ANNUAL
REPORT
2019
Executive Chairman
Director
Director
DIRECTORY
Directors
Paul Poli
Franciscus (Frank) Sibbel
Andrew Chapman
Company Secretary
Andrew Chapman
Registered Office
Suite 11,
139 Newcastle Street
PERTH WA 6000
Tel: (08) 9230 3555
Fax: (08) 9227 0370
Email: reception@matsa.com.au
Postal Address
PO BOX 376
Northbridge W.A. 6865
Website
www.matsa.com.au
Share Registry
Advanced Share Registry Services
110 Stirling Highway
Nedlands WA 6009
Tel: (08) 9389 8033
Fax: (08) 9262 3723
Home Stock Exchange
Australian Securities Exchange Ltd
Level 40, Central Park
152-158 St George’s Terrace
Perth WA 6000
ASX Code: MAT
Auditors
Nexia Perth Audit Services Pty Ltd
Level 3
88 William Street
PERTH WA 6000
MATSA RESOURCES LIMITED
2019 ANNUAL REPORT · PAGE 3
CONTENTS
CORPORATE DIRECTORY
CHAIRMAN’S REPORT
OPERATIONS REVIEW
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
FINANCIAL STATEMENTS
-
-
-
-
-
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to and Forming Part of the Consolidated Financial Statements
DIRECTORS’ DECLARATION
INDEPENDENT AUDIT REPORT
ADDITIONAL ASX INFORMATION
SCHEDULE OF MINING TENEMENTS
1
3
4
34
47
48
49
50
51
52
97
98
102
107
MATSA RESOURCES LIMITED · CHAIRMAN’S REPORT
2019 ANNUAL REPORT · PAGE 3
Dear Shareholder,
I welcome you to another year at Matsa, during which, in my opinion, we have continued to develop and grow, and I trust we
have demonstrated that we have delivered on our forecasts and predictions.
We have accomplished much during the year, but most importantly our relationship with AngloGold Ashanti has continued to
develop positively. Matsa has executed another ore purchase agreement, this time a 5 year ore purchase agreement with Anglo.
I believe this is a vote of confidence in the performance of the whole Matsa team and the operations at Lake Carey. I cannot
understate the importance of this relationship and I sincerely thank Anglo for their professionalism and openness in all their
dealings with us.
This year we have reopened the Red October underground mine which we expect to become a long term operation delivering
considerable shareholder value over many years. The operations are running smoothly and we look forward to increasing
production, which will allow us to develop and progress towards becoming a mid-size gold producer in time. This asset, while
the key focus right now, is one of several high value projects that we are proudly working on at Lake Carey.
While we will continue our exploration activities with some impressive targets, we will also concentrate on bringing the Fortitude
Stage 2 mine into production. Stage 2 is a company changer in my mind, because it should develop a substantial cashflow which
we will be able in utilise to further develop our assets and resources into a much stronger operation at Lake Carey. The sole
focus is on developing our company into a safe, environmentally aware, mid-size gold producer in Western Australia. We will
continue to investigate all opportunities and nurture and develop all of those opportunities diligently.
We have now been operating as a producer for approximately 2 years, and I am proud to say that we have not had a major
safety incident or serious work injury within the entire Lake Carey project area. Safety is extremely important to us all and must
be at the forefront of our minds at all times. I ask all members of Matsa and the wider community who visit our project area to
remain vigilant.
I take this opportunity to thank all staff, contractors, fellow board members and members of the whole Matsa community for
their tireless dedication and high work ethic. It’s because of “the Team” that Matsa can flourish and provide deserved rewards
to all stakeholders.
Importantly, together with all at Matsa, I sincerely express my gratitude and thanks to all shareholders who continue day to day
to support and encourage our work, and we trust our supporters are aware that we know that without them, we cannot continue
our endeavours.
PAUL POLI
EXECUTIVE CHAIRMAN
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 4
INTRODUCTION
Matsa is an ASX listed exploration and gold mining company operating in the north eastern goldfields of Western Australia. The
corporate office is located in Perth, Western Australia with also an office in Bangkok, Thailand.
Matsa is pleased to present its report on its activities during FY2019.
The Company’s activities during the year under review were principally focused within its ~ 673km2 Lake Carey project which
includes the Fortitude gold mine and the Red October gold mine where mining has commenced (Figure 1). The Company is
committed to becoming a mid-tier gold mining company, and the implementation of this vision commenced last year with its
trial mining operation at Fortitude. During the year under review, mining of the Red Dog deposit was also completed with
subsequent underground mining commencing at the Red October gold mine. Concurrently, studies continued into the viability
of commencing the Stage 2 mine at Fortitude.
REVIEW OF OPERATIONS
LAKE CAREY GOLD PROJECT
Activities during the year include:
• Completion of mining at Red Dog which produced a substantial cash surplus of $A5.4M
• Transitioning the high grade underground Red October gold mine from care and maintenance to a mining operation
• Advancing within mine exploration underground at Red October
• Continuation of studies into the viability of commencing the Stage 2 gold mine at Fortitude
• Exploration drilling at a number of targets including Fortitude North and Red Dog
• Acquisition of additional highly prospective mining and exploration areas including the Devon Mine and a number of
high grade historical workings in the Linden field
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 5
FIGURE 1: Lake Carey Gold Project
FORTITUDE GOLD MINE
The trial mining operation at Fortitude was completed during April 2018 with no further gold production or exploration being
carried out at Fortitude during the year.
Matsa has continued to conduct mining studies and prepare budgets into the commencement of a longer-term Stage 2 mining
operation at Fortitude throughout the year.
A strong relationship has been established with AngloGold Ashanti Australia Limited (AGAA) through several ore purchase
agreements which underpinned the trial mining project. It provides an excellent foundation for future mining operations at
Fortitude and elsewhere at Lake Carey. All mining permits applicable to the Stage 2 mining operation are already in hand.
Subsequent to the end of the year under review, Matsa released outcomes of the mining study which provides a compelling
case for commencement of a Stage 2 mining project at Fortitude based on the following:
• Total cash surplus A$21.8M over 22 months
• Total production of 54,400 oz gold at 93% recovery
• Capital outlay A$6.6M which includes pre-stripping
• Operating cash cost of A$1,628/oz gold
• Assumed average gold price of A$2,150
• Total material movement 5.85M bank cubic metres (bcm’s) at a waste to ore ratio of 14.4
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 6
RED OCTOBER GOLD MINE
During March 2018, Matsa completed the acquisition of the Red October gold mine. Activities during the year under review
remained focused on bringing the mine into production which occurred during April 2019.
The Red October gold mine was actively maintained under care and maintenance while potential for near-term mining was being
advanced. Dewatering and equipment maintenance continued throughout the year to ensure that all areas of the underground
mine were accessible for exploration and mining.
April 2018 saw Matsa announcing that it had entered into Phase 1 high level economic analysis work for the Red October
underground gold mine.
Phase 1 was an initial high level mine design and financial model, which identified areas within the existing 85,000 oz @ 13.6 g/t
Au underground resource with potential for near-term mining.
Twelve additional targets outside of the existing resource were also identified as having potential for near-term mining and were
flagged for further exploration and evaluation.
Activities during the year have included the following:
• Finalisation of Phase 1 mining studies
• Grade control diamond drilling
• Consultant-led geomechanical strain modelling to define near mine exploration targets
• Executed 5 year Ore Purchase agreement with AGA Sunrise Dam Operations
• Approval of initial mine plan
• Acquired plant equipment for owner operated underground gold mining
• Mining workforce recruited
• Commencement of mining February 2019
MINING STUDIES
FIGURE 2: Planned mining areas identified at Red October (Long-section view)
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 7
INITIAL MINE PLAN
Mine studies delivered a comprehensive mine plan which forecasts a profitable targeted mining operation over an initial seven
month period.
The initial phase 1 mine plan is expected to produce 56,673 tonnes of ore at 5.61g/t for 10,222oz of gold sourced from 8 lodes. The
mine is operated by Matsa as an owner operator with all mining equipment and machinery being previously purchased (Table 1).
This mining operation is forecast to generate revenue of A$16.09 million and deliver a net cash surplus A$4.075 million at a gold
price of A$1,750 per oz gold. (MAT announcement to ASX 18 February 2019).
Strong potential is seen to extend the mining operation at Red October beyond the initial mine plan.
Key Project Statistics
Mineral Resources (Underground)
Indicated Resources: 89,000t at 12.1 g/t Au
Inferred Resources: 106,000t at 14.6 g/t Au
Total Resources: 195,000t at 13.6 g/t Au
Production Summary
Mine Plan: 56,673t at 5.6 g/t Au
Initial mining phase (months)
Initial mining phase incl. haulage & rehab (months)
Metallurgical Recovery
Gold Mined (oz)
(average stope width of 1.5m)
Project Economics
Gold Price (A$/oz)
Revenue (A$M)
Costs (A$M)
Cash Surplus (A$M)
AISC (A$/oz)
35,000 oz
50,000 oz
85,000 oz
10,222 oz
7
8
90%
10,222 oz
1,750
16.09
12.02
4.075
1,307
TABLE 1: Red October Initial 7 month mine Key Parameters (Refer Forward Looking and Cautionary Statements below)
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 8
Forward Looking and Cautionary Statements
Information included in this release constitutes forward looking statements. Often, but not always, forward looking
statements can generally be identified by the use of forward-looking words such as “may”, “will”, “expect”, “intend”, “plan”,
“estimate”, “anticipate”, “continue” and “guidance” or other similar words, and may include, without limitation, statements
regarding plans, strategies and objectives of management, anticipated production or construction commencement
dates and expected costs or production outputs.
Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause
the company’s actual results, performance and achievements to differ materially from any future results, performance
or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange
fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative
nature of exploration and project development, including the risks of obtaining necessary licences and permits and
diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which
the company operates or may in the future operate, environmental conditions including extreme weather conditions,
staffing and litigation. Forward looking statements are based on the company and its management’s assumptions made
in good faith relating to the financial, market, regulatory and other relevant environments that exist and affect the
company’s business operations in the future. Readers are cautioned not to place undue reliance on forward looking
statements.
Forward looking statements are only current and relevant for the date of issue. Subject to any continuing obligations
under applicable law or any relevant stock exchange listing rules, in providing this information the Company does not
undertake any obligation to publicly update or revise any of the forward-looking statements or advise of any change in
events, conditions or circumstances on which such statement is based.
The Company believes that it has a reasonable basis for making the forward-looking statements in this announcement,
including with respect to any mining and financial estimates, based on the information compiled in this announcement.
Key aspects of the mining study were compiled by specialist consulting groups, each with a particular expertise for the
area of study reported. The Company considers that the investigations and studies carried out for this study comply
with the requirements of a mining study.
COMMENCEMENT OF MINING
Mining activities commenced in February 2019 and included the following:
• Decline and equipment refurbishment
• Refurbishment and upgrading of electrical facilities, water pumps and ventilation equipment
• Completion of grade control drilling and receival of assay results
• Grade control drilling results incorporated into block model and updated mine designs produced
• Five year ore purchase agreement was executed with AngloGold Ashanti Australia Limited (AGAA) for ore delivery to
the Sunrise Dam processing plant
• Mining commenced during the year for an initial 168 metres of drives being developed in order to access high grade
ore in preparation for mining. This resulted in 831 tonnes of low-grade development ore and 8,754 tonnes of waste
being produced
• Development was focused on levels N1260, N1290 and N1240, with level N1260 successfully reaching the ore zone at
the predicted location
• Finalisation of access, control and preparation of necessary haul roads for ore delivery which commenced in July 2019
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 9
GRADE CONTROL DRILLING
The grade control drilling programme was designed to fulfil two functions (MAT announcement to ASX 1st May 2019):
• de-risk the preliminary mine plan; and
• define new potentially mineable gold mineralisation.
Underground grade control drilling was successfully completed in March 2019 for a total of 38 drill holes for ~1,800m of NQ
diamond core (Figure 3). The grade control drilling program was completed on key mining targets in line with the Red October
mine plan, and was also designed to prove up additional gold ounces in other near-mine target areas.
FIGURE 3: Red October, Summary Longitudinal Section and Location of Grade Control Drilling (in red)
Grade control drilling returned multiple intersections of very high-grade gold and led to the discovery of a new high-grade,
moderately north-plunging shoot, within the Red October Shear Zone (ROSZ). The newly discovered shoot plunges moderately
to the north. Previous wide spaced drilling in the area had defined the mineralised ROSZ but had not intersected the high grade
shoot which remains open down-plunge, and indicates strong potential for more shoots to be discovered.
The ROSZ is made up of a sheared mafic package with a quartz breccia, pervasive pyrite and narrow intercalated sedimentary
units. Typical alteration minerals seen include biotite, carbonate, silica and sericite. Visible gold is observed in drill core at Red
October.
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 10
Outstanding gold intercepts in the Red October Shear Zone North include:
•
1.60m @ 36.90g/t Au
• 4.32m @ 16.30g/t Au
• 2.84m @ 15.95g/t Au
• 6.30m @ 4.54g/t Au
Outstanding results were also seen from the Red October Shear Zone South including:
•
•
1.60m @ 36.90g/t Au from 15.20m
Incl. 0.85m @ 67.60g/t Au from 15.7m
• 2.75m @ 3.25g/t Au from 38.50m
Additional impressive high-grade gold intercepts include:
• 0.81m @ 181.50g/t Au in HW 362 lode
•
1.33m @ 40.51g/t Au in HW 362 lode
• 0.80m @ 248.00g/t Au in a new lode
There are a number of other untested structural junctions along the ROSZ which form dilational fluid traps, potentially causing
ideal pressure/temperature ranges conducive to the deposition of gold mineralisation. Grade control drilling also identified
new opportunities for immediate mining which included the Smurf 310 lode and the high-grade HW 362 lode which lies adjacent
to the ROSZ.
These opportunities can significantly enhance the existing mine plan and further evaluation is being undertaken. Matsa will
continue targeting such structural junctions to identify other potential future mining areas along the ROSZ to the north of the
current mine workings.
In summary, results have provided a compelling platform for the current mining phase which strongly endorses Matsa’s belief
that several new high-grade gold mineralisation areas remain to be discovered. Drilling will continue during 2019 on new mining
targets within and outside of the existing resource to expand the operations at Red October.
POTENTIAL FOR EXTENSION TO MINING
The initial phase 1 of mining currently underway at Red October represents the start of Matsa’s planned long-term mining
operation at Red October.
At the conclusion of the initial phase seven month mining operation, Matsa’s intention is to continue mining operations as mining
characteristics and controls on mineralisation become clearer and new mineralisation is defined by further exploration drilling.
A number of new targets have already been identified as a result of the mining studies undertaken to date.
The Red October resource remains open, and Matsa considers the deposit as under-explored along strike and down-dip
(Figure 4). There is evidence of high-grade gold intersections within the existing drilling dataset, both within and outside the
existing mine footprint. This strongly supports the potential to expand mining immediately, both adjacent to existing workings
and further afield.
The initial mining operation represents an opportunity for Matsa to fine-tune narrow-vein mining techniques and to undertake
diamond drilling to define new mining areas.
There is also the opportunity to learn more about the detailed geological controls on gold mineralisation to further guide
exploration.
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 11
FIGURE 4: Red October, Longitudinal Section showing existing resource wireframes, drilling and mine workings
(RO mine grid co-ordinates)
PRODUCTION AND DEVELOPMENT SUMMARY
Matsa commenced underground activities during February 2019, with site establishment, pump refurbishment, equipment
mobilisation, ventilation, compliance and electrical works and underground mining and access development commencing on
April 24th 2019.
Initially, dayshift only operations were undertaken with a focus on geological diligence where a small underground crew also
undertook development mining including access to the ROSZ North ore in preparation for ore production.
A summary of the development carried out during the year under review is shown in Table 2.
Development (m)
Gold Ore
Waste
Ore
Tonnes
Grade *
Ounces
157.9
9.7
831
1.81
48.4
TABLE 2: Red October Mine Development Summary for FY 2019
*Estimate only, assays pending
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 12
MINING ACTIVITIES PRODUCTION
There was no stoping (ore production) carried out at Red October during the year.
MINING ACTIVITIES – DEVELOPMENT
Development of the N-1260 level advanced towards the high-grade shoot within the ROSZ North which was discovered by
Matsa’s recent drilling as noted above. Development is also underway to access the same shoot on the N-1240 and the N-1290
levels.
The N-1260 is the first level being developed in this area which creates a production front north of the existing mine workings
(Figures 5 and 6).
FIGURE 5: Long section looking West (mine grid) – ROSZ block model showing grade Au g/t >1g/t
It is planned to continue development and mining of the newly discovered high grade shoot in the ROSZ with development
almost reaching the southern end of the high grade shoot by 30th June 2019. It is planned for stoping to commence during the
new financial year as a source of high-grade ore. (MAT announcement to the ASX 31st July 2019 ).
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 13
FIGURE 6: N-1260 level ROSZ development during FY 2019 (blue outline), on the edge of the high grade
At the time of reporting, the tenor of the high grade zone and its spatial position has been confirmed, with visible gold seen in
development (Figure 7).
FIGURE 7: N-1260 level ROSZ development during FY 2019 (blue outline), on the edge of the high grade
Development also commenced on the N-1290 and N-1240 levels to access ROSZ North ore to create multiple stoping levels for
near term mining. These development drives could also access other potential nearby lodes which could be added to the ore
production profile and thus contribute to longer-term mining operations.
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 14
MINING ACTIVITIES – EXPLORATORY DEVELOPMENT
Exploratory development occurred in a number of areas with detailed geological mapping carried out with the aim of providing
additional geological information relevant to nearby lodes (Figure 8).
FIGURE 8: Exploratory development during FY2019
POTENTIAL TO EXTEND MINING BEYOND INITIAL PHASE 1
The initial phase of mining at Red October represents the start of Matsa’s planned long-term mining operation.
Matsa considers that the Red October resource remains open and under-explored along strike and down-dip. There is evidence
of high-grade gold intersections within the existing drilling dataset, both within and outside of the existing mine footprint. This
dataset strongly supports the idea that potential exists to continue mining beyond the initial phase 1 both:
• within the existing resource wireframes, adjacent to existing workings and further afield (Figure 7)
• outside the existing resource wireframes where potential is demonstrated by existing high- grade drill results (Figure 9)
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 15
FIGURE 9: Red October, Longitudinal Projection with summary of high grade gold mineralisation >5g/t Au
(RO mine grid co-ordinates) (June 2016 Saracen Resource Model)
A number of new targets have already been identified for future mining as a result of studies undertaken to date. The initial
phase 1 mining operation represents an opportunity for Matsa to fine-tune narrow-vein mining at Red October, and gain a better
understanding of geological controls on gold mineralisation.
Exploration drilling both underground and from surface, will define new mineralisation and continue to build the resource base.
GEOMECHANICAL STRAIN MODELLING
In late 2018, Matsa commissioned the services of GMEX (Dr John McLellan) to construct a geomechanical model to aid the
prediction of mineralised fluid flow within structures. The technique has been used successfully at Red October previously by
under Saracen Mineral Holdings Ltd, who was the previous owner of the mine and has also been used at Sunrise Dam. The
geomechanical model was instrumental in the 2Moz+ Vogue deposit discovery at Sunrise Dam by AGAA.
Geomechanical analysis has the potential to be a cost-effective tool to focus on exploration drilling, discovering new gold
mineralisation and expanding the gold resource base at Red October.
The Red October model has recently been completed, and initial results show favourable conditions along known structures
for localised fluid flow and potential for mineralisation. The model shall be interrogated further later in 2019 to assist with the
finalisation of an exploration targeting pipeline in addition to existing structural geology, lithology, geochemistry and geophysics
datasets.
