ABN 77 610 319 769
ANNUAL REPORT - 30 JUNE 2020
Corporate Information
ABN 77 610 319 769
Directors
Mr Stephen Dennis (Non-Executive Chairman)
Mr Phil Hoskins (Managing Director)
Mr Andrew Pardey (Non-Executive Director) (appointed 17 June 2020)
Mr Chris van Wijk (Executive Director) (appointed 17 June 2020)
Mr Daniel Saint Don (Non-Executive Director) (resigned 17 June 2020)
Mr Grant Davey (resigned 25 September 2019)
Company Secretary
Mr Stuart McKenzie
Registered Office
Emerald House
1202 Hay Street
WEST PERTH WA 6005
Tel +61 8 9200 4960
Fax +61 8 9200 4961
Bankers
Commonwealth Bank of Australia
150 St Georges Terrace
PERTH WA 6000
Share Register
Computershare Limited
Level 11, 172 St Georges Terrace
PERTH WA 6000
Tel + 61 8 9323 2000
Fax + 61 8 9323 2033
Auditors
PricewaterhouseCoopers
Brookfield Place
125 St Georges Terrace
PERTH WA 6000
Website Address
www.marvelgold.com.au
ASX Code
Shares are listed on the Australian Securities Exchange (ASX) under stock code MVL.
1
Contents
Managing
Director’s
report
Directors'
report
Corporate governance statement
Auditor’s independence declaration
Consolidated
statement of
profit or
loss and
other
comprehensive
income
Consolidated
balance sheet
Consolidated
statement of
changes in
equity
Consolidated
statement of cash flows
Notes to the
financial
statements
Directors' declaration
Independent
audit
report
ASX
additional
information
3
4
25
26
27
28
29
30
31
56
57
62
2
Marvel Gold Limited
30 June 2020
Managing Directors’ report
Dear Shareholders
On behalf of the Directors, I am pleased to introduce the 2020 Annual Report for Marvel Gold Limited. The past 12 months has been a
challenging period as we sought to overcome the disappointment of US based international private investment firm Castlelake L.P.
(Financier) electing not to proceed with finance for the development of the Chilalo Graphite Project (Chilalo) and have repositioned the
Company as a Mali focused gold explorer.
We began the financial year firmly focused on meeting the conditions required for the Financier to make available finance for the
development of Chilalo; a key condition being completion of a definitive feasibility study (DFS). The DFS was delivered in January and
confirmed Chilalo to be a robust project that generates strong margins and cash flow, based on a Probable Reserve of 9.2 million tonnes,
underpinning an estimated 18-year mine life producing approximately 50,000tpa of high-value graphite products.
Receipt of the DFS enabled the Financier to commence the final phase of its due diligence, however this occurred at the same time as
the outbreak of the COVID-19 global pandemic. Owing to the economic impact of COVID-19 and the subsequent market fallout which
resulted in a sharp decline in the Company’s market capitalisation, the Financier elected not to proceed with financing for the
development of the Chilalo Project. The Financier’s decision was reached prior to the completion of its due diligence and is therefore
not a negative reflection on the quality of the Chilalo Project, the Tanzanian investment climate for mining projects or the coarse flake
graphite market opportunity.
The Company was then able to negotiate amendments to the agreements with the Financier whereby their security was confined to
Chilalo Project related assets, with no legal recourse to Marvel Gold Limited. Such an amendment was critical, as it enabled the Company
to pursue other opportunities and raise capital.
Subsequently, we acquired an interest in a Joint Venture with Altus Strategies Plc to earn-in to two Mali gold exploration projects,
Tabakorole and Lakanfla and completed a $5 million capital raising comprised of a share placement and entitlement offer.
The Tabakorole Gold Project hosts a historical mineral resource of almost 600,000oz of contained gold that was completed in 2007. We
are currently preparing an updated mineral resource estimate that will include a number of high-grade intersections since 2007 as well
as recent drilling completed by Marvel which recorded several high-grade results, including 38m at 2.1g/t gold from 145m, including
14m at 4.7g/t gold from 145m. We are excited by the opportunity to improve both the size and grade of the Tabakorole mineral resource.
Lakanfla hosts a significant number of active and historic artisanal gold workings and historical drilling has returned encouraging
intersections including 26m at 5.1 g/t Au from 32m (hole 04KRC-02) and 18m at 4.31 g/t Au from 34m. The geology at Lakanfla is similar
to the 4.5Moz Yatela deposit, located 35km to the north-west and also the Sadiola FE3 and FE4 pits which are around 3km to the north-
west of Lakanfla. Drilling recently commenced at Lakanfla, with the first assay results expected in November.
We have worked hard to assemble an attractive portfolio of exploration assets and in a transaction with ASX listed Oklo Resources
Limited acquired an 80% interest in three South Mali gold projects, covering 675km2 of highly prospective Birimian Greenstone terrain
in South Mali. In addition, we have an exclusive option to acquire the Sakaar exploration licence that is strategically located 15km south
of Lakanfla.
In order to strengthen the Company’s west African gold exploration expertise, Andrew Pardey and Chris van Wijk have joined the Board.
Andrew has over 30 years in the resources industry and between February 2015 and December 2019, he was Chief Executive Officer of
Centamin Plc which holds the Tier 1 Sukari Gold Mine. Chris is an experienced geologist, who specialises in project evaluation and project
generation, with extensive experience in base metal and gold exploration in Africa, Europe, the Americas and Australia. Mr Daniel Saint
Don has stepped down as a director and we thank him for his contribution.
Rest assured, we are leaving no stone unturned to make a success of our exploration efforts in Mali. We believe that the portfolio of
projects we have acquired in recent months gives us a real opportunity to make a meaningful discovery in what is a premium location
for large-scale gold deposits. Finally, the Board and I would like to thank all shareholders for your continued support and look forward
to keeping you updated as we continue our progress in Mali.
Yours faithfully
Phil Hoskins
Managing Director
3
Marvel Gold Limited
30 June 2020
Directors’ report
Basis of preparation
The Directors present their report, together with the financial statements, on the Consolidated Entity (referred to hereafter as the
Consolidated Entity or Company) consisting of Marvel Gold Limited and the entities it controlled at the end of, or during, the year
ended 30 June 2020. Marvel Gold Limited (Marvel) is a Company limited by shares that is incorporated and domiciled in Australia.
The attached financial statements for the year ended 30 June 2020 contains an independent auditor's report which includes a material
uncertainty related to going concern. For further information, refer to note 26 of the financial statements together with the auditor’s
report.
Directors and Company Secretary
The following persons were Directors of Marvel (Directors) during the 2020 financial year and up to the date of this report:
Mr Stephen Dennis (Non-Executive Chairman)
Mr Phil Hoskins (Managing Director)
Mr Andrew Pardey (Non-Executive Director) (appointed 17 June 2020)
Mr Chris van Wijk (Executive Director) (appointed 17 June 2020)
Mr Daniel Saint Don (Non-Executive Director) (resigned 17 June 2020)
Mr Grant Davey (resigned 25 September 2019)
The Company Secretary is Mr Stuart McKenzie.
Directors were in office for the entire period unless otherwise stated.
Principal activities
During the period, the principal continuing activities of the Group related to the exploration and development of the Chilalo Graphite
Project in Tanzania and gold exploration at the Tabakorole Project in Mali.
Dividends
During the period, no dividends were declared or paid.
Significant changes in the state of affairs
As a result of the economic uncertainty caused by COVID-19, CL V Investment Solutions LLC, an entity managed by Castlelake L.P.
(Financier) decided not to proceed with the previously announced financing of the development of the Company’s Chilalo Graphite
Project. The economic impact of COVID-19 and the subsequent market fallout resulted in a sharp decline in the Company’s market
capitalisation, and as such any project finance solution under terms previously agreed was likely to result in unacceptable dilution for
the Company’s shareholders. The Company has committed to a process to either sell or refinance the Chilalo Graphite Project.
Events since the end of the financial year
Subsequent to year end, the Company:
•
•
Completed the placement of 137,500,000 shares at a price of $0.02 per share for gross proceeds before costs of $2,750,000.
Issued a further 115,011,555 shares at a price of $0.02 per share under a fully underwritten entitlement offer.
• On the 20 July 2020 the Company’s shareholder voted to complete the Company’s change in strategic direction including
approving:
o
Changing the Company name from Graphex Mining Limited to Marvel Gold Limited (ASX: MVL).
o Adopting the amended the terms of the Loan Note Subscription Agreement as detailed in note 10.
o Adopting the transaction with Glomin Services Ltd (Glomin), a wholly-owned subsidiary of Capital DI Limited, a ~5%
shareholder of the Company (Capital DI) under which the Company acquired Glomin’s interest in a joint venture with
Altus Strategies Plc to earn in to two Mali gold exploration projects, Tabakorole and Lakanfla. As consideration for
the acquisition of Glomin’s interest, the Company issued Capital DI 35,000,000 shares as reimbursement of costs
incurred by Glomin under the existing joint venture.
4
Marvel Gold Limited
30 June 2020
Directors’ report
•
Signed a binding term sheet with Oklo Resources Limited (Oklo) to acquire an 80% interest in Oklo’s three south Mali gold
projects covering 675km2 of highly prospective Birimian Greenstone terrain in South Mali.
Likely developments and expected results
As outlined above, subsequent to year end the Company has completed a change in strategic direction. The Company will be focused
on its highly prospective gold exploration projects Lakanfla, Tabakorole, Kolodieba, Yanfolila and Sakkar in Mali in subsequent reporting
periods.
Environmental regulation
The Group’s exploration and development activities and those of its partners are subject to environmental regulations and guidelines
applicable to the tenements on which such activities are carried out. Failure to meet environmental conditions attaching to the Group’s
exploration and mining tenements could lead to forfeiture of those tenements. The Group is committed to achieving a high standard
of environmental performance. No environmental breaches have occurred or have been notified by any Government agencies during
the period ended 30 June 2020 and up to the date of this report.
Review of operations
Results of operations
A summary of results for 2020 is as follows:
2020
$
2019
$
Net loss after income tax
(7,486,841)
(8,049,751)
attributable to:
Corporate and administration costs
Employee benefits
Exploration and evaluation expenditure
Business development and marketing
Share based payments
(1,238,722)
(1,176,126)
(3,461,198)
(698,332)
149,584
(1,297,059)
(931,214)
(4,231,952)
(1,383,857)
138,657
Chilalo Graphite Project
During the first half of the year, the Company’s primary focus was on completion of a definitive feasibility study (DFS) to assess the
development of the Chilalo Graphite Project (Chilalo Project).
In October 2018, the Company entered into financing agreements that included a term sheet setting out the proposed terms on which
the financier and other market participants (subject to the satisfaction of agreed conditions) would provide up to US$40 million in equity
and up to US$40 million from the issue of senior secured loan notes (Senior Funding Package). The DFS was a condition to the Senior
Funding Package.
The DFS demonstrated that the Chilalo Project was a robust project based on a Probable Reserve of 9.2 million tonnes, underpinning an
estimated 18-year mine life producing approximately 50,000tpa of high-value graphite products. Estimated key outcomes, including
economics from value-added products are shown in the table below.
5
Directors’ report
Mine life
Total plant feed
Annual plant feed
Average head grade
Physicals
Average graphite concentrate production1
Steady state expandable graphite sales
Steady state micronised graphite sales
Project Financials
NPV8 (Post-tax)
IRR (Post tax)
Post-tax payback period
Pre-production capital cost (incl. 10% contingency and pre-strip)
Average annual EBITDA
Marvel Gold Limited
30 June 2020
Life of mine
18
8.9
500
10.1%
50
12
8
Life of mine
331
36%
3.5
87.4
74
Unit
Years
Mt
ktpa
TGC %
ktpa
ktpa
ktpa
Unit
US$M
%
years
US$M
US$M
1.
Average graphite concentrate production includes graphite concentrate used as feedstock into both value-added products.
Financing development of the Project
As noted above in the section titled “Significant changes in the state of affairs”, the Financier elected not to proceed with the Senior
Funding Package for the development of the Chilalo Project.
The Financier’s decision was reached prior to the completion of all due diligence and is therefore not a negative reflection on the quality
of the Chilalo Project, the Tanzanian investment climate for mining projects or the coarse flake graphite market opportunity.
The Company is now undertaking a process for the sell-down or refinancing of the Chilalo Project (Chilalo Process as described below).
Amendment of financing agreements confine security to Chilalo Project entities
In order to provide the Company with the best opportunity to achieve an outcome that was in the best interests of shareholders, the
Company and the Financier agreed on the terms and conditions of a restructure of the Loan Note Subscription Agreement (LNSA), under
which approximately US$6.59M (including capitalised interest and fees) would be outstanding (LNSA Debt). The amendments to the
terms of the LNSA were voted on and adopted by shareholders on 20 July 2020.
Among other things, the amended LNSA (Amended LNSA) confines the Financier’s security to Chilalo Project related assets and removes
the Financier’s legal recourse to the Company. The removal of the Company from the amended security package is critical, as it enables
the Company to pursue other opportunities and raise capital. The Amended LNSA also includes a two-year extension (to October 2022)
for repayment of the LNSA Debt.
In exchange for removal of the Financier’s legal recourse to the Company and extension of the repayment date for the LNSA Debt, the
Company has, among other things:
•
•
•
•
Paid an amendment fee of 7.5% of the LNSA Debt, which will be capitalised to the LNSA Debt;
Paid a security release fee of US$100k cash to the Financier, which was paid out of proceeds from the capital raising;
Issued 7.5 million Marvel shares to the Financier which are subject to voluntary escrow until 15 June 2021; and
Agreed to complete a capital raising of A$1 million.
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Marvel Gold Limited
30 June 2020
Directors’ report
The Company is also undertaking and managing the Chilalo Process which is considering multiple transaction forms, including a
refinancing for project development, offtake related financing, earn-in or joint venture arrangements and a sale (full or partial). The
Company anticipates that the Chilalo Process will take some time to complete, particularly in light of current travel restrictions, and
notes that the Company’s wholly owned subsidiary Graphex UK No.1 Limited has until 29 October 2022 to repay the LNSA Debt.
•
•
Should the Chilalo Process yield cash proceeds that exceed the LNSA Debt, Marvel will receive the excess proceeds; and
If the Chilalo Process does not result in repayment of the LNSA Debt by 29 October 2022, the Financier will take control of the
Chilalo Project, with no recourse to the Company.
Joint venture agreement for Mali gold projects
Subsequent to concluding the Amended LNSA, the Company executed a transaction with Glomin under which the Company acquired
Glomin’s interest in a Joint Venture (Mali JV) with Altus Strategies Plc to earn-in to two Mali gold exploration projects, Tabakorole and
Lakanfla (Mali Gold Projects).
