Magmatic Resources Limited
ABN 32 615 598 322
Annual report
for the year ended 30 June 2020
Contents
Corporate Information
Chairman’s letter to shareholders
Review of operations
Directors’ report
Auditor’s independence declaration
Corporate governance statement
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 consolidated 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 J Richardson – Executive Chairman (elected 3 February 2020)
Peter B Duerden – Managing Director (appointed 3 February 2020)
David W Berrie – Non-Executive Director
David N Flanagan – Non-Executive Director (appointed 28 October 2019)
Malcolm Norris – Non-Executive Director (resigned 3 February 2020)
Andrew J Viner – Non-Executive Director (appointed 16 September 2019,
resigned 11 October 2019)
Company Secretary
Anthony M Walsh (appointed 15 October 2019)
David W Berrie
Registered Office and
Principal Place of Business
Suite 7, 85 Hampden Road
Nedlands WA 6009
Share Registry
Auditors
Solicitors
ASX Code
Telephone:
Email:
Website:
+61 8 9322 6009
info@magmaticresources.com
www.magmaticresources.com
Computershare Investor Services Pty Ltd
Level 11, 172 St George’s Terrace
Perth WA 6000
Telephone:
Telephone:
1300 850505
+61 8 9415 4000
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
DLA Piper Australia
Level 31, Central Park
152-158 St Georges Terrace
Perth WA 6000
Magmatic Resources Limited is listed on the Australian Securities
Exchange
Shares: MAG, Quoted Options: MAGOA
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Magmatic Resources Limited
ABN 32 615 598 322
Chairman’s Letter
Dear shareholder,
I am pleased to present the Company’s fourth annual report since listing on the ASX in May 2017. The
Company has been working to add value to its extensive gold/copper portfolio. We continued to drill our
copper-gold targets in our desire to build shareholder value.
In October/November 2019 and February 2020, we raised $7 million in aggregate through two placements to
sophisticated and professional investors. Through sound fiscal management and careful allocation of
resources, the Company continues to advance its existing portfolio, including the further ground acquired in
Western Australia.
Significant work was carried out by our team located in Orange on the existing tenement package in the East
Lachlan. This exploration and evaluation work has enabled the Company to focus on several key prospects at
its’ very exciting Wellington North Project.
During the year JOGMEC, its Parkes East Joint Venture partner, withdrew from the joint venture on the Parkes
Project. The Company would like to thank JOGMEC for its support and input on the Parkes East Project.
In October 2019 Magmatic announced the appointment of experienced mining executive and director, Mr
David Flanagan to the Company’s Board. Mr Flanagan joined Magmatic as an independent Non-Executive
Director effective from 28 October 2019.
In December 2019, Magmatic announced the appointment of New South Wales Porphyry Gold-Copper
specialist Mr Peter Duerden as Managing Director effective from 3 February 2020. Following Mr Duerden’s
commencement as Managing Director, I assumed the role of Executive Chairman and Mr David Berrie
became Non-Executive Director. To maintain the appropriate board size, current Non-Executive Director Mr
Malcolm Norris stood down from the Board effective from 3rd February 2020. I would like to thank Malcolm for
his great service to the Company.
The Company has now entered a new phase of exploration at its East Lachlan Gold and Porphyry Gold-
Copper projects, and Mr Duerden’s and Mr Flanagan’s technical, corporate and management experience will
greatly enhance the Company’s capabilities.
We look forward to advancing our gold/copper targets in the 2021 Financial Year.
I want to take this opportunity to thank our dedicated employees and contractors across the business for their
contributions to the successful execution of both exploration and corporate activities in the reporting period
and acknowledge our loyal shareholders for their continued support of the Company.
Sincerely
David Richardson
Executive Chairman
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Magmatic Resources Limited
ABN 32 615 598 322
Review of Operations
Magmatic Resources Ltd (“Magmatic” or the “Company”) (ASX:MAG) is a New South Wales-focused gold and
copper explorer that listed in May 2017, following the acquisition of an advanced gold-copper target portfolio in
the East Lachlan, New South Wales from Gold Fields Limited in 2014.
Since listing on the ASX the Company has added new tenements to its New South Wales portfolio and also
developed a Western Australian exploration portfolio, comprising the Yamarna Gold Project and nearby Mt Venn
Copper-Nickel-Cobalt Project, located 150km east of Laverton.
Figure 1: Magmatic has four advanced exploration projects in New South Wales and two target generation
projects in Western Australia. Plan also shows the terminated WA Gold and Copper Gold acquisitions
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East Lachlan Exploration
Magmatic Resources Limited
ABN 32 615 598 322
The Company has four 100%-owned projects comprising eight licences in the East Lachlan, New South
Wales – Myall, Moorefield, Wellington North and Parkes.
The East Lachlan has an endowment of more than 80 million ounces of gold and 13 million tonnes of copper
(Phillips 2017). It is most famous for Newcrest Mining’s world class gold-copper porphyry cluster at the Cadia
Valley District, where currently the Cadia East Mine represents Australia’s largest gold mine and one of the
world’s most profitable gold producers (Newcrest 2019). In addition, the Northparkes copper-gold porphyry
deposits (China Molybdenum/Sumitomo, CMOC 2019) and Cowal gold deposit (Evolution Mining, Evolution
2018) represent other significant long-life mining operations.
The recent Boda porphyry gold – copper major discovery by Alkane Resources Ltd (ASX:ALK) has highlighted
the value of Magmatic’s dominant surrounding tenure position in the northern Molong Belt, in what is emerging
as a significant gold porphyry discovery hotspot. The Boda discovery has highlighted the surface signature of
porphyry mineralisation in the area and has significantly upgraded Magmatic’s target portfolio for Boda-style
gold-copper porphyry mineralisation.
The Company also holds a strategic position in the Parkes Fault Zone (Parkes Project), immediately south
from Alkane’s Tomingley Gold Operations and recent Roswell and San Antonio discoveries.
Figure 2: Location of Magmatic’s East Lachlan Projects
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Magmatic Resources Limited
ABN 32 615 598 322
Wellington North Gold and Copper-Gold Project (100% MAG)
Targeting: Porphyry Gold Copper, Epithermal Gold and Orogenic Gold Deposits
The Wellington North Project covers the northern extension of the Molong Volcanic Belt, located ~110km north
and along strike from Newcrest’s world-class Cadia Valley gold-copper porphyry deposits and surrounding
Alkane Resources’ recent Boda gold-copper porphyry discovery.
The Wellington North Project comprises three exploration licences that essentially surround the Boda
discovery, covering 177km2 and is considered prospective for gold-copper porphyry, gold epithermal and lode
style gold mineralisation.
Magmatic’s activity during the year has focussed in the Lady Ilse District, with the completion of MIMDAS
geophysics and a maiden diamond drill hole (20LIDD001: 1014.8m), which defined a vertical, broadly north-
south trending zone of porphyry style sulphide mineralisation.
20LIDD001
50m @ 0.27g/t Au, 0.04% Cu from 691m
incl 18m @ 0.45g/t Au, 0.08% Cu from 691m
and
and
and
10m @ 0.87g/t Au, 0.06% Cu from 593m
17m @ 0.77g/t Au, 0.04% Cu from 803m
incl 1m @ 6.14g/t Au, 0.15% Cu from 819m
4m @ 1.11g/t Au from 948m
Future work will include RC and AC drilling, along strike from the core hole and within the district to assess
areas considered prospective for Boda-style gold-copper porphyry mineralisation.
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Magmatic Resources Limited
ABN 32 615 598 322
Figure 3: Aeromagnetic imagery, RTP (Magmatic and Open File Company/Government)
showing northern Molong Belt porphyry target portfolio, Wellington North Project,
highlighting Boda Au‐Cu Porphyry Discovery (ALK), extensions to the Boda Porphyry Belt
and target zones at Boda North, Boda South
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Magmatic Resources Limited
ABN 32 615 598 322
Parkes Project (100% MAG)
Targeting: Porphyry Copper – Gold and Orogenic Gold Deposits
The Parkes Project covers a portion of the Parkes Fault Zone, within the Junee – Narromine Volcanic Belt,
located ~40km south and along strike from Alkane’s Tomingley Gold Operations and recent orogenic gold
discoveries along the Roswell - San Antonio - El Paso Trend.
The Parkes Project comprises two licences (EL7676 and EL7424) covering 159 km2 and is considered
prospective for copper-gold porphyry, high sulfidation epithermal and orogenic gold mineralisation.
In 2017, the Parkes Project was joint ventured with JOGMEC (Japanese National government resources
agency), who spent $2.7m on exploration activity over the initial three-year earn in period. In September
2019, both parties negotiated to finalise the joint venture with 100% of the project and the two licences
(EL7424 and EL7676) remaining with Magmatic (JOGMEC JV).
The Parkes JOGMEC JV completed two diamond holes during the year with drillhole 19ATDD013 (930.05m)
at Buryan intersecting copper-gold porphyry mineralisation with best results:
10m at 0.49 g/t Au (from 448m), incl. 2m at 1.67 g/t Au (from 456m)
57m at 0.17% Cu, 0.11 g/t Au (from 822m), and
79m at 0.11% Cu, 0.06 g/t Au (from 545m)
Future exploration activity on the Parkes Project will focus on the orogenic gold potential of the project area,
including the MacGregors, MacGregors South and Stockmans Prospects, within the Parkes Fault Zone.
The prospectivity of these target areas has been upgraded based on the recent discoveries made by Alkane
Resources Ltd, located along strike, south of the Tomingley Gold Operations.
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Magmatic Resources Limited
ABN 32 615 598 322
Figure 4: Magmatic’s Parkes JV licence area straddles the highly prospective Parkes Fault Zone
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Magmatic Resources Limited
ABN 32 615 598 322
Myall Gold-Copper Project (100% MAG)
Targeting: porphyry Copper Gold deposits
The Myall Project covers the Narromine Intrusive Complex within the Junee-Narromine Volcanic Belt, located
~50km north and along strike from CMOC/Sumitomo’s Northparkes copper-gold porphyry deposits.
The Myall Project comprises a single exploration licence (EL6913) covering 244km2 and is considered
prospective for Northparkes-style copper-gold porphyry and epithermal gold mineralisation.
Ongoing exploration activity has enhanced the potential of the Myall Project to host a Northparkes style
copper-gold porphyry cluster. The identification of Wombin Volcanics equivalent rocks at Myall (Northparkes
mineralisation host rocks) is an important knowledge breakthrough for the project.
Additionally, the Greater Kingswood area copper anomaly shows similar dimensions and tenor to the
Northparkes copper anomaly. Previous intercepts at Myall include:
121m at 0.4% Cu, 0.09 g/t Au, including 70m at 0.54 Cu, 0.15 g/t Au (Kingswood)
Figure 5: Myall Project: Greater Kingswood area copper anomaly at 500ppm Cu and 1000ppm Cu versus
Northparkes copper geochemistry at the same scale. Shows similar anomaly dimensions
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Magmatic Resources Limited
ABN 32 615 598 322
Moorefield Gold and Base Metals Project (100% MAG)
Targeting: Gold and Base Metal deposits
The Moorefield Project covers a portion of Ordovician metasediments (Girilambone Group) and Siluro-
Devonian volcanics and sediments (Derriwong Group) in the central Lachlan Orogen of New South Wales.