Initial gold targets from first pass interpretation of the geomechanical model are shown in Figure 10.
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 16
Further interrogation of the model in conjunction with existing structural geology, lithology, geochemistry and geophysics
datasets, will be a key aspect in developing an exploration targeting pipeline.
FIGURE 10: Initial Exploration Target Areas from the GMEX Geomechanical Mode
RED DOG GOLD MINE
Mining at Red Dog commenced in late August 2018 and was completed in late November 2018, and haulage of ore to AGAA’s
Sunrise Dam Gold Mine treatment plant(SDGM) under Matsa’s Red Dog ore purchase agreement with AGAA was completed
in late December.
Mine operating results were in accordance with the mine budgets and mine plan. The operations proceeded smoothly with
mining equipment performing well.
The mining at Red Dog delivered an outstanding result, generating production of 12,704 ounces and an operating profit of $5.4
million, which exceeded the forecast set down in the mining study. Final proceeds from the ore delivered in December were
received the week ending 11th January 2019 from AGAA.
The key outcomes from the Red Dog gold project are shown in Table 3 with the open pit mine shown in Figure 11.
Total Tonnes
Grade (g/t)
Strip Ratio (Waste:Ore)
Metallurgical Recovery (%)
Production (Oz)
Cash Surplus (A$M)
AISC (A$ per Oz)
*
Absolute figure
Mining Study July 2018
182,000
2.5
2.4
92.5
13,400
5.4
1,294
Actual
185,730
2.3
1.7
92.5
12,704
5.5
1,288
TABLE 3: Red Dog Gold Project Key Outcomes
% Achieved
101.88
92.00
70.83
100
94.81
101.85
(6)*
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 17
FIGURE 11: Red Dog Gold Project close to completion of mining
MINING SUMMARY
The mining and haulage operations at the Red Dog gold mine were conducted over a 4 month period after the establishment of
the required infrastructure. Actual mining started in mid-September 2018 and was completed as initially planned with the mine
design being altered minimally following grade control drilling resulting in approximately 5% less ounces. These reduced ounces
were significantly compensated for by a lower stripping ratio which resulted in lower mining costs. A gold price slightly higher
than forecast was achieved during the operation. Dilution was contained by using contour mining methods and by implementing
stringent geological supervision.
Adverse weather conditions impacted haulage of the ore at times to SDGM which was completed on 24th December 2018.
Importantly, the weather delays did not impact mining operations and overall the project exceeded Matsa’s forecasts. Mining
was conducted in a safe manner with no time lost due to injuries.
LAKE CAREY EXPLORATION
Exploration at Lake Carey during the year under review comprised the following:
• Fortitude North Lake Aircore, RC and Diamond Drilling
• BE4 Lake Aircore Drilling
• Golden Ring RC Drilling
• Resampling of historic drill holes in the Capella Mining leases
• Complete airborne magnetic and radiometric survey of Capella and Red October
• Review of results from R&D Seismic Survey over BE1
• Red Dog Diamond Drilling
• Tin Dog RC and diamond drilling 31 RC drill holes for 1,372m
• Acquisition of third party gravity survey
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 18
These programmes were previously announced as MAT reports 11th July 2018, 20th July 2018, 22nd October 2018, 9th November
2019, 17th December 2018, and 7th May 2019.
FORTITUDE NORTH
Drilling
The Fortitude North Target is located ~7km northwest of Matsa’s Fortitude Gold Mine, and is also located along the Fortitude
Fault. Matsa’s land aircore drilling programme carried out in the previous year detected basement gold mineralisation. Drilling
during the year comprised Lake Aircore drilling followed by RC and diamond drilling outside the lake at the northern end of the
target, using a truck mounted multipurpose drilling rig.
The following drill holes were completed during the year as summarised in Figure 12.
Lake Aircore drilling
RC drilling
Diamond drilling
29 drillholes for 2,622m
10 drillholes for 1,860m
1 drill hole for 329m
FIGURE 12: Fortitude North Summary Drill Results showing location of Aircore, RC and Diamond Drill Holes
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 19
Aircore drilling including earlier drilling off the lake, has defined a linear zone of anomalous bedrock gold mineralisation ~1.8km
long with most of this mineralisation located under the lake where access is restricted to specialised lake drilling equipment.
Diamond and RC drilling has only been completed off the lake at the northern end of the 1,800m basement gold mineralised
zone and this is the only section of the target which has been tested below aircore refusal. Consequently ~1,500m of the target
which is located under the lake remains untested at depth.
RC drilling in September 2018 (18FNRC001-5) was carried out on 3 sections (Sections 1-3 Figure 12) with drilling facing towards
the NE.
Subsequent RC drilling in February 2019 was carried out on the same three sections but with drilling facing towards the SW to
test the working hypothesis that mineralisation intersected in the first RC drillholes on Section 3, dipped moderately towards
the east.
Diamond drilling was carried out in conjunction with the second Stage RC drilling and appears to confirm a moderate dipping
mineralised zone as discussed below (Figure 13).
FIGURE 13: Fortitude North, Cross Section Line 3
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 20
FORTITUDE NORTH - LAKE AIRCORE DRILL HOLE RESULTS
Aircore drilling assays returned a number of significant gold values, with the best intercepts highlighted as follows:
47m @ 2.55 g/t Au from 42m
(18FNAC071)
incl.
and
incl.
8m @ 2.22 g/t Au from 42m
5m @ 17.7 g/t Au from 53m
1m @ 84.1 g/t Au from 53m
4m @ 4.43 g/t Au from 96m
(18FNAC064)
1m @ 1.87 g/t Au from 42m
(18FNAC070)
9m @ 0.78 g/t Au from 79m
(18FNAC075)
1m @ 8.28 g/t Au from 63m
(18FNAC083)
Lake aircore intercepts were all from deeply weathered basement rocks (mostly metabasalt and dolerite) and has extended
gold mineralisation under the lake for a distance of approximately 1.8km along the Fortitude Fault.
The selected higher-grade intercepts in drill hole 18FNAC071 are all located within a broad intersection of 47m @ 2.55 g/t Au
from 42m with gold values up to 84.1 g/t Au. The highest grades in aircore drill hole 18FNAC71 are interpreted to reflect
supergene enrichment in the weathering profile above primary gold mineralisation.
Anomalous gold values up to 0.78 g/t Au in transported lake clays to the east of the zone of basement mineralisation are
interpreted to represent the product of erosion and dispersion of adjacent basement gold mineralisation during deposition of
the lake sediments (Figure 12).
FORTITUDE NORTH - RC AND DIAMOND DRILL HOLE ASSAY RESULTS
RC drilling was carried out in two campaigns (Stages 1 and 2) at the northern end of the bedrock gold anomaly where access is
possible for truck mounted drilling equipment. Drilling was designed to discover primary mineralisation beneath/adjacent to
the supergene mineralisation discovered by aircore drilling in the weathered profile.
Drill holes encountered variably to strongly sheared and altered basalt beneath ~40m of lake sediments and 20-60m of
weathered basement.
FORTITUDE NORTH - STAGE 1 RC DRILLING RESULTS
RC drill hole 18FNRC003 on Section 3 returned significant intersections as follows:
50m @ 1.1 g/t Au from 42m
(18FNRC003)
Inc.
5m @ 5.46 g/t Au from 79m
RC drill hole 18FNRC005 intersected a narrow zone of higher grade gold mineralisation at depth as follows:
2m @ 4.96 g/t Au from 190m
The interpretation of Stage 1 RC drilling is of a gold-mineralised zone dipping moderately towards the NE as shown in Figure 13
(MAT announcement to ASX 22nd October 2018).
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 21
FORTITUDE NORTH - STAGE 2 RC DRILLING RESULTS
The Stage 2 drilling programme comprised one stratigraphic/structural diamond drill hole (19FNDD01) and 5 RC drill holes
(19FNRC01-19FNRC05). The programme was designed to test the hypothesis of a moderately dipping mineralised zone dipping
towards the east with the added objective that the diamond hole was to provide a stratigraphic section and to provide core
suitable for sonic logging in order to provide information for Matsa’s ongoing R&D seismic survey programme MRIWA M514
being undertaken by Curtin University.
Assay results for Stage 2 drilling were announced in early May (MAT announcements to ASX 7th May 2019) and include a
number of gold intersections which Matsa believes to be significant as follows (Figure 12 and Figure 13).
19FNDD01
8m @ 2.94 g/t Au from 106.25m
incl.
and
5.75m @ 3.8g/t Au
1.3m @ 6.73 g/t Au
3.35m @ 1.32 g/t Au from 237.5m
19FNRC05
6m @ 1.91 g/t Au from 90m
The upper, higher grade diamond drill intercept (8m @ 2.94 g/t Au) is interpreted as a down-dip extension of the mineralised
intercept in 19FNRC05 and the earlier high grade intercepts in weathered rocks referred to above. Mineralisation is associated
with quartz veining in a broader zone of alteration characterised by albite and pyrite (Figure 14) and supports the previously
announced interpretation of a moderately ENE dipping gold mineralised zone (MAT announcement to ASX 22nd October 2018).
FIGURE 14: Primary Mineralisation comprising quartz veins, coarse disseminated pyrite
in brecciated and albite altered dolerite (107m in 19FNDD01).
This mineralisation remains open to the south where Matsa’s basement gold anomaly extends for a further 1.5km (Figure 1).
Results from drilling on Sections 1 and 2 (Figure 12) indicate that significant mineralisation does not extend to the north.
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 22
NEXT STEPS AT FORTITUDE NORTH
A total of 10 RC and one diamond hole have been completed at Fortitude North to date with full assay results from the
current diamond and RC programme rescived. This represents only ~20% of the interpreted 1.8km strike extent of bedrock
mineralisation. The southern 80% of the mineralised zone has only been defined by comparatively wide spaced (200m x 100m)
aircore drilling.
Diamond drilling using specialised lake drilling equipment is planned to target primary gold mineralisation in and adjacent to
this zone.
BE4 LAKE AIRCORE DRILLING
A total of 20 drillholes for 1,347m at BE 4 and a further 6 drill holes for 392m were carried out over regional aeromagnetic target
AF 1. Drilling at BE 4 was carried out to follow up anomalous gold values up to 3m @ 2.62 g/t Au in lake aircore drilling 2km
north of BE 1 in mid-2017 (Figure 15). Initial follow up in early 2018 using a land based drilling rig, returned best values of 1m @
1.22 g/t Au in one drill hole and a number of significantly anomalous gold results > 0.5 g/t Au.
Lake aircore drilling during FY2019 included a best intercept of 3m @ 2.01 g/t Au from 62m in drill hole 18BN053. This result
is located on the western end of a drill traverse which remains open to the west. Anomalous gold values are located over a NS
distance of ~2km and follows the western edge of the Bindah Fault corridor which has undergone a major strike change from
NNW to N trending. This change in strike direction is interpreted to be a structurally favourable location for accumulation
of gold mineralisation along the Bindah Fault. The anomalous gold values occur in deeply weathered intermediate and mafic
volcanics. Further infill and step-out aircore drilling is planned in order to better define this target for diamond drilling.
FIGURE 15: BE 4 Aircore Drilling Summary
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 23
ANGEL FISH 1 LAKE AIRCORE DRILLING RESULTS
This prospect is located approximately 5km SW of BE 1 and comprised a discrete linear magnetic anomaly. No significantly
anomalous results were returned from drill samples in six drill holes completed on this prospect. No further work is proposed
at this stage.
CAPELLA, RE-SAMPLING OF HISTORIC AIRCORE DRILL HOLES
Matsa revisited its Capella drill sites in late 2018 and found small quantities of fresh drill-cuttings at 447 drill sites which were
sampled for a multi-element suite of assays including gold and also samples for mineralogical analysis (Figure 16). The objective
of this sampling was to use multi-element and mineralogical data to refine basement geology, potentially identify pathfinder
element signatures, and use multi-element assays as a tool to map hydrothermal alteration footprints thereby identifying and
prioritising targets for further drilling.
FIGURE 16: Capella Summary of previous drill holes showing maximum gold values
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 24
Summary Statistics of selected pathfinder element assay results is given in Table 3. Summary sampling and assay protocols are
described in Appendix 1.
447 rows - Univariate Au_ppm
As_ppm
Sb_ppm
Pb_ppm
Count
Unique Values
Minimum
Maximum
Mean
Median
Range
Interquartile Range
Standard Deviation
25 percentile
75 percentile
90 percentile
95 percentile
99 percentile
443
96
-0.001
2.13
0.05
0.005
2.13
0.02
0.21
0.001
0.02
0.06
0.16
1.50
446
187
0.1
>250
21.59
3.9
250
10.45
49.37
1.68
12.13
55.71
132.00
250.10
446
101
-0.05
11.65
0.36
0.15
11.63
0.24
0.77
0.08
0.32
0.86
1.40
3.74
447
22
-2
83
5.33
4
82
7
5.74
-2
8
10
11
20.56
TABLE 4: Capella ML’s Selected Pathfinder Element Assay Results
A re-interpretation of litho-geochemical data, has resulted in a new geological interpretation, which separates an eastern
ultramafic group mostly made up of pyroxenite and minor peridotite, from a mafic unit in the west made up of basalts and minor
dolerite. Small granite intrusions are also evident from this re-interpretation (Figure 16).
Furthermore, a comprehensive review of major element data from the fresh sample materials, has given two areas (Jacks Trend
and Owen Hills) with geochemical patterns which can be interpreted to represent larger areas of hydrothermal alteration. The
predominant alteration signature at Jacks Trend is a moderate sericite overprint, while Owen Hills is characterised by a very
strong albite chlorite signature.
Drilling data is currently being reviewed in order to plan selective deeper drilling on these two targets.
AIRBORNE MAGNETIC AND RADIOMETRIC SURVEY CAPELLA
During the period Matsa carried out a detailed aeromagnetic survey over the western part of the Lake Carey gold project
including the Capella/Red October mining leases. This is the first survey of this kind carried out over the Red October mine
area. Matsa has integrated this data into the project-wide aeromagnetic coverage and it can be seen to have significantly
increased the resolution of potentially important structures and rock types.
RC DRILLING - GOLDEN RING PROSPECT
A total of 4 RC drill holes for 432m of drilling were completed at the Golden Ring/Golden Orb prospect. Drilling was carried
out to test for extensions to outcropping high grade quartz-vein hosted mineralisation exposed in historic gold workings. Results
of this drilling have been received and returned a best result of 1m @ 0.62g/t Au from 70m in drill hole 19GRRC04 This drilling
has downgraded this prospect and no further work is planned at this stage (Table 5).
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 25
Hole ID
19GRRC002
19GRRC003
19GRRC003
19GRRC004
19GRRC004
19GRRC004
19GRRC004
19GRRC004
Sample
RDO3172
RDO3247
RDO3248
RDO3360
RDO3361
RDO3385
RDO3386
RDO3394
From (m)
To (m)
Au ppm
67
58
59
45
46
70
71
79
68
59
60
46
47
71
72
80
0.16
0.44
0.12
0.34
0.26
0.62
0.16
0.21
TABLE 5: Golden Ring Prospect, assay values >0.1 g/t Au
Collar and setup data for drilling was announced previously (MAT announcement to the ASX 18th April 2019).
RED DOG - DIAMOND DRILLING
Assays were received from diamond drill hole 19RDD01 which was completed at Red Dog where Matsa completed mining in late
2018. The drill hole was designed to target down-dip extensions of the Red Dog orebody to the SW, towards the interpreted
position of the NNW trending Mt Horner shear zone (Figure 17).
FIGURE 17: Red Dog and Tin Dog Projects, Drilling Summary
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 26
Drill hole 19RDD01 demonstrated that mineralisation continues down-plunge towards the Mt Horner shear to the southwest
where mineralisation remains open down-plunge with better intercepts as follows (Figure 18):
1.7m at 3.7g/t Au from 14.5m
3.1m at 1.8g/t Au from 46.3m
Gold mineralisation can be seen to coincide with zones of narrow quartz veins within a broader envelope of hematite, carbonate
and pyrite altered meta-basalt. Mineralised syenite intruding the meta-basalt host rock, was intersected over a short interval at
shallow depth, potentially linking Red Dog with the larger Tin Dog syenite-related gold mineralised system to the west.
FIGURE 18: Red Dog Diamond Drilling Oblique cross section
RC AND DIAMOND DRILLING TIN DOG
The drilling program at Tin Dog was planned to follow up significant drill results by previous explorers and was primarily designed
to target shallow gold mineralisation similar to the nearby Red Dog orebody (Figure 11).
Drilling at Tin Dog produced a number of significant gold intersections including the following of which some are shown in
Figure 19:
19RDRC023:
3m at 2.9g/t Au from 14m
19RDRC023:
7m at 3.3g/t Au from 45m
and
3m at 3.7g/t Au from 56m
within
23m at 1.9g/t Au from 37m
19RDRC022:
3m at 2.1g/t Au from 4m
within
14m at 1.0g/t Au from 2m
19RDRC020
10m at 1.2g/t Au from 35m
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 27
FIGURE 19: Tin Dog cross section 9900mN, interpreted geology and summary results
Gold mineralisation at Tin Dog occurs in a mixed suite of rocks mostly made up of basaltic volcanics and intrusive syenite, and
located close to the major NW trending Mt Horner shear zone. It is noteworthy that the Butchers Well gold deposit currently
being explored by AGAA is geologically very similar to the Tin Dog/Red Dog project and is located 16km to the NW, also on the
Mt Horner Shear Zone. At Tin Dog, gold mineralisation is interpreted to have formed in and adjacent to quartz-calcite veins
within a broader hematite-carbonate-pyrite alteration zone and is located in close proximity to intrusive syenite bodies.
GRAVITY SURVEY
Results of a gravity survey carried out by AGAA as part of their regional exploration of their adjoining tenements, were made
available to Matsa under the MOU between the two companies. Matsa takes this opportunity to thank AGAA for their
co-operation and assistance to Matsa.
A preliminary inspection of the gravity data in conjunction with drilling and geological mapping, has identified a ring-shaped
gravity feature at Tin Dog which may reflect the chilled margin or “hornfels” zone around a larger syenite body at depth.
A second ENE trending linear gravity feature can be seen to partly coincide with the Red Dog gold orebody. Matsa is currently
carrying out a detailed review of the project and further drilling is being considered.
NEW TENEMENT ACQUISITIONS LAKE CAREY
During the period under review Matsa expanded its Lake Carey gold project through tenement acquisitions which significantly
add to its portfolio. These include:
• Tin Dog gold project, option to purchase from Mr Scott Wilson;
• Devon gold mine purchase from GME Resources Ltd - ASX GME;
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 28
• Devon gold project option to purchase from Anova Metals Ltd – ASX AWV; and
• Zelica gold project purchase from Anova Metals Ltd - ASX AWV.
TIN DOG PROJECT ACQUISITION
In November 2018 Matsa entered into an option to purchase agreement with Mr Scott Wilson to acquire a granted mining lease
adjoining Matsa’s Red Dog gold mine which Matsa believes to be a part of the same gold mineralised system and to be highly
prospective for significant further gold mineralisation.
This project includes a number of significant gold intercepts from historic drilling including:
6m at 13.8 g/t Au from 20m and
16m at 2.9 g/t Au from 55m
Mineralisation appears to be related to the presence of syenite intrusions adjacent to the Mt Hornet shear zone and may be
similar to the Anglo/Saracen JV project at Butchers Well which is also associated with syenite intrusions on the same structure.
Mineralisation at Matsa’s Red Dog mine is interpreted to form part of this potentially much larger gold-mineralised system.
Matsa is currently integrating drilling, aeromagnetic and geological data from the two projects to guide exploration drilling.
