.
Accounting policies and inter-segment transactions
The accounting policies used by the Group in reporting segments internally are per note 1 of the accounts. To avoid asymmetrical
allocation within segments which management believe would be inconsistent policy is that if items of revenue and expense are not
allocated to operating segments then any associated assets and liabilities are also not allocated to segments.
PAGE 49
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 Segment results and revenues
Segments
Australia
East Africa
Inter-segment elimination
Consolidated
Segment assets and liabilities
Segments
Australia
East Africa
Inter-segment elimination
Consolidated
2016 Profit/(loss)
before tax $
2016 Segment
revenue $
2015 Profit/(loss)
before tax $
2015 Segment
revenue $
(12,259,525)
739,416
(11,820,117)
574,297
(7,241,142)
7,473,886
56
(1,044,548)
(573,389)
(379,911)
(12,026,781)
166,083
(13,244,576)
39
(379,911)
76,830
2016 Segment
assets $
2016 Segment
liabilities $
2015 Segment
assets $
2015 Segment
liabilities $
7,062,966
690,996
2,890,575
621,177
557,820
52,500,333
(40,834)
(52,476,383)
334,128
(24,398)
43,958,630
(43,607,116)
7,579,952
714,946
3,200,305
972,691
4. DIVIDENDS PAID OR PROVIDED FOR ON ORDINARY SHARES
The Company divested non-core uranium assets in April 2016 via a demerger and in-specie distribution of shares in a new company,
Uranium Africa Limited (UAL).
No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made.
5. INCOME TAX
Current income tax
Current income tax credit/(expense)
Tax losses not recognised as not probable
Deferred income tax
Consolidated
2016 $
2015 $
801,952
(3,734,632)
3,957,184
(6,575,491)
(2,932,680)
(2,618,307)
Relating to origination and reversal of temporary differences
2,932,680
2,618,307
Tax losses brought to account to offset net deferred tax liability
Income tax credit/(expense) reported in the Statement of Comprehensive Income
a) Statement of Changes in Equity
Deferred income tax related to items charged or credited directly to equity
Share issue costs
Deferred tax offset
Income tax benefit reported in Equity
b) Tax Reconciliation
-
-
-
-
-
-
(3,202)
3,202
-
37,865
(37,865)
-
A reconciliation between tax expense and the product of accounting profit before income tax
multiplied by the Group’s applicable income tax rate is as follows:
Accounting (loss) before tax
(12,026,781)
(13,244,576)
At the Group’s statutory 30% tax rate (2015: 30%)
Share based payment expense
3,608,034
(536,213)
3,973,373
(131,400)
PAGE 50
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 Movement in temporary differences
Non-assessable debt forgiveness gain
Gain on demerger of uranium tenements
Non-assessable R&D offset income
Deductible option issue costs
Tax losses not brought to account
Income tax (expense) reported in the Statement of Comprehensive Income
Consolidated
2016 $
20,036
169,914
324,000
38,999
109,862
2015 $
2,612,941
-
-
-
120,577
(3,734,632)
(6,575,491)
-
-
At the reporting date, the Group has estimated tax losses of $78,895,129 (2015: $76,147,879) available to offset against future taxable
income subject to continuing to meet relevant statutory tests. To the extent that it does not offset a deferred tax liability, a deferred tax
asset has not been recognised for these losses because it is not probable that future taxable income will be available to use against such
losses. Furthermore, a deferred tax liability arising from temporary differences of $2,673,631 (2015: $2,252,570) has not been recognised
due to the tax losses above offsetting any liability that may arise in future.
6. CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Cash on hand
Cash at bank
7. TRADE AND OTHER RECEIVABLES
Accrued interest
Goods and services tax recoverable
Prepayments and other receivables
8. NON CURRENT ASSETS - RECEIVABLES
Security deposit
Consolidated
2016 $
54,355
2015 $
16,976
7,154,049
2,800,030
7,208,404
2,817,006
Consolidated
2015 $
171
29,044
234,539
263,754
Consolidated
2015 $
50,000
50,000
2016 $
123
54,116
157,862
212,101
2016 $
67,391
67,391
The $50,000 bank guarantee for NAB overdraft facility and $17,391 for general security deposit with suppliers. This receivable is not past
due nor impaired.
9. PROPERTY PLANT AND EQUIPMENT
Reconciliation of carrying amounts at the beginning and end of the year.
