Magmatic Resources Limited
ABN 32 615 598 322
Annual report
for the year ended 30 June 2017
Contents
Corporate Information
Review of operations
Directors’ report
Auditor’s independence declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Directors’ declaration
Independent auditor’s report to the members
ASX additional information
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Magmatic Resources Limited
ABN 32 615 598 322
Corporate Information
Directors
David Berrie (appointed 28 October 2016)
David Richardson (appointed 28 October 2016)
Malcolm Norris (appointed 20 December 2016)
Alan Gibson (resigned 25 November 2016)
Ryoko Komatsuzaki (resigned 20 December 2016)
Company secretary
Ian Hobson
Registered office and
principal place of business
Level 1, 11 Lucknow Place,
West Perth, Western Australia 6005
Share registry
Auditors
Solicitors
ASX code
Telephone:
Email:
Website:
(08) 6102 2709
info@magmaticresources.com
www.magmaticresources.com
Computershare Investor Services Pty Ltd
Level 11, 172 St George’s Terrace
Perth, Western Australia 6000
Telephone: 1300 850 505
Telephone: +61 3 9415 4000
BDO Audit (WA) Pty Ltd
38 Station Street
SUBACIO WA 6008
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
PERTH WA 6000
Magmatic Resources Limited is listed on the Australian
Securities Exchange (Shares: MAG, Options: MAGO)
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Review of Operations
About Magmatic Resources Ltd
The Company’s portfolio consists of four 100% owned projects Myall, Moorefield, Wellington North
and Parkes (joint venture with Japanese Government exploration agency JOGMEC) comprising
seven granted exploration licences (856km2) in the East Lachlan’s central NSW.
The East Lachlan is host to major gold-copper mining operations (Figure 5) with endowments1 such
as Cadia Valley (52Moz Au & 9.2Mt Cu), Cowal (7.8Moz Au) and Northparkes (4Moz Au & 3.7Mt
Cu).
Magmatic’s projects were acquired from Gold Fields Australia Pty Ltd (Gold Fields – world’s 7th
largest gold miner) and are prospective for porphyry copper-gold, epithermal and orogenic gold
deposits and skarn and VHMS base metals ± gold deposits.
Gold Fields spent over $13.5m exploring the projects and identified over 40 prospects (see: Prospect
Pipeline) and retains a significant shareholding in the Company.
Magmatic has multiple exploration programs planned / in progress across its 4 projects over the next
9 months:
Moorefield Project:
1. Carlisle Reefs (Gold):
Significant gold intercepts from 1st drill program included:
8m @ 5.00g/t Au from 74m; incl 2m @ 18.05g/t Au
30m @ 1.79g/t Au from 80m; incl 16m @ 2.09g/t Au
6m @ 3.59g/t Au from 46m
28m @ 0.86g/t Au from 20m; incl 2m @ 3.38g/t Au
24m @ 0.65g/t Au from 8m; incl 4m @ 2.63g/t Au
Second Drill program consisting of 14 RC holes completed on 7th September.
Waiting for assay results.
2. Application for new tenement ELA 5520 adjacent to Carlisle Reefs. Inferred extension
of Boxdale – Carlisle Reefs gold trend.
3. Boxdale (Gold): auger soil sampling planned for October/November.
4. Pattons (VHMS type Copper-Gold): auger soil sampling planned for Oct/Nov.
Parkes Project:
5. Brolgan (Copper/Gold): DH drill program approved and planned to for Sept 21 to test
the known Zn-Cu-S anomalism at the Brolgan prospect with two 350 m aircore-diamond
holes (AC-HQ to coherent basement, then NQ). The area of interest lies in a regional
magnetic low where NW-trending cross faults transect the stratigraphy of interest.
Targets - Skarn Cu-Au and Orogenic Au deposits
6. Alectown: Hylogging of previous drill core and RC chips: total of 2439m RC drilling and
4019m DH drill core will be scanned at GSNSW’s Londonderry core library facility.
Scanning of the RC drill chips is complete, and DH core underway. The next stage is to
review the spatial relationships of the geophysical, geological, geochemical and
Hylogger data in 3D.
7. MacGregors (Gold) and Goonumbla Volcanics targets: FPXRF soil sampling
underway - further exploration planned for Oct/Nov
Wellington Project:
8. GEUR7 (Gold): AC drill program approved and planned for September/October. 43
holes for 1075 m of AC drilling to test the geology at the GEUR7 and GEUR12
prospects. Targets - Orogenic Au deposits and Porphyry Cu-Au deposits.
9. Bodangora (Gold): exploration planned for October/November
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Myall Project:
Barina (Gold-Copper epithermal and porphyry): an air core drilling program comprising 41
holes for approximately 4,615m has been designed targeting the epithermal gold potential with
concurrent testing of porphyry targets. The program is aimed to commence in December. This
drilling aims to generate multi‐point geochemical and geological anomalies enabling diamond
drill testing including:
Kingswood North (Porphyry Cu/Au target)
Barina (Telescoped Epithermal Au on Porphyry Cu/Au target)
Gemini (Epithermal Gold target)
Cooperative Drilling funds will finance the 4,615m Air Core drilling component of
the proposed program.
JOGMEC Joint Venture
The Group entered into a Joint Venture (JV) with Japan Oil, Gas and Metals National Corporation
(JOGMEC), which commenced effective 30 March 2017.
JOGMEC can earn up to a 51% interest in two exploration tenements, EL7427 and EL7676, owned by
the Company, located in East Lachlan, NSW, Australia, known as the Parkes Project (Project) by funding
up to $3,000,000 of exploration expenditure. The Parkes JV is only the fifth JV JOGMEC has in
Australia. The Project is prospective for copper/gold porphyry.
A 1st year $1m agreed exploration program has already commenced and drilling is planned to begin in
October or November 2017.
JOGMEC is a Japanese government independent administrative institution which among other things
seeks to secure stable resource supply for Japan. Details about JOGMEC can be found on the
corporation’s website at: jogmec.go.jp/english/about/index.html.
Key terms of the JV are set out below:
JOGMEC has the right to earn a 51% interest in the Parkes Project by funding $3,000,000 of
exploration expenditure on the Project tenements over a period of up to 3 years.
JOGMEC is required to spend a minimum of $300,000 before withdrawing from the Agreement.
MAG to act as Operator of the project on behalf of the parties during the JV until JOGMEC
becomes a majority owner at which point the Operator shall be appointed by JOGMEC.
JOGMEC has the right to assign its interest in the agreement to Japanese company(s) (this is
in line with JOGMEC’s mission, which is to help source and de-risk opportunities for Japanese
corporations).
Exploration
Exploration during the period focussed on RC drilling at the Carlisle Reefs prospect at the Moorefield project,
where promising gold intercepts were returned from the first drilling program.
Work is also in progress at the Parkes JV with JOGMEC and planning is underway to drill test porphyry
targets at Wellington North.
Drilling planned for the next quarter includes: follow-up RC drilling at Carlisle Reefs (Moorefield); aircore and
RC drilling of porphyry targets at the Rose Hill and GEUR007 prospects at Wellington North; diamond drilling
of skarn targets at Brolgan (Parkes JV); and auger soil sampling at the Pattons and Boxdale prospects at
Moorefield.
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Figure 1 – Location of Magmatic’s projects in the East Lachlan province showing mines and
advanced projects with selected metal endowments
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Moorefield Project: Gold, Copper, Zinc (MAG 100%)
Targets: epithermal gold and orogenic gold deposits, and skarn-related and VHMS base metals ± gold
deposits.
The Moorefield project consists of two tenements EL7675 & ELA5520 covering 478km located 25km
northeast of Condobolin (Figure 5). The project covers geological units prospective for vein-hosted gold and
skarn-related mineralisation in the Ordovician Girilambone Group and VHMS-hosted base metal (± gold)
mineralisation in Siluro-Devonian volcanic and sedimentary rocks.
Outcropping gold mineralisation is present at Carlisle Reefs, an historic goldfield with unknown production
where high-grade gold rock chips results were returned (including >1000g/t Au). The goldfield contains
nearly 100 historic gold workings over an 800m x 800m area, including shafts, adits and drives (Figure 2)
and had never been drilled previously. RC drilling completed in the quarter tested beneath surface and
underground workings (15 holes; 2,222m). Multiple significant gold intervals incorporating a number of high-
grade gold shoots were intersected with mineralisation extending from near surface to 100m vertical. The
mineralisation is open down dip and along strike to the north and northwest. Significant gold intercepts
include:
8m @ 5.00g/t Au from 74m; incl 2m @ 18.05g/t Au
30m @ 1.79g/t Au from 80m; incl 16m @ 2.09g/t Au
6m @ 3.59g/t Au from 46m
28m @ 0.86g/t Au from 20m; incl 2m @ 3.38g/t Au
24m @ 0.65g/t Au from 8m; incl 4m @ 2.63g/t Au
The gold mineralisation at Carlisle Reefs is interpreted as an orogenic gold system in strongly sheared and
folded metasedimentary host rocks. The mineralisation occurs as quartz-sulphide veins and disseminated
sulphide (arsenopyrite and pyrite) in the host sequence. Favourable structural positions are zones of dilation
and fracturing in fold structures. Gold mineralisation is associated with anomalous arsenic (>500ppm) and
remains open down dip and along strike. Samples were analysed as 2m composites. Selected intervals
have been re-split as 1m samples and were be sent for gold analysis. The best intercepts were returned from
holes MFRC011-013 (Figure 3) and MFRC001-002 (Figure 4).
The recent drilling was part funded by a NSW government New Frontiers Drill Grant.
Carlisle Reefs is located at the southern end of a regionally extensive magnetic trend that extends from
south of the Carlisle Reefs prospect to The Dam prospect, which is 15km to the northwest (Figure 4). Gold
mineralisation has now been intersected in drilling at Carlisle Reefs and Boxdale, both occurring along this
trend. Gold Fields previously drilled 5 RC holes at Boxdale including gold intercepts of:
19m @ 1.28g/t Au from 114m; incl 4m @ 4.3g/t Au
15m @1.0g/t Au from 85m incl; 6m @ 2.11g/t Au
Regionally, the magnetic signal at Moorefield is impacted by the Fifield Suite, which consists of several large
mafic-ultramafic intrusions north, east and south of EL7675. These intrusions are highly magnetic which
tends to suppress the subtle, more localised, magnetic anomalies, which may be associated with mineralised
trends at Carlisle Reefs and Pattons (Figures 5 & 6). In addition to RC drilling at Carlisle Reefs, exploration in
the next quarter will focus on the trend between the Carlisle Reefs and Boxdale prospects, which is
prospective for orogenic gold mineralisation and on the Pattons prospect which is prospective for Tritton-
style copper mineralisation. A new tenement application, ELA5520, was lodged in June 2017 which is
adjacent to EL7675 to the east and south and covers possible extensions of mineralised trends at Carlisle
Reefs and Pattons (Figures 5 & 6).
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Figure 2 – Aerial view of the Carlisle Reefs goldfield showing mapped lode structures, recently completed
RC drillholes with significant gold drill intercept and locations of drill sections A & B, which are shown in
figures 3 & 4 respectively.
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Figure 3 – RC drill section looking northwest through holes MFRC011-013
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Figure 4 – RC drill section looking northwest through holes MFRC001-002
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Figure 5 – Moorefield simplified basement geology showing the recent Exploration Licence Application
ELA5520 and possible extensions of mineralised trends from magnetics (see figure 6).
Figure 6 – Moorefield regional RTP magnetics showing possible extensions of mineralised trends
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Parkes Project: Gold and Copper (MAG 100%; JV with JOGMEC earning 51% and funding 100%)
Targets: porphyry copper-gold, epithermal gold and orogenic gold deposits
The Parkes project includes two Exploration Licences EL7424 and EL7676, covering 159km2 located
northwest of Parkes (Figure 1). The project is within the Junee Narromine Volcanic Belt of the Ordovician
Macquarie Arc, which hosts porphyry copper-gold deposits at Northparkes and Temora as well as the Cowal
gold deposit. It is within structurally prominent stratigraphy east of Northparkes Cu-Au deposits along strike
from the recently developed Tomingley gold deposit.
Magmatic has identified several targets including a structurally hosted gold target similar to Tomingley
mineralisation, and porphyry Cu-Au targets similar to Northparkes.
The Company entered a joint venture with Japan Oil, Gas and Metals National Corporation (JOGMEC), on
30 March 2017, whereby JOGMEC can earn up to a 51% interest in the project by funding up to AUD $3m of
exploration expenditure over three years.