LINDEN GOLD PROJECT (ANOVA METALS LTD)
In November 2018, Matsa entered into two agreements with Anova Metals Ltd (“Anova”) whereby Matsa can acquire
two projects:
• Five mining leases and one exploration licence making up Anova’s 17.8 km2 Devon gold project; and
• One mining lease, one exploration licence and one miscellaneous licence making up Anova’s Zelica gold project
located 20km NW of Matsa’s Red October gold mine.
The Zelica project area was subsequently sold in June for the same value as its acquisition cost and as a result Matsa
has no further interest in Zelica project area.
DEVON GOLD PROJECT (GME RESOURCES LTD)
In December 2018 Matsa entered into a Sale and Purchase Agreement (“SPA”) with GME Resources Ltd (“GME Resources”) to
acquire 2 mining leases and one miscellaneous licence comprising the Devon gold mine and gold project area and the adjacent
New Years Gift exploration licence. The tenements acquired under this agreement make up the rest of the greater Devon
project as acquired from Anova and delivers to Matsa the control of the known gold mineralised areas surrounding the Devon
mine, which is currently on care and maintenance.
The Devon open pit gold mine was initially trial mined by GME Resources in May 2015, producing approximately 13,590t at 5.36g/t
for 2,195 oz of gold. The pit was extended in 2016 with GME Resources reporting production of 47,032t at 5.3g/t for 7,398oz gold
over the six month mining operation. GME Resources reported drilling below the pit and old workings indicated mineralisation
remains open at depth and had planned to test down dip extensions, however, access for drilling for potential extensions of the
open pits was limited by tenure. Matsa’s recent option to acquire agreement with Anova on the surrounding ground in M39/500
removes this tenure obstacle and will now allow Matsa to progress exploration of this exciting high grade opportunity.
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 29
The New Year’s Gift prospect which was also acquired from GME Resources, is located less than 2km north of the Devon mine.
This prospect is hosted within the same north-northwest trending greenstone package as Devon. This prospect which was
defined by a number of historical gold workings and has undergone minimal recent exploration. In 2015, GME drilled 4 RC holes
over the New Year’s Gift prospect. All holes intersected mineralisation with gold values greater than 1 g/t Au and potential for
high grade mineralisation was confirmed in two holes with better results of (GME announcement to ASX 6th July 2015 and 4th
November 2015):
4m at 10.6g/t Au from 25m
1m at 23.6g/t Au from 23m
The Linden and Devon projects are located immediately south of Red October and are contiguous with Matsa’s Red October
tenements. The tenements hold multiple historical workings that produced approximately 23,000 ounces of gold with quoted
average gold grades of ~ 50 g/t Au, over outcropping and near surface quartz veins. The acquisition is of particular interest
as it forms a large contiguous land package with existing gold targets already to hand and strongly complements the recently
acquired Red October gold mine.
Matsa is planning a follow-up RC drilling programme to better define and assess the potential of this high-grade mineralisation
to commence in the first half of 2020.
FIGURE 20: Summary of the Anova-Devon and GME-Devon Projects and Significant Drill Results
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 30
ZELICA PROJECT
The Zelica gold project is located 20km to the NW of Red October.
Historical drilling at Zelica has advanced the project to the status of a JORC 2004 Resource of 358,200t @ 1.65 g/t Au for a
total of 19,036 ounces of gold.
Exploration activities undertaken by Anova prior to acquisition of the project by Matsa have concentrated on carrying out
optimisation studies on the in-situ gold resources. Work included drilling on the low grade stockpile to confirm grades from
historic drilling and a programme of pit floor trenching, mapping and sampling.
Anova also identified the potential presence of near-surface, high-grade zones within the main ore zone, most notably in the
central parts, and near the southern pit ramp.
Following a detailed review of the Zelica gold project during the year as a potential open pit mining operation, the decision was
taken to sell this project because it did not meet the Company’s development criteria.
PARABURDOO PROJECT
During the period ended 31 December 2018 a field programme was conducted to follow up further anomalous gold values in
stream sediment samples as previously reported.
The field programme was carried out in June 2018 and was focused over the area of reported gold nugget discoveries, and gold
anomalous drainages. A total of 9 stream sediment samples, 116 soil samples and 7 rock chip samples were collected with the
following results:
• Stream sediment samples returned values up to 0.48 g/t confirming earlier results which point to mechanical
dispersion of gold along drainages.
• A number of weakly anomalous soil gold values up to 16 ppb Au appear to reflect geochemical dispersion of gold in
the vicinity of a reported gold nugget discovery area.
• All rock chip results were below the 10 ppb Au detection limit.
SYMONS HILL (NICKEL FRASER RANGE)
Matsa engaged in an R&D programme comprising a 2D Seismic Survey over its 100% owned Symons Hill project in March 2019
(Figure 15). (MAT announcement to ASX 18th April 2019).
The following activities were carried out during the year:
• preliminary results were presented by Curtin University researchers
• Seismic velocity measurements were made in diamond core from 15SHDD07 (300.8m) and 16SHDD10 (612.6m) which
Matsa completed on the project in 2015 and 2016 respectively.
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 31
FIGURE 21: Symons Hill E69/3070 Showing Experimental Seismic Survey Location
on Summary Magnetics and Basement Geochemistry
SYMONS HILL PRELIMINARY SEISMIC RESULTS
Results from the three survey lines completed in March defined a distinctive seismic pattern recognizable in three sections over
a distance of ~5km. Curtin’s working hypothesis is that this represents a coherent geological unit which plunges gently towards
the north. Diamond drill hole 16SHDD10 was projected ~200m onto the southern seismic section (Figure 16). A comparison
of the drill hole geology and nickel assay results suggests that the geological unit highlighted in the Seismic survey may be
correlated with nickel enriched troctolite gabbro.
SYMONS HILL SEISMIC VELOCITY MEASUREMENTS
Matsa carried out seismic velocity measurements using an ultrasonic tool provided by Curtin. Results are currently being
integrated with the survey data obtained in March and will be used to refine the interpretation of the seismic survey data which
is being carried out as part of an ongoing research and development project.
SYMONS HILL SEISMIC SURVEY BACKGROUND
The survey was carried out by Curtin University’s Department of Geophysics. Survey lines were designed to pass over nickel
bearing troctolite gabbros identified in earlier drilling programmes. These gabbro bodies are interpreted to be very similar to
the host rocks at the nearby Nova mine.
The innovative use of seismic survey techniques in the district by Independence Group (ASX-IGO), operator of Nova nickel
mine, announced encouraging results from seismic surveys at Nova. (IGO Quarterly Report to the ASX, Dec 2018).
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 32
FIGURE 22: Symons Hill Project Seismic Section SL01 showing trace of diamond drill hole SHDD10 and
distinctive seismic survey results. (Drill hole projected approximately 200 metres onto cross section
Objectives of the survey were to:
•
evaluate equipment and in particular the cost-effective use of fibre-optic cable which has potential to significantly reduce
the traditionally astronomical cost of seismic surveys and make them more generally applicable to the search for base metals
•
determine the effectiveness of 2D seismic in mapping potential mineralized structures and geological units
THAILAND EXPLORATION
Matsa is determining how to approach the Thailand Agricultural Land Reform Office “ALRO” so that clear access to tenement
areas can be obtained which would allow more intensive exploration and mining activities. Importantly, Matsa has already
received permits from the Forestry Department to access Forestry Land for exploration at the Siam 1, Siam 2 and Siam 5 projects.
On-ground work during the period under review comprised low key exploration activities pending the outcome of discussions
between the company and ALRO.
CORPORATE ACTIVITIES
On 20 August 2018, Matsa executed a binding agreement with Liontown Resources Limited (“Liontown”; ASX: LTR) for the sale
of Matsa’s Killaloe Project to Liontown. The agreement covers the sale of all tenements held 100% and its 80% interest in two
other tenements held in joint venture with Cullen Resources Limited (“Cullen”).
The consideration for the sale of the project was:
1. The issue of 20 million fully paid ordinary shares in Liontown to Matsa in two tranches; and
2. The grant of a 1% Net Smelter Royalty (“NSR”) to Matsa on all minerals recovered and produced from the
Killaloe Project.
MATSA RESOURCES LIMITED · OPERATIONS REVIEW
2019 ANNUAL REPORT · PAGE 33
In August 2017, Matsa entered into loan agreements with two separate parties for a $4M loan facility of which $3M was drawn
down immediately, with the balance of $1M available at call but remained undrawn. The loan attracts an interest rate of 12%, and
was repayable by 31 July 2019 and is secured by a mortgage over the Fortitude gold project, the Symons Hill project and a Deed
of Charge over the Company’s shareholdings in Bulletin Resources Limited and Panoramic Resources Limited.
Subsequently, Matsa reached agreement with the lenders to extend the loan repayment date to 31 July 2020, and increase the
debt facility to A$5 million and draw down a further A$1 million, to be used for the acquisition of underground mining equipment
and refurbishment of the equipment to be used at Red October underground mine. Terms and conditions of the loan have
not changed.
Exploration results
The information in this report that relates to Exploration results is based on information compiled by David Fielding,
who is a Fellow of the Australasian Institute of Mining and Metallurgy. David Fielding is a full time employee of Matsa
Resources Limited. David Fielding has sufficient experience which is relevant to the style of mineralisation and the type
of ore deposit under consideration and the activity which he is undertaking to qualify as a Competent Person as defined
in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.
David Fielding consents to the inclusion in the report of the matters based on his information in the form and context in
which it appears.
MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
Your directors present their report for the year ended 30 June 2019.
DIRECTORS
The names and details of the Company’s directors in office during the year and until the date of this
report are as follows. Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Mr Paul Poli Bachelor of Commerce, FCPA (Executive Chairman)
Mr Poli is a fellow of the Australian Society of Certified Practicing Accountants and was the founder
and managing partner of an accounting firm for 19 years from 1989 to 2008. He is well versed in all
aspects of accounting and taxation and has considerable experience in business through his role as a
consultant to many varied clients and through his own involvement in ownership of businesses in
Western Australia, the Northern Territory and South East Asia.
He has been chairman of Matsa Resources Limited for 10 years and as a former registered Securities
Trader and a significant investor in the mining industry, Mr Poli is particularly well qualified to drive
the creation of a significant new mining and exploration company.
During the past three years, Mr Poli has also served as a Director of the following publicly listed
companies:
Bulletin Resources Limited (Appointed 24 June 2014)
Mr Franciscus (Frank) Sibbel B.E.(Hons) Mining, F.Aus.IMM
Mr Sibbel is a Mining Engineer who has over 40 years of extensive operational and management
experience in overseeing large and small scale mining projects from development through to
successful production. He was formerly the Operations Director of Tanami Gold NL until 30 June 2008,
and worked as the Principal in his own established mining consultancy firm where he has undertaken
numerous projects for both large and small mining companies. Mr Sibbel is currently a director and
former Chairman of Bulletin Resources Limited.
During the past three years, Mr Sibbel has also served as a Director of the following publicly listed
companies:
Bulletin Resources Limited (Appointed 13 August 2013)
Mr Andrew Chapman CA F Fin
Mr Chapman is a chartered accountant with over 20 years’ experience with publicly listed companies
where he has held positions as Company Secretary and Chief Financial Officer and has experience in
the areas of corporate acquisitions, divestments and capital raisings. Since 1993 he has worked for a
number of public companies in the mineral resources, oil and gas and technology sectors.
Mr Chapman is an associate member of the Chartered Accountants Australia and New Zealand
(CAANZ) and a Fellow of the Financial Services Institute of Australasia (Finsia).
During the past three years, Mr Chapman has also served as a Director of the following publicly listed
companies:
Carnavale Resources Limited (Appointed 31 March 2015; resigned 28 April 2017)
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MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
COMPANY SECRETARY
Mr Chapman is also the Company Secretary and Chief Financial Officer of Matsa. Refer to the directors’
particulars as noted above.
PRINCIPAL ACTIVITIES
During the year the principal activities of entities within the consolidated entity were gold and other
base metal exploration in Australia and Thailand.
There were no significant changes in the nature of these activities during the year.
Operating Results for the Year
The Group’s net loss for the year after income tax is $4,947,360 (2018: $5,117,800).
The Group’s net loss for the year includes the following items:
• A loss of $194,649 (2018: gain of $1,263,661) on the sale of shares held in listed investments.
• A provision for diminution in investments of $1,248,296 (2018; Nil).
•
Impairment losses of $156,500 (2018: Nil) attributable to the Group's exploration projects.
• Care and maintenance costs on the Red October gold project of $1,232,675 (2018: $406,598).
• The write-off of exploration expenditure of $834,982 (2018: $755,335).
• Share based payments expense of $882,611 (2018: Nil).
•
Income of $100,570 (2018: $276,475) relating to a tax refund for eligible research and
development expenditure.
• Share of loss from the investment in associate Bulletin Resources Limited of $487,915 (2018:
$157,106).
Review of Financial Position
The net assets attributable to the shareholders of the parent have decreased by $4,064,749 from 30
June 2018 to $13,245,281 at 30 June 2019.
In the previous financial year $2,548,143 (before costs) was raised via the issue of 11,325,079 fully
paid ordinary shares at an issue price of $0.225 each with one free unlisted option for every three
shares subscribed for with an exercise price of $0.30 each and expiring 30 November 2019.
In the previous financial year $375,000 was raised during the financial year from the exercise of
unlisted options that resulted in the issue of 1,700,000 fully paid ordinary shares.
Cash reserves at 30 June 2019 were $0.90 million compared to $3.79 million in the previous financial
year and the Group had investments in listed shares of $2,082,954.
DIVIDENDS
No dividend was paid or declared by Matsa in the period since the end of the previous financial year,
and up to the date of this report. The Directors do not recommend that any amount be paid by way
of dividend.
CORPORATE STRUCTURE
Matsa is a company limited by shares, which is incorporated and domiciled in Australia.
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MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
EMPLOYEES
The Group had 25 employees of which 20 were full-time as at 30 June 2019 (2018: 20 full-time
equivalent employees).
Review of Operations
A full review of the operations of the Group during the year ended 30 June 2019 is included on pages
4 to 33.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
In the opinion of the Directors, there were no significant changes in the state of affairs of the Group
that occurred during the financial year other than as disclosed in this report or the consolidated
financial statements.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 23 July 2019 Matsa announced that it had sold an 80% interest in the Lake Rebecca gold project to
Bulletin Resources Limited for $125,000 and a 1% net smelter royalty.
On 23 September 2019, Matsa announced that that it had raised $6 million via way of a placement of
40 million ordinary fully paid shares at $0.15 each with one free attaching option for every four shares
issued with an exercise price of $0.25 each and expiring 31 March 2021.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
It is expected that the Consolidated Entity will continue its exploration, development and mining
activities in Australia and Thailand. These are described in more detail in the Review of Operations on
page 4.
ENVIRONMENTAL REGULATIONS AND PERFORMANCE
The group’s exploration activities are subject to various environmental laws and regulations under
Australian and Thai Legislation. The Group has adequate systems in place for the management of its
environmental obligations. The directors are not aware of any breaches of the legislation during the
financial year which are material in nature.
DIRECTORS’ MEETINGS
The number of meetings of directors held during the year and the number of meetings attended by
each director were as follows:
Paul Poli
Frank Sibbel
Andrew Chapman
Directors’ Meetings
Number eligible
to attend
3
3
3
Number
attended
3
3
3
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MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
DIRECTORS’ INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
As at the date of this report, the interests of the directors in the shares and options of Matsa Resources
Limited were:
Number of Ordinary
Shares
Number of $0.25
Options
Number of $0.17
Options
Paul Poli
Frank Sibbel
Andrew Chapman
11,855,000
494,852
69,000
2,750,000
1,500,000
1,500,000
2,500,000
1,250,000
1,250,000
Options granted to directors and officers of the Company
During the financial year, the Company granted 8,700,000 options over unissued ordinary shares for
no consideration in the Company to directors or officers of the Company as part of their remuneration.
SHARE OPTIONS
As at the date of this report the unissued ordinary shares of Matsa Resources Limited under option
are as follows:
Date of Expiry
Exercise Price
Number under Option
30 November 2019
30 November 2019
30 November 2019
30 November 2021
$0.25
$0.25
$0.30
$0.17
3,900,000
5,750,000
3,775,025
8,600,000
22,025,025
Option holders do not have any right, by virtue of the option, to participate in any share issue of the
Company or any related body corporate.
Shares Issued on Exercise of Options
There were no options exercised during the financial year.
- 37 -
MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT - Audited
Principles of Compensation
This remuneration report for the year ended 30 June 2019 outlines the remuneration arrangements
of the Company and the Group in accordance with the requirements of the Corporations Act 2001
(“the Act”) and its regulations. This information has been audited as required by Section 308(3C) of
the Act.
The remuneration report details the remuneration arrangements for Key Management Personnel
(“KMP”) who are defined as those persons having authority and responsibility for planning, directing
and controlling the major activities of the Group, directly or indirectly, including any director (whether
executive or otherwise) of the parent company, and includes the four executives in the parent and
the Group receiving the highest remuneration.
For the purposes of this remuneration report, the term ‘executive’ includes the Executive Directors,
Senior Executives and Secretary of the Parent and the Group.
The remuneration report is presented under the following sections:
1. Individual key management personnel disclosures
2. Board oversight of remuneration
3. Non-executive Director remuneration arrangements
4. Executive remuneration arrangements
5. Company performance and the link to remuneration
6. Executive contractual arrangements
7. Equity instruments disclosures
Individual Key Management Personnel Disclosures
Details of KMP of the Parent and Group are set out below:
Key Management Personnel
Name
Directors
P Poli
F Sibbel
A Chapman
Executives
D Fielding
Position
Date of
Appointment
Date of
Resignation
Executive Chairman
Director
23 December 2008
25 October 2010
Director and Company Secretary 17 December 2009*
Group Exploration Manager
12 April 2010
-
-
-
-
*A Chapman was appointed Company Secretary on 6 November 2007.
There were no other changes to key management personnel after reporting date and before the date
the financial report was authorised for issue.
- 38 -
MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT (continued)
Board Oversight of Remuneration
Remuneration Committee
In the opinion of the directors the Company is not of sufficient size to warrant the formation of a
remuneration committee. It is the board of directors’ responsibility for determining and reviewing
compensation arrangements for the directors and the senior executives.
The Board assesses the appropriateness of the nature and amount of remuneration of Non-Executive
Directors and Executives on a periodic basis by reference to relevant employment market conditions
with the overall objective of ensuring maximum stakeholder benefit from the retention of a high
performing Director and executive team.
Remuneration Approval Process
The Board approves the remuneration arrangements of the Executive Directors and Executives and all
awards made under the long-term incentive plan. The Board also sets the aggregate remuneration of
non-executive directors which is then subject to shareholder approval.
Remuneration Strategy
The Company’s remuneration strategy is designed to attract, motivate and retain employees and non-
executive directors by identifying and rewarding high performers and recognising the contribution of
each employee to the continued growth and success of the Group.
To this end, the Company embodies the following principles in its remuneration framework:
• retention and motivation of key executives;
• attraction of quality management to the Company; and
• performance incentives which allow executives to share the rewards of the success of the
Company.
Remuneration Structure
In accordance with best practice corporate governance, the structure of Non-Executive Director and
Senior Management remuneration is separate and distinct.
Non-Executive Director Remuneration
Objective
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability
to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to
shareholders.
Remuneration Policy
The Constitution and the ASX Listing Rules specify that the aggregate remuneration of Non-Executive
Directors shall be determined from time to time by a general meeting. An amount not exceeding the
amount determined is then divided between the Directors as agreed. The current aggregate
remuneration is $250,000 per year.