The Moorefield Project comprises two tenements (EL7675 and EL8669) covering 478km2 and is considered
prospective for near surface gold and polymetallic base metal, gold VMS mineralisation.
Ongoing exploration activity has developed VMS gold-base metal targets at the Pattons Prospect where the
Company was awarded a New Frontiers Cooperative Drilling (NFCD) programme grant for future drilling.
In addition, work has further developed orogenic gold targets along the Boxdale-Carlisle Reef trend
warranting future drill testing.
Figure 6: Moorefield interpreted aeromagnetic image and target (1VD RTP TMI)
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Magmatic Resources Limited
ABN 32 615 598 322
Western Australian Projects
Magmatic’s Western Australian exploration portfolio comprises the Yamarna Gold Project and nearby Mt Venn
Copper-Nickel-Cobalt Project, located 150km east of Laverton.
These strategic ground positions are in a proven mineralised district of Western Australia, considered
prospective for gold, cobalt and nickel.
Agreements for further West Australian acquisitions had been negotiated during the year, however these were
terminated following the Boda Porphyry Discovery (ASX:ALK) in September 2019 and a timely re-rating of the
value and potential of the Company’s East Lachlan assets.
Figure 7: Magmatic’s Yamarna and Mt Venn projects
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Magmatic Resources Limited
ABN 32 615 598 322
Mt Venn Project (100% MAG)
Targeting: Mt Venn-style Copper Nickel Cobalt deposits
The Mt Venn Project is located 120 km east of Laverton in Western Australia. It consists of 2 tenements
(E38/2961 and E38/3351) for ~87 km2 which covers 60% of the Mt Venn Intrusion, where Great Boulder
Resources (“GBR”) recently discovered Copper Nickel Cobalt mineralisation at its Mt Venn Project. GBR
Intercepts included 48m at 0.75% Cu, 0.2% Ni and 0.07% Co and 61m at 0.51% Cu, 0.19% Ni and 0.06% Co.
Magmatic identified undrilled EM conductors at its Mt Venn Project following the acquisition and interpretation
of previous VTEM and ground EM datasets. One of the larger conductors, MVVA2, is along strike from a
previous drilling intercept which may indicate a repeat of GBR’s Mt Venn mineralisation on Magmatic’s
tenement. Magmatic completed a reconnaissance field program at the Mt Venn Project, completing initial soil
and rock chip sampling and confirmed the EM anomalies are under shallow cover.
Yamarna Gold Project (100% MAG)
Targeting: Gruyere-style gold mineralisation
The Yamarna Project is 150km northeast of Laverton in the underexplored Yamarna Greenstone Belt of WA,
40km northeast of the Company’s Mt Venn Project. Magmatic has applied for a further exploration tenement
this year (E38/3327) to add to the prospective tenements E38/2918 and E38/3312 (under application). The
project covers about 355km2. The Yamarna Project is 15km northwest of the Gruyere (5.88Moz) gold mine
under construction (Gold Fields/ Gold Road JV). Gruyere gold mine is expected to commence production in
mid-2019.
Magmatic completed the acquisition of Landslide Investments Pty Ltd, holder of Exploration Licence E38/2918,
which forms part of the Company’s Yamarna Gold Project.
Major international gold producer Gold Fields has recognised the potential of the Yamarna greenstone belt as
being a long term, high margin production opportunity for its portfolio, opting to participate in a 50% joint venture
partnership with Australian explorer Gold Road to develop the Gruyere mine and continue to explore the
associated tenements.
The Magmatic exploration team have identified a large-scale regional structure transecting the Company’s
Yamarna Project, interpreted to be prospective for gold. Previous exploration is limited and includes minor
shallow RAB and AC drilling which Magmatic intends to follow up.
References
CMOC 2019., China Molybdenum Company Limited, http://www.cmocinternational.com/australia/
Evolution., 2018, https://evolutionmining.com.au/reservesresources/
Newcrest., 2019, Newcrest Investor and Analyst Presentation, ASX Announcement, 18 November 2019
Phillips, G N (Ed), 2017. Australian Ore Deposits, The Australasian Institute of Mining and Metallurgy:
Melbourne
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Competent Persons Statement
Magmatic Resources Limited
ABN 32 615 598 322
The information in this document that relates to Exploration Results, Mineral Resources or Ore Reserves is
based on information compiled by Mr Peter Duerden who is a Registered Professional Geoscientist (RPGeo)
and member of the Australian Institute of Geoscientists. Mr Duerden is a full-time employee of, and has
associated shareholdings in, Magmatic Resources Limited, and has sufficient experience which is relevant to
the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking
to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves”. Mr Duerden consents to the inclusion in this
presentation of the matters based on his information in the form and context in which it appears.
Additionally, Mr Duerden confirms that the entity is not aware of any new information or data that materially
affects the information contained in the ASX releases referred to in this report.
15
Directors’ Report
Magmatic Resources Limited
ABN 32 615 598 322
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 its wholly owned subsidiaries
Modeling Resources Pty Ltd (“Modeling”), Landslide Investments Pty Ltd (“Landslide”) and Australia Gold and
Copper Ltd (“AGC”). 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 J Richardson – Executive Chairman (elected Chairman 3 February 2020)
Peter B Duerden – Managing Director (appointed 3 February 2020)
David W Berrie – Non-Executive Director
David N Flanagan – Non-Executive Director (appointed 28 October 2019)
Malcolm Norris – Non-Executive Director (resigned 3 February 2020)
Andrew J Viner – Non-Executive Director (appointed 16 September 2019, resigned 11 October 2019)
Company Secretary
Anthony M Walsh (appointed 15 October 2019)
David W Berrie
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 5 to 15 of this
Annual Report. COVID 19 had an impact on the exploration program during the four months to 30 June 2020 with
the contracted drill rig operating on day shifts only and with a lower than usual efficiency. To partially offset this
cost the Group received a $96,005 Australian federal government Cash Boost subsidy.
Financial review
The Group incurred a loss of $4,318,026 after income tax for the financial year (2019: loss of $1,993,025).
As at 30 June 2020, the Group had net assets of $5,812,849 (30 June 2019: $1,196,256), including cash and cash
equivalents of $4,234,820 (30 June 2019: $233,431).
Significant changes in the state of affairs
The Group raised $7,200,000 through the issue of 44,166,667 new shares at a cost of $451,000, and raised a
further $375,132 from option holders who exercised 3,266,063 options.
Matters subsequent to the end of the financial year
On 31 January 2020, the World Health Organisation (WHO) announced a global health emergency because of a
new strain of coronavirus originating in Wuhan, China (COVID-19 outbreak) and the risks to the international
community as the virus spreads globally beyond its point of origin. Because of the rapid increase in exposure
globally, on 11 March 2020, the WHO classified the COVID-19 outbreak as a pandemic.
The full impact of the COVID-19 outbreak continues to evolve at the date of this report. The Group is therefore
uncertain as to the full impact that the pandemic will have on its financial condition, liquidity, and future results of
operations during FY2021.
Management is actively monitoring the global situation and its impact on the Group's financial condition, liquidity,
operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global
responses to curb its spread, the Group is not able to estimate the effects of the COVID-19 outbreak on its results
of operations, financial condition, or liquidity for the 2021 financial year.
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Magmatic Resources Limited
ABN 32 615 598 322
The Company announced to the ASX on 18 September 2020 that its wholly owned subsidiary, Australian Gold
and Copper Limited (AGC) has entered into a binding term sheet to purchase two Central Lachlan gold/polymetallic
projects from private company, New South Resources Pty Ltd (NSR).
NSR will receive as consideration AGC shares amounting to a 40% interest in AGC pre the initial public offering
(IPO) proposed to be undertaken by AGC for their Cargelligo and Gundagai projects (NSR Tenements). The
Company will hold the remaining 60% in AGC pre-IPO.
Subject to shareholder approvals, and all necessary regulatory approvals, compliance with ASX escrow
requirements and waivers, the Company and NSR have the right to distribute in specie up to 50% of their AGC
holdings to their respective shareholders. The Company considers the combined AGC project portfolio to provide
multiple drill ready discovery opportunities of ‘Fosterville-style’ orogenic gold, McPhillamys-style gold and ‘Cobar-
Hera-style’ goldpolymetallic mineralisation within the Central Lachlan Fold Belt. The demerger of Moorefield will
allow the Company to focus on its East Lachlan gold and gold-copper porphyry projects.
The demerger of Moorefield and the NSR acquisitions remain contingent on the Company’s shareholders
approval, satisfactory tax ruling being received from the ATO regarding tax implications of a distribution in specie
for Magmatic shareholders, necessary regulatory approvals, compliance with 2 ASX escrow requirements and
waivers and will be considered at Magmatic’s upcoming Annual General Meeting.
Likely developments and expected results
Additional comments on expected results of certain operations of the Group are included in the Review of
Operations. The impact of COVID-19 on the Company going forward, including its financial condition cannot be
reasonably estimated at this stage and will be reflected in the Group’s 2021 interim and annual financial
statements.
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.
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 Richardson B. Comm MBA Executive Chairman (appointed 28 October 2016, elected Chairman 3
February 2020)
Experience and expertise
Mr David Richardson has extensive international corporate experience including 15 years in Japan in Asia
Pacific regional director positions with organisations such as Pacific Dunlop Ltd and Amcor Ltd, expertise
includes venture capital and finance.
Mr Richardson founded Magmatic Resources in 2014, listing the Company on the ASX in 2017 and is Executive
Chairman of the Company. Mr Richardson holds an Masters of Business Administration from the University of
Southern California (USC), Los Angeles.
Mr Richardson is not considered to be independent due to his executive role as Executive Chairman of the
Company and his interest in the securities of the Company.
Other current directorships: Nil
Former directorships in the last 3 years: Nil
Special responsibilities: Executive Chairman
Interests in shares and options at the date of this report:
42,442,571 ordinary shares (indirectly held) and 9,000,000 options (indirectly held).
Peter Duerden BSc Hons (EconGeo), M (EconGeo), RPGeo Managing Director (appointed 3 February 2020)
Experience and expertise
Mr Peter Duerden has over 20 years experience in the mining and exploration industry working across a wide
range of commodities and deposit styles with particular expertise in NSW mineral systems. Before joining
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Magmatic Resources Limited
ABN 32 615 598 322
Magmatic, Mr Duerden was involved in the start-up of Sky Metals Limited and the development of their
successful NSW gold strategy and has held senior management positions with Newcrest Mining and Alkane
Resources. Mr Duerden holds a Masters of Economic Geology and is a Registered Professional Geoscientist
(RPGeo) and member of the AIG.