The first year AUD $1m exploration program has commenced with re-processing and imaging of geophysical
datasets underway and soil sampling over porphyry targets within EL7676 in progress.
Drilling is planned to test a copper-gold skarn target at Brolgan in September 2017. Magmatic is managing
the joint venture.
Previous Gold Fields (GFA) exploration within the Parkes Project included:
Tenement wide aeromagnetic and radiometric data-sets acquired and imaged.
Prospect scale high resolution ground magnetic, gravity and IP data-sets acquired with undrilled
geophysical anomalies.
Prospect scale soil, rock chip air-core and auger drilling data sets acquired with comprehensive
EOH multi-element geochemistry with undrilled Au/Cu and pathfinder geochemical anomalies.
MacGregors orogenic gold prospect – two holes completed by GFA intersect quartz-pyrite-
arsenopyrite veining with best intercepts of:
15m @ 0.66g/t Au from 76m, Incl. 6m @ 1.03g/t Au
12m @ 0.41g/t Au from 52m
19m @ 0.63g/t Au from 95m, Incl. 1m @ 5.75g/t Au
Glenroy high-sulphidation epithermal Au prospect – RC drilled quartz-muscovite-paragonite-pyrite
alteration zone analogous to nearby Peak Hill high-sulphidation epithermal Au deposit with untested
geophysical (IP, gravity and magnetics) anomaly to the north.
Buryan porphyry Cu-Au prospect – RC drilled porphyry style quartz-pyrite-chalcopyrite v ei ns in
andesitic volcaniclastic rocks and diorite.
Buryan intermediate-sulphidation epithermal Au-Pb-Zn prospect – RC/DD drilled quartz-
carbonate-sulphide (pyrite-sphalerite-galena-chalcopyrite) veins and matrix infill in phyllic and
propylitic altered polymictic breccia.
Follow-up RC/DD drilling at MacGregors orogenic gold prospect, Buryan porphyry and
intermediate-sulphidation epithermal prospects and Glenroy high-sulphidation epithermal
prospect is recommended where open intersections at shallow depths and undrilled geophysical
and geochemical anomalies remain untested.
Evaluation of regional targets is also recommended including an undrilled >1km strike Zn air-
core geochemical anomaly at the Brolgan prospect within the Parkes East tenement.
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Figure 7 – Parkes RTP magnetics (mosaic of high-resolution survey over regional survey)
showing key prospectus
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Wellington North Project: Gold and Copper (MAG 100%)
Targets: porphyry copper-gold, epithermal gold and orogenic gold deposits
The Wellington North Project includes three Exploration Licences, EL7440, EL6178 and EL8357, covering
177km2 located immediately north of Wellington (Figure 1). The project is within the Molong Volcanic Belt of
the Ordovician Macquarie Arc, which hosts the porphyry copper-gold deposits at Cadia Valley (54Moz Au &
9.2Mt Cu).
Gold Fields explored the region for epithermal gold and copper-gold deposits similar to Cadia Valley. Several
porphyry Cu-Au targets were advanced through initial drilling and intersected mineralisation. The project is
also prospective for orogenic gold deposits and includes near surface gold targets such as historical gold
mines Mitchells Creek and Dicks Reward at Bodangora, which are estimated to have produced 230koz @
26g/t of gold from narrow quartz lodes in the early 1900’s .
Previous Gold Fields exploration within the Wellington North Project included:
Identification of high K to shoshonitic volcanics with high K to alkalic intrusions and outcropping
mineralisation.
Tenement wide aeromagnetic, radiometric and gravity data-sets.
Prospect scale high resolution ground magnetic, gravity and IP (3DIP, gradient array and pole-dipole)
data-sets with undrilled geophysical anomalies.
Rock chip sampling and auger drilling – comprehensive EOH multi- element geochemistry and ASD
mineralogy data- sets with undrilled Cu-Au and pathfinder geochemical anomalies.
Significant amount of RC/DD drilling (>20,000m) across a number of targets and confirming
hydrothermal systems with anomalous Cu-Au at Mayhurst and Rose Hill prospects.
Rose Hill – Pyrite-chalcopyrite-bornite- malachite-native Cu in calc-potassic and calc-sodic altered
diorite with best intercept: 71m @ 0.30g/t Au, 0.43% Cu and 57ppm Mo, Incl. 8m @ 0.52g/t Au, 1.34%
Cu.
Geophysical and geochemical anomalies considered prospective for porphyry Cu-Au deposits
remaining for future RC and diamond drill testing.
Drill planning is underway to test porphyry targets at Rose Hill, where previous drilling intersected 71m @
0.3g/t Au, 0.43% Cu & 57ppm Mo from surface and GEUR007 which is a combined radiometric, magnetic
and geochemical anomaly. Drilling is scheduled for September 2017, subject to permitting.
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Figure 8 – Wellington North RTP magnetics (mosaic of high-resolution surveys over regional survey)
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Myall Project: Gold and Copper (Magmatic 100%)
Targets: porphyry copper-gold, epithermal gold and orogenic gold deposits
Myall EL6913 is located 20km southwest of Narromine covering 244km2 of the Narromine Igneous Complex
in the Junee-Narromine Volcanic Belt which is part of the Ordovician Macquarie Arc (Figure 1). The project is
prospective for porphyry copper-gold deposits and Cowal-style epithermal carbonate base metal gold
systems.
Previous drilling has intersected significant porphyry copper-gold mineralisation at Kingswood: 70m @
0.15g/t Au & 0.54% Cu from 141m, including 10m @ 0.61g/t Au & 0.64% Cu from 268m; and Cowal-style
carbonate base-metal gold mineralisation at Barina: 0.5m @ 204g/t Au, 93g/t Ag & 8.6% Zn from 221.9m.
The latter intercept represents an emerging target style for the Myall project, which has been confirmed by
the NSW government awarding drill funding under the New Frontiers Drill Grant scheme to test the Barina
target. Most of the area is currently under winter crop and drilling is planned after harvest (November-
December 2017).
Previous Gold Fields exploration within the Myall Project included:
One of the largest volcano-intrusive complexes in the East Lachlan with medium to high K calc-
alkaline island arc volcanics and multiphase intrusive centres.
Multi-disciplinary datasets including high resolution 50m line spaced aeromagnetics and 500m x
500m gravity data in-filled to 250m x 250m.
Systematic full-field air-core at 500m x 500m spacing with infill down to 250m x 250m has identified
large alteration systems with associated anomalous geochemistry.
35 diamond core holes drilled on eight targets for (>11,000m).
Kingswood – vein and hydrothermal breccia style porphyry system with best intercept of 70m @
0.15g/t Au, 0.54% Cu, incl 10m @ 0.61g/t Au, 0.64% Cu.
Kingswood North - porphyry style quartz sulphide vein system in hydrothermally altered ‘reddened’
feldspar porphyry.
Barina - alkalic carbonate base metal epithermal Au-Ba-Te signature telescoped on reddened
potassic altered feldspar porphyry dykes. Best intercept of 0.5m @ 204g/t Au, 93g/t Ag, 8.6% Zn in
carbonate base-metal gold vein.
Gemini – quartz carbonate base metal gold system with significant gold intercepts over 2km strike
overlying an underexplored porphyry system. Best intercept of 9m @ 3.19g/t Au incl. 1m @ 8.8g/t Au
and 2m @ 6.4g/t Au.
Multi-disciplinary datasets including high resolution 50m line spaced aeromagnetics and 500m x
500m gravity data in-filled to 250m x 250m.
Competent Persons Statement:
The information in this document that relates to Exploration Results, Mineral Resources or Ore Res erves is based on information
compiled by Mr. Gordon Barnes who is a Member of the Australian Institute of Geoscientists. Mr. Barnes is a full-time employee of
Magmatic Resources Limited and has sufficient experience which is relevant to the style of miner alisation and type of deposit under
consideration and to the activity which he is undertaking 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. Gordon Barnes consents to the
inclusion in the report of the matters based on his information in the form and context in which it appears.
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Figure 9 – Myall RTP magnetics (mosaic of high-resolution survey over regional survey)
showing key prospects
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Directors’ Report
Your directors present their annual financial report on the consolidated entity (referred to hereafter as the “Group”)
consisting of Magmatic Resources Limited (the “Company” or “parent entity”) and the entity Modeling Resources
Pty Ltd (“Modeling”) it controlled during the financial year ended 30 June 2017. In order to comply with the
provisions of the Corporations Act, the directors report as follows:
Directors
The names of the directors of the Company during or since the end of the year are noted below. Directors were in
office for the entire period unless otherwise stated:
David Berrie – Non-Executive Chairman (appointed 28 October 2016)
David Richardson – Managing Director (appointed 28 October 2016)
Malcolm Norris – Non-Executive Director (appointed 20 December 2016)
Ryoko Komatsuzaki (resigned 20 December 2016)
Alan Gibson (resigned 25 November 2016)
Company Secretary
Ian Hobson (appointed 20 January 2017)
Principal activities
The principal activity of the Group during the financial year was mineral exploration.
Dividends
No dividend has been paid or declared since the start of the financial year and the directors do not recommend the
payment of a dividend in respect of the financial year.
Review of operations
Information on the operations of the Group is set out in the review of Operations Report on pages 4 to 18 of this
Annual Report.
Financial review
The Group incurred a loss of $3,794,220 after income tax for the financial year (2016: loss of $203,261).
As at 30 June 2017, the Group had net assets of $4,264,431 (30 June 2016: net liability of $372,983), including
cash and cash equivalents of $3,080,365 (30 June 2016: $45,4560).
Significant changes in the state of affairs
On 16 and 19 September 2016, Modeling raised a total of $500,000 through the issue of convertible notes. The
notes were convertible into shares of the Company at the greater of $0.17 per share and a 15% discount to the
Initial Public Offering (IPO) price of the Company with a maturity date of 30 September 2017. A coupon rate of 5%
applied if the IPO was not successful.
On 28 October 2016, Magmatic Resource Limited was incorporated. On the same date, Magmatic Resources
Limited acquired, through a common control transaction, the existing entity, Modeling Resources Pty Ltd which has
the same principal activities referred to above. The common control transaction was entered into in relation to the
listing of Magmatic Resources Limited onto the Australian Securities Exchange in May 2017.
As such, these financial statements for the period ended 30 June 2017 represent the consolidated financial
statements of Magmatic Resources Limited. The comparative amounts shown at 30 June 2016, relate to the
financial statements of Modeling Resources Pty Ltd, as a single entity.
The Company issued a prospectus dated 24 March 2017 pursuant to which an offer of 20 million shares at 20
cents per share to raise $4,000,000 was made. On completion of the capital raising, the Company was admitted to
the official list of ASX.
Otherwise, there have been no significant changes in the state of affairs of the Group to the date of this report.
Matters subsequent to the end of the financial year
There has not been any matter or circumstance that has arisen after balance date that has significantly affected, or
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may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the
Group in future financial periods.
Likely developments and expected results
Additional comments on expected results of certain operations of the Group are included in the review of
operations and activities.
Environmental legislation
The Group is subject to significant environmental legal regulations in respect to its exploration and evaluation
activities. The group is compliant with the NGER Act 2007. There have been no known breaches of these
regulations and principles.
Indemnification and insurance of directors and officers
During the financial year the Company has paid premiums in respect of insuring directors and officers of the
Company against liabilities incurred as directors or officers. The amount paid is confidential under the terms of the
terms of the insurance policy. The Company has no insurance policy in place that indemnifies the Company’s
auditors.
Information on directors
David Berrie; LLB Non-Executive Chairman (appointed 28 October 2016)
Experience and expertise
Mr. David Berrie has over 30 years’ experience in the mining industry. Mr Berrie worked as a solicitor in the mining
team at Clayton Utz before joining the international mining house Western Mining Corporation in 1987 with much of
that time spent in the exploration division before transitioning over to BHP Billiton. Mr Berrie has extensive public
company experience and continues to be a director of Summit Resources Ltd, which is listed on the ASX (ASX:
SMM). Mr Berrie has a Bachelor of Laws and a Bachelor of Juris prudence from the University of Western
Australia.
Mr Berrie is not considered to be independent due to his interest in the securities of the Company.
Other current directorships
Summit Resources Limited
Former directorships in the last 3 years: Nil
Special responsibilities
Non-Executive Chairman
Interests in shares and options at the date of this report
10,524,044 ordinary shares (indirectly held), 1,360,000 class A performance shares (indirectly held), 1,360,000
class B performance shares (indirectly held).