- 39 -
MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT (continued)
The amount of aggregate remuneration sought to be approved by shareholders and the manner in
which it is apportioned amongst Directors is reviewed annually. The Board considers advice from
external consultants as well as the fees paid to non-executive Directors of comparable companies
when undertaking the annual review process. No external advice was received during the year. Each
Director receives a fee for being a Director of the Company.
Non-Executive Directors are encouraged by the Board to hold shares in the Company (purchased by
the Director on market). It is considered good governance for Directors to have a stake in the
Company on whose Board he or she sits.
Structure
The remuneration of Non-Executive Directors consists of directors’ fees. Non-Executives are entitled
to receive retirement benefits and to participate in any incentive programs. There are currently no
specific incentive programs.
The Executive Chairman receives no additional directors’ fee in addition to his executive
remuneration. The other non-executive directors received a base fee of $42,000 per annum during
the financial year for being a director of the Group.
There are no additional fees for serving on any board committees. Non-executive directors can receive
additional fees for work conducted for the Company outside the scope of their normal duties subject
to being authorised by the Board.
The remuneration report for the Non-Executive Directors for the year ended 30 June 2019 and 30 June
2018 is detailed in this report.
Managing Director and Executive Remuneration Structure
Remuneration Policy
The Company aims to reward executives with a level and mix of remuneration commensurate with
their position and responsibilities within the Company. The current remuneration policy adopted is
that no element of any executive package be directly related to the Company’s financial performance.
Indeed there are no elements of any executive remuneration that are dependent upon the satisfaction
of any specific condition. Remuneration is not linked to the performance of the Company but rather
to the ability to attract and retain executives of the highest calibre. The overall remuneration policy
framework however is structured in an endeavour to advance/create shareholder wealth.
Structure
In determining the level and make-up of executive remuneration, the Board engages external
consultants as needed to provide independent advice.
Remuneration consists of the following key elements:
•
Fixed remuneration (base salary and superannuation); and
• Variable remuneration (short and long term incentives).
The proportion of fixed remuneration and variable remuneration for each executive for the period
ended 30 June 2019 and 30 June 2018 is detailed in this report.
- 40 -
MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT (continued)
Fixed Remuneration
Executive contracts of employment do not include any guaranteed base pay increase. Fixed
remuneration is reviewed annually by the Board. The process consists of a review of the Company,
business unit and individual performance, relevant comparative remuneration internally and
externally and, where appropriate, external advice independent of management.
Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms
including cash and fringe benefits such as motor vehicles. It is intended that the manner of payment
chosen will be optimal for the recipient without creating undue cost for the Company.
The fixed remuneration component for executives for the period ended 30 June 2019 and 30 June
2018 is detailed in this report.
Variable Remuneration – Short Term Incentive (STI)
The objective of the STI is to link the increase in shareholder value over the year with the remuneration
received by the Executives charged with achieving that increase. The total potential STI available is set
at a level so as to provide sufficient incentive to the Executives to achieve the performance goals and
such that the cost to the Group is reasonable in the circumstances.
Annual STI payments granted to each Executive depend on their performance over the preceding year
and are based on recommendations from the Executive Chairman following collaboration with the
Board. Typically included are measures such as contribution to strategic initiatives, risk management
and leadership/team contribution.
The aggregate of annual STI payments available for Executives across the Group is subject to the
approval of the Board. Payments are usually delivered as a cash bonus. During the year there were
no STI payments.
Variable Remuneration – Long Term Incentive (LTI)
The objective of the LTI plan is to reward Executives in a manner which aligns the element of
remuneration with the creation of shareholder wealth. As such LTI’s are made to Executives who are
able to influence the generation of shareholder wealth and thus have an impact on the Group’s
performance.
The level of LTI granted is, in turn, dependent on the Company’s recent share price performance, the
seniority of the Executive and the responsibilities the Executive assumes in the Group.
LTI grants to Executives are delivered in the form of employee share options. These options are issued
at an exercise price determined by the Board at the time of issue. The employee share options are
issued in accordance with the Company’s Share Option Plan.
Typically, the grant of LTI’s occurs at the commencement of employment or in the event that the
individual receives a promotion and, as such, is not subsequently affected by the individual’s
performance over time. However, under certain circumstances, including breach of employment
conditions, the Directors may cause the options to expire prior to their vesting date.
The Group does have a policy to prohibit executives or directors from entering into arrangements to
protect the value of unvested LTI awards.
- 41 -
MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT (continued)
Other Benefits
Key management personnel can receive additional benefits as non-cash benefits as part of the terms
and conditions of their appointment. Non-cash benefits typically include car parking and expenses
where the Company pays fringe benefits tax on these benefits.
Company Performance and the Link to Remuneration
Remuneration is not linked to the performance of the Company, but based on the ability to attract
and retain executives of the highest calibre. The overall remuneration policy framework however is
structured in an endeavour to advance/create shareholder wealth.
The Matsa Resources Limited Long Term Incentive Plan has no direct performance requirements but
has specified time restrictions on the exercise of options and performance rights. The granting of
options and performance rights is in substance a performance incentive which allows executives to
share the rewards of the success of the Company.
Service Agreements
It is the Board’s policy that service contracts are entered into with all key management personnel and
that these contracts have no termination date.
Mr Paul Poli, Executive Chairman, has a contract of employment with the Company. Mr Poli is entitled
to receive a salary of $375,000 plus statutory superannuation. This contract is for an unlimited term
and is capable of termination by Mr Poli on one month’s notice. The Group has the right to terminate
the employment contract by giving Mr Poli six months’ notice or making payment equal to six months’
pay in lieu of notice.
Mr David Fielding, Group Exploration Manager, has a contract of employment with the Company. Mr
Fielding receives a salary of $221,000 plus statutory superannuation. This contract is for an unlimited
term and is capable of termination on one month’s notice. The Group retains the right to terminate
the contract immediately, by making payment equal to one month’s pay in lieu of notice.
Mr Frank Sibbel, Non-Executive Director, has a consultancy contract with the Company. Mr Sibbel is
paid an hourly rate for the provision of consultancy services outside those provided as a director as
required. This contract is capable of termination on one month’s notice. The Group retains the right
to terminate the contract immediately, by making payment equal to one month’s pay in lieu of notice.
Mr Andrew Chapman, Director and Company Secretary, has a contract of employment with the
Company and is remunerated on an hourly basis for the provision of company secretarial services and
acting as Chief Financial Officer.
The table below shows the performance of the Group as measured by share price.
As at 30 June
Closing share price
Net comprehensive
income/(loss) per year ended
2019
$0.145
2018
$0.155
2017
$0.25
2016
$0.17
2015
$0.145
(4,947,360)
(3,886,427)
2,517,038
(2,231,886)
(7,425,418)
- 42 -
MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT (continued)
2019
Short Term Benefits
Post-
employment
Benefits
Share-
based
payments
Key Management
Person
Salary &
Fees
$
Other
$
Superannuation
$
Securities
$
Total
$
%
Performance
Related
% of
Remuneration
that consists
of securities
Directors
Paul Poli1
Frank Sibbel2
Andrew Chapman3
Total
1 Mr Poli is a director and shareholder of Strategic Siam Co Ltd which received payments totalling $56,441 during the year. Strategic Siam
608,243
187,428
379,826
1,175,497
244,876
122,438
122,438
489,752
342,336
64,990
235,066
642,392
20,531
-
22,322
42,853
40.26
65.33
32.24
-
40.26
65.33
32.24
-
500
500
-
-
provides administration services to Thai entities. Mr Poli receives an internet allowance as part of his terms of employment.
2 Mr Sibbel provided consultancy services to the Company totalling $22,990 during the year.
3 Mr Chapman provided company secretarial services to the Company totalling $193,066 during the year.
Executives
David Fielding
Total
221,000
221,000
-
-
20,531
20,531
79,634
79,634
321,165
321,165
24.80
-
24.80
-
2018
Short Term Benefits
Post-
employment
Benefits
Share-
based
payments
Key Management
Person
Salary &
Fees
$
Other
$
Superannuation
$
Securities
$
Total
$
%
Performance
Related
% of
Remuneration
that consists
of securities
Directors
Paul Poli1
Frank Sibbel2
Andrew Chapman3
Total
1 Mr Poli is a director and shareholder of Strategic Siam Co Ltd which received payments totalling $61,508 during the year. Strategic Siam
provides administration services to Thai entities. Mr Poli receives travel and internet allowances as part of his terms of employment.
362,409
71,642
241,091
675,142
341,860
71,642
221,451
634,953
20,049
-
19,640
39,689
500
-
-
500
-
-
-
-
-
-
-
-
-
-
-
-
2 Mr Sibbel provided consultancy services to the Company totalling $29,642 during the year.
3 Mr Chapman provided company secretarial services to the Company totalling $179,451 during the year.
Executives
David Fielding
Total
241,049
241,049
221,000
221,000
20,049
20,049
-
-
-
-
-
-
-
-
Compensation Options Granted and Vested during the year
The table below sets out options granted during the year to Directors and Executives. There were
5,750,000 options issued to Directors and Executives during the year. There were no options that were
granted in previous years that vested during the year. The options were issued free of charge and
entitle the holder to subscribe for one fully paid ordinary share in the Company. Due to the nature of
the Company’s activities it does not believe it is appropriate to set vesting conditions at this time.
- 43 -
MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT (Continued)
2019
Vested
Granted Grant Date
Value per
Security
at Grant
Date
Exercise
Price
First
Exercise
Date
Expiry
Date
No.
No.
Cents
Cents
2,500,000 2,500,000
P Poli
F Sibbel
1,250,000 1,250,000
A Chapman 1,250,000 1,250,000
750,000
D Fielding
750,000
23.11.18
23.11.18
23.11.18
6.12.18
9.79
9.79
9.79
10.62
17
17
17
17
23.11.18 30.11.21
23.11.18 30.11.21
23.11.18 30.11.21
6.12.18 30.11.21
For details on the valuation of the options, including models and assumptions used, please refer to
Note 26.
There were no alterations to the terms and conditions of options granted as remuneration since their
grant date.
The maximum value of the award is equal to the number of options granted multiplied by the fair
value at the grant date. The minimum value of the award in the event of forfeiture is zero.
There were no shares issued on exercise of compensation options during the year.
Value of Options granted as part of remuneration
2019
Paul Poli
Frank Sibbel
Andrew Chapman
David Fielding
Value of options
granted during the
prior year
Value of options
exercised during
the year
Value of options
lapsed during the
prior year
Remuneration
consisting of
options during the
prior year
$
$
$
%
244,876
122,438
122,438
79,634
-
-
-
-
-
-
-
-
43.77
64.13
32.24
24.80
Option holdings of key management personnel
2019
Balance 1
July
No.
Granted as
remune-
ration
No.
Exercised Net change
other*
Balance on
Resignation
Balance 30
June
Vested &
Exercisable
Not
Exercisable
No.
No.
No.
No.
No.
No.
P Poli
A Chapman
F Sibbel
D Fielding
2,750,000
1,500,000
1,500,000
500,000
6,250,000
2,500,000
1,250,000
1,250,000
750,000
5,750,000
-
-
-
-
-
-
-
-
-
-
5,250,000
2,750,000
2,750,000
1,250,000
5,250,000
-
2,750,000
-
2,750,000
-
1,250,000
-
- 12,000,000 12,000,000
-
-
-
-
-
- 44 -
MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT (Continued)
Option holdings of key management personnel (continued)
2018
Balance 1
July
No.
Granted as
remune-
ration
No.
Exercised
No.
Net
change
other*
No.
Balance on
Resignation
Balance 30
June
Vested &
Exercisable
Not
Exercisable
No.
No.
No.
No.
P Poli
A Chapman
F Sibbel
D Fielding
5,500,000
2,250,000
2,250,000
900,000
10,900,000
-
-
-
-
-
-
-
-
-
-
(2,750,000)
(750,000)
(750,000)
(400,000)
(4,650,000)
-
-
-
-
-
2,750,000
1,500,000
1,500,000
500,000
6,250,000
2,750,000
1,500,000
1,500,000
500,000
6,250,000
-
-
-
-
-
*Net change other refers to expiry of options during the year.
Shareholdings of key management personnel
2019
Balance 1 July
P Poli
A Chapman
F Sibbel
D Fielding
No.
11,825,000
44,000
294,852
715,929
12,879,781
2018
Balance 1 July
P Poli
A Chapman
F Sibbel
D Fielding
No.
10,600,000
40,000
268,048
454,176
11,362,224
Granted as
remuneration
No.
Options
exercised
No.
Net change
other*
No.
Balance on
resignation
No.
Balance
30 June
No.
-
-
-
-
-
Granted as
remuneration
No.
Options
exercised
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,000
25,000
200,000
40,000
295,000
Net change
other*
No.
Balance on
resignation
No.
1,225,000
4,000
26,808
261,753
1,517,557
-
-
-
-
-
-
-
-
-
-
11,855,000
69,000
494,852
755,929
13,174,781
Balance
30 June
No.
11,825,000
44,000
294,852
715,929
12,879,781
*Net change other refers to on market purchases and sale and any other corporate action taken by the Company during
the year.
End of Audited Remuneration Report
- 45 -
MATSA RESOURCES LIMITED
DIRECTORS’ REPORT
INDEMNIFYING OFFICERS
The Company’s Constitution provides that, subject to and so far as permitted by the Corporations Act
2001, the Company must, to the extent the person is not otherwise indemnified, indemnify every
officer of the Company out of the assets of the Company to the relevant extent against any liability
incurred by the officer in or arising out of the conduct of the business of the Company or in or arising
out of the discharge of the duties of the officer.
Since the end of the previous financial year, the Company has paid insurance premiums in respect of
Directors’ and Officers’ liability. The policy indemnifies all Directors and Officers of the Company and
its controlled entities against certain liabilities. In accordance with common commercial practice, the
insurance policy prohibits disclosure of the nature of the liability insured against and the amount of
the premium. The Directors have not included details of the nature of the premium paid in respect of
Directors’ and Officers’ liability as such disclosure is prohibited under the terms of the contract.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the company or 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 any part of those proceedings.
The Company was not a party to any such proceedings during the year.
CORPORATE GOVERNANCE
In recognising the needs for the highest standards of corporate behaviour and accountability, the
Directors of the Company support and have adhered to the principles of Corporate Governance. The
Company’s corporate governance statement is available on the Company’s website at:
http://www.matsa.com.au/company/corporate-governance/
NON-AUDIT SERVICES
The board of directors is satisfied that the provision of non-audit services during the year is compatible
with the general standard of independence for auditors imposed by the Corporations Act 2001. The
directors are satisfied that the services disclosed below did not compromise the external auditor’s
independence as the nature of the services provided did not compromise the general principles
relating to auditor independence.
The following fees for non-audit services were paid/payable to the external auditors, or by related
practices of the external auditors, during the year ended 30 June 2019:
Taxation services
$6,000
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2019 has been received and
can be found on page 47.
Signed in accordance with a resolution of the Board of Directors.
Paul Poli
Executive Chairman
Dated this 27th day of September 2019
- 46 -
Auditor’s independence declaration under Section 307C of the Corporations Act 2001
To the directors of Matsa Resources Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year
ended 30 June 2019 there have been:
(i) no contraventions of the auditor’s independence requirements as set out in the Corporations
Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
Nexia Perth Audit Services Pty Ltd
M. Janse Van Nieuwenhuizen
Director
Perth
27 September 2019
- 47 -
MATSA RESOURCES LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2019
Note
5(a)
5(c)
5(d)
12
12
5(b)
11
6
11
Revenue
Mining operations
Amortisation and depreciation
Other income
Depreciation expense
Other expenses
Loss on sale of investments
Loss on sale of tenements
Exploration and evaluation expenditure written
off/provided for
Results from operating activities
Finance income
Finance costs
Net finance income
Share of loss of equity-accounted investee, net of tax
Loss before income tax expense
Income tax expense
Net loss for the year attributable to equity holders of
the company
Other comprehensive income to be reclassified
subsequently through profit or loss
Equity-accounted investees – share of other
comprehensive income
Net change in fair value of available-for-sale financial
assets
Available-for-sale financial assets – reclassified to profit
or loss
Other comprehensive income/(loss) for the year, net of
tax
Total comprehensive loss for the year attributable to
equity holders of the company
Loss for the year is attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive loss for the year is attributable to:
Owners of the parent
Non-controlling interest
Basic loss per share attributable to ordinary equity
holders of the parent
Diluted loss per share attributable to ordinary equity
holders of the parent
21
21
2019
$
11,563,369
(8,192,646)
(695,718)
2,675,005
658,587
(318,615)
(5,874,769)
(194,649)
(59,314)
(932,168)
(4,045,923)
32,749
(446,271)
(413,522)
(487,915)
(4,947,360)
-
2018
$
10,049,231
(9,813,882)
(3,168,815)
(2,933,466)
1,627,149
(157,078)
(2,406,655)
-
-
(755,335)
(4,625,385)
38,181
(373,490)
(335,309)
(157,106)
(5,117,800)
-
(4,947,360)
(5,117,800)
-
-
-
-
12,652
1,638,141
(419,420)
1,231,373
(4,947,360)
(3,886,427)
(4,947,518)
158
(4,947,360)
(4,947,518)
158
(4,947,360)
(2.80)
(2.80)
(5,117,742)
(58)
(5,117,800)
(3,886,369)
(58)
(3,886,427)
(3.18)
(3.18)
The accompanying notes form part of these financial statements.
- 48 -
MATSA RESOURCES LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019
Note
2019
$
2018
$
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Inventories
Total current assets
Non-current assets
Other assets
Financial assets
Investments in associates
Exploration and evaluation assets
Property, plant and equipment
Mine properties and development
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity attributable to equity
holders of the Company
Non-controlling interests
Total equity
24
7
8
9
8
10
11
12
14
13
15
16
17
16
17
18
19
20
901,148
317,288
67,825
106,923
1,393,184
327,662
1,110,206
355,617
16,355,239
1,785,389
649,941
20,584,054
21,977,238
1,715,618
102,273
258,002
2,075,893
4,058,952
2,597,112
6,656,064
8,731,957
13,245,281
3,791,684
900,405
222,304
-
4,914,393
288,943
2,683,246
843,533
14,874,547
748,454
473,973
19,912,696
24,827,089
1,714,010
71,590
217,567
2,003,167
2,955,286
2,558,606
5,513,892
7,517,059
17,310,030
44,292,467
9,396,962
(40,521,595)
13,167,834
77,447
13,245,281
44,292,467
10,455,642
(37,515,368)
17,232,741
77,289
17,310,030
The accompanying notes form part of these financial statements.
- 49 -
MATSA RESOURCES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2019
Issued
Capital
Ordinary
$
Accumulated
Losses
$
Other
Reserves
$
Equity
Settled
Benefits
Reserve
$
Total
$
Non-
controlling
interest
$
Total
$
40,688,126
(32,397,626)
696,074
8,421,088 17,407,662
77,347 17,485,009
-
-
(5,117,742)
1,231,373
-
(3,886,369)
(58)
(3,886,427)
(5,117,742)
1,231,373
-
(3,886,369)
(58)
(3,886,427)
3,786,793
(182,452)
-
-
-
-
-
-
-
-
-
3,786,793
(182,452)
107,107
107,107
-
-
-
3,786,793
(182,452)
107,107
44,292,467
(37,515,368)
1,927,447
8,528,195 17,232,741
77,289 17,310,030
44,292,467
(37,515,368)
1,927,447
8,528,195 17,232,741
77,289 17,310,030
-
-
-
1,941,291
(1,941,291)
-
-
-
-
(4,947,518)
-
-
(4,947,518)
158
(4,947,360)
(3,006,227)
(1,941,291)
-
(4,947,518)
158
(4,947,360)
-
-
-
882,611
882,611
-
882,611
44,292,467
(40,521,595)
(13,844) 9,410,806 13,167,834
77,447 13,245,281
The accompanying notes form part of these financial statements.