Mr Duerden is not considered to be independent due to his executive role as Managing Director of the Company.
Other Current Directorships: Nil
Former directorships in the last 3 years: Sky Metals Limited (appointed 14 October 2019 resigned 4 December
2019)
Special Responsibilities: Managing Director
Interests in shares and options at the date of this report:
4,850,313 ordinary shares (indirectly held) and 6,000,000 options (indirectly held)
David Flanagan AM CitWA Non-Executive Director (appointed 28 October 2019)
Experience and expertise
Mr David Flanagan is a geologist with more than 25 years’ experience in the multi commodity mining and mineral
exploration industry in Australia, Indonesia and Africa. David has a BSc Mining & Minerals Exploration Geology,
undertaken at Curtin University, School of Mines in Western Australia. He is a Fellow of the Australian Institute of
Company Directors and Member of the Australasian Institute of Mining and Metallurgy. David was Chancellor of
Murdoch University from 2013 to 2019.
During 2014, Mr Flanagan was named the Western Australian of the Year and Western Australian Business
Leader of the Year. He was awarded an Eisenhower Fellowship in 2013 and remains active in the not for profit
sector. In January 2018, Mr Flanagan was awarded the prestigious Member of the General Division of the Order
of Australia Award.
Other directorships: Non-Executive Chairman of ASX listed companies, Battery Minerals Limited and Coziron
Limited.
Former directorships in the last 3 years: Nil
Special responsibilities: Nil
Interests in shares and options at the date of this report:
Nil ordinary shares held and 6,000,000 options (directly held).
David Berrie LLB Non-Executive Director (appointed 28 October 2016)
Company Secretary (appointed 01 June 2019)
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. Mr Berrie has a Bachelor of Laws and a Bachelor of Juris Prudence from the University of
Western Australia.
Other current directorships: Summit Resources Limited
Former directorships in the last 3 years: Hylea Metals Limited (appointed 6 February 2018, resigned 2 January
2019)
Special responsibilities: Joint Company Secretary
Interests in shares and options at the date of this report:
14,029,044 ordinary shares (indirectly held) and 2,675,000 options (indirectly held).
Meetings of directors
During the financial year there were eight formal directors’ meetings. 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 Company has no separate Audit committee or Remuneration committee as is not of a sufficient size to warrant
these. All matters usually dealt with by these committees are dealt with by the whole Board.
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Magmatic Resources Limited
ABN 32 615 598 322
The number of meetings of the Company’s board of directors attended by each director were:
Directors’ meetings held Directors’ meetings
attended
D Richardson
P Duerden
D Berrie
D Flanagan
M Norris
A Viner
Shares under option
8
4
8
6
4
1
8
4
8
6
4
1
Outstanding share options at the date of this report are as follows:
Grant date
30 August 2018
14 October 2019
16 October 2019
22 October 2019
29 November 2019
31 January 2020
31 January 2020
04 December 2019
04 December 2019
Date of expiry
30 August 2021
14 October 2022
30 November 2022
30 November 2022
30 November 2022
31 January 2023
31 January 2023
31 January 2023
31 January 2023
Shares issued on the exercise of options
Exercise price
Number of options
$0.10
$0.10
$0.10
$0.10
$0.26
$0.37935
$0.63225
$0.37935
$0.63225
26,535,708
3,000,000
11,500,000
10,500,000
8,000,000
9,040,000
4,460,000
660,000
340,000
Options Grant Date
10 March 2019
31 August 2018
11 May 2017
11 May 2017
31 August 2018
Date of Expiry
10 March 2024
30 August 2012
17 May 2020
17 May 2020
30 August 2021
Date Exercised
2 December 2019
7 January 2020
9 March 2020
17 May 2020
22 May 2020
Exercised Price
$0.03
$0.10
$0.30
$0.30
$0.10
Number of Options
2,000,000
306,433
12,593 (*)
930,037 (*)
17,000
(*) remaining 17,037,983 $0.30 options lapsed unexercised on 17 May 2020 as did 2,500,000 options with an
exercise price of the greater of $0.20 or the 20-day VWAP on 11 May 2020
Remuneration Report (Audited)
This report outlines the remuneration arrangements in place for the key management personnel of Magmatic
Resources Limited (the “Company” or “Parent”) for the financial year ended 30 June 2020. 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 Richardson - Executive Chairman (elected Chairman 3 February 2020)
Peter Duerden – Managing Director (appointed 3 February 2020)
David Flanagan – Non-Executive Director (appointed 28 October 2019)
David Berrie – Non-Executive Director
Malcolm Norris – Non-Executive Director (resigned 3 February 2020)
Andrew Viner – Non-Executive Director (appointed 16 September 2019, resigned 11 October 2019)
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Magmatic Resources Limited
ABN 32 615 598 322
(ii) Executives
Michael Franklin - Chief Financial Officer
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, the directors. Non-executive directors’ fees and payments are reviewed annually by the Board and are intended
to be in line with the market. Non-executive directors receive a board fee and fees for chairing or participating on
board committees. They do not receive performance-based pay or retirement allowances.
For the year ended 30 June 2020, exclusive of superannuation guarantee the annual cash remuneration for the
Non-Executive Directors was $100,000 and $60,000.
The non-executive directors fee pool approved by shareholders is $250,000 per annum.
Directors’ fees
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. The letter summarises the Board policies and terms, including remuneration relevant to the
office of director.
The Board policy is to remunerate non-executive directors at commercial market rates for comparable companies for
their time, commitment and responsibilities. Non-executive directors receive a Board fee but do not receive fees for
chairing or participating on Board committees. Board members are allocated superannuation guarantee contributions
as required by law, and do not receive any other retirement benefits. From time to time, some individuals may choose
to sacrifice their salary or consulting fees to increase payments towards superannuation.
Fees for non-executive directors are not linked to the performance of the Group.
Retirement allowances for directors
20
Magmatic Resources Limited
ABN 32 615 598 322
Apart from superannuation payments paid on salaries there are no retirement allowances for directors.
Executive pay
The executive pay and rewards framework has the following components:
base pay and benefits such as superannuation where appropriate
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, in the past, issued options and performance rights to some
key personnel.
Share-based compensation
Issue of shares
Details of shares issued to directors on Conversion of Class B Performance Shares during the year ended 30 June
2020 are set out below:
Name
Date
Shares
Issue Price
$
David Richardson
David Berrie
Note: The issue of these shares was approved by shareholders at a general meeting held on 22 October 2019.
30 October 2019
30 October 2019
4,480,000
1,360,000
618,240
187,680
$0.138
$0.138
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and
other key management personnel in this financial year or future reporting years are as follows:
Name
David Flanagan
Malcolm Norris
David Richardson
David Richardson
Peter Duerden
Peter Duerden
David Berrie
David Berrie
Grant
Date
Expiry
date
Vesting and
exercisable
date
Number of
Options
granted
6,000,000 29 Nov 2019 29 Nov 2019 30 Nov 2022
2,000,000 29 Nov 2019 29 Nov 2019 30 Nov 2022
31 Jan 2023
2,700,000 23 Jan 2020
31 Jan 2023
1,300,000 23 Jan 2020
31 Jan 2023
4,000,000 23 Jan 2020
31 Jan 2023
2,000,000 23 Jan 2020
31 Jan 2023
1,350,000 23 Jan 2020
31 Jan 2023
650,000 23 Jan 2020
31 Jan 2020
31 Jan 2020
31 Jan 2020
31 Jan 2020
31 Jan 2020
31 Jan 2020
Exercise
price
$0.26
$0.26
$0.37935
$0.63225
$0.37935
$0.63225
$0.37935
$0.63225
Fair value
Per option
at grant date
$0.09738
$0.09738
$0.13534
$0.10897
$0.13534
$0.10897
$0.13534
$0.10897
Options granted carry no dividend or voting rights.
All options were granted over unissued fully paid ordinary shares in the Company. Options vest based on the
provision of service over the vesting period whereby the executive becomes beneficially entitled to the option on
vesting date. Options are exercisable by the holder as from the vesting date. There has not been any alteration to
the terms or conditions of the grant since the grant date. There are no amounts paid or payable by the recipient in
relation to the granting of such options other than on their potential exercise.
21
Magmatic Resources Limited
ABN 32 615 598 322
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management
personnel as part of compensation during the year ended 30 June 2020 are set out below:
Value of
options
granted
during the
year
$
584,281
194,760
73,029
109,353
36,514
Value of
options
exercised
during the
year
$
-
-
-
-
-
Value of
options
lapsed
during the
year
$
-
-
-
-
-
Remuneration
consisting of
options
for the
year
%
90%
88%
8%
48%
12%
Name
David Flanagan
Malcolm Norris
David Richardson
Peter Duerden
David Berrie
No performance rights were issued during the year ended 30 June 2020.
Company performance, shareholder wealth and directors’ and executives’ remuneration
No relationship exists between shareholder wealth, director and executive remuneration and Company
performance due to the nature of the Company’s operations being a non-producing resources exploration
company.
The table below shows the losses and earnings per share of the Company for the last four financial years:
2020
2019
2018
2017
Net loss
$4,318,026
$1,993,025
$2,533,870
$3,794,220
Share Price at year end (cents)
Loss per share (cents)
27.0
3.02
1.8
1.76
6.1
2.75
12.0
4.74
B
Details of remuneration
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 2020 are set out in the
following tables.
The key management personnel of the Group comprise the directors of the Company and persons 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.
Year ended 30 June 2020
Name
Director
D Richardson
P Duerden (appointed 3 February 2020)
D Flanagan (appointed 28 October 2020)
D Berrie
M Norris (resigned 3 February 2020)
Key Management Personnel
M Franklin
Salary /
Fees
$
180,000
108,333
62,206
60,000
23,333
100,000
533,872
Post-
employment
benefits /
Superannuation
$
Share-
based
payments
$
Other
Total
$
$
54,469
19,412
5,910
5,700
2,217
73,028
109,353
584,281
36,514
194,760
-
-
-
-
-
307,497
237,098
652,397
102,214
220,310
-
87,708
-
997,936
-
100,000
- 1,619,516
22
Other non-executive director, Andrew Viner did not receive any remuneration for the year (2019: nil).
Magmatic Resources Limited
ABN 32 615 598 322
Year ended 30 June 2019
Name
Director
D Richardson
D Berrie
M Norris
Key Management Personnel
M Franklin (appointed 1 June 2019)
I Wowesny (appointed 1 December 2017,
resigned 31 May 2019)
Post-
employment
benefits /
Superannuation
$
Share-
based
payments
$
Other*
$
Total
$
17,100
5,700
3,800
-
15,438
42,038
-
-
-
-
-
-
-
-
-
-
197,100
65,700
43,800
10,256
25,000
25,000
177,938
494,794
Salary /
Fees
$
180,000
60,000
40,000
10,256
137,500
427,756
* Other benefits include termination benefits paid to Ms Wowesny in 2019.
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.