The key terms of the agreements with Glomin and Capital DI include:
•
The issue of 35 million shares to Capital DI as consideration for reimbursement of approximately:
o US$50,000 upfront Stage 1 JV payment made by Glomin; and
o US$400,000 of Stage 1 JV expenditure incurred by Glomin.
• Under the Mali JV, Glomin was previously earning a 33% interest in the Mali Gold Projects in the first stage of the earn-in
arrangement. By acquiring Glomin’s interest in the Mali JV, Marvel can earn up to 80% in the Tabakorole and Lakanfla Gold
Projects, subject to certain milestones including drilling, expenditure and completion of feasibility studies. Marvel could
potentially move to 100% ownership if it is ultimately the sole funder of project construction.
Mali Gold Projects – Tabakorole
The Tabakorole Gold Project covers an area of 100 km2 and is located in southern Mali, approximately 230km south of the capital city of
Bamako. Historical results of diamond and Reverse Circulation (RC) drilling at Tabakorole include:
•
•
•
44m @ 3.3 g/t Au from 24m in hole 05TKRC-18
60m @ 2.9 g/t Au from 14m in hole 05FLRC-11
16m @ 9.3 g/t Au from 80m in hole 05FLRC-51
In 2007, a mineral resource estimate was reported under Canadian National Instrument 43-101 (2007 Tabakorole MRE). The 2007
Tabakorole MRE totalled 18.4 Mt at 1.0g/t Au for 594,000 oz of contained gold, comprised of:
•
•
Indicated Resources of 7.9Mt at 1.0g/t Au for 241,000 oz of contained gold; and
Inferred Resources of 10.6Mt at 1.1g/t Au for 353,000 oz of contained gold.
The Company has significantly advanced its conceptual understanding of the Tabakorole Gold Project following detailed analysis of post-
2007 exploration data that was not previously included in the 2007 Tabakorole MRE. This includes 11,736m of Reverse RC and 1,936m
of diamond drilling that has been completed at Tabakorole since 2007, the results of which included:
•
•
•
18m at 6.0 g/t Au from 12m
26m at 2.9 g/t Au from 46m
24m at 2.5 g/t Au from 48m
In addition to incorporating the results of previous drilling in an updated mineral resource estimate, there are multiple other
opportunities to expand the resource including high-grade plunge extensions which remain open, strike extension to the south-east and
the 600m north-west strike extension following-up recent aircore drilling which included intersections such as 6m at 6.2g/t gold. An
updated Tabakorole MRE is expected to be completed in September 2020.
7
Marvel Gold Limited
30 June 2020
Directors’ report
Mali Gold Projects – Lakanfla
The Lakanfla Gold Project is located in the Kenieba inlier of western Mali, adjacent to the northern section of the gold-rich Senegal Mali
Shear Zone (SMSZ). The project lies 6km to the south-east of the tier 1 Sadiola gold mine (13.5Moz production historically) and 35km SE
of the Yatela gold mine (4.5Moz production historically).
Lakanfla hosts a significant number of active and historic artisanal gold workings which are coincident with major geochemical and gravity
anomalies. Significantly, there is evidence of ground collapse at surface, indicative of karst (or cave-like) voids at depth within carbonate
rock units. This is geologically analogous to the 4.5moz Yatela deposit some 35km to the north-west and also the Sadiola FE3 and FE4
pits which are around 3km to the north-west of the license boundary.
Historical drilling has returned encouraging intersections including 26m at 5.1 g/t Au from 32m (hole 04KRC-02) and 18m at 4.31 g/t Au
from 34m (hole 04KDD-06). In addition, several drillholes have intersected voids and unconsolidated sand at depths of up to 150m below
surface. However, none of the priority gravity low targets have been systematically drill tested. Of the historical drilling that has been
undertaken at Lakanfla, 35 holes coincide with the priority targets, however the majority of these holes were drilled no deeper than 75m
vertical depth and the exploration target is expected to be below this stratigraphic level at the bedrock-weathering interface. In
comparison with the nearby large scale Yatela deposit, which is a direct exploration analogue, mineralisation was encountered at depths
up to 220m below surface and as such, the Company believes that a valid exploration target of this style exists at Lakanfla.
Subsequent to year end, the Company commenced a 3,500m stage 1 drill program at Lakanfla.
Shareholder approval
A general meeting of the Company’s shareholders was held on 20 July 2020, at which, among other things, shareholders approved the
Amended LNSA, the acquisition of the Mali Gold Projects and related transactions.
Mali Gold Projects – post year end acquisitions
In August, the Company signed a binding term sheet with Oklo Resources Limited (ASX: OKU) (Oklo) to acquire an 80% interest in Oklo’s
three South Mali gold projects (South Mali Gold Projects), covering 675km2 of highly prospective Birimian Greenstone terrain in South
Mali. The South Mali Gold Projects comprise:
•
•
Three adjoining tenements – Sirakourou, Solabougouda and Solabougouda Sud – with Sirakourou contiguous with the
Company’s Tabakorole Gold Project. The structure that hosts the Tabakorole MRE appears to continue to the west into the
Sirakourou tenement;
Yanfolila – a 200km2 advanced exploration project strategically located on splays off the Siekerole Shear Zone, with historical
intercepts including:
o
o
27m at 3.6 g/t gold; and
16m at 2.0 g/t gold.
•
Kolondieba – a 200km2 project hosting numerous artisanal workings over 15km of strike, located on the Bannifin Shear Zone,
one of the major controlling structures in southern Mali.
Most recently, the Company entered into a binding option agreement to acquire the Sakaar exploration licence, located 15km south of
Lakanfla, on the northern extent of the prolific SMSZ, which is one of the fundamental structures controlling mineralisation in western
Mali and contributing to mineralisation at the nearby Sadiola (13.5Moz) and Yatela (4.5Moz) deposits. The option agreement provides
for Marvel to earn an 80% interest by sole funding exploration and a pre-feasibility study.
The location of the Tabakorole Project, the Lakanfla Project, the South Mali Gold Projects and the Sakaar Project are shown in Figure 1.
8
Directors’ report
Figure 1: Location of Marvel’s Gold Projects in Mali
Marvel Gold Limited
30 June 2020
9
Marvel Gold Limited
30 June 2020
Directors’ report
Information on Directors
Mr Stephen Dennis – Non-Executive Chairman
Experience and expertise
Stephen Dennis has been actively involved in the mining industry for over 30 years. He has
held senior management positions at MIM Holdings Limited, Minara Resources Limited
and Brambles Australia Limited. Mr Dennis was previously the Chief Executive Officer and
Managing Director of CBH Resources Limited, the Australian subsidiary of Toho Zinc Co.,
Ltd of Japan.
Other current directorships
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
Mr Philip Hoskins – Managing Director
Experience and expertise
Other current directorships
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
Heron Resources Limited (Non-Executive Chairman)
Rox Resources Limited (Non-Executive Chairman)
EHR Resources Limited (Non-Executive Chairman)
LeadFx Inc. (Non-Executive Chairman)
Kalium Lakes Limited (Non-Executive Chairman)
CBH Resources Limited
Chairman
Ordinary shares
Unlisted Options
4,047,598
2,300,000
Mr Hoskins commenced his career at a large international accounting firm and has since
gained corporate experience with both Australian and international listed companies. He
is a senior executive with over 15 years of broad finance and commercial experience across
resources exploration, project development and production as well as large-scale property
developments requiring debt and equity financing. He was the Chief Financial Officer of
IMX Resources Limited from 2011 to 2014 and then Managing Director from 2014 to
2016. Mr Hoskins became the Managing Director of Graphex Mining Limited in June 2016
which became Marvel Gold Limited in June 2020.
Nil
N/A
Nil
Ordinary shares
Unlisted options
7,231,328
12,967,220
Mr Chris van Wijk – Executive Director (appointed 17 June 2020)
Experience and expertise
Other current directorships
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
Mr Van Wijk is an experienced geologist, who specialises in project evaluation and project
generation. Chris brings to his role in Marvel a wealth of relevant experience including
base metal and gold exploration in Africa, Europe, the Americas and Australia as well as
joint venture management and project evaluation for major mining companies including
BHP, IAMGOLD, First Quantum Minerals and Fortescue Metals Group. Chris has managed
various successful exploration projects including the Scoping Study at Mont Nimba in
Guinea for BHP Billiton and the resource drilling at First Quantum’s Sentinel Project in
Zambia.
Tanga Resources Limited
Indiana Resources Limited
Nil
Ordinary shares
Unlisted options
250,000
8,750,000
10
Directors’ report
Marvel Gold Limited
30 June 2020
Andrew Pardey – Non-executive Director (appointed 17 June 2020)
Experience and expertise
Mr. Pardey has over 30 years in the mining industry with experience in exploration, project
development, construction and operations. Between February 2015 and December 2019,
he was Chief Executive Officer of Centamin Plc which holds the Tier 1 Sukari Gold Mine.
Andrew also served as General Manager Operations at Sukari before his previous
appointment as Chief Operating Officer in May 2012. He was a major driving force in
bringing Sukari into production, having joined during the mine’s construction phase, and
was instrumental in the successful transition of the operation through construction and
into production. Andrew holds a BSc in Geology and has also previously held senior
positions in Africa, Australia and other parts of the world including Guinor Gold
Corporation and Ashanti Goldfields, now AngloGold Ashanti.
Nil
Other current directorships
Former directorships in the last 3 years Centamin PLC
Special responsibilities
Interests in shares and options
Nil
Ordinary shares
Unlisted options
2,000,000
4,500,000
Mr Daniel Saint Don – Non-Executive Director (resigned 17 June 2020)
Experience and expertise
Daniel is based in Denver and has over 30 years of operational and technical experience
in North America and internationally. This includes responsibilities in mine operations,
engineering, contracting services, due diligence review, and project development. Daniel
has demonstrated success in managing and directing projects encompassing all phases of
the mining cycle and offers strong technical and practical skills. He is currently a non-
executive director of North River Resources and has held senior roles with Golder
Associates, Atna Resources Ltd, DMC Mining Services, Boart Longyear Company, Stillwater
Mining Company, Inmet Mining, and Mosaic (formerly IMC).
North River Resources (Executive Director)
Other current directorships
Former directorships in the last 3 years N/A
Special responsibilities
Interests in shares and options
Nil
Ordinary shares
Unlisted options
Nil
Nil
Mr Grant Davey BSc – Non-Executive Director (resigned 25 September 2019)
Experience and expertise
Grant Davey has over 20 years of senior management and operational experience in the
construction and operation of gold, platinum and coal mines in Africa, Australia, South
America and Russia. More recently, he has been involved in venture capital investments
in several Canadian and Australian listed exploration and mining projects. Mr Davey was
instrumental in acquiring the Honeymoon Uranium Project in South Australia and was the
Managing Director of Cradle Resources Limited and founder and Managing Director of the
Panda Hill niobium project in Tanzania.
Other current directorships
Cradle Resources Limited (Executive Director)
Superior Lake Resources Limited (Non-Executive Director)
Lotus Resources Limited (Non-executive Director)
Former directorships in the last 3 years Boss Resources Limited (Non-Executive Director)
Matador Mining Limited (Non-Executive Director)
Nil
Ordinary shares
Unlisted options
Special responsibilities
Interests in shares and options
Nil
Nil
11
Marvel Gold Limited
30 June 2020
Directors’ report
Information on Company Secretary
Stuart McKenzie LLB, Bec. (Hons.), AGIA, ACIS – Company secretary
Experience and expertise
Mr McKenzie has over 30 years of experience in senior commercial roles. He was
previously Company Secretary with Anvil Mining Limited for six years, prior to which he
held senior positions with Ok Tedi Mining Limited, Ernst and Young and HSBC. Mr
McKenzie is the current company secretary of Matador Mining Limited, Lotus Resources
Limited, Superior Lake Resources Limited and Tanga Resources Limited.
Meetings of Directors
The number of meetings of the Company’s Directors held during the year ended 30 June 2020 and the number of meetings attended
by each Director is shown below:
S Dennis
P Hoskins
D Saint Don
G Davey
Meetings of Directors
Held
7
7
7
2
Attended
7
7
6
2
As at the date of this report, there is no audit and risk committee or remuneration committee. The Board has determined that given
the size and composition of the Board and the scale of the Company’s activities, the functions of those committees ought to be
performed by the Board. For further information, please see the Company’s Corporate Governance Statement.
Remuneration report (audited)
(a) Key management personnel covered in this report
This Remuneration Report sets out information relating to the remuneration of the key management personnel (KMP) of the Group
during the 2020 financial year. KMP are defined as those persons having authority and responsibility for planning, directing and
controlling the activities of the Company and Group, directly or indirectly. The KMP for the 2020 and 2019 financial year are as set out
below.
Non-Executive and Executive Directors
Name
S Dennis
A Pardey
P Hoskins
C van Wijk
D Saint Don
G Davey
Other KMP
Name
S McKenzie
C Knee
Position
Non-Executive Chairman
Non-Executive Director (appointed 17 June 2020)
Managing Director
Executive Director (appointed 17 June 2020)
Non-Executive Director (resigned 17 June 2020)
Non-Executive Director (resigned 25 September 2020)
Position
Commercial Manager and Company Secretary
Chief Financial Officer
12
Marvel Gold Limited
30 June 2020
Directors’ report
(b) Statutory key performance measures
The Company aims to align executive remuneration to the strategic and business objectives and the creation of shareholder wealth.
The table below shows measures of the group’s financial performance over the last five years as required by the Corporations Act 2001.
These are not necessarily consistent with the measures used in determining the variable amounts of remuneration to be awarded to
KMPs, as outlined in (c) below. As a consequence, there may not always be a direct correlation between the statutory key performance
measures and the variable remuneration awarded.
Company performance
metric
Company share price
(ASX:MVL)
Company loss after tax
Company exploration
expense
2020
2019
2018
2017
$0.039
$0.260
$0.230
$0.385
2016
$0.520
7,486,841
8,049,751
4,106,569
4,635,240
1,256,415
3,461,198
4,231,952
951,705
1,389,808
80,326
(c) Remuneration policy and link to performance
The Group’s approach to remuneration is designed to attract and retain key executive talent, recognise the individual contributions of
the Group’s people, and motivate them to achieve strong performance aligned to the business strategy, whilst discouraging excessive
risk taking.
In summary, the Group’s approach to remuneration is to:
•
•
•
•
•
•
Provide remuneration that is competitive and consistent with market standards;
Align remuneration with the Company’s overall strategy and shareholder interests;
Reward superior performance within an objective and measurable incentive framework;
Ensure that executives understand the link between individual reward and Group and individual performance;
Be at a level acceptable to shareholders; and
Apply sufficiently flexible remuneration practices that enable the Company to respond to changing circumstances.