Consolidated
Plant &
equipment
$
Office
equipment
$
Software
$
Office
furniture &
fittings $
Motor
vehicles
$
Total
$
Year ended 30 June 2016
Balance at 1 July 2015 net of accumulated depreciation
24,436
41,665
488
Additions
Currency translation differences
-
22,805
980
26
-
-
1,973
11,223
(228)
983
69,545
21,970
55,998
(375)
403
PAGE 51
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 Consolidated
Plant &
equipment
$
Office
equipment
$
Software
$
Office
furniture &
fittings $
Motor
vehicles
$
Total
$
Depreciation charge for the year
(12,952)
(15,791)
Balance at 30 June 2016 net of accumulated depreciation
12,464
48,705
At 30 June 2016
Cost
375,716
98,993
Accumulated depreciation and impairment
(363,252)
(50,288)
Net carrying amount
12,464
48,705
(180)
308
717
(409)
308
(1,964)
(3,002)
(33,889)
11,004
19,576
92,057
11,831
(827)
23,057
510,314
(3,481)
(418,257)
11,004
19,576
92,057
Year ended 30 June 2015
Balance at 1 July 2014 net of accumulated depreciation
70,474
27,741
824
Additions
Disposals
Currency translation differences
29,771
30,521
-
10,929
(24)
979
Depreciation charge for the year
(86,738)
(17,552)
Balance at 30 June 2015 net of accumulated depreciation
24,436
41,665
At 30 June 2015
Cost
365,213
75,843
Accumulated depreciation and impairment
(340,777)
(34,178)
Net carrying amount
24,436
41,665
10. TRADE AND OTHER PAYABLES
-
-
-
(336)
488
717
(229)
488
Current
Trade payables
Other payables and accruals
Related party payables and accruals
11. PROVISIONS
Current
Provision for annual leave (a)
Provision for onerous lease (b)
Non-current
Provision for long service leave (c)
PAGE 52
5,564
648
(2,014)
1,044
105,647
-
-
60,940
(2,038)
-
216
12,124
(2,225)
(277)
(107,128)
1,973
983
69,545
10,214
(8,241)
1,973
1,511
453,498
(528)
(383,953)
983
69,545
Consolidated
2016 $
2015 $
50,351
458,624
508,975
35,442
544,417
-
690,142
690,141
31,830
721,972
Consolidated
2015 $
2014 $
150,854
-
150,854
98,474
95,374
193,848
19,675
9,391
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 Provision for make–good (d)
Movements in provisions
Consolidated
2015 $
-
19,675
2014 $
47,480
56,871
Movements in each class of provision during the financial year, other than provisions relating to employee benefits, are set out as follows:
At 1 July 2015
Additions/(utilised/reversed)
At 30 June 2016
(a) Annual Leave
Onerous
Lease $
Make-good
Costs $
95,374
(95,374)
-
47,480
(47,480)
-
An estimate of annual leave is provided after reviewing relevant workplace agreements and industrial awards for respective
employees and determining entitlement at the reporting date. The cost includes an account of direct employment costs.
(b) Onerous lease
The lease for the Company’s former registered office in Melbourne. The lease has already expired therefore the full provision has been
fully reversed.
(c) Long Service Leave
The significant assumptions applied in the measurement of this provision include devising probabilities for employees complying with
the legislative requirements (years of service) and the computed employment costs discounted by using the relevant RBA bond rate
applied for the respective years of service.
(d) Make - good
Make good provision for Company’s former registered office in Melbourne. The full provision has been reversed.
12. CONTRIBUTED EQUITY
(a) Issued capital and options
Ordinary shares fully paid
Options - listed
In addition to the above, 16,875,000 unlisted options were not exercised as at 30 June 2016.
Please refer to Note 24(c) for further details.
Fully paid ordinary shares carry on vote per share and carry a right to dividends.