Remuneration of the Managing Director and other executives are formalised in letters of appointment and
employment agreements. These agreements provide details of the salary and employment conditions relating to
each employee.
Name
Term of agreement
and notice period
Base salary (excl.
superannuation)
Termination
payments
David Richardson
Executive Chairman
Peter Duerden
Managing Director
Michael Franklin
Chief Financial Officer
2 years
3 months
N/A
6 months
N/A
N/A
$180,000
$260,000
$100,000
N/A
N/A
N/A
D
Key management personnel equity holdings
2020
Ordinary shares
Directors
D Richardson
P Duerden (appointed 3 February 2020)
D Flanagan (appointed 28 October 2020)
D Berrie
M Norris (resigned 3 February 2020)
A Viner (appointed 16 September 2019,
resigned 11 October 2019)
Other Key management personnel
M Franklin
Balance at
beginning of year
Net movement
during the year
Balance at the
end of year
37,962,571
-
-
12,669,044
-
40,000
4,480,000
4,850,313
-
1,360,000
-
203,000
42,442,571
4,850,313
-
14,029,044
-
243,000
-
-
-
23
Magmatic Resources Limited
ABN 32 615 598 322
Options
Directors
D Richardson
P Duerden (appointed 3 February 2020)
D Flanagan (appointed 28 October 2020)
D Berrie
M Norris (resigned 3 February 2020)
A Viner (appointed 16 September 2019,
resigned 11 October 2019)
Other Key management personnel
M Franklin
Balance at
beginning of year
Net movement
during the year
Balance at the end
of year
5,121,875
-
-
919,375
750,000
-
3,878,125
6,000,000
6,000,000
1,755,625
1,250,000
-
9,000,000
6,000,000
6,000,000
2,675,000
2,000,000
-
-
-
-
No remuneration consultants have been used. Other than disclosed above, there are no other transactions
with key management personnel.
Loans to Key Management Personnel
There were no loans to individuals or members of key management personnel during the financial year.
Transactions with Key Management Personnel
Mr David Richardson (Executive Chairman)
During the financial year the son of Mr Richardson provided casual administrative services to the Company to
the value of $538. These services were provided on normal commercial terms and conditions.
Mr Richardson’s related entity D&R Superannuation Fund lent $50,000 from 26 July 2019 to 27 November
2019 to the group and it was paid interest at the rate of 10% per annum on that loan which totalled $1,699.
Mr Richardson’s related entity Bilingual Software Pty Ltd lent $50,000 from 2 August 2019 to 28 November
2019 and a further $90,000 from 30 August 2019 to 28 November 2019 to the group and it was paid interest
at the rate of 10% per annum on that loan which totalled $3,874.
Mr David Berrie (Non-Executive Chairman)
Mr Berrie’s related entity Davthea Pty Ltd lent $25,000 from 28 August 2019 to 26 November 2019, a further
$5,000 from 29 August 2019 to 26 November 2019, a further $15,000 from 11 September 2019 to 26 November
2019, followed by a further $15,000 from 12 September 2019 to 26 November 2019 to the group and it was
paid interest at the rate of 10% per annum on that loan which totalled $1,368.
Other than described above, there were no transactions with key management personnel during the financial
year or the previous financial year
E
Voting and comments made at the Company’s 2019 Annual General Meeting
Magmatic Resources Ltd received more than 98% of “yes” votes on its remuneration report for the 2019
financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its
remuneration practices.
End of audited remuneration report.
24
Magmatic Resources Limited
ABN 32 615 598 322
Auditor’s 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 24 and forms part of this directors’ report for the year ended
30 June 2020.
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
Consolidated
2020
$
2019
$
42,902
42,902
28,077
28,077
Total auditor’s remuneration
42,902
28,077
Proceedings on behalf of Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party,
for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.
Insurance of Directors and Officers
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 Richardson
Executive Chairman
PERTH, Western Australia
Dated: 25 September 2020
25
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 DEAN JUST TO THE DIRECTORS OF MAGMATIC RESOURCES
LIMITED
As lead auditor of Magmatic Resources Limited for the year ended 30 June 2020, 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.
Dean Just
Director
BDO Audit (WA) Pty Ltd
Perth, 25 September 2020
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 a firms. Liability limited by a scheme approved under Professional Standards Legislation.
26
Magmatic Resources Limited
ABN 32 615 598 322
Corporate Governance Statement
The Company and the Board are committed to achieving and demonstrating the highest standards of corporate
governance. The Company has reviewed its corporate governance practices against the Corporate
Governance Principles and Recommendations (4th edition) published by the ASX Corporate Governance
Council. The Company’s updated corporate governance practices were approved by the Board on 27 August
2020.
The 2020 Corporate Governance Statement was approved by the Board on 25 September 2020 and is current
as at 25 September 2020. A description of the Group’s current corporate governance practices is set out in
the Group’s Corporate Governance Statement which can be viewed at www.magmaticresources.com.
27
Magmatic Resources Limited
ABN 32 615 598 322
Consolidated Statement of Profit or Loss and Other
Comprehensive Income for the year ended 30 June 2020
Consolidated
Note
2020
$
2
3
3
19
4
Continuing Operations
Other income
Corporate administration expenses
Exploration expenditure incurred
Exploration asset impairments
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
the members of Magmatic Resources Limited:
2019
$
97,289
97,289
(1,129,482)
(471,707)
(445,000)
(42,898)
(1,227)
(2,090,314)
254,494
254,494
(1,389,438)
(1,466,443)
-
(1,700,486)
(16,153)
(4,318,026)
(4,318,026)
(1,993,025)
-
-
(4,318,026)
(1,993,025)
-
-
-
-
(4,318,026)
(1,993,025)
(4,318,026)
(1,993,025)
Loss per share attributable to the members of
Magmatic Resources Limited
Loss per share (dollars)
5
$0.030
$0.018
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the accompanying notes.
28
Magmatic Resources Limited
ABN 32 615 598 322
Consolidated Statement of Financial Position
as at 30 June 2020
Current Assets
Cash and cash equivalents
Other receivables
Total Current Assets
Non-Current Assets
Plant and Equipment
Security Bonds
Exploration assets
Right-of-use assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Lease Liabilities
Total Current Liabilities
Non-Current Liabilities
Lease Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Consolidated
Note
2020
$
2019
$
7
8
9
10
11
12
4,234,820
73,677
233,431
108,561
4,308,497
341,992
89,623
91,300
1,628,350
115,235
36,420
91,300
1,628,350
-
1,924,508
1,756,070
6,233,005
2,098,062
304,637
39,200
901,806
-
343,837
901,806
76,319
76,319
-
-
420,156
901,806
5,812,849
1,196,256
13
14
15,071,988
3,753,235
(13,012,374)
6,733,855
3,156,749
(8,694,348)
5,812,849
1,196,256
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying
notes.
29
Magmatic Resources Limited
ABN 32 615 598 322
Consolidated Statement of Changes in Equity for the year
ended 30 June 2020
Consolidated
Share
Based
Payments
Reserve
$
Capital
Restructure
Reserve
$
Issued
Capital
$
Accumulated
Losses
$
Total
Equity
$
Balance at 1 July 2018
5,838,182
3,068,453
250
(6,701,323)
2,205,562
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
Total transactions with owners
recorded directly in equity
-
-
-
42,898
-
42,898
1,004,365
(108,692)
-
45,148
895,673
45,148
-
-
-
-
-
(1,993,025)
(1,950,127)
-
-
(1,993,025)
(1,950,127)
-
-
1,004,365
(63,544)
940,821
Balance at 30 June 2019
6,733,855
3,156,499
250
(8,694,348)
1,196,256
Balance at 1 July 2019
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
Vesting of Performance Shares
Share-based payments
Issue of ordinary shares
Capital raising expenses
Total transactions with owners
recorded directly in equity
6,733,855
3,156,499
250
(8,694,348)
1,196,256
-
-
-
-
-
-
1,104,000
-
7,685,133
(451,000)
(1,104,000)
1,700,486
-
-
8,338,133
596,486
-
-
-
-
-
-
-
-
(4,318,026)
(4,318,026)
-
-
(4,318,026)
(4,318,026)
-
-
-
-
-
-
1,700,486
7,685,133
(451,000)
8,934,619
Balance at 30 June 2020
15,071,988
3,752,985
250
(13,012,374)
5,812,849
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying
notes.
30
Magmatic Resources Limited
ABN 32 615 598 322
Consolidated Statement of Cash Flows
for the year ended 30 June 2020
Consolidated
Note
2020
$
2019
$
Cash flows from operating activities
Receipts from customers, contract discontinuance fees
received and Government Subsidies
Payments to suppliers and employees
Payments for exploration expenditure
Proceeds from / (returned to) earn-in partner
Net Interest received / (paid)
251,160
(1,389,284)
(1,808,487)
(38,427)
(253)
-
(971,330)
(1,253,997)
1,000,000
4,452
Net cash used in operating activities
19(a)
(2,985,291)
(1,220,875)
Cash flows from investing activities
Payments for property, plant & equipment
Payment for tenements
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Proceeds from the issue of shares
Payment of capital raising costs
Net cash from financing activities
(91,641)
-
(91,641)
550,000
(450,000)
(45,811)
7,475,132
(451,000)
7,078,321
-
(30,000)
(30,000)
-
-
-
994,365
(63,544)
930,821
Net increase/(decrease) in cash and cash equivalents
4,001,389
(320,053)
Cash and cash equivalents at the beginning of the year
233,431
553,484
Cash and cash equivalents at the end of the year
7
4,234,820
233,431
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
31
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
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. The adoption of these Accounting Standards and Interpretations did not have any material impact
on the financial performance or position of the Group.
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.
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 1(u).
(c)
Going Concern
For the year ended 30 June 2020 the entity recorded a net loss of $4,318,026 (2019: $1,993,025), had net
cash outflows from operating activities of $2,985,291, cash balance of $4,234,820 and future minimum
exploration commitments of $1,397,847 (Refer to Note 16). 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. The Company intends to raise capital through the
issue of new shares as and when required to fund the Company’s ongoing activities.
On 31 January 2020, the COVID-19 pandemic announced by the World Health Organisation is having a
negative impact on world stock markets, currencies and general business activity. The Group has developed
a policy and is evolving procedures to address the health and wellbeing of employees, consultants and
contractors in relation to COVID-19. The timing and extent of the impact and recovery from COVID-19 is
unknown but it may have an impact on activities and potentially impact the ability for the entity to raise capital
in the current prevailing market conditions.
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 as at the
date of this report.
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
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
32
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
the recoverability and classification of recorded asset amounts or liabilities that might be necessary should
the entity not continue as a going concern.
(d)
(e)
(f)
(g)
(h)
Statement of compliance
The financial report was authorised by the Board of directors for issue on 25 September 2020.
The financial report complies with Australian Accounting Standards and International Financial Reporting
Standards (IFRS).
Government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period
necessary to match them with the costs that they are intended to compensate. This includes Cash Boost
income (add any other incentives received) received due to COVID-19 during the year which has been
recognised as other income in the statement of profit or loss and other comprehensive income this year.