Balance at 1 July
2017
Comprehensive
gain/(loss) for the
year
Total comprehensive
gain/(loss) for the
year
Transactions with
owners recorded
directly in equity
Issue of shares
Share based
payment
Balance at 30 June
2018
Balance at 1 July
2018
Adjustments on the
initial application of
AASB 9
Comprehensive
gain/(loss) for the
year
Total comprehensive
gain/(loss) for the
year
Transactions with
owners recorded
directly in equity
Share based
payment
Balance at 30 June
2019
- 50 -
MATSA RESOURCES LIMITED
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2019
Note
2019
$
2018
$
Cash flows from operating activities
Receipts from customers
Other income
Payments to suppliers and employees
Interest received
Net cash provided by/(used in) operating activities
24
12,221,038
442,679
(11,388,710)
37,560
1,312,567
9,391,562
367,266
(11,814,450)
33,370
(2,022,252)
Cash flows from investing activities
Payments for financial assets
Proceeds from sale of financial assets
Purchase of plant and equipment
Exploration and evaluation expenditure
(capitalised)
Proceeds on sale of plant and equipment
Proceeds on sale of tenements
Payments for mine properties
(Payments for)/refund of security deposits
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Costs of issue
Repayment of lease liabilities
Proceeds from borrowings
Interest paid
Net cash provided by financing activities
(225,000)
838,968
(1,382,217)
(3,514,253)
80,000
150,000
(739,690)
149,630
(4,642,562)
-
-
(110,817)
1,000,000
(449,724)
439,459
(257,903)
2,166,104
(141,750)
(3,211,242)
-
-
(518,903)
333,517
(1,630,177)
2,923,143
(182,452)
(61,512)
3,000,000
(302,084)
5,377,095
Net increase/(decrease) in cash and cash equivalent
Cash and cash equivalents at beginning of financial
year
Cash and cash equivalents at end of financial year
24
(2,890,536)
1,724,666
3,791,684
901,148
2,067,018
3,791,684
The accompanying notes form part of these financial statements.
- 51 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
1.
CORPORATE INFORMATION
The consolidated financial statements of Matsa Resources Limited for the year ended 30 June 2019
were authorised for issue in accordance with a resolution of the Board of Directors on 27 September
2019.
Matsa Resources Limited (the “Company”) is a for profit company limited by shares incorporated and
domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange.
The nature of the operations and principal activities of the Group are described in the Directors’
Report.
The consolidated financial statements of the Company as at and for the year ended 30 June 2019
comprise the Company, its subsidiaries (together referred to as the “Group” or “Consolidated Entity”)
and the Group’s interest in associates.
2.
SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of Preparation
The financial report is a general purpose financial report which has been prepared in accordance with
the requirements of the Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board.
The consolidated financial statements have been prepared on the historical cost basis except for the
available-for-sale financial assets which have been measured at fair value.
The financial report is presented in Australian dollars.
(b)
Compliance with IFRS
The financial report complies with Australian Accounting Standards as issued by the Australian
Accounting Standards Board and also International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board.
(c)
Changes in Accounting Policies and Disclosures
Adoption of new accounting standards
In the current year, the Consolidated Entity has adopted all of the new and revised Standards and
Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to
its operations and effective for annual reporting periods beginning on 1 July 2018. The adoption of
these new and revised Standards and Interpretations did not have any effect on the financial position
or performance of the Consolidated Entity.
New and amended accounting standards adopted by the Group
The following standards relevant to the operations of the Group and effective from 1 July 2018 have
been adopted.
• AASB 9: Financial Instruments; and
• AASB 15: Revenue from Contracts with Customers.
- 52 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
(c)
SIGNIFICANT ACCOUNTING POLICIES (continued)
Changes in Accounting Policies and Disclosures (continued)
Impact of adoption of AASB 9: Financial Instruments (“AASB 9”)
AASB 9 replaces the provisions of AASB 139: Financial Instruments: Measurement and Recognition,
that relate to the recognition, classification and measurement of financial assets and financial
liabilities, derecognition of financial instruments, impairment of financial assets and hedge
accounting.
The adoption of AASB 9 resulted in minimal changes in accounting policies. The new accounting
policies are set out in Note 7 and 10. There was no significant impact on the financial performance to
position of the Group on the date of initial application, 1 July 2018, or at reporting date, 30 June 2019.
Details are below.
Classification and measurement of financial assets
On the date of initial application, 1 July 2018, the financial instruments of the Group were as follows,
with any reclassifications noted.
Measurement category
Carrying amount
Original (AASB 139)
New (AASB 9)
Original
New
Difference
$
$
Current and non-current financial assets
Other
receivables
Amortised cost
Amortised cost
4,811
4,811
Listed equities
Available-for-sale
Fair value through
profit or loss
(“FVPL”)
2,683,246 2,683,246
$
-
-
Related fair value gains of $1,941,291 were transferred from the available-for-sale financial assets
reserve (recognised within other reserves) to retained earnings on 1 July 2018.
The Group elected to present in profit and loss changes in the fair value of all its listed equities
previously classified as available-for-sale. As a result, listed equities with a fair value of $2,683,246
were reclassified from available-for-sale recognised under current available-for-sale financial assets
to financial assets at FVPL on 1 July 2018.
Impairment of other receivables
Prior to the adoption of AASB 9, in accordance with AASB 139 Financial Instruments: Measurement
and Recognition, the Group applied an incurred credit loss model. Upon adoption of AASB 9, the Group
has elected to apply the simplified approach to measuring expected credit losses, which uses the
lifetime expected loss allowance for all Other receivables.
Due to the nature of the Group’s Other receivables, there was no impact of the expected loss
allowance under AASB 9 against the loss incurred under AASB 139 to the Group.
Impact of adoption of AASB 15: Revenue from Contracts with Customers (“AASB 15”)
AASB 15 replaces AAB 118 Revenue. AASB 15 provides a single, principles based five step model to be
applied to all contracts with customers.
- 53 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
(c)
Changes in Accounting Policies and Disclosures (continued)
The adoption of AASB 15 resulted in minimal changes in accounting policies. The new accounting
policies are set out in Notes 2(i) and 2(n). There was no impact on the financial performance to
position of the Group on the date of initial application, 1 July 2018, or at reporting date, 30 June 2019.
(d) New and amended standards and interpretations issued but not yet effective
The following standards and interpretations have been issued by the AASB, but are not yet effective
and have not been adopted by the Group for the period ended 30 June 2019.
Reference
Title
AASB 16
Leases
Application Date
of Standard *
1 January 2019
Summary
AASB 16 requires lessees to account for all leases under a
single on- balance sheet model in a similar way to finance
leases under AASB 117 Leases. The standard includes two
recognition exemptions for lessees – leases of ’low-value’
assets (e.g., personal computers) and short-term leases (i.e.,
leases with a lease term of 12 months or less). At the
commencement date of a lease, a lessee will recognise a
liability to make lease payments (i.e., the lease liability) and an
asset representing the right to use the underlying asset during
the lease term (i.e., the right-of-use asset).
Lessees will be required to separately recognise the interest
expense on the lease liability and the depreciation expense on
the right-of-use asset.
Lessees will be required to remeasure the lease liability upon
the occurrence of certain events (e.g., a change in the lease
term, a change in future lease payments resulting from a
change
index or rate used to determine those
payments). The lessee will generally recognise the amount of
the remeasurement of the lease liability as an adjustment to
the right-of-use asset.
in an
AASB 16 requires lessees to account for all leases under a
Lessor accounting is substantially unchanged from today’s
accounting under AASB 117.
Lessors will continue to classify all leases using the same
classification principle as in AASB 117 and distinguish between
two types of leases: operating and finance leases.
- 54 -
Likely Impact on
Initial Application
AASB 16 Leases
eliminates
the
distinction
between
and
operating
leases,
finance
and
all
brings
leases (other than
short term leases)
onto the balance
sheet.
The
standard does not
apply mandatorily
before 1 July 2019.
The Group plans
to
the
adopt
modified
retrospective
approach
on
transition, where
the lease liability is
measured as the
present value of
future
lease
payments on the
of
initial
application being
1 July 2019.
Based
on
entity’s
preliminary
assessment,
the
Group estimates
that
will
it
recognise right-of-
use assets within a
range of $115,000
to $125,000 and
lease
liabilities
within a range of
$110,000
to
$120,000.
date
the
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reference
Title
Summary
Application Date
of Standard *
Likely Impact on
Initial Application
The
cumulative
effect of adopting
AASB 16 will be
recognised as an
adjustment to the
opening balance
retained
of
earnings from 1
July 2019.
There will be no
material impact.
AASB 16
Leases
1 January 2019
IAS 19
Amendments to
Australian
Accounting
Standards –
Plan
Amendment,
Curtailment or
Settlement
1 January 2019
This Standards amends AASB 119 Employee Benefits – address
the accounting when a plan amendment, curtailment or
settlement occurs during a reporting period.
Determining the current service cost and net interest
When accounting for defined benefit plans under IAS 19, the
standard generally requires entities to measure the current
service cost using actuarial assumptions determined at the
start of the annual reporting period. Similarly, the net interest
is generally calculated by multiplying the net defined benefit
liability (asset) by the discount rate, both as determined at the
start of the annual reporting period. The amendments specify
that when a plan amendment, curtailment or settlement
occurs during the annual reporting period, an entity is
required to:
• Determine current service cost for the remainder of the
period after the plan amendment, curtailment or settlement,
using the actuarial assumptions used to remeasure the net
defined benefit liability (asset) reflecting the benefits offered
under the plan and the plan assets after that event
• Determine net interest for the remainder of the period after
the plan amendment, curtailment or settlement using: the net
defined benefit liability (asset) reflecting the benefits offered
under the plan and the plan assets after that event; and the
discount rate used to remeasure that net defined benefit
liability (asset)
Effect on asset ceiling requirements
A plan amendment, curtailment or settlement may reduce or
eliminate a surplus in a defined benefit plan, which may cause
the effect of the asset ceiling to change.
The amendments clarify that an entity first determines any
past service cost, or a gain or loss on settlement, without
considering the effect of the asset ceiling. This amount is
recognised in profit or loss. An entity then determines the
effect of the asset ceiling after the plan amendment,
curtailment or settlement. Any change
in that effect,
excluding amounts included in the net interest, is recognised
in other comprehensive income.
This clarification provides that entities might have to
recognise a past service cost, or a gain or loss on settlement,
that reduces a surplus that was not recognised before.
Changes in the effect of the asset ceiling are not netted with
such amounts.
- 55 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
Application Date
of Standard *
Likely Impact on
Initial Application
1 January 2019
is
The Company
assessing
still
whether there will
be any material
impact.
1 January 2020
is
The Company
still
assessing
whether there will
be any material
impact
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reference
Title
Summary
Uncertainty
over Income
Tax Treatments
AASB
Interpretation
23, and
relevant
amending
standards
AASB 2018-7
Definition of
Material
The Interpretation clarifies the application of the recognition
and measurement criteria in AASB 112 Income Taxes when
there
income tax treatments. The
Interpretation specifically addresses the following:
• Whether an entity considers uncertain tax treatments
is uncertainty over
separately
• The assumptions an entity makes about the examination of
tax treatments by taxation authorities
• How an entity determines taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax rates
• How an entity considers changes in facts and circumstances.
In October 2018, the IASB issued amendments to AASB 101
Presentation of Financial Statements and AASB 108 to align
the definition of ‘material’ across the standards and to clarify
certain aspects of the definition. The new definition states
that, ’Information is material if omitting, misstating or
obscuring it could reasonably be expected to influence
decisions that the primary users of general purpose financial
statements make on the basis of those financial statements,
which provide financial information about a specific reporting
entity.’
The amendments clarify that materiality will depend on the
nature or magnitude of information, or both. An entity will
need to assess whether the information, either individually or
in combination with other information, is material in the
context of the financial statements.
Obscuring information
The amendments explain that information is obscured if it is
communicated in a way that would have a similar effect as
omitting or misstating the information. Material information
may, for instance, be obscured if information regarding a
material
is scattered
throughout the financial statements, or disclosed using a
language that is vague or unclear. Material information can
also be obscured if dissimilar items, transactions or other
events are inappropriately aggregated, or conversely, if similar
items are inappropriately disaggregated.
item, transaction or other event
New threshold
The amendments replaced the threshold ‘could influence’,
which suggests that any potential influence of users must be
considered, with ‘could reasonably be expected to influence’
in the definition of ‘material’. In the amended definition,
therefore, it is clarified that the materiality assessment will
need to take into account only reasonably expected influence
on economic decisions of primary users.
Primary users of the financial statements
The current definition refers to ‘users’ but does not specify
their characteristics, which can be interpreted to imply that an
entity is required to consider all possible users of the financial
statements when deciding what information to disclose.
Consequently, the IASB decided to refer to primary users in
the new definition to help respond to concerns that the term
‘users’ may be interpreted too widely.
- 56 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
(e)
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the parent entity and its
subsidiaries (‘the Group’) as at 30 June each year.
Control is achieved where the company has exposure to variable returns from the entity and the
power to affect those returns. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether a consolidated entity controls
another entity.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies. In preparing consolidated financial statements, all
intercompany balances and transactions, income and expenses and profit and losses resulting from
intra-group transactions, have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Consolidated
Entity and cease to be consolidated from the date on which control is transferred out of the
Consolidated Entity.
Where there is loss of control of a controlled entity, the consolidated financial statements include the
results for the part of the reporting period during which the Company has control.
Changes in ownership interest of a subsidiary (without a change in control) are accounted for as a
transaction with owners in their capacity as owners.
Segment Reporting
(f)
Determination and presentation of operating segments
An operating segment is a component of the Group that engages in business activities from which it
may earn revenues and incur expenses, including revenues and expenses that relate to transactions
with any of the Group’s other components. All operating segments’ operating results are regularly
reviewed by the Group’s chief operating decision maker to make decisions about resources to be
allocated to the segment and assess its performance, and for which discrete financial information is
available.
Segment results that are reported to 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.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and
equipment, and intangible assets other than goodwill.
Business combinations
(g)
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, measured at acquisition date fair value
and the amount of any non-controlling interest in the acquiree. For each business combination, the
Group elects whether it measures the non-controlling interest in the acquiree either at fair value or
at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are
expensed and included in administrative expenses.
- 57 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Business combinations (continued)
(g)
When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date
through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed
to be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or as
a change to other comprehensive income. If the contingent consideration is classified as equity, it will
not be remeasured. Subsequent settlement is accounted for within equity. In instances where the
contingent consideration does not fall within the scope of AASB 139, it is measured in accordance with
the appropriate IFRS.
(h)
Foreign currency transactions and balances
(i) Functional and presentation currency
The functional currency of each entity within the Consolidated Entity is 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.
(ii) Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency at the exchange
rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the rate of exchange ruling at the reporting date.
Non monetary items are measured in terms of historical cost in a foreign currency are translated using
the exchange rate as at the date of the initial transaction. All exchange differences in the consolidated
financial report are recorded in profit and loss.
(iii) Transactions of subsidiary Companies’ functional currency to presentation currency
The results of the subsidiaries are translated into Australian Dollars (presentation currency). Income
and expenses are translated at the exchange rates at the date of the transactions. Assets and liabilities
are translated at the closing exchange rate for each balance date. Share capital, reserves and
accumulated losses are converted at applicable historical rates.
Exchange variations resulting from the translation are recognised in the foreign currency translation
reserve in equity. On consolidation, exchange differences arising from the translation of the net
investment in subsidiaries are taken to the foreign currency translation reserve. If a subsidiary were
sold, the proportionate share of exchange differences would be transferred out of equity and
recognised in the statement of comprehensive income.
- 58 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
(i)
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments
Non derivative financial instruments
Non derivative financial instruments comprise investments in equity securities, other receivables, cash
and cash equivalents and trade and other payables.
Trade and other 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.
Trade and other receivables are recognised at amortised cost using the effective interest rate method,
less any allowance for expected credit losses.
The Group assesses at each balance date whether there is objective evidence that a financial asset or
group of financial assets is impaired. For trade and other receivables, the Group applies the simplified
approach permitted by AASB 9 to determine any allowances for expected credit losses, which requires
expected lifetime losses to be recognised from initial recognition of the receivables. The expected
credit losses on these financial assets are estimated using a provision matrix based on the Group’s
historical credit loss experience. The amounts held in trade and other receivables do not contain
impaired assets and are not past due. Based on the credit history of these trade and other receivables,
it is expected that the amounts will be received when due.
The Group’s financial risk management objectives and policies are set out in Note 26.
Due to the short-term nature of these receivables their carrying value is assumed to approximate their
fair value.
Financial assets are recognised and derecognised on settlement date where the purchase or sale of
an investment is under a contract whose terms require delivery of the investment within the time-
frame established by the market concerned. They are initially measured at fair value, net of
transaction costs, except for those financial assets classified as fair value through profit or loss, which
are initially measured at fair value. Transaction costs of financial assets carried at fair value through
profit or loss are expensed in profit or loss.
The Group classifies its financial assets as either financial assets at fair value though profit or loss
(“FVPL”), fair value though other comprehensive income (“FVOCI”) or at amortised cost. The
classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
For investments in equity instruments, the classification depends on whether the Group has made an
irrevocable election at the time of initial recognition to account for the equity investment at FVPL or
FVOCI.
Financial assets at FVPL
For assets measured at FVPL, gains and losses will be recorded in profit or loss. The Group’s derivative
financial instruments are recognised at FVPL. Assets in this category are subsequently measured at
fair value. The fair values of financial assets in this category are determined by reference to active
market transactions or using a valuation technique where no active market exists. Refer to Note 26
for additional details. The Group has elected to measure its listed equities at FVPL.
- 59 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
(i)
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (continued)
Financial assets at OCI
For assets measured at FVOCI, gains and losses will be recorded in other comprehensive income. There
is no subsequent reclassification of fair value gains and losses to profit or loss following the
derecognition of the investment. Dividends from such investments continue to be recognised in profit
or loss as other income when the Group’s right to receive payments is established. Impairment losses
(and reversal of impairment losses) on equity investments measured at FVOCI are not reported
separately from other changes in fair value.
Assets in this category are subsequently measured at fair value. The fair values of quoted investments
are based on current bid prices in an active market.
Other
Other non-derivative financial instruments are measured at amortised cost using the effective interest
method.
Available-for-sale financial assets (policy prior to 1 July 2018 and adoption of AASB 9)
All available-for-sale investments are initially recognised at fair value plus directly attributable
transaction costs.
Available-for-sale investments are those non-derivative financial assets, principally equity securities
that are designated as available-for-sale. Investments are designated as available-for-sale if they do
not have fixed maturities and fixed and determinable payments and management intends to hold
them for the medium to long term.
After initial recognition, available-for-sale investments are measured at fair value. Gains or losses are
recognised as a separate component of equity until the investment is sold, collected or otherwise
disposed of, or until the investment is determined to be impaired, at which time the cumulative gain
or loss previously reported in equity is included in the statement of comprehensive income.
The fair value of investments that are actively traded in organised markets is determined by reference
to quoted market bid prices at the close of business on the reporting date.
For investments with no active market, fair value is determined using valuation techniques. Such
valuation techniques include using recent arm’s length transactions; reference to the current market
value of another instrument that is substantially the same; discounted cash flow analysis and option
pricing models. Where fair value cannot be reliably measured for certain unquoted investments, these
investments are measured at cost.
Investments in associates
(j)
The Consolidated Entity's investment in its associates is accounted for using the equity method of
accounting in the consolidated financial statements. The associates are entities over which the
Consolidated Entity has significant influence and that are neither subsidiaries nor joint ventures.
