ANNUAL REPORT FOR THE YEAR
ENDED 30 JUNE 2020
Manuka Resources Ltd ABN 80 611 963 225
CORPORATE DIRECTORY
Directors
Dennis Karp – Executive Chairman
Lawyers
K&L Gates
Nick Lindsay – Non-Executive Director
Level 31, 1 O’Connell Street
Anthony McPaul – Non-Executive Director
Sydney NSW 2000
Key Management
Haydn Lynch – Chief Operating Officer
Joint Company Secretaries
Toni Gilholme
Dennis Wilkins
Registered Office
Level 4, Grafton Bond Building
201 Kent Street
Sydney NSW 2000
www.manukaresources.com.au
Auditor
Grant Thornton Audit Pty Ltd
Level 17, 383 Kent Street
Sydney NSW 2000
Share Registry
Automic Group Pty Ltd
Level 5, 126 Phillip Street
Sydney , NSW 2000
Stock Exchange Listing
Manuka Resources Limited shares (Code: MKR) are
listed on the Australian Securities Exchange.
Manuka Resources Ltd
For the year ended 30 June 2020
Contents
Executive Chairman’s Letter
Review of Operations
Mineral Resources and Ore Reserves Statement
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
ii
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Manuka Resources Ltd
For the year ended 30 June 2020
2
Executive Chairman’s Letter
Pursuit of excellence in precious metals production
As your Executive Chairman, I am very pleased to present our maiden report as a company listed on the
Australian Securities Exchange (‘ASX’). We are an exciting company and extremely well positioned to capitalise
on current market conditions for the benefit of all shareholders and other stakeholders.
We do not forecast commodity prices, however I have been active in commodity and financial markets for
over 35 years, and the current climate for gold and silver is exceptional. Manuka Resources Limited has a large
land holding for a young company with outstanding prospects for increasing our gold and silver resource
inventory. We believe that silver has been undervalued for an extended period of time which has been
reflected in the “higher than normal” gold-silver ratio despite there being a silver supply deficit for the past 5
years. This imbalance appears likely to be rectified in the near term.
Manuka was privileged to join the main board of the ASX on 14 July 2020, and at the time I noted that we were
Australia’s newest gold and silver producer, and as far as I can determine, this remains the case.
The past 12 months have been very active, as we secured a debt facility for the refurbishment and upgrade of
the Wonawinta plant (which we completed between August and December 2019), commenced mining at Mt
Boppy, built a production team from scratch and commenced gold production at Wonawinta on the Mt Boppy
gold ores. We also progressed our IPO and admission onto the ASX, and we received our letter of acceptance
on 30th June 2020.
By way of background, Manuka Resources Limited was incorporated in April 2016 for the purpose of
purchasing the various assets comprising the Wonawinta silver project. This occurred in August 2016, and in
June 2019 Manuka completed purchase of Mt Boppy Resources Pty Ltd, which is the corporate owner of the
assets and tenements included in the Mt Boppy gold project. These two projects, which include more than
1,130km2 of mining licences and exploration licences, provide a terrific platform from which to build a
substantial company focused on mining and processing in the Cobar Basin.
It is my objective to lead Manuka on its journey to be a profitable gold producer at Mt Boppy, followed by
returning the Wonawinta project to its historical position as Australia’s largest primary silver producer - again
with a focus on profitable production. On behalf of the Company I would like to assure all that we will also
strive to ensure both objectives are achieved within a framework of safety, responsibility, commitment to local
communities, and sustainability.
We produced 4,500oz Au in our first quarter of gold production. We are confident of reaching our 12-month
production target of over 24,000oz Au. As announced to the market, recent drilling success indicates that we
are likely to produce in excess of the target. We have commenced exploration programs at both Mt Boppy
and Wonawinta and are committed to exploration through the second half of calendar 2020. We await the
results of this exploration with anticipation, and initial indications are very pleasing.
Manuka Resources Ltd
For the year ended 30 June 2020
3
This is a good opportunity to again outline our three mining projects (one current and two future) at Manuka.
1) Our current mining project is the Mt Boppy gold project. This project is 45km east of Cobar and has its
origins dating back to between 1895 and 1925 when it was one of the richest gold mines in NSW
(producing circa 500,000oz Au at 15g/t Au). We will be mining and processing the gold ores from this
project through our Wonawinta plant until June 2021 from ore included in the existing JORC reserve
(31,000oz at 3.1g Au/t). We have commenced exploring for resource extension at this time.
2) We promptly follow the Mt Boppy gold production with the mining and processing of silver ores from
our Wonawinta silver project. Historically the largest producer of primary silver in Australia,
Wonawinta is currently engaged in an infill drilling program seeking to convert part of its 52 million oz
Ag resource into reserve. Company expectations are conservative and internally target mining 4
million tonnes of silver ore grading over 90g/t Ag. Key to the processing of our silver ores is their scale.
We will process 2.4 times the quantity of silver ore compared to gold ore. Specifically, we are able to
process 850,000tpa of the softer silver ore compared with 350,000tpa of the harder Mt Boppy gold
ore. Furthermore, there is no road haulage cost for the Wonawinta ore with the plant onsite at the
deposits. Both these factors (scale of production, and no haulage) impact substantially when applying
the rule of thumb calculation for converting silver projects into gold equivalent at Wonawinta. The
successful production of over 2.5 million ounces Ag annually will be very profitable for our company.
3) Wonawinta also hosts a number of substantial high conviction sulphide targets on which exploration
work is scheduled to commence imminently. We are seeking a high grade Pb Zn Ag sulphide project
and it is worthwhile noting that our existing resource all ends in sulphide mineralisation. I look forward
to reporting on the exploration results arising from this campaign in the months ahead.
Of course, companies are essentially about people and we have been extremely fortunate in this regard. I
would like to make special mention of our two non-executive directors Tony McPaul and Nick Lindsay as well
as Haydn Lynch, our COO. They have engaged wholeheartedly in our invigorating but at times tumultuous
four-year journey. Justin Boylson resigned as a director during the 2020 financial year, and his support since
the incorporation of Manuka has been invaluable both for the advice and counsel he extended as a non-
executive director and also as an associated shareholder. David Power and the strong on-site team we have
built over the past twelve months, from a standing start, each and everyone one of them have contributed so
very much. It has been a leap of faith from all to join us at Manuka, and we very much appreciate their
commitment to our continued pursuit of excellence in precious metal production.
Thank you to all.
Dennis Karp
Executive Chairman
Manuka Resources Limited
Manuka Resources Ltd
For the year ended 30 June 2020
4
Review of Operations
COMPANY PROFILE
Manuka Resources Ltd (Manuka or the Company) has been focussed on completing its path to steady state
production at the Wonawinta processing plant. The Company and its wholly owned subsidiary, Mt Boppy
Resources Pty Ltd, (the Group) has also been focussed on preparing the Mt Boppy pit for commencement of
mining with first tonnes mined and initial plant production during June quarter 2020.
ADMISSION AND COMMENCEMENT OF OFFICIAL QUOTATION ON THE ASX
On Friday 10 July 2020, the Company was admitted to the Official List of the Australian Securities Exchange
(‘ASX’). Official Quotation of the Company’s shares commenced on 14 July 2020. The Company raised
$7,000,000 pursuant to the offer under its prospectus dated 22 May 2020 by the issue of 35,000,000 shares
at an issue price of $0.20 per share.
BACKGROUND
Manuka Resources Limited (Manuka or the Company) is a public company which was incorporated in Victoria,
Australia on 20 April 2016. The Company’s assets comprise:
(a)
(b)
the Mt Boppy Gold Project; and
the Wonawinta Silver Project.
As a part of these key projects, the Company has at balance date:
•
•
•
•
•
•
a processing plant and mill with current nameplate capacity of approximately 850,000 tpa (that is, the
Wonawinta Processing Plant);
mining accommodation camps at both projects;
tailing storage facilities at both projects;
a probable gold reserve1 of 268,505 tonnes at 3.04 g/t
approximately 500,000 tonnes at 70 g/t silver oxide ROM stockpiles located at the Wonawinta Silver
Project.
An inferred silver resource2 of 38.8m tonnes at 42g/t
The Company commenced production from Mt Boppy in the June quarter after successful commissioning of
the plant.
1 See Mineral Resources and Ore Reserves Statement
2 See Mineral Resources and Ore Reserves Statement
Manuka Resources Ltd
For the year ended 30 June 2020
5
(Figure 1 – Location of the Mt Boppy Gold Project and the Wonawinta Silver Project)
The Company’s strategy can be broken into three (3) separate but interrelated phases:
Phase 1: Mt Boppy
(a)
(b)
Continue processing gold ore from the Mt Boppy Gold Project3. The Company expects that such
processing will produce approximately 24,000 ounces of gold over the next approximately 12 months.
Progress fieldwork on known exploration targets on granted Mt Boppy Gold Project mining leases and
adjacent exploration licences with the intention of increasing the Mineral Resources attributable to the
Mt Boppy Gold Project.
Phase 2: Wonawinta
(a)
(b)
After the processing of Mt Boppy gold ore has concluded, the Company intends to commence
processing the existing approximately 500,000t of oxide silver material stockpiled at the Wonawinta
Processing Plant.
Exploration will continue with a focus on priority exploration targets to seek to identify potential further
Mineral Resources in both precious and base metals at the Wonawinta Silver Project. Completion of
infill drilling to upgrade the current mineral resource estimate so that work to develop silver reserves
can be completed
Phase 3: Wonawinta
(a)
Commence the mining and processing of the shallow oxide material located on the Wonawinta Mining
Lease (Wonawinta ML). The Company expects to be in a position to start this third phase during 1H
2022.
3 Processing of Mt Boppy gold ore commenced in April 2020.
Manuka Resources Ltd
For the year ended 30 June 2020
6
THE MT BOPPY GOLD PROJECT
Tenements
The Mt Boppy Gold Project (which comprises 3 granted mining leases, 4 gold leases, and one exploration
licence (which together cover an area in excess of approximately 210 km2)) is located approximately 46 km
east of Cobar, on the eastern side of the highly prospective and metalliferous Cobar Basin. The Company owns
(via its wholly owned subsidiary, Mt Boppy Resources) 100% of the interests in the tenements detailed in the
following table:
Tenement
Grant Date
Renewal Date
Expiry Date
Area (Ha)
GL3255
20-May-1926
08-Jul-2014
20-May-2033
GL5836
15-Jun-1965
08-Jul-2014
15-Jun-2033
GL5848
15-Feb-1968
08-Jul-2014
15-Jun-2033
GL5898
21-Jun-1972
08-Jul-2014
12-Dec-2033
8.30
6.05
8.62
7.50
ML311
08-Dec-1976
08-Jul-2014
12-Dec-2033
10.12
ML1681
12-Dec-2012
12-Dec-2012
12-Dec-2033
188.10
MPL240
17-Jan-1986
08-Jul-2014
12-Dec-2033
17.80
EL5842
19-Apr-2001
03-Jul-2017
19-Apr-2021
210 km2
(Table 1 – Tenements Mt Boppy)
(Figure 2 - Tenements and geology of Mt Boppy Gold Project)
Manuka Resources Ltd
For the year ended 30 June 2020
7
Accessibility
The Mt Boppy Gold Project mine site is accessed via the Barrier Highway located on the northern edge of
EL5842 and via the Canbelego-Nymagee road which traverses the entire north-south extent of EL5842. Further
access to the Mt Boppy Gold Project is obtained via dry weather shire roads and property access tracks located
within EL5842.
Regional Geology
Mount Boppy is hosted within Devonian-age sedimentary and volcanic rocks of the Canbelego-Mineral Hill Rift
Zone. Mineralisation occurs largely in brecciated and silicified fine-grained sediments of the Baledmund
Formation, within and adjacent to a faulted contact with older Girilambone Group sedimentary rocks. Lodes
strike approximately north-south and dip steeply west, although the widest zone of mineralisation is related
to slightly shallower dips. Gold mineralisation is fine-grained and commonly associated with coarse grained
iron rich sphalerite. Section 7.2 of the Independent Technical Report4 discusses the local geology of the project
area.
Tenement Activity History
Gold was first discovered at the Mt Boppy Gold Project in 1896 with the Mount Boppy Gold Mining Company
formed in 1900 to mine 168 acres of gold leases that were secured around the discovery site. Major production
from underground mining commenced in 1901 and continued until 1923. In its day, the mine was one of the
largest gold producers in Australia. The orebody delivered some 417,000 ounces of gold from ore with a
notional grade of 15 g/t gold5 (12.2 g/t gold recovered). Exploration was conducted by several companies in
the following years and it was only in 2002 that mining recommenced with Polymetals as detailed below:
Company
Polymetals
Years
2002 - 2005
BOK
2015
Activity
Reopened mine and commenced open cut operations over the historic
underground mine. Produced 68,000 ounces of gold.
Cutback of the open pit with ore trucked to Wonawinta for processing.
Produced 8,700 ounces of gold.
(Table 2 – Modern Operational History – Mt Boppy)
4 See Prospectus dated 22 May 2020 and released on the ASX market announcements platform on 10 July 2020.
5 ibid
Manuka Resources Ltd
For the year ended 30 June 2020
8
THE WONAWINTA SILVER PROJECT
The Company holds title to the pastoral lease for the grazing property called “Manuka”, upon part of which
the Wonawinta Silver Project is located. The Manuka pastoral lease is connected to the low voltage rural power
network and contains useful infrastructure namely a homestead and airstrip.
(Figure 3 - Tenements and geology of Wonawinta Silver Project)
Manuka Resources Ltd
For the year ended 30 June 2020
9
Tenements
The Company directly owns 100% of the interests in the Wonawinta Tenements detailed in the following table:
Tenement
Grant Date
Renewal Date
Expiry Date
Area (km2)
ML1659
23-Nov-11
23-Nov-2011
23-Nov-32
18-Nov-05
07-Mar-2017
11-Nov-21
25-May-09
30-Mar-2017
25-May-22
17-Nov-03
16-May-2017
17-Nov-21
23-Sep-04
08-Feb-2017
23-Sep-21
7-Apr-10
26-Jul-2017
7-Apr-22
31-Aug-06
20-Jun-2019
6 30-Aug-20
9.24
268.21
169.18
10.54
280.02
14.53
26.24
EL6482
EL7345
EL6155
EL6302
EL7515
EL6623
EL8498
10-Jan-17
Pending
10-Jan-20
139.93
(Table 3 – Tenements Wonawinta)
Accessibility
The Wonawinta Silver Project is accessible via state highways, formed gravel local council roads and pastoral
property tracks. Unsealed roads and tracks may become difficult to traverse for heavy vehicles for several days
after heavy rain. Unsealed roads comprise no more than 30 km of access to the Wonawinta Silver Project and
are continually maintained by the Company to enable heavy vehicle movements in all but the heaviest rainfall.
Regional Geology
The Cobar Basin is located in central-west New South Wales, approximately 700 km north-west of Sydney. It
is a complex metallogenic system containing numerous mineral deposits. “Cobar-style” mineral deposits
comprise a unique class of large and commonly high-grade base and precious metal deposits hosted by marine
sediments. They typically have great vertical extent but only a small surface footprint.
6 Renewal in process
Manuka Resources Ltd
For the year ended 30 June 2020
10
(Figure 4 – Existing mine infrastructure and resource outline in ML 1659)
Manuka Resources Ltd
For the year ended 30 June 2020
11
STRATEGY AND DEVELOPMENT PLANS
The Company’s strategy is based on undertaking a logical sequence of events which is designed to provide
maximum value to all stakeholders. This strategy includes:
•
•
With the Wonawinta Processing Plant refurbishment complete, the Company will process reserves
from the Mt Boppy Gold Project and will also conduct an infill drilling program on known silver
resources at the Wonawinta Silver Project.
Once the current Mt Boppy open pit gold reserves are exhausted, mining and processing of silver
oxide material through the Wonawinta Processing Plant will commence. Concurrently, the Company
intends to undertake infill and exploration drilling at the Wonawinta Silver Project in order to:
i.
ii.
iii.
define areas for mine planning by infill drilling the current inferred oxide resource base;
test drill deeper sulphide targets on the Wonawinta ML with the aim of developing secondary
sulphide ore streams; and
conduct field work on priority targets on exploration leases for both precious and base metal
systems as discussed in the Section below.
(Figure 5 - The Wonawinta Plant)
Exploration Strategy and Overview
The Company intends to undertake exploration on its over 1,100 km2 of tenements all of which are located
within the highly prospective Cobar Superbasin. The exploration strategy comprises a combination of
brownfields evaluation (on granted mining titles and nearby exploration licences) and greenfields exploration
on its prospective, either not fully explored or underexplored, exploration licences. Numerous other
companies are conducting mining and exploration activities within the Cobar Superbasin as shown below.
Manuka Resources Ltd
For the year ended 30 June 2020
12
(Figure 6 - Location of Manuka Resources sites (Wonawinta and Mt Boppy Gold Mine) and other companies’
operations/exploration in the Cobar Superbasin)
Exploration Planning and Drilling Programs
The Company intends to conduct a range of exploration activities and follow-up drilling programs, along with
facilitating planning for potential oxide silver mining and to evaluate the potential to mine silver, lead and zinc
sulphide. Drilling will be conducted on high priority targets at both the Mt Boppy Gold Project and the
Wonawinta Silver Project contemporaneously with the ongoing processing of Mt Boppy gold ore. Greenfields
activities on less advanced or incompletely assessed prospects will also be carried out in line with an overall
strategy of progressively testing and identifying potential mineralisation, increasing confidence in existing
resources and processing to mine planning for future mining.
The Company’s exploration planning and drilling programs are divided into three (3) key components, namely
(i) near-mine evaluation activities at Mt Boppy (ML/GLs and adjacent EL5842), (ii) near-mine evaluation at
Wonawinta (Wonawinta ML and adjacent Wonawinta ELs) and (iii) early/follow-up-phase exploration on the
Company’s exploration tenements/mining leases as follows:
i. Near mine Mt Boppy (ML/GLs and adjacent EL5842)
The Mt Boppy Gold Project encompasses a high-grade gold deposit similar to other Cobar-style polymetallic
(Zn-Pb-Ag-Cu-Au) deposits. Cobar-style deposits are understood to have pipe-like orientations with small
surface footprints and steep plunges extending to considerable depth (up to 1 km deep). Multiple deposits
can develop over large strike extents (+10 km). The objective of the Company’s near mine activities at the
Mt Boppy Gold Project is to evaluate the ML/GLs and adjacent EL5842 for gold mineralisation extensions
by:
(A)
Identifying potential mineralisation extensions to the known gold Resources. Existing Resources
have to date been tested unsystematically to only 215m depth. Very little effective deep drilling
Manuka Resources Ltd
For the year ended 30 June 2020
13
(B)
(C)
has been undertaken at the Mt Boppy Gold Project to test for depth extensions and strike extents
have received only limited assessment;
Undertaking 3D synthesis and targeting in the 3 × 3 km Mt Boppy-Canbelego Gold Camp area.