Remuneration policy for the year ended 30 June 2020
All Executive KMP remuneration was comprised of the following:
•
Fixed (base remuneration):
o
o
Contractual salary; and
Legislated superannuation guarantee (9.5% of gross salary for 2020).
•
At risk component:
o
o
Short-term incentive (STI) – described further in the table below; and
Long-term incentive (LTI) – described further in the table below.
Element
Base (fixed)
remuneration
Purpose
Provide a market
competitive salary,
including
superannuation.
Performance metrics
Nil
STI
Equity based reward for
12 month performance.
Corporate and project development
objectives. Company strategy is set at
the Board level and is used to
determine the Managing Director’s
KPIs, which are then cascaded down
to the other Executives.
13
Potential value
Within industry averages for the
position’s required skill and
experience. Third party advice is
sought periodically to ensure these
are at or close to market median.
Managing Director up to 40% of
base remuneration, other KMP up
to 20% of base remuneration.
Marvel Gold Limited
30 June 2020
Directors’ report
Element
LTI
Purpose
Alignment with growth
in long-term shareholder
value over a three year
period.
Performance metrics
Achievement of key Company
objectives, such as obtaining offtake
and funding for the development of
Chilalo, share price targets and
achieving commercial graphite
production.
Potential value
Managing Director and other KMP
up to 55% of base remuneration on
an annual basis.
Balancing short-term and long-term performance
The Company considers performance-based remuneration to be a critical component of the overall remuneration framework, by
providing a remuneration structure that rewards employees for achieving goals that are aligned to the Group’s strategy and objectives.
Both STIs and LTIs are issued under the Company’s Option Plan (Option Plan).
Short-term incentives
The STI scheme operates to link performance and reward with key measurable financial and non-financial performance indicators to
provide employees with clear and understandable targets that are aligned with the Group’s objectives.
STIs are in the form of zero exercise price options which vest on completion of the one-year period. The number of options that vest is
determined by assessment of individual performance against stated objectives to determine the percentage of objectives that has been
achieved. This percentage is then applied to the options granted in order to determine the number of options that vest. The employee
then has two years in which to exercise the options for nil consideration. Each vested STI option represents a right to be issued one
Marvel share.
The Board sets the objectives of the Managing Director and these are then cascaded down through the organisation to ensure
alignment of objectives. The STI performance objectives are communicated to KMPs at the beginning of the twelve-month performance
period, with performance evaluations conducted following the end of the respective twelve month performance period. Subsequent
to year-end, the Board reviewed performance against the following KPI measures, all of which related to the financing and development
of the Chilalo Graphite Project:
•
•
Drawdown of construction financing (80%); and
Final investment decision and construction commencement (20%).
Having assessed performance, the Board determined that 0% of STIs vest for all KMP’s for the 2020 financial year due the withdrawal
by the financier and subsequent change in strategic direction to West African gold exploration.
Details of the KMPs’ 2020 vested STIs are summarised in the table below. As the vesting date for the options is 1 July 2020, the options
vested in the table below have not been reflected in notes e) and f).
KMP
Position
Total STI
opportunity
Percentage
of total STI
granted
Total STI ($)
(full STI
opportunity
at grant
date)
STI vesting
as a
percentage
of base
package
Options to
vest
P Hoskins
Managing Director
549,647
96,188
S McKenzie
Commercial Manager and
Company Secretary
83,091
18,695
C Knee
Chief Financial Officer
77,294
17,391
-
-
-
-
-
-
-
-
-
Long-term incentives
The KMP remuneration structure also seeks to drive performance and align with shareholder interests through LTI equity-based
remuneration. This involves the issue of zero exercise price options to KMP as LTIs. Subject to performance against agreed vesting
criteria, LTIs vest three years from the grant date and expire five years from the grant date. Each vested LTI option represents a right
to be issued one Marvel share. KMPs are assessed against applicable KPIs on the third anniversary from the date of issue.
14
Directors’ report
The vesting criteria for LTIs granted relating to KPIs for the 1 July 2017 to 30 June 2020 performance period were:
Marvel Gold Limited
30 June 2020
•
•
•
Completion of offtake and financing arrangements;
Achieving commercial graphite production; and
Share price performance.
Having assessed performance, the Board determined that no LTIs vest and that all LTIs granted for the period 1 July 2017 to 30 June
2020 performance period lapse, as shown in the table below.
KMP
Position
Total LTI
opportunity
Percentage
of total LTI
granted
Total LTI ($)
(full LTI
opportunity
at grant
date)
STI vesting as
a percentage
of base
package
Options to
vest
P Hoskins
Managing Director
596,261
166,953
S McKenzie
Commercial Manager
and Company Secretary
400,934
96,224
C Knee
Chief Financial Officer
349,532
83,888
-
-
-
-
-
-
-
-
-
Change in remuneration policy subsequent to year end
Following the change in strategic direction and acknowledging that the Company’s performance is best assessed by share price
performance (as compared to specific known measurable milestones as could be determined previously) the Company implemented a
once off grant of options to KMP subsequent to year end relating to the 2021 financial year. This grant replaces the previously distinctive
STI and LTIs and incentivises KMP’s by aligning their interests with the interests with those of shareholders.
(d) Contractual arrangements with executive KMPs
Component
Fixed remuneration
Managing Director
$320,000 plus superannuation.
Effective 1 May 2020 this has
been reduced to $260,000
Executive Director –
Exploration
$120,000 plus
superannuation.
Contract duration
Ongoing contract
Services agreement
Other KMP - Senior executives
$200,000 to $215,000 plus
superannuation. All other KMPs
are subcontracted to two
external companies to reduce
Company costs
Ongoing contract
Notice by individual
Notice by Company
Change of control bonus
payment
3 months
6 months
3 months
3 months
3 months
3 months
12 months fixed remuneration.
In the event of a change of
control, any unvested options
will immediately vest on the
date that the change of control
event occurs, so as to permit
the option holder to exercise
such options.
6 months fixed
remuneration. In the
event of a change of
control, any unvested
options will immediately
vest on the date that the
change of control event
occurs, so as to permit
the option holder to
exercise such options.
6 months fixed remuneration.
In the event of a change of
control, any unvested options
will immediately vest on the
date that the change of control
event occurs, so as to permit
the option holder to exercise
such options.
Termination of employment
(with or without cause)
Unvested STIs and LTIs to be automatically forfeited unless the Board determines in its
discretion to vest some or all of the options.
15
Marvel Gold Limited
30 June 2020
Directors’ report
(e) Non-Executive Director arrangements
Non-Executive Directors receive an annual fee, paid quarterly. No compensation other than the annual fee (including superannuation)
was paid to Directors in 2020. As the Company is not of sufficient size to have separate audit and remuneration committees, no
additional fees are paid in connection with the provision of these services.
Non-Executive Director fees are reviewed annually by the Board taking into account comparable roles and market data. Directors’ fees
will next be reviewed in July 2021, with no changes made in the 2020 financial year. Annual Directors’ Fees were approved by
shareholders on 25 February 2016 with a maximum pool of $250,000 per year available for Non-Executive Directors. Fees for the
financial year are as follows:
• Non-Executive Chairman – $60,000 plus superannuation
• Non-Executive Directors – $40,000 plus superannuation
All Non-Executive Directors enter into a service agreement with the Company in the form of a letter of appointment which summarises
the key terms and conditions of the Non-Executive Director’s appointment.
(f) Remuneration expenses for key management personnel
The following table shows details of the remuneration expense recognised for the Group’s KMP for the current financial period
measured in accordance with the requirements of the accounting standards:
2020 financial year
Name
Non-executive directors
S Dennis
A Pardey3
G Davey1
D Saint Don2
Executive directors
P Hoskins6
C van Wijk3
Other KMP
S McKenzie
C Knee
Total executive and
other KMP
Total NED remuneration
Total KMP
remuneration expensed
Fixed remuneration
Variable
Cash salary
Annual
leave
Post-
employment
benefits
STI / LTI
share based
payment
Termination
Shared
services
recovery
60,000
1,444
10,000
38,590
310,000
-
210,425
200,000
720,425
110,034
-
-
-
-
20,551
-
10,138
4,777
35,466
-
5,700
-
950
-
21,003
-
25,000
19,000
65,003
6,650
-
-
-
-
(53,908)4
-
(43,496)4
(38,269)4
(135,673)
-
830,459
35,466
71,653
(135,673)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(160,889)5
(151,779)5
(312,668)
-
372,553
116,684
(312,668)
489,237
Total
65,700
1,444
10,950
38,590
297,646
-
41,178
33,729
1 Mr Davey resigned 25 September 2019
2 Mr Saint Don resigned 17 June 2020.
3 Mr Andrew Pardey and Mr Chris van Wijk were appointed 17 June 2020.
4 At the end of each reporting period the Company applies a probability to options with non-market based vesting criteria to reflect the likely number
of options that will vest at the end of the vesting period taking into consideration all the vesting criteria. As outlined in the Directors Report, the Company
has changed strategic direction which will likely result in all previous options lapsing unvested. This is a result of previous vesting criteria being based
on progression and financing of the Chilalo Graphite Project. This results in a reversal of amounts previously expensed.
5 The Group is a party to a shared services agreement with Matador Mining Limited (Matador) and Superior Lake Resources Limited (Superior) under
which the Company, Matador and Superior shared certain costs. During the year, Mr McKenzie and Mr Knee spent a portion of their time working for
Matador and Superior, with this time recharged by the Group on an at cost basis. This is included in the table above as the shared services recovery.
6 Effective 1 May 2020 Mr Hoskins cash salary has been reduced to $260,000.
16
Directors’ report
2019 financial year
Fixed remuneration
Variable
Name
Cash salary
Annual
leave
Post-
employment
benefits
STI / LTI
share based
payment
Termination
Shared
services
recovery
Non-executive directors
S Dennis
G Davey
D Saint Don1
Executive directors
P Hoskins
Other KMP
S McKenzie
C Knee
Total executive and
other KMP
Total NED remuneration
Total KMP
remuneration expensed
60,000
40,000
10,000
-
-
-
5,700
3,800
-
-
-
-
290,000
46,519
20,531
(68,165)2
188,525
180,000
658,525
110,000
26,035
(2,669)
69,885
-
25,000
17,100
62,631
9,500
(38,175)2
(36,837)2
(143,176)
-
768,525
69,885
72,131
(143,176)
1 Mr Saint Don was appointed 1 April 2019.
(g) Additional statutory information
Relative proportions of fixed and variable remuneration expense
-
-
-
-
-
-
-
-
-
Marvel Gold Limited
30 June 2020
Total
65,700
43,800
10,000
288,885
103,700
75,944
468,530
119,500
-
-
-
-
(97,685)
(81,650)
(179,335)
-
(179,335)
588,030
The following table shows the relative proportions of remuneration that are linked to performance and those that are fixed, based on
the amounts disclosed as statutory remuneration expense above:
Name
Managing Director
P Hoskins
Other KMP
C van Wijk1
S McKenzie
C Knee
2020
2019
Fixed
remuneration
At risk
remuneration -
STI / LTI
Fixed
remuneration
At risk
remuneration -
STI / LTI
100%
-
100%
100%
-
-
-
-
100%
-
100%
100%
-
-
-
-
1 Mr Chris van Wijk was appointed 17 June 2020.
The non-IFRS information in the table above has not been subject to audit
Performance based remuneration granted and forfeited
The remuneration of KMPs was approved by the Board in September 2019. The years assessment of performance against the stated
objectives took place in July 2020 as outlined in note (b) above.
17
Marvel Gold Limited
30 June 2020
Directors’ report
Options
The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period are as follows:
Grant date
27-Sept-17
21-Nov-17
21-Nov-17
21-Nov-17
26-Nov-18
26-Nov-18
13-Dec-18
13-Dec-18
13-Dec-18
24-Jul-19
24-Jul-19
14-Nov-19
Vesting
date
01-Jul-20
1-Jul-19
1-Jul-20
01-Jul-18
01-Jul-19
01-Jul-21
13-Dec-18
01-Jul-19
01-Jul-21
01-Jul-20
01-Jul-22
01-Jul-22
Expiry date
Exercise
price
01-Jul-22
9-Jun-21
1-Jul-22
01-Jul-20
01-Jul-21
01-Jul-23
01-Jul-20
01-Jul-21
01-Jul-23
01-Jul-22
01-Jul-24
01-Jul-24
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Value per
option at
grant date
$0.24
$0.28
$0.28
$0.28
$0.25
$0.12
$0.19
$0.19
$0.08
$0.23
$0.13
$0.06
Performance
achieved
% Vested
Post year end1
0%
Post year end1
Nil
25%
To be determined2
100%
25%
To be determined2
Post year end1
To be determined2
To be determined2
Nil
100%
Nil
Nil
100%
Nil
100%
100%
Nil
Nil
Nil
Nil
1 Subsequent to year end zero options have vested in line with the Board’s assessment which is disclosed in note (b) above.
2 To be determined after the options have passed the vesting date.
18
Directors’ report
Marvel Gold Limited
30 June 2020
The number of options over ordinary shares in the Company provided as remuneration to KMP is shown below. The options carry no dividend or voting rights. When exercisable, each option is convertible
into one ordinary share of the Company.
Reconciliation of
options
2020
Balance at the start of the period
Granted as
compensation
Name and Grant dates
Vested
Unvested
P Hoskins
S McKenzie
C Knee
9-Jun-16
21-Nov-17
21-Nov-17
26-Nov-18
26-Nov-18
14-Nov-19
14-Nov-19
14-Nov-19
9-Jun-16
21-Nov-17
27-Sept-17
13-Dec-18
13-Dec-18
13-Dec-18
24-Jul-19
24-Jul-19
9-Jun-16
21-Nov-17
27-Sept-17
13-Dec-18
13-Dec-18
13-Dec-18
24-Jul-19
24-Jul-19
-
-
-
-
-
-
-
-
-
-
-
-
-
42,545
-
-
-
-
-
-
38,130
-
-
476,667
238,333
596,261
421,818
580,000
-
-
-
330,000
164,500
400,934
141,818
390,000
-
-
-
311,667
155,833
349,532
130,909
360,000
-
-
-
-
-
-
-
-
130,093
549,647
755,764
-
-
-
-
-
-
83,091
507,779
-
-
-
-
-
-
472,353
77,294
KMP not listed in the table above have zero options at year end.