The Consolidated Entity generally deems it has significant influence if it has over 20% of the voting
rights.
Under the equity method, investments in the associates are carried in the consolidated statement of
financial position at cost plus post-acquisition changes in the Consolidated Entity's share of net assets
of the associates.
- 60 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments in associates (continued)
(j)
Goodwill relating to an associate is included in the carrying amount of the investment and is not
amortised. After application of the equity method, the Consolidated Entity determines whether it is
necessary to recognise any impairment loss with respect to the Consolidated Entity's net investment
in associates. Goodwill included in the carrying amount of the investment in associate is not tested
separately, rather the entire carrying amount of the investment is tested for impairment as a single
asset. If an impairment is recognised, the amount is not allocated to the goodwill of the associate. The
Consolidated Entity's share of its associates' post-acquisition profits or losses is recognised in the
profit and loss, and its share of post-acquisition movements in reserves is recognised in reserves. The
cumulative post-acquisition movements are adjusted against the carrying amount of the investment.
Dividends receivable from associates reduce the carrying amount of the investment.
When the Consolidated Entity's share of losses in an associate equals or exceeds its interest in the
associate, including any unsecured long-term receivables and loans, the Consolidated Entity does not
recognise further losses, unless it has incurred obligations or made payments on behalf of the
associate.
The financial statements of the associate are prepared for the same reporting period as the
Consolidated Entity. When necessary, adjustments are made to bring the accounting policies in line
with those of the Consolidated Entity.
Leases
(k)
Leases are classified at their inception as either operating or finance leases based on the economic
substance of the agreement so as to reflect the risks and benefits incidental to ownership.
Operating Leases
The minimum lease payments of operating leases, where the lessor effectively retains substantially all
of the risks and benefits of ownership of the leased item, are recognised as an expense on a straight
line basis.
Finance Leases
Leases which effectively transfer substantially all the risks and benefits incidental to ownership of the
leased item to the Consolidated Entity are capitalised at the inception of the lease at the fair value of
the leased property or, if lower, at the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and reduction of the lease liability so
as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
charged directly to the statement of comprehensive income.
Impairment of non-financial assets
(l)
The Group assesses, at each reporting date, whether there is any objective evidence that a financial
asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed
to be impaired if, and only if, there is objective evidence of impairment as a result of one or more
events that has occurred after the initial recognition of the asset (an incurred ”loss event”) and that
loss event has an impact on the estimated future cash flows of the financial asset or the group of
financial assets that can be reliably estimated. Evidence of impairment may include indications that
the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency
in interest or principal payments, the probability that they will enter bankruptcy or other financial
reorganisation and when observable data indicate that there is a measurable decrease in the
estimated future cash flows, such as changes in arrears or economic conditions that correlate with
defaults.
- 61 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
(m) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand
and short-term deposits that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within
interest bearing loans and borrowings in the current liabilities on the statement of financial position.
Trade and other receivables
(n)
Trade and other receivables, which generally have 30-60 day terms, are recognised initially at fair
value and subsequently measured at amortised cost using the effective interest rate method, less an
allowance for impairment.
Collectability of trade and other receivables is reviewed on an ongoing basis. Individual debts that are
known to be uncollectible are written off when identified. An impairment allowance is recognised
when there is objective evidence that the Consolidated Entity will not be able to collect the receivable.
Financial difficulties of the debtor, default payments or debts more than 60 days overdue are
considered objective evidence of impairment. The amount of the impairment loss is the receivable
carrying amount compared to the present value of estimated future cash flows, discounted at the
original effective interest rate.
Inventories
(o)
Inventories are valued at the lower of cost and net realisable value. Cost includes expenditure incurred
in acquiring and bringing the inventories to their existing condition and location and is determined
using the weighted average cost method.
Interests in Joint Ventures
(p)
The Group’s share of the assets, liabilities, revenue and expenses of joint venture operations are
included in the appropriate items of the consolidated financial statements.
(q)
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment.
Capital work-in-progress is stated at cost and comprises all costs directly attributable to bringing the
assets under construction ready to their intended use. Capital work-in-progress is transferred to
property, plant and equipment at cost on completion.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset which
ranges between 3 and 5 years except for buildings which are depreciated over 20 years.
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the item) is included in the statement of comprehensive
income in the period the item is derecognised.
- 62 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
(r)
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Exploration, evaluation and development expenditure
Expenditure on acquisition, exploration and evaluation relating to an area of interest is capitalised and
carried forward at cost where rights to tenure of the area of interest are current and:
i) it is expected that expenditure will be recouped through successful development and
exploitation of the area of interest or alternatively by its sale; or
ii) exploration and evaluation activities are continuing in an area of interest, but at balance date
have not yet reached a stage which permits a reasonable assessment of the existence or
otherwise of economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing
to carry forward costs in relation to that area of interest. Where uncertainty exists as to the future
viability of certain areas, the value of the area of interest is written off to the statement of
comprehensive income or provided against.
Impairment
The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment
at the cash generating unit level whenever facts and circumstances suggest that the carrying amount
of the asset may exceed its recoverable amount.
An impairment exists when the carrying amount of an asset or cash generating unit exceeds its
recoverable amount. The asset or cash generating unit is then written down to its recoverable amount.
Any impairment losses are recognised in the statement of comprehensive income.
(s) Mine properties and development
Expenditure on the acquisition and development of mine properties within an area of interest are
carried forward at cost separately for each area of interest. Accumulated expenditure is amortised
over the life of the area of interest to which such costs relate on a production output basis.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing
to carry forward costs in relation to that area of interest.
Impairment
The carrying value of capitalised mine properties and development expenditure is assessed for
impairment whenever facts and circumstances suggest that the carrying amount of the asset may
exceed its recoverable amount.
Recoverable amount is determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of assets. When the carrying
amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount.
(t)
Trade and other payables
Trade and other payables are carried at amortised cost. They represent liabilities for goods and
services provided to the Group prior to the end of the financial year that are unpaid and arise when
the Group becomes obligated to make future payments in respect of the purchase of these goods and
services. The amounts are unsecured and are usually paid within 30 days of recognition.
- 63 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
(u)
Rehabilitation costs
The Consolidated Entity is required to decommission and rehabilitate mines and processing sites at
the end of their producing lives to a condition acceptable to the relevant authorities.
The expected cost of any approved decommissioning or rehabilitation programme, discounted to its
net present value, is provided when the related environmental disturbance occurs. The cost is
capitalised when it gives rise to future benefits, whether the rehabilitation activity is expected to occur
over the life of the operation or at the time of closure. The capitalised cost is amortised over the life
of the operation and the increase in the net present value of the provision for the expected cost is
included in financing expenses. Expected decommissioning and rehabilitation costs are based on the
discounted value of the estimated future cost of detailed plans prepared for each site. Where there is
a change in the expected decommissioning and restoration costs, the value of the provision and any
related asset are adjusted and the effect is recognised in profit or loss on a prospective basis over the
remaining life of the operation.
The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes
in legislation, technology or other circumstances. Cost estimates are not reduced by potential
proceeds from the sale of assets or from plant clean up at closure.
(v)
Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received, less
directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest method. Fees paid on the establishment of loan facilities
that are yield related are included as part of the carrying amount of the loans and borrowings.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer
settlement of the liability for at least 12 months after the balance date.
(w) Borrowing costs
Borrowing costs are recognised as an expense when incurred unless they relate to qualifying assets in
which case they are capitalised.
(x)
Employee benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by
employees to balance date. Employee benefits expected to be settled within one year have been
measured at the amounts expected to be paid when the liability is settled, plus related on-costs.
Employee benefits payable later than one year have been measured at the present value of the
estimated future cash outflows to be made for those benefits.
(y)
Provisions
Provisions are recognised when the Consolidated Entity has a present obligation (legal or constructive)
as a result of a past event, it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation.
- 64 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
(y)
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Provisions (continued)
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the reporting date. The discount rate used to determine
the present value reflects current market assessments of the time value of money and the risks
specific to the liability. The increase in the provision resulting from the passage of time is recognised
in finance costs.
(z)
Share-based payment transactions
The Consolidated Entity provides benefits to employees (including Directors) in the form of share-
based payment transactions, whereby employees render services in exchange for shares or rights over
shares (equity-settled transactions).
The Consolidated Entity has one plan in place that provides these benefits. It is the Employee Share
Option Plan (“ESOP”) which provides benefits to all employees including Directors. The scheme has
no direct performance requirements. The terms of the share options are as determined by the Board.
Where a participant ceases employment prior to the vesting of their share options, the share options
are forfeited. Where a participant ceases employment after the vesting of their share options, the
share options automatically lapse after one month of ceasing employment unless the Board decides
otherwise at its discretion.
The cost of these equity-settled transactions with employees is measured by reference to the fair
value at the date at which they are granted. The fair value is determined by using a Black & Scholes
model. Further details of which are given in Note 27.
In valuing equity-settled transactions, no account is taken of any vesting conditions, other than
conditions linked to the price of the shares of the Company (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance and/or service conditions are fulfilled (the vesting period),
ending on the date on which the relevant employees become fully entitled to the award (the vesting
date).
At each subsequent reporting date until vesting, the cumulative charge to the statement of
comprehensive income is the product of (i) the grant date fair value of the award; (ii) the current best
estimate of the number of awards that will vest, taking into account such factors as the likelihood of
employee turnover during the vesting period and the likelihood of non-market performance
conditions being met; and (iii) the expired portion of the vesting period. The charge to the statement
of comprehensive income for the period is the cumulative amount as calculated above less the
amounts already charged in previous periods. There is a corresponding credit to equity.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer
awards vest than were originally anticipated to do so. Any award subject to a market condition is
considered to vest irrespective of whether or not the market condition is fulfilled, provided that all
other conditions are satisfied.
If a non-vesting condition is within the control of the Consolidated Entity, Company or the employee,
the failure to satisfy the condition is treated as a cancellation. If a non-vesting condition within the
control of neither the Consolidated Entity, Company nor employee is not satisfied during the vesting
period, any expense for the award not previously recognised is recognised over the remaining vesting
period, unless the award is forfeited.
- 65 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
(z)
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Share-based payment transactions (continued)
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the
terms had not been modified. An additional expense is recognised for any modification that increases
the total fair value of the share-based payment arrangement, or is otherwise beneficial to the
employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated
as if it had vested on the date of cancellation, and any expense not yet recognised for the award is
recognised immediately. However, if a new award is substituted for the cancelled award, and
designated as a replacement award on the date that it is granted, the cancelled and new award are
treated as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of earnings per share.
(aa) Revenue
Revenue is recognised when or as the Group transfers control of goods or services to a customer at
the amount to which the Group expected to be entitled. If the consideration promised includes a
variable amount, the Group estimates the amount of consideration to which it will be entitled. The
following specific recognition criteria must be met before revenue is recognised:
Sale of goods
The Group recognises revenue when it satisfies a performance obligation by transferring a promised
good or service to a customer which occurs when control of goods or services have been transferred
to the buyer and the associated costs can be estimated reliably, there is no continuing management
involvement with the goods, and the amount of revenue can be measured reliably. Revenue from ore
sales is brought to account when the control of goods or services is transferred have transferred to
the buyer and selling prices are known or can be reasonably estimated.
Sale of goods (policy prior to 1 July 2018 and adoption of AASB 15)
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed
to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured
reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery
of the goods to the customer.
R&D Refund
Revenue is recognised on receipt of refunds from the Australian Taxation Office for research and
development expenditure incurred during the previous financial year.
Dividend Income
Revenue is recognised on receipt of dividends from listed investments.
Finance income
Income is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net carrying amount of the financial
asset.
- 66 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
(ab)
Income tax
Deferred income tax is provided on all temporary differences at the reporting date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
• when the deferred income tax liability arises from the initial recognition of an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; and
• when the taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, except where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary differences will not reverse
in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry-forward of unused tax
assets and unused tax losses can be utilised:
• when the deferred income tax asset relating to the deductible temporary difference arises from
the initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
and
• when the deductible temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, deferred tax assets are only recognised to the extent
that it is probable that the temporary differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred income tax asset to be utilised.
Unrecognised income taxes are reassessed at each reporting date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be
recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the
statement of comprehensive income.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to
the same taxable entity and the same taxation authority.
- 67 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
(ac) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
The amount of benefits brought to account or which may be realised in the future is based on the
assumption that no adverse change will occur in income taxation legislation and the anticipation that
the economic entity will derive sufficient future assessable income to enable the benefit to be realised
and comply with the conditions of deductibility imposed by the law.
(ad) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the
taxation authority, in which case the GST is recognised as part of the cost of acquisition of the
asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of
cash flows arising from investing and financing activities, which is recoverable from, or payable to, the
taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of amounts of GST recoverable from, or payable
to, the taxation authority.
(ae) Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to
exclude any costs of servicing equity (other than dividends) and preference share dividends, divided
by the weighted average number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted
for:
•
•
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary
shares that have been recognised as expenses; and
• other non-discretionary changes in revenue or expenses during the period that would result
from the dilution of potential ordinary shares.
Divided by the weighted average number of ordinary shares and dilutive potential ordinary shares,
adjusted for any bonus element.
(af)
Financial Position
The financial report has been prepared on the going concern basis, which contemplates continuity of
normal business activities and the realisation of assets and settlements of liabilities in the ordinary
course of business.
The Group has reported a loss for the year of $4,947,360 (2018: $5,117,800), a cash inflow from
operating activities of $1,312,567 (2018: outflow $2,022,252) and a working capital deficit of $682,709
(2018: $2,911,226 positive working capital).
- 68 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
(af)
Financial Position
At year end, the Group had $901,148 in cash and term deposit balances, $1,830,206 of investments
in listed securities and $1,000,000 of unused loan facilities.
Management has prepared a cash flow forecast and have the ability to manage at their discretionary
the forecast expenditure to be in line with the Group’s actual cash flow.
Based on the above facts, the Directors consider the going basis of preparation to be appropriate.
3.
SIGNIFICANT 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 and estimates on historical
experience and on other various factors it believes to be reasonable under the circumstances, the
result of which form the basis of the carrying values of assets and liabilities that are not readily
apparent from other sources.
Management has identified the following critical accounting policies for which significant judgements,
estimates and assumptions are made. Actual results may differ from these estimates under different
assumptions and conditions and may materially affect financial results or the financial position
reported in future periods.
Further details of the nature of these assumptions and conditions may be found in the relevant notes
to the financial statements.
Significant accounting estimates and assumptions
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 a Black & Scholes model, using the assumptions as discussed in Note 27. The
accounting estimates and assumptions relating to equity-settled share-based payments would have
no impact on the carrying amounts of assets and liabilities in the next annual reporting period but may
impact expenses and equity.
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a
number of factors, including whether the Consolidated Entity decides to exploit the related lease itself
or, if not, whether it successfully recovers the related exploration and evaluation asset through sale.
Factors that could impact the future recoverability include the level of reserves and resources, future
technological changes, which could impact the cost of mining, future legal changes (including changes
to environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be
recoverable in the future, profits and net assets will be reduced in the period in which this
determination is made.
- 69 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
3.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (Continued)
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have
not yet reached a stage that permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves. To the extent it is determined in the future that this capitalised
expenditure should be written off, profits and net assets will be reduced in the period in which this
determination is made.
Impairment of financial assets
In determining the amount of impairment of financial assets, the Consolidated Entity has made
judgements in identifying financial assets whose decline in fair value below cost is considered
“significant” or “prolonged”. A significant decline is assessed based on the historical volatility of the
share price.
The higher the historical volatility, the greater the decline in fair value required before it is likely to be
regarded as significant. A prolonged decline is based on the length of time over which the share price
has been depressed below cost. A sudden decline followed by immediate recovery is less likely to be
considered prolonged compared to a sustained fall of the same magnitude over a longer period.
The Consolidated Entity considers a less than a 10% decline in fair value is unlikely to be considered
significant for investments actively traded in a liquid market, whereas a decline in fair value of greater
than 20% will often be considered significant. For less liquid investments that have historically been
volatile (standard deviation greater than 25%), a decline of greater than 30% is usually considered
significant.
Generally, the Consolidated Entity does not consider a decline over a period of less than three months
to be prolonged. However, where the decline in fair value is greater than six months for liquid
investments and 12 months for illiquid investments, it is usually considered prolonged.
Impairment of property, plant and equipment
Property, plant and equipment is reviewed for impairment if there is any indication that the carrying
amount may not be recoverable. Where a review for impairment is conducted, the recoverable amount
is assessed by reference to the higher of “value in use” (being net present value of expected future cash
flows of the relevant cash generating unit) and “fair value less costs to sell.”
In determining the value in use, future cash flows are based on:
• estimates of the quantities of ore reserves and mineral resources for which there is a high
degree of confidence of economic extraction;
future production levels;
future commodity prices; and
future cash costs of production and capital expenditure.
•
•
•
Variations to the expected cash flows, and the timing thereof, could result in significant changes to any
impairment losses recognised, if any, which in turn could impact future financial results.
Mine rehabilitation provision
The Consolidated Entity assesses its mine rehabilitation provision on an annual basis in accordance with
the accounting policy stated in Note 2(u). In determining an appropriate level of provision,
consideration is given to the expected future costs to be incurred, the timing of those future costs
(largely dependent on the life of mine) and the estimated level of inflation. The ultimate rehabilitation
costs are uncertain, and cost estimates can vary in response to many factors, including estimates of the
extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases
as compared to the inflation rates, and changes in discount rates. The expected timing of expenditure
- 70 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
3.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (Continued)
can also change, for example in response to changes in reserves or to production rates. These
uncertainties may result in future actual expenditure differing from the amounts currently provided.
Therefore, significant estimates and assumptions are made in determining the provision for mine
rehabilitation. As a result, there could be significant adjustments to the provisions established which
would affect future financial result. The provision at reporting date represents management’s best
estimate of the present value of the future rehabilitation costs required.
- 71 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
4.
SEGMENT REPORTING
Identification of reportable segment
The Group identifies its operating segments based on the internal reports that are reviewed and used
by the Board of Directors (chief operating decision maker) in assessing performance and determining
the allocation of resources.
The Group operates primarily in mineral exploration in Western Australia and Thailand. The Group
was awarded Special Prospecting Licences (SPL’s) in Thailand in March 2015 for the first time.
Accordingly the Group now considers that it operates in two geographical segments but within the
same operating segment, mineral exploration. The decision to allocate resources to individual projects
is predominantly based on available cash reserves, technical data and the expectation of future metal
prices.
Accordingly, the Group effectively operates as one segment, being mineral exploration. The financial
information presented in the statement of comprehensive income and statement of financial position
is the same as that presented to the chief operating decision maker.
Basis of accounting for purposes of reporting by operating segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors as the chief operating decision
maker is in accordance with accounting policies that are consistent to those adopted in the annual
financial statements of the Group.
Information about reportable segments
Information relating to each reportable segment is shown below.
2019
External revenues
Inter-segment revenue
Segment revenue
Segment profit/(loss) before tax
Interest income
Interest expense
Depreciation and amortisation
Share of profit/(loss) of equity accounted
investees
Other material non-cash items
-
Impairment of losses of non-financial
assets
Segment assets
Equity accounted investees
Capital expenditure
Segment liabilities
Reportable Segments
Australia
$
12,210,506
-
12,210,506
(3,713,548)
30,566
(446,271)
(1,011,655)
Thailand
$
11,450
-
11,450
(1,233,812)
2,183
-
(2,678)
Total
$
12,221,956
-
12,221,956
(4,947,360)
32,749
(446,271)
(1,014,333)
(487,915)
-
(487,915)
-
20,903,675
355,617
1,437,218
8,759,905
-
1,073,563
-
-
(27,948)
-
21,977,238
355,617
1,437,218
8,731,957
- 72 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
4.