There are significant gold occurrences in historical shallow drill holes and numerous mine shafts
are located within the Gold Camp. The Company intends to undertake an integrated camp-scale
compilation approach to facilitate near mine targeting for new gold Resources. The past decade
has seen many advances in understanding the genesis of Cobar-style polymetallic ore systems
which have not yet been systematically applied in the Mt Boppy-Canbelego Project area; and
Further investigating numerous untested or inadequately tested areas by drilling, various
prospects located in the structural corridor known as the “Central Structural Zone” in the
northern part of EL5842, along with other prospects and areas located further south on EL5842
that require further assessment.
(Figure 7 - Mt Boppy-Canbelego Project Area and Prospects.)
Manuka Resources Ltd
For the year ended 30 June 2020
14
(Figure 8 - Mt Boppy-Canbelego Gold Camp area)
ii. Near Mine Wonawinta Silver Project
The Company’s primary objectives in relation to the Wonawinta ML include:
(A)
To increase confidence in Inferred Mineral Resources to Indicated and/or Measured categories.
Following this, mining studies will be undertaken to prepare mining schedules for the
commencement of “Phase 3” activities; and
(B)
Define new areas of both oxide and sulphide mineralisation on the Wonawinta ML.
The Company intends to undertake priority exploration along the trend from the Wonawinta ML and into
EL7345, comprising the “Wonawinta” line of lode.
There are two (2) main avenues to increasing the known mineralisation within the Wonawinta project:
(A)
(B)
Definition of further supergene oxide clay material at near surface (less than 50 metres depth);
and
Define the deeper, sulphide mineralisation extensions below current drilling.
Manuka Resources Ltd
For the year ended 30 June 2020
15
(Figure 9 - Wonawinta Silver Project Area and Prospects)
Manuka Resources Ltd
For the year ended 30 June 2020
16
Mineral Resources and Ore Reserves Statement
Mining operations commenced at Mt Boppy in 2020 and as at 30th June 2020 JORC 2012 categorised
Resources and Reserves have been updated78. JORC categorised Mineral Resources for Wonawinta are
unchanged from the initial reporting in the Prospectus9.
Production commenced with the processing of the legacy stockpiled material, (56,832 t). Mining from the 205
bench depleted 12,000t from the resource, and an extra 5,604 ore included from outside of the resource
model. Of this material 13,972t at 2.00 g/t remained on the ROM pad.
Mt Boppy Resource Statement
The total resource remaining at the 30th June 2020 is 371,7000 tonnes at 3.23 g/t Au providing 38,020 ounces.
An additional 13,972 t at 2.00 g/t were on the ROM at the close of the month.
Resource Category Material Tonnes Grade Contained gold
Measured
Indicated
Inferred
Total
Stockpiles (measured)
in-situ
in-situ
stopes
in-situ
g/t Au Troy ounces
40,500
195,500
111,700
24,000
371,700
13,972
3.43
2.99
3.6
3.33
3.23
2.00
4,473
18,790
12,930
2,570
38,763
898
(Table 4 – Mt Boppy Gold Resource Statement at 30th June 2020)
Note: Reported differences may be present due to rounding of significant figures.
The Company was admitted to the official list of the ASX on 10 July 2020. As such, it cannot provide a
comparison of the Mineral Resources as at 30 June 2020 against those reported as at 30 June 2019. The table
below provides a comparison of Mineral Resources as at 30 June 2020 against those reported in the Company’s
initial public offer Prospectus as at 31 March 2020. The Company will provide a balance date previous year
comparison in its 2021 annual report.
Resource Category Material Tonnes Grade Contained gold
g/t Au Troy ounces
As at 31 March 2020
Measured
Indicated
Inferred
Total
Stockpiles (measured)
in-situ
in-situ
stopes
in-situ
48,900
195,500
115,300
24,000
383,700
60,300
3.24
2.99
3.60
3.33
3.23
2.54
5,090
18,790
13,350
2,570
39,800
4,920
(Table 5 – Comparative Mt Boppy Gold Mineral Resource Statement)
7 Resources are inclusive of Ore Reserves
8 See Prospectus dated 22 May 2020 and released on the ASX market announcements platform on 10 July 2020
9 Ibid
Manuka Resources Ltd
For the year ended 30 June 2020
17
The changes arise from mining depletion, as detailed above.
Full details in relation to the Mineral Resources (other than mining depletion) are given in the Company’s ASX
announcement dated 10 July 2020 (Prospectus), including JORC 2012 Table 1.
Mt Boppy Ore Reserves Statement
In June 2020, the Company crushed and exhausted the legacy stockpile and extracted 17,604 t at
approximately 2.0g/t Au from the 205RL blasted bench. Within the extraction area it is estimated that 7,456t
at 3.04g/t Au was depleted from the previously estimated Ore Reserves. The updated Probable Ore Reserves
Estimate is summarised below.
tonnes
Ore Type
10,000
Oxide
130,000
Transitional
20,000
Fresh
100,000
Stope tailings fill
Stockpiles
10,000
Total Probable Ore Reserves 270,000
Au g/t Au Au oz
1,000
12,000
2,000
11,000
1,000
26,000
3.1
2.9
3.3
3.3
2.0
3.0
(Table 6 Mt Boppy Probable Ore Reserves at 30th June 2020)
Note: The estimated Ore Reserve tonnes and grades shown are stated to a number of significant figures
reflecting the confidence of the estimate. The table may nevertheless show apparent inconsistencies between
the sum of components and the corresponding rounded totals.
The Company was admitted to the official list of the ASX on 10 July 2020. As such, it cannot provide a
comparison of the Ore Reserves as at 30 June 2020 against those reported as at 30 June 2019. The table below
provides a comparison of Ore Reserves as at 30 June 2020 against those reported in the Company’s initial
public offer Prospectus as at 31 March 2020. The Company will provide a balance date previous year
comparison in its 2021 annual report.
tonnes
Ore Type
As at 31 March 2020
10,000
Oxide
130,000
Transitional
20,000
Fresh
100,000
Stope tailings fill
Stockpiles
60,000
Total Probable Ore Reserves 320,000
As at 30 June 2020
10,000
Oxide
130,000
Transitional
20,000
Fresh
100,000
Stope tailings fill
Stockpiles
10,000
Total Probable Ore Reserves 270,000
Au g/t Au Au oz
3.1
2.9
3.3
3.3
2.5
3.0
3.1
2.9
3.3
3.3
2.0
3.0
1,000
12,000
2,000
11,000
5,000
31,000
1,000
12,000
2,000
11,000
1,000
26,000
(Table 7 – Comparative Mt Boppy Gold Ore Reserves Statement)
Manuka Resources Ltd
For the year ended 30 June 2020
18
The changes arise from mining depletion, as detailed above and rounding.
Full details in relation to the Ore Reserves (other than mining depletion) are given in the Company’s ASX
announcement dated 10 July 2020 (Prospectus), including JORC 2012 Table 1.
Wonawinta Mineral Resources Statement
JORC categorised Mineral Resources for Wonawinta are unchanged from the initial reporting in the
Prospectus10. The total resource is 38.774 million tonnes at 42.0 g/t Ag and 0.61% Pb providing 52,367
thousand ounces and 236.5 thousand tonnes of lead.
Resource category Material Type Tonnes (kt) Ag (g/t) Pb (%)
koz
Measured
Indicated
Sub Total
MI
Inferred
Total MII
Ox
Fr
Ox
Fr
Ox
Fr
Ox
Fr
785.75
105.30
6,023
2,473
6,808
2,579
14,474
14,913
45.7
40.3
46.7
52.8
46.6
52.3
38.9
41.1
0.73
0.47
0.85
0.66
0.83
0.66
0.68
0.44
Kt
5.7
0.5
51.0
16.4
1,154
137
9,041
4,200
10,195 57
4,336
17
18,119 97.9
19,718 64.9
38,774
42.0
0.61
52,367 236.5
Stockpiles (Indicated)
515.7
70.01
1,161
(Table 8 – Wonawinta Resource Statement at 30th June 2020)
Note: Reported differences may be present due to rounding of significant figures.
The Company will provide a balance date previous year comparison in its 2021 annual report.
Full details in relation to the Mineral Resources are given in the Company’s ASX announcement dated 10 July
2020 (Prospectus), including JORC 2012 Table 1.
Governance arrangements and internal controls
Manuka has put in place governance arrangements and internal controls with respect to its estimates of
Mineral Resources and Ore Reserves and the estimation process, including:
•
•
•
•
oversight and approval of each annual statement by external consultants or responsible senior
officers;
establishment of internal procedures and controls to meet JORC Code 2012 compliance in all external
reporting11;
independent review of new and materially changed estimates;
annual reconciliation with internal planning to validate reserve estimates for operating mines; and
10 See Prospectus dated 22 May 2020 and released on the ASX market announcements platform on 10 July 2020
Manuka Resources Ltd
For the year ended 30 June 2020
19
Competent Persons retained by the Company are members of the Australasian Institute of Mining and
Metallurgy (AusIMM) and/or the Australian Institute of Geoscientists (AIG), and qualify as Competent Persons
as defined in the JORC Code 2012.
Competent Persons Statements
The information in this report that relates to Mineral Resources is based on, and fairly represents, information
and supporting documentation prepared by Mr Ian Taylor, who is a Certified Professional by The Australasian
Institute of Mining and Metallurgy and is employed by Mining Associates Pty Ltd. Mr Taylor 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 Taylor
consents to the inclusion in the report of the matters based on his information in the form and context in
which it appears.
The information in this report that relates to Ore Reserves is based on, and fairly represents, information and
supporting documentation prepared by Christopher Desoe, BE (Min)(Hons), FAusIMM (CP), RPEQ, Manager –
Mining at consultancy Australian Mine Design and Development Pty Ltd (AMDAD). Mr Desoe has 37 years of
experience in metalliferous mining, including more than 20 years in metalliferous open cut mining, and he has
completed the Professional Certificate JORC Code Reporting course through the Australasian Institute of
Mining and Metallurgy. Mr Desoe 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’. Applicable to the Mt Boppy Mine is his operations experience as Open Cut and
Mine Planning Superintendent at Selwyn gold-copper mine, as well as consulting experience for small to
medium scale open cut gold mines in Eastern Australia including Tomingley Gold Mine, Osborne Copper Gold
Mine, Twin Hills Area 3, Lorena Gold Mine, Mungana Gold Copper Project, Pajingo Venue Gold Mine,
Inheritance Copper Gold Mine and the Highway and Reward Copper Gold Mines.
This report includes information that relates to Mt Boppy Mineral Resources and Ore Reserves which were
prepared and first disclosed under JORC Code 2012. The information was extracted from the Company’s ASX
announcement dated 10 July 2020 (Prospectus). The Company confirms that, other than mining depletion, it
is not aware of any new information or data that materially affects the information included in the original
market announcement and, in the case of reporting of Ore Reserves and Mineral Resources, that all material
assumptions and technical parameters underpinning the estimates in the relevant market announcement
continue to apply and have not materially changed. The Company confirms that the form and context in which
any Competent Person’s findings are presented have not been materially modified from the original market
announcement.
This report includes information that relates to Wonawinta Mineral Resources which were prepared and first
disclosed under JORC Code 2012. The information was extracted from the Company’s ASX announcement
dated 10 July 2020 (Prospectus). The Company confirms that it is not aware of any new information or data
that materially affects the information included in the original market announcement and, in the case of
reporting of Ore Reserves and Mineral Resources, that all material assumptions and technical parameters
underpinning the estimates in the relevant market announcement continue to apply and have not materially
changed. The Company confirms that the form and context in which any Competent Person’s findings are
presented have not been materially modified from the original market announcement.
Manuka Resources Ltd
For the year ended 30 June 2020
20
Directors’ Report
The Directors of Manuka Resources Ltd (‘Manuka Resources’) present their report together with the financial
statements of the Entity or the Group, being Manuka Resources (‘the Company’) and its subsidiary Mt Boppy
Resources Pty Ltd (‘Mt Boppy’) for the year ended 30 June 2020.
Manuka Resources Limited is a company limited by shares and incorporated in Australia on the 20th April 2016.
Director details
The following persons were Directors of Manuka Resources during or since the end of the financial period
and up to the date of this report:
• Mr Dennis Karp
• Mr Anthony McPaul
• Mr Nicholas Lindsay
• Mr Justin Boylson (resigned 17 March 2020)
Mr Dennis Karp
Executive Chairman
Director since 20th April 2016
Mr Karp commenced his career in the Australian financial markets in 1983. He was the Head of Trading at
HSBC Australia prior to joining Tennant Limited in 1997, one of Australia’s largest physical commodities trading
companies with operations in Asia and Europe. He was a principal shareholder of Tennant Metals until 2010,
and managing director until December 2014. Mr Karp founded ResCap Investments Pty Ltd in December 2014.
Over the past 10 years, Mr Karp has been involved in various resource projects and investment opportunities
in base metals and bulk commodities which have had marketing rights attached.
Mr Karp holds a Bachelor of Commerce from the University of Cape Town. Mr Karp does not hold any current
and has not held any former directorships in other listed companies in the last 3 years.
Mr Anthony McPaul
Non-executive Director
Director since 25th November 2016
Mr Anthony McPaul is a senior mining executive with over 35 years’ experience in mining operations and
mineral processing. Mr McPaul has worked in and led both open cut and underground operations and was
most recently the general manager for Newcrest’s Cadia Valley Operations, in Orange NSW.
Mr McPaul commenced his career as an automotive engineer and progressed to maintenance and then onto
operations management at various companies, including CRA, Denehurst, MIM and more recently Newcrest.
He has successfully managed a wide range of operating projects from base through to precious metals in both
surface and underground mines and has been directly responsible for all aspects of production and scheduling.
Mr McPaul formally retired from Newcrest in July 2016 and has since devoted his time to non-executive and
contract roles. Mr McPaul has represented Newcrest and the resources industry on many boards, such as NSW
Manuka Resources Ltd
For the year ended 30 June 2020
21
Minerals Council, NSW Minerals Council Executive Committee, and was the NSW Minerals Council
representative on the Mine Safety Advisory Council. Mr McPaul has chaired many of these committees.
Mr McPaul is the current Chairman of the NSW Minerals Council Board and Executive Committee and a
member of the recently formed Mineral Industry Advisory Council.
Mr McPaul has formal qualifications in automotive engineering from Goulburn TAFE. Mr McPaul does not hold
any current and has not held any former directorships in other listed companies in the last three years.
Dr Nicholas Lindsay
Non-executive Director
Director since 20th June 2019
Dr Nicholas Lindsay is an experienced mining executive who brings an attractive mix of commercial, technical
and academic qualifications, all of which are relevant to the Company. He has worked directly for a range of
major and mid-tier mining companies over his career, and led juniors in copper, gold and silver though listings
and mergers. Dr Lindsay is a geologist by profession, specialising in process mineralogy, and has postgraduate
degrees from the University of Otago (NZ), the University of Melbourne and the University of the
Witwatersrand (South Africa). He is a member of the AusIMM and Australian Institute of Geoscientists. Mr
Lindsay has held the following Directorships in other listed companies in the 3 years immediately before the
end of the financial year:-
• Valor Resources Ltd - Chief Executive Officer and Executive Director – Technical (current)
•
Lake Resources NL - Non-Executive Director (current)
• Daura Capital Corp. - Non-Executive Director (current)
Mr Justin Boylson
Non-executive Director
Director since 31st January 2019, Resigned 17 March 2020
Justin commenced his career in the international trade and commodity markets in 1996 after time in the
Australian Army. He worked for Brickworks Limited (and its subsidiaries) where in various senior managerial
positions for over 7 years, including as regional export manager, project manager Western Australia and
regional director Middle East. Justin joined Sinosteel Australia in 2006 where he was responsible for the day
to day running of the trade desk until 2008 when he joined Tennant Metals as its Western Australia and Bulk
Commodity General Manager where he was responsible for some high profile off-take transactions for
Tennant Metals. Justin joined ResCap Investments as a Director in 2014 and is also a Director of Mt Boppy
Resources Pty Ltd. Mr Boylson does not hold any current and has not held any former directorships in other
listed companies in the last three years.
Manuka Resources Ltd
For the year ended 30 June 2020
22
Interests in the shares and options of the Company and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of Manuka Resources
Limited were:
Ordinary
Shares
91,814,557
-
-
Options over
Ordinary
Shares
1,500,000
1,500,000
1,500,000
Mr Dennis Karp
Mr Anthony McPaul
Dr Nick Lindsay
Company Secretary details
Ms Toni Gilholme
Company Secretary since 20th April 2016
Ms Toni Gilholme is an experienced Financial Controller and a Qualified Chartered Accountant with over 15
years of experience in Financial Accounting and Company Secretarial matters and over 10 years of experience
in Public Practice.
Ms. Gilholme holds a Bachelor of Business from the University of Technology, Sydney and is a qualified
Chartered Accountant.
Mr Dennis Wilkins
Company Secretary since 15th September 2016
Mr Wilkins is the founder and principal of DWCorporate Pty Ltd a leading privately held corporate advisory
firm servicing the natural resources industry. Since 1994 he has been a director of, and involved in the
executive management of, several publicly listed resource companies with operations in Australia, PNG,
Scandinavia and Africa. From 1995 to 2001 he was the Finance Director of Lynas Corporation Ltd during the
period when the Mt Weld Rare Earths project was acquired by the group. He was also founding director and
advisor to Atlas Iron Ltd at the time of Atlas’ initial public offering in 2006.