Number
-
-
-
105,455
-
130,093
-
-
-
-
-
35,454
-
-
-
-
-
-
-
32,727
-
-
-
-
Vested
Forfeited
Balance at end of period
Exercised
Number
476,667
238,333
-
316,363
-
-
-
-
330,000
164,500
-
106,364
-
-
-
-
311,667
155,833
-
98,182
-
-
-
-
%
100
100
-
75
-
-
-
-
100
100
-
75
-
-
-
-
100
100
-
75
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Vested
Unvested
-
-
-
105,455
-
130,093
-
-
-
-
-
35,454
-
42,545
-
-
-
-
-
32,727
-
38,130
-
-
-
-
596,261
-
580,000
-
549,647
755,764
-
-
400,934
-
390,000
-
83,091
507,779
-
-
349,532
-
360,000
-
472,353
77,294
%
-
-
-
25
-
100
-
-
-
-
-
25
-
-
-
-
-
-
-
25
-
-
-
-
19
Directors’ report
Marvel Gold Limited
30 June 2020
Shareholdings
Name
S Dennis
G Davey
D Saint Don2
P Hoskins
A Pardey3
C van Wijk3
S McKenzie
C Knee
Balance at start of
period
Received during
the period on the
exercise of options
Other changes
during the period
Balance at end of
the period
773,799
756,372
-
877,728
-
-
335,971
226,822
-
-
-
-
-
-
-
-
-
(756,372)1
-
-
-
-
-
-
773,799
-
-
877,728
-
-
335,971
226,822
1 Mr Grant Davey resigned 25 September 2019.
2 Mr Saint Don resigned 17 June 2020.
3 Mr Andrew Pardey and Mr Chris van Wijk were appointed 17 June 2020.
None of the shares in the above table are held nominally by the Directors or by any of the other KMP.
Loans to KMP
There were no loans made to Directors or KMP.
Reliance on external remuneration consultants
In performing its role, the Board may seek advice from independent remuneration consultants where appropriate, to make
recommendations as to the nature and amount of remuneration payable to KMPs. Remuneration consultants are engaged by, and
report directly to the Board. In 2020, the Board did not engage an independent remuneration consultant to review the Company’s
remuneration structure. Having considered publicly available information on the remuneration practices of peer group companies and
obtained advice from an independent human resources consultant, the Board believes that current remuneration arrangements are
appropriate.
Shares under option
Unissued ordinary shares
Shares under option held by Directors and KMP that formed part of remuneration at the date of this report are as follows:
Date options granted
Expiry date
Exercise price
Number under option
27-Sep-17
21-Nov-17
26-Nov-18
26-Nov-18
13-Dec-18
13-Dec-18
13-Dec-18
24-Jul-19
24-Jul-19
14-Nov-19
14-Nov-19
14-Nov-19
20-Jul-20
20-Jul-20
20-Jul-20
01-Jul-22
1-Jul-22
01-Jul-23
01-Jul-21
01-Jul-21
01-Jul-23
01-Jul-20
01-Jul-22
01-Jul-24
01-Jul-20
01-Jul-22
01-Jul-24
20-Jul-23
20-Jul-23
20-Jul-23
1 Issued subsequent to year end.
750,466
596,261
580,000
105,455
68,181
750,000
80,675
160,385
980,132
130,093
549,647
755,764
16,050,000
8,025,000
8,025,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
$0.0351
$0.061
$0.101
20
Directors’ report
No option holder has any right under the options to participate in any other share issue of the Company or any other entity.
Voting of shareholders at last year’s Annual General Meeting
The Group received 78.03% votes for its remuneration report for the 2019 financial year. The Company did not receive any specific
feedback at the AGM or throughout the year on its remuneration practices.
END OF REMUNERATION REPORT (audited)
Marvel Gold Limited
30 June 2020
21
Marvel Gold Limited
30 June 2020
Directors’ report
Insurance of officers and indemnities
Marvel’s constitution allows the Company to indemnify each Director or officer of the Company, to the extent permitted by law, against
liability incurred in or arising out of the conduct of the business of the Company or the discharge of the duties of the Directors or
officers.
The Group has granted indemnities under deeds of indemnity with its current Directors and officers. In conformity with the constitution,
each deed of indemnity indemnifies the relevant Director or officer to the full extent permitted by law. Where applicable, each deed of
indemnity indemnifies the relevant Director, officer or employee to the fullest extent permitted by law for liabilities incurred whilst acting
as a director, officer or employee of the Company, any of its related bodies corporate and any outside entity, where such an office is held
at the request of the Company.
The Group has a policy that it will, as a general rule, support and hold harmless an employee who, while acting in good faith, incurs
personal liability to others as a result of working for the Group.
No indemnity has been granted to an auditor of the Group in their capacity as auditors of the Group.
During the period, the Group paid insurance premiums (inclusive of fees and charges) in respect of directors’ and officers’ liability
insurance of $127,650 (2019: $139,150) (ex goods and services tax (GST)).
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against officers
in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred by the officers in connection
with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or
the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause
detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs
and those relating to other liabilities.
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.
Non-audit services
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.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services provided during the
period are set out in note 23.
The Board has considered the position and is satisfied that the provision of the non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations Act 2001. 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 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.
22
Marvel Gold Limited
30 June 2020
Directors’ report
Auditor independence
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 27.
Annual Statement of Ore Reserves and Mineral Resources
Chilalo Project: Ore Reserve and Mineral Resource Estimate
Domain
Classification
Zone
Million Tonnes (Mt)
TGC (%)
High-Grade
Total Ore Reserve
Probable Reserve
Probable Reserve
High-Grade
Indicated
Inferred
Total High-Grade
Indicated + Inferred
Low-Grade
Inferred
Main
Main
Main
North East
All
Main
North East
All
All
Main
North East
All
High-Grade +
Low-Grade
Indicated + Inferred
All
5.3
5.3
9.2
1.0
10.3
7.4
2.3
9.8
20.1
37.8
9.5
47.3
67.3
10.9
10.9
10.6
9.5
10.5
9.5
8.8
9.3
9.9
3.4
4.1
3.5
5.4
Contained Graphite
(Kt)
576
576
982
100
1,082
704
205
908
1,991
1,282
394
1,677
3,667
Mineral Resources are inclusive of Ore Reserves. The Mineral Resource was estimated within constraining wireframe solids using a core high-grade
domain defined above a nominal 5% TGC cut-off within a surrounding low-grade zone defined above a nominal 2% TGC cut-off. The resource is
quoted from all classified blocks above a lower cut-off of 2% TGC within these wireframe solids. Differences may occur due to rounding.
Tabakorole Gold Project: Mineral Resource Estimate
Indicated Resources
Inferred Resources
Tonnes
Au
(Mt)
(g/t)
1.0
6.8
7.9
1.0
0.9
1.0
K Oz
(Au)
34
207
241
Tonnes
Au
(Mt)
(g/t)
1.0
9.6
10.6
1.1
1.0
1.1
K Oz
(Au)
35
318
353
Tonnes
(Mt)
2
16
18.4
Total
Au
(g/t)
1.1
1.0
1.0
K Oz
(Au)
69
525
594
Note: Figures have been rounded
Oxide
Sulphide
Total
The 2007 Tabakorole MRE was announced on 17 June 2020. The 2007 Tabakorole MRE was not reported in accordance with the 2012 JORC Code; a
competent person has not done sufficient work to classify the Tabakorole MRE as mineral resources in accordance with the 2012 JORC Code; and it is
uncertain that following evaluation and/or further exploration work that the Tabakorole MRE will be able to be reported as mineral resources in
accordance with the 2012 JORC Code. Marvel confirms that it is not in possession of any new information or data relating to the 2007 Tabakorole MRE
that materially impacts on the reliability of the 2007 Tabakorole MRE or Marvel’s ability to verify the 2007 Tabakorole MRE as mineral resources in
accordance with Appendix 5A of the 2012 JORC Code and the supporting information provided in the announcement of 17 June 2020 continues to apply
and has not materially changed.
23
Marvel Gold Limited 30 June 2020 Directors’ report 24 Competent persons’ statements Mineral Resources Information in this annual report that relates to in situ Mineral Resources for Chilalo is based on information compiled by Mr. Grant Louw under the direction and supervision of Dr Andrew Scogings, who are both full-time employees of CSA Global Pty Ltd. Dr Scogings takes overall responsibility for the report. Dr Scogings is a Member of both the Australian Institute of Geoscientists and Australasian Institute of Mining and Metallurgy and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as a Competent Person in terms of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code 2012). Dr Scogings consents to the inclusion of such information in this annual report in the form and context in which it appears. Marvel confirms that it is not aware of any new information or data that materially affects the information included in the announcement of 28 August 2019 and that all material assumptions and technical parameters underpinning the estimates in the announcement of 28 August 2019 continue to apply and have not materially changed. Ore Reserves The information in this annual report that relates to the Ore Reserve at the Chilalo Project is based on information compiled by Mr Karl van Olden, a Competent Person, who is a Fellow of The Australasian Institute of Mining and Metallurgy. Karl van Olden is employed by CSA Global Pty Ltd, an independent consulting company. Mr van Olden 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 JORC Code 2012. Mr van Olden consents to the inclusion in this annual report of the matters based on his information in the form and context in which it appears. Marvel confirms that it is not aware of any new information or data that materially affects the information included in the announcement of 20 September 2018 and that all material assumptions and technical parameters underpinning the estimates in the announcement of 20 September 2018 continue to apply and have not materially changed. Ore Reserves and Mineral Resources Governance Marvel reviews its Mineral Resource and Ore Reserve estimates on an annual basis. The Annual Statement of Mineral Resources and Ore Reserves is prepared in accordance with the JORC Code 2012 and the ASX Listing Rules. Competent Persons named by the Company are members of the Australian Institute of Mining and Metallurgy and/or the Australian Institute of Geoscientists and qualify as Competent Persons as defined under the JORC Code 2012. The Company engages external consultants and Competent Persons to prepare and calculate estimates of its Mineral Resources and Ore Reserves. These estimates and underlying assumptions are reviewed by the Directors and management for reasonableness and accuracy. The results of the Mineral Resource and Ore Reserve estimates are then reported in accordance with the JORC Code 2012 and the ASX Listing Rules. Where material changes occur to a project during the period, including the project’s size, title, exploration results or other technical information, previous resource estimates and market disclosures are reviewed for completeness. The Company reviews its Mineral Resources and Ore Reserves as at 30 June each year and where a material change has occurred in the assumptions or data used in previously reported Mineral Resources and Ore Reserves, a revised estimate will be prepared as part of the annual review process. This report is made in accordance with a resolution of the Directors. Stephen Dennis Chairman of the Board PERTH On the 28th day of September 2020
Corporate governance statement
Marvel and the Board are committed to achieving and demonstrating the highest standards of corporate governance. Marvel has
reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (3rd edition) published
by the ASX Corporate Governance Council.
The 2020 corporate governance statement is dated as at 30 June 2020 and reflects the corporate governance practices in place
throughout the 2020 financial year. The 2020 corporate governance statement was approved by the Board on 28 September 2020. A
description of the Group's current corporate governance practices is set out in the Group's corporate governance statement which can
be viewed on the Company’s website at www.marvel gold.com.au/corporate-governance/.
Marvel Gold Limited
30 June 2020
25
Auditor’s Independence Declaration
As lead auditor for the audit of Marvel Gold Limited for the year ended 30 June 2020, I declare that to
the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Marvel Gold Limited and the entities it controlled during the period.
Craig Heatley
Partner
PricewaterhouseCoopers
Perth
28 September 2020
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Consolidated statement of profit or loss and other comprehensive income
for the period ended 30 June 2020
Marvel Gold Limited
30 June 2020
Continuing operations
Research and development rebate
Other income
Exploration and evaluation expenses
Corporate and administration expenses
Business development and marketing
Finance costs
Employee benefits
Share based payments
Other expenses
Loss before income tax
Income tax benefit
Loss for the period
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Total comprehensive loss for the period
Net loss is attributable to:
Owners of Marvel Gold Limited
Total comprehensive loss is attributable to:
Owners of Marvel Gold Limited
Notes
30 June 2020
$
30 June 2019
$
1(a)
1(c)
1(b)
12
3
436,948
450,103
(3,461,198)
(1,238,772)
(698,332)
(1,949,048)
(1,176,126)
149,584
-
(7,486,841)
-
(7,486,841)
201,735
263,364
(4,231,952)
(1,297,059)
(1,383,857)
(513,187)
(1,190,848)
138,657
(36,605)
(8,049,751)
-
(8,049,751)
17,300
(68,010)
(7,469,541)
(8,117,761)
(7,486,841)
(8,049,751)
(7,469,541)
(8,117,761)
Earnings per share attributable to owners of the Company
Basis EPS
Diluted EPS
24
24
$
(0.07)
(0.07)
$
(0.10)
(0.10)
The above consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to the
financial statements.
27
Consolidated balance sheet
as at 30 June 2020
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Property, plant and equipment
Exploration and evaluation
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Shareholder funds received in advance
Provisions
Loans and borrowings
Total current liabilities
Non-current liabilities
Provisions
Loans and borrowings
Total non-current liabilities
Total liabilities
Net assets / (liabilities)
EQUITY
Share capital
Reserves
Retained earnings
Total equity
Marvel Gold Limited
30 June 2020
Notes
30 June 2020
$
30 June 2019
$
4
5
6
7
8
9
10
9
10
11
12
13
304,633
142,900
447,533
1,264,791
318,465
1,583,256
69,072
5,000,000
5,069,072
5,516,605
112,880
5,000,000
5,112,880
6,696,136
(437,200)
(35,000)
(198,328)
(8,748,377)
(9,418,905)
(449,871)
-
(171,377)
-
(621,248)
(73,641)
-
(72,018)
(5,799,825)
(73,641)
(5,871,843)
(9,492,546)
(6,493,091)
(3,975,941)
203,045
20,272,214
1,316,781
(25,564,936)
16,832,075
1,449,065
(18,078,095)
(3,975,941)
203,045
The above consolidated balance sheet is to be read in conjunction with the notes to the financial statements.