David Richardson; B. Comm MBA Managing Director (appointed 28 October 2016)
Experience and expertise
Mr. David Richardson is an experienced international Executive and has worked in strategic partnerships,
international business development and fund-raising in the Asia-Pacific region for over 25 years. He has lived and
worked in Asia extensively, speaks fluent Japanese and is a founding board member of the Telethon Adventurers
charity for childhood cancer research. David holds a Masters of Business Administration from the University of
Southern California in Los Angeles and undertook post graduate Japanese studies at Keio University in Tokyo.
Mr Richardson is not considered to be independent due to his executive role as Managing Director of the Company
and interest in the securities of the Company.
Other current directorships: Nil
Former directorships in the last 3 years: Nil
Special responsibilities
Managing Director
Interests in shares and options at the date of this report
27,952,573 ordinary shares (indirectly held), 4,480,000 class A performance shares (indirectly held), 4,480,000
class B performance shares (indirectly held).
Malcolm Norris; MSc, MAppFin Non-Executive Director (appointed 20 December 2016)
Experience and expertise
Mr. Malcolm Norris is a geologist with extensive experience in business management, asset transactions and
exploration with a focus on porphyry discovery. He is currently the managing director of Sunstone Metals Limited
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(ASX:STM). Previously chief executive officer and managing director of SolGold Plc, Mr Norris holds a Bachelor of
Science (Geology, Hons 1) from the University of Queensland, a Master of Science from the University of Western
Ontario and a Master of Applied Finance (Kaplan).
The Board considers Mr. Norris to be an independent Director as he is not a member of management and is free of
any interest, position, association or relationship that might influence, or reasonably be perceived to influence, in a
material respect his capacity to bring an independent judgement to bear on issues before the Board.
Other current directorships
Sunstone Metals Limited
Former directorships in the last 3 years
Afranex Gold Limited
Special responsibilities: Nil
Interests in shares and options at the date of this report
750,000 unlisted options exercisable at 30 cents on or before 19 May 2020.
Meetings of directors
During the financial year there was one formal directors’ meeting. All other matters that required formal Board
resolutions were dealt with via written circular resolutions. In addition, the directors met on an informal basis at
regular intervals during the financial year to discuss the Group’s affairs.
The number of meetings of the Company’s board of directors attended by each director were:
Directors’ meetings held
whilst in office
Directors’ meetings
attended
D Berrie (appointed 28 October 2016)
D Richardson (appointed 28 October 2016)
M Norris (appointed 20 December 2016)
R Komatsuzaki (appointed 28 October 2016, resigned
20 December 2016)
A Gibson (appointed 28 October 2016, resigned 25
November 2016)
Shares under option
1
1
-
1
-
Outstanding share options at the date of this report are as follows:
1
1
-
1
-
Grant Date
Date of expiry
Exercise price
Number of options
11 May 2017
11 May 2017
11 May 2017
11 May 2017
11 May 2017
17 May 2020
17 May 2020
11 May 2018
11 May 2019
11 May 2020
$0.30
$0.30
$0.20*
$0.20*
$0.205*
8,480,613
9,500,000
2,500,000 (Tranche 1)
2,500,000 (Tranche 2)
2,500,000 (Tranche 3)
*Unlisted options exercisable at a price which is greater of $0.20 or a 5% discount to the 20-day weighted average
price of shares on ASX. On the assumption that the Options will be exercised on expiry, a Monte Carlo simulation
has been prepared in order to assess the higher of the 5% discount to the 20 VWAP or 20 cents for the Options at
expiry for the Tranche I, Tranche 2 and Tranche 3 Options. The following exercise prices result:
Tranche 1: 20 cents (20 cents was the higher of the two) Monte valuation =19.3 cents
Tranche 2: 20 cents (20 cents was the higher of the two) Monte valuation = 19.7 cents
Tranche 3: 20.5 cents (5% discount to the 20 Day VWAP was higher of the two)
No option holder has any right under the options to participate in any other share issue of the Company or any other
controlled entity.
Shares issued on the exercise of options
There have been no shares issued upon the exercise of options.
21
Magmatic Resources Limited
ABN 32 615 598 322
Remuneration Report (Audited)
This report outlines the remuneration arrangements in place for the key management personnel of Magmatic
Resources Limited (the “Company”) for the financial year ended 30 June 2017. The information provided in this
remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001.
The remuneration report details the remuneration arrangements for key management personnel (“KMP”) who are
defined as 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 parent company, and includes all executives in the Parent and the Group receiving the highest
remuneration.
Key Management Personnel
(i) Directors
David Berrie (appointed 28 October 2016) (Non-Executive Chairman)
David Richardson (appointed 28 October 2016) (Managing Director)
Malcolm Norris (appointed 20 December 2016) (Non-Executive Director)
Ryoko Komatsuzaki (appointed 28 October 2016, resigned 20 December 2016) (Non-Executive Director)
Alan Gibson (appointed 28 October 2016, resigned 25 November 2016) (Non-Executive Director)
(ii) Executives
Ian Hobson (appointed 20 January 2017) (Chief Financial Officer and Company Secretary)
Shane Cranswick (appointed 28 October 2016, resigned 20 January 2017) (Chief Financial Officer and Company
Secretary)
Details of directors’ and executives’ remuneration are set out under the following main headings:
A
B
C
D
Principles used to determine the nature and amount of remuneration
Details of remuneration
Employment contracts/Consultancy agreements
Share-based compensation
Principles used to determine the nature and amount of remuneration
A
The objective of the Company’s executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aims to align executive reward with the creation of value
for shareholders. The key criteria for good remuneration governance practices adopted by the Board are:
competitiveness and reasonableness
acceptability to shareholders
performance incentives
transparency
capital management
The framework provides a mix of fixed salary, consultancy agreement based remuneration and share based
incentives.
The broad remuneration policy for determining the nature and amount of emoluments of Board members and
senior executives of the Company is governed by the full board. Although there is no separate remuneration
committee the Board’s aim is to ensure the remuneration packages properly reflect directors’ and executives’
duties and responsibilities. The Board assesses the appropriateness of the nature and amount of emoluments of
such officers on a periodic basis by reference to relevant employment market conditions with the overall objective
of ensuring maximum stakeholder benefit from the retention and motivation of a high quality Board and executive
team.
The current remuneration policy adopted is that no element of any director or executive package is directly related
to the Company’s financial performance. Indeed there are no elements of any director or executive remuneration
that are dependent upon the satisfaction of any specific condition however the overall remuneration policy
framework is structured to advance and create shareholder wealth.
Non-executive directors
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of,
22
Magmatic Resources Limited
ABN 32 615 598 322
the directors. Non-executive directors’ fees and payments are reviewed annually by the Board and are intended to
be in line with the market.
Directors’ fees
Some of the directors perform at least some executive or consultancy services. As the Board considers it important to
distinguish between the executive and non-executive roles each of the directors receive a separate fixed fee for their
services as a director.
Retirement allowances for directors
Apart from superannuation payments paid on salaries there are no retirement allowances for directors.
Executive pay
The executive pay and reward framework has the following components:
base pay and benefits such as superannuation
long-term incentives through participation in employee equity issues
Base pay
All executives are either full time employees or consultants who are paid on an agreed basis that has been
formalised in a consultancy agreement.
Benefits
Apart from superannuation paid on executive salaries there are no additional benefits paid to executives.
Short-term incentives
There are no current short term incentive remuneration arrangements.
Performance based remuneration
To ensure that the Company has appropriate mechanisms in place to continue to attract and retain the services of
suitable directors and employees, the Company has issued options and performance rights to key personnel.
During the year ended 30 June 2017, the Company issued 11,680,000 performance rights to directors while in the
year ended 30 June 2016, the Company did not issue performance rights to directors (refer note 15).
Details of remuneration
B
Amounts of remuneration
Details of the remuneration of the directors and other key management personnel (as defined in AASB 124
Related Party Disclosures) of the Company and the Group for the year ended 30 June 2017 are set out in the
following tables.
The key management personnel of the Group comprise the directors of the Company who have the authority and
responsibility for planning, directing and controlling the activities of the Group. Given the size and nature of the
Group, there are no other employees who are required to have their remuneration disclosed in accordance with the
Corporations Act 2001. No cash remuneration is linked to performance however performance rights were issued
during the year as discussed below.
Remuneration of directors
Year ended 30 June 2017
Name
Director
D Berrie (appointed 28 October 2016)
D Richardson (appointed 28 October 2016)
M Norris (appointed 20 December 2016)
R Komatsuzaki (appointed 28 October
2016, resigned 20 December 2016)
A Gibson (appointed 28 October 2016,
Salary /
fees
$
45,572
35,238
5,000
-
-
Post-
employment
benefits
Superannuation
$
Share-based
payments1
Total
$
$
4,323
3,348
-
459,680
1,514,240
89,661*
509,575
1,552,826
94,661
-
-
-
-
-
-
23
Magmatic Resources Limited
ABN 32 615 598 322
resigned 25 November 2016)
Key Management Personal
I Hobson (appointed 20 January 2017)
S Cranswick (28 October 2016, resigned 20
January 2017
63,900
51,095
-
-
41,842*
105,742
-
51,095
200,805
7,671
2,105,423
2,313,899
Year ended
30 June 2016 (Modeling
Resources Pty Ltd)
Name
Director
D Berrie
D Richardson
R Komatsuzaki**
Salary / fees
$
Post-employment
benefits
Superannuation
$
Share-based
payments1
$
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
-
-
-
-
* Issued as an incentive at the time of IPO. There are no performance criteria attached to these options.
** Appointed 28 October 2016, resigned 20 December 2016
1 The assessed fair value at grant date of options and performance rights granted to directors is included in key
management personnel remuneration above and expensed in the statement of profit or loss and other comprehensive
income over the vesting period of the options. Fair values at grant date are determined using market value for listed
options or a Black and Scholes pricing model that takes into account various assumptions as detailed in Note 15.
Performance Rights
On 17 May 2017, the Company issued 5,840,000 Class A Performance Rights and 5,840,000 Class B
Performance Rights to directors David Richardson and David Berrie as an incentive at the time of IPO.
The Milestones for the Performance Rights are as follows:
(Class A Performance Rights) the Company achieving both of the following:
i.
ii.
by no later than 31 December 2017, the Company entering into a JV agreement with a JV partner
(with a minimum market capitalisation of $100m or is a Foreign Government Investor or equivalent)
in a single existing project, being Myall, Moorefield, Wellington or Parkes, where the JV Partner
agrees to spend $3,000,000 to acquire not more than a 51% stake in the JV asset; and
the JV Partner has spent $1,000,000 on exploration expenditure on the JV asset;
(Class B Performance Rights) the Company achieving two of the following:
i.
ii.
iii.
signing a JV agreement with a JV partner (with a minimum market capitalisation of $100m or is a
Foreign Government Investor or equivalent) in a single existing Modeling project, being Myall,
Moorefield, Wellington or Parkes, where the JV partner agrees to spend $4,000,000 to acquire not
more than a 51% stake in the JV asset, within the first 24 months post of admission to the Official
List of the ASX; and/or
the 30 day VWAP in the trading of the Company’s Shares of a minimum of 25c per share within the
first 12 months of admission to the Official List of the ASX; and/or
a minimum of $4m spent by the Company on exploration and associated costs with an emphasis on
the near surface gold targets within the area covered by the existing East Lachlan tenement licences
within the first 24 months of admission to the Official List of the ASX.
24
Magmatic Resources Limited
ABN 32 615 598 322
The fair value for Class A Performance Rights have been determined using the share price at grant date:
Holder
Number
Grant date
Share price $
Fair value $
D Richardson
4,480,000
17 May 2017
D Berrie
1,360,000
17 May 2017
0.20
0.20
$896,000
$272,000
Given that the conditions are non vesting conditions (ie. No service conditions attached), the performance
rights vested immediately. A share based payment expense of $1,168,000 has been recorded on the
Statement of Profit or Loss and Other Comprehensive income. The fair value of the performance rights are
calculated based on market value of shares at grant date.
The Class B Performance Rights are more complex having a market condition attached. The fair value of
these performance rights at grant date are determined using a Hybrid Share Option pricing method that
takes into account the term, the share price at grant date and expected volatility of the underlying share, the
expected dividend yield and the risk-free interest rate for the term of the performance rights. The following
table lists the inputs to the model used for the valuation:
Item
Volatility (%)
Risk free interest rate (%)
Expected life (years)
Expected dividend yield
Underlying security price at grant date
Expiry date
Value per performance share
Holder
Number
Grant date
D Richardson
4,480,000
17 May 2017
D Berrie
1,360,000
17 May 2017
Inputs
30%
1.64%
2
Nil
$0.20
19 May 2019
$0.138
Price per
performance
share $
0.138
0.138
Fair value $
$618,240
$187,680
Given that the conditions are non vesting conditions (ie. No service conditions attached), the performance
rights vested immediately. A share based payment expense of $805,920 has been recorded on the
Statement of Profit or Loss and Other Comprehensive income.