Since July 2001 Mr Wilkins has been running DWCorporate Pty Ltd where he advises on the formation of, and
capital raising for, emerging companies in the Australian resources sector. Mr Wilkins is currently a non-
executive director of Key Petroleum Ltd since 5 July 2006, and an alternate director of Middle Island Resources
Ltd since 1 May 2010.
Principal activities
During the period, the principal activities undertaken by the Group were:
Since the acquisition of the Mt Boppy Gold Project and the Wonawinta Silver Project, the Company has:
(a)
(b)
(c)
commissioned a resource estimation report for the Mt Boppy Gold Project (a majority of
which has been now upgraded to Mineral Reserve status);
prepared exploration strategies and detailed work programs for both the Mt Boppy Gold
Project and the Wonawinta Silver Project;
updated mine operations plans and obtained all relevant consents, authorisations and
licences for both the Mt Boppy Gold Project and the Wonawinta Silver Project;
Manuka Resources Ltd
For the year ended 30 June 2020
23
(d)
(e)
(f)
(g)
refurbished the Wonawinta Processing Plant to enable the restart of processing onsite at
the Wonawinta Silver Project;
completed physical construction of the stage 2 TSF lift;
commenced crushing and hauling of the Mt Boppy gold ore for processing at the
Wonawinta Processing Plant; and
completed the IPO of the Company on the ASX and commenced trading on the ASX on 14
July 2020, raising $7million from institutional, sophisticated and retail investors.
Review of operations
Information on the operations and financial position of the group and its business strategies and prospects is
set out in the review of operations on pages 4 to 15 of this annual report.
Significant changes in state of affairs
During the year there have been no significant changes in the state of affairs of the Group other than:
• TransAsia Private Capital (TPC) Facility – Secured Loan
The Company entered into a term sheet with a TPC in January 2020, and a signed debt facility agreement
(TPC Facility) with its first drawdown occurring in July 2019. The TPC Facility is a Senior Secured Debt
Facility for US$14 Million (approximately. A$20 Million).
At time of writing the Company has received all five tranches totalling US$14 Million, which has been
utilised for repayment of the MCP Manager Pty Ltd loan, and the upgrade and refurbishment of the plant
as well as the multitude of pre-mining factors needing attention. All borrowings in place at the time of
entering into the TPC facility with the exception of the MCP Manager Facility, have been subordinated to
the TPC Facility. Refer to Note 19.2 of the financial report for details of borrowings.
• Commencement of production
During the financial period, the Company completed an extensive plant refurbishment and upgrade. The
Company then moved into steady state production in April 2020. This involved significant investment in
capital and extensive recruitment to mobilise an experienced workforce running on a 24/7 basis. The
Company completed its first sale of gold doré in May 2020.
• TSF lift physical completion
Concurrently with the path to production, the Company completed the physical expansion of the Tailings
Storage Facility to increase tailings capacity. The expanded capacity is expected be sufficient to contain
tailings for two to three years of future production before a further lift is required.
• Coronavirus (COVID-19) pandemic
Manuka Resources has implemented a number of processes in response to the COVID-19 pandemic to
ensure the health and safety of employees and contractors and to aid in reducing the risk of transmission
while still supporting an effective and productive workforce. These include measures which support social
distancing, restrict non-essential travel, support staff wellbeing and include improved hygiene and
cleaning protocols. Mining, production and exploration activities have continued without interruption
with no material impact from COVID-19 on the Company’s operations. The Company will continue to
Manuka Resources Ltd
For the year ended 30 June 2020
24
adopt best practice protocols as the situation evolves to ensure the ongoing safety and wellbeing of
employees and contractors.
• Admission to ASX
On Friday 10 July 2020, the Company was admitted to the Official List of the Australian Securities Exchange.
Dividends
No dividends were paid or declared during the financial year and no recommendation is made as to
dividends.
Events arising since the end of the reporting period
• Commencement of Official Quotation on the ASX
Official Quotation of the Company’s shares commenced on 14 July 2020. The Company raised $7,000,000
pursuant to the offer under its prospectus dated 22 May 2020 by the issue of 35,000,000 shares at an issue
price of $0.20 per share.
• Commencement of exploration
In August 2020, the Company commenced its three stage exploration and drilling program. The initial
phase of the program is for approximately a two month term, drilling over 200 holes comprising
approximately 7,000 metres predominantly reverse circulation (RC), with 1,000 diamond drilling (DD)
expected.
•
Initial Mt Boppy drill results released
On 24 August 2020, the Company released the results of the assays from initial drill holes conducted as
extension of existing grade control program. Extremely high-grade gold intersections were recorded from
two holes drilled under the planned pit floor including
o Hole MBGC0042: 10 m @ 34.48 g/t Au from 57 m depth
o Hole MBGC0043: 14 m @ 14.51 g/t Au from 59 m depth
• Repayment of interest Convertible note holders
In July 2020, the Company paid all the outstanding interest of $1.78 million to Convertible Note holders.
• Coronavirus (COVID-19) pandemic
The COVID-19 pandemic did not have any significant impact on the Group's operations during the year.
Subsequent to the end of the financial year, the pandemic and its impact has continued to evolve with
further outbreaks resulting in lockdown restrictions in Victoria, additional border closures between states,
new stimulus measures (such as Jobkeeper 2.0) and many other items. It is therefore not practical to
estimate the potential impact, positive or negative, after reporting date.
Manuka Resources Ltd
For the year ended 30 June 2020
25
Apart from the matters noted above, there are no other matters or circumstances that have arisen since the
end of the period that has significantly affected or may significantly affect either:
•
•
•
the Group’s operations in future financial years;
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years.
Likely developments
During the next twelve to eighteen months it is expected that the Company will complete the processing of
the gold ore from the Mt Boppy Gold Project. The plant will be transitioned from gold to silver and the
Company will commence processing the existing approximately 500,000t of oxide silver material stockpiled at
the Wonawinta Processing Plant.
During this period the Company also intends to expand its exploration activities and follow-up drilling
programs, along with facilitating planning for potential oxide silver mining and to evaluate the potential to
mine silver, lead and zinc sulphide.
Further information on the likely developments of the group and its business strategies and prospects is set
out in the review of operations on pages 4 to 15 of this annual report.
Directors’ meetings
The number of meetings of Directors (including meetings of Committees of Directors) held during the period
and the number of meetings attended by each Director is as follows:
Board Member
Dennis Karp
Anthony McPaul
Nicholas Lindsay
Justin Boylson (resigned 17 March 2020)
Board Meetings
A
11
11
11
7
B
11
10
10
5
Where:
column A: is the number of meetings the Director was entitled to attend
column B: is the number of meetings the Director attended
Unissued shares under option
Unissued ordinary shares of Manuka Resources under option at the date of this report are:
Date Options Granted
Expiry Date Exercise Price
of Shares
$
Number
under option
Apr 2020
Mar 2020
June 2020
17th Apr 2023
17th Apr 2023
14th Jul 2023
$0.25
$0.25
$0.25
3,250,000
8,000,000
10,000,000
21,250,000
No shares were issued during or since the end of the year as a result of exercise of the options.
Manuka Resources Ltd
For the year ended 30 June 2020
26
Environmental legislation
The operations of Manuka Resources Limited are subject to a number of particular and significant
environmental regulations under a law of the Commonwealth or of a State or Territory in Australia.
All conditions governing the administration of various environmental and tenement licences have been
complied with. So far as the Directors are aware there has been no known breach of the Group’s licence
conditions and all activities comply with relevant environmental regulations. The Directors are not aware of
any environmental regulation which is not being complied with.
Remuneration report (audited)
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001. The remuneration report sets out remuneration information for the Company’s
Executive Director, Non-Executive Directors and other Key Management Personnel (“KMP”). The report
contains the following sections:
a) Key Management Personnel disclosed in this report;
b) Remuneration policy;
c) Performance-based remuneration;
d) Company performance, shareholder wealth and directors’ and executives’ remuneration;
e) Use of remuneration consultants;
f) Details of remuneration;
g) Service agreements;
h) Share-based compensation;
i) Equity instruments held by Key Management Personnel; and
j) Other transactions with Key Management Personnel.
a) Key Management Personnel disclosed in this report
Non-Executive and Executive directors (refer pages 20 to 21 for details on each director)
• Dennis Karp
• Anthony McPaul
• Nick Lindsay
•
Justin Boylson (resigned 17 March 2020)
• Brett Fletcher (resigned 1 October 2018)
Other Key Management Personnel
• Haydn Lynch, Chief Operations Officer (from 1st July 2019)
• David Power, Operations Manager (from 30th September 2019)
There have been no changes to directors or KMP since the end of the reporting period.
b) Remuneration policy
The remuneration policy of Manuka Resources Limited has been designed to align key management personnel
objectives with shareholder and business objectives by providing a fixed remuneration component and
offering specific long-term incentives based on key performance areas affecting the Group’s financial results.
The board of Manuka Resources Limited believes the remuneration policy to be appropriate and effective in
its ability to attract and retain the best key management personnel to run and manage the Group.
Manuka Resources Ltd
For the year ended 30 June 2020
27
The board’s policy for determining the nature and amount of remuneration for key management personnel of
the Group is as follows:
• The remuneration policy, setting the terms and conditions for the executive directors and other senior
executives (if any), was developed by the board. All executives receive a base salary (which is based on
factors such as length of service and experience) and superannuation. The board reviews executive
packages annually by reference to the Group’s performance, executive performance and comparable
information from industry sectors and other listed companies in similar industries.
• The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is
designed to attract and retain the highest calibre of executives and reward them for performance that
results in long term growth in shareholder wealth.
• Executives are also entitled to participate in the employee share and option arrangements.
• The executive directors and executives (if any) receive a superannuation guarantee contribution required
by the government, which was 9.5% for the 2020 financial year, and do not receive any other retirement
benefits. Some individuals may choose to sacrifice part of their salary to increase payments towards
superannuation.
• All remuneration paid to directors and executives is valued at the cost to the Group and expensed. The
cost of share-based payments is measured by reference to the fair value at the date at which they are
granted using an option pricing model.
• The board policy is to remunerate non-executive directors at market rates for comparable companies for
time, commitment, and responsibilities. The board determines payments to the non-executive directors
and reviews their remuneration annually, based on market practice, duties and accountability.
Independent external advice is sought when required. The maximum aggregate amount of fees that can
be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting
(currently $180,000). Fees for non-executive directors are not linked to the performance of the Group.
However, to align directors’ interests with shareholder interests, the directors are encouraged to hold
shares in the Company.
c) Performance-based remuneration
The Group currently has no performance-based remuneration component built into key management
personnel remuneration packages. Remuneration and share based payments are issued to align the Directors’
interest with that of shareholders.
d) Company performance, shareholder wealth and directors’ and executives’ remuneration
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’
investment objectives and key management personnel performance. Currently, this is facilitated through the
issue of options to the majority of key management personnel to encourage the alignment of personal and
shareholder interests. The Group believes this policy will be effective in increasing shareholder wealth.
The table below shows the gross revenue, losses and earnings per share for the last five financial periods for
the listed entity.
2020
$
2019
$
2018
$
2017
$
Revenue and other income
Net loss
Loss per share (cents) *
9,468,320
(4,552,843)
(3.28)
-
(5,428,238)
(4.08)
1
(4,344,351)
(3.28)
909,999
(3,745,221)
(4.95)
No dividends have been paid during the financial years ended 30 June 2016 to 30 June 2020.
2016
$
-
(144,998)
(268,515)
Manuka Resources Ltd
For the year ended 30 June 2020
28
* In accordance with AASB 133 paragraph 26, the weighted average number of shares outstanding during the
period and for all period presented shall be adjusted for events (such as a share consolidation) that have
changed the number of shares outstanding without a corresponding change in resources. As a result, the share
consolidation described in Note 22.1 (e) has been applied to the full financial year ended 30 June 2020 and all
the previous reporting periods.
e) Use of remuneration consultants
The Group did not employ the services of any remuneration consultants during the financial year ended 30
June 2020 (2019: None).
f) Details of remuneration
Details of the remuneration of the key management personnel of the Group are set out in the following table.
Fixed Remuneration
Variable
Remuneration
Salary/
Directors Fee
Non-
Monetary
Benefits
Annual and
Long Service
Leave
Superannuation
Options
$
$
$
$
$
Total
$
Directors
Dennis Karp
2020
2019
Anthony McPaul
2020
2019
Nick Lindsay
2020
2019
Justin Boylson
2020
2019
Brett Fletcher 1
2020
2019
Other KMP (Group)
Haydn Lynch
2020
2019
David Power
2020
2019
Total KMP remuneration
expensed
2020
2019
$110,000
$30,000
$41,000
$22,495
$39,000
-
$24,000
$9,375
-
$3,750
$206,495
-
$166,848
-
$587,343
$65,620
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$7,001
$81,677
$198,678
-
-
-
-
-
-
-
-
-
-
$30,000
$81,677
$122,677
-
$22,495
$81,677
$120,677
-
-
$81,677
$105,677
-
-
-
$9,375
-
$3,750
$12,683
$20,822
$81,677
$321,677
-
-
-
-
$15,850
-
-
-
-
-
$182,698
-
$12,683
-
$43,673
$408,385
$1,052,084
-
-
$65,620
(1) Brett Fletcher resigned effective 1 October 2018
g) Service agreements
The details of service agreements of the key management personnel of the Group are as follows:
Dennis Karp, Executive Chairman:
(a) Mr Karp was appointed Executive Chairman on 1 March 2020 at an annual salary of $262,800 (inclusive
of superannuation); and
Manuka Resources Ltd
For the year ended 30 June 2020
29
(b)
The agreement is ongoing until terminated in accordance with the agreement. Mr Karp may terminate
the agreement by giving 12 weeks’ notice in writing to the Company and the Company may terminate
the agreement (without cause) by giving Mr Karp 12 weeks’ written notice or by making payment in lieu
of notice.
Haydn Lynch, Chief Operations Officer:
(a) Mr Lynch will receive an annual salary of $240,000 (inclusive of superannuation); and
(b)
The agreement is ongoing until terminated in accordance with the agreement. Mr Lynch may terminate
the agreement by giving 12 weeks’ notice in writing to the Company and the Company may terminate
the agreement (without cause) by giving Mr Lynch 12 weeks’ written notice or by making payment in
lieu of notice.
David Power, Executive Chairman:
(a) Mr Power will receive an annual salary of $219,000 (inclusive of superannuation); and
(b)
The agreement is ongoing until terminated in accordance with the agreement. Mr Power may terminate
the agreement by giving 4 weeks’ notice in writing to the Company and the Company may terminate
the agreement (without cause) by giving Mr Power 4 weeks’ written notice or by making payment in
lieu of notice.
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.
h) Share-based compensation
Options
Options are issued to key management personnel as part of their remuneration. The options are not issued
based on performance criteria but are issued to the majority of key management personnel of Manuka
Resources Limited to increase goal congruence between key management personnel and shareholders. The
following options were granted to or vesting with key management personnel during the year:
Grant Date
Granted
Number
Vesting
Date
Expiry Date
Exercise
Price
(cents)
Value Per
Option at
Grant Date
(cents) (1)
Exercised
Number
% of
Remuner-
ation
Directors
Dennis Karp
11/03/2020 1,500,000
6/05/2020
17/04/2023
Anthony McPaul
11/03/2020 1,500,000
6/05/2020
17/04/2023
Nick Lindsay
11/03/2020 1,500,000
6/05/2020
17/04/2023
Justin Boylson
11/03/2020 1,500,000
6/05/2020
17/04/2023
25.0
25.0
25.0
25.0
5.45
5.45
5.45
5.45
Other KMP
Haydn Lynch
11/03/2020 1,500,000
6/05/2020
17/04/2023
25.0
5.45
Nil
Nil
Nil
Nil
Nil
41%
67%
68%
77%
25%
(1)
The value at grant date in accordance with AASB 2: Share Based Payments of options granted during the
year as part of remuneration.
For options granted during the current year, the valuation inputs for the option pricing model were as follows:
Underlying
Share Price
(cents)
Exercise Price
(cents)
Volatility
Interest Rate Valuation Date
Expiry Date
Risk Free
Directors and Other
KMP
14.95
25.0
77%
0.25%
11/03/2020
17/04/2023
Manuka Resources Ltd
For the year ended 30 June 2020
30
No ordinary shares in the Company have been provided as a result of the exercise of remuneration options to
each director of Manuka Resources Limited and other key management personnel of the Group during the
year.
i) Equity instruments held by Key Management Personnel
Share holdings
The numbers of shares in the Company held during the financial year by each director of Manuka Resources
Limited and other key management personnel of the Group, including their related parties, and any nominally
held, are set out below. There were no shares granted during the reporting period as compensation.
Directors
Dennis Karp
Anthony McPaul
Nick Lindsay
Justin Boylson
Other KMP
Haydn Lynch
David Power
Received
during the
year on the
exercise of
Options
Other
changes
during the
year
Balance at end
of the year
-
-
-
-
-
-
10,944,990
91,814,557
-
-
-
-
-
-
-
(1) -
-
-
Balance at
start of the
year
80,869,567
-
-
-
-
-
(1)
Balance held at the date of resignation (17 March 2020).
Option holdings
The numbers of options over ordinary shares in the Company held during the financial year by each director
of Manuka Resources Limited and other key management personnel of the Group, including their personally
related parties, and any nominally held, are set out below.
Balance at
start of the
year
Granted as
compen-
sation
Exercised
Other
changes
Balance at
end of the
year
Vested and
exercisable
Unvested
Directors
Dennis Karp
Anthony McPaul
Nick Lindsay
Justin Boylson
Other KMP
Haydn Lynch
David Power
-
-
1,500,000
1,500,000
3,000,000
1,500,000
-
-
-
1,500,000
1,500,000
-
-
-
-
-
-
-
-
-
1,500,000
1,500,000
1,500,000
1,500,000
(3,000,000)
1,500,000
1,500,000
-
-
-
(1) 1,500,000
1,500,000
1,500,000
1,500,000
-
-
-
-
-
-
-
-
(1)
Balance held at the date of resignation (17 March 2020).
All vested options are exercisable at the end of the year.
j) Other transactions with Key Management Personnel
• ResCap Investments Pty Ltd - A director, Mr Dennis Karp, is a director of, and holds a controlling interest
in, ResCap Investments Pty Ltd (“ResCap”). The Group has borrowing arrangements with ResCap, along
with transactions for the sublease of office premises and a service agreement for the provision of
administrative services. The ResCap office sublease ended in July 2019 and the service agreement ended
in February 2020.