28
Consolidated statement of changes in equity
for the period ended 30 June 2020
Balance at 30 June 2018
Total comprehensive loss for the period:
Loss for the period
Foreign exchange translation differences
Total comprehensive loss for the period
Transactions with owners in their capacity as owners:
Issue of shares net of transaction costs
Employee share schemes - value of employee services
Balance at 30 June 2019
Total comprehensive loss for the period:
Loss for the period
Foreign exchange translation differences
Total comprehensive loss for the period
Transactions with owners in their capacity as owners:
Issue of shares net of transaction costs
Employee share schemes - value of employee services
Marvel Gold Limited
30 June 2020
Foreign currency
translation
reserve
Share based
payment reserve
Retained earnings
/ (Accumulated
losses)
Total equity
Contributed
equity
$
15,111,194
-
-
-
1,720,881
-
$
26,986
-
(68,010)
(68,010)
-
-
16,832,075
(41,024)
-
-
-
3,440,139
-
-
17,300
17,300
-
-
$
$
$
1,628,745
(10,028,344)
6,738,581
-
-
-
-
(138,657)
1,490,089
-
-
-
-
(149,584)
1,340,505
(8,049,751)
(8,049,751)
-
(68,010)
(8,049,751)
(8,117,761)
-
-
(18,078,095)
1,720,881
(138,657)
203,045
(7,486,841)
(7,486,841)
-
17,300
(7,486,841)
(7,469,541)
-
-
3,440,139
(149,584)
(25,564,936)
(3,975,941)
Balance at 30 June 2020
20,272,214
(23,724)
The above consolidated statement of changes in equity should be read in conjunction with the notes to the financial statements.
29
Consolidated statement of cash flows
for the period ended 30 June 2020
Marvel Gold Limited
30 June 2020
Cash flows from operating activities
Payments to suppliers and employees
Payments for business development and marketing
Payment of exploration expenditure
Other income received
Receipts from research and development rebate
Notes
30 June 2020
$
30 June 2019
$
(1,567,498)
(553,296)
(3,664,566)
1,702
436,948
(2,207,252)
(1,370,280)
(2,476,773)
3,731
201,735
Net cash (outflow) from operating activities
14
(5,346,710)
(5,848,839)
Cash flows from investing activities
Payment for property, plant and equipment
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from the issue of interim loan notes
Proceeds from the issue of ordinary shares
Shareholder funds received in advance
Share issue transaction costs
Net cash flow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effects of exchange rate changes on cash and cash
equivalents
Cash and cash equivalents at the end of the period
4
(15,495)
(15,495)
(36,464)
(36,464)
1,358,576
3,452,409
35,000
(407,070)
4,438,915
(923,290)
5,192,664
104,567
-
(21,997)
5,275,234
(610,069)
1,264,791
1,838,886
(36,868)
304,633
35,974
1,264,791
The above consolidated statement of cash flows is to be read in conjunction with the notes to the financial statements.
30
Notes to the financial statements
1. Income and expenses
(a) Other income
Recharges
Other income
Marvel Gold Limited
30 June 2020
2020
$
448,401
1,702
450,103
2019
$
259,634
3,730
263,364
The Group is a party to a shared services agreement with Matador Mining Limited (Matador) and Superior Lake Resources Limited
(Superior) under which the Company, Matador and Superior shared certain costs. During the year, some Company employees spent a
portion of their time working for Matador and Superior, with this time recharged by the Group on an at cost basis.
(b) Employee benefits
Salaries
Salaries – Technical and exploration1
Superannuation
Changes in leave provisions
2020
$
1,205,741
(145,589)
87,559
28,415
1,176,126
2019
$
1,248,393
(227,542)
86,821
83,176
1,190,848
1 Technical and exploration salaries are classified as exploration and evaluation expenditure.
Employee expenses above include all employee expenses of all departments in the Group. On the face of the Consolidated statement of
profit or loss and other comprehensive income, technical and exploration staff wages of $145,589 (2019: $227,542) are included as
exploration expenses. Employee benefits expense on the face of the statements therefore includes only corporate and administrative staff.
(c) Finance costs
Interest expense
Other finance costs
2020
$
1,882,720
66,328
1,949,048
2019
$
513,187
-
513,187
Other finance costs include a fee payable to Citi Bank Hong Kong for the provision of agency and trustee services.
2. Segment information
Management has determined the operating segments based on the reports reviewed by the chief operating decision makers, being the
Directors. The Group’s reportable segments in accordance with AASB 8 are as follows:
•
•
Exploration – exploration carried out in Tanzania; and
Corporate – management of corporate affairs.
31
Marvel Gold Limited
30 June 2020
Notes to the financial statements
2. Segment information (continued)
The segments have applied the same accounting policies as applied to the Group and disclosed in note 26 of these financial statements.
Exploration
Tanzania
$
-
-
-
30-Jun-20
Corporate
$
450,103
436,948
887,051
Total
$
450,103
436,948
887,051
Exploration
Tanzania
$
-
-
-
30-Jun-19
Corporate
$
263,364
201,735
465,099
Total
$
263,364
201,735
465,099
(25,788)
-
(3,461,198)
(2,377,165)
(29,431)
149,583
-
(2,629,894)
(55,219)
149,583
(3,461,198)
(5,007,059)
(23,880)
-
(4,231,952)
(819,560)
(26,039)
138,657
-
(3,552,076)
(49,919)
138,657
(4,231,952)
(4,371,636)
(5,864,151)
(1,622,690)
(7,486,841)
(5,075,392)
(2,974,359)
(8,049,751)
5,097,768
418,837
5,516,605
5,309,334
1,386,802
6,696,136
Other income
Research and development rebate
Total income
Depreciation and amortisation
Share based payments
Exploration expenses
Other expenses
Segment loss
Segment assets
Segment liabilities
(27,466)
(9,465,080)
(9,492,546)
(26,191)
(6,466,900)
(6,493,091)
Additions to PP&E
-
10,299
10,299
-
27,355
27,355
3. Income tax expense
The Company has total carried forward tax losses of $14,485,258 (2019: $9,926,702) available for offset against future assessable income of
the Company. The net deferred tax asset attributable to the residual tax losses of $3,983,446 (2019: $2,729,843) has not been brought to
account until convincing evidence exists that assessable income will be earned of a nature and amount to enable such benefit to be realised.
4. Cash and cash equivalents
Cash at bank
Refer to note 15 for the Group’s exposure to interest rate and credit risk.
5. Trade and other receivables
Accounts receivable
Other receivables
Prepayments
Security bond
32
2020
$
2019
$
304,633
304,633
1,264,791
1,264,791
2020
$
94,803
30,917
17,180
-
142,900
2019
$
118,038
31,863
150,283
18,281
318,465
Notes to the financial statements
6. Property, plant and equipment
Marvel Gold Limited
30 June 2020
Non-current
At 30 June 2020
Cost or fair value
Accumulated depreciation
Net book amount
Period ended 30 June 2020
Opening net book amount
Additions
Disposal
Foreign exchange movement
Depreciation charge
Closing net book amount
Non-current
At 30 June 2019
Cost or fair value
Accumulated depreciation
Net book amount
Period ended 30 June 2019
Opening net book amount
Additions
Foreign exchange movement
Depreciation charge
Closing net book amount
7. Exploration and evaluation expenditure
(a) Reconciliation of exploration and evaluation expenditure
Exploration and evaluation acquisition costs
Carrying amount at the end of the period
8. Trade and other payables
Creditors
Accruals
Other payables
33
Plant and
equipment
Furniture and
fittings
$
$
125,157
(101,302)
23,855
48,139
-
-
3,325
(27,609)
23,855
120,855
(75,638)
45,217
64,741
10,299
(22,149)
19,936
(27,610)
45,217
Plant and
equipment
$
Furniture and
fittings
$
122,791
(74,652)
48,139
66,236
2,536
7,094
(27,727)
48,139
134,918
(70,177)
64,741
60,099
24,819
2,015
(22,192)
64,741
Total
$
246,012
(176,940)
69,072
112,880
10,299
(22,149)
23,261
(55,219)
69,072
Total
$
257,709
(144,829)
112,880
126,335
27,355
9,109
(49,919)
112,880
2020
$
2019
$
5,000,000
5,000,000
5,000,000
5,000,000
2020
$
306,099
30,001
101,100
437,200
2019
$
188,871
216,314
44,686
449,871
Notes to the financial statements
Marvel Gold Limited
30 June 2020
9. Provisions
Current
Provision for annual leave
Non-current
Provision for long service leave
10. Loans and borrowings
Current
Interim Loan Notes drawn
Effective interest capitalised
Foreign currency movement
Non- current
Interim Loan Notes drawn
Effective interest capitalised
Foreign currency movement
Net debt reconciliation
1 July 2018
Cashflows
Capitalised fees and interest
Foreign exchange differences
30 June 2019
Cashflows
Capitalised fees and interest
Foreign exchange differences
Closing
2020
$
198,328
198,328
73,641
73,641
2020
$
6,551,240
2,001,106
196,031
8,748,377
-
-
-
-
Cash
$
1,838,886
(610,069)
-
35,974
1,264,791
(923,290)
-
(36,868)
304,633
2019
$
171,377
171,377
72,018
72,018
2019
$
-
-
-
5,192,664
513,187
93,974
5,799,825
Net debt
$
1,838,886
(5,802,733)
(513,187)
(58,000)
(4,535,034)
(2,281,866)
(1,487,919)
(138,925)
(8,443,744)
Loans and
Borrowings
$
-
(5,192,664)
(513,187)
(93,974)
(5,799,825)
(1,358,576)
(1,487,919)1
(102,057)
(8,748,377)
1 Interest includes an amount of $394,000 that was reclassified from a liability to equity in the current period.
On 29 October 2018, the Company signed agreements for financing the development of its Chilalo Graphite Project with funds managed by
global private investment firm Castlelake, L.P (Castlelake), which provided for a funding package of up to US$80 million subject to satisfaction
of agreed conditions.
Under the funding package, the Company entered into a Loan Note Subscription Agreement (LNSA) to raise US$5 million from the issue of
secured Interim Loan Notes, which became immediately available. At the end of the year, the Company has fully drawn the US$5 million
Interim Loan Notes. Other material terms of the Interim Loan Notes agreed in 2018 are:
•
•
•
•
•
•
Loan Notes expire 29 October 2020 (extended to 29 October 2020 subsequent to year end);
Structuring fee 2% and an issuer discount of 7.5%;
Interest rate of 15% on drawn funds and 4% commitment fee on undrawn funds;
All fees other than the issuer discount are capitalised into the balance of the interim loan notes;
Capital raising by the Company restricted to $5 million unless for the purpose of debt repayment; and
Security over the Chilalo Project.
34
Marvel Gold Limited
30 June 2020
Notes to the financial statements
10. Loans and borrowings (continued)
On satisfactory completion of conditions precedent, the US$5 million facility was to be rolled into a senior funding package in accordance
with an agreed term sheet that sets out the proposed terms on which the Castlelake Funds and other market participants (subject to the
satisfaction of agreed conditions) provide up to US$40 million in equity and up to US$40 million from the issue of senior secured loan notes.
On 17 June 2020 the Company announced Castlelake had decided not to proceed with the Senior Funding Package. As a result, the Company
agreed with Castlelake to restructure the debt which included:
•
•
•
•
•
Confining the Financier’s security to Chilalo Project related assets and removing the Castlelake’s legal recourse to the Company;
Paying an amendment fee of 7.5% of the debt capitalised into the balance of the loan notes;
Paying a security release fee of US$100,000;
Issuing 7.5 million shares of the Company;
Extending the due date of the debt by two years to October 2022;
• Undertaking steps to either sell the Chilalo Project or refinance the Castlelake debt amount;
•
•
Should the Chilalo sales process yield cash proceeds that exceed the LNSA debt, the Company will received the excess proceeds;
and
If the Chilalo process does not result in repayment of the LNSA by 29 October 2022, the Castlelake will take control of the Chilalo
Project with no further recourse to the Company.
Subsequent to year end on the 20 July 2020, the Company’s shareholders voted to approve the above amended terms which formalised the
amended agreement.
11. Share capital
(a) Issued and paid up capital
Ordinary fully paid shares
(b) Movement in ordinary shares
Opening balance
Issue of equities
Conversion of loyalty options
Exercise of employee options
Shares issued as consideration for drilling
Shares issued to interim loan note holders
Issue of shares
Less: Transaction costs arising on share issues
Movement for the period
Closing balance
2020
Shares
2020
$
2019
Shares
2019
$
115,011,555
20,272,214
88,145,208
16,832,075
88,145,208
16,832,075
78,714,794
15,111,194
-
-
-
312,500
26,553,847
-
26,866,347
-
-
-
457,3001
3,389,909
(407,070)
3,440,139
138,748
1,369,737
5,956,357
1,645,000
320,572
-
9,430,414
34,687
-
1,638,312
-
69,880
(21,997)
1,720,882
115,011,555
20,272,214
88,145,208
16,832,075
1 Of this amount $394,000 was reclassified from a liability to equity in the current period.
(c) Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the
number of, and amounts paid on, shares held.
On a show of hands, every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote. Upon a poll,
each fully paid share has one vote.
35
Notes to the financial statements
12. Reserves
The following table shows a breakdown of the balance sheet line item ‘reserves’ and the movements in these reserves during the
period. A description of the nature and purpose of each reserve is provided below.
Marvel Gold Limited
30 June 2020
Share based
payments
Foreign
currency
translation
Total reserves
$
1,628,745
-
-
(138,657)
1,490,089
-
-
(149,584)
1,340,505
$
26,986
(68,010)
(68,010)
-
(41,024)
17,300
17,300
-
(23,724)
$
1,655,731
(68,010)
(68,010)
(138,657)
1,449,065
17,300
17,300
(149,584)
1,316,781
At 30 June 2018
Translation of foreign subsidiaries
Other comprehensive income
Transactions with owners in their capacity as owners
Employee share based payments expense
At 30 June 2019
Translation of foreign subsidiaries
Other comprehensive income
Transactions with owners in their capacity as owners
Employee share based payments expense
At 30 June 2020
(a) Nature and purpose of reserves
(i) Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations as well as from the translation of the Company’s net investment in a foreign subsidiary.
(ii) Share based payment reserve
The share-based remuneration reserve is used to recognise the fair value of options issued.
13. Retained earnings
Opening balance
Net loss for the period
Closing balance
2020
$
2019
$
(18,078,095)
(7,486,841)
(25,564,936)
(10,028,344)
(8,049,751)
(18,078,095)
36
Notes to the financial statements
14. Cash flow information
(a) Reconciliation of operating loss after income tax to the net cash
flows from operating activities:
Loss for the period
Adjustments for:
Depreciation
Non-cash employee benefits expense - share based payments
Non-cash shares issued as consideration for drilling
Non-cash costs of interim loan notes capitalised
Net exchange differences
Changes in operating assets and liabilities:
Changes in trade and other receivables
Changes in provisions
Changes in trade and other payables
Net cash (outflow) from operating activities
(b) Non-cash investing and financing activities
Marvel Gold Limited
30 June 2020
2020
$
2019
$
(7,486,841)
(8,049,751)
55,219
(149,583)
-
1,920,140
122,889
49,919
(138,657)
1,638,312
513,187
(10,009)
175,565
28,573
(12,672)
(154,129)
83,550
218,739
(5,346,710)
(5,848,839)
As part of the financing arrangement outlined in note 10 the Company issued 312,500 shares to the Interim Loan Note holders as part
of the terms of the financing transaction.