C
Employment contracts/Consultancy agreements
On appointment to the Board, all Non-Executive Directors enter into a service agreement with the Company in the
form of a letter of appointment. Formal services contracts have been made with the Managing Director and
Company Secretary. The Company may terminate the managing directors contract on 3 months’ notice or by
paying 3 months’ fees. The Company Secretary service agreements contain no termination or notice periods.
Share-based compensation
D
The terms and conditions of options granted affecting remuneration in the current or a future reporting period are
as follows:
Options
Grant date
Expiry date
Exercise price
Value per right
at grant date
% Vested
17 May 2017
17 May 2020
$0.30
$0.1195
100
There were no performance conditions relating to these options.
25
Magmatic Resources Limited
ABN 32 615 598 322
Key management personnel equity holdings
2017
Director
Ordinary shares
D Berrie (1)
D Richardson (2)
M Norris
Other Key management personnel
I Hobson (3)
Options
D Berrie
D Richardson
M Norris
Other Key management personnel
I Hobson
Performance shares
D Berrie
D Richardson
M Norris
Other Key management personnel
I Hobson
Balance at
beginning of
year
Net movement
during the year
Balance at the end of
year
-
-
-
-
-
-
-
-
-
-
-
-
10,524,044
27,952,573
-
10,524,044
27,952,573
-
30,000
30,000
-
-
-
-
750,000
750,000
350,000
350,000
2,720,000
8,960,000
2,720,000
8,960,000
-
-
-
-
(1) 1,191,176 were issued on conversion of loans at $0.17 per share, and the balance on normal market terms.
(2) 1,985,294 were issued on conversion of loans at $0.17 per share, and the balance on normal market terms
(3) Acquired on normal market terms.
Loans from key management personnel
The Company, Modeling, Davthea Pty Ltd (ACN 125 870 064) as trustee for David Berrie Superannuation
Fund (Davthea) and Bilingual Software Pty Ltd (ACN 124 821 218) as trustee for Let’s Go Investment Trust
(Bilingual), are parties to loan agreements whereby Davthea and Billingual provided funding for the
exploration and administration requirements of Modeling prior to the Company listing on ASX (the Loans).
Davthea is associated with director and shareholder: Mr David Berrie and Billingual is associated with
director and shareholder: David Richardson.
The Loans were unsecured and interest free until Davthea or Billingual deemed otherwise. Part of the debt
was repayable in cash and part repayable by way of conversion into Shares in the Company at a conversion
price of $0.17, on that date that is two business days after:
1. Magmatic is given conditional approval to be admitted on the Official List of the ASX; and
2. Magmatic has closed its Offer having received valid applications for Securities offered pursuant to
the Offer equivalent to or in excess of the minimum subscription for the Offer.
26
Magmatic Resources Limited
ABN 32 615 598 322
The loans were repaid by a combination of cash and equity conversion during the year as follows:
Opening balance 1 July 2015
Cash advances
Closing balance 30 June 2016
Opening balance 1 July 2016
Cash advances
Cash repayments
Conversion to shares
Finance costs*
Closing balance 30 June 2017
Consolidated
2017
$
-
-
-
2016
$
211,700
228,645
440,345
440,345
473,220
(373,565)
(635,294)
95,294
-
-
-
-
-
-
*Accounting standards require the recognition of the finance cost of the discount afforded on conversion of
the Notes and Loans being the difference between the deemed issue price of $0.17 compared to the market
value of $0.20. The shares were then recorded at their fair values.
No remuneration consultants have been used. Other than disclosed above, there are no loans or other
transactions with key management personnel.
End of audited remuneration report.
Auditor independence and non-audit services
Section 307C of the Corporations Act 2001 requires our auditors, BDO Audit (WA) Pty Ltd to provide the directors of
the Company with an Independence Declaration in relation to the audit of the annual report. This Independence
Declaration is set out on page 29 and forms part of this directors’ report for the year ended 30 June 2017.
Non-audit services
The Company may decide to employ the auditors on assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the Company and/or the consolidated entity are important. The Company
has considered the position and is satisfied that the provision of the non-audit services is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001. Details of remuneration paid
to the auditors are:
Assurance services
BDO Audit (WA) Pty Ltd
Audit and review of financial statements
Total remuneration for audit services
Other services
BDO Advisory (WA) Pty Ltd- Investigating
Accountant’s Report
Total auditor’s remuneration
Proceedings on behalf of Company
Consolidated
2017
$
2016
$
24,162
28,478
52,640
-
-
-
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of
taking responsibility on behalf of the Company for all or part of those proceedings.
27
Magmatic Resources Limited
ABN 32 615 598 322
Insurance of Directors and Officers
During the financial year, the Company paid a premium to insure the directors and secretary of the Company. The
total amount of insurance contract premiums paid is confidential under the terms of the insurance policy. The
amount has been included in the compensation amounts disclosed for key management personnel elsewhere in this
report and in the notes to the financial statements.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be
brought against the officers in their capacity as officers of the Company, and any other payments arising from
liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise
from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of
information to gain advantage for themselves or someone else or to cause detriment to the company. It is not
possible to apportion the premium between amounts relating to the insurance against legal costs and those relating
to other liabilities.
This report is made in accordance with a resolution of the directors.
D Berrie
Chairman
PERTH, Western Australia
Dated: 29 September 2017
28
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY NEIL SMITH TO THE DIRECTORS OF MAGMATIC RESOURCES
LIMITED
As lead auditor of Magmatic Resources Limited for the year ended 30 June 2017, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Magmatic Resources Limited and the entities it controlled during the
period.
Neil Smith
Director
BDO Audit (WA) Pty Ltd
Perth, 29 September 2017
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
Magmatic Resources Limited
ABN 32 615 598 322
Consolidated Statement of Profit or Loss and Other
Comprehensive Income for the year ended 30 June 2017
Continuing Operations
Other income
Corporate administration expenses
Exploration expenditure incurred
Share based payment expense
Finance costs
Loss before tax
Income tax
Net loss for the period
Other comprehensive income, net of tax
Items that will not be classified subsequently to profit or
loss
Items that may be reclassified subsequently to profit or loss
Total comprehensive loss for the year
Total comprehensive loss for the period attributable to:
Owners of the Company
Non-controlling interests
Consolidated
2017
$
Note
3
15
10,510
10,510
(682,650)
(595,719)
(2,342,832)
(183,529)
(3,804,730)
Company
2016
$
104
104
(71,354)
(132,011)
-
(203,261)
(3,794,220)
(203,261)
4(a)
-
-
(3,794,220)
(203,261)
-
-
-
-
(3,794,220)
(203,261)
(3,794,220)
-
(203,261)
-
Loss per share attributable to the members of
Magmatic Resources Limited
Loss per share (dollars)
5
$0.066
$0.006
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
30
Magmatic Resources Limited
ABN 32 615 598 322
Consolidated Statement of Financial Position
as at 30 June 2017
Note
Consolidated
2017
$
Current Assets
Cash and cash equivalents
Other receivables
Total Current Assets
Non-Current Assets
Plant and Equipment
Security Bonds
Exploration assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
7
8
9
10
11
12
13
15
2016
$
45,560
17,800
63,360
27,533
10,000
50
37,583
3,080,365
84,737
3,165,102
44,531
71,300
1,368,350
1,484,181
4,649,283
100,943
384,852
-
33,581
440,345
384,852
473,926
384,852
473,926
4,264,431
(372,983)
3,763,182
4,668,702
(4,167,453)
250
-
(373,233)
4,264,431
(372,983)
The above statement of financial position should be read in conjunction with the accompanying notes.
31
Magmatic Resources Limited
ABN 32 615 598 322
Consolidated Statement of Changes in Equity for the
year ended 30 June 2017
Share Based
Payments
Reserved
$
Capital
Restructure
Reserve
$
Accumulated
losses
Total equity
$
$
Issued
capital
$
125
-
-
-
125
125
250
250
-
-
-
5,223,529
(1,460,597)
-
-
Consolidated
Balance at 1 July 2015
Loss after income tax
expense for the year
Other comprehensive
income for the year, net of
tax
Total comprehensive loss
for the year
Transactions with owners
recorded directly in equity
Issue of ordinary shares
Total transactions with
owners recorded directly in
equity
Balance at 30 June 2016
Balance at 1 July 2016
Loss after income tax
expense for the year
Other comprehensive
income for the year, net of
tax
Total comprehensive loss
for the year
Transactions with owners
recorded directly in equity
Issue of ordinary shares
Capital raising expenses
Restructure reserve on
acquisition of subsidiary
Options issued during the
year
Total transactions with
owners recorded directly in
equity
-
-
-
-
-
-
-
-
-
-
-
-
-
4,668,452
Balance at 30 June 2017
3,763,182
4,668,452
3,762,932
4,668,452
-
-
-
-
-
-
-
-
-
-
250
-
250
250
(169,972)
(169,847)
(203,261)
(203,261)
-
-
(203,261)
(203,261)
-
-
125
125
(373,233)
(372,983)
(373,233)
(372,983)
(3,794,220)
(3,794,220)
-
-
(3,794,220)
(3,794,220)
-
-
-
-
-
5,223,529
(1,460,597)
250
4,668,452
8,431,634
(4,167,453)
4,264,431
The above statement of changes in equity should be read in conjunction with the accompanying notes.
32
Magmatic Resources Limited
ABN 32 615 598 322
Consolidated Statement of Cash Flows
for the year ended 30 June 2017
Cash flows from operating activities
Payments to suppliers and employees
Payments for exploration expenditure
Proceeds from earn-in partner
Interest received
Consolidated
Inflows/
(Outflows)
2017
$
Inflows/
(Outflows)
2016
$
Note
(520,148)
(652,508)
208,783
4,780
(185,456)
104
Net cash outflow from operating activities
20(a)
(959,093)
(168,883)
Cash flows from investing activities
Payments for property, plant & equipment
Tenement security bonds
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from the issue of shares
Payment of capital raising costs
Net cash inflow from financing activities
(31,781)
(61,300)
(93,081)
973,220
(373,566)
4,000,011
(512,686)
4,086,979
(26,576)
-
(26,576)
228,645
-
75
-
228,720
Net increase in cash and cash equivalents
3,034,805
33,261
Cash and cash equivalents at the beginning of
the year
Cash and cash equivalents at the end of the
year
45,560
12,299
7
3,080,365
45,560
The above statement of cash flows should be read in conjunction with the accompanying notes.
33
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2017
Note 1: Statement of significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
(a)
(b)
New, revised or amending Accounting Standards and Interpretations adopted
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting
period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have
not been early adopted.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the
Corporations Act 2001. Magmatic Resources Limited is a for-profit entity for the purpose of preparing the
financial statements.
Capital Restructure – Script Transfer
The Company was incorporated on 28 October 2016 with $250 in issued capital (500 Shares issued at
$0.50 per Share) and acquired Modeling on 28 October 2016. The acquisition of Modeling by the
Company (the Capital Restructure) was not considered to be a business combination and does not result
in any change of economic substance. Accordingly, following the Restructure on 28 October 2016, the
consolidated financial statements of the Company represent a continuation of the operations of Modeling.
The Company and Modeling, together form the Group. As such the financial statements for the period
ended 30 June 2017 represent the consolidated financial statements of the Group as this is the first
reporting date after the Group Reorganisation. The comparative amounts shown at 30 June 2016, relate to
the financial statements of Modeling, as a single entity.
Historical cost convention
The financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the company's accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the financial statements, are disclosed in note 2.
(c)
Going Concern
For the year ended 30 June 2017 the entity recorded a net loss of $3,794,220, had net cash outflows from
operating activities of $959,093 and future exploration commitments of $2,241,225 (Refer to Note 17).
The ability of the entity to continue as a going concern is dependent on securing additional funding
through capital raising or joint venture of projects to continue to fund its exploration and marketing
activities.
These conditions indicate a material uncertainty that may cast a significant doubt about the entity’s ability
to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
Management believe there are sufficient funds to meet the entity’s working capital requirements and as at
the date of this report. Subsequent to year end the entity expects to receive additional funds via capital
raisings or joint venture of projects.
The financial statements have been prepared on the basis that the entity is a going concern, which
contemplates the continuity of normal business activity, realisation of assets and settlement of liabilities in
34
Magmatic Resources Limited
ABN 32 615 598 322
the normal course of business as the directors are confident the Group will raise funds through capital
raising events or joint venture projects as and when required.