Manuka Resources Ltd
For the year ended 30 June 2020
31
• Cobar Gold Unit Trust 2020- Mr Dennis Karp is a director of Cobar United Pty Ltd that acted as trustee for
the Cobar Gold Unit Trust 2020. Manuka entered into a prepayment in relation to the sale of gold ore to
Cobar United Pty Ltd ATF Cobar Gold Unit Trust 2020 amounting to $950,000. There is a call and put option
in Manuka’s favour in relation to the agreement. The put option was exercised in June 2020 and payment
was made on 26 June 2020 to settle the agreement.
Aggregate amounts of each of the above types of other transactions with key management personnel of
Manuka Resources Limited:
interest charged on loan
Details of related party transactions with ResCap
through the loan facility:
•
Details of related party transactions with ResCap as
trade and other creditors
•
amounts charged pursuant to sublease to
ResCap and month to month lease payments
amounts charged pursuant to service
agreement to ResCap
•
Details of related party transactions with Cobar Unit
Trust through the loan facility:
•
of gold
interest paid in relation to prepayment of sale
Details of balances with related parties:
Balance of loan with Manuka Resources Ltd
- payable to ResCap Investments Pty Ltd
- payable to Cobar Unit Trust
Balance of loan with Mt Boppy Resources Pty Ltd
- payable to ResCap Investments Pty Ltd
End of audited Remuneration Report
30 June
2020
$
30 June
2019
$
107,225
106,374
21,267
83,094
240,000
360,000
95,000
-
2,005,327
-
1,776,080
-
196,143
3,084,143
Indemnities given to, and insurance premiums paid for, auditors and officers
During the period, Manuka Resources has paid a premium to insure officers of the Company. The officers of
the Company that are covered by the insurance policy includes all directors.
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, other than where such liabilities
arise out of 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 to cause detriment to the
Company.
The Company has not otherwise, during or since the end of the financial period, except to the extent permitted
by law, indemnified or agreed to indemnify any current or former officer of the Company against a liability
incurred as such by an officer.
The Company has agreed to indemnify its auditors, Grant Thornton, to the extent permitted by law, against
any claim by a third party arising from the Company’s breach of its agreement. The indemnity requires the
Company to meet the full amount of any such liabilities including a reasonable amount of legal costs.
Manuka Resources Ltd
For the year ended 30 June 2020
32
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party,
for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.
No proceedings have been brought, or intervened in, on behalf of the company with leave of the court under
section 237 of the Corporations Act 2001.
Audit and non-audit services
Details of the amounts paid or payable to the auditor (Grant Thornton Audit Pty Ltd) for audit and non-audit
services during the year are disclosed in Note
.
The Company may decide to employ the auditor on assignments additional to their statutory audit duties
where the auditor’s expertise and experience with the Company and/or the Group are important.
The board of directors is satisfied that the provision of the non-audit services is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that
the provision of non-audit services by the auditor did not compromise the auditor independence requirements
of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the board of directors to ensure they do not impact the
impartiality and objectivity of the auditor, and
• none of the services undermine the general principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants.
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under s.307C of the Corporations Act 2001 is
included on the following page of this financial report and forms part of this Directors’ Report.
Signed in accordance with a resolution of the Directors
Dennis Karp
Executive Chairman
Dated the 25th day of September 2020
Liability limited by a scheme approved under Professional Standards Legislation.
Manuka Resources Ltd
For the year ended 30 June 2020
34
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2020
Sales revenue
Cost of sales
Operating profit
Other income
Other expenses
Movement in fair value of derivative liability
Share based payment credit / (expense)
Loss on acquisition of asset
Loss before finance expenses
Finance expenses
Loss before income tax
Income tax expense
Loss for the year attributable to members of
Manuka Resources Limited
Other comprehensive income
Total comprehensive loss for the year
attributable to members of Manuka Resources
Limited
Notes
5(a)
6(a)
5(b)
6(c)
13
26
30
7
8
30 June
2020
$
9,261,798
(7,264,503)
1,997,295
206,522
30 June
2019
$
-
-
-
-
(2,554,138)
(1,760,183)
(239,130)
(435,611)
-
(1,025,062)
(3,527,781)
(4,552,843)
-
-
150,266
(1,552,915)
(3,171,832)
(2,256,406)
(5,428,238)
-
(4,552,843)
(5,428,238)
-
-
(4,552,843)
(5,428,238)
Loss per share for loss attributable to the
ordinary equity holders of the Company
Basic and diluted loss per share (cents per share)
25
(3.28)
(4.08)
This statement should be read in conjunction with the notes to the financial statements.
Manuka Resources Ltd
For the year ended 30 June 2020
35
Consolidated Statement of Financial Position
As of 30 June 2020
Assets
Current
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Total current assets
Non-current
Mine properties and development assets
Exploration and evaluation assets
Property, plant and equipment
Right of use asset
Other financial assets
Total non-current assets
Total assets
Liabilities
Current
Trade and other payables
Provisions
Borrowings
Lease liabilities
Current liabilities
Non-current
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net deficit
Equity
Share capital
Other contributed equity
Share based payment reserve
Accumulated losses
Total equity
Notes
30 June
2020
$
30 June
2019
$
11
12
14
15
16
17
18
19
20
21
19
18
21
18
22
23
26
1,509,040
7,653,740
2,007,761
351,127
11,521,668
62
12,914
-
-
12,976
9,343,296
3,307,887
322,305
-
8,589,019
2,200,710
194,557
-
6,456,370
6,253,362
24,905,547
11,761,959
36,427,215
11,774,935
7,670,573
2,246,362
188,617
17,607
25,704,579
17,234,551
128,937
-
33,692,706
19,498,520
5,108,158
5,339,653
73,078
-
5,181,236
5,339,653
38,873,942
24,838,173
(2,446,727)
(13,063,238)
5,112,041
8,867,407
1,486,077
1
296,170
-
(17,912,252)
(13,359,409)
(2,446,727)
(13,063,238)
This statement should be read in conjunction with the notes to the financial statements.
Manuka Resources Ltd
For the year ended 30 June 2020
36
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Share
Capital
Other
Contributed
Equity
Share based
payment
reserve
Accumulated
losses
Total equity
$
$
$
$
Balance at 1 July 2018
1
296,170
749,835
(8,530,740)
(7,484,734)
Loss for the period
Other comprehensive
income
Total comprehensive loss
for the period
Reversal of share options
expired
Reversal of share based
payment expense
Balance at 1 July 2019
Loss for the period
Other comprehensive
income
Total comprehensive loss
for the period
-
-
-
-
-
1
-
-
-
-
-
-
-
-
296,170
-
-
-
Contribution of equity
5,112,040
9,934,830
-
-
-
(5,428,238)
(5,428,238)
-
-
(5,428,238)
(5,428,238)
(599,569)
599,569
-
(150,266)
-
(150,266)
-
-
-
-
-
-
(13,359,409)
(13,063,238)
(4,552,843)
(4,552,843)
-
-
(4,552,843)
(4,552,843)
-
-
-
15,046,870
(1,363,593)
1,486,077
Share issue costs
Share based payments
-
-
(1,363,593)
-
1,486,077
Balance at 30 June 2020
5,112,041
8,867,407
1,486,077
(17,912,252)
(2,446,727)
This statement should be read in conjunction with the notes to the financial statements.
Manuka Resources Ltd
For the year ended 30 June 2020
37
Consolidated Statement of Cash Flows
For the year ended 30 June 2020
Notes
2020
$
Operating activities
Receipts from customers
Payments to suppliers and employees
Other income
Finance costs paid
Net cash from / (used in) operating activities
24
Investing activities
Acquisition of property, plant and equipment
Payments for development and exploration assets
Payment for other assets
Cash on acquisition of Mt Boppy Resources
Net cash (used in) / from investing activities
Financing activities
Proceeds from borrowings
Repayments of borrowings
Repayment of lease liabilities
Proceeds from issues of ordinary shares
Net cash from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, at beginning of the
period
8,822,251
(6,223,442)
206,522
(1,037,063)
1,768,268
(6,816,544)
(7,927,193)
(91,280)
-
(14,835,017)
24,009,356
(9,860,466)
(73,163)
500,000
14,575,727
1,508,978
62
Cash and cash equivalents, at end of period
11
1,509,040
This statement should be read in conjunction with the notes to the financial statements.
2019
$
-
(648,586)
-
-
(648,586)
-
-
-
62
62
635,118
-
-
-
635,118
(13,406)
13,468
62
Manuka Resources Ltd
For the year ended 30 June 2020
38
Notes to the Financial Statements
Nature of operations and general information and statement of compliance
1
The principal activities of Manuka Resources Ltd comprise mine development, mining and processing of silver
and gold and exploration activities.
During the financial year the Company’s principal activities related to refurbishing and upgrading the
Wonawinta production facility, the finalisation of a mine plan for Mt Boppy, and the identification and
appointment of the required staff to oversee the two projects (the mining of Mt Boppy and the production
process at Wonawinta) and commencement of production at the Wonawinta plant.
The financial report includes the consolidated financial statements and notes of Manuka Resources Limited
and its controlled entity Mt Boppy Resources Pty Ltd (Consolidated Group or Group).
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. These include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance
with AIFRS ensures the that the financial report, comprising the financial statements and the notes, complies
with International Financial Reporting Standards (IFRS). Manuka Resources Limited is a for-profit entity for the
purpose of preparing the financial statements.
Manuka Resources Ltd is a Public Company incorporated and domiciled in Australia. The address of its
registered office and its principal place of business is Level 4, Grafton Bond Building, 201 Kent Street, Sydney,
New South Wales.
The consolidated financial statements for the year ended 30 June 2020 were approved and authorised for
issue by the Board of Directors on 25th September 2020. The directors have the power to amend and reissue
the financial statements.
Changes in accounting policies
2
2.1 New and amended standards adopted as at 1 July 2019
The Group has adopted all the new, revised or amending Accounting Standards and Interpretations issued by
the AASB that are relevant to its operations and effective for the current annual reporting period. New and
revised Standards and amendments thereof and Interpretations effective for the current year that are relevant
to the Group include:
AASB 16 – Leases
The Group adopted AASB 16 from 1 July 2019, which replaces AASB 117 Leases and some lease-related
Interpretations:
•
•
•
•
Requires all leases to be accounted for ‘on-balance sheet’ by lessees, other than short-term and low
value asset leases
Provides new guidance on the application of the definition of lease and on sale and lease back
accounting
Largely retains the existing lessor accounting requirements in AASB 117
Requires new and different disclosures about leases
Manuka Resources Ltd
For the year ended 30 June 2020
39
The Group has reviewed its contracts that were in place at 1 July 2019 and determined that there were no
operating leases with a term greater than 12 months. The Group has not applied any of the practical
expedients allowed when applying AASB 16.
On adoption of AASB 16, the Group recognises on its balance sheet the minimum lease payments under its
lease arrangements as ‘right-of-use assets’ with a corresponding financial lease liability. The financial liability
is adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of
any future restoration, removal or dismantling costs. Straight-line operating lease expense previously
recognised under AASB 117 is replaced with a depreciation charge for the leased asset (included in operating
costs), and an interest expense on the recognised lease liability (included in finance costs). In the earlier
periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to
lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation
in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in
operating activities and the principal portion of the lease payments are separately disclosed in financing
activities.
Impact of adoption
AASB 16 was applied upon the Company entering into a leasing arrangement during the financial year, as a
result there was no impact on the opening retained earnings. A right-of-use asset of $258,702 and a lease
liability of $258,702 were recognised on 1 January 2020 being the commencement date of the lease.
Interpretation 23 – Uncertainty over income tax treatments
Interpretation 23 clarifies how to apply the recognition and measurement requirements of AASB 112 ‘Income
Taxes’ in circumstances where uncertain tax treatment exists. The Interpretation specifically addresses the
following:
•
•
•
•
Whether an entity considers uncertain tax treatments separately
The assumptions an entity makes about the examination of tax treatments by taxation authorities
How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and
tax rates
How an entity considers changes in facts and circumstances
The Group determines whether to consider each uncertain tax treatment separately or together with one or
more other uncertain tax treatments and uses the approach that better predicts the resolution of the
uncertainty. The Group applies significant judgement in identifying uncertainties over income tax treatments.
The Group has adopted Interpretation 23 from 1 July 2019. Upon adoption of the Interpretation, the Group
considered whether it has any uncertain tax positions. The Group has determined, based on its tax compliance,
that it is probable that its tax treatments will be accepted by the taxation authorities. The adoption of
Interpretation 23 did not have an impact on the consolidated financial statements of the Group.
The Group will continue to review the “Same Business Test” and the “Continuity of ownership test” to assess
whether it has an impact on the accessibility of tax losses.
2.2 Accounting standards and interpretations not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for the 30
June 2020 reporting period and have not been early adopted by the Group. The Group’s assessment of the
Manuka Resources Ltd
For the year ended 30 June 2020
40
impact of these new standards and interpretations is that they are not expected to have a material impact on
the entity in the current or future reporting periods and on foreseeable future transactions.
Summary of accounting policies
3
3.1 Overall considerations
The significant accounting policies that have been used in the preparation of these financial statements are
summarised below.
The financial statements have been prepared using the measurement bases specified by Australian Accounting
Standards for each type of asset, liability, income and expense. The measurement bases are more fully
described in the accounting policies below.
The financial statements have been prepared on a historical cost basis, except for the assets held for sale which
are measured at fair value less cost of disposal. The financial statements are presented in Australian dollars
which is the Company’s functional and presentation currency.
3.2 Going Concern
The financial report has been prepared on a going concern basis, which contemplates continuity of normal
business activities and realisation of assets and settlement of liabilities in the ordinary course of business. The
financial statements do not include any adjustments that might be necessary to realise its assets and discharge
its liabilities in the normal course of business, and at the amounts stated in the financial report, should the
Group not be able to continue as a going concern.
During the financial year ended 30 June 2020, the Group achieved the following significant milestones:
•
•
•
The Group entered into a new debt facility (TFC/TA Facility) of USD$13 million (approximately AUD$19
million) with TransAsia Private Capital Limited (TPC) which was then increased to USD$ 14 million. The
facility has been fully drawdown to fund the necessary capital and operational expenses to
recommission the plant located at Wonawinta. The repayments are scheduled for in three tranches
being USD$2.5 million on 30 November 2020, USD$ 5 million on 3 February 2021 and USD$ 6.5 million
on 5 April 2021;
On 17 April 2020, The Group completed its refurbishment and upgrade program of the plant and started
gold commercial production, achieving $9.261 million of revenue for the period ended 30 June 2020;
and
On 12 June 2020, the Group closed its offer under its prospectus dated 22 May 2020 after a successful
capital raising of $7,000,000. The Group was admitted to Official Quotation on the ASX on 14 July 2020.
Whilst a significant improvement in the net liability position of the Group is noted driven by commercial
production, and the raising of $7,000,000 in capital, the Group incurred a loss for the year ended 30 June 2020
of $4,552,843 (2019: 5,428,238) and still had a deficit of assets of $2,446,727 (2019: 13,063,238) and is in a
net current liability position of $22,171,038 (2019: 19,485,544) as of the reporting date.
Management have prepared cash flow projections for the period to 30 September 2021 that support the ability
of the Group to continue as a going concern.
In order to repay its current liabilities in the timeframe, the projections rely on the ability of the Group
continuing gold production profitably based on the forecast gold price, the cut-off grade, the amount of known
resources and reserves, the successful transition of the plant to silver production at Wonawinta, the forecast
silver price and the forecast USD/AUD exchange rate.
Manuka Resources Ltd
For the year ended 30 June 2020
41
In the event the Group is unable to achieve some of the matters detailed above, this would create a material
uncertainty with respect to the ability of the Group to continue as a going concern and accordingly to realise
its assets and extinguish its liabilities in the ordinary course of operations.
In such a scenario the Group has a number of alternative plans including:
•
Undertaking capital raising activities on the market; and
Renegotiating with TPC the terms of the facility by delaying some of the repayment dates and/or
•
finding alternative financing arrangements.
As a result, the Directors are convinced with respect to the favourable outcome of the above matters and as
such have therefore prepared the financial statements on a going concern basis.
3.3 Basis of consolidation
The Group’s financial statements consolidate those of the Parent Company and all of its subsidiaries at the
end of the reporting period. The parent controls a subsidiary if it is exposed, or has rights, to variable returns
from its involvement with the subsidiary and has the ability to affect those returns through its power over the
subsidiary. All subsidiaries have a reporting date of 30 June.
All transactions and balances between Group companies are eliminated on consolidation, including unrealised
gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset
sales are reversed on consolidation, the underlying asset is also tested for impairment from a group
perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary
to ensure consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are
recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.
3.4 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the full Board of Directors.
3.5 Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (‘the functional currency’). The consolidated
financial statements are presented in Australian dollars, which is Manuka Resources Limited's functional and
presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss. They are deferred in equity if they are
attributable to part of the net investment in a foreign operation.
Manuka Resources Ltd
For the year ended 30 June 2020
42
Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss,
within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or
loss on a net basis within other gains/(losses).
Income taxes
3.6
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in
other comprehensive income or directly in equity.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian
Taxation Office (ATO) and other fiscal authorities relating to the current or prior reporting periods that are
unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the
financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or
substantively enacted by the end of the reporting period.
Deferred income taxes are calculated using the liability method on temporary differences between the
carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the
initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction
is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated
with investments in subsidiaries and joint ventures is not provided if reversal of these temporary differences
can be controlled by the Company and it is probable that reversal will not occur in the foreseeable future.
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply
to their respective period of realisation, provided they are enacted or substantively enacted by the end of the
reporting period.
Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against
future taxable income. Deferred tax liabilities are always provided for in full.
Deferred tax assets and liabilities are offset only when the Company has a right and intention to set off
current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit
or loss, except where they relate to items that are recognised in other comprehensive income (such as the
revaluation of land) or directly in equity, in which case the related deferred tax is also recognised in other
comprehensive income or equity, respectively.
3.7 Leases
As explained in Note 2.1 above, the Company has changed its accounting policy for leases where the Company
is the lessee.