15. Financial risk management
The Company and Group’s activities expose it to a variety of financial risks, including market, foreign currency, credit and liquidity risk.
For the Group, market risk includes:
•
•
Interest rate risk; and
Foreign exchange risk.
Financial risk management is carried out by the Group’s Managing Director and Chief Financial Officer, in close co-operation with the
Board. The Group obtains independent external advice as required to assist it in understanding and managing its exposures and risks.
The Group held the following financial instruments at reporting date:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Total Financial Assets
Financial Liabilities
Trade and other payables
Loans and borrowings
Total Financial Liabilities
(a) Market risk
(i) Interest rate risk
Note
4
5
8
10
2020
$
304,633
142,900
447,533
2019
$
1,264,791
318,465
1,583,256
(437,200)
(8,748,377)
(449,871)
(5,799,825)
(9,185,577)
(6,249,696)
The Group and the Company are exposed to interest rate volatility on deposits and loans. Deposits and loans at variable rates expose the
Group and the Company to cash flow interest rate risk. Deposits and loans at fixed rates expose the Group to fair value interest rate risk.
37
Notes to the financial statements
15. Financial risk management (continued)
Effective Average
Interest Rate (%)
Variable
Interest Rate
$
Fixed Interest
Rate
$
Non-Interest
Bearing
$
Marvel Gold Limited
30 June 2020
Total
$
304,633
142,900
447,533
0.19%
0.00%
0.00%
30.00%
0.01%
230,376
-
230,376
-
-
-
74,257
142,900
217,157
-
-
-
-
(8,748,377)
(8,748,377)
(437,200)
-
(437,200)
(437,200)
(8,748,377)
(9,185,577)
22,385
-
22,385
-
-
-
1,242,406
18,281
1,260,686
1,264,791
18,281
1,283,071
29.20%
-
(5,799,825)
-
(5,799,825)
2020 (consolidated)
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liability
Trade and other payables
Loans and borrowings
2019 (consolidated)
Financial Assets
Cash and cash equivalents
Security bonds
Financial Liability
Loans and borrowings
Sensitivity Analysis
The following tables summarise the sensitivity of the Group’s financial assets to interest rate risk. Had the relevant variables, as illustrated
in the tables, moved with all other variables held constant, post-tax loss and equity would have been affected as shown below.
Interest Rate Risk
-100 basis points (-1%)
Interest Rate Risk
+100 basis points (+1%)
Carrying
Amount
$
Net Profit /
(Loss)
$
Equity
$
Net Profit /
(Loss)
$
230,376
230,376
22,385
22,385
(2,304)
(2,304)
(2,304)
(2,304)
(224)
(224)
(224)
(224)
2,304
2,304
224
224
Equity
$
2,304
2,304
224
224
2020 (consolidated)
Financial Assets
Cash and cash equivalents
2019 (consolidated)
Financial Assets
Cash and cash equivalents
(ii) Foreign exchange risk
The Group is exposed to fluctuations in foreign currencies arising from costs incurred in currencies other than Australian dollars, which
is the Group’s presentation currency.
The Group operates internationally and is primarily exposed to foreign exchange risk arising from currency exposures to the United
States dollar and Tanzanian shilling.
The Group has not formalised a foreign currency risk management policy and it holds only limited amounts of cash in foreign currencies
at any point in time. The Group monitors foreign currency expenditure in light of exchange rate movements.
38
Notes to the financial statements
15. Financial risk management (continued)
The Groups exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars was as follows.
Marvel Gold Limited
30 June 2020
Foreign currency balances
Cash at bank
Trade receivables
Trade payables
Loans and borrowings
Sensitivity analysis
2020 (Consolidated)
USD (10% movement)
TZS (10% movement)
2019 (Consolidated)
USD (10% movement)
TZS (10% movement)
(b) Liquidity risk
2020
2019
US Dollar
13,749
-
(21,130)
(8,748,377)
Tanzanian
Shilling
1,356
16,039
(333)
-
US Dollar
1,077,411
18,959
(15,005)
(5,799,825)
Tanzanian
Shilling
14,249
3,464
(3,530)
-
10% Strengthening to the AUD
10% Weakening to the AUD
Equity
$
(1,923)
1,428
Net Profit /
(Loss)
$
(798,831)
123
359
(6)
(429,310)
1,295
Equity
$
2,351
(1,745)
(439)
7
Net Profit /
(Loss)
$
976,349
(151)
524,713
(1,583)
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet the Group’s financial commitments
in a timely and cost-effective manner.
The Group’s treasury function continually reviews the Group’s liquidity position, including cash flow forecasts, to determine the
forecast liquidity position and maintain appropriate liquidity levels.
Contractual maturities of financial liabilities
Less than 1 year
$
Between 1 and 2
years
$
2020 (Consolidated)
Trade and other payables
Loans and borrowings1
2019 (Consolidated)
Trade and other payables
Loans and borrowings
437,200
9,759,920
10,197,120
449,871
-
449,871
-
-
-
-
7,771,155
7,771,155
Total
contractual
cash flows
$
437,200
9,759,920
10,197,120
449,871
7,771,155
8,221,026
Carrying amount
$
437,200
8,748,377
9,185,577
449,871
5,799,825
6,249,696
1 Subsequent to year end the Company’s shareholders voted to approve the restructure of the debt including extending the due date
by two years to October 2022.
(c) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group’s receivables from customers. The Group manages its credit risk on financial
instruments, including cash, by only dealing with banks licensed to operate in Australia and credit ratings of AA.
39
Marvel Gold Limited
30 June 2020
Notes to the financial statements
15. Financial risk management (continued)
(i) Trade and other receivables
The Group operates in the mining exploration sector and does not have trade receivables from customers. It does however have credit
risk arising from other receivables.
(ii) Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit
risk at the reporting date was:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Total Financial Assets
(d) Fair value measurements
Note
4
5
2020
$
304,633
142,900
447,533
2019
$
1,264,791
318,465
1,583,256
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement, or for disclosure purposes.
AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value
measurement hierarchy:
(a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b)
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (prices) or
indirectly (derived from prices) (level 2); and
(c)
Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The carrying amounts and estimated fair values of all the Group’s financial instruments recognised in the financial statements are
materially the same.
16. Capital management
(a) Risk management
The Group’s policy is to maintain a strong capital base so as to ensure investor, creditor and market confidence and to sustain future
development of the business.
The Company has welcomed equity investment from major stakeholders so that goals are aligned and there is a vested interest in the
Group’s success. Current stakeholders that are also shareholders include major suppliers for exploration, project management and
feasibility studies advisors, corporate advisors, Directors, executives and employees.
The Company monitors its total shares on issue, market capitalisation and enterprise value on a regular basis so as to maintain a critical
balance between having its strategy fully funded and minimising existing shareholder dilution.
As disclosed in note 10, the Company has incurred debt in the form of the Interim Loan Notes to help fund project development. The
loan funding was used as bridging funding to access the senior funding arrangement. The financier has now made a decision to not
proceed with the senior funding arrangement. The Company has chosen to take on this debt as opposed to issuing additional shares
so as to avoid excessive shareholder dilution at the Company’s current market capitalisation. The Company was aiming to fund ongoing
project development at a gearing ratio of 50%.
40
Notes to the financial statements
16. Capital management (continued)
Net debt
Share capital
Net debt to equity ratio
(b) Dividends
Marvel Gold Limited
30 June 2020
2020
$
2019
$
(8,443,744)
20,272,214
(4,535,034)
16,832,075
42%
27%
Up until the date of this report, no dividend has been declared or paid by the Company.
17. Interests in other entities
The Group’s principal subsidiaries at 30 June 2020 are set out below. Unless otherwise stated, they have share capital consisting solely
of ordinary shares that are held directly by the group, and the proportion of ownership interests held equals the voting rights held by
the Group. The country of incorporation or registration is also their principal place of business.
Name
Country of incorporation
Class of shares
Graphex Mining UK No.1 Limited
Ngwena Tanzania Limited
United Kingdom
Tanzania
Ordinary
Ordinary
18. Contingent liabilities
The Group did not have any contingent liabilities as at 30 June 2020 (2019: Nil).
19. Commitments
(a) Lease and operating contract expenditure commitments
Lease (non-cancellable), minimum lease payments
- not later than one year
- beyond one year
Equity
Holding
2020
Equity
Holding
2019
%
100
100
%
100
100
2020
$
8,215
-
8,215
2019
$
6,625
-
6,625
The Group previously leased an office premises with a fixed term lease which expired 4 August 2019. The Company now sub-leases a
premises with the lease cancellable with 60 days notice.
(b) Exploration commitments
The Company is required to meet certain minimum expenditure commitments on the mineral exploration assets in which it has an
interest. The minimum expenditure commitment is set out in the Prospecting Licences held by the Group. Outstanding exploration
commitments are as follows:
- not later than one year
- beyond one year
41
2020
$
275,269
-
275,269
2019
$
338,525
-
338,525
Notes to the financial statements
19. Commitments (continued)
(c) Prospecting and mining licence rentals
- not later than one year
- beyond one year
Marvel Gold Limited
30 June 2020
2020
$
57,221
-
57,221
2019
$
73,847
-
73,847
The Company pays an annual lease amount for the tenements it holds. The leases can be relinquished on or before the anniversary
date, therefore there are no contractual commitments beyond one year. The Company has no current plans to drop any existing
tenements.
(d) Other commitments
- not later than one year
- beyond one year
2020
$
-
-
-
2019
$
1,458,164
-
1,458,164
During the prior financial year the Company completed a BFS in which it had issued suppliers and contractors purchase orders to
complete various sections of the study. The Company had issued purchase orders of a total value of $3,397,292 as at 30 June 2019. A
total of $1,939,128 had been spent against those open purchase orders.
20. Events occurring after reporting dates
Subsequent to year end, the Company:
•
•
Completed the placement of 137,500,000 shares at a price of $0.02 per share for gross proceeds before costs of $2,750,000.
Issued a further 115,011,555 shares at a price of $0.02 per share under a fully underwritten entitlement offer.
• On the 20 July 2020 the Company’s shareholder voted to complete the Company’s change in strategic direction including
approving:
o
Changing the Company name from Graphex Mining Limited to Marvel Gold Limited (ASX: MVL).
o Adopting the amended the terms of the Loan Note Subscription Agreement as detailed in note 10.
o Adopting the transaction with Glomin Services Ltd (Glomin), a wholly-owned subsidiary of Capital DI Limited, a ~5%
shareholder of the Company (Capital DI) under which the Company acquired Glomin’s interest in a joint venture with
Altus Strategies Plc to earn in to two Mali gold exploration projects, Tabakorole and Lakanfla. As consideration for the
acquisition of Glomin’s interest, the Company issued Capital DI 35,000,000 shares as reimbursement of costs incurred
by Glomin under the existing joint venture.
•
Signed a binding term sheet with Oklo Resources Limited (Oklo) to acquire an 80% interest in Oklo’s three south Mali gold projects
covering 675km2 of highly prospective Birimian Greenstone terrain in South Mali.
42
Marvel Gold Limited
30 June 2020
Notes to the financial statements
21. Related party transactions
(a) Parent entity
Marvel Gold Limited is the ultimate Australian parent entity of the Group. Marvel Gold Limited is a company limited by shares that is
incorporated and domiciled in Australia.
(b) Subsidiaries
Interests in subsidiaries are set out in note 17.
(c) Group transactions
Controlled entities made payments and received funds on behalf of the Company and other controlled entities by way of inter-company
loan accounts with each controlled entity. These loans are unsecured, bear no interest and are repayable on demand, however demand for
repayment is not expected in the next twelve months.
(d) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Annual and long service leave
Share-based payments
Shared Services Recovery1
2020
$
830,459
71,653
35,466
(135,673)
(312,668)
489,237
2019
$
838,410
72,131
-
(143,176)
(179,335)
588,030
1 The Group was a party to a Shared Services Agreement with Matador Mining Limited and Superior Lake Resources Limited under which
the Company shared certain costs. During the year, Executives Mr McKenzie and Mr Knee spent a portion of their time working for the
above-mentioned companies, with this time recharged by the Group on an at cost basis. This is included above as the Shared Services
Recovery.
Detailed remuneration disclosures are provided in the Remuneration Report.
(e) Other KMP transactions
Mr. Grant Davey, who was a Non-Executive Director of the Company is a Director and shareholder of Matador Capital Pty Ltd (Matador
Capital). The Company makes payments to Matador Capital under a Shared Services Agreement in which Matador Capital provides office
space and general office costs to the Company at cost plus 2%. The Company also uses Matador Capital’s technical and project management
expertise including the DFS project manager of which the Company pays a fee of cost plus 14%.
Mr. Davey is also a Director of Superior Lake Resources Limited and former Director of Matador Mining Ltd (resigned 2 June 2020), ASX listed
Companies that have a Shared Services Agreement with the Company. Under this arrangement the Company provides company secretarial,
accounting and administration services. Payments made under these arrangements for the year are set out below.
Related party transactions
Payments to Matador Capital Pty Ltd
Receipts from Superior Lake Resources Limited
Receipts from Matador Mining Ltd
43
2020
$
2019
$
(307,445)
(182,000)
278,200
278,200
103,335
103,534
Marvel Gold Limited
30 June 2020
Notes to the financial statements
22. Share-based payments
(a) Employee option plan
Information on the Company’s Option Plan (Plan) was set out in the Company’s Replacement Prospectus lodged on 10 May 2016. Given the
disclosure of the Plan in the Replacement Prospectus, the issue of shares under the Plan rules does not count towards the Company’s share
issuance capacity under ASX listing Rules 7.1 and 7.1A. The Plan is designed to:
a) assist and reward the retention and motivation of employees;
b)
link employee reward to shareholder value creation; and
c)
align the interests of employees with shareholders by providing an opportunity for employees to receive an equity interest in the
Company in the form of Options.
Under the Plan, participants are granted options which only vest if certain performance criteria are satisfied. Participation in the Plan is at
the Board’s discretion and no individual has a contractual right to participate in the Plan or to receive any guaranteed benefits.
The number of STI options that vest is linked to performance against shorter term strategic objectives of the Company and a performance
assessment of employees against specific KPI’s relevant to that position. Once vested, the options remain exercisable for a period of two
years. The number of LTI options that vest depends on performance against a number of Board approved Company objectives, including
finalisation of finance and offtake arrangements for the development of the Chilalo Graphite Project, bringing Chilalo into production and
share price performance.