Option holders are not entitled to vote and dividend.
b) Movements in fully paid shares
At 1 July 2015
Shares issued
Exercise of listed options
Exercise of unlisted rights and options
Transaction costs
Demerger distribution (Note 13)
Reclassification
At 30 June 2016
c) Movements in options
At 1 July 2015
Options exercised
Number of shares
and options
2016 $
428,590,093
117,672,741
85,501,522
1,974,923
546,262,834
87,476,445
314,212,116
18,571,429
91,656,548
4,150,000
-
-
-
70,162,879
7,000,000
8,944,530
752,626
(355,533)
(1,766,900)
763,920
428,590,093
85,501,522
209,329,289
(91,656,548)
1,974,923
-
PAGE 53
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 At 30 June 2016
During the year the Company raised funds from equity as follows:
Number of shares
and options
117,672,741
2016 $
1,974,923
» $7,000,000 (2015: $9,565,446) from share placement of 18,571,429 (2015: 44,052,294). Transaction costs amounted to $355,533.
» $9,697,156 (2015: $394,526) from the exercise of rights and options, subsequent issue of 95,806,548 (2015: 8,070,255) ordinary fully
paid shares.
d) Capital management
Management’s prime objective when managing the Group’s capital is to ensure the entity continues as a going concern as well as
ensuring that funds expended provide shareholders with optimal returns. The capital structure is intended to provide the lowest cost of
capital available to the Group considering its present phase of operations.
Management is continually reviewing the Group’s equity needs. During the financial year the entity raised $16,697,156 (2015: $9,959,971)
through options and shares issue before costs of $355,533 (2015: $528,140).
The Group is undertaking an exploration and evaluation program that requires a significant outlay of funds. Management monitors this
expenditure against the budget approved by the Board. A new term capital raising or asset sale should ensure the Group has a safety
margin of funds available to continue with its desired level of operations - refer Note 1.
Capital risk management
During the previous year the Company used an equity instrument combination of shares and options to raise funds. The group is
undertaking an exploration program that requires a significant outlay of funds. Management monitors this expenditure against the
budget approved by the Board. A new term capital raising or asset sale should ensure the group has a safety margin of funds available to
continue with its desired level of operations – refer Note 1.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current company’s share price at the time of the investment. The consolidated entity is not actively pursuing additional
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk
management decisions. There have been no events of default on the financing arrangements during the financial year.
The capital risk management policy remains unchanged from the 30 June 2015 Annual Report.
13. DEMERGER ACTIVITIES
a) Demerger of Uranium Africa Limited
On 15 April 2016, the Company’s wholly owned Australian subsidiary, Uranium Africa Limited was demergered as per the result of
Extraordinary General Meeting held on 5 April 2016. Uranium Africa Limited is operated as a separate and independent holding Company,
which is unlisted.
The Board engaged Northeast Securities Co., Ltd (Valuer) to provide an independent valuation of the Uranium Assets, to assist the
Company to determine the value of the capital reduction by reason of the Demerger and the Entitlements of Shareholders to share in the
In-Specie Distribution.
Having regard to the value of comparable projects in Africa and Australia with similar grades and geology, the Valuer determined that the
Uranium Assets were valued at $1.75 million.
Having due regard to this, the Board has determined that the value of the capital reduction to be $1,766,900 (being $1,746,900 for the
Uranium Assets with an additional $20,000 cash contributed by the Company to UAL in the form of equity).
Uranium Africa Limited is the current holder of all the Uranium Tenements that previously held by Magnis Resources Group.
b) Financial information
Gain after income tax expense from demerger activities
Gain on demerger
Income tax expense
PAGE 54
2016 $
1,746,900
-
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 Gain on demerger after income tax
Cash and cash equivalents
Total Assets
Issued Capital
14. FAIR VALUE MEASUREMENT
2016 $
1,746,900
20,000
20,000
1,766,900
The fair value of financial assets and financial liabilities are the equivalent of the net carrying amount as the financial assets and
liabilities are short term instruments. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction.
The carrying amounts of cash, trade and other receivables and trade and other payables are assumed to approximate their fair values due
to their short-term nature.
There are no other financial assets or liabilities as at 30 June 2016.
15. RESERVES
(a) Reserves
Foreign currency translation
Share based payment
b) Nature and purpose of reserves
i. Foreign currency translation reserve
Consolidated
2016 $
2015 $
4,889,136
2,235,537
7,134,673
4,598,116
1,892,579
6,490,695
Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation reserve, as
described in note 1. The reserve is recognised in profit or loss when the net investment is disposed of.
ii. Share based payment reserve
The share based payment reserve is used to recognise the fair value of paid options issued to Directors, employees and contractors.