Policy applicable before 1 July 2019
Until 30 June 2019, leases where a significant portion of the risks and rewards of ownership are not transferred
to the Company as lessee are classified as operating leases. Payments made under operating leases (net of
any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of
the lease.
Policy applicable from 1 July 2019
On adoption of AASB 16, the Group recognises on its balance sheet the minimum lease payments under its
lease arrangements as ‘right-of-use assets’ with a corresponding financial lease liability. The financial liability
Manuka Resources Ltd
For the year ended 30 June 2020
43
is adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of
any future restoration, removal or dismantling costs. Straight-line operating lease expense recognised
previously recognised under AASB 117 is replaced with a depreciation charge for the leased asset (included in
operating costs), and an interest expense on the recognised lease liability (included in finance costs). The new
policy and the impact of the change are described in Note 2.1.
Short-term leases and leases of low value assets
The group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of
machinery that have a lease term of 12 months of less. The Group recognises the lease payments associated
with these leases as an expense on a straight-line basis over the lease term.
3.8 Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Company is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the
Company: identifies the contract with a customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates of variable consideration and the time
value of money; allocates the transaction price to the separate performance obligations on the basis of the
relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when
or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the
goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such
as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other
contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount'
method. The measurement of variable consideration is subject to a constraining principle whereby revenue
will only be recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty
associated with the variable consideration is subsequently resolved. Amounts received that are subject to the
constraining principle are initially recognised as deferred revenue in the form of a separate refund liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the
goods, which is generally at the time of delivery. The Company has one Key Customer which is an LBMA
Accredited Refinery. Sales revenue is recognised at the time of the Lock-in Contract. This is when goods are
delivered and title and risk passes to the customer. The Lock-in contract is based on provisional assays at the
spot price. Final assays are completed at the Outturn and the resulting difference in product is deposited to
the Company’s Unallocated Metals account, where the goods are recognised as Inventory at cost price.
3.9 Government grants
Grants from the government, including the COVID-19 cashflow boost, are recognised at their fair value where
there is a reasonable assurance that the grant will be received, and the Group will comply with all attached
conditions. Government grants are recorded in other income.
Manuka Resources Ltd
For the year ended 30 June 2020
44
3.10 Operating expenses
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.
3.11 Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest.
These costs are only carried forward to the extent that they are expected to be recouped through the
successful development of the area or where activities in the area have not yet reached a stage that permits
reasonable assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the year in
which the decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are transferred to mine
properties and amortised over the life of the area according to the rate of depletion of the economically
recoverable reserves.
Costs of site restoration are provided over the life of the facility from when exploration commences and are
included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant,
equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of
the mining permits. Such costs have been determined using estimates of future costs, current legal
requirements and technology on a discounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of
site restoration, there is uncertainty regarding the nature and extent of the restoration due to community
expectations and future legislation. Accordingly, the costs have been determined on the basis that the
restoration will be completed within one year of abandoning the site. A regular review for impairment is
undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in
relation to that area of interest. Exploration expenditure which fails to meet at least one of the conditions
outlined above is written off.
3.12 Property, plant and equipment
Property, plant, equipment, is stated at cost less accumulated depreciation and any impairment in value.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Company and
the cost of the item can be measured reliably.
All other repairs and maintenance are charged to the income statement during the financial year in which they
are incurred.
Manuka Resources Ltd
For the year ended 30 June 2020
45
Depreciation commences on assets when it is deemed they are capable of operating in the manner intended.
Useful lives are examined on an annual basis and adjustments, where applicable, are made on a revised useful
life basis.
Asset
Freehold land – at cost
Computer Equipment:-
- Laptops and mobile devices
- Other Computer equipment
Plant and Equipment
Ball Mill Motor
Other Pumps and Motors
Generators
Other
Processing Plant
Depreciation rate
not depreciated
2 years effective life (50%) - straight-lined
4 years effective life (25%) - straight-lined
25 years effective life (4%) - straight-lined
20 years effective life (5%) - straight-lined
10 years effective life (10%) - straight-lined
2-5 years effective life (20% to 50%) - straight-lined
units of production
The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable.
3.13 Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument and are measured initially at fair value adjusted by transactions costs,
except for those carried at fair value through profit or loss, which are measured initially at fair value.
Subsequent measurement of financial assets and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire,
or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is
derecognised when it is extinguished, discharged, cancelled or expires.
Except for those trade receivables that do not contain a significant financing component and are measured at
the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets, other than those designated and effective as
hedging instruments, are classified into the following categories upon initial recognition:
•
•
•
•
financial assets at amortised cost
financial assets at fair value through profit or loss (FVPL)
debt instruments at fair value through other comprehensive income (FVOCI)
equity instruments at fair value through other comprehensive income (FVOCI)
Classifications are determined by both:
•
•
The entity’s business model for managing the financial asset
The contractual cash flow characteristics of the financial assets
Manuka Resources Ltd
For the year ended 30 June 2020
46
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVPL):
•
•
they are held within a business model whose objective is to hold the financial assets and collect its
contractual cash flows; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting
is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and
most other receivables fall into this category of financial instruments.
Financial assets at fair value through profit or loss (FVPL)
Financial assets that are held within a business model other than ‘hold to collect’ or ‘hold to collect and sell’
are categorised at fair value through profit and loss. Further, irrespective of business model, financial assets
whose contractual cash flows are not solely payments of principal and interest are accounted for at FVPL. All
derivative financial instruments fall into this category.
Impairment of financial assets
The AASB 9 impairment model uses forward looking information to recognize expected credit losses - the
‘expected credit losses (ECL) model’. The application of this impairment model depends on whether there has
been a significant increase in credit risk.
The Group considers a broader range of information when assessing credit risk and measuring expected credit
losses, including past events, current conditions, reasonable and supportable forecasts that affect the
expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
•
•
financial instruments that have not deteriorated significantly in credit quality since initial recognition or
that have low credit risk (‘Stage 1’); and
financial instruments that have deteriorated significantly in credit quality since initial recognition and
whose credit risk is not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date. ‘12-
month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are
recognised for the second category. Measurement of the expected credit losses is determined by a probability-
weighted estimate of credit losses over the expected life of the financial instrument.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract
assets and records the loss allowance at the amount equal to the expected lifetime credit losses. In using this
practical expedient, the Group uses its historical experience, external indicators and forward-looking
information to calculate the expected credit losses using a provision matrix.
Manuka Resources Ltd
For the year ended 30 June 2020
47
The Group assess impairment of trade receivables on a collective basis as they possess credit risk
characteristics based on the days past due.
Classification and measurement of financial liabilities
The Group’s financial liabilities include trade and other payables.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs
unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial
liabilities are measured at amortised cost using the effective interest method except for derivatives and
financial liabilities designated at FVPL, which are carried subsequently at fair value with gains or losses
recognised in profit or loss (other than derivative financial instruments that are designated and effective as
hedging instruments).
3.14 Inventories
Inventories are measured at the lower of their costs and net realisable value. An impairment provision is
recognised when there is objective evidence that the Company will not be able to realise the carrying amount
through use or sale.
Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable
value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed
overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned
to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are
determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the estimated costs necessary to make
the sale inventories are valued at the lower of cost and net realisable value.
3.15 Care and Maintenance
When a mine moves into the care and maintenance stage, the costs of maintaining the mine are expensed in
the period as incurred unless there are future economic benefits for other operating mines.
3.16 Mine development
Mine development expenditure relates to costs incurred to access a mineral resource. It represents those
exploration and evaluation costs incurred after the technical feasibility and commercial viability of extracting
the mineral resource has been demonstrated and an identified mineral reserve is being prepared for
production (but is not yet in production).
Significant factors considered in determining the technical feasibility and commercial viability of the project
are the completion of a feasibility study, the existence of sufficient proven and probable reserves to proceed
with development and approval by the Board of directors to proceed with development of the project. Mine
development costs include direct and indirect costs associated with mine infrastructure, pre-production
development costs, development excavation, project execution costs and other subsurface expenditure
pertaining to that area of interest. Costs related to tangible surface plant and equipment and any associated
land and buildings are accounted for as property, plant and equipment.
Development costs are carried forward in respect of areas of interest in the development phase until
commercial production commences. When commercial production commences, carried forward development
costs are transferred to Mine Properties and amortised on a units of production basis over the life of
economically recoverable reserves of the area of interest. The Group assesses future capital costs required to
bring existing reserves into production and includes an estimate of these costs in the base when calculating
amortisation expense. Development assets are assessed for impairment if an impairment trigger is identified.
Manuka Resources Ltd
For the year ended 30 June 2020
48
For the purposes of impairment testing, development assets are allocated to CGUs to which the development
activity relates.
Production Stripping
Removal of waste material normally continues after commercial production commences and throughout the
life of a mine. This activity is referred to as production stripping. The costs of production stripping are
capitalised. The amount of stripping costs deferred is based on the ratio of waste tonnes mined and ore tonnes
mined. Amortisation of the production stripping asset takes place on a unit of production based on the
identified component of the ore body which is mined. An identifiable component is a specific volume of the
ore body that is made more accessible by the stripping activity. Significant judgement is required to identify
and define these components, and also to determine the expected volumes (e.g. tonnes) of waste to be
stripped and ore to be mined in each of these components.
3.17 Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents includes cash on hand and at bank,
deposits held at call with financial institutions, other short term, highly liquid investments with maturities of
three months or less, that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value and bank overdrafts.
3.18 Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the
redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest
method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred
until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility
will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period
of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor
to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which
is measured as the difference between the carrying amount of the financial liability and the fair value of the
equity instruments issued.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting period.
3.19 Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalised during the period of time that is required to complete and
prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial
period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred.
Manuka Resources Ltd
For the year ended 30 June 2020
49
3.20 Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are
subsequently remeasured to their fair value at the end of each reporting period. Changes in the fair value of
derivatives are recognised immediately in profit or loss and are included in other gains/(losses).
3.21 Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled
within 12 months of the reporting date are recognised in other payables in respect of employees’ services up
to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefit obligations
The Group also has liabilities for long service leave that are not expected to be settled wholly within 12 months
after the end of the period in which the employees render the related service. These obligations are therefore
measured as the present value of expected future payments to be made in respect of services provided by
employees up to the end of the reporting period using the projected unit credit method. Consideration is given
to expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the end of the reporting period of high-quality
corporate bonds with terms that match, as closely as possible, the estimated future cash outflows.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised
in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the Group does not have an
unconditional right to defer settlement for at least twelve months after the reporting period, regardless of
when the actual settlement is expected to occur.
Share based payments
Options over ordinary shares have been granted to employees, Directors and finance providers from time to
time, on a discretionary basis. The cost of these share-based payments is measured by reference to the fair
value at the date at which they are granted using an option pricing model. The options may be subject to
service or other vesting conditions and their fair value is recognised as an expense together with a
corresponding increase in other reserve equity over the vesting period.
3.22 Equity, reserves and dividend payments
Share capital represents the fair value of shares that have been issued. Any transaction costs associated with
the issuing of shares are deducted from share capital, net of any related income tax benefits.
Retained earnings include all current and prior period retained profits.
Dividend distributions payable to equity shareholders are included in other liabilities if the dividends have
been being appropriately authorised and are no longer at the discretion of the entity prior to the reporting
date.
All transactions with owners of the parent are recorded separately within equity.
Manuka Resources Ltd
For the year ended 30 June 2020
50
3.23 Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
3.24 Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the
cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement
of financial position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST components of
investing and financing activities, which are disclosed as operating cash flows.
3.25 Rehabilitation
Provisions made for rehabilitation are recognised where there is a present obligation as a result of exploration,
development or production activities having been undertaken, and it is probable that an outflow of economic
benefits will be required to settle the obligation. The estimated future obligations include the costs of
removing facilities, abandoning mining activities and restoring the affected areas. The provision for future
rehabilitation costs is the best estimate of the present value of the expenditure required to settle the
obligation at the reporting date, based on current legal requirements and technology. Future rehabilitation
costs are reviewed annually, and any changes are reflected in the present value of the rehabilitation provision
at the end of the reporting period. The amount of the provision for future rehabilitation costs relating to
exploration and development activities is capitalised as a cost of those activities. If the effect is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money, and where appropriate the risks specific to the liability.
3.26 Significant management judgement in applying accounting policies and estimation
uncertainty
When preparing the financial statements, management undertakes a number of judgements, estimates and
assumptions about the recognition and measurement of assets, liabilities, income and expenses.
Rehabilitation provision
The Company is required by the relevant regulatory authorities to ensure that appropriate rehabilitation is
carried out on tenements that are mined. The amount of the rehabilitation cost is an estimate based upon the
estimated life of each mined tenement, as well as the future timing and cost of such rehabilitation. The
provision is constantly revised as information about the life of mine, depth of mining and cost estimates are
updated.
Manuka Resources Ltd
For the year ended 30 June 2020
51
Share based payment reserve
Management uses valuation techniques to determine the fair value of the reserve created when options are
issued to employees and executives. This involves developing estimates and assumptions determined by
reference to historical data of comparable entities over a period of time. Management bases its assumptions
on observable data as far as possible, but this is not always available. In that case management uses the best
information available.
Taxation
Balances disclosed in the financial statements and the notes thereto related to taxation are based on the best
estimates of the directors. These estimates consider both the financial performance and position of the Group
as they pertain to current income taxation legislation, and the directors understanding thereof. No adjustment
has been made for pending or future taxation legislation. The current income tax position represents the
directors’ best estimate, pending an assessment by the Australian Taxation Office.
Exploration and evaluation costs
Exploration and evaluation costs have been capitalised and are only carried forward to the extent that they
are expected to be recouped through the successful development of the area or where activities in the area
have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable
reserves. Key judgements are applied in considering the costs to be capitalised which includes determining
expenditures directly related to these activities and allocating overheads between those that are expensed
and capitalised.
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 Group based on known information. This consideration extends to the nature of the
products and services offered, customers, supply chain, staffing and geographic regions in which the Group
operates. 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 Group unfavourably as at the reporting date or subsequently as a result of the
Coronavirus (COVID-19) pandemic.
Impairment
The Group assesses impairment at the end of each reporting period by evaluating conditions and events
specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets
are reassessed using the directors’ best estimate of the asset’s fair value, which can incorporate various key
assumptions. Any amounts in excess of the fair value are impaired.
Life of mine method of amortisation and depreciation
The Group applies the life of mine method of amortisation and depreciation to its mine specific plant and to
mine properties and development based on ore tonnes mined. These calculations require the use of estimates
and assumptions. Significant judgement is required in assessing the available reserves and the production
capacity of the plants to be depreciated under this method. Factors that are considered in determining
reserves and production capacity are the complexity of metallurgy, markets and future developments. When
these factors change or become known in the future, such differences will impact pre tax profit and carrying
values of assets.
Net realisable value of inventories
The calculation of net realisable value for raw materials, work in progress and finished goods involves
significant judgement and estimates in relation to timing and cost of processing, commodity prices, recoveries.
Manuka Resources Ltd
For the year ended 30 June 2020
52
A change in any of these assumptions will alter the estimated net realisable value and may therefore impact
the carrying value of inventories.
Determination of mineral resources and ore reserves
The Group reports its Mineral Resources and Ore Reserves in accordance with the Joint Ore Reserves
Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves (JORC Code). The information on Mineral Resources and Ore Reserves is prepared by Competent
Persons as defined by the JORC Code.
There are numerous uncertainties inherent in estimating the quantities of economically recoverable Mineral
Resources and Ore Reserves. Assumptions that are valid at the time of estimation may change significantly
when new information becomes available.
Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change
the economic status of reserves and may, ultimately, result in the reserves being restated. Such changes may
impact asset carrying values, depreciation and amortisation rates, deferred development costs and provisions
for rehabilitation.
Commencement of production
The Group achieved operating status on 17 April 2020, reaching production for accounting purposes.
Accordingly, for the period 17 April 2020 to 30 June 2020, revenues derived from mining activities and
associated costs were no longer capitalised and have been recognised in profit or loss, and depreciation and
amortisation of mine properties commenced on 17 April 2020.
Segment reporting
4
Identification of reportable segments
The Group has identified that it operates in only one segment based on the internal reports that are reviewed
and used by the board of directors (chief operating decision makers) in assessing performance and
determining the allocation of resources. The Group is operated under one business segment which is
investment in the exploration, appraisal, development and commercialisation of gold and silver deposits.
Currently all the Group’s gold and silver tenements and resources are in New South Wales.
Revenue and assets by geographical region
The Company's revenue is derived from sources and assets located wholly within Australia.
Major customers
The Company currently delivers all its product to one off-taker.
Financial information
Reportable items required to be disclosed in this note are consistent with the information disclosed in the
Statement of Profit or Loss and Other Comprehensive Income and Statement of Financial Position and are not
duplicated here.
Manuka Resources Ltd
For the year ended 30 June 2020
5
Revenue and other income
(a) Operating sales revenue
Sale of mineralised ore – gold (point in time)
Sale of mineralised ore – silver (point in time)
Total revenue from contracts with customers
(b) Other income
Government grant
Other income
Total other income
6
Expenses
(a) Cost of sales
Operating expenses
Royalties
Inventory movements
Total operating expenses
(b) Operating expenses
Mining expenses
Hauling and crushing expenses
Processing and refining expenses
Site administration expenses
Amortisation of mine properties
Total operating expenses
(c) Other expenses
Professional expenses
Employment expenses
Depreciation and amortisation - leases
IPO expenses
Other expenses
Total other expenses
53
30 June
2019
$
-
-
-
30 June
2019
$
-
-
-
-
30 June
2019
$
-
-
-
-
30 June
2019
$
-
-
-
-
-
30 June
2019
$
1,036,204
289,087
-
-
443,892
1,769,183
30 June
2020
$
9,243,350
18,448
9,261,798
30 June
2020
$
168,000
38,522
206,522
30 June
2020
$
8,555,954
439,201
(1,730,652)
7,264,503
30 June
2020
$
647,863
1,684,782
3,110,883
2,130,244
982,182
8,555,954
30 June
2020
$
1,169,448
519,420
64,145
429,282
371,843
2,554,138
6(b)
15
Manuka Resources Ltd
For the year ended 30 June 2020
54
7
Finance costs
Finance costs are made up of the following items:
Interest expenses and other finance charges – net of capitalisation of
borrowing costs
Net discounting impact of rehabilitation provisions and financial assets
Net foreign exchange loss
Accrued interest charged to notes
Total finance costs
8
Income tax expense
(a) Income tax benefit recognised in the income statement
Current tax
Deferred tax
Income tax as reported in the statement of comprehensive income
(b) Reconciliation of income tax expense to prima facie tax payable
The prima facie income tax expense on pre-tax accounting loss from
operations reconciles to the income tax expense in the financial
statements as follows:
Loss from ordinary activities before income tax expense
Tax at the Australian rate of 27.5% (2019: 27.5%)
Increase / (decrease) in income tax due to:
Temporary differences
Permanent differences
Unused tax losses not recognised
Income tax expense
(c) Deferred tax assets not recognised
Deferred tax assets
- carry forward tax losses at 27.5% (2019: 27.5%) not recognised
- other deferred tax assets
Deferred tax liabilities
Net deferred tax assets not recognised
The Company has no available franking credits.