To exercise an option, an employee must deliver a signed notice of exercise and, subject to a cashless exercise of options, pay the option
exercise price prior to the expiry date. An option may specify that at the time of exercise, the employee may elect not to be required to
provide payment of the option exercise price. Alternatively, the Company will transfer or issue to the employee that number of shares equal
in value to the positive difference between the market value of the shares at the time of exercise and the option exercise price that would
otherwise be payable to exercise those options.
The Board has determined that STI awards and LTI awards will be equity settled to ensure alignment with shareholders’ interests and to
preserve cash.
Options are granted under the Plan for no consideration and carry no dividend or voting rights. When exercisable, each option is convertible
into one ordinary share subject to the payment of any applicable exercise price. Set out below are summaries of options granted under the
Plan:
As at 1 July
Granted during the period1
Exercised during the period
Forfeited during the period
As at 30 June
1 Options granted carried a nil exercise price.
2020
2019
Weighted
average
exercise price
Nil
Nil
Nil
Nil
Nil
Number of
options
‘000
5,357
2,576
-
(2,311)
5,622
Weighted
average
exercise price
$0.15
Nil
$0.16
$0.21
Nil
Number of
options
‘000
13,782
2,186
(3,686)
(6,925)
5,357
44
Marvel Gold Limited
30 June 2020
Notes to the financial statements
22. Share-based payments (continued)
Options outstanding at the end of the period have the following expiry date and exercise prices:
Grant date
Expiry date
Exercise price
Options 30 June
2020
‘000
28-Sep-17
24-Nov-17
26-Nov-18
26-Nov-18
13-Dec-18
13-Dec-18
13-Dec-18
24-Jul-19
24-Jul-19
14-Nov-19
14-Nov-19
14-Nov-19
01-Jul-22
01-Jul-22
01-Jul-23
01-Jul-21
01-Jul-21
01-Jul-23
01-Jul-20
01-Jul-22
01-Jul-24
01-Jul-20
01-Jul-22
01-Jul-24
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
804
596
580
106
75
804
81
160
980
130
550
756
Weighted average remaining contractual life of options outstanding at period end is 2.76 years (2019: 2.74 years).
Fair value of options granted
All options issued during the period were zero priced options. These options can be exercised for nil consideration after vesting. Given the
nil exercise price, the fair value of all options with non-market based conditions is reflected by the share price at the date of issue. The
estimated fair value of the long term share options with market based conditions was determined using a combination of analytical
approaches and Monte Carlo simulation.
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions during the period were as follows:
Options issued under the Plan1
2020
$
2019
$
(149,583)
(149,583)
(138,657)
(138,657)
1 At the end of each reporting period the Company applies a probability to options with non-market based vesting criteria to reflect the likely number of
options that will vest at the end of the vesting period taking into consideration all the vesting criteria. As outlined in the Directors Report, the Company has
changed strategic direction which will likely result in all previous options lapsing unvested. This is a result of previous vesting criteria being based on
progression and financing of the Chilalo Graphite Project. This results in a reversal of amounts previously expensed.
45
Notes to the financial statements
23. Remuneration of auditors
During the period, the following fees were paid and payable for services provided by the auditor of the parent entity, its related practices
and non-related audit firms:
Marvel Gold Limited
30 June 2020
(a) PricewaterhouseCoopers Australia (PwC)
(i) Audit and assurance services
Audit and review of financial statements
Other assurance services
Total audit and assurance remuneration
(ii) Taxation services
Taxation services
Total taxation remuneration
(b) Network firms of PwC (Tanzania)
(i) Audit and assurance services
Audit of financial statements
Total audit and assurance remuneration
(ii) Taxation services
Taxation services
Total taxation remuneration
2020
$
45,684
-
45,684
32,874
32,874
11,089
11,089
15,850
15,850
2019
$
64,770
1,500
66,270
70,846
70,846
17,824
17,824
18,162
18,162
The Company has engaged PwC to perform tax compliance services provided during the 2020 and 2019 financial year being the preparation
and lodgement of the Group’s tax returns in both Australian and Tanzania. In addition to compliance engagements, the Company also
engaged PwC Australia and Tanzania for tax structuring advice on an ad hoc basis. It is the Group’s general preference to employ PwC on
assignments additional to their statutory audit duties where PwC’s expertise and experience with the Group are important. These
assignments are principally tax advice, or where PwC is awarded assignments on a competitive basis.
24. Earnings per share
(a) Basic earnings per share
2020
$
2019
$
From continuing operations attributable to ordinary equity holders
(0.07)
(0.10)
The weighted average number of shares used to calculate both the basic and diluted earnings per share is 104,446,456 (2019: 82,734,539 ).
(b) Fully diluted earnings per share
From continuing operations attributable to ordinary equity holders
(0.07)
(0.10)
(c) Information concerning the classification of securities
Options granted to employees under the Plan and those issued to contractors are considered to be potential ordinary shares. They have
been included in the determination of diluted earnings per share with the assumption all such options will vest, and to the extent to which
they are dilutive. The options have not been included in the determination of basic earnings per share. Details relating to the options are
set out in note 22.
46
Notes to the financial statements
25. Parent entity financial information
The individual financial statements for the parent entity show the following aggregate amounts:
(a) Summary of financial information
Marvel Gold Limited
30 June 2020
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Retained earnings
Total shareholders’ equity
Loss for the period
Total comprehensive loss
(b) Guarantees
2020
$
2019
$
416,882
5,461,214
(9,465,079)
(9,465,079)
1,383,530
6,447,493
(667,075)
(6,466,900)
20,272,214
1,340,505
(25,616,584)
(4,003,865)
16,832,075
1,490,088
(18,341,570)
19,407
(6,273,559)
(10,285,136)
(6,273,559)
(10,285,136)
Marvel, as the parent company, has provided a guarantee for ongoing financial support to its wholly owned Tanzanian subsidiary Ngwena
Tanzania Limited.
(c) Commitments
Of the commitments in note 19, all of the leases disclosed in note 19 related to the parent, Marvel. These related to the fixed term non-
cancellable low value leases of the Company’s photocopier/printer lease.
(d) Contingencies
The parent entity did not have any contingent liabilities as at 30 June 2020 or 30 June 2019. For information about guarantees given by the
parent entity, please see above.
47
Marvel Gold Limited
30 June 2020
Notes to the financial statements
26. Summary of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements to the
extent they have not already been disclosed in the other notes above. The financial statements are for the Group consisting of Marvel and
its subsidiaries disclosed in note 17.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities.
These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards
Board ('IASB').
(i) Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial
assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income, investment
properties, certain classes of property, plant and equipment and derivative financial instruments.
(ii) Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise
its judgment in the process of applying the company’s accounting policies. The areas involving a higher degree of judgment or complexity,
or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 27.
(iii) New or amended Accounting Standards and Interpretations adopted
The company has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting
Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these Accounting Standards and
Interpretations has not resulted in a significant or material change to the company’s accounting policies.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The adoption of AASB 16 Leases did not have any significant impact on the financial performance or position of the company as it only had
short term leases of 12 months or less.
(iv) Going concern
These financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities
and the realisation of assets and settlement of liabilities in the normal course of business.
As disclosed in the financial statements, the Group incurred a loss of $7,486,841 and had net cash outflows from operating activities of
$5,346,710 for the year ended 30 June 2020. As at that date, the Group had net current liabilities of $8,971,372 although subsequent to year
end the primary current liability, being loans and borrowings of $8,748,377 was novated to a subsidiary (i.e. no security recourse to the
Company) and extended the repayment date to 29 October 2022 which will move its classification to non-current. The ability of the Group
to continue as a going concern is principally dependent upon the ability of the Group to secure funds by raising capital from equity markets
and managing cash flows in line with available funds.
These factors indicate a material uncertainty which may cast significant doubt as to whether the Group will continue as a going concern and
therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at amounts stated in the financial
report.
The Directors believe that it is reasonably foreseeable that the Group will continue as a going concern and that it is appropriate to adopt the
going concern basis in the preparation of the financial report after consideration of the following factors:
•
•
As disclosed in note 10, the company amended the terms of the Loan Note Subscription Agreement to extend the repayment date
and limit the security over the Company’s asset to that of its holding company and subsidiary.
o
o
Should the Chillao sales process yield cash proceeds that exceed the LNSA debt, the Company will receive the excess
proceeds.
If the Chilalo process does not result in repayment of the LNSA by 29 October 2022, the Castlelake will take control of
the Chilalo Project with no further recourse to the Company.
As disclosed at note 20, subsequent to period end the Company completed the placement of 137,500,000 share at a price of $0.02
per share for gross proceeds before costs of $2,750,000.
48
Marvel Gold Limited
30 June 2020
Notes to the financial statements
•
•
•
As disclosed in note 20, subsequent to period end the Company Issued a further 115,011,555 shares at a price of $0.02 per share
under a fully underwritten entitlement offer to raise $2,300,000 before costs.
The Group has the ability to issue additional equity securities under the Corporations Act 2001 to raise further working capital; and
The Group has the ability to curtail administrative, discretionary exploration and overhead cash outflows as and when required.
(b) Principles of consolidation and equity accounting
(i) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted by the Group.
(c) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost
includes expenditure that is directly attributable to the acquisition of the asset and costs directly attributable to bringing the asset to a
working condition for their intended use.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from
disposal and the carrying amount of the item) is recognised in profit or loss.
(ii) Subsequent costs
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow
to the Group. Ongoing repairs and maintenance are expensed as incurred.
(iii) Depreciation
Depreciation of plant and equipment is calculated on a straight-line basis so as to write off the net costs of each asset over the expected
useful life. The rates vary between 2% and 50% per annum.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset's carrying amount is
written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.
(d) Impairment
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any
indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the
asset's fair value less costs of disposal and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value
over its recoverable amount is expensed to the consolidated statement of profit or loss and other comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
(e) Exploration and evaluation costs
Costs arising from the acquisition of exploration and evaluation activities are carried forward where these activities have not, at reporting
date, reached a stage to allow a reasonable assessment regarding the existence of economically recoverable reserves. The ultimate
recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development and commercial
exploitation or sale of the respective areas of interest. Ongoing exploration activities are expensed as incurred.
The Directors believe that this policy results in the carrying value of exploration expenditure more appropriately reflecting the definition of
an asset, being future benefits controlled by the Group. All costs carried forward are in respect of areas of interest in the exploration and
evaluation phases and accordingly, production has not commenced.
Exploration and evaluation assets shall be assessed for impairment when facts and circumstances suggest that the carrying amount of an
exploration and evaluation asset may exceed its recoverable amount, in particular when exploration for and evaluation of mineral resources
in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the Company has decided to
discontinue such activities in the specific area.
49
Marvel Gold Limited
30 June 2020
Notes to the financial statements
Where tenements or part of an area of interest are disposed of, the proceeds of this partial disposal will reduce the value of the asset by the
fair value of those proceeds. This recognises that part of the future economic benefit of the asset has effectively been disposed.
(f) Income tax
Tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it
relates to a business combination, or items recognised directly in equity or in other comprehensive income.
Current tax
Current tax is the expected tax payable of the taxable income or loss for the period, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous periods.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes.
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted
or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to
taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities
and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable
that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and
are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Tax exposures
In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax positions and whether
additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about
future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing
tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made. The Company and its
wholly owned Australian tax resident entities (Graphex UK No. 1 Limited) are part of a tax consolidated group.
(g) Other taxes
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST) or value added tax (VAT), unless the GST /
VAT incurred is not recoverable from taxation authorities. In this case it is recognised as part of the cost of acquisition of the asset or as part
of an item of the expense.
Receivables and payables are stated inclusive of the amount of GST / VAT receivable or payable. The net amount of GST / VAT recoverable
from, or payable to, taxation authorities is included with other receivables or payables in the Consolidated Statement of Financial Position.
Cash flows are included in the Consolidated Statement of Cash Flows inclusive of GST / VAT. The GST / VAT components of cash flows arising
from investing and financing activities which are recoverable from, or payable to, taxation authorities are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST / VAT recoverable from, or payable to taxation authorities. The net
of GST / VAT payable and receivable is remitted to the appropriate tax body in accordance with legislative requirements.
(h) Foreign currency translation
Functional and presentation currency
The functional currency of each of the Group's entities is measured using the currency of the primary economic environment in which that
entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and
presentation currency.
50
Marvel Gold Limited
30 June 2020
Notes to the financial statements
(h) Foreign currency translation (continued)
Foreign currency transactions
Transactions in foreign currencies are translated to the respective financial currencies of Group entities at exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional
currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in
the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised
cost in foreign currency translated at the exchange rate at the end of the period.
Non-monetary assets and liabilities that are measured in a foreign currency are retranslated to the functional currency at the exchange rate
at the date that the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
Foreign currency differences arising on retranslation are recognised in profit or loss, However, foreign currency differences arising on the
retranslation of available-for-sale equity instruments, a financial liability designated as a hedge of the net investment in a foreign operation,
or qualifying cash flow hedges are recognised in other comprehensive income.
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the
presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Australian
dollars at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and presented in the foreign currency translation reserve
(translation reserve) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportion of the translation
difference is allocated to the non-controlling interests. When a foreign operation is disposed of, such that control, significant influence or
joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part
of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while
retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes
of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint
control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
(i) Accounts payable
Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost when the Group becomes
obliged to make payments resulting from the purchase of goods and services. The amounts are non-interest-bearing, unsecured and are
usually paid within 30 days of recognition.
(j) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably,
and it is probable that an outflow of economic benefits will be required to settle the obligation. 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 the risks specific
to the liability. The unwinding of the discount is recognised as a finance cost.
(k) Employee benefits
(i) Wages, salaries and annual leave
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 the provision for employee benefits in respect of employees’ services up to the reporting date and are measured at
the amounts expected to be paid, inclusive of on costs, when the liabilities are settled. The expense for non-accumulating sick leave is
recognised when the leave is taken and measured at the rates paid or payable.
(ii) Long-term employee benefits
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future
payments to be made in respect of services provided by employees up to the reporting date 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 reporting date on corporate bonds with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows.
51
Marvel Gold Limited
30 June 2020
Notes to the financial statements
(k) Employee benefits (continued)
(iii) Share-based payment transactions
The fair value of options previously granted under the Plan is recognised as an employee benefit expense with a corresponding increase in
equity. The fair value is measured at grant date and recognised over the period during which the Directors, employees or contractors become
unconditionally entitled to the options.