16. STATEMENT OF CASH FLOWS
(a) Reconciliation of the net loss after income tax to the net cash flows from operating activities
Operating activities
Net loss
Non cash and non operating items
Gain on demerger activities
Depreciation of non current assets
Share based payments
Net foreign currency translation gain (loss)
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in prepayments
(Increase)/decrease in security bonds
Increase/(decrease) in trade and other payables
Consolidated
2016 $
2015 $
(12,026,781)
(13,244,576)
(1,746,900)
33,889
1,787,376
302,387
-
107,128
555,000
533,483
(25,024)
1,129,805
76,678
(17,391)
29,252
36,385
(177,555)
(301,102)
PAGE 55
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016
Increase/(decrease) in provisions
Net cash outflow from operating activities
b) Reconciliation of cash and cash equivalents
Cash at bank
Cash at bank and in hand
17. COMMITMENTS
a) Exploration commitments
Consolidated
2016 $
(80,190)
2015 $
(76,996)
(11,873,511)
(11,231,621)
7,208,404
7,208,404
2,817,006
2,817,006
The Group has certain commitments to meet minimum expenditure requirements on the mineral exploration assets in which it has an
interest. Note 1 outlines the Group’s future funding options to meet its commitments. Outstanding exploration commitments are as
follows:
Not later than one year
Consolidated
2016 $
767,351
767,351
2015 $
2,012,874
2,012,874
Exploration expenditure commitments beyond twelve months could not be reliable determined because the annual commitment was set
at the anniversary date for each tenement.
b) Remuneration
Amounts disclosed as remuneration commitments include commitments arising from the service contracts of key management
personnel referred to in note 22 and other senior employees that are not recognised as liabilities and are not included in the key
management personnel compensation.
Not later than one year
Later than one year and no later than five years
a) Leasing
Operating lease commitments – the Group as lessee
Consolidated
2016 $
478,638
-
2015 $
446,655
-
478,638
446,655
The Group has commercial leases on commercial property. These lease now has expired and being extended on month to month basis.
Future minimum rentals payable under non-cancellable operating leases as at 30 June 2016 are as follows:
Within one year
After one year but not more than five years
Total minimum lease payment
Consolidated
2016 $
-
-
-
2015 $
95,374
-
95,374
18. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
There are no contingent liabilities or assets at 30 June 2016. The Group has guarantees for property leases and banking finance facilities
of $50,000 (2015: $50,000).
19. SUBSEQUENT EVENTS
No other matter or circumstance has arisen since 30 June 2016, which has significantly affected, or may significantly affect the operations
of the Group, the result of those operations or the state of the affairs of the Group in subsequent years.
PAGE 56
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016
20. AUDITORS’ REMUNERATION
Consolidated
2016 $
2015 $
The auditor of Magnis Resources Limited in the current year is BDO East Coast Partnership (2015 : Ernst & Young).
a) Amounts received or due and receivable by Magnis Group Auditor’s (Australia) for:
An audit or review of the financial report of the entity and any other entity in the consolidated Group
60,000
81,130
Other services in relation of the entity and any other entity in the consolidated Group – Taxation services
155,085
-
215,085
81,130
b) Amounts received or due and receivable by related practices of Magnis Group Auditor’s (Australia) for:
An audit or review of the financial report of the entity and any other entities in the consolidated Group
13,730
4,182
Other services in relation of other entities in the consolidated Group
- Taxation compliance services
21. LOSS PER SHARE
a) Reconciliation of earnings to profit or loss
2,746
16,476
35,249
39,431
Consolidated
2016 $
2015 $
Net loss
Loss used in calculating basic loss per share
12,026,781
13,244,576
b) Weighted average number of ordinary shares outstanding during the year used in calculating basic loss per share
Number of shares
2016
Number of shares
2015
Weighted average number of ordinary shares used in calculating basic loss per share
351,583,998
314,212,116
c) Effect of dilutive securities
For the year ended 30 June 2016 and for the comparative period there are no dilutive ordinary shares because conversion of share
options and performance rights would decrease the loss per share and hence be non-dilutive.