30 June
2020
$
30 June
2019
$
2,439,578
242,794
181,135
664,274
3,527,781
2,038,085
(169,399)
-
387,720
2,256,406
30 June
2020
30 June
2019
$
-
-
-
$
-
-
-
(4,552,843)
(1,252,032)
(5,428,238)
(1,492,765)
(1,355,229)
(134,776)
2,742,037
-
175,758
427,052
889,955
-
6,003,401
2,985,591
(2,978,743)
6,010,249
3,261,364
2,027,940
(909,669)
4,379,635
Potential deferred tax assets attributable to tax losses and other temporary differences have not been brought
to account as at 30 June 2020. Because the directors do not believe it is appropriate to regard realisation of
the deferred tax assets as probable at this point in time. These benefits will be obtained if:
•
The Company derives future assessable income of a nature and an amount sufficient to enable the
benefit from the deductions for the expenditure to be realised; and
No changes in tax legislation adversely affect the Company in realising the benefit from the deductions
for the expenditure.
•
Manuka Resources Ltd
For the year ended 30 June 2020
55
Auditor remuneration
9
During the year the following fees were paid or payable for services provided by the auditor of the parent
entity, its related practices and non-related audit firms:
Audit of financial statements
Grant Thornton Audit Pty Ltd – audit and review of financial reports
Remuneration from audit of financial statements
Other services
Grant Thornton Australia Ltd – Investigating Accountants Report
Total other services remuneration
Total auditor’s remuneration
30 June
2020
$
189,997
189,997
69,025
69,025
259,022
30 June
2019
$
55,253
55,253
-
-
55,253
10 Dividends
No dividends for the year ended 30 June 2020 have been declared or paid to shareholders by the Company.
11 Cash and cash equivalents
Cash and cash equivalents comprise the following:
Cash at bank and in hand
Cash and cash equivalents as shown in the statement of
financial position and the statement of cash flows
Cash at bank and in hand is non-interest bearing.
12 Trade and other receivables
Current
Trade receivables
Other receivables
IPO funds raised not yet received
Total trade and other receivables
23
30 June
2020
$
1,509,040
1,509,040
30 June
2020
$
200,403
453,337
7,000,000
7,653,740
30 June
2019
$
62
62
30 June
2019
$
-
12,914
-
12,914
13 Derivative financial liability
During the 2018 financial year 8,000,000 and 12,500,000 share options were issued to Gleneagle Securities
(Aust) Pty Ltd and MCP Manager respectively in lieu of borrowing facility provided and extension of facilities.
The exercise price was variable to certain factors creating a derivative financial liability including a settlement
price the Company may be liable to pay in the instance of an IPO. During 2020, the Company issued an IPO
notice to option holders and has assessed the fair value of the settlement price of the options as $239,130 (30
June 2019: Nil).
Manuka Resources Ltd
For the year ended 30 June 2020
56
14
Inventories
Consumables, supplies and spares
Gold concentrate in circuit at cost
Ore stockpiles
Inventories at cost
15 Development assets and mine properties
Development assets at cost
Accumulated amortisation
Net carrying amount
Mine properties at cost
Accumulated amortisation
Net carrying amount
Total development assets and mine properties at cost
Accumulated amortisation
Total net carrying amount
30 June
2020
$
277,109
1,085,212
645,440
2,007,761
30 June
2019
$
-
-
-
-
30 June
2020
$
30 June
2019
$
450,919
3,307,887
-
-
450,919
3,307,887
9,874,559
(982,182)
8,892,377
10,325,478
(982,182)
9,343,296
-
-
-
-
-
-
30 June
2019
$
193,213
The following tables show the movements in development assets and mine properties:
Development assets
Opening carrying value
Additions at cost
Transfer to mine properties
30 June
2020
$
3,307,887
5,516,730
(8,373,698)
Closing carrying value net of accumulated amortisation
450,919
3,307,887
Mine Properties
Opening carrying value
Transfer from development assets
Additions at cost
Amortisation charge for the year
Closing carrying value net of accumulated amortisation
Total development assets and mine properties at cost
Opening carrying value
Additions at cost
Amortisation charge for the year
Total closing carrying value net of accumulated amortisation
-
8,373,698
1,500,861
(982,182)
8,892,377
3,307,887
7,017,591
(982,182)
9,343,296
-
-
-
-
-
193,213
3,114,674
-
3,307,887
Manuka Resources Ltd
For the year ended 30 June 2020
57
(a)
In June 2019, the Company purchased 100% of the equity of Mt Boppy Resources Pty Ltd (Mt Boppy). Mt
Boppy is a gold mine, 45km to the East of Cobar in NSW on the Barrier Highway. It has produced over
500,000oz at an average grade 15g p/t Au. Mt Boppy has been in intermittent production since 1895 but
has surprisingly had little exploration to date. The acquisition will provide immediate cashflow to the
group through processing of the existing approximate 36,000oz Au resource on site. It is an open-pit mine
that is fully permitted. The cost of the acquisition was settled through the issue of 61,772,40012 shares in
Manuka Resources Ltd.
16 Exploration and evaluation assets
Exploration and evaluation costs carried forward in respect of areas of interest:
30 June
2020
Exploration assets
Opening net book amount
Exploration and evaluation costs during the year
16(a)
Net book value
$
-
322,305
322,305
30 June
2019
$
-
-
-
(a) During the year, the Company undertook planning and evaluation activities to assess the potential to
mine silver, lead and zinc sulphide in line with the activities outlined in its prospectus dated 22 May 2020.
The Company’s exploration planning and drilling programs are divided into three key components, as
follows:
(i)
(ii)
(iii) early/follow-up-phase exploration on the Company’s exploration tenements/mining leases.
near-mine evaluation activities at Mt Boppy (ML/GLs and adjacent EL5842),
near-mine evaluation at Wonawinta (Wonawinta ML and adjacent Wonawinta ELs); and
Post balance date the Company commenced infill drilling of the Wonawinta silver resource. Detailed
planning for high priority targets at both the Mt Boppy Gold Project and the Wonawinta Silver Project
have commenced. Greenfields activities on less advanced or incompletely assessed prospects will also be
carried.
12 Pre share consolidation on 11 May 2020
Manuka Resources Ltd
For the year ended 30 June 2020
58
17 Property, plant and equipment
The following tables show the movements in property, plant and equipment:
Fixtures &
Fittings
Plant &
Equipment
IT Equipment
Land
$
$
$
$
Balance 30 June 2018
Cost
Depreciation
Net book value
Year ended 30 June 2019
754,994
-
754,994
Opening net book value
754,994
Additions
Depreciation
-
-
Closing net book value
754,994
1,664
(1,664)
-
-
-
-
-
964,714
-
964,714
964,714
251,000
-
1,215,714
Balance 30 June 2019
Cost
Depreciation
Net book value
754,994
1,664
1,215,714
-
(1,664)
-
754,994
-
-
1,215,714
1,215,714
Year ended 30 June 2020
Opening net book value
754,994
Additions
Depreciation
-
-
42,361
6,384,420
(13,065)
(96,396)
Closing net book value
754,994
29,296
7,503,738
12,757
(1,107)
11,650
Motor
Vehicles
$
Total
$
293,610
2,014,403
(33,749)
(34,834)
259,861
1,979,569
259,861
1,979,569
-
(29,859)
251,000
(29,859)
230,002
2,200,710
293,610
2,265,982
(63,608)
(65,272)
230,002
2,200,710
230,002
2,200,710
93,794
6,533,332
(34,455)
(145,023)
289,341
8,589,019
-
-
-
-
-
-
-
-
-
-
-
Balance 30 June 2020
Cost
Depreciation
Net book value
754,994
44,025
7,600,134
-
(14,729)
(96,396)
754,994
29,296
7,503,738
12,757
(1,107)
11,650
387,404
8,799,314
(98,063)
(210,295)
289,341
8,589,019
Included within Plant and Equipment is an amount of $782,105 (2019 : Nil) representing costs incurred on a
machine which was not brought to use as at 30 June 2020 and as such represents capital works in progress.
18 Right-of-use assets and liabilities
Leases
The Group has one lease contract for its office premises which commenced on 1 January 2020. The lease has
a lease term of two years with no option to extend and with a rent increase of 4% after one year of
commencement.
Short term lease expenses
The following table shows the short-term lease expenses during the period.
Rent expenses – office rental
Cost of Sales/Operating expenses – hire of plant
Total short-term lease expenses
30 June
2020
$
56,712
310,129
366,841
30 June
2019
$
83,094
-
83,094
Manuka Resources Ltd
For the year ended 30 June 2020
59
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the
period.
Year ended 30 June 2020
Balance at 1 July 2019
Additions
Depreciation
Closing net book value
Set out below are the carrying amounts of lease liabilities.
As at 1 July 2019
Additions
Accretion of interest (included in finance expenses)
Payments
As at 30 June 2020
Current
Non-current
30 June
2020
$
-
258,702
(64,145)
194,557
30 June
2020
$
-
258,702
16,477
(73,164)
202,015
128,937
73,078
30 June
2019
$
-
-
-
-
30 June
2019
$
-
-
-
-
-
-
-
Financial assets and liabilities
19
19.1 Categories of financial assets and financial liabilities
The carrying amounts of financial assets in each category are as follows:
Financial assets at amortised cost
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total financial assets at amortised cost
Total financial assets
Notes
11
12
19.3
30 June
2020
$
1,509,040
7,200,403
6,456,370
15,165,813
15,165,813
30 June
2019
$
62
-
6,253,362
6,253,424
6,253,424
Manuka Resources Ltd
For the year ended 30 June 2020
The carrying amounts of financial liabilities in each category are as follows:
Financial liabilities at amortised cost
Trade and other payables
Current borrowings – Other
Current borrowings – Related party loans owed by Manuka
Current borrowings – Convertible notes
Current borrowings – Short-term loan
Current borrowings – MCP Manager loan
Current borrowings – Senior secured lender – TPC facility (net of
borrowing costs)
Current borrowings – Related Party Loans owed by Mt Boppy
Lease liabilities
Notes
0
19.2(a)
19.2(b)
19.2(c)
19.2(d)
19.2(e)
19.2(f)
30 June
2020
$
7,670,573
251,664
2,507,878
1,760,513
426,475
-
20,561,906
196,143
202,015
60
30 June
2019
$
2,246,362
13,178
2,253,179
4,327,238
355,616
5,809,196
-
4,476,143
-
Total financial liabilities at amortised cost
33,577,167
19,480,912
Financial liabilities at fair value through profit and loss
Derivative liabilities
Total financial liabilities at fair value through profit and loss
Total financial liabilities
19.2 Borrowings
Borrowings include the following financial liabilities:
Notes
(a)
(b)
(c)
(d)
(e)
(f)
Current
Related party loans owed by Manuka
Convertible notes
Short-term Loan
MCP Manager Loan
Senior secured lender – TPC facility (net of borrowing costs)
Related party Loans owed by Mt Boppy
Other borrowings
Total current borrowings
Total borrowings
-
-
-
-
33,577,167
19,480,912
30 June
2020
$
2,507,878
1,760,513
426,475
-
20,561,906
196,143
251,664
25,704,579
25,704,579
30 June
2019
$
2,253,179
4,327,238
355,616
5,809,196
-
4,476,143
13,178
17,234,550
17,234,550
All borrowings are denominated in Australian Dollars except for the TPC Facility which is denominated in US
Dollars.
(a) The related party loans include the following:
ResCap Investments Pty Ltd
Gleneagle Securities (Aust) Pty Ltd
30 June
2020
$
2,005,327
502,551
30 June
2019
$
1,776,080
477,099
Manuka Resources Ltd
For the year ended 30 June 2020
61
The loan provided by ResCap Investments Pty Ltd includes working capital drawn down during the period
and amounts owing for services provided. The loan on the working capital portion has an interest rate of
16%. On 3 July 2019, the facility was subordinated to the TPC Facility changing the repayment date of the
loan to after the repayment of new TPC facility.
The loan provided by Gleneagle Securities (Aust) Pty Ltd includes working capital drawn down during the
period and amounts owing for services provided. The loan on the working capital portion has an interest
rate of 12%. On 3 July 2019, the facility was subordinated to the TPC Facility changing the repayment date
of the loan to after the repayment of new TPC facility.
(b) On the 1st September 2016 the Company issued 3,231,000 convertible notes with a $1.00 face value. The
terms of the Convertible Notes are outlined in a Convertible Note Deed Poll and they were to convert to
shares on occurrence of the any of an IPO event, an RTA event or a Trade Sale event. The Company was
admitted to the ASX on 30 June 2020, and the convertible note was reassessed as Other Contributed
Equity. At 30 June 2020, total interest of $1,760,513 (2019: $1,096,238) has been accrued on the note.
Interest owing on the convertible note was paid in full on 14 July 2020 and the principal of $3,231,000
was converted into equity on IPO.
(c) Short-term Loan – The Short-term loan was drawn down in November 2017 and was expected to be
repaid following a partial sale of an asset which fell over during final documentation. On 3 July 2019 this
facility was subordinated to the TPC Facility, changing the repayment date of the loan to after the
repayment of new TPC facility.
(d) MCP Manager Loan – was a secured facility which was repaid in full in July 2019, consequent to the receipt
of tranche 1 funds under the TPC Facility.
(e) The Company signed a US $13 Million debt facility agreement (TPC Facility) with TransAsia Private Capital
Limited (TPC) during July 2019, with the first drawdown occurring in July 2019. During April 2020 the TPC
Facility limit was increased to US$14 Million (and the additional US$1 Million was drawn) with repayments
scheduled for three tranches being US$2.5 Million on 5 October 2020, US$5 Million on 3 February 2021
and US$6.5 Million on 5 April 2021. The interest rate attributable to this facility is 14% per annum payable
quarterly.
The Company also entered into a further AU$3.25 Million facility (the “extension TFC Facility”) to fund
the company into production. Only AU$2 Million was drawn down against the extension TFC Facility. This
facility was repaid in full prior to 30 June 2020.
(f) The related party loans include the following loans advanced to Mt Boppy Resources Pty Ltd:
ResCap Investments Pty Ltd
Gleneagle Securities (Aust) Pty Ltd
30 June
2020
$
196,143
-
30 June
2019
$
3,084,143
1,392,000
The loan provided by ResCap Investments Pty Ltd includes amounts advanced and working capital drawn
down during the period. No interest has been charged. The loan provided by Gleneagle Securities (Aust)
Pty Ltd includes amounts advanced.
Manuka Resources Ltd
For the year ended 30 June 2020
62
The original vendor loans to Mt Boppy Resources Ltd from ResCap Investments Pty Ltd and Gleneagle
Securities (Aust) Pty Ltd which comprised amounts advanced as Vendor Loans were converted to equity
on 13 May 2020 at a share price of $0.20 as follows:
ResCap Investments Pty Ltd
Gleneagle Securities (Aust) Pty Ltd
19.3 Other financial assets
Other financial assets comprises the following:
Non-current assets at amortised cost
Manuka Resources - Deposit for environmental bond
Term Deposit – at amortised cost
Rental Bond – at amortised cost
Non-current asset at amortised cost
Mt Boppy Resources – Deposit for environmental bond
Vendor Loan
Shares issued
$
2,088,000
1,392,000
#
10,440,000
6,960,000
30 June
2020
$
30 June
2019
$
4,825,210
171,563
86,615
1,372,982
6,456,370
4,680,380
200,000
-
1,372,982
6,253,362
Notes
(a)
(b)
The carrying amount of other financial assets is considered a reasonable approximation of fair value unless
stated below:
(a) The Environmental Bond and Rental Bond Deposits in the name of Manuka Resources Ltd have been
amortised with reference to a discount rate of 2.6%. They have been discounted over a 6 year period
which is a reasonable approximation as to when the rehabilitation work will have to be conducted.
(b) The Environmental Bond Deposit in the name of Mt Boppy Resources Pty Ltd has been recorded at
historical cost which has been assessed as a reasonable approximation of its fair value given the
rehabilitation work will have to be undertaken within 18 months.
19.4 Other financial instruments
The carrying amount of the following financial assets and liabilities is considered a reasonable approximation
of fair value due to the short-term nature of the financial instruments:
• Trade and other receivables
• Cash and cash equivalents
• Trade and other payables
• Other financial assets
Manuka Resources Ltd
For the year ended 30 June 2020
63
20 Trade and other payables
Current
Trade creditors
Other creditors and accruals
Total trade and other payables
30 June
2020
$
5,733,337
1,937,236
7,670,573
30 June
2019
$
1,776,438
469,924
2,246,362
Trade and other payables amounts are short-term. The carrying values of trade payables and other payables
are considered to be a reasonable approximation of fair value.
21 Provisions
Current
Provision for annual leave
Total current provisions
Non-current
Rehabilitation provisions
Total non-current provisions
Total provisions
Notes
21.1
30 June
2020
$
188,617
188,617
30 June
2019
$
17,607
17,607
5,108,158
5,108,158
5,296,775
5,339,653
5,339,653
5,357,260
21.1 Rehabilitation provisions
Rehabilitation provisions split between the parent and subsidiary are as follows:
Rehabilitation provisions
Manuka Resources Ltd
Mt Boppy Resources Ltd
Total rehabilitation provisions
30 June
2020
$
3,912,817
1,195,341
5,108,158
Set out below are the movements of the rehabilitation provision during the period.