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 subsidiaries; Modeling Resources Pty Ltd, Landslide
Investments Pty Ltd and Australian Gold and Copper Ltd. 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.
33
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
(i)
(j)
(k)
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 and
equipment (excluding land) over their expected useful lives as follows:
Plant and equipment 3-7 years
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.
(l)
Leases
For the year ended 30 June 2020
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
•
•
leases of low value assets; and
leases with a term of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the
lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the group’s incremental borrowing rate on
commencement of the lease is used. Variable lease payments are only included in the measurement of the
lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability
assumes the variable element will remain unchanged throughout the lease term. Other variable lease
payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
• amounts expected to be payable under any residual value guarantee;
•
the exercise price of any purchase option granted in favour of the group if it is reasonable certain to
assess that option; and
• any penalties payable for terminating the lease, if the term of the lease has been estimated on the
basis of termination option being exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives
received, and increased for:
•
•
•
lease payments made at or before commencement of the lease;
initial direct costs incurred; and
the amount of any provision recognised where the group is required to dismantle, remove or restore
the leased asset.
34
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate
on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised
on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset
if, rarely, this is judged to be shorter than the lease term.
When the group revises its estimate of the term of any lease (because, for example, it re-assesses the
probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the
lease liability to reflect the payments to make over the revised term, which are discounted using a revised
discount rate (being the interest rate implicit in the lease for the remainder of the lease term or, if that cannot
be readily determined, the Group’s incremental borrowing rate at the re-assessment date). An equivalent
adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being
amortised over the remaining (revised) lease term.
The carrying value of lease liabilities is also revised when the variable element of future lease payments
dependent on a rate or index is revised or there is a revision to the estimate of amounts payable under a
residual value guarantee. In both cases an unchanged discount rate is used. In both cases an equivalent
adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being
amortised over the remaining (revised) lease term.
When the group renegotiates the contractual terms of a lease with the lessor, the accounting depends on
the nature of the modification:
•
•
•
if the renegotiation results in one or more additional assets being leased for an amount
commensurate with the standalone price for the additional rights-of-use obtained, the modification
is accounted for as a separate lease in accordance with the above policy
in all other cases where the renegotiated increases the scope of the lease (whether that is an
extension to the lease term, or one or more additional assets being leased), the lease liability is
remeasured using the discount rate applicable on the modification date, with the right-of-use asset
being adjusted by the same amount.
if the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the
lease liability and right-of-use asset are reduced by the same proportion to reflect the partial of full
termination of the lease with any difference recognised in profit or loss. The lease liability is then
further adjusted to ensure its carrying amount reflects the amount of the renegotiated payments
over the renegotiated term, with the modified lease payments discounted at the rate applicable on
the modification date. The right-of-use asset is adjusted by the same amount.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-
line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or
less. Low-value assets are items such as IT-equipment and small items of office furniture.
(m)
(n)
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.
35
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
(o)
Exploration expenditure
Exploration expenditure is expensed to the statement of profit or loss as incurred and acquisition costs are
capitalised as noncurrent 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.
Impairment testing of exploration and evaluation expenditure
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(j).
(p)
Share based payments
Equity-settled share-based payment transactions to Directors and seed capitalists for services are
measured 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.
The fair value is measured at the grant date of the equity instrument and is recognised in equity in the share-
based payment reserve. The number of instruments expected to vest is estimated based on the non-market
vesting conditions. The total expense is recognised at the date of grant of the options and rights.
(q)
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.
36
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
(r)
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
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.
(s)
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.
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.
(t)
Adoption of new and amended accounting standards
A number of new or amended standards became applicable for the current reporting period and the Group
has had to change its accounting policies and make adjustments as a result of adopting the following
standard:
― AASB 16 Leases
The impact of the adoption of this standard and the new accounting policies are disclosed below.
AASB 16 Leases
AASB 16 Leases replaces AASB 117 Leases and Interpretation 4 ‘Determining whether an Arrangement
contains a Lease.’
In accordance with the transitional provisions of AASB 16, the Group has elected to adopt AASB 16 using
the modified retrospective approach, where the lease liability is measured at the present value of future
lease payments on the initial date of application, being 1 July 2019. In determining the present value, the
discount rate is determined by reference to the group’s incremental borrowing rate on the date of initial
application of the standard (1 July 2019).
On transition to AASB 16 the Group has measured its right of use assets at the amount of the lease
liability, adjusted for any lease prepayments or accruals recognised under the old leasing standard, AASB
117.
In applying the modified retrospective approach, the Group has taken advantage of the following practical
expedients:
• A single discount rate has been applied to portfolios of leases with reasonably similar
characteristics.
• Leases with a remaining term of 12 months or less from the date of application have been
accounted for as short-term leases (i.e. not recognised on balance sheet) even though the initial
term of the leases from lease commencement date may have been more than 12 months.
37
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
The weighted average incremental borrowing rate applied to lease liabilities on 1 July 2019 was 5.00%.
The Group’s operating lease commitment at 30 June 2019 can be reconciled to the aggregate lease
liability recognised in the statement of financial position at 1 July 2019 as follows:
Operating lease commitment at 30 June 2019
Less: short-term and low value leases being accounted for off balance sheet
Effect of discounting those lease commitments at an annual rate of 5%
Add: finance lease liabilities recognised as at 30 June 2019
Lease liability recognised as at 1 July 2019
$’000
20,000
(20,000)
157,419
-
157,419
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework includes some new concepts, provides updated definitions and
recognition criteria for assets and liabilities and clarifies some important concepts. It is arranged in
eight chapters, as follows:
•
•
•
•
•
•
•
•
Chapter 1 – The objective of financial reporting
Chapter 2 – Qualitative characteristics of useful financial information
Chapter 3 – Financial statements and the reporting entity
Chapter 4 – The elements of financial statements
Chapter 5 – Recognition and derecognition
Chapter 6 – Measurement
Chapter 7 – Presentation and disclosure
Chapter 8 – Concepts of capital and capital maintenance
AASB 2019-1 has also been issued, which sets out the amendments to Australian Accounting
Standards, Interpretations and other pronouncements in order to update references to the revised
Conceptual Framework. The changes to the Conceptual Framework may affect the application of
accounting standards in situations where no standard applies to a particular transaction or event. In
addition, relief has been provided in applying AASB 3 and developing accounting policies for
regulatory account balances using AASB 108, such that entities must continue to apply the
definitions of an asset and a liability (and supporting concepts) in the Framework for the Preparation
and Presentation of Financial Statements (July 2004), and not the definitions in the revised
Conceptual Framework.
The amendments apply prospectively on or after 1 January 2020, with no material effect to the
Group.
Interpretation 23 Uncertainty over Income Tax Treatments
This interpretation clarifies how to apply the recognition and measurement requirements in AASB
112 when there is uncertainty over income tax treatments. In such a circumstance, an entity shall
recognise and measure its current or deferred tax asset or liability applying the requirements in
AASB 112 based on taxable profit (tax loss), unused tax losses, unused tax credits and tax rates
determined applying this interpretation.
Interpretation 23 is effective from annual reporting periods beginning on or after 1 July 2019. The
adoption of this interpretation has not had a significant impact on the results of the consolidated
group.
Amendments to AASB 101: Definition of Material
This Standard amends AASB 101 Presentation of Financial Statements and AAS 108 Accounting
Policies, Changes in Accounting Estimates and Errors to align the definition of ‘material’ across the
standards and to clarify certain aspects of the definition. The amendments clarify that materiality will
depend on the nature or magnitude of information. An entity will need to assess whether the
information, either individually or in combination with other information, is material in the context of
38
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
the financial statements. A misstatement of information is material if it could reasonably be expected
to influence decisions made by the primary users.
The amendments apply prospectively on or after 1 January 2020, with no material effect to the
Group.
Amendments to IAS 1: Presentation of Financial Statements
This Standard aims to improve presentation in financial statements by clarifying the criteria for the
classification of a liability as either current or non-current.
This amendment is to:
•
•
Clarify that the classification of a liability as either current or non-current is based on the
entity’s rights at the end of the reporting period
Clarify the link between the settlement of the liability and the outflow of resources from the
entity
The amendments apply prospectively on or after 1 January 2022. The client has not yet determined
the impact of this amendment.
(u)
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.
Judgements:
Leases – determining the lease term.
The Group has in place a number of leases of property and equipment with terms that can be
renewed or extended, or, where no formal extension or renewal option exist, there is a practice of
renewing or extending the lease.
In determining the lease term, management is required to determine:
• Whether there is an actual or implied extension or renewal option. An implied extension or renewal
option will exist if both the lessee and lessor would incur a more than insignificant penalty if the
lease were not extended or renewed; and
• Whether the Group is reasonably certain to exercise any actual or implied extension options, taking
into account all facts and circumstances relating to the lease.
Estimates:
Leases - determining the incremental borrowing rate.
Where the interest rate implicit in a lease is not known, the Group is required to determine the
incremental borrowing rate, being the rate of interest the Group would have to pay to borrow a similar
amount, over a similar term, with similar security to obtain an asset of similar value in a similar
economic environment.
As this information may not be readily available, the Group is required to estimate its incremental
borrowing rate using such information as is available and making adjustments to reflect the particular
circumstances of each lease.
The weighted average incremental borrowing rate applied to lease liabilities on 1 July 2019 was 5%.
Impact of Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19)
pandemic has had, or may have, on the company based on known information. This consideration
extends to the nature of the products and services offered, customers, supply chain and staffing.
Other than as addressed in specific notes, there does not currently appear to be either any significant
impact upon the financial statements or any significant uncertainties with respect to events or
conditions which may impact the company unfavourably as at the reporting date or subsequently as a
result of the Coronavirus (COVID-19) pandemic. The areas involving a higher degree of judgement
or complexity, or areas where assumptions and estimates are significant to the financial statements
are:
39
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
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 been abandoned or sold will be written off or written down.
Impairment 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(o). The carrying amounts of exploration and evaluation assets are set out in Note 11.
Share-based payments
The Group measures the cost of equity-settled transactions by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using the Black-
Scholes model taking into account the terms and conditions upon which the instruments were
granted. The accounting estimates and assumptions relating to equity-settled share-based payments
would have no impact on the carrying amounts of assets and liabilities within the next annual
reporting period but may impact profit or loss and equity. Refer to note (p).