SEGMENT REPORTING (Continued)
2018
External revenues
Inter-segment revenue
Segment revenue
Segment profit/(loss) before tax
Interest income
Interest expense
Depreciation and amortisation
Share of profit/(loss) of equity accounted
investees
Other material non-cash items
-
Impairment of losses of non-financial
assets
Segment assets
Equity accounted investees
Capital expenditure
Segment liabilities
Reportable Segments
Australia
$
11,676,380
-
11,676,380
(4,291,001)
33,242
(373,490)
(3,316,398)
Thailand
$
-
-
-
(826,799)
4,939
-
(9,495)
Total
$
11,676,380
-
11,676,380
(5,117,800)
38,181
(373,490)
(3,325,893)
(157,106)
-
(157,106)
-
23,014,060
843,532
700,300
7,513,564
-
1,813,029
-
-
3,495
-
24,827,089
843,532
700,300
7,517,059
- 73 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
5. Revenue
The loss before income tax includes the following revenues
whose disclosure is relevant in explaining the performance of
the entity:
(a) Other income
R&D tax incentive refund
Net gain on sale of plant and equipment
Net gain on sale of investments
Net gain on sale of tenements
Other income
(b) Finance income
Interest earned
2019
$
2018
$
100,570
61,483
-
160,985
335,549
658,587
276,475
-
1,263,661
-
87,013
1,627,149
32,749
38,181
(c) Expenses included in the statement of comprehensive
income
Depreciation of plant and equipment
318,615
157,078
(d) Other expenses
(i) Employee benefits expense
Salaries and wages
Superannuation expenses
Share based payments
Total employee benefits expense
(ii) Administration and other expenses
Operating lease rentals
Care and maintenance
Administration expenses
1,185,747
62,799
882,611
2,131,157
166,552
1,232,675
2,344,385
3,743,612
5,874,769
760,006
51,264
-
811,270
171,393
406,599
1,017,393
1,595,385
2,406,655
- 74 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
2019
$
2018
$
-
-
-
-
-
-
6. Income taxes
Tax expense/(income) comprises:
Current tax expense/(income)
Deferred tax expense/(income)
Income tax recognised in profit or loss
The prima facie income tax expense/(income) on the pre-tax
accounting profit/(loss) from operations reconciles to the
income tax expense/(income) in the financial statements as
follows:
Loss from continuing operations
(4,947,360)
(5,117,800)
Income tax expense calculated at 27.5% (2018: 30%)
(1,360,524)
(1,535,340)
Effect of temporary differences not recognised in prior
periods
Non-deductible expenses
Non-assessable income
Effect of temporary differences not recognised in current year
Effect of change in income tax rate
Effect of temporary differences that would be recognised
directly in equity
Adjustments recognised in the current year in relation to the
current tax of previous years
-
244,280
(18,399)
1,473,124
280,118
1,121,942
2,066
(296,118)
92,180
(297,204)
(530,047)
912,474
(88,552)
-
-
-
The tax rate used in the above reconciliation is the corporate tax rate of 27.5% (2018: 30%) payable
by Australian corporate entities on taxable profits under Australian tax law.
Unrecognised deferred tax assets/(liabilities)
The following deferred tax assets have not been brought to
account:
Tax losses - revenue
Investments
Temporary differences - exploration
Section 40-880 expenses
Other temporary differences
2019
$
2018
$
6,704,156
343,281
(2,362,128)
42,839
106,396
4,834,544
5,937,681
(831,294)
(2,084,305)
62,310
277,028
3,361,420
The ability of the Group to utilise unrecognised tax losses will depend on whether the Group meets
the statutory requirements for utilising tax losses as and when it generates taxable profit.
- 75 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
7. Trade and other receivables
Current
Trade debtors
Amounts receivable from Australian Taxation Authorities
Other receivables
8. Other current assets
Current
Prepayments
Cash backed performance bond (i)
Non-current
Deposits held (ii)
2019
$
2018
$
192,087
7,700
117,501
317,288
2019
$
35,953
31,872
67,825
327,662
327,662
723,436
86,557
90,412
900,405
2018
$
40,802
181,502
222,304
288,943
288,943
(i) The Company’s bankers have provided performance bonds as security for the due and proper
performance of leases in accordance with the tenement conditions associated with certain Group
tenements. The Company has cash-backed these performance bonds with fixed term deposits with
the bank.
(ii) The Company has cash deposits held with the Thailand government with respect to a number of
tenement applications in Thailand. Should the applications not be successful 75% of the deposits
will be returned to the Company. A cumulative impairment (representing the non-recoverable
25%) of $109,221 (2018: $96,314) has been made against the deposits held of $436,883 (2018:
$385,258).
9. Inventories
Current
Stores and spares at cost
10. Other
Other financial assets
2019
$
2018
$
106,923
106,923
-
-
2019
$
2018
$
1,110,206
1,110,206
2,683,246
2,683,246
- 76 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
10. Other (continued)
Movements in financial assets:
At 1 July
Additions
Disposals
Net change in investments
At 30 June
2019
$
2018
$
2,683,246
735,000
(1,059,744)
(1,248,296)
1,110,206
2,109,065
259,649
(1,323,609)
1,638,141
2,683,246
Other financial assets consist of investments in ordinary shares, and therefore have no fixed maturity
date or coupon rate.
Listed shares
(i) The Company holds shares in Panoramic Resources Limited, which is involved in the mining and
exploration of base metals in Australia and Canada. Panoramic is listed on the Australian
Securities Exchange.
At the end of the year the fair value of the investment was $1,051,238 (30 June 2018: $2,681,500)
which is based on Panoramic Resources Limited’s quoted share price.
(ii) The Company acquired 20 million shares in Liontown Resources Limited (LTR), which is involved
in exploration and development of lithium in Western Australia as consideration for the sale of
its Killaloe project. LTR is listed on the Australian Securities Exchange. The Company disposed of
its entire interest during the year.
(iii) The Company purchased 10 million shares for $225,000 in Anova Minerals Limited (AWV), which
is involved in exploration and development of gold in Western. AWV is listed on the Australian
Securities Exchange.
At the end of the year the Company’s investment was $58,750 (30 June 2018: Nil) which is based
on AWV’s quoted share price.
11. Equity Accounted Investments
The Company has a 26.77% (2018: 26.77%) interest in Bulletin Resources Limited, which is involved
in the exploration of precious and base metals in Australia. Bulletin is listed on the Australian
Securities Exchange.
2019
$
Movements in carrying value of the Company’s investment in associate:
At 1 July
Share of loss after income tax
Share of change in reserves
At 30 June
843,533
(487,915)
-
355,617
2018
$
987,987
(157,106)
12,652
843,533
- 77 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
11. Equity Accounted Investments (continued)
The following table illustrates the summarised financial information of the Company’s investment
in Bulletin:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
2019
$
2,277,397
85,484
(224,172)
-
2,138,709
2018
$
3,608,830
250,000
(136,489)
-
3,722,341
Company’s share of loss for the year
(487,915)
(157,106)
The associate had no contingent liabilities or capital commitments as at 30 June 2019.
12. Exploration and evaluation assets
Exploration expenditure capitalised at cost
-exploration and evaluation phase
Movements in carrying amounts
Exploration and evaluation phase
Balance at beginning of year
Acquisition of tenements
Disposal of tenements
Exploration and evaluation incurred
Expenditure written off/provided for
Transferred from/(to) mine property and development
Balance at end of year
2019
$
2018
$
16,355,239
16,355,239
14,874,547
14,874,547
14,874,547
823,910
(499,015)
2,955,816
(991,482)
(808,537)
16,355,239
8,488,310
2,813,526
-
2,494,006
(755,335)
1,834,040
14,874,547
The ultimate recoupment of costs carried forward for exploration and evaluation phase is dependent
on the successful development and commercial exploitation or sale of the respective areas. Upon a
review of current exploration projects the board elected to provide for impairment of $Nil (2018: $Nil)
in the financial year.
- 78 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
13. Mine Property and Development
Mine properties
Balance at beginning of year
Transferred from/(to) exploration and evaluation assets
Additions
Depreciation expense for the period
Amortisation expense for the period
Balance at end of year
Mine capital development
Balance at beginning of year
Additions
Amortisation expense for the period
Balance at end of year
2019
$
2018
$
473,973
275,968
-
(100,000)
-
649,941
-
532,569
(532,569)
-
4,782,499
(1,834,040)
502,701
(26,028)
(2,951,159)
473,973
171,468
46,188
(217,656)
-
Total mine properties and development
649,941
473,973
14. Property, plant and equipment
Plant and equipment at cost
Accumulated depreciation
Total property, plant and equipment
Movements in carrying amounts
Consolidated
Balance 30 June 2017
Additions
Disposals
Depreciation expense
Balance 30 June 2018
Additions
Disposals
Depreciation transferred to mine properties
Depreciation expense
Balance 30 June 2019
2019
$
2018
$
3,239,946
(1,454,557)
1,785,389
1,785,389
Plant and
Equipment
$
179,204
700,300
-
(131,050)
748,454
1,437,217
(18,518)
(63,149)
(318,615)
1,785,389
1,761,966
(1,013,512)
748,454
748,454
Total
$
179,204
700,300
-
(131,050)
748,454
1,437,217
(18,518)
-
(381,764)
1,785,389
The Group leases motor vehicles and plant and equipment under a number of finance lease
agreements. The leased equipment secures the lease obligations. At 30 June 2019 the net carrying
amount of leased plant and equipment was $200,379 (2018: $89,355). During the year, the Group
acquired leased assets of $189,400 (2018: $67,539).
- 79 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
15. Trade and other payables
Unsecured liabilities
Trade payables
Sundry creditors and accrued expenses
16. Borrowings
Current
Secured liabilities
Finance lease liabilities (i)
Non Current
Secured liabilities
Loan (ii)
Finance lease liabilities (i)
2019
$
2018
$
1,177,144
538,474
1,715,618
2019
$
1,275,655
438,355
1,714,010
2018
$
102,273
102,273
71,590
71,590
3,960,846
98,106
4,058,952
2,937,521
17,765
2,955,286
(i) The finance lease liabilities are secured over the Company’s motor vehicles and plant and
equipment.
(ii) Reconciliation of loan
Balance at beginning of year
Amount borrowed
Share based payment
Interest charge
Balance at end of year
2019
$
2,937,521
1,000,000
-
23,325
3,960,846
2018
$
-
3,000,000
(107,107)
44,628
2,937,521
On 8 August 2017 Matsa entered into loan agreements with two separate parties for a $4M facility
with the funds being predominantly used as a working capital facility to ensure smooth operations
of the trial mine at the Fortitude Gold Project and to conduct further exploration at Lake Carey.
The repayment date was initially 31 July 2018 but was extended by mutual consent on 12 April
2018 to 31 July 2019. On 5 May 2019 a further $1M was borrowed and the repayment date
extended to 31 July 2020. On this basis the loan has been disclosed as non-current.
The key terms of the finance facility are as follows:
Principal Amount: $5,000,000 ($4M drawn down and $1M any time if required)
Interest Rate:
12% per annum paid monthly in arrears (penalty rate of 18% if Matsa is in
default)
Repayable by 31 July 2020
The loan facility is secured by a mortgage over the Fortitude gold project, the
Symons Hill project and a Deed of Charge over the Company’s shareholdings
in Bulletin Resources Limited and Panoramic Resources Limited
Term:
Security:
- 80 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
16. Borrowings (Continued)
At the time of the original loan Matsa agreed to issue a total of 1 million options in the Company,
split equally amongst the parties, with an exercise price of $0.20 each with a two year life from the
date of issue. The principal loan balance of $4M has been offset by the value of the options issued.
At the end of the period the carrying value of the loan was $3,960,846.
17. Provisions
Current
Provision for annual leave
Non-current
Provision for long service leave
Provision for mine restoration
Movement in long service leave provision
Opening balance 1 July
Increase in provision
Closing balance 30 June
Movement in provision for mine restoration
Opening balance 1 July
Acquisition of tenements
Increase/(decrease) in provision
Closing balance 30 June
2019
$
2018
$
258,002
258,002
217,567
217,567
176,136
2,420,976
2,597,112
154,548
2,404,058
2,558,606
2019
$
2018
$
154,548
21,588
176,136
2,404,058
-
16,918
2,420,976
138,114
16,434
154,548
24,312
2,224,876
154,870
2,404,058
18. Issued capital
176,917,368 (2018: 176,917,368) fully
paid ordinary shares
Ordinary shares
At the beginning of reporting period
Exercise of options
Share placement
Shares issued on acquisition
Bonus issue
Transaction costs
At reporting date
2019
$
2018
$
2019
$
2018
$
44,292,467
No.
44,292,467
No.
44,292,467
$
44,292,467
$
176,917,368
-
-
-
-
-
176,917,368
144,706,779
1,700,000
11,325,079
4,545,000
14,640,510
-
176,917,368
44,292,467
-
-
-
-
-
44,292,467
40,688,126
375,000
2,548,143
863,650
-
(182,452)
44,292,467
- 81 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
18. Issued capital (continued)
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in
proportion to the number of shares held. At shareholders meetings each ordinary share is entitled to
one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.
Options
The movement of the options on issue during the financial year is set out below:
Exercise
Price
$0.25
$0.25
$0.30
$0.17
$0.17
Expiry Date
30 November 2019
30 November 2019
30 November 2019
30 November 2021
30 November 2021
Balance at
beginning
of year
4,175,000
5,750,000
3,775,025
-
-
13,700,025
19. Reserves
Equity settled transaction
Available-for-sale reserve
Other reserves
Equity settled transaction reserve
Balance at beginning of financial year
Share based payment
Balance at end of financial year
Issued
Exercised
Lapsed
Balance at
end of year
-
-
-
5,000,000
3,700,000
8,700,000
-
-
-
-
-
-
(275,000)
-
-
-
(100,000)
(375,000)
3,900,000
5,750,000
3,775,025
5,000,000
3,600,000
22,025,025
2019
$
2018
$
9,410,806
-
(13,844)
9,396,962
8,528,195
1,941,291
(13,845)
10,455,641
8,528,195
882,611
9,410,806
8,421,088
107,107
8,528,195
The equity settled transaction reserve records share-based payment transactions.
Available-for-sale reserve
Balance at beginning of financial year
Adjustments on the initial application of AASB 9
Reclassified to profit and loss
Net change in fair value of available-for-sale financial assets
Balance at end of financial year
1,927,447
(1,941,291)
-
-
(13,844)
696,074
-
(419,420)
1,650,793
1,927,447
20. Accumulated losses
Accumulated losses at beginning of financial year
Adjustments on the initial application of AASB 9
Loss for the year
Accumulated losses at end of financial year
37,515,368
(1,941,291)
4,947,518
40,521,595
32,397,626
-
5,117,742
37,515,368
- 82 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
21. Loss per share
The loss and weighted average number of ordinary shares used
in the calculation of loss per share are as follows:
Loss
Weighted average number of ordinary shares
2019
$
2018
$
4,947,518
5,117,800
No.
176,917,368
No.
161,177,741
Diluted loss per share
Diluted loss per share has not been calculated as the Company’s potential ordinary shares are not
considered dilutive and do not increase loss per share.
22. Commitments and Contingencies
Exploration and expenditure commitments
In order to maintain the mineral tenements in which the Company and other parties are involved, the
consolidated entity is committed to fulfil the minimum annual expenditure conditions under which
the tenements are granted. The minimum estimated expenditure commitment requirement for
granted tenements for the next year is $2,176,578 (2018: $1,480,098). This amount has not been
provided for in the financial report. These obligations are capable of being varied from time to time.
Exploration expenditure commitments beyond twelve months cannot be reliably determined.
Mine Development and Operating Commitments
The mine development and operating costs are determined on a time and cost basis.
Finance lease commitments
2019
$
2018
$
Commitments in relation to finance leases are payable as
follows:
Within one year
Later than one year but not later than five years
Minimum lease payments
Less: Future finance charges
Recognised as a liability
Representing lease liabilities:
Current (note 16)
Non-current (note 16)
Operating lease commitments
Future operating lease rentals of office space provided for in
the financial statements and payable:
- Not later than one year
- Later than one year but not later than five years
112,531
106,369
218,900
(18,521)
200,379
102,273
98,106
200,379
82,013
34,860
116,873
75,899
18,483
94,382
(5,027)
89,355
71,590
17,765
89,355
47,154
-
47,154
Contingencies
There are no contingent assets or contingent liabilities as at 30 June 2019.
- 83 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
23. Subsidiaries
Parent Entity
Matsa Resources Limited
Subsidiary
Matsa Gold Pty Ltd
Killaloe Minerals Pty Ltd
Lennard Shelf Exploration Pty Ltd
Red October Gold Pty Ltd
Australian Strategic and Precious
Metals Investment Pty Ltd
Matsa Resources (Aust) Pty Ltd
Matsa Iron Pty Ltd
Cundeelee Pty Ltd
Matsa (Thailand) Co Ltd
PVK Mining Loei Co Ltd
Khlong Tabaek Co Ltd
Paisali Mining Co Ltd
Wichan Buri Resources Co Ltd
Siam Copper Resources Co Ltd
Loei Mining Co Ltd
Azure Circle Co Ltd
24. Cash flow information
Country of Incorporation
Percentage Owned (%)
2019
2018
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
100
100
100
100
100
100
100
100
100
100
95
95
100
100
100
100
100
100
100
100
100
100
100
100
100
100
95
95
100
100
100
100
Reconciliation of cash and cash equivalents
Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows is
reconciled to the related items in the statement of financial position as follows:
Cash and cash equivalents
901,148
3,791,684
2019
$
2018
$
- 84 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
24. Cash flow information (Continued)
Reconciliation of loss for year to net cash flows from operating activities
Profit/(loss) for year
(4,947,360)
(5,117,800)
2019
$
2018
$
Non-cash flows in loss from ordinary activities:
Share-based payments
Depreciation
Exploration expenditure written off
Share of investee (profit)/loss
Net (gain) on sale of financial assets
Net (gain)/loss on disposal of plant and equipment
Net (gain)/loss on tenements
Net change in investments
Interest expense classified as financing cash flow
Amortisation
Changes in assets and liabilities:
Decrease/(increase) in receivables
Increase/(decrease) in trade creditors and accruals
Increase/(decrease) in provisions
Cash flow from operations
Non-cash financing and investing activities
882,611
318,615
932,168
487,915
194,649
(61,483)
59,314
1,248,296
449,724
695,718
-
157,078
755,335
157,106
(1,263,661)
-
-
-
302,084
3,168,815
583,117
390,341
78,941
1,312,567
(831,883)
(1,729,072)
2,379,746
(2,022,252)
In the previous financial year Matsa acquired the Red October gold project for a total deemed
consideration of $2,000,000. Of that amount part of the consideration was satisfied by the issue of
4,545,000 fully paid ordinary shares to the vendor, Saracen Mineral Holdings Limited.
- 85 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
25. Parent Entity Disclosures
As at, and throughout, the financial year ended 30 June 2019 the parent company of the Group was
Matsa Resources Limited.
Result of the parent Entity
Profit/(loss) for the year
Other comprehensive gain/(loss)
Total comprehensive profit/(loss) for the year
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Share capital
Reserves
Accumulated losses
Total equity
26. Financial instruments
Financial risk management
Company
2019
$
2018
$
(10,655,157)
-
(10,655,157)
(4,660,218)
1,218,721
(3,441,497)
880,196
12,076,598
3,526,500
20,191,137
1,307,129
5,542,217
774,377
3,884,211
44,292,467
9,393,601
(47,151,686)
44,292,467
10,452,278
(38,437,819)
6,534,382
16,306,926
Overview
This note presents information about the Group’s exposure to credit, liquidity and market risks, their
objectives, policies and processes for measuring and managing risk, and the management of capital.