Should the entity not be able to continue as a going concern, it may be required to realise its assets and
discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those
stated in the financial statements and that the financial report does not include any adjustments relating to
the recoverability and classification of recorded asset amounts or liabilities that might be necessary should
the entity not continue as a going concern.
Statement of compliance
The financial report was authorised by the Board of directors for issue on 29 September 2017.
The financial report complies with Australian Accounting Standards and International Financial
Reporting Standards (IFRS).
Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent
entity (Magmatic Resources Limited) and its controlled entity Modeling. The parent controls an entity when
it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of
the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is
discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains
or losses on transactions between group entities are fully eliminated on consolidation. Accounting policies
of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the
accounting policies adopted by the Group.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based
on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior
periods, where applicable.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is current when it is expected to be realised or intended to be sold or consumed in normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within twelve
months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets
are classified as non-current.
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the
purpose of trading; it is due to be settled within twelve months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least twelve months after the reporting
period.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other
short-term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
The Group accounts for long term restricted security deposits as ‘other’ non-current assets.
Other receivables
Other receivables are recognised at amortised cost, less any provision for impairment.
Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical
cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant
35
(d)
(e)
(f)
(g)
(h)
(i)
(j)
Magmatic Resources Limited
ABN 32 615 598 322
and equipment (excluding land) over their expected useful lives as follows:
Plant and equipment
3-7 years
(k)
(l)
(m)
(n)
(o)
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at
each reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful
life of the assets, whichever is shorter.
An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit
to the company. Gains and losses between the carrying amount and the disposal proceeds are taken to
profit or loss.
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 of a specific asset or assets and the arrangement conveys a right to use the asset.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on
a straight-line basis over the term of the lease.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The
value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax
discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not
have independent cash flows are grouped together to form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial period and which are unpaid. Due to their short-term nature they are measured at amortised cost
and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
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.
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.
Exploration expenditure
Exploration expenditure is expensed to the statement of profit or loss as incurred and acquisition costs are
capitalised as non current assets. A regular review is undertaken of each area of interest to determine the
appropriateness of continuing to carry forward costs in relation to that area of interest. Where uncertainty
exists as to the future viability of certain areas, the value of the area of interest is written off or provided
against. Due to the speculative nature, when exploration assets have been acquired through equity
instruments, the fair value of the asset cannot be measure reliably, therefore the fair value of the equity
instrument is used to determine the fair value of the asset. Refer to Note (1q).
Impairment testing of exploration and evaluation expenditure
36
Magmatic Resources Limited
ABN 32 615 598 322
Exploration and evaluation expenditure is assessed for impairment if sufficient data exists to determine
technical feasibility and commercial viability or facts and circumstances suggest that the carrying amount
exceeds the recoverable amount.
Exploration and evaluation expenditure is tested for impairment when any of the following facts and
circumstances exist:
The term of exploration licence in the specific area of interest has expired during the reporting period
or will expire in the near future, and is not expected to be renewed;
Substantive expenditure on further exploration for and evaluation of mineral resources in the specific
area are not budgeted nor planned;
Exploration for and evaluation of mineral resources in the specific area have not led to the discovery of
commercially viable quantities of mineral resources and the decision was made to discontinue such
activities in the specified area; or
Sufficient data exist to indicate that, although a development in the specific area is likely to proceed,
the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from
successful development or by sale.
Where a potential impairment is indicated, an assessment is performed for each area of interest. The
Group performs impairment testing in accordance with accounting policy note 1(l).
(p)
Borrowings
The Group provides benefits to employees and consultants of the Group in the form of share-based Loans
and borrowings are initially recognised at the fair value of consideration received, net of transaction costs.
They are subsequently measured at amortised cost using effective interest method.
The fair value of the liability portion of a convertible note is determined using a market interest rate for an
equivalent non-convertible bond. This amount is recorded as a liability on an amortised cost basis until
extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the
conversion option and recognised in shareholders’ equity, net of tax effects.
Borrowings are removed from the statement of financial position when the obligation specified in the
contract is discharged, cancelled or expired. The difference between the carrying amount of a financial
liability that has been extinguished or transferred to another party and the consideration paid, including
any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or
finance costs.
(q) Share based payments
For equity settled share based payment transactions to Directors and seed capitalists for services
aremeasures in reference to the fair value of equity instruments granted.
Equity-settled share based payments in return for goods and services are measured at fair value of the
goods and services received, except where the fair value cannot be estimated reliably, in which case they
are measured at the fair value of the equity instruments.
The fair value of options and performance rights with non-vesting conditions and no service conditions
attached issued to Directors, seed capitalists and suppliers, are valued with a Black-Scholes pricing
model. Those with both market and non-market vesting conditions are valued using a Hybrid pricing
model. The fair value ismeasured at the grant date of the equity instrument and is recognised in
equity in the share-basedpayment reserve. The number of instruments expected to vest is estim
ated based on the non-marketvesting conditions. The total expense is recognised at the date of grant
of the options and rights.
-
(r)
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
(s)
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST
37
Magmatic Resources Limited
ABN 32 615 598 322
incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other
payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to the tax authority, are presented as operating
cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to,
the tax authority.
(t)
Deferred tax
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
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.
(u)
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the
extent that it has become probable that future taxable profit will allow the deferred tax asset to be
recovered.
Amendments to AASBs and the new Interpretation that are mandatorily effective for the current
reporting period
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current
year.
Standards issued but not yet effective
A number of new standards, amendment of standards and interpretations have recently been issued but
are not yet effective and have not been adopted by the Group as at the financial reporting date.
The Group has reviewed these standards and interpretations, and with the exception of the items listed
below for which the final impact is yet to be determined, none of the new or amended standards will
significantly affect the Group’s accounting policies, financial position or performance.
38
Reference
and title
AASB 9
Financial
Instruments
AASB 15
Revenue from
Contracts with
Customers
AASB 16
Leases
Magmatic Resources Limited
ABN 32 615 598 322
Application date
of standard *
1 January
2018
Application date
for Group *
1 July
2018
1 January
2018
1 July
2018
1 January
2019
1 July
2019
Summary
AASB 9 (December 2014) is a
new standard which replaces
AASB 139. This new version
includes a model for
classification and
measurement, a single,
forward-looking ‘expected loss’
impairment model and a
substantially-reformed
approach to hedge accounting.
AASB 15 provides a single,
principles-based five-step
model to be applied to all
contracts with customers.
Guidance is provided on topics
such as the point at which
revenue is recognised,
accounting for variable
consideration, costs of fulfilling
and obtaining a contract and
various related matters. New
disclosures regarding revenue
are also introduced.
Based on an initial impact
assessment, the new standard
is not expected to significantly
impact revenue recognition.
This Standard introduces a
single lessee accounting model
and requires a lessee to
recognise assets and liabilities
for all leases with a term of
more than 12 months, unless
the underlying asset is of low
value. A lessee is required to
recognise a right-of-use asset
representing its right to use the
underlying leased asset and a
lease liability representing its
obligation to make lease
payments.
* Designates the beginning of the applicable annual reporting period
(v) Critical accounting estimates and judgements
The preparation of these financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group’s accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are:
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its
property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a
result of technical innovations or some other event. The depreciation and amortisation charge will increase where
the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have
39
been abandoned or sold will be written off or written down.
Magmatic Resources Limited
ABN 32 615 598 322
Share-based Payments
The Group measures the cost of equity settled transactions with directors, service providers and Gold Fields by
reference to the fair value of equity instruments at the date at which they are granted. Management have
assessed that the achievement of the non-market performance conditions attached to the performance rights are
‘more likely than not’. 100% of the calculated fair value has therefore been determined by management to be the
fair value of the rights and the expense to be recognised in the statement of profit or loss and other
comprehensive income for the current year.
Recoverability of Exploration and Evaluation Asset
Determining the recoverability of exploration and evaluation expenditure capitalised in accordance with the
Group’s accounting policy (refer Note 1(o)), requires judgements as to future events and circumstances, in
particular, whether successful development and commercial exploitation, or alternatively sale, of the respective
areas of interest will be achieved. If, after having capitalised the expenditure under accounting policy 1(o), a
judgement is made that recovery of the expenditure is unlikely, an impairment loss is recorded in the income
statement in accordance with accounting policy 1(l). The carrying amounts of exploration and evaluation assets
are set out in Note 10.
Note 3: Expenses
Loss from ordinary activities before income tax
expense includes the following corporate
administration expenses:
Depreciation
Consulting Fees
Investor Relations
Legal Fees
Travel
Employee Expenses
Rental Expense
Other
Consolidated
2017
$
2016
$
14,275
84,463
28,054
56,274
78,650
214,412
78,518
128,004
3,096
21,104
-
-
10,332
-
30,555
6,267
682,650
71,354
40
Magmatic Resources Limited
ABN 32 615 598 322
Note 4: Income tax
(a) Income tax benefit
The prima facie income tax expense on pre-tax accounting result
from operations reconciles to the income tax benefit in the
financial statements as follows
Accounting loss from continuing operations before
income tax
Tax expense/(benefit) calculated at 27.5% (2016: 30%)
Add
Non-deductible expenses
Deductible equity costs
Tax loss not brought to accounts
Income tax (benefit) reported in the statement of
profit or loss and other comprehensive income
(b) Unrecognised deferred tax balances
The following deferred tax assets have not been brought to
account
Deferred tax assets comprise:
Accruals
Employee entitlements
Share issue costs
Losses available for offset against future income – revenue
Deferred tax liabilities comprise:
Prepayments
Property, plant and equipment
Consolidated
2017
$
2016
$
(3,794,220)
(203,261)
(1,043,411)
(60,978)
743,897
(39,641)
339,155
-
-
60,978
-
-
4,950
4,200
134,983
436,435
580,568
1,502
-
1,502
-
(4,125)
-
340,861
336,736
-
-
-
Net unrecognised deferred tax assets
579,066
336,736
Deferred tax assets have not been recognised in respect of these items because it is not that future taxable
profit will be available against which the Group can utilise the benefit thereof.
41
Magmatic Resources Limited
ABN 32 615 598 322
Note 5: Loss per share
Total basic loss per share
The loss and weighted average number of ordinary
shares used in the calculation of basic loss per share is
as follows:
Net loss for the period
The weighted average number of ordinary shares
Consolidated
2017
$
2016
$
0.066
0.006
(3,794,220)
(203,261)
57,459,631
36,233,701
The diluted loss per share is not reflected as the result is anti-dilutive.
Note 6: Segment information
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the
Consolidated Entity that are regularly reviewed by the chief operating decision maker in order to allocate
resources to the segment and to assess its performance.
AASB 8 “Operating Segments’” states that similar operating segments can be aggregated to form one
reportable segment. Following incorporation, the Company acquired Modeling Resources Pty Ltd. The Group
has one reportable operating segment being gold exploration projects in Australia.
Note 7: Cash and cash equivalents
Cash at bank and on hand
2017
$
3,080,365
3,080,365
2016
$
45,560
45,560
(Refer to Note 16(f) which contains risk exposure analysis for cash and cash equivalents)
(a) Reconciliation to Statement of Cash Flows
The above figures agree to cash at the end of the financial year as shown in the Statement of Cash Flows.
(b) Cash at bank and on hand
These are non-interest bearing accounts.
Note 8: Other receivables
Goods and services tax receivable
Other
No receivables are past their due date and therefore no impairment recognised.
79,276
5,461
84,737
11,853
5,947
17,800
42
Magmatic Resources Limited
ABN 32 615 598 322
Note 9: Security Bonds
Office bond
Tenement bonds
Note 10: Exploration project acquisition costs
Opening balance
Project acquisition costs
Acquisition costs in respect of areas of
interest in the exploration phase
Consolidated
2017
$
1,300
70,000
71,300
Consolidated
2017
$
50
1,368,300
1,368,350
2016
$
-
10,000
10,000
2016
$
-
50
50
Exploration expenditure is expensed to the statement of profit or loss as incurred and acquisition costs are
capitalised as non-current assets. A regular review is undertaken of each area of interest to determine the
appropriateness of continuing to carry forward costs in relation to that area of interest. Where uncertainty exists as
to the future viability of certain areas, the value of the area of interest is written off or provided against.
The carrying value of capitalised exploration expenditure is assessed for impairment at each area of interest
whenever facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable
amounts.
An impairment exists when the carrying amount of an asset or area of interest exceeds its estimated recoverable
amount. The asset or area of interest is then written down to its recoverable amount. Any impairment losses are
recognised in the profit or loss account.