Consolidated
Note 2: Other income
JV management fee
Contract discontinuance fee received
COVID 19 Cash Boost subsidy
Office sub-lease
Interest income
Other
Note 3: Expenses
Corporate and administration expenses
Depreciation
Director and Company Secretarial Fees
Consulting Fees
Investor Relations
Legal Fees
Travel
Employee Expenses
Rental Expense
Contract discontinuance settlements
Other
Exploration and evaluation expenses
Exploration expenses incurred
Less: reimbursement from JV partner
Net exploration and evaluation expense
2020
$
-
100,000
96,005
22,041
15,881
20,567
254,494
38,438
212,570
153,115
89,704
89,281
90,058
235,648
45,350
60,000
375,274
1,389,438
2019
$
92,492
-
-
-
4,452
345
97,289
40,706
109,500
39,821
21,834
146,674
40,124
553,827
73,663
-
103,333
1,129,482
1,466,443
-
1,466,443
1,622,795
(1,151,088)
471,707
40
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
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
At the statutory income tax rate of 27.5% (2019: 27.5%)
Add
- Non-assessable income
- Share based payments
- Deductible equity costs
- Non-deductible expenses
- Tax loss not brought to account
Income tax (benefit) reported in the statement of
comprehensive income
Consolidated
2020
$
2019
$
(4,318,026)
(1,187,457)
(1,993,025)
(548,082)
(26,401)
494,034
(52,991)
1,422
771,393
-
11,797
(28,186)
-
576,471
-
-
(b) Unrecognised deferred tax balances
The following deferred tax assets have not been brought to
account
Deferred tax assets comprise:
Accruals
Operating lease
Employee entitlements
Share issues & capital costs
Exploration expenditure
Losses available for offset against future income – revenue
Deferred tax liabilities comprise:
Prepayments
Capitalised expenditure deductible for tax purposes
4,400
78
27,092
218,786
40,963
2,274,005
2,565,324
9,051
1,081
10,132
19,668
-
16,560
125,276
49,708
1,508,435
1,719,647
866
6,015
6,881
Net unrecognised deferred tax assets
2,555,192
1,712,766
Deferred tax assets have not been recognised in respect of these items because it is not certain that future taxable
profit will be available against which the Group can utilise the benefit thereof.
Tax Losses
As at 30 June 2020, the Consolidated Entity has $8,269,109 (2019: $5,485,218) of taxable losses that are available
for offset against future taxable profits of the consolidated entity, subject to the loss recoupment requirements in the
Income Tax Assessment Act 1997. No deferred tax assets have been recognised in the Statement of Financial
Position in respect of the amount of these losses, as it is not presently probable future taxable profits will be available
against which the Company can utilise the benefit.
41
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
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
The diluted loss per share is not reflected as the result is anti-dilutive.
Consolidated
2020
$
2019
$
0.0302
0.0176
(4,318,026)
(1,993,025)
142,824,641
112,920,483
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, Landslide Investments Pty
Ltd and incorporated Australian Gold and Copper 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
Consolidated
2020
$
2019
$
4,234,820
4,234,820
233,431
233,431
(Refer to Note 15(f) which contains risk exposure analysis for cash and cash equivalents)
Note 8: Other receivables
Goods and services tax receivable
Other
No receivables are past their due date and therefore no impairment recognised.
Consolidated
2020
$
2019
$
29,493
44,184
73,677
98,409
10,152
108,561
42
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
Note 9: Property, plant and equipment
Office equipment
- At cost
- Accumulated depreciation
Total Office Equipment
Information Technology
- At cost
- Accumulated depreciation
Total Information Technology
Motor Vehicles
- At cost
- Accumulated depreciation
Total Motor Vehicles
Exploration Equipment
- At cost
- Accumulated depreciation
Total Exploration Equipment
Consolidated
2020
$
2019
$
21,498
(12,400)
9,098
70,902
(65,515)
5,387
76,293
(5,086)
71,207
53,822
(49,891)
3,931
10,241
(10,241)
-
66,811
(52,264)
14,548
-
-
-
53,822
(31,950)
21,872
Total property, plant and equipment
89,623
36,420
Movement in carrying amounts
Movements in the carrying amounts for each class of property, plant and equipment between the beginning and
the end of the year
2019
Consolidated
Office
Equipment
Information
Technology
Motor
Vehicles
Exploration
Equipment
Total
Property
Plant &
Equipment
Balance at the beginning of the year
Acquisitions
Depreciation expense
Disposals
Carrying amount at the end of the year
3,982
-
(3,982)
-
-
31,623
1,709
(18,784)
-
14,548
-
-
-
-
-
39,814
-
(17,942)
-
75,419
1,709
(40,708)
-
21,872
36,420
2020
Consolidated
Office
Equipment
Information
Technology
Motor
Vehicles
Exploration
Equipment
Total
Property
Plant &
Equipment
Balance at the beginning of the year
Acquisitions
Depreciation expense
Disposals
-
11,257
(2,159)
-
14,548
4,091
(13,250)
-
-
76,293
(5,086)
-
21,872
-
(17,943)
-
36,420
91,641
(38,438)
-
Carrying amount at the end of the year
9,098
5,389
71,207
3,929
89,623
43
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
Note 10: Security Bonds
Office bond
Tenement bonds
Note 11: Exploration project acquisition costs
Opening balance
Project acquisition costs
Impairment of acquired exploration projects*
Acquisition costs in respect of areas of
interest in the exploration phase
Consolidated
2020
$
2019
$
1,300
90,000
91,300
1,300
90,000
91,300
Consolidated
2020
$
2019
$
1,628,350
-
-
2,043,350
30,000
(445,000)
1,628,350
1,628,350
*$445,00 was impaired during the 2019 financial year in relation to the Mt Venn area of interest in order to bring the
carrying value of the exploration asset down to the recoverable amount based on an independent valuation report
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.
Project acquisition costs
The project acquisition costs of $30,000 in the 2019 financial year were in relation to the acquisition of Landslide
Investments Pty Ltd, the owner of the Yamarna South tenement. In consideration for the acquisition of E38/2918 the
Company has agreed to the following payment structure with Landslide Investment’s shareholder (the seller):
Consideration
•
Payment of A$20,000 in cash and A$10,000 worth of ordinary fully paid MAG shares;
The above transaction was completed on 9 October 2018. The Company paid $20,000 in cash, and satisfied the
share based payment of A$10,000 MAG shares by the issue of 362,942 fully paid ordinary shares at $0.0276 per
share. The number of issued shares was arrived at by calculation based on a 30-day Volume Weighted Average
Price during the 30 days preceding 23 March 2018, the date the offer to purchase was made and accepted, to the
value of $40,000 as per the Agreement and was agreed by both Magmatic and the seller.
44
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
Note 12: Trade and other payables
Current Trade and other payables
Consolidated
Trade creditors *
Other creditors
Goods and services tax payable
JOGMEC – Funds Received in Advance
* Trade payables are non-interest bearing and are normally paid on 30 day terms.
Note 13: Issued capital
(a) Ordinary shares issued
2020
$
135,559
153,228
15,850
-
304,637
2019
$
224,713
625,452
4,448
47,193
901,806
Consolidated
2020
$
2019
$
173,115,298 (2019: 117,242,568) ordinary shares
15,071,988
6,733,855
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
Balance as at 30 June 2018
31 August 2018
8 October 2018
Details
Renounceable entitlements issue
Landslide Investments Vendor Consideration
Capital Raising Expenses
Number of
shares
92,020,485
24,859,141
362,942
$
5,838,182
994,365
10,000
(108,692)
Balance as at 30 June 2019
117,242,568
6,733,855
14 October 2019
23 October 2019
30 October 2019
25 November 2019
25 November 2019
6 January 2020
20 February 2020
4 March 2020
18 May 2020
20 May 2020
North Iron Cap Discontinuance Settlement
Tranche 1 Share Placement
Class ‘B’ Performance Shares Issue
Tranche 2 Share Placement
Options exercised at $0.03
Options exercised at $0.10
Share Placement
Options exercise at $0.30
Options exercised at $0.10
Options exercised at $0.30
Capital Raising Expenses
Balance as at 30 June 2020
1,000,000
10,375,000
7,440,000
17,125,000
2,000,000
306,433
16,666,667
12,593
17,000
930,037
110,000
830,000
1,104,000
1,370,000
60,000
30,644
5,000,000
3,778
1,700
279,011
(451,000)
173,115,298
15,071,988
45
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
(c) Movements in Class B Performance shares
Class B Performance shares:
Beginning of the financial year
Issued during the year
Expired during year
Balance at end of financial year
(d) Movements in share options
Number of performance shares
2020
2019
8,000,000
(7,440,000)
(560,000)
8,000,000
-
-
-
8,000,000
2020
Weighted
average
exercise price
2019
Weighted
average
exercise price
Number of
Options
Number of
Options
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
Converted during the year
Expired during the year
Balance at end of financial year
17,980,613
-
(942,630)
(17,037,983)
-
Listed Options to acquire ordinary fully
paid shares at $0.10 on or before
30 August 2021:
Beginning of the financial year
(3) Issued during the year
Converted during the year
Expired during the year
Balance at end of financial year
26,859,141
-
(323,433)
-
26,535,708
0.30
-
0.30
0.30
-
0.10
-
0.10
-
0.10
17,980,613
-
-
-
17,980,613
-
26,859,141
-
-
26,859,141
0.30
-
-
-
0.30
-
0.10
-
-
0.10
2020
2019
Number of
Options
Weighted
average
exercise price
Number of
Options
Weighted
average
exercise price
(1) 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
(2) 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
-
-
-
-
-
-
-
-
2,500,000
-
(2,500,000)
-
2,500,000
-
(2,500,000)
-
0.205
-
0.205
-
2,500,000
-
-
2,500,000
0.20
-
0.20
-
0.205
-
-
0.205
46
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
2020
2019
Number of
Options
Weighted
average
exercise price
Number of
Options
Weighted
average
exercise price
(2) Unlisted Options to acquire
ordinary fully paid shares on or before
29 May 2024:
Beginning of the financial year
Issued during the year
Converted during the year
Expired during the year
Balance at end of financial year
(4) Unlisted Options to acquire
ordinary fully paid shares on or before
14 October 2022:
Beginning of the financial year
Issued during the year
Converted during the year
Expired during the year
Balance at end of financial year
2,000,000
-
(2,000,000)
-
-
-
3,000,000
-
-
3,000,000
0.03
-
0.03
-
-
-
0.10
-
-
0.10
-
2,000,000
-
-
2,000,000
-
-
-
-
-
-
0.03
-
-
0.03
-
-
-
-
-
2020 2019
Issued during the year
Converted during the year
Expired during the year
Balance at end of financial year
(6) Unlisted Options to acquire
ordinary fully paid shares on or before
31 January 2023:
Beginning of the financial year
Issued during the year
Converted during the year
Expired during the year
Balance at end of financial year
Number of
Options
30,000,000
-
-
30,000,000
-
14,500,000
-
-
14,500,000
Weighted
average
exercise price
Number of
Options
Weighted
average exercise
price
0.1426
-
-
0.1426
-
0.4431
-
-
0.4431
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
(1) 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. These options have expired.
Tranche 2: 20 cents (20 cents was the higher of the two) Monte valuation = 19.7 cents. These options have expired.
Tranche 3: 20.5 cents (5% discount to the 20 Day VWAP was higher of the two) These options have expired.