The fair value of the options at grant date is independently determined using the Black-Scholes option pricing model that takes into account
the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying
share, the expected dividend yield and the risk-free interest rate for the term of the option.
The fair value of the options granted is adjusted to reflect market vesting conditions but excludes the impact of any non-market vesting
conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the
number of options that are expected to become exercisable. At each reporting date, the entity revises its estimate of the number of options
that are expected to become exercisable. The expense recognised each period takes into account the most recent estimate. The impact of
the revision to original estimates, if any, is recognised in the consolidated statement of comprehensive income with a corresponding
adjustment to equity.
The fair value of these equity instruments does not necessarily relate to the actual value that may be received in future by the recipients.
The Company accounts for share based payments issued to non-employees in accordance with the share based payments standard.
(l) Revenue recognition
Interest revenue is recognised as it accrues in profit or loss, using the effective interest method.
(m) Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less
provision for impairment. Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless
collection is not expected for more than 12 months after the reporting date.
Collectability of trade receivables is reviewed on an ongoing basis. The Company uses an 'expected credit loss' (ECL) model to recognise an
allowance if not collectable.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or
delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the
impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting
is immaterial.
The amount of the impairment loss is recognised in profit or loss within other expenses. When a trade receivable for which an impairment
allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against other expenses in profit or loss.
(n) Earnings per share (EPS)
Basic earnings per share
Basic EPS is calculated as the profit / (loss) attributable to equity holders of the Company, excluding any costs of servicing equity other than
ordinary shares, divided by the weighted average number of ordinary shares outstanding during the financial period, adjusted for any bonus
elements in ordinary shares issued during the period.
Diluted earnings per share
Diluted EPS adjusts the figures used in the determination of basic EPS to take into account the after income tax effect of interest and other
financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued
for no consideration in relation to dilutive potential ordinary shares.
52
Marvel Gold Limited
30 June 2020
Notes to the financial statements
(o) Cash and cash equivalents
For Consolidated Statement of Cash Flow presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with
financial institutions, other short-term highly liquid investments with original maturities of three months or less that are readily convertible
to known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown
within borrowings in current liabilities on the Consolidated Balance Sheet.
(p) Financial instruments
(i) Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they originated. All other financial assets (including assets
designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to
receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the
financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate
asset or liability.
Financial assets and liabilities are offset and the net amount presented in the consolidated balance sheet when, and only when, the Group
has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
The classification depends on the purpose for which the investments were acquired. Management determines the classification of its
investments at initial recognition and in the case of assets classified as held-to-maturity investments, re-evaluates this designation at each
reporting date.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are
recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are
measured at amortised cost using the effective interest method, less any impairment losses.
Loans and receivables comprise cash and cash equivalents and trade and other receivables (see notes 4 and 5).
When an investment is derecognised, the cumulative gain or loss in equity is transferred to the consolidated statement of comprehensive
income. Fair value is determined by reference to the quoted price at the reporting date.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and at call deposits with original maturities of three months or less.
(ii) Non-derivative financial liabilities
All financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date at which
the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or have expired.
The Group classified non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised
initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured
at amortised cost using the effective interest rate method.
Other financial liabilities comprise loans from related parties and trade and other payables.
(iii) Loans and Borrowings
The Company entered into a Loan Note Subscription Agreement with funds managed by Castlelake L.P. to raise US$5 million from the issue
of secured Interim Loan Notes, which became available during the period. At the end of the period, the Company has drawn the US$5 million
Interim Loan Notes available. Full details of the Interim Loan Notes are outlined in note 10.
The Loan Notes are valued at amortised cost using the effective interest method over the life of the loan. The Interim Loan Notes are classified
as current given they are 12 months or less from the maturity date of 29 October 2020. Subsequent to year end the primary current liability,
being loans and borrowings of $8,748,377 was novated to a subsidiary (i.e. no security recourse to the Company) and extended the
repayment date to 29 October 2022 which will move its classification to non-current
53
Marvel Gold Limited
30 June 2020
Notes to the financial statements
(q) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are
recognised as a deduction from equity, net of any tax effects.
(r) Segment reporting
Segment results that are reported to the Group’s Managing Director (the chief operating decision maker) include items directly attributable
to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the
Company’s headquarters), head office expenses, and income tax assets and liabilities.
(s) Parent entity information
The financial information for the parent entity, Marvel Gold Limited, disclosed in note 25 has been prepared on the same basis as the
consolidated financial statements.
(t) Rounding
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued by the
Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the financial statements. Amounts in the
financial statements have been rounded off in accordance with the instrument.
(u) Comparatives and restatements of prior year balances
Comparatives have been reclassified where appropriate to enhance comparability.
27. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported
amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on
other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting
accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the
next financial year are discussed below.
Exploration and evaluation
Exploration and evaluation acquisition costs have been capitalised on the basis that 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
recoverability of the value of the asset. The Company assesses whether any impairment indicators may exist over the area of interest to
assess recoverability each year.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model taking
into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to
equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting
period but may impact profit or loss and equity.
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
consolidated entity 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 consolidated entity operates.
As outlined in the events since the end of the financial year note in the Directors Report and note 10, as a result of the economic uncertainty
caused by COVID-19, the Company’s financier decided not to proceed with the previously announced financing of the development of the
Company’s Chilalo Graphite Project. The economic impact of COVID-19 and the subsequent market fallout resulted in a sharp decline in
the Company’s market capitalisation, and as such any project finance solution under terms previously agreed was likely to result in
unacceptable dilution for the Company’s shareholders. Subsequent to year end, the Company formalised revision of the terms of the terms
LNSA to defer repayment to 29 October 2022 and confining the Financier’s security to Chilalo Project related assets and removing the
Financier’s legal recourse to the Company.
54
Notes to the financial statements
Other than as addressed in specific notes, there does not currently appear to be any other significant impact upon the financial statements
or any significant uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably as at the
reporting date or subsequently as a result of the COVID-19 pandemic.
Marvel Gold Limited
30 June 2020
55
Marvel Gold Limited 30 June 2020 Directors declaration 56 In the opinion of the Directors: (a) the consolidated financial statements and notes set out on pages 27 to 55 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and (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 (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and The Directors have been given the declarations by the Managing Director and Chief Financial Officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Directors. Stephen Dennis Chairman PERTH On this 28th day of September 2020
Independent auditor’s report
To the members of Marvel Gold Limited (formerly Graphex Mining Limited)
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Marvel Gold Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 June 2020 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated balance sheet as at 30 June 2020
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the financial statements, which include a summary of significant accounting policies
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
Material uncertainty related to going concern
We draw attention to Note 26(a)(iv) in the financial report, which indicates that the Group incurred a
net loss of $7,486,841 during the year ended 30 June 2020 and a net cash outflow from operating
activities of $5,346,710 and, as of that date, the Group had net current liabilities of $8,971,372. As a
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
result, the Group is dependent on obtaining additional funding in the next 12 months to enable it to
continue its normal business activities. These conditions, along with other matters set forth in Note
26(a)(iv), indicate that a material uncertainty exists that may cast significant doubt on the Group’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
•
For the purpose of our audit we used overall Group materiality of $374,000, which represents approximately
5% of the Group’s loss before tax.
• We applied this threshold, together with qualitative considerations, to determine the scope of our audit and
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
financial report as a whole.
• We chose Group loss before tax because, in our view, it is the benchmark against which the performance of
the Group is most commonly measured and reflects the Group’s accounting policy to expense ongoing
exploration activities as incurred.
• We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
• Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
•
The Group maintains its corporate head office in Australia and has exploration assets in Tanzania. Key
financial processes are principally managed from the head office finance function in Australia.
2
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Board of Directors.
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matter described below to be the key audit matter to be communicated in our
report.
Key audit matter
How our audit addressed the key audit matter
Carrying value of exploration and evaluation
assets
(Refer to note 7, 27)
To assess the carrying value of exploration and
evaluation assets, we performed the following
procedures, amongst others:
As at 30 June 2020, the Group had capitalised
exploration and evaluation assets of $5,ooo,ooo
relating to the Chilalo graphite project in Tanzania.
Judgement was required by the Group to assess
whether there were indicators of impairment of the
capitalised exploration and evaluation assets due to the
need to make estimates and assumptions about future
events and circumstances, such as whether the mineral
resources may be economically viable to mine in the
future.
This was a key audit matter because of the significance
of the balance and the risk of impairment of the
exploration and evaluation assets following the
decision by Castlelake, L.P not to proceed with
financing the development of the Chilalo project.
•
•
•
Tested whether the Group retained right of
tenure for its exploration licence areas by
obtaining licence status records maintained by
the relevant government authority in
Tanzania.
Considered the consistency of information
provided with other available information,
such as market releases made by the Group
about the results of test work and other
project development activities.
Evaluated the Group's impairment indicator
assessment for its capitalised exploration and
evaluation assets by performing the following
procedures, amongst others:
o
Inquired of management and
directors to develop an
understanding of the current status
and future intentions for the Group's
project.
o Obtained plans for future
expenditure and compared these to
contractual minimum licence
expenditure requirements.
Key audit matter
How our audit addressed the key audit matter
o Read the most up-to-date borrowing
agreements between the Group and
Castlelake, L.P to obtain an
understanding of the amended terms
associated with the Interim Loan
Notes and considered the
implications of the amendments in
relation to the Group's impairment
indicator assessment.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2020 but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 12 to 21 of the directors’ report for the year
ended 30 June 2020.
In our opinion, the remuneration report of Marvel Gold Limited for the year ended 30 June 2020
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Craig Heatley
Partner
Perth
28 September 2020
ASX Additional Information
Marvel Gold Limited
30 June 2020
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The
information is current as at 16 September 2020.
(a) DISTRIBUTION OF EQUITY SECURITIES
Ordinary Shares
1
5,001
10,001
100,001
-
-
-
5,000
10,000
100,000
and over
Number of holders holding less than a
marketable parcel of shares
Number of
holders
2,665
182
543
308
3,698
2,765
Number of
shares
1,350,598
1,400,896
20,015,385
390,877,179
413,644,0581
1,980,442
1.
7,500,000 shares are subject to voluntary escrow to 15 June 2023.
Unlisted Options
1
10,001
100,001
-
-
10,000
100,000
and over
Number of
holders
-
2
8
8
Number of Unlisted
Options
-
168,669
38,359,338
38,528,007
(b) TWENTY LARGEST SHAREHOLDERS
The names of the twenty largest holders of quoted shares as at 16 September 2020 are:
Rank
Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
CAPITAL DI LIMITED
MONTANA REALTY PTY LTD
BPM CAPITAL LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
MR MARTYN ROGER BROWN
QUINTERO GROUP LTD
CITICORP NOMINEES PTY LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
CLARKSON'S BOATHOUSE PTY LTD
MR PHILIP HOSKINS
LOMACOTT PTY LTD
ONE MANAGED INVESTMENT FUNDS
MR ANDREW CLAYTON
MR BRIAN MCCUBBING
MRS JUDI MARIE RUDD
BNP PARIBAS NOMS PTY LTD
1202 MANAGEMENT PTY LTD
EQUITY TRUSTEES LIMITED
MR STEPHEN BRUCE DENNIS
BEEBEE HOLDINGS PTY LTD
Total Top 20 holders of ORDINARY FULLY PAID SHARES
Total Remaining Holders Balance
62
Number of
shares
57,692,223
20,050,430
19,550,000
16,783,886
16,250,000
14,565,386
9,983,044
9,458,469
7,254,188
7,231,328
7,159,658
5,759,664
5,374,224
5,290,440
5,000,000
4,682,221
4,145,187
4,100,000
4,047,598
3,831,853
228,209,799
185,434,259
% of shares
13.95
4.85
4.73
4.06
3.93
3.52
2.41
2.29
1.75
1.75
1.73
1.39
1.30
1.28
1.21
1.13
1.00
0.99
0.98
0.93
55.17
44.83
ASX Additional Information
(c) TWENTY LARGEST HOLDERS OF UNLISTED OPTIONS
Rank
Name
1.
2.
3.
4.
5.
6.
MR PHILIP HOSKINS
MR CHRISTOPHER PHILIP VAN WIJK
MR ANDREW PARDEY
MRS RUTH MARY MCKENZIE AND MR STUART ANDREW MCKENZIE
MR CHRISTOPHER BRUCE KNEE
MR STEPHEN BRUCE DENNIS + MRS ALISON JILL DENNIS
Marvel Gold Limited
30 June 2020
Number of unlisted
options
12,967,220
8,750,000
4,500,000
4,609,803
4,480,036
2,300,000
% of
unlisted
options
33.66
22.71
11.68
11.96
11.63
5.97
The options listed in the table above excludes all options issued to KMP under the employee share scheme up to 30 June 2020. These
options will lapse unexercised owing to a failure to meet applicable vesting criteria.
(d) SUBSTANTIAL SHAREHOLDERS
Capital DI Limited: 13.95%
(e) VOTING RIGHTS
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one
vote on a show of hands. Options have no voting tights until such time as they are exercised and shares have been issued.
Number
5,125,000
4,375,000
2,562,500
2,187,500
2,562,500
2,187,500
2,717,220
(f) UNQUOTED SECURITIES >20% HOLDERS
Class
Options exercisable @ $0.035, expiring 29/07/24
Options exercisable @ $0.06, expiring 29/07/24
Options exercisable @ $0.10, expiring 29/07/24
Zero priced options (STI/LTI)
(g) TENEMENT SCHEDULE
Tenement
Ownership
ML 569/2017 - Chilalo
PL 11050/2017 - Chilalo West
PL 11034/2017 - Chilalo
PL 9929/2014 - Chikwale
PL 9946/2014 - Machangaja
PR 15/758 - Tabakorole
PR 18/950 – Lakanfla
PR 16/387 - Sirakourou
PR 19/1057 - Solabougouda
TBA – Solabougouda South
100%
100%
100%
100%
100%
-
-
-
-
-
63
Holder
Phil Hoskins
Chris van Wijk
Phil Hoskins
Chris van Wijk
Phil Hoskins
Chris van Wijk
Phil Hoskins
Project
Chilalo
Chilalo
Chilalo
Chilalo
Chilalo
Tabakorole
Lakanfla
Tabakorole
Tabakorole
Tabakorole
Location
Tanzania
Tanzania
Tanzania
Tanzania
Tanzania
Mali
Mali
Mali
Mali
Mali
ASX Additional Information
Marvel Gold Limited
30 June 2020
Tenement
PR 17/879
PR 16/803
PR 17/875
PR 16/802
Ownership
Project
Location
-
-
-
-
Kolondieba
Kolondieba North
Yanfolila
Yanfolila East
Mali
Mali
Mali
Mali
64