Note 11: Trade and other payables
Trade creditors
Other creditors
Other creditor – to be settled as share base payment (refer
note 16)
Goods and services tax payable
JOGMEC – Funds Received in Advance**
Consolidated
2017
$
106,297
80,260
50,000
2,539
145,756
384,852
2016
$
33,581
-
-
-
33,581
* Trade payables are non-interest bearing and are normally paid on 30 day terms.
** The Group entered into a Joint Venture (JV) with Japan Oil, Gas and Metals National Corporation
(JOGMEC), which commenced effective 30 March 2017.
JOGMEC can earn up to a 51% interest in two exploration tenements, EL7427 and EL7676, owned by the
Company, located in East Lachlan, NSW, Australia, known as the Parkes Project (Project) by funding up
to $3,000,000 of exploration expenditure. A 1st year $1m agreed exploration budget has been agreed
and JOCMEG has advanced funds in advance of expenditure being incurred.
Key terms of the JV are set out below:
JOGMEC has the right to earn a 51% interest in the Parkes Project by funding $3,000,000 of
43
Magmatic Resources Limited
ABN 32 615 598 322
exploration expenditure on the Project tenements over a period of up to 3 years.
JOGMEC is required to spend a minimum of $300,000 before withdrawing from the Agreement.
MAG to act as Operator of the project on behalf of the parties during the JV until JOGMEC
becomes a majority owner at which point the Operator shall be appointed by JOGMEC.
JOGMEC has the right to assign its interest in the agreement to Japanese company(s) (this is in
line with JOGMEC’s mission, which is to help source and de-risk opportunities for Japanese
corporations).
Note 12: Borrowings
Shareholder Loan – Bilingual Software Pty Ltd *
Shareholder Loan – Davthea Pty Ltd *
-
-
-
237,845
202,500
440,345
* Shareholder loans were fully repaid in cash and the issue of shares.
Modeling issued convertible notes (Notes) to investors on 16 and 19 September 2016 in consideration for an
aggregate amount of $500,000. The Notes were subsequently varied upon the Company’s acquisition of
100% of the issued capital of Modeling so that the face value of the Notes converted into Shares on the date
that was two business days after:
(a)
(b)
conditional approval was given by the ASX for the Company to be admitted to the Official List; and
the Company to have received valid applications for Securities offered under the Offer, equivalent to
or in excess of the minimum subscription for the Offer, (the Conversion Date).
On the Conversion Date, the Notes automatically converted into that number of Shares equal to the face
value of the Notes divided by $0.17. A 5% coupon rate was payable on the face value of each note. On 11
May 2017, the Company issued 2,941,176 Shares (at a deemed issue price of $0.17 per Share) to the
Noteholders in consideration for the conversion of the notes.
On 11 May 2017, the Company issued 3,176,471 shares on conversion of loans totalling $540,000 at a
deemed issue price of $0.17 per share.
Accounting standards require the recognition of the finance cost of the discount afforded on conversion of the
Notes and Loans being the difference between the deemed issue price of $0.17 compared to $0.20. The
shares were then recorded at their fair values. Finance costs of $183,529 were expensed as a result.
Note 13: Issued capital
(a) Ordinary shares issued
Consolidated
$
2017
80,000,000 (2016: 500) ordinary shares
5,223,529
$
2016
250
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote
per share at shareholders’ meetings. In the event of winding up of the parent entity, ordinary shareholders rank after
all creditors and are fully entitled to any proceeds on liquidation.
(b) Movements in ordinary share capital:
Date
Details
1 July 2015
21 August 2015
17 December 2015
7 January 2016
Opening balance
Share issue
Share issue (project acquisition)
Share split
Balance as at 30 June 2016
Number of
shares
125
75
50
250
500
$
125
75
50
-
250
44
Magmatic Resources Limited
ABN 32 615 598 322
28 October 2016
11 May 2017
11 May 2017
11 May 2017
11 May 2017
Incorporation
Share Split*
Share Issue – IPO
Conversion of loans
Conversion of notes
Capital raising expenses
Balance as at 30 June 2017
* Share split agreed to by shareholders as part of IPO process.
Weighted average shares on issue as at 30 June 2017 – 57,459,613
(c) Share options
500
53,881,853
20,000,000
3,176,471
2,941,176
-
250
-
4,000,011
635,294
588,235
(1,964,453)
80,000,000
3,259,337
Listed Options exercisable at $0.30 on or
before 17 May 2020
Unlisted Options exercisable at $0.30 on or
before 17 May 2020
Unlisted Options expiring 11 May 2018*
Unlisted Options expiring 11 May 2019*
Unlisted Options expiring 11 May 2020*
$ Value
2017
Number of options
2016
2017
2016
-
$1,136,642
$210,000
$285,000
$332,500
$1,964,142
-
-
-
-
-
-
8,480,613
9,500,000
2,500,000
2,500,000
2,500,000
25,480,613
-
-
-
-
-
-
*Unlisted Options exercisable at a price which is greater of $0.20 or a 5% discount to the 20 day volume weighted
average price of share on the ASX.
(d) Movements in share options
2017
2016
Number of
Options
Weighted
average
exercise price
Number of
Options
Weighted
average
exercise price
Listed Options to acquire ordinary fully
paid shares at $0.30 on or before 17
May 2020:
Beginning of the financial year
Issued during the year
Expired during the year
Balance at end of financial year
-
10,000,000
-
10,000,000
-
0.30
-
0.30
-
-
-
-
-
-
-
-
Unlisted Options to acquire ordinary
fully paid shares at $0.30 on or before
17 May 2020:
Beginning of the financial year
Issued during the year
Expired during the year
2017
2016
Number of
Options
Weighted
average
exercise price
Number of
Options
Weighted
average
exercise price
-
9,500,000
-
-
0.30
-
-
-
-
-
-
-
45
Magmatic Resources Limited
ABN 32 615 598 322
Balance at end of financial year
9,500,000
0.30
-
-
*Unlisted Options to acquire ordinary
fully paid shares on or before
11 May 2018:
Beginning of the financial year
Issued during the year
Expired during the year
Balance at end of financial year
*Unlisted Options to acquire ordinary
fully paid shares on or before
11 May 2019:
Beginning of the financial year
Issued during the year
Expired during the year
Balance at end of financial year
*Unlisted Options to acquire ordinary
fully paid shares on or before
11 May 2020:
Beginning of the financial year
Issued during the year
Expired during the year
Balance at end of financial year
2017
2016
Number of
Options
Weighted
average
exercise price
Number of
Options
Weighted
average
exercise price
-
2,500,000
-
2,500,000
-
0.20
-
0.20
-
-
-
-
-
-
-
-
2017
2016
Number of
Options
Weighted
average
exercise price
Number of
Options
Weighted
average
exercise price
-
2,500,000
-
2,500,000
-
0.20
-
0.20
-
-
-
-
-
-
-
-
2017
2016
Number of
Options
Weighted
average
exercise price
Number of
Options
Weighted
average
exercise price
-
2,500,000
-
2,500,000
-
0.205
-
0.205
-
-
-
-
-
-
-
-
*Unlisted Options exercisable at a price which is the greater of $0.20 or a 5% discount to the 20 day volume
weighted average price of shares on ASX. On the assumption that the Options will be exercised on expiry, a Monte
Carlo simulation has been prepared in order to assess the higher of the 5% discount to the 20 VWAP or 20 cents
for the Options at expiry for the Tranche I, Tranche 2 and Tranche 3 Options. The following exercise prices result:
Tranche 1: 20 cents (20 cents was the higher of the two) Monte valuation =19.3 cents
Tranche 2: 20 cents (20 cents was the higher of the two) Monte valuation = 19.7 cents
Tranche 3: 20.5 cents (5% discount to the 20 Day VWAP was higher of the two)
(e) Share options exercised during the year
No share options were exercised during the year (2016: nil).
46
(f) Share options outstanding at the end of the year
Magmatic Resources Limited
ABN 32 615 598 322
The share options outstanding at the end of the year had a weighted average exercise price of $0.27 and a
weighted average remaining contractual right of 943 days (2016: nil).
(g) Performance shares
Class A performance shares
Class B performance shares
Value $
2017
2016
Number of performance
shares
2017
2016
1,600,000
1,104,000
2,704,000
-
-
-
8,000,000
8,000,000
16,000,000
-
-
-
(h) Movements in Class A Performance shares
Class A Performance shares
Beginning of the financial year
Issued during the year
Expired during year
Balance at end of financial year
(i) Movements in Class B Performance shares
Class A Performance shares
Beginning of the financial year
Issued during the year
Expired during year
Balance at end of financial year
Note 14: Reserves
Capital Restructure reserve (a)
Opening balance
Expense for the year
Closing balance
Option reserve (b)
Opening balance
Share based acquisition cost
Share based expense for year
Share based capital raising costs
Closing balance
Number of performance
shares
2017
2016
-
8,000,000
-
8,000,000
-
-
-
-
Number of performance
shares
2017
2016
-
8,000,000
-
8,000,000
-
-
-
-
Consolidated
2017
$
-
250
250
-
1,368,300
2,342,832
957,320
4,668,452
2016
$
-
-
-
-
-
-
-
-
47
Magmatic Resources Limited
ABN 32 615 598 322
(a)
(b)
Capital Restructure reserve
The capital restructure reserve arises from the acquisition of Modeling Resources Pty Ltd.
Option reserve
The option reserve represents share compensation used to record the value of equity benefits provided
to consultants and directors as part of their remuneration and the cost of acquisition of tenements.
Refer Note 15.
Note 15: Share based payments
Share based payments consists of options and performance rights issued to directors and consultants and were
issued also issued in consideration of the acquisition of tenements. The expense is recognised in the Statement
of Profit or Loss and Other Comprehensive Income and Statement of Changes in Equity over the vesting periods
of the options and rights. The following share-based payment arrangements were in place during the current and
prior years:
Number
Grant date Exercise price
Fair value
Expensed Capitalised to
Exploration
Asset
Capital
raising
costs
Options to directors
/ Seed capitalist
1,500,000 17 May 2017
$0.300
$179,632
$179,632
-
Gold Fields options 2,500,000 17 May 2017 $0.200* $207,500 - $207,500 -
Gold Fields options 2,500,000 17 May 2017 $0.200* $282,500 - $282,500 -
Gold Fields options 2,500,000 17 May 2017 $0.205* $328,700 - $328,700 -
Underwriter options 8,000,000 17 May 2017 $0.300 $957,320 - - $957,320
Class A
performance shares 8,000,000 17 May 2017 - $1,600,000 $1,280,000 $320,800 -
Class B
performance shares 8,000,000 17 May 2017
$2,234,832 $1,368,300 $957,320
-
$1,104,000
$883,200
$228,800
*Unlisted options exercisable at a price which is greater of $0.20 or a 5% discount to the 20 day weighted
average pie of shares on ASX.
Broker options
8,000,000 options were granted to the Underwriter pursuant to the Prospectus dated 17 May 2017.