(2) During the previous year, the Group issued options with the fair value of $42,898 to Element 25 Limited (formerly
Montezuma) which vested immediately. The options were valued using a Black-Scholes option pricing model using
the following inputs:
Grant date
share price
Exercise
Price
Expected
volatility
Option
Life
Dividend
Yield
7 May 2019
$0.03
95%
5.12 years
0.00%
Interest
Rate
1.07%
Fair value per
option
$0.0214
These options were all exercised during the year.
(3) During the previous year the announced a rights issue where 1 free attaching option would be issued for every
one share subscribed for, resulting in 24,859,141 free attaching options issued. In addition to this, 2,000,000
options were issued to the broker as part of the transaction. The fair value of the service provided was not able to
be estimated, therefore a Black-Scholes model was used to fair value these options using the following inputs:
Option
Grant date
share price
Life
Fair value per
option
Expected
volatility
Dividend
Yield
Exercise
Price
Interest
Rate
30 July 2018
$0.022
3.09 years
The share-based payment expense of $45,148 has been offset against issued capital as a capital raising cost.
323,433 of these options were exercised during the year.
0.00%
0.96%
$0.10
95%
(4) During the year, the Group issued options with the fair value of $126,398 to Blue Cap Mining Pty Ltd as
settlement of a contract discontinuance which vested immediately. The options were valued using a Black-
Scholes option pricing model using the following inputs:
Grant date
share price
Exercise
Price
Expected
volatility
Option
Life
Dividend
Yield
11 October
2019
$0.10
100%
3.011 years
0.00%
Interest
Rate
0.68%
Fair value per
option
$0.042
(5) During the year, the Group issued options with the fair value of $1,187,520 to the Company’s corporate
adviser, two non-executive directors and its company secretary as consideration for their engagement which
vested immediately. 20,000,000 of these options were valued at $140,000 based on a fixed percentage of
funds the corporate advisers raised while 10,000,000 of the options issued to the non-executive directors and
the company secretary were valued using a Black-Scholes option pricing model using the following inputs:
Grant date
share price
Exercise
Price
Expected
volatility
Option
Life
Dividend
Yield
$0.10
100%
3.025 years
0.00%
Interest
Rate
0.68%
Fair value per
option
$0.0134
22 November
2019
29 November
2019
$0.10
100%
3.005 years
0.00%
0.68%
$0.097
The share-based payment expense of $140,000 has been offset against issued capital as a capital raising cost
48
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
(6) During the year, the Group issued 13,500,000 options with the fair value of $1,709,438 in accordance with
the Company’s employee share ownership plan to certain key management personnel which vest progressively
throughout the period during which they can be exercised but lapse if their employment is terminated. The
options were valued using a Black-Scholes option pricing model using the following inputs:
Grant date
share price
Exercise
Price
Expected
volatility
Option
Life
Dividend
Yield
$0.37935
100%
3.025 years
0.00%
Interest
Rate
0.73%
Fair value per
option
$0.135
$0.63225
100%
3.025 years
0.00%
0.73%
$0.109
23 January
2020
23 January
2020
(6) During the year, the Group issued 1,000,000 options with the fair value of $126,371 to the Company’s
investor relations consultancy firm as part of their engagement terms which vest immediately but lapse if their
engagement is terminated. The options were valued using a Black-Scholes option pricing model using the
following inputs:
Grant date
share price
Exercise
Price
Expected
volatility
Option
Life
Dividend
Yield
$0.37935
100%
3.025 years
0.00%
Interest
Rate
0.73%
Fair value per
option
$0.135
$0.63225
100%
3.025 years
0.00%
0.73%
$0.109
4 December
2019
4 December
2019
Note 14: Reserves
Capital Restructure reserve
Opening balance
Expense for the year
Closing balance
Share-based payment reserve
Opening balance
Share based acquisition cost
Performance share conversion
Share based expense for year
Share based capital raising costs
Closing balance
Nature of reserves:
(a) Capital restructure reserve
Consolidated
2020
$
2019
$
250
-
250
250
-
250
Consolidated
2020
$
2019
$
3,156,499
-
(1,104,000)
1,700,486
-
3,068,453
-
-
42,898
45,148
3,752,985
3,156,499
The capital restructure reserve arises from the acquisition of Modeling Resources Pty Ltd
(b) Share-based payment reserve
This reserve records the value of equity instruments issued to directors, employees and suppliers as
recognition for services provided.
49
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
Note 15: 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 2020, if interest rates had changed by + 50 basis points and all other variables were held constant, the
Group’s loss would have been $9,465 (2019: $1,514) lower as a result of higher interest income on cash and cash
equivalents. If interest rates dropped on average – 50 basis points then the Group’s loss would have increased the
by $9,465 (2019: $1,514).
(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.
50
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
2020
Weighted
Average
Interest
Rate
Financial assets
Cash and cash equivalents – non - interest bearing
Cash and cash equivalents – interest bearing
Trade and other receivables
n/a
0.35%
n/a
Less than
1 month
1-3
months
3 months
– 1 year
5 + years
$
$
84,268
-
73,677
157,945
-
4,150,552
-
4,150,552
$
-
-
-
-
$
-
-
-
-
Financial liabilities
Trade and other payables
Lease Liabilities
n/a
5%
206,119
4,100
210,219
41,417
12,300
53,717
57,101
22,800
79,901
-
76,319
76,319
$
-
-
-
-
-
-
2019
Financial assets
Cash and cash equivalents – non - interest bearing
Cash and cash equivalents – interest bearing
Trade and other receivables
n/a
0.03%
n/a
Weighted
Average
Interest
Rate
$
132,343
101,088
108,561
341,992
Less than
1 month
1-3
months
3 months
– 1 year
$
-
-
-
-
$
-
-
-
-
Financial liabilities
Trade and other payables
n/a
406,020
406,020
396,575
396,575
99,212
99,212
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.
Note 16: Commitments and contingencies
In order to maintain an interest in the exploration tenements in which the Group is involved, the Group is committed
to meet the conditions under which the tenements were granted. The timing and amount of exploration expenditure
commitments and obligation of the Group are subject to the minimum expenditure commitments over the life of the
licenses, required as per the Mining Act 1978, as amended, and may vary significantly from the forecast based upon
the results of the work performed which will determine the prospectivity of the relevant area of interest. Currently,
the minimum expenditure commitment for the granted tenements are approximately $1,397,847 (2019: $264,599).
Contingent liabilities
From time to time the Company may be party to claims from suppliers and service providers arising from operations
in the ordinary course of business.
As at the date of this report there are no claims or contingent liabilities that are expected to materially impact, either
individually or in aggregate, the Company’s financial position or results from operations, other than as set out below.
51
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
Mt Venn project
Pursuant to the Purchase agreement (details refer Note 11), the Group has the following deferred consideration
obligations with respect to the Mt Venn project:
Event
Consideration
Relevant condition (if any)
Performance hurdle 1
Performance hurdle 2
$350,000 cash; and
$350,000 in ordinary fully paid
Magmatic shares
$350,000 cash; and
$350,000 in ordinary fully paid
Magmatic shares
Magmatic defining a JORC 2012 Mineral
Resource of 20Mt @>= 1% CuEq
Magmatic making a Decision to Mine
Event
Consideration
Relevant condition (if any)
Royalty payment
2% Net Smelter Royalty (NSR) on
production
Magmatic has been granted a buyback
option over the NSR in return of a payment
of $5,000,000
The consideration will become due and payable in the event that the relevant conditions are met. As at the
reporting date, the conditions in respect of each of the items have not been met and therefore the amounts are
recognised as contingent liabilities.
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 17: Key management personnel disclosures
(a) Directors
At the date of this report the directors of the Company are:
D Richardson – Executive Chairman (elected Chairman 3 February 2020)
P Duerden – Managing Director (appointed 3 February 2020)
D Flanagan – Non-Executive Director (appointed 28 October 2019)
D Berrie – Non-Executive Director and Joint Company Secretary
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:
M Franklin – Chief Financial Officer
52
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
(c) Key management personnel compensation
Short-Term
Post-employment
Share-based payments
Termination benefits
Consolidated
2020
$
533,872
87,708
997,936
-
1,619,516
2019
$
427,756
42,038
-
25,000
494,794
Detailed remuneration disclosures of directors and key management personnel are in pages 19 to 24 of this
report.
There were no loans to individuals or members of the key management personnel during the financial year or the
previous financial year.
During the financial year the son of Mr Richardson provided casual administrative services to the Company to the
value of $538. These services were provided on normal commercial terms and conditions.
Mr Richardson’s related entity D&R Superannuation Fund lent $50,000 from 26 July 2019 to 27 November 2019 to
the group and it was paid interest at the rate of 10% per annum on that loan which totalled $1,699.
Mr Richardson’s related entity Bilingual Software Pty Ltd lent $50,000 from 2 August 2019 to 28 November 2019
and a further $90,000 from 30 August 2019 to 28 November 2019 to the group and it was paid interest at the rate
of 10% per annum on that loan which totalled $3,874.
During the year Mr Berrie’s related entity Davthea Pty Ltd lent $25,000 from 28 August 2019 to 26 November 2019,
a further $5,000 from 29 August 2019 to 26 November 2019, a further $15,000 from 11 September 2019 to 26
November 2019, followed by a further $15,000 from 12 September 2019 to 26 November 2019 to the group and it
was paid interest at the rate of 10% per annum on that loan which totalled $1,368.
Note 18: Subsidiaries
Name of entity
Country of
incorporation
Class of shares
Equity holding
Modeling Resources Pty Ltd
Landslide Investments Pty Ltd
Australian Gold and Copper Ltd
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
2020
%
100
100
100
2019
%
100
100
100
53
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
Note 19: 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
(4,318,026)
(1,993,025)
Consolidated
2020
$
2019
$
Share based payment expense
Finance cost (equity)
Share issue costs
Depreciation
ROU Asset Amortisation
Exploration asset impairments
Movements in working capital
1,700,486
-
-
38,438
46,094
-
42,898
-
-
40,706
-
445,000
(Increase) / Decrease in other receivables
(Increase) in prepayments
Increase / (Decrease) in trade and other payables
1,700
(29,762)
(424,221)
(95,773)
(3,150)
322,469
Net cash outflows from operating activities
(2,985,291)
(1,240,875)
b) Non-cash financing and investing activities
There were no non-cash financing and investing activities in the financial year ended 30 June 2020.
During the financial year ended 30 June 2019, the Group acquired Landslide Investments Pty Ltd including its
Yamarna project for $30,000 cash and $10,000 in Magmatic Resources shares (as per note 11). The share
consideration component of this transaction is not reflected in the statement of cashflows.