22. KEY MANAGEMENT PERSONNEL
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out
below:
Short-term employee benefits
Termination benefits
Post-employment benefits
Share-based payments
a) Other transactions and balances with key management personnel and their related parties
Transactions with Directors’ related entities
Consolidated
2016 $
822,716
-
69,562
50,228
2015 $
750,841
-
68,508
220,120
942,506
1,039,469
PAGE 57
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 Identity of
Related Party
Nature of
Relationship
Type of
Transaction
Terms &
Conditions of
Transaction
Strong Solutions Pty Limited
Frank Poullas is a related party of
Strong Solutions Pty Limited and a
director of Magnis Resources Limited
Consulting
fees and PP&E
purchases
Normal
commercial
terms
Aggregate Amount
2016 $
2015 $
327,817
159,765
Minerals and Metal Marketing Stephen Hunt is a related party of
Consulting
Minerals and Metal Marketing and a
Director of Magnis Resources Limited
32,946
63,000
Normal
commercial
terms
Fivemark Capital
Len Eldridge is a related party of
Fivemark Capital and a Director of
Magnis Resources Limited
Consulting and
Share based
payment
Normal
commercial
terms
Peter Tsegas
Peter Tsegas is a Director of Magnis
Resources Ltd
Consulting
Normal
commercial
terms
184,634
56,494
-
-
b) Outstanding balances arises from purchases of goods and services at the reporting date in relation to other transactions with key
management personnel.
Assets and liabilities
Current liabilities
Trade and other payables
Total liabilities
23. RELATED PARTY DISCLOSURES
Parent entity
2016 $
2015 $
35,442
35,442
31,830
31,830
Magnis Resources Limited is the ultimate Australian parent entity of the consolidated entity. Its interests in controlled entities are set out
in note 25.
Wholly owned group transactions
Controlled entities made payments and received funds on behalf of Magnis Resources Limited and other controlled entities by way of
inter-company loan accounts with each controlled entity. These loans are unsecured, bear no interest and are repayable on demand.
However, demand for repayment is not expected in the next twelve months.
Transactions and balances between the Company and its controlled entities were eliminated in the preparation and consolidation of the
financial statements of the group.
Key management personnel
Details relating to key management personnel, including remuneration paid, are included in note 22 and the Remuneration Report in the
Directors Report.
Transactions with related parties
All amounts payable to related parties are unsecured and at no interest cost.
The amount outstanding will be settled in cash. No guarantees have been given or received. No expense has been recognised in the
period for bad or doubtful debts in respect of the amounts owed by related parties.
The following table provides the total amount of transactions that were entered into with related parties for the relevant financial year (for
information regarding outstanding balances on related party trade payables at year-end, refer to note 10).
Entity with significant influence over the Group
MAZZDEL PTY LIMITED controls 11.31% of the ordinary shares in Magnis Resources Limited (2015: 7.9%) and 0.04% of the listed options in
Magnis Resources Limited (2015: 16.15%).
PAGE 58
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 24. PARENT ENTITY INFORMATION
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Equity settled employee benefits reserve
Retained profits
Total equity
Contingent liabilities
Parent
2016 $
2015 $
(12,346,299)
(11,758,338)
(12,346,299)
(11,758,338)
6,963,684
7,062,968
297,470
457,164
2,771,419
2,859,458
170,808
269,452
87,476,445
72,137,802
2,235,534
1,893,633
(83,106,175)
(71,441,429)
6,605,804
2,590,006
The parent entity had no contingent liabilities as at 30 June 2016 and 30 June 2015.
Capital commitments - Property, plant and equipment
The parent entity had no capital com mitments for property, plant and equipment at as 30 June 2016 and 30 June 2015.
Remuneration commitments
The parent entity has a remuneration commitment of $478,638 as at 30 June 2016 (2015: $446,655).
25. INTERESTS IN CONTROLLED ENTITIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1:
Equity Holding*
Class of shares
2016 $
2015 $
Name
Uranex Tanzania Limited
Uranex Mozambique Limitada
Uranex ESIP Pty Ltd
Faru Resources Limited
Juhudi Minerals Limited
Investor Resources Services Pty Ltd
Uranium Africa Limited1
African Uranium Limited2
Uranex Option Share Trust #
Country of
incorporation
Tanzania
Mozambique
Australia
Tanzania
Tanzania
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
1 Uranium Africa Ltd was incorporated on 15 February 2016 then left the group as per result of EGM held on 5 April 16
2 African Uranium Ltd was incorporated on 9 February 2016 then left the group as per result of EGM held on 5 April 16
* percentage of voting power is in proportion to ownership.
# special purpose entity consolidated under AASB 10.
100
100
100
100
100
100
-
-
-
100
100
100
100
100
100
-
-
-
PAGE 59
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 26.