The fair value of the options at grant date are determined using a Black Scholes pricing method that
takes into account the exercise price, the term of the option, the share price at grant date and
expected volatility of the underlying share, the expected dividend yield and the risk-free interest rate
for the term of the option. The following table lists the inputs to the model used for valuation of the
unlisted options:
-
-
Item
Volatility (%)
Risk free interest rate (%)
Expected life of option (years)
Expected dividend yield
Exercise price per terms and conditions
Underlying security price at grant date
Expiry date
Value per option
Inputs
110%
1.84%
3
Nil
$0.30
$0.20
17 May 2020
$0.1195
48
Magmatic Resources Limited
ABN 32 615 598 322
Director & Seed Capitalist
1,500,000 options were granted to a Director and seed capitalists pursuant to the Prospectus dated 17
May 2017. The fair value of the options at grant date are determined using a Black-Scholes pricing
method that takes into account the exercise price, the term of the option, the share price at grant
date and expected volatility of the underlying share, the expected dividend yield and the risk-free interest
rate for the term of the option. The following table lists the inputs to the model used for valuation
of the unlisted options:
Item
Volatility (%)
Risk free interest rate (%)
Expected life of option (years)
Expected dividend yield
Exercise price per terms and conditions
Underlying security price at grant date
Expiry date
Value per option
Inputs
110%
1.84%
3
Nil
$0.30
$0.20
17 May 2020
$0.1195
Gold Fields options
7,500,000 options were granted to Gold Fields on 17 May 2017 with expiry dates being split between
2,500,000 options on 17 May 2018, 2,500,000 options on 17 May 2019, 2,500,000 options on 17 May
2020. The fair value of the options at grant date are determined using a Black Scholes pricing method
that takes into account the exercise price, the term of the option, the share price at grant date and
expected volatility of the underlying share, the expected dividend yield and the risk-free interest rate for
the term of the option. The following table lists the inputs to the model used for valuation of the unlisted
options:
Item
Volatility (%)
Risk free interest rate (%)
Expected life of option (years)
Expected dividend yield
Exercise price per terms and conditions
Underlying security price at grant date
Expiry date
Value per option
Inputs
110%
1.53%, 1.7%, 1.84%
1-3 yrs
Nil
$0.20
$0.20
17 May 2017/18/19
$0.083, $0.113,
$0.132
*Unlisted options exercisable at a price which is greater of $0.20 or a 5% discount to the 20 day weighted
average pie of shares on ASX. On the assumption that the Options will be exercised on expiry, a Monte Carlo
simulation has been prepared in order to assess the higher of the 5% discount to the 20 VWAP or 20 cents for
the Options at expiry for the Tranche I, Tranche 2 and Tranche 3 Options. The following exercise prices
result:
Tranche 1: 20 cents (20 cents was the higher of the two) Monte valuation =19.3 cents
Tranche 2: 20 cents (20 cents was the higher of the two) Monte valuation = 19.7 cents
Tranche 3: 20.5 cents (5% discount to the 20 Day VWAP was higher of the two)
Performance Rights
On 17 May 2017, the Company issued 8,000,000 Class A Performance Rights and 8,000,000 Class B
Performance Rights to Gold Fields, entities associated with directors David Richardson and David Berrie and
seed capitalist.
The Milestones for the Performance Rights are as follows:
(Class A Performance Rights) both of the following being met:
49
Magmatic Resources Limited
ABN 32 615 598 322
i.
ii.
by no later than 31 December 2017, the Company entering into a JV agreement with a JV partner
(with a minimum market capitalisation of $100m or is a Foreign Government Investor or equivalent) in
a single existing project, being Myall, Moorefield, Wellington or Parkes, where the JV Partner agrees
to spend $3,000,000 to acquire not more than a 51% stake in the JV asset; and
the JV Partner has spent $1,000,000 on exploration expenditure on the JV asset;
(Class B Performance Rights) the Company achieving two of the following:
iii.
iv.
v.
signing a JV agreement with a JV partner (with a minimum market capitalisation of $100m or is a
Foreign Government Investor or equivalent) in a single existing Modeling project, being Myall,
Moorefield, Wellington or Parkes, where the JV partner agrees to spend $4,000,000 to acquire not
more than a 51% stake in the JV asset, within the first 24 months post of admission to the Official List
of the ASX; and/or
the 30 day VWAP in the trading of the Company’s Shares of a minimum of 25c per share within the
first 12 months of admission to the Official List of the ASX; and/or
a minimum of $4m spent by the Company on exploration and associated costs with an emphasis on
the near surface gold targets within the area covered by the existing East Lachlan tenement licences
within the first 24 months of admission to the Official List of the ASX.
The Class A Performance Rights are non-complex (being the share price on issue date of 20 cents per share)
and are fair valued to KMP as follows:
Holder
Number
Grant date
Share price $
Fair value $
D Richardson
4,480,000
17 May 2017
D Berrie
1,360,000
17 May 2017
Seed Capitalist
560,000
17 May 2017
Gold Fields
1,600,000
17 May 2017
0.20
0.20
0.20
0.20
$896,000
$272,000
$112,000
$320,000
Given that the conditions are non-vesting conditions (ie. No service conditions attached), the options vested
immediately. The performance shares issued to Goldfields have been accounted for as a share based
payment for an asset acquisition. The fair value calculated above takes into account 100% probability that the
non-market vesting conditions will occur.
The Class B Performance Rights are more complex having a market condition attached. The fair value of
these performance shares at grant date are determined using a Hybrid Share Option pricing method that
takes into account the term, the share price at grant date and expected volatility of the underlying share, the
expected dividend yield and the risk-free interest rate for the term of the performance share. The following
table lists the inputs to the model used for valuation of the unlisted options:
Item
Volatility (%)
Risk free interest rate (%)
Expected life (years)
Expected dividend yield
Underlying security price at grant date
Expiry date
Value per performance share
Inputs
30%
1.64%
2
Nil
$0.20
19 May 2019
$0.138
Holder
Number
Grant date
D Richardson 4,480,000 17 May 2017 0.138 $618,240
D Berrie 1,360,000 17 May 2017 0.138 $187,680
Seed Capitalists 560,000 17 May 2017 0.138 $77,280
Gold Fields 1,600,000 17 May 2017 0.138 $220,800
Price per
performance
share $
Fair value $
50
Magmatic Resources Limited
ABN 32 615 598 322
Given that the conditions are non-vesting conditions (ie. No service conditions attached), the rights vested
immediately. The performance rights issued to Goldfields have been accounted for as a share based payment
for an asset acquisition. The fair value calculated above takes into account the 100% probability that the non-
market vesting conditions (excluding the market condition) will occur.
The actual value of these rights may be materially different to this accounting estimation. The expected life of
the option/rights is based on historical data and is not necessarily indicative of exercise patterns that may occur.
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which
may also not necessarily be the actual outcome. No other features of option/rights granted were incorporated
into the measurement of fair value.
A marketing fee for the value of $50,000 plus GST was incurred during the year which was settled on 4 August
2017 by the issue of 250,000 fully paid ordinary shares at 20 cents per share. The GST was settled in cash.
Note 16: Financial instruments
(a) Capital risk management
Prudent capital risk management implies maintaining sufficient cash and marketable securities to ensure
continuity of tenure to exploration assets and to be able to conduct the Group’s business in an orderly and
professional manner. The Board monitors its future capital requirements on a regular basis and will when
appropriate consider the need for raising additional equity capital or to farm-out exploration projects as a means
of preserving capital. The Board currently has a policy of not entering into any debt arrangements.
(b) Categories of financial instruments
The Group’s principal financial instruments comprise of cash and short-term deposits. The main purpose of
these financial instruments is to raise finance for the Group’s operations. The Group has various other financial
assets and liabilities such as receivables and trade payables, which arise directly from its operations. It is, and
has been throughout the year, the Group’s policy that no trading in financial instruments shall be undertaken
during the year.
(c) Financial risk management objectives
The Group is exposed to market risk (including interest rate risk and equity price risk), credit risk and liquidity
risk.
The main risks arising from the Group’s financial instruments are interest rate risk and credit risk. The Board
reviews and agrees policies for managing each of these risks and they are summarised below.
(d) Market risk
Equity price risk sensitivity analysis
There has been no change to the Group’s exposure to market risks or the manner in which it manages and
measures the risk from the previous period.
(i) Interest rate risk management
All cash balances attract a floating rate of interest. Excess funds that are not required in the short term are placed
on deposit for a period of no more than 3 months. The Group’s exposure to interest rate risk and the effective
interest rate by maturity periods is set out below.
Interest rate sensitivity analysis
As the Group has no interest bearing borrowings its exposure to interest rate movements is limited to the amount
of interest income it can potentially earn on surplus cash deposits.
At 30 June 2017, if interest rates had changed by + 50 basis points and all other variables were held constant,
the Group’s after tax loss would have been $1,500 (2016: $100) higher as a result of higher interest income on
cash and cash equivalents. If interest rates dropped on average – 50 basis points then the Group may not have
earned any interest income which would have increased the Group’s after tax loss by $1,500 (2016: $100).
51
Magmatic Resources Limited
ABN 32 615 598 322
(e) Credit risk management
Credit risk relates to the risk that counterparties will default on their contractual obligations resulting in financial
loss to the Group. The Group has adopted a policy of only dealing with credit worthy counterparties and
obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial
loss from any defaults.
(f) Liquidity risk management
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities to ensure
continuity of tenure to exploration assets and to be able to conduct the Group’s business in an orderly and
professional manner. Cash deposits are only held with major financial institutions.
2017
Financial assets
Cash and cash equivalents – non - interest
bearing
Cash and cash equivalents – interest bearing
Trade and other receivables
Financial liabilities
Trade and other payables
2016
Financial assets
Cash and cash equivalents – non - interest
bearing
Cash and cash equivalents – interest bearing
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Weighted
Average
Interest
Rate
Less than
1 month
1-3
months
3 months
– 1 year
5 + years
$
n/a
167,170
0.06%
n/a
2,913,195
84,737
3,165,102
n/a
384,852
384,852
$
n/a
45,560
0.06%
n/a
n/a
0%
-
17,800
63,360
33,581
-
33,581
$
-
-
-
-
-
-
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
$
-
-
-
-
-
440,345
440,345
$
-
-
-
-
-
-
$
-
-
-
-
-
-
-
The directors consider that the carrying value of the financial assets and financial liabilities are recognised in
the consolidated financial statements approximate their fair values.
52
Note 17: Commitments and contingencies
Magmatic Resources Limited
ABN 32 615 598 322
Exploration Commitments – East Lachlan region, NSW:
Within one year
After one year but not more than 5 years
More than 5 years
Lease Commitments – West Perth head office:
Within one year
After one year but not more than 5 years
More than 5 years
2017
$
2016
$
2,241,225
-
-
492,000
272,285
-
8,327
-
-
2,249,552
-
-
-
764,285
In order to maintain rights to tenure to its mineral tenements, the Company is required to complete minimum
exploration expenditure, which if not completed in the calendar year then continued tenure to the projects could be
in jeopardy.
Note 18: Key management personnel disclosures
(a) Directors
At the date of this report the directors of the Company are:
D Berrie – Non-Executive chairman
D Richardson – Managing director
M Norris – Non executive director
There were no changes of the key management personnel after the reporting date and the date the financial report
was authorised for issue.
(b) Key management personnel
At the date of this report the other Key management personnel of the Company are:
I Hobson (appointed 20 January 2017) Chief Financial Officer and Company Secretary
S Cranswick (resigned 20 January 2017) Chief Financial Officer and Company Secretary
(c) Key management personnel compensation
Short-Term
Post-employment
Share-based payments
Consolidated
2017
$
200,805
7,671
2,105,423
2,313,899
2016
$
-
-
-
-
Detailed remuneration disclosures of directors and key management personnel are in pages 22 to 27 of this
report.
53
Magmatic Resources Limited
ABN 32 615 598 322
Name of entity
Country of
incorporation
Class of shares
Equity holding
Modeling Resources Pty Ltd
Australia
Ordinary
2017
%
100
2016
%
-
There were no transactions between Magmatic Resources Limited and its controlled entity during the financial year
other than intercompany loan funding to support operations of $1,601,299 (2016: nil).
Loans from shareholders / directors
The Company, Modeling, Davthea Pty Ltd (ACN 125 870 064) as trustee for David Berrie Superannuation Fund
(Davthea) and Bilingual Software Pty Ltd (ACN 124 821 218) as trustee for Let’s Go Investment Trust (Bilingual),
are parties to loan agreements whereby Davthea and Billingual provided funding for the exploration and
administration requirements of Modeling prior to the Company listing on ASX (the Loans). Davthea is associated
with director and shareholder: Mr David Berrie and Billingual is associated with director and shareholder: David
Richardson.
The Loans were unsecured and interest free until Davthea or Billingual deemed otherwise. Part of the debt was
repayable in cash and part repayable by way of conversion into Shares in the Company at a conversion price of
$0.17, on that date that is two business days after:
3. Magmatic is given conditional approval to be admitted on the Official List of the ASX; and
4. Magmatic has closed its Offer having received valid applications for Securities offered pursuant to the
Offer equivalent to or in excess of the minimum subscription for the Offer.
The loans were repaid by a combination of cash and equity conversion during the year as follows:
Opening balance 1 July 2015
Cash advances
Closing balance 30 June 2016
Opening balance 1 July 2016
Cash advances
Cash repayments
Conversion to shares
Finance cost
Closing balance 30 June 2017
Consolidated
2017
$
-
-
-
2016
$
211,700
228,645
440,345
440,345
473,220
(373,565)
(635,294)
95,294
-
-
-
-
-
-
-
Note 20: Reconciliation of loss after income tax to net cash outflow from operating activities
a) Reconciliation of loss from ordinary activities after income tax
to net cash outflow from operating activities
Net loss for the year after income tax
(3,794,220)
(203,261)
Consolidated
2017
$
2016
$
Share based payment expense
Finance cost (equity)
Share issue costs
Depreciation
Movements in working capital
(Increase) / decrease in other receivables
2,342,832
183,529
9,399
14,783
66,937
-
-
-
3,096
1,993
54
Magmatic Resources Limited
ABN 32 615 598 322
(Increase) / decrease in prepayments
Increase / (decrease) in trade and other payables
Increase / (decrease) in provisions
Net cash outflows from operating activities
-
217,647
-
(3,479)
32,768
-
(959,093)
(168,883)
As at 30 June 2017, the Group had non-cash investing activities of $1,368,300 (2016: Nil) from the acquisition
on mining tenements. Non-cash financing activities of $956,382 (2016: Nil) were the result of Broker options
issued as part of capital raising costs.