Carrying amount at start of year
Re-assessment of provision
Additions through asset acquisition
Net impact of discounting
Carrying amount at end of year
30 June
2020
$
5,339,653
(587,297)
-
355,802
5,108,158
30 June
2019
$
3,966,671
1,372,982
5,339,653
30 June
2019
$
4,760,274
-
1,372,982
(793,603)
5,339,653
Provisions made for rehabilitation are recognised where there is a present obligation as a result of exploration,
development or production activities having been undertaken, and it is probable that an outflow of economic
benefits will be required to settle the obligation. The estimated future obligations include the costs of
removing facilities, abandoning mining activities and restoring the affected areas. The provision for future
Manuka Resources Ltd
For the year ended 30 June 2020
64
rehabilitation costs is the best estimate of the present value of the expenditure required to settle the
obligation at the reporting date, based on current legal requirements and technology. Future rehabilitation
costs are reviewed annually, and any changes are reflected in the present value of the rehabilitation provision
at the end of the reporting period. The amount of the provision for future rehabilitation costs relating to
exploration and development activities is capitalised as a cost of those activities. If the effect is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money, and where appropriate the risks specific to the liability. The
fair value of the rehabilitation provision for Manuka Resources has been calculated with reference to a
discount rate of 5.6% over 6 years. The discounting impact for Mt Boppy has been considered to be non-
material as a result of the Company expecting to complete its rehabilitation work within twelve to eighteen
months.
The Company is required by the relevant regulatory authorities to ensure that appropriate rehabilitation is
carried out on tenements that are mined. The amount of rehabilitation cost is an estimate based upon the
estimated life of each mined tenement, as well as the future timing and cost of such rehabilitation. The
provision is constantly revised as information about the life of mine, depth of mining and cost estimates are
updated.
22 Equity
22.1 Share capital
The share capital of Manuka Resources consists only of fully paid ordinary shares; the shares do not have a
par value. All shares are equally eligible to receive dividends and the repayment of capital and represent one
vote at the shareholders’ meeting of Manuka Resources.
Shares issued and fully paid:
• At beginning of period
• share issue 20 June 2019 (a)
• share issue 23 September 2019 (b)
• share issue 24 February 2020 (c)
• share issue 27 February 2020 (d)
• share consolidation 11 May 2020 (e)
(144,907,234)
• share issue 11 May 2020 (f)
• share issue 12 May 2020 (g)
• share issue 13 May 2020 (h)
2,500,000
679,348
17,400,000
Total share capital at end of period
193,087,960
305,838,647
30 June
2020
30 June
2019
# Shares
# Shares
305,838,647
244,066,247
-
61,772,400
3,023,353
2,400,000
6,153,846
-
-
-
-
-
-
-
30 June
2020
30 June
2019
$
1
-
296,170
200,000
500,000
-
500,000
135,870
3,480,000
5,112,041
$
1
-
-
-
-
-
-
-
-
1
a) On 20 June 2019, the Company acquired Mt Boppy Resources Pty Ltd. The consideration was paid by the
Company by issuance of its equity instruments (61,772,400 shares)13. As a result of the fair value of the
liabilities of Mt Boppy Resources being greater than the fair value of the assets, this did not result in an
increase of the value of the Company’s share capital.
b) On 23 September 2019 the Company issued 3,023,353 shares to Gleneagle as a result of services rendered
to the Company.
13 Pre share consolidation on 11 May 2020
Manuka Resources Ltd
For the year ended 30 June 2020
65
c) On 24 February 2020 the Company issued 2,400,000 shares to Mining Associates (or its nominated entity)
as a result of an agreement to convert $200,000 of debt to equity.
d) On 27 February 2020 the Company issued 6,153,846 shares to Hargreaves Singapore Pte Ltd as a result
of a capital raise for a cash consideration of $500,000.
e) On 11 May 2020 the Company undertook a share consolidation on the basis that each share be divided
by 1.84 subsequent to a resolution approved at the 2019 AGM.
f) On 11 May 2020 the Company issued 2,500,000 shares to Hargreaves Singapore Pte Ltd (or its nominated
entity) at $0.20 per share in respect of services rendered with helping to secure the additional loan facility.
This share issue has been capitalised against the borrowing.
g) On 12 May 2020 the Company issued 679,348 shares MCP Manager (or its nominees entities) at $0.20
per share pursuant to an agreement to settle their options for an amount equivalent to the difference
between the exercise price of 18.4 cents per share and 20 cents per share plus an additional 25% in
accordance with the terms of the option agreement.
h) On 13 May 2020 the Company issued 17,400,000 shares at $0.20 per share to ResCap Investments and
Gleneagle Securities (Aust) (or its nominated entity) as a result of an agreement to convert $3,480,000 of
debt owing by Mt Boppy Resources Pty Ltd into equity in Manuka Resources Ltd.
22.2 Movements in options on issue or granted
Beginning of the financial year
Expired on 8 December 2018, exercisable at $0.25
Expired on 4 January 2019, exercisable at $0.35
Lapsed on 28 August 2018, exercisable at $0.35
Forfeited on 6 May 2020, exercisable at $0.35
Issued, exercisable at $0.25 on or before 17 April 2023
Granted, exercisable at $0.25 on or before 14 July 2023
End of the financial year
Number of Options
2020
3,000,000
-
-
(3,000,000)
11,250,000
10,000,000
21,250,000
2019
10,500,000
(5,500,000)
(1,000,000)
(1,000,000)
-
-
-
3,000,000
22.3 Capital management policies and procedures
Management’s objectives when managing the capital of the company are to maintain a good debt to equity
ratio, provide the shareholders with adequate returns and to ensure that the company can fund its operations
and continue as a going concern.
The Company’s capital includes ordinary share capital, short-term borrowings and financial liabilities,
supported by financial assets.
The Company has a Loan to Value Ratio requirement of 80% under its TPC Facility. Borrowings are regularly
monitored and reported monthly to the Senior Secured Lender.
Management effectively manages the Company’s capital by assessing the Company’s financial risks and
adjusting its capital structure in response to changes in these risks and in the market. In making decisions to
adjust its capital structure the company considers not only its short-term position but also its long-term
Manuka Resources Ltd
For the year ended 30 June 2020
66
operational and strategic objectives. In order to maintain or adjust the capital structure, the Company may
return capital to shareholders, pay dividends to shareholders or issue new shares.
23 Other contributed equity
Other contributed equity comprises the following:
services rendered
IPO funds raised, not yet received
convertible notes
Shares allotted but not yet issued in respect of
•
•
•
IPO expenses in equity
Share based payments in equity
Total other contributed equity
30 June
2020
$
-
7,000,000
3,231,000
(490,094)
(873,499)
8,867,407
30 June
2019
$
296,170
-
-
-
-
296,170
24 Reconciliation of cash flows from operating activities
(a) Details of the reconciliation of cash flows from operating activities are listed in the following table:
Cash flows from operating activities
Loss for the period
Adjustments for non-cash items:
•
•
•
•
•
•
•
•
depreciation and amortisation
loss on acquisition of asset
discounting of provisions and financial assets
share based payments
amortisation of finance transaction costs
accretion of interest
finance costs accrued, not paid
movement in fair value of derivative liability
Change in operating assets and liabilities:
•
•
•
•
•
change in trade and other receivables
change in prepayments
change in inventories
change in trade, other payables and related party advances
change in provisions
Net cash used in operating activities
30 June
2020
$
30 June
2019
$
(4,552,843)
(5,428,238)
1,191,350
-
242,794
435,611
120,606
16,477
1,871,711
239,131
(439,547)
(351,127)
(2,007,761)
4,830,856
171,010
1,768,268
29,859
1,552,915
(169,399)
(150,266)
-
-
2,425,549
-
90,253
-
-
1,025,741
(25,000)
(648,586)
Manuka Resources Ltd
For the year ended 30 June 2020
67
(b) The Company has undertaken a number of non-cash investing and financing activities. Details of the non-
cash financing activities which have resulted in the issue of shares are outlined above at Note 22.1. In
addition the Company has issued options in respect of non-cash financing and investing activities as
outlined in the table below.
# options
30 June
2020
$
30 June
2019
$
3 June 2020 - Options granted to lead broker for IPO
services
•
Other contributed equity
10,000,000
(873,499)
16 April 2020 – Options issued to finance provider in
respect of financing and extension of financing
•
Borrowings – capitalised finance expenses
3,250,000
(176,967)
-
-
25
Loss per share
30 June
2020
$
30 June
2019
$
Loss attributable to the owners of the Company used in calculating
basic and diluted loss per share
(4,552,843)
(5,428,238)
Weighted average number of ordinary shares used as the
denominator in calculating basic and diluted loss per share *
Basic and diluted loss per share
No of shares No of shares
138,695,011
133,104,589
Cents per
share
(3.28)
Cents per
share
(4.08)
As the Group made a loss for the year ended 30 June 2020, none of the potentially dilutive securities were
included in the calculation of diluted earnings per share. These securities could potentially dilute basic earnings
per share in the future.
* In accordance with AASB 133 paragraph 26, the weighted average number of shares outstanding during the
period and for all periods presented shall be adjusted for events (such as a share consolidation) that have
changed the number of shares outstanding without a corresponding change in resources. As a result, the share
consolidation described in Note 22.1 (e) has been applied to the full financial year ended 30 June 2020 and 30
June 2019.
26 Share based payments
Options over ordinary shares have been granted to employees and Directors and finance providers from time
to time, on a discretionary basis. The cost of these share-based payments is measured by reference to the fair
value at the date at which they are granted using an option pricing model. The options may be subject to
service or other vesting conditions and their fair value is recognised as an expense together with a
corresponding increase in other reserve equity over the vesting period.
The weighted average fair value of the options granted during the year was 25 cents (2019: N/A). The fair
values were determined using a variation of the binomial option pricing model that takes into account factors
such as the vesting period, applying the following inputs:
Manuka Resources Ltd
For the year ended 30 June 2020
68
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Risk free interest rate
30 June
2020
30 June
2019
25
3
17
77%
0.25%
35
4
14
-
-
Set out below is a summary of the share-based payment options granted:
30 June 2020
30 June 2019
Beginning of the year
Granted
Forfeited
Exercised
Expired
Outstanding at year end
Exercisable at year end
Weighted
average exercise
price cents
35
25
35
-
-
25
25
# Options
3,000,000
21,250,000
(3,000,000)
-
-
21,250,000
21,250,000
# Options
10,500,000
-
(1,000,000)
-
(6,500,000)
3,000,000
3,000,000
Weighted
average exercise
price cents
30
-
35
-
27
35
35
The weighted average remaining contractual life of share options outstanding at the end of the financial year
was 2.9 years (2019: 1.9 years), and the exercise prices are at 25 cents.
In total, a share-based payment expense of $435,611 (2019: credit of $150,266) has been included in the profit
or loss and credited (2019: debited) to the share option reserve. At 30 June 2020 the total value of the share
based payment reserve is $1,486,077 (2019: $Nil).
27
Financial risk management
General objectives, policies and processes
In common with all other businesses, the Company is exposed to risks that arise from its use of financial
instruments. This note describes the Company’s objectives, policies and processes for managing those risks
and the methods used to measure them. Further quantitative information in respect of these risks is presented
throughout these financial statements.
There have been no substantive changes in the Company’s exposure to financial instrument risks, its
objectives, policies and processes for managing those risks or the methods used to measure them from
previous periods unless otherwise stated in this note.
Activities undertaken by the Company may expose the Company to market risk (including currency risk and
interest rate risk), credit risk and liquidity risk. The Board has overall responsibility for the determination of
the Company’s risk management objectives and policies and, whilst retaining ultimate responsibility for them,
it has delegated the authority to its finance team, for designing and operating processes that ensure the
effective implementation of the objectives and policies of the Company. The Company's risk management
policies and objectives are therefore designed to minimise the potential impacts of these risks on the results
of the Company where such impacts may be material. The Board receives regular updates from Management
through which it reviews the effectiveness of the processes put in place and the appropriateness of the
objectives and policies it sets.
Manuka Resources Ltd
For the year ended 30 June 2020
69
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly
affecting the company’s competitiveness and flexibility.
At 30 June 2020, the Company held the following financial instruments:
Financial assets
Cash and cash equivalent
Trade and other receivables
Other financial assets
Total financial assets
Financial liabilities
Trade and other payables
Related party loans
Convertible notes
Other interest-bearing loans (net of borrowing costs)
Lease liabilities
Other borrowings
Total financial liabilities
30 June
2020
$
1,509,040
7,200,403
6,456,370
15,165,813
30 June
2020
$
7,670,573
2,704,021
1,760,513
20,988,381
202,015
251,664
30 June
2019
$
62
-
6,253,362
6,253,424
30 June
2019
$
2,246,362
6,729,322
4,327,238
6,164,812
-
13,178
33,577,167
19,480,912
The fair value of these current financial instruments is assumed to approximate their carrying value.
Credit risk
Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting
in the Company incurring a financial loss. This usually occurs when debtors fail to settle their obligations owing
to the Company. The policy of the Company is that sales are only made to customers that are credit worthy.
Credit limits for each customer are reviewed and approved by Management.
Receivable balances are monitored on an ongoing basis. The Company has one Key Customer which is an LBMA
Accredited Refinery. To mitigate Credit Risk associated with its Key Receivable, the Company has in place a
contract which ensures payment is received at the time of transfer of title and physical delivery of goods.
To mitigate the credit risk associated with cash and cash equivalents, contracts are taken out only with
reputable financial institutions in Australia.
The maximum exposure to credit risk at balance date in relation to each class of financial asset is the carrying
amount of those assets, which is net of impairment losses. Refer to the summary of financial instruments table
above for the total carrying amount of financial assets.
Liquidity risk
Liquidity risk is the risk that the Company may encounter difficulties raising funds to meet commitments
associated with financial instruments, e.g. borrowing repayments. Prudent liquidity risk management implies
maintaining sufficient cash and ensuring the availability of funding through an adequate amount of committed
credit facilities.
Manuka Resources Ltd
For the year ended 30 June 2020
70
The Company manages liquidity risk by continuously monitoring forecasted and actual cash flows, seeking the
financial support from its shareholders, finding debt providers and matching the maturity profiles of financial
assets and liabilities.
Maturity Analysis
The table below summarises the maturity profile of the Company’s financial liabilities based on contractual
commitments.
Carrying
Amount
Contractual
Cash flows
< 6 months
6- 12
months
1-3 years
2020
Non-derivatives
Trade and other payables
Related party loans
Convertible notes
Other interest-bearing loans
Lease liabilities
Other borrowings
2019
Non-derivatives
Trade and other payables
Related party loans
Convertible notes
Other interest-bearing loans
Other borrowings
$
$
$
7,670,573
7,670,573
7,670,573
$
-
2,704,021
1,760,513
20,988,381
202,015
251,664
2,842,992
1,780,152
22,659,562
225,347
259,974
196,143
1,780,152
4,979,156
73,164
86,658
2,646,849
-
17,680,406
76,092
173,316
33,577,167
35,438,600
14,785,846
20,576,663
2,246,362
6,729,322
4,327,238
6,164,812
13,178
19,480,912
2,246,362
6,729,322
4,327,238
6,164,812
13,178
19,480,912
2,246,362
6,729,322
4,327,238
6,164,812
13,178
19,480,912
-
-
-
-
-
-
$
-
-
-
-
76,091
-
76,091
-
-
-
-
-
-
a) On 3 July 2019 the Company secured a USD$13 Million loan facility (TPC Facility) from TPC, a Hong Kong
based fund. As part of this facility the existing interest-bearing loans were subordinated until the after
repayment of the TPC Facility. As at 30 June 2019, all the loans were due for repayment, all the balances
have therefore been reclassified in the column “< 6 months”.
Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency. The Group has not formalised a foreign
currency risk management policy however, it monitors its foreign currency expenditure considering exchange
rate movements.
The Group is exposed to foreign exchange risk through the USD denominated debt facility obtained from TPC,
refer Note 19.2(e). The Group’s exposure to foreign currency risk at the end of the reporting period, expressed
in Australian dollar, was as follows:
Borrowings
30 June
2020
$
21,118,267
30 June
2019
$
-
Manuka Resources Ltd
For the year ended 30 June 2020
71
The aggregate net foreign exchange gains/losses recognised in profit or loss were:
Net foreign exchange (loss) recognised in profit or loss
included in finance expenses
30 June
2020
$
181,135
30 June
2019
$
-
Sensitivity analysis
The following table demonstrates the sensitivity to a reasonably possible change in the USD:AUD exchange
rate, with all other variables held constant, of the Company’s profit/loss after tax (through the impact on USD
denominated financial liabilities).
USD:AUD exchange rate – increase 10%
USD:AUD exchange rate – decrease 10%
30 June
2020
$
1,919,842
(2,346,474)
30 June
2019
$
-
-
Interest rate risk
The Company’s exposure to market risk for changes in interest rates relates primarily to cash and interest-
bearing liabilities.
The Company's exposure to interest rate risk and the effective weighted average interest rate by maturity
periods is set out in the tables below:
Weighted
average
interest rate
Floating rates
Fixed rates
Non-interest
bearing
Total
2020
Financial assets
Cash and cash equivalent
Trade and other receivables
Other financial assets
Financial liabilities
Other
Trade and other payables
Related party loans
Convertible notes
Other interest-bearing loans
Lease liability
-
-
-
4.5%
-
15%
12%
14%
14%
$
-
-
-
-
251,664
-
-
-
-
-
251,664
$
-
-
-
-
-
1,217,486
1,760,513
20,825,717
202,015
24,005,731
$
$
1,509,040
7,200,403
6,456,370
15,165,813
-
7,670,573
1,486,535
-
162,664
-
9,319,772
1,509,040
7,200,403
6,456,370
15,165,813
251,664
7,670,573
2,704,021
1,760,513
20,988,381
202,015
33,577,167
Manuka Resources Ltd
For the year ended 30 June 2020
72
Weighted
average
interest rate
Floating rates
Fixed rates
Non-interest
bearing
Total
2019
Financial assets
Cash and cash equivalent
Other financial assets
Financial liabilities
Other
Trade and other payables
Related party loans
Notes
Other interest-bearing loans
-
-
-
15%
12%
43%
$
-
-
-
-
-
-
-
-
-
$
-
-
-
13,178
-
962,788
4,327,238
6,164,812
11,468,016
$
$
62
6,253,362
62
6,253,362
6,253,424
6,253,424
-
2,246,362
5,766,534
-
-
8,012,896
13,178
2,246,362
6,729,322
4,327,238
6,164,812
19,480,912
Sensitivity analysis
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all
other variables held constant, of the Company’s profit/loss after tax (through the impact on floating rate
financial assets and financial liabilities).