SHARE-BASED PAYMENT PLANS
a) Recognised share-based payment expenses
The expense recognised for employees and contractors received during the year is shown below:
Expense arising from the issue of options (employees)
Expense arising from the issue of options (non-employees)
Expense arising from the options to be issued
Expense arising from the issue of rights
Expense arising from the issue of shares
Consolidated
2016 $
64,912
1,737,150
-
(14,686)
-
2015 $
284,605
166,000
117,000
(12,605)
-
Total expense arising from share-based payment transactions
1,787,376
555,000
The share-based payment plans are described below.
b) Types of share-based payment plans for employee
Employee share option plan (ESOP)
Share options are granted to Directors, other Key Management Personnel (KMP) and other employees. The ESOP is designed to align
participants’ interests with those of shareholders by increasing the value of the Company’s shares. Under the ESOP, the exercise price of
the options is set by the Board on the date of grant.
The life of options to KMP and other employees granted are for 3 years but these must be exercised within 3 months of the option holder
ceasing employment with Magnis Resources Limited. There are no cash settlement alternatives.
c) Summaries of options and rights granted under share-based payment
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options issued
during the year.
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
2016 No.
2016 WAEP
2015 No.
2015 WAEP
11,575,000
11,250,000
(4,150,000)
(1,800,000)
16,875,000
16,875,000
0.23
0.41
0.18
0.05
0.38
0.38
20,050,000
6,900,000
(6,000,000)
(9,375,000)
11,575,000
11,575,000
0.20
0.33
0.03
0.36
0.23
0.23
The range of exercise prices for rights and options outstanding at the end of the year was between $0.1753 and $0.60 (2015: $0.00 and
$0.35).
d) Weighted average remaining estimated life
The weighted average remaining estimated life for the share options outstanding as at 30 June 2016 is 1.63 years (2015: 1.69 years).
e) Weighted average fair value
The weighted average fair value of options granted during the year was $0.17 (2015: $0.065).
f) Option pricing model
Equity-settled transactions
The fair value of the equity-settled share options granted under the share based payment is estimated as at the date of grant using a
Binomial Model taking into account the terms and conditions upon which the options were granted.
The following table lists the inputs to the models used for the year ended 30 June 2016.
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Option exercise price (cents)
PAGE 60
2016
Nil
51-59
1.53 - 2.52
1.56-3
40-60
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 Weighted average share price at measurement dates (cents)
Exercise price multiple
Model used
2016
39.50-93
2
Binomial
The effects of early exercise have been incorporated into calculations by using an expected life for the option that is shorter than the
estimated life based on historical exercise behaviour, which is not necessarily indicative of exercise patterns that may occur in the future.
The expected volatility was determined using a historical sample of Company share-prices. The resulting expected volatility therefore
reflects the assumption that the historical volatility is indicative of future trends which may also not necessarily be the actual outcome.
The option holders were assumed to exercise prior to expiry date when the price is twice that of the exercise price. This reflects the
restrictions to trading of directors and employees outlined in the Company’s share trading policy.
During the financial year the Uranex Option Share Trust (UOST) acquired and was issued with 750,000 options on varying terms and
conditions for allotment to Director (refer to Remuneration Report for details).
27. FINANCIAL INSTRUMENTS
a) Financial risk management objectives and policies
The Group’s principal financial instruments consist of short term deposits, receivables and payables. These activities expose the Group to
a variety of financial risks: market risk, i.e. (interest rate risk and foreign exchange risks), credit risk and liquidity risk.
The overall objective of the Group’s financial risk management policies is to meet its financial targets whilst protecting future financial
security.
The Board fulfils its corporate governance and oversight responsibilities by monitoring and reviewing the integrity of financial statements,
the effectiveness of internal financial control and the policies on risk oversight and management. Management is charged with
implementing the policies. The management manages the different types of risks to which the Group is exposed by considering risk and
monitoring levels of exposure to interest risk and by being aware of market forecasts for interest rates. Liquidity risk is monitored through
general business budgets and forecasts. The Board reviews and agrees on policies for managing these risks.
b) Market Risk
Interest rate risk
The Group is exposed to movements in market interest rates on short-term deposits. Management ensures a balance is maintained
between the liquidity of cash assets and the interest rate return. Presently, the Group has no interest bearing liabilities.