Note 21: Parent Entity Disclosures
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive income/loss
Total comprehensive income/loss
Note 22: Events after the reporting date
30 June 2017
$
30 June 2016
$
2,864,955
1,516,821
4,381,776
117,345
117,345
63,360
37,583
100,943
473,926
473,926
4,264,431
(372,983)
4,949,406
3,482,227
(4,167,202)
250
-
(373,233)
4,264,431
372,983
(4,167,202)
-
203,261
-
(4,167,202)
203,261
There has not been any matter or circumstance that has arisen after balance date that has significantly affected, or
may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the
Group in future financial periods.
Note 23: Auditor’s remuneration
The auditors of the Group are BDO Audit (WA) Pty Ltd
Assurance services
BDO Audit (WA) Pty Ltd
Audit and review of financial statements
Total remuneration for audit services
Other services
Consolidated
2017
$
2016
$
24,162
-
55
Magmatic Resources Limited
ABN 32 615 598 322
BDO Advisory (WA) Pty Ltd- Investigating
Accountant’s Report
Total auditor’s remuneration
Note 24: Interest in jointly controlled operation
28,478
52,640
-
-
The Group entered into a Joint Venture (JV) with Japan Oil, Gas and Metals National Corporation (JOGMEC),
which commenced effective 30 March 2017.
JOGMEC can earn up to a 51% interest in two exploration tenements, EL7427 and EL7676, owned by the
Company, located in East Lachlan, NSW, Australia, known as the Parkes Project (Project) by funding up to
$3,000,000 of exploration expenditure. The Parkes JV is only the fifth JV JOGMEC has in Australia. The
Project is prospective for copper/gold porphyry.
A 1st year $1m agreed exploration program has already commenced and drilling is planned to begin in
October or November 2017.
JOGMEC is a Japanese government independent administrative institution which among other things seeks
to secure stable resource supply for Japan. Details about JOGMEC can be found on the corporation’s
website at: jogmec.go.jp/english/about/index.html.
Key terms of the JV are set out below:
JOGMEC has the right to earn a 51% interest in the Parkes Project by funding $3,000,000 of
exploration expenditure on the Project tenements over a period of up to 3 years.
JOGMEC is required to spend a minimum of $300,000 before withdrawing from the Agreement.
MAG to act as Operator of the project on behalf of the parties during the JV until JOGMEC becomes
a majority owner at which point the Operator shall be appointed by JOGMEC.
JOGMEC has the right to assign its interest in the agreement to Japanese company(s) (this is in line
with JOGMEC’s mission, which is to help source and de-risk opportunities for Japanese corporations).
56
Magmatic Resources Limited
ABN 32 615 598 322
Directors’ declaration
1.
In the opinion of the directors of Magmatic Resources Limited (the “Company”):
a.
the accompanying financial statements and notes are
Corporations Act 2001 including:
in accordance with
the
i. giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
performance for the financial year then ended; and
ii. complying with Accounting Standards, Corporations Regulations 2001, professional
b.
c.
reporting requirements and other mandatory requirements.
there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
the financial statements and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board.
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 year ended 30 June 2017.
This declaration is signed in accordance with a resolution of the Board of Directors.
D Berrie
Chairman
Perth, Western Australia
29 September 2017
57
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Magmatic Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Magmatic Resources Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1(c) in the financial report which describes the events and/or conditions
which give rise to the existence of a material uncertainty that may cast significant doubt about the
group’s ability to continue as a going concern and therefore the group may be unable to realise its
assets and discharge its liabilities in the normal course of business. Our opinion is not modified in
respect of this matter.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Accounting for Share-based payments
Key audit matter
How the matter was addressed in our audit
During the year ended 30 June 2017, as part of
the Initial Public Offering, the Group issued
equity instruments to key management
personnel, seed capitalists, brokers and Gold
Fields Australia Pty Ltd (“Gold Fields”) which
have been accounted for as share based pay
ments, as disclosed in Note 15 of the Financial
Report.
Share based payments is a key audit matter as
the accounting can be complex and requires
judgement and the use of assumptions regarding
their recognition and measurement.
Our procedures included, but were not limited
to:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Obtaining an understanding of the
underlying transactions through
discussions with management and
reviewing arrangements in place;
Evaluating management’s assessment of
the likelihood of meeting performance
conditions attached to the equity
instruments;
Recalculating the estimated fair value of
the equity instruments using relevant
valuation methodologies and assessing
the valuation inputs using internal
specialists where appropriate;
Checking the share based payment
expense had been recognised
appropriately according to the vesting
conditions; and
Assessing the adequacy of the related
disclosures in Note 1(q), Note 1(v) and
Note 15 to the Financial Report.
Recoverability of Exploration and Evaluation Asset
Key audit matter
How the matter was addressed in our audit
At 30 June 2017 the carrying value of Exploration
and Evaluation Assets was $1,368,350, as
disclosed in Note 10 of the Financial Report.
As the carrying value of these Exploration and
Evaluation Assets represents a significant asset of
the Group, we considered it necessary to assess
whether any facts or circumstances exist to
suggest that the carrying amount of this asset
may exceed its recoverable amount.
As a result, the assets was required to be
assessed for impairment indicators in accordance
with AASB 6 Exploration for and Evaluation of
Mineral Resources. In particular whether facts
and circumstances indicate that the exploration
and expenditure assets should be tested for
impairment.
Our procedures included, but were not limited
to:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Obtaining a schedule of the areas of
interest held by the Group and assessing
whether the rights to tenure of those
areas of interest remained Current at
balance date;
Holding discussions with management as
to the status of ongoing exploration
programmes in the respective areas of
interest;
Considering whether any such areas of
interest had reached a stage where a
reasonable assessment of economically
recoverable reserves existed;
Considering whether any facts or
circumstances existed to suggest
impairment testing was required; and
Assessing the adequacy of the related
disclosures in Note 1(o), Note 1(v) and
Note 10 to the Financial Report.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2017, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_files/ar2.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 22 to 27 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the Remuneration Report of Magmatic Resources Limited, for the year ended 30 June
2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Neil Smith
Director
Perth, 29 September 2017
Additional Shareholder Information
The following additional information is current as at 27 September 2017.
CORPORATE GOVERNANCE:
The Company’s Corporate Governance Statement is available on the company’s website at
www.magmaticresources.com/corporate-governance
SUBSTANTIAL SHAREHOLDER:
Holder Name
BILLINGUAL SOFTWARE PTY LTD
GOLD FIELDS AUSTRALIA PTY LTD
DAVTHEA PTY LTD
Holding
% IC
27,708,823
16,000,000
10,524,044
34.53%
19.94%
13.12%
Ordinary Shares:
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-
Totals
Holders
3
21
130
168
47
369
Total Units
1,181
81,845
1,254,069
7,096,664
71,816,241
80,250,000
%
0
0.1
1.56
8.84
89.49
100.00
There are 18 shareholders with less than a marketable parcel.
VOTING RIGHTS
Each fully paid ordinary share carries voting rights of one vote per share.
THE TOP 20 HOLDERS OF ORDINARY SHARES ARE:
Ranking
Holder
Shares Held
%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Billingual Software Pty Ltd
Gold Fields Australia Pty Ltd
Davthea Pty Ltd
Mr Alan John Tate
Serca Superfund Pty Ltd
Executive Risk Solutions Pty Ltd
Melshare Nominees Pty Ltd
Thomas Asset Discovery Limited
Jasper Hill Resources Pty Ltd
Eric Mckenzie Nominees Pty Ltd
Gosojo Pty Ltd
Hanwood Lodge Pty Ltd
Perth Select Seafoods Pty Ltd
Mr Alan Schwartz
Wythenshawe Pty Ltd
27,708,823
16,000,000
10,524,044
2,277,647
1,500,000
1,470,588
1,195,000
947,059
791,375
588,235
500,000
500,000
500,000
500,000
500,000
34.53
19.94
13.12
2.84
1.87
1.83
1.49
1.18
0.99
0.73
0.62
0.62
0.62
0.62
0.62
16
17
18
19
20
Mr Mirko Andrew Nizich
Mr Alan Goodfellow
T T Nicholls Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
Black Swan Superannuation Pty Ltd
Total
Total remaining holders
480,000
450,000
372,745
345,574
312,500
0.60
0.56
0.46
0.43
0.39
67,463,590
84.07%
12,786,410
15.93%
LISTED OPTIONS EXERCISABLE AT $0.30 EXPIRING 17 MAY 2020:
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-
Totals
Holders
Total Units
%
0
122
30
113
17
282
0
607,500
214,134
3,472,642
4,186,337
8,480,613
0
7.16
2.25
40.95
49.36
100.00
THE TOP 20 HOLDERS OF LISTED OPTIONS ARE:
Holder
Serca Superfund Pty Ltd
Melshare Nominees Pty Ltd
Gosojo Pty Ltd
Hanwood Lodge Pty Ltd
Mr Alan Schwartz
Wythenshawe Pty Ltd
Davthea Pty Ltd
Mr Mirko Andrew Nizich
Mr Alan Goodfellow
T T Nicholls Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
Goffacan Pty Ltd
Mr Constantine Differding + Mrs Tonie Maree
Differding
Lightframe Holdings Pty Ltd
Mr Trevor John Pitcher + Mrs Fay Rosemary Pitcher
Ms Shirley Eleanor In't Veld
David John Richardson + Ryoko Richardson
Mr Ben Bartlett + Mrs Holly Marie Bartlett
Mr Murray James Mcgill + Mrs Suzanne Appel Mcgill
Beirne Trading Pty Ltd
Holding
750,000
587,500
250,000
250,000
250,000
250,000
244,375
240,000
225,000
186,372
172,787
158,428
125,000
125,000
125,000
125,000
121,875
100,000
85,000
83,625
%
8.84
6.93
2.95
2.95
2.95
2.95
2.88
2.83
2.65
2.20
2.04
1.87
1.47
1.47
1.47
1.47
1.44
1.18
1.00
0.99
Total of Securities
4,454,962
52.53
UNQUOTED EQUITY SECURITIES
Number
51,044,118
Number of
Holders
3
+Class
Escrow Period
Holders of more than 20%
Ordinary shares
19 May 2019
947,059
1
Ordinary shares
11 May 2018
8,000,000
Class A performance
shares
19 May 2019 (7,440,000)
11 May 2018 (560,000)
8,000,000
Class B performance
shares
19 May 2019 (7,440,000)
11 May 2018 (560,000)
9,500,000
23
Unlisted options*
19 May 2019 (8,750,000)
7,500,000
1
Unlisted options**
19 May 2019
Billingual Software Pty Ltd
(26,815,441 shares)
Gold Fields Aust. Pty Ltd
(16,000,000 shares)
Thomas Asset Discovery Ltd
(947,059 shares)
Billingual Software Pty Ltd
(4,480,000)
Gold Fields Aust. Pty Ltd
(1,600,000 shares)
Billingual Software Pty Ltd
(4,480,000)
Gold Fields Aust. Pty Ltd
(1,600,000)
Melshare Nominees Pty Ltd
(2,000,000 options)
Gold Fields Aust. Pty Ltd
(7,500,000 options)
*Exercisable at 30 cents and expiring 17 May 2020
**Exercisable at a price which is the greater of $0.20 or a 5% discount to the 20 day volume weighted average
price of shares on ASX and expiring in three tranches as follows:
2,500,000 options expiring 11 May 2018;
2,500,000 options expiring 11 May 2019;
2,500,000 options expiring 11 May 2020
Use of Funds
The entity has used the cash and assets in a form readily convertible into cash at the time of
listing in a way that is consistent with its business objectives.
There is no current buy-back.
Tenement Listing
Project Area
Wellington North
Myall
Parkes
Wellington North
Moorefield
Parkes
Wellington North
Moorefield
Tenement Details
% Held
EL6178
EL6913
EL7424
EL7440
EL7675
EL7676
EL8357
ELA5520
100
100
100 (subject to 51% JV earn in)
100
100
100 (subject to 51% JV earn in)
100
Application Pending