Carrying
amount
2020
$
+1%
-1%
Cash and cash deposits
1,509,040
Tax charge at 27.5% (2019:27.5%)
After tax increase / (decrease)
15,090
(4,150)
(15,090)
4,150
10,940
(10,940)
Carrying
amount
$
62
2019
+1%
-1%
1
-
1
Other
251,664
(2,517)
Tax charge at 27.5% (2019:27.5%)
After tax increase / (decrease)
Net after tax increase / (decrease)
692
(1,825)
2,517
(692)
1,825
9,115
(9,115)
13,178
(132)
36
(96)
(95)
(1)
-
(1)
132
(36)
96
95
28 Commitments for expenditure
28.1 Tenement Commitments
In order to maintain current rights of tenure to exploration tenements, the Company is required to perform
minimum exploration work to meet the minimum expenditure requirements specified by the State
Government. Due to the nature of the Company’s operations in exploring and evaluating areas of interest,
exploration expenditure commitments beyond twelve months cannot be reliably determined. It is anticipated
that expenditure commitments in subsequent years will be similar to that for the forthcoming twelve months.
These obligations are not provided for in the financial report and are payable as follows:
Not later than one year
Between 1 year and 5 years
30 June
2020
$
910,000
1,255,000
2,165,000
30 June
2019
$
954,000
1,170,417
2,124,417
If the Company decides to relinquish certain leases and/or does not meet these obligations, assets recognised
in the Statement of Financial Position may require review to determine the appropriateness of carrying values.
Manuka Resources Ltd
For the year ended 30 June 2020
73
29 Contingent assets and liabilities
29.1 Bank Guarantee to Cobar Shire Council and road rehabilitation
The Company has a term deposit with NAB to cover a bank guarantee of $200,000 issued by the NAB to Cobar
Shire Council. The bank guarantee is required by Cobar Shire Council to cover the estimated cost of restoring
the road to their pre-mining condition.
Due to the contingent nature of the asset and liability and the significant uncertainty of timing and because
the cost of necessary road repairs cannot be estimated with any degree of certainty, the value of the bank
guarantee has not been brought to account in the financial statements of the Company.
29.2 Meadowhead royalty agreement
Pursuant to a royalty agreement attaching to the Mt Boppy Gold Project, the Company is also potentially
required to provide Meadowhead Investments Pty Ltd (Meadowhead) with 3% of all gold produced from any
of the existing mining leases associated with the Mt Boppy Gold Project. The Company is seeking legal advice
in relation to the enforceability of this royalty agreement given technical issues associated with the assignment
of the royalty by the previous owners of the Mt Boppy Gold Project to Meadowhead.
30 Acquisition of Mt Boppy
The Company acquired 100% Mt Boppy Resources Pty Ltd (Mt Boppy) on 20th June 2019 for a consideration
settled through issuance of 61,772,40014 shares of the Company’s equity instrument.
The transaction was treated as an asset acquisition as it did not meet the definition of a business combination.
As a result of the fair value of the assets acquired being $4,738,981 and the fair value of the liabilities acquired
being $6,91,896 a loss on acquisition of $1,552,915 was recognised as at 30 June 2019.
Mt Boppy is a gold mine, 45km to the East of Cobar in NSW on the Barrier Highway. It has produced over
500,000oz at an average grade 15g p/t Au. Mt Boppy has been in intermittent production since 1895 but has
had little modern exploration to date. The acquisition has provided short-term cashflow to the group through
processing of the existing approximate gold resource on site. It is an open-pit mine that is fully permitted.
Interests in Subsidiaries
31
Set out below are details of the subsidiaries held directly by the Group:
Name of the subsidiary
Place of incorporation and
place of business
Principal
activity
Mt Boppy Resources Pty Ltd
Australia
Gold Mine
30 June
2020
100%
30 June
2019
100%
Proportion of ownership interests
held by the Group
14 Pre share consolidation on 11 May 2020
Manuka Resources Ltd
For the year ended 30 June 2020
74
32 Parent Entity Information
Information relating to Manuka Resources Ltd (the Parent Entity):
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net deficit
Issued capital and other contributed equity
Accumulated losses
Share based payment reserve
Total equity
Statement of profit or loss and other comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive loss
30 June
2020
$
30 June
2019
$
11,521,149
12,651
19,020,187
7,023,303
30,541,336
7,035,954
29,002,168
14,579,606
3,985,895
1,266,671
32,988,063
18,546,277
(2,446,727)
(11,510,323)
13,979,448
296,171
(17,912,252)
(11,806,494)
1,486,077
-
(2,446,727)
(11,510,323)
(6,105,758)
(3,875,323)
-
-
(6,105,758)
(3,875,323)
The Parent Entity has not entered into a deed of cross guarantee nor are there any contingent liabilities at the
year end. Refer to Note 29 for details of the Group’s contingent liabilities.
33 Related party transactions
33.1 Transactions with related parties and outstanding balances
The Company’s related parties include key management personnel, and others as described below. Unless
otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were
given or received. Outstanding balances are usually settled in cash.
30 June
2020
$
30 June
2019
$
DETAILS OF TRANSACTIONS WITH RELATED PARTIES:
Details of related party transactions with ResCap
Investments Pty Ltd, an entity controlled by a member of
KMP:
•
•
•
•
interest charged on intercompany loan
107,225
106,374
amounts charged pursuant to sublease to ResCap
Investments Pty Ltd and month to month lease
payments
amounts charged pursuant to service agreement to
ResCap Investments Pty Ltd
conversion of debt in Mt Boppy Resources to
equity in Manuka Resources
22.1(h)
21,267
83,094
240,000
360,000
2,088,000
-
Manuka Resources Ltd
For the year ended 30 June 2020
75
Details of related party transactions with Cobar Gold Unit
Trust 2020, an entity related to KMP:
•
interest paid in relation to prepayment of sale of
gold
Details of related party transactions with MCP Unit Trust,
an entity related to KMP:
•
interest expenses and finance fees charged on
loan
Details of related party transactions with Gleneagle
Securities (Aust) Pty Ltd, being an entity which is a related
party due its control over the Convertible Notes pursuant to
the Convertible Note Deed Poll. Gleneagle Securities (Aust)
Pty Ltd ceased being a related party on conversion of the
Convertible Notes in July 2020.
•
•
interest charged on intercompany loan
interest on notes payable to convertible note
holders
Details of related party transactions with Gleneagle
Securities Nominees Pty Ltd, an entity which was a
substantial shareholder of the Company. Gleneagle
Securities Nominees Pty Ltd ceased as a shareholder and
related party on 6 May 2020.
•
•
conversion of debt in Mt Boppy Resources to
equity in Manuka Resources
conversion of trade creditor amount to equity in
Manuka Resources
DETAILS OF BALANCES WITH RELATED PARTIES:
Balance of loan with Manuka Resources Ltd
- payable to ResCap Investments Pty Ltd
- payable to Gleneagle Securities (Aust) Pty Ltd
- payable to Cobar Unit Trust
- payable to MCP Unit Trust
Balance of convertible notes
Balance of Directors fees and wages payable to KMP
Balance of loan with Mt Boppy Resources Pty Ltd
- payable to ResCap Investments Pty Ltd
30 June
2020
$
30 June
2019
$
33.1(a)
95,000
-
16,287
1,831,036
25,452
12,099
664,274
387,720
22.1(h)
1,392,000
200,000
2,005,327
502,551
-
-
1,760,513
181,122
19.2(a)
19.2(a)
33.1(a)
19.2(d)
19.2(b)
-
-
1,776,080
477,099
-
5,809,196
4,327,238
193,138
19.2(f)
196,143
3,084,143
19.2(f)
- payable to Gleneagle Securities Nominees Pty Ltd
a) Agreement for Prepayment of Gold Sales with Cobar Gold Unit Trust 2020 - Mr Dennis Karp, the Executive
Chairman, is a director of Cobar United Pty Ltd the trustee for the Cobar Gold Unit Trust 2020. Manuka
entered into a prepayment in relation to the sale of gold to Cobar United Pty Ltd ATF Cobar Gold Unit
Trust 2020 amounting to $950,000. There is a call and put option in Manuka’s favour in relation to the
agreement. The put option was exercised and payment was made to Cobar Unit Trust on 26 June 2020 to
settle the agreement.
1,392,000
-
Manuka Resources Ltd
For the year ended 30 June 2020
33.2 Transactions with key management personnel
Key management personnel remuneration includes the following expenses:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Total remuneration
30 June
2020
$
600,026
43,673
-
408,385
1,052,084
76
30 June
2019
$
65,620
-
-
-
65,620
Detailed remuneration disclosures are provided in the remuneration report on pages 26 to 31.
34 Events subsequent to the end of the reporting period
• Commencement of Official Quotation on the ASX
Official Quotation of the Company’s shares commenced on 14 July 2020. The Company raised $7,000,000
pursuant to the offer under its prospectus dated 22 May 2020 by the issue of 35,000,000 shares at an issue
price of $0.20 per share.
• Commencement of exploration
In August 2020, the Company commenced its three stage exploration and drilling program. The initial
phase of the program is for approximately two months term, drilling over 200 holes comprising
approximately 7,000 metres predominantly reverse circulation (RC), with 1,000 diamond drilling (DD)
expected.
•
Initial Mt Boppy drill results released
On 24 August 2020, the Company released the results of it’s the assays from initial drill holes conducted
as extension of existing grade control program. Extremely high-grade gold intersections were recorded
from two holes drilled under the planned pit floor including
o Hole MBGC0042: 10 m @ 34.48 g/t Au from 57 m depth
o Hole MBGC0043: 14 m @ 14.51 g/t Au from 59 m depth
• Repayment of interest to Convertible note holders
In July 2020, the Company paid all the outstanding interest of $1.78Million to Convertible Note holders.
• Coronavirus (COVID-19) pandemic
The COVID-19 pandemic did not have any significant impact on the Group's operations during the year.
Subsequent to the end of the financial year, the pandemic and its impact has continued to evolve with
further outbreaks resulting in lockdown restrictions in Victoria, additional border closures between states,
new stimulus measures (such as Jobkeeper 2.0) and many other items. It is therefore not practical to
estimate the potential impact, positive or negative, after reporting date.
Manuka Resources Ltd
For the year ended 30 June 2020
77
Apart from the matters noted above, there are no other matters or circumstances that have arisen since the
end of the period that has significantly affected or may significantly affect either:
•
•
•
the entity’s operations in future financial years;
the results of those operations in future financial years; or
the entity’s state of affairs in future financial years.
35 Company Details
The registered office and principle place of business of the Company is:
Manuka Resources Ltd
Level 4 Grafton Bond Building
201 Kent Street, Sydney, New South Wales
Manuka Resources Ltd
For the year ended 30 June 2020
78
Directors’ Declaration
In the opinion of the Directors of Manuka Resources Ltd:
a The financial statements and notes of Manuka Resources Ltd are in accordance with the Corporations
Act 2001, including:
i.
ii.
Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of
its performance for the financial year ended on that date; and
Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements;
b There are reasonable grounds to believe that Manuka Resources Ltd will be able to pay its debts as
and when they become due and payable; and
c a statement that the attached financial statements are in compliance with International Financial
Reporting Standards has been included in the notes to the financial statements.
The directors have been given the declarations by the chief executive officer and chief financial officer required
by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors.
Dennis Karp
Executive Chairman
Dated the 25th day of September 2020
Corporations Act 2001
Corporations Regulations 2001
Auditors Responsibilities for the Audit of the Financial Report
Corporations Act 2001
Code of Ethics for
Professional Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Material uncertainty related to going concern
Corporations Act 2001
Corporations Act 2001
Corporations Act 2001
Manuka Resources Ltd
For the year ended 30 June 2020
83
ASX Additional Information
Additional information required by Australian Securities Exchange Ltd and not shown elsewhere
in this report is as follows. The information is current as at 21 September 2020.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1
1,001
5,001
10,001
100,001
-
-
-
-
1,000
5,000
10,000
100,000
and over
The number of equity security holders holding less than a marketable
parcel of securities are:
Ordinary shares
Number of holders
Number of shares
195
671
504
567
140
2,077
199
158,495
1,822,742
4,350,522
18,689,698
224,332,255
249,353,712
162,516
(b) Twenty largest shareholders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted ordinary shares are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
RESCAP INVESTMENTS PTY LTD
CLAYMORE CAPITAL PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
SPINITE PTY LTD
BRADFORD LEON BANDUCCI
LANGSTON KEY LIMITED
CLAYMORE CAPITAL PTY LTD
JONATHAN MARQUARD & AMANDA HUTTON
GLS PHOENIX LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
INVIA CUSTODIAN PTY LIMITED
ARUNDEL WILTON PTY LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MR PETER RUNGE &
MRS NOELA RUNGE
PILLAIYAR PTY LTD
A N HOLMAN INVESTMENTS PTY LIMITED
UBS NOMINEES PTY LTD
MR GUY LEON BANDUCCI
BNP PARIBAS NOMINEES PTY LTD
Listed ordinary shares
Number of shares
10,440,000
3,995,804
Percentage of
ordinary shares
14.41%
5.51%
3,087,190
2,840,000
2,750,000
2,100,000
1,889,000
1,508,778
1,150,000
825,000
750,000
750,000
744,865
732,969
700,000
691,446
572,677
500,000
475,000
473,366
4.26%
3.92%
3.80%
2.90%
2.61%
2.08%
1.59%
1.14%
1.04%
1.04%
1.03%
1.01%
0.97%
0.95%
0.79%
0.69%
0.66%
0.65%
37,435,040
51.66%
Manuka Resources Ltd
For the year ended 30 June 2020
84
(c) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with
section 671B of the Corporations Act 2001 are:
Number of Shares
% Issued Capital
Level 1 Pty Ltd (ACN 105 622 928) , Kizogo Pty Ltd
(ACN003 334 370) , Claymore
Capital Pty Ltd (ACN 082 722 290) , Mile Oak
Investments Limited, Sharron Ruth Rosenberg
ResCap Investments Pty Ltd
Dennis Karp (including holding of ResCap Investments Pty Ltd)
29,686,268
11.91%
90,273,280
91,814,557
36.20%
36.82%
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
(e) Schedule of interests in mining tenements as at 21 September 2020
Location : Wonawinta Silver Project is situated approximately 90 kilometres to the south of
Cobar, NSW, and comprises one (1) granted mining lease and seven (7) granted exploration
licences as below, plus processing plant and associated infrastructure .
Tenement
ML1659
EL6482
EL7345
EL6155
EL6302
EL7515
EL6623
EL8498
Percentage held / earning
100%
100%
100%
100%
100%
100%
100%
100%
Change during quarter
-
-
-
-
-
-
-
-
Location : Mt Boppy Gold Project is situated approximately 45 kilometres east of Cobar, NSW,
adjacent to the Barrier Highway. The Project comprises four (4) gold leases , two(2) mining
leases, one (1) mining purpose lease and one (1) exploration licence which encompasses the
MLs and extends the project area to the south.
Tenement
GL3255
GL5836
GL5848
GL5898
ML311
ML1681
MPL240
EL5842
Percentage held / earning
100%
100%
100%
100%
100%
100%
100%
100%
Change during quarter
-
-
-
-
-
-
-
-
Manuka Resources Ltd
For the year ended 30 June 2020
85
(f) Unquoted Securities
At 21 September 2020, the Company had the following unlisted securities on issue:
Class
$0.25 options, expiring 17/04/2023
Number of
Securities
11,250,000
Number of
Holders
7
$0.25 options, expiring 14/07/2023
10,000,000
1
Holders of 20% or more of the class
Holder Name
Hargreaves Singapore
Pte Ltd
Bell Potter Securities Ltd
Number of
Securities
3,250,000
10,000,000
(f) Restricted Securities
At 21 September 2020, the Company had the following restricted securities on issue:
Class
ESCROWED SHARES 24 MONTHS FROM QUOTATION
ESCROWED SHARES 12 MONTHS FROM ISSUE 27.2.20
ESCROWED SHARES 12 MONTHS FROM ISSUE 12.5.20
ESCROWED SHARES 12 MONTHS FROM ISSUE 8.7.20
Date escrow period ends
14/07/2022
27/02/2021
12/05/2021
08/07/2021
167,862,649
844,482
3,095,593
5,088,606
Number of Securities
(h) Approach to Corporate Governance
Manuka Resources Ltd ACN 611 963 225 (Company) has established a corporate governance framework
commencing from when the Company was admitted to the official list of ASX. In establishing its corporate
governance framework, the Company has referred to the recommendations set out in the ASX Corporate
Governance Council's Corporate Governance Principles and Recommendations 4th edition (Principles &
Recommendations). The Company has followed each recommendation where the Board has considered the
recommendation to be an appropriate benchmark for its corporate governance practices.
following governance-related documents can be
The
www.manukaresources.com.au, under the section marked "About Us > Corporate Governance":
found on
the Company's website at
Charters
• Board
• Audit & Risk Committee
• Nomination Committee
• Remuneration Committee
Policies and Procedures
• Corporate Code of Conduct
• Disclosure - Performance Evaluation
• Disclosure - Continuous Disclosure
• Disclosure - Risk Management
• Trading Policy
• Diversity Policy
• Shareholder Communication Strategy
Manuka Resources Ltd
For the year ended 30 June 2020
86
For the financial year ended 30 June 2020 (Reporting Period) the Company was an unlisted public company
and was not subject to the requirements of the ASX Listing Rules or the Principles & Recommendations. The
Company will publish its Corporate Governance Statement for the reporting period 1 July 2020 to 30 June
2021 with its 2021 Annual Report.
(i) Use of Funds
The Company was admitted to the official list of the ASX on 11 July 2020 and so was not admitted before the
end of the reporting period. The Company has, during the period from admission to the Official List of the ASX
on 11 July 2020 to 25 September 2020, used the funds that it had at the time of admission in a way consistent
with its initial business objectives.
Manuka Resources Limited
Level 4, Grafton Bond Building,
201 Kent St, Sydney, NSW
Australia, 2000