At reporting date, the Group had the following financial assets and liabilities exposed mostly to Australian variable interest rates
and are unhedged.
Cash and cash equivalents
The weighted average interest rate for the Group at reporting date was 2.49% (2015: 3.38%).
Consolidated
2016 $
2015 $
7,208,404
2,817,006
In accordance with the Group policy of reviewing this risk, the following sensitivity analysis based on interest rate exposures at reporting
date where the interest rate movement varies and other variables remain constant, post tax loss and equity would have been affected as
shown. The analysis has been performed on the same basis for both 2016 and 2015
Interest Rate Risk -1%
Interest Rate Risk +1%
Carrying Amount
Net Loss $
Equity $
Net Loss $
Equity $
30 June 2016
Consolidated Entity
Financial asset
Cash and cash equivalents
7,208,404
(72,084)
(72,084)
72,084
72,084
30 June 2015
Consolidated Entity
Financial asset
Cash and cash equivalents
2,817,006
(28,170)
(28,170)
28,170
28,170
PAGE 61
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 The sensitivity is higher in 2016 than 2015 because of a combination of higher cash balances. The analysis assumes the carrying
amounts noted will be maintained over the next financial year.
Foreign currency risk
The Group is exposed to fluctuations in foreign currencies arising from transactions including exploration commitments in currencies
other than Australian dollars, the Group’s presentation currency.
The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures to the United States dollar
and to the Tanzanian shilling.
The net exposure to financial assets and liabilities denominated in currencies other than the functional currency of each entity in the
Group were immaterial at reporting date.
c) Credit risk
The Group has no significant concentrations of credit risk. The maximum exposure to credit risk at reporting date is the carrying
amount (net of provision of doubtful debts) of those assets as disclosed in the statement of financial position and notes to the financial
statements.
As the Group does not presently have any lending or any other credit risk and low level of debtors, a formal credit risk management
policy is not maintained nor a sensitivity analysis prepared.
d) Liquidity risk
Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability to meet their obligations to repay their
financial liabilities as and when they fall due.
The Group’s objective is to maintain a balance between continuity of funding and flexibility as to its source.
The Directors monitor cash flow monthly and increase the frequency of review when the safety margin is or is nearly breached. The
Board formulates plans to replenish its cash resources when required and implements cost reduction programmes to reduce cash
expenditure.
The table below reflects all contractually fixed pay-offs, repayments and interest from recognised financial liabilities. For these obligations
the undiscounted cash flows for the respective upcoming financial years are presented. Cash flows for financial assets and liabilities
without fixed timing or amount are based on the conditions existing at 30 June 2015.
The remaining contractual maturities of the Group entity’s financial liabilities consisting of trade and other payables are:
On demand
Less than 1 year
1-5 years
> 5 years
e) Net Fair Values
Consolidated
2016 $
-
544,417
-
-
2015 $
-
721,971
-
-
544,417
721,971
The carrying amounts of financial assets and liabilities as shown in the statement of financial position approximate their fair value.
PAGE 62
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 JUNE 2016 DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Magnis Resources Limited, I state that:
1.
In the opinion of the Directors:
a)
the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i) Giving a true and fair view of its financial position as at 30 June 2016 and performance for the financial year ended on that date.
(ii)
Complying with Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001.
b) The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1.
c)
There are reasonable grounds to believe that the Company, as noted by Directors in Note 1 – Going concern will be able to pay its
debts as and when they become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with
section 295A of the Corporations Act 2001 for the financial year ended 30 June 2016.
On behalf of the board
F Poullas
Non - Executive Chairman
Sydney, 16 September 2016
PAGE 63
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 INDEPENDENT AUDITOR’S REPORT
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MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 (cid:3)
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(cid:3)
(cid:3)
(cid:3)
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(cid:3)
(cid:3)
(cid:3)
(cid:42)(cid:68)(cid:85)(cid:72)(cid:87)(cid:75)(cid:3)(cid:41)(cid:72)(cid:90)(cid:3)
(cid:51)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:3)
(cid:54)(cid:92)(cid:71)(cid:81)(cid:72)(cid:92)(cid:15)(cid:3)(cid:20)(cid:25)(cid:3)(cid:54)(cid:72)(cid:83)(cid:87)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:20)(cid:25)(cid:3)
(cid:3)
(cid:21)(cid:3)
PAGE 65
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016INDEPENDENT AUDITOR’S REPORT ADDITIONAL SHAREHOLDER INFORMATION
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows.