Note 20: 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
2020
$
4,219,753
1,631,034
5,850,787
2019
$
122,150
1,628,300
1,750,451
99,899
99,899
347,542
347,542
5,750,888
1,402,909
15,117,136
3,707,837
(13,074,085)
6,693,380
3,196,974
(8,487,445)
5,750,888
1,402,909
54
Magmatic Resources Limited
ABN 32 615 598 322
Notes to the consolidated financial statements for the
year ended 30 June 2020
Financial performance
Loss for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Note 21: Events after the reporting date
(4,551,182)
182,975
(4,368,207)
(1,022,528)
(487,898)
(1,510,426)
On 31 January 2020, the World Health Organisation (WHO) announced a global health emergency because of a new
strain of coronavirus originating in Wuhan, China (COVID-19 outbreak) and the risks to the international community as
the virus spreads globally beyond its point of origin. Because of the rapid increase in exposure globally, on 11 March
2020, the WHO classified the COVID-19 outbreak as a pandemic.
The full impact of the COVID-19 outbreak continues to evolve at the date of this report. The Group is therefore uncertain
as to the full impact that the pandemic will have on its financial condition, liquidity, and future results of operations
during FY2021.
Management is actively monitoring the global situation and its impact on the Group's financial condition, liquidity,
operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global
responses to curb its spread, the Group is not able to estimate the effects of the COVID-19 outbreak on its results of
operations, financial condition, or liquidity for the 2021 financial year.
The Company announced to the ASX on 18 September 2020 that its wholly owned subsidiary, Australian Gold and
Copper Limited (AGC) has entered into a binding term sheet to purchase two Central Lachlan gold/polymetallic projects
from private company, New South Resources Pty Ltd (NSR).
NSR will receive as consideration AGC shares amounting to a 40% interest in AGC pre the initial public offering (IPO)
proposed to be undertaken by AGC for their Cargelligo and Gundagai projects (NSR Tenements). The Company will
hold the remaining 60% in AGC pre-IPO.
Subject to shareholder approvals, and all necessary regulatory approvals, compliance with ASX escrow requirements
and waivers, the Company and NSR have the right to distribute in specie up to 50% of their AGC holdings to their
respective shareholders. The Company considers the combined AGC project portfolio to provide multiple drill ready
discovery opportunities of
‘Cobar-Hera-style’
goldpolymetallic mineralisation within the Central Lachlan Fold Belt. The demerger of Moorefield will allow the Company
to focus on its East Lachlan gold and gold-copper porphyry projects.
‘Fosterville-style’ orogenic gold, McPhillamys-style gold and
The demerger of Moorefield and the NSR acquisitions remain contingent on the Company’s shareholders
approval, satisfactory tax ruling being received from the ATO regarding tax implications of a distribution in specie for
Magmatic shareholders, necessary regulatory approvals, compliance with 2 ASX escrow requirements and waivers
and will be considered at Magmatic’s upcoming Annual General Meeting.
Note 22: 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
Total auditor’s remuneration
Consolidated
2020
$
2019
$
42,902
42,902
42,902
28,077
28,077
28,077
55
Magmatic Resources Limited
ABN 32 615 598 322
Directors’ declaration
1.
In the opinion of the directors of Magmatic Resources Limited (the “Company”):
a.
b.
c.
the accompanying financial statements and notes are in accordance with the Corporations Act 2001
including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance
for the financial year then ended; and
ii. complying with Accounting Standards, Corporations Regulations 2001, professional 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 2020.
This declaration is signed in accordance with a resolution of the Board of Directors.
D Richardson
Chairman
Perth, Western Australia
25 September 2020
56
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 2020, 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 2020 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 (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
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 a firms. Liability limited by a scheme approved under Professional Standards Legislation.
57
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.
Valuation of Share Based Payments
Key audit matter
How the matter was addressed in our audit
During the year, the Group issued
options to consultants and key
management personnel as disclosed in
Note 13, which have been accounted for
as share-based payments.
Share-based payments are a complex
accounting area and due to the complex
and judgemental estimates used in
determining the fair value of the share-
based payment, we consider it to be a
key audit matter.
Our audit procedures included, but were not limited to:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Reviewing relevant supporting documentation to
obtain an understanding of the contractual nature
and terms and conditions of the share-based
payment arrangements;
Holding discussions with management to
understand the share-based payment transactions
in place;
Reviewing management’s determination of the
fair value of the share-based payments granted,
considering the appropriateness of the valuation
models used and assessing the valuation inputs;
Involving our valuation specialists, to assess the
reasonableness of management’s valuation inputs
in respect of volatility;
Assessing the allocation of the share-based
payment expense over the relevant vesting
period; and
Assessing the adequacy of the related disclosures
in Note 13 and Note 14 to the Financial
Report.
58
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 2020, 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 at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
59
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 19 to 24 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Magmatic Resources Limited, for the year ended 30 June
2020, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Dean Just
Director
Perth, 25 September 2020
60
Magmatic Resources Limited
ABN 32 615 598 322
Additional Shareholder Information
The following additional information is current as at 11 September 2020.
CORPORATE GOVERNANCE:
The Company’s Corporate Governance Statement is available on the Company’s website at
www.magmaticresources.com/corporate-governance
SUBSTANTIAL SHAREHOLDERS:
Holder Name
BILLINGUAL SOFTWARE PTY LTD AND D & R RICHARDSON
GOLD FIELDS AUSTRALIA PTY LTD
DAVTHEA PTY LTD
Holding
% IC
42,442,573
19,200,000
14,029,044
24.33%
11.09%
8.10%
Ordinary Shares:
Holdings Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 -
Totals
Holders
30
232
188
545
162
1,157
Total Units
4,472
85,541
1,641,215
21,428,005
149,290,118
172,449,351
%
0.00
0.43
0.95
12.38
86.24
100.00
There are 125 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
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
BILINGUAL SOFTWARE PTY LTD
GOLD FIELDS AUSTRALIA PTY LTD
DAVTHEA PTY LTD
MR DAVID RICHARDSON + MRS RYOKO RICHARDSON
BUDWORTH CAPITAL PTY LTD
MR NEVRES CRLJENKOVIC
DUERDEN INVESTMENTS PTY LIMITED
SEASCAPE CAPITAL PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NINAN PTY LTD
WOMBAT SUPER INVESTMENTS PTY LTD
SERCA SUPERFUND PTY LTD
MR ALAN JOHN TATE
EXECUTIVE RISK SOLUTIONS PTY LTD
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
JAMESON FARM PTY LTD
GOSOJO PTY LTD
Shares Held
36,668,823
19,200,000
14,029,044
5,448,751
5,000,000
5,000,000
3,984,782
3,125,000
2,447,697
2,317,774
2,000,000
1,634,302
1,487,572
1,470,588
1,447,618
1,405,735
1,250,000
1,165,000
%
21.18
11.09
8.10
3.15
2.89
2.89
2.30
1.81
1.41
1.34
1.16
0.94
0.86
0.85
0.84
0.81
0.72
0.67
61
19
20
Magmatic Resources Limited
ABN 32 615 598 322
CRLJENKOVIC SUPER FUND PTY LTD
ATB JAPAN LIMITED
Total
Total remaining holders
1,125,788
1,107,059
111,315,533
61,799,765
LISTED OPTIONS EXERCISABLE AT $0.10 EXPIRING 30 AUGUST 2021:
Holdings Ranges
Holders
Total Units
%
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 -
Totals
6
19
14
70
26
135
1,313
61,723
120,944
2,643,677
23,708,051
26,535,708
There are 239 shareholders with less than a marketable parcel.
THE TOP 20 HOLDERS OF LISTED OPTIONS EXPIRING 30 AUGUST 2021 ARE:
1
2
3
4
5
6
7
8
9
9
9
12
13
14
14
16
17
18
19
20
Holder
MR NEVRES CRLJENKOVIC
MR DAVID RICHARDSON + MRS RYOKO RICHARDSON
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
SERCA SUPERFUND PTY LTD
MR TERENCE PATRICK FARRELL
CRLJENKOVIC SUPER FUND PTY LTD
DAVTHEA PTY LTD
MR GRAHAM ROBERT FOREMAN
ACTIVEST CAPITAL PTY LTD
GOSOJO PTY LTD
MRS DEVINA LOUISE MAHER
MR ALAN GOODFELLOW
MR DANIEL ELLIDGE
MR PAUL JOSEPH MASSARA
MR PETER RAYMOND MURRELL
INTRAVISION SOFTWARE PTY LTD
JBM TRADING PTY LTD
ERIC MCKENZIE NOMINEES PTY LTD
MR BRETT JAMES RUDD
MR TIMOTHY JARRAD BAILEY
Total
Total remaining holders
Holding
4,940,000
4,918,751
4,653,062
1,445,043
1,010,000
880,600
675,000
600,000
500,000
500,000
500,000
450,000
400,000
250,000
250,000
214,808
200,000
196,078
190,000
165,000
0.65
0.64
64.30
35.70
0.00
0.23
0.46
9.96
89.35
100.00
%
18.62
18.54
17.54
5.45
3.81
3.32
2.54
2.26
1.88
1.88
1.88
1.70
1.51
0.94
0.94
0.81
0.75
0.74
0.72
0.62
22,938,342
3,597,366
86.44
13.56
62
Magmatic Resources Limited
ABN 32 615 598 322
UNQUOTED EQUITY SECURITIES
Number
Number of
Holders
+Class
Escrow
Period
Holders of more than 20%
3,000,000
1
Unlisted options*
N/A
Blue Capital Managers Pty Ltd ATF Blue Capital
Trust No 2
(3,000,000 options)
22,000,000
4
Unlisted options**
N/A
N/A
N/A
Budworth Capital Pty Ltd
(6,666,667 options)
Seascape Capital Pty Ltd
(6,666,667 options)
Westgate Capital Pty Ltd
(6,666,666 options)
8,000,000
9,700,000
2
6
Unlisted options****
N/A
Unlisted options***
N/A
Mr David Nathan Flanagan
(6,000,000 options)
Duerden Investments Pty Ltd
(4,000,000 options)
Bilingual Software Pty Ltd
(2,700,000 options)
Duerden Investments Pty Ltd
(2,000,000 options)
Bilingual Software Pty Ltd
(1,300,000 options)
4,800,000
6
Unlisted options*****
N/A
*Exercisable at $0-10 on or before 29 May 2024.
**Exercisable at $0-10 on or before 30 November 2022.
***Exercisable at $0-26 on or before 30 November 2022.
****Exercisable at $0-363 on or before 31 January 2023.
*****Exercisable at $0-605 on or before 31 January 2023.
Use of Funds
The entity has used the cash and assets in a form readily convertible into cash in a way that is
consistent with its business objectives.
There is no current buy-back.
63
Magmatic Resources Limited
ABN 32 615 598 322
Tenement Listing
Project Area
Tenement Details
% Held
Wellington North – Duke
Myall
Parkes – Alectown
EL6178
EL6913
EL7424
Wellington North – Bodangora EL7440
Moorefield
Parkes
Wellington North - Combo
Moorefield - Derriwong
Yamarna
Yamarna North
Cowderoy Hill
Mt Venn
Mt Venn North
EL7675
EL7676
EL8357
EL8669
E38/2918
E38/3327
E38/3312
E38/2961
E38/3351
100
100
100
100
100
100
100
100
100
100
100
100
100
64