The information is current as at 30 June 2016.
a) Distribution of equity securities
The numbers of shareholders, by size of holding, in each class of share are:
Ordinary shares
Listed options
Number of
holders
Number of
shares
Number of
option holders
Number of
options
411
1,131
718
1,559
484
209,965
3,461,984
5,908,434
55,297,618
363,712,092
4,303
428,590,093
520
520,948
25
79
74
202
153
533
77
14,628
240,046
595,152
8,422,495
108,400,420
117,672,741
125,649
Number of
Shares
% of Ordinary
Shares
48,489,553
19,310,872
18,145,522
15,908,988
9,470,926
6,172,085
5,200,000
5,172,857
5,100,000
4,777,462
4,738,163
4,000,000
3,887,142
3,852,183
3,738,758
3,719,769
3,613,000
3,330,000
3,137,516
3,000,000
174,764,796
11.31
4.51
4.23
3.71
2.21
1.44
1.21
1.21
1.19
1.11
1.11
0.93
0.91
0.90
0.87
0.87
0.84
0.78
0.73
0.70
40.77
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
The number of shareholders holding less than
a marketable parcel of shares are:
b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
Name
MAZZDEL PTY LIMITED
CITICORP NOMINEES PTY LIMITED
PERSHING AUSTRALIA NOMINEES PTY LTD
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
MR FRANK POULLAS
NATIONAL NOMINEES LIMITED
GIBBS PLUMBING SERVICES PTY LTD
FINMIN SOLUTIONS PTY LTD
MR JURGEN BEHRENS
MISS HAZEL DARCY
MS RUIE YAO
MR PHILLIP TOWZELL
BOEMI INVESTMENTS PTY LTD
MR PETER SARANTZOUKLIS
S P ANDREWS & CO PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
4F INVESTMENTS PTY LTD
MS SUQIN YAN
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
JINBIAO WEI
PAGE 66
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 The names of the twenty largest holders of quoted options are:
Name
MR MATTHEW JOHN BOYSEN
MR FRANK POULLAS
QUAY AVENUE INVESTMENTS PTY LTD
MR EMMANUEL POULLAS
MR JOHN PETER SAUNIG
MR JURGEN BEHRENS
MR JOSHUA TUTAWAKE JOHNS
MR JOHN PICCININ
MR TRAVIS PELUSO
MR DAVID BYEONG YEON CHO
MR MARLON PATHER
MR YOUNGKIL AN
MR ANTHONY JOHN O'TOOLE
MR JASON COLIN NIXON & MRS LISA NIXON
MR PETER SARANTZOUKLIS
MR MINA NAROUZ
SPECTRUM IT PTY LTD
CITICORP NOMINEES PTY LIMITED
MRS WAI YIN BARTLEY
MR TRAVIS PELUSO & MRS MICHELLE ANNE PELUSO
c) Substantial shareholders
Number of
Options
8,158,000
4,640,500
3,500,000
3,350,000
3,000,000
3,000,000
3,000,000
2,530,900
2,500,000
2,334,794
2,300,000
2,244,210
2,185,557
2,150,000
2,140,000
2,039,453
1,800,000
1,407,669
1,400,000
1,380,200
% of Options
6.93
3.94
2.97
2.85
2.55
2.55
2.55
2.15
2.12
1.98
1.95
1.91
1.86
1.83
1.82
1.73
1.53
1.20
1.19
1.17
55,061,283
46.78
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001
are:
MAZZDEL PTY LIMITED
Voting rights
All ordinary shares carry one vote per share without restriction.
d) Stock Exchange Listing
Magnis Resources Limited is listed on the Australian Stock Exchange.
The Company’s ASX code for ordinary shares is MNS and for options it is MNSO.
Fully Paid Number
of Shares
Percentage %
48,489,553
11.31
PAGE 67
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016ADDITIONAL SHAREHOLDER INFORMATION GRAPHITE INTO THE FUTURE
PAGE 68
MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 PAGE 69
????????MAGNIS RESOURCES LIMITED ANNUAL REPORT 2016 Suite 4.03, Level 4 Goldfields House
1 Alfred Street Sydney NSW 2000 Australia
T +61 2 8397 9888 F +61 2 8397 9801
E info@magnis.com.au www.magnis.com.au