The Group does not use any form of derivatives as it is not at a level of exposure that requires the use
of derivatives to hedge its exposure. Exposure limits are reviewed by management on a continuous
basis. The Group does not enter into or trade financial instruments, including derivative financial
instruments, for speculative purposes.
The Board of Directors has overall responsibility for the establishment and oversight of the risk
management framework. Management monitors and manages the financial risks relating to the
operations of the group through regular reviews of the risks.
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 cash
balances at bank, deposits with statutory authorities.
- 86 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
26. Financial instruments (Continued)
Presently, the Group undertakes exploration and evaluation activities exclusively in Australia and
South-East Asia. At the balance date there were no significant concentrations of credit risk with the
exception of its cash balances at bank.
Cash and cash equivalents
The Group limits its exposure to credit risk by only investing in liquid securities and only with
counterparties that have an acceptable credit rating of no less than AA rating.
Trade and other receivables
The Group manages its exposure to credit risk by extensive due diligence on the party processing its
gold sales.
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:
Trade and other receivables
Cash and cash equivalents
Deposits held
Impairment of deposits (refer Note 8 (ii))
Consolidated
Carrying amount
2019
$
309,588
901,148
436,883
(109,221)
2018
$
813,848
3,791,684
385,258
(96,314)
The Group has $183,910 in other receivables that are past due (2018: $183,910).
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate cash reserves from funds raised in the
market and by continuously monitoring forecast and actual cash flows. The Group also has
investments in listed shares that could be sold to raise cash.
The Company has leased assets financed by way of finance leases and has taken out a premium
funding facility over their insurance requirements.
The following are the contractual maturities of financial liabilities, including estimated interest
payments and excluding the impact of netting agreements:
30 June 2019
Trade and other
payables
Finance lease
liabilities
Loan
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12
mths
1-2 years
2-5
years
Weighted
average
interest
rate
$
$
$
$
$
$
1,715,618
1,715,618 1,715,618
-
-
-
7.58
12
200,379
3,960,846
5,876,843
57,379 44,894
41,391 56,715
200,379
3,960,846
-
5,876,543 1,772,997 44,894 4,002,237 56,715
- 3,960,846
-
- 87 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
26. Financial instruments (Continued)
30 June 2018
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12
mths
1-2 years
2-5
years
Weighted
average
interest
rate
Trade and other
payables
Finance lease
liabilities
Loan
$
$
$
$
$
$
1,714,010
1,714,010 1,714,010
-
-
8.27
12
89,355
2,937,521
4,740,886
35,968 35,622
17,765
89,355
2,937,521
- 2,937,521
-
4,740,886 1,749,978 35,622 2,955,286
-
-
-
-
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and
equity prices will affect the Group’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return.
Currency risk
The Group is exposed to currency risk on investments and purchases that are denominated in a
currency (Thai baht) other than the respective functional currencies of Group entities, which is
primarily the Australian dollar.
As at the statement of financial position date the Group holds the following financial assets or
liabilities which are exposed to foreign currency risk.
Other current assets
Cash and cash equivalents
Sensitivity analysis
Carrying amount
2019
$
77,035
285,298
2018
$
240,554
310,869
The Group is exposed to fluctuations in foreign currencies arising from the acquisition of services from
time to time in currencies other than the Group’s functional currency. A change of 10% in the foreign
currency exchange rate at 30 June 2019 would have increased equity by $36,233 (2018: $55,142), an
equal change in the opposite direction would have decreased equity by an equal but opposite amount.
Interest rate risk
The Group is exposed to interest rate risk (primarily on its cash and cash equivalents), which is the risk
that a financial instrument’s value will fluctuate as a result of changes in the market interest rates on
interest-bearing financial instruments. The Group does not use derivatives to mitigate these
exposures. The Group is not exposed to cash flow volatility from interest rate changes on borrowings
as the finance leases carry fixed rates of interest.
The Group adopts a policy of ensuring that as far as possible it maintains excess cash and cash
equivalents in short terms deposit at interest rates maturing over 90 day rolling periods or less.
- 88 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
26. Financial instruments (Continued)
Profile
At the reporting date the interest rate profile of the Group’s and the Company’s interest-bearing
financial instruments was:
Fixed rate instruments
Cash and cash equivalents
Lease liabilities
Loan
Variable rate instruments
Cash and cash equivalents
Cash backed performance bonds
Carrying amount
2019
$
2018
$
50,000
200,379
3,960,846
4,211,225
851,148
31,872
883,020
390,505
(89,355)
(2,937,521)
(2,636,371)
3,401,179
181,502
3,582,681
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit
or loss, Therefore a change in interest rates at the reporting date would not affect profit or loss.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased (decreased)
equity and profit or loss by the amounts shown below. This analysis assumes that all other variables,
in particular foreign currency rates, remain constant. The analysis is performed on the same basis as
2018.
Profit or loss
100bp
increase
$
100bp
decrease
$
Equity
100bp
increase
$
100bp
decrease
$
8,830
(8,830)
8,830
(8,830)
35,827
(35,827)
35,827
(35,827)
30 June 2019
Variable rate instruments
30 June 2018
Variable rate instruments
Fair values
Fair values versus carrying amounts
The carrying amounts of financial assets and liabilities approximate fair value. The basis for
determining fair values versus carrying value of financial instruments not carried at fair value is
described below.
(i)
Other receivables, trade and other payables:
Other receivables, trade and other payables are short term in nature. As a result, the carrying
amount of these instruments is considered to approximate its fair value.
Deposits held on tenement applications :
The deposits held with Thai authorities are recoverable at 75% of their value should the
applications not be granted. As a result the carrying amount is considered to approximate its
fair value.
(ii)
- 89 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
26. Financial instruments (Continued)
Equity Price Risk
Other Equity price risk is the risk that the value of the instrument will fluctuate as a result of changes
in market prices (other than those arising from interest rate risk or currency risk), whether caused by
factors specific to an individual investment, its issuer or all factors affecting all instruments traded in
the market.
Investments are managed on an individual basis and material buy and sell decisions are approved by
the Board of Directors. The primary goal of the Group’s investment strategy is to maximise investment
returns.
The Group’s investments are solely in equity instruments. These instruments are classified as financial
investments and carried at fair value with fair value changes recognised directly in the profit and loss
account.
The following table details the breakdown of the investment assets and liabilities held by the Group:
Listed equities (Level 1 fair value
hierarchy)
Note
30 June 2019
$
30 June 2018
$
10
1,110,206
2,683,246
Sensitivity analysis
The Group’s equity investments are listed on the Australian Securities Exchange. A 3% increase in
stock prices at 30 June 2019 would have increased equity by $33,306 (2018: $80,497), an equal change
in the opposite direction would have decreased equity by an equal but opposite amount.
Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern, so as to maintain a strong capital base sufficient to maintain future exploration and
development of its projects. In order to maintain or adjust the capital structure, the Group may return
capital to shareholders, issue new shares or sell assets to reduce debt. The Group’s focus has been to
raise sufficient funds through equity to fund exploration and evaluation activities and mine
development. The Group monitors capital on the basis of the gearing ratio, while there are no external
borrowings as at balance date the Group entered into a short term debt facility subsequent to year
end.
The Group encourages employees to be shareholders through the Long Term Incentive Plan and the
Executive Share Option Plan.
There were no changes in the Group’s approach to capital management during the year. Risk
management policies and procedures are established with regular monitoring and reporting.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital
requirements.
- 90 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
27. Share-based payments
Employee Share Option Plan
The Group has an Employee Share Option Plan (ESOP) for the granting of options to staff members,
directors and consultants. A new ESOP was approved by shareholders on 18 November 2016 and
adopted. Options issued under the ESOP vest on the grant date.
Other relevant terms and conditions applicable to options granted under the ESOP include:
(a)
(b)
(c)
(d)
(e)
(f)
Options issued pursuant to the plan will generally be issued free of charge.
The exercise price of the options shall be as the Directors in their absolute discretion
determine, provided the exercise price shall not be less than the weighted average of the last
sale price of the Company’s shares on ASX at the close of business on each of the 5 business
days immediately preceding the date on which the Directors resolve to grant the options.
Subject to the above, the options may be exercised at any time prior to the expiration date
from the issue date.
The Directors may limit the total number of options which may be exercised under the plan in
any year.
Options with a common expiry date may have a different exercise price and exercise date.
Options shall lapse upon the earlier of:
(i)
(ii)
The expiry of the exercise period; and
The expiry of three months after the option holder ceases to be an employee by
reason of dismissal, resignation or termination of employment, office or services for
any reason, except the Directors may resolve that the options shall lapse on other
terms they consider appropriate.
(g)
Upon exercise the options will be settled in ordinary shares of Matsa Resources Limited.
- 91 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
27.
Share-based payments (Continued)
(a)
Summary of options issued under the Employee Share Option Plan
The following table summarises the number (No.) and the weighted average exercise price (WAEP) of,
and movements in, share options issued during the year to employees other than to key management
personnel which have been disclosed in the Remuneration Report.
2019
Number of
Options
2019
Weighted
Average
Exercise Price
$
2018
Number of
Options
2018
Weighted
Average
Exercise Price
$
Outstanding at the beginning
of the year
Granted
Exercised
Expired
Outstanding at year-end
Exercisable at year-end
3,675,000
2,450,000
-
(375,000)
5,750,000
5,750,000
0.25
0.17
-
0.23
0.22
0.22
6,125,000
-
(700,000)
(1,750,000)
3,675,000
3,675,000
0.25
-
0.25
0.25
0.25
0.25
The outstanding balance as at 30 June 2019 is represented by the following options over ordinary
shares, exercisable upon meeting the above terms and conditions:
2,350,000 options with an exercise price of $0.17 each and with an expiry date of 30 November
2021. All have vested and are exercisable at balance date.
3,400,000 options with an exercise price of $0.25 each and with an expiry date of 30 November
2019. All have vested and are exercisable at balance date.
Directors and Executives Options
In addition to the ESOP, the Company has issued options to Directors and Executives from time to
time. The terms and conditions of those options vary between option holders. There were 5,750,000
(2018: nil) options issued to Directors or Executives during the financial year.
Options issued to the Executive Chairman and the Executive Director and Executives vested
immediately.
Other relevant terms and conditions applicable to options granted as above include:
any Directors or Executives vested options that are unexercised by the anniversary of their grant
date will expire or, if they resigned, in accordance with their specific terms and conditions; and
upon exercise, these options will be settled in ordinary shares of Matsa Resources Limited.
- 92 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
27. Share-based payments (Continued)
(b) Summary of options issued to Directors and Executives
(i)
The following table illustrates the number (No.) and weighted average exercise prices
(WAEP) of share options issued.
Outstanding at 1 July
Granted during the year
Expired during the year
Outstanding at 30 June
Exercisable at 30 June
2019
No.
6,250,000
5,750,000
-
12,000,000
12,000,000
2019
WAEP
$
0.25
0.17
-
0.21
0.21
2018
No.
10,900,000
-
(4,650,000)
6,250,000
6,250,000
2018
WAEP
$
0.27
-
0.29
0.25
0.25
There were 5,750,000 options issued during the year.
Directors
5,750,000 options over ordinary shares with an exercise price of $0.25 each, exercisable upon
meeting the relevant conditions and until 30 November 2019.
5,000,000 options over ordinary shares with an exercise price of $0.17 each, exercisable upon
meeting the relevant conditions and until 30 November 2021.
Executives
500,000 options over ordinary shares with an exercise price of $0.25 each exercisable upon
meeting the relevant conditions and until 30 November 2019.
750,000 options over ordinary shares with an exercise price of $0.17 each exercisable upon
meeting the relevant conditions and until 30 November 2021.
(c) Valuation models of options and performance rights issued to Directors and Executives
The fair value of the options is estimated at the date of grant using a Black & Scholes model. The
following table gives the assumptions made in determining the fair value of the options granted in the
year.
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Option exercise price ($)
Share price at grant date ($)
Fair value at grant date (c)
2019
2018
Directors
-
140.56
2.09
3.01
0.17
0.13
9.79
Executives
-
140.56
1.95
2.97
0.17
0.14
10.62
Directors
-
-
-
-
-
-
-
Executives
-
-
-
-
-
-
-
- 93 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
27. Share-based payments (Continued)
Valuation models of options and performance rights issued to Directors and Executives
(c)
(continued)
The expected life of the options is based on historical data and is not necessarily indicative of exercise
patterns that may occur.
The expected volatility reflects the assumption that the historical volatility is indicative of future
trends, which may also not necessarily be the actual outcome.
Employee Expenses
Share options granted in 2019
- equity settled
Total expense recognised as employee costs
28. Key management personnel
Consolidated
2019
$
2018
$
882,611
882,612
-
-
Details of key management personnel
The directors and other members of key management personnel of the Group during the financial
year were:
Name
Position
Directors
Paul Poli
Frank Sibbel
Andrew Chapman Director, Company Secretary and Chief Financial Officer
Executive Chairman
Non-Executive Director
Executives
David Fielding
Group Exploration Manager
Key management personnel remuneration has been included in the Remuneration Report section of
the Directors’ Report on pages 38 to 45. These transferred disclosures have been audited.
Compensation of Key Management Personnel
Short-term employment benefits
Post-employment benefits
Termination benefits
Share-based payment
2019
$
2018
$
863,892
63,384
-
569,386
1,496,662
856,453
59,738
-
-
916,191
The compensation disclosed above represents an allocation of the key management personnel’s
estimated compensation from the Group in relation to their services rendered to the Company.
Loans to Key Management Personnel
There were no loans to key management personnel during the current or previous financial year.
- 94 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
28. Key management personnel (Continued)
Other transactions and balances with Key Management Personnel
(a) P Poli and F Sibbel are Directors of Bulletin Resources Limited. The Consolidated Entity has an
agreement with Bulletin to provide accounting, technical and administrative services on an
arms-length basis. In the current year $318,153 has been charged to Bulletin for these services
(2018: $76,146).
At 30 June 2019 there was an outstanding balance of $192,087 (2018: $24,272) for Bulletin.
(b) P Poli is a director and controlling shareholder of West-Sure Group Pty Ltd which provides
alarm monitoring services to the Consolidated Entity. In the current year $625 has been
charged to the Consolidated Entity for this service (2018: $576).
At 30 June 2018 there was an outstanding balance of $nil (2018: nil) payable to West-Sure.
(c) P Poli is a director and controlling shareholder of West-Sure Group Pty Ltd which the
Consolidated Entity sub-lets storage space from. In the current year $6,371 has been charged
to the Consolidated Entity for this service (2018: $6,372).
At 30 June 2018 there was an outstanding balance of $nil (2018: nil) payable to West-Sure.
(d) P Poli is a director and controlling shareholder of WA Fleet Systems Pty Ltd which provided
the Consolidated Entity with a hire car from time to time. In the current year $600 has been
charged to the Consolidated Entity for this service (2018: 1,975).
At 30 June 2019 there was an outstanding balance of $nil (2018: nil) payable to WA Fleet
Systems.
Individual directors and executives compensation disclosure
Information regarding individual directors and executives compensation and some equity instruments
disclosures as permitted by Corporations Regulation 2M.3.03 is provided in the remuneration report
section of the Directors’ report.
No director has entered into a material contract with the Company or the Group since the end of the
previous financial year and there were no material contracts involving directors’ interests existing at
year-end.
29. Related party transactions
Subsidiaries
Interests in subsidiaries are set out in Note 23.
Key management personnel
Disclosures relating to key management personnel are set out in the Remuneration Report and Note
28.
- 95 -
MATSA RESOURCES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2019
30. Remuneration of auditors
The auditor of Matsa Resources Limited is Nexia Perth Audit Services Pty Ltd (Nexia Perth).
Amounts received or due and receivable by Nexia Perth for an
audit or review of the entity and any other entity in the
consolidated group.
Amounts received or due and receivable by related practices of
Nexia Perth for:
- tax compliance
31. Events Subsequent to Balance Date
Consolidated
2019
$
2018
$
64,000
56,140
6,000
70,000
7,700
63,840
On 23 July 2019 Matsa announced that it had sold an 80% interest in the Lake Rebecca gold project to
Bulletin Resources Limited for $125,000 and a 1% net smelter royalty.
On 23 September 2019, Matsa announced that that it had raised $6 million via way of a placement of
40 million ordinary fully paid shares at $0.15 each with one free attaching option for every four shares
issued with an exercise price of $0.25 each and expiring 31 March 2020.
Other than the above, there has been no matter or circumstance that has arisen that has significantly
affected, or may significantly affect:
•
•
•
the group’s operations in future financial years, or
the results of those operations in future financial years, or
the group’s state of affairs in future financial years.
- 96 -
MATSA RESOURCES LIMITED
DIRECTORS DECLARATION
1.
In the opinion of the directors of Matsa Resources Limited (the “Company”):
(a)
the consolidated financial statements and notes are in accordance with the Corporations
Act 2001, including:
(i) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June
2019 and of its performance, for the financial year ended on that date; and
(b)
(c)
(ii) complying with Australian Accounting Standards and Corporations Regulations 2001;
the financial report also complies with International Financial Reporting Standards as
disclosed in note 2(b);
the remuneration disclosures that are contained in page 38 to 45 of the Remuneration
Report in the Directors’ Report comply with the Corporations Act and Australian
Accounting Standard AASB 124 Related Party Disclosures and
(d)
there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
2.
The directors have been given the declarations required by Section 295A of the Corporations
Act 2001 from the chief executive officer and chief financial officer for the financial year ended
30 June 2019.
Signed in accordance with a resolution of the directors;
Paul Poli
Executive Chairman
Perth, 27 September 2019
- 97 -
Independent Auditor’s Report to the Members of Matsa Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Matsa Resources Limited (the Company and its subsidiaries (the
Group)), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the “Auditor’s responsibilities for the audit of the financial
report” section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit addressed
the matter is provided in that context.
- 98 -
Key audit matter
How our audit addressed the key audit
matter
Funding and Liquidity
Refer to Note 2af (Financial Position)
The Group is involved in exploration for gold
and base metals and the development of gold
projects.
As at 30 June 2019, the Group had completed
mining the Red Dog project and is currently
mining the Red October phase I project.
The development of Red October phase I will
be funded from the Group’s existing financial
assets, existing loan facility and capital raised.
Subsequent to 30 June 2019, the Group raised
$6 million by way of a share placement of 40
million ordinary fully paid shares at $0.15 per
share, inclusive of one free attaching option for
every four shares issued with an exercise price
of $0.25 each and expiring on 31 March 2021.
The adequacy of funding and liquidity as well
as the relevant impact on the going concern
assessment is a key audit matter due to the
inherent uncertainties associated with the
development of a mine.
We evaluated the Group’s funding and liquidity
position at 30 June 2019 and its ability to fund its
existing liabilities and future expenditure for a
minimum of 12 months from the date of signing
the financial report. In doing so, we:
to
the
forecast
revenue
obtained management’s cash flow forecast
for the 15 months from the commencement
of the 2019 financial year and checked the
mathematical accuracy of the forecast;
checked mine development costs included
in the forecast to external and internal
experts’ reports;
verified
the
feasibility study performed by the external
expert and to the latest physical amount
expected to be recovered to the Ore
Reserve and the gold price to market
information;
assessed the reliability and completeness of
management’s assumptions by comparing
the forecast cash flows to those of the
current year and as well as our
understanding of
future events and
conditions;
considered events subsequent to year end
to determine whether any additional facts
or information have become available since
the date on which management made its
assessment; and
note that the Group had $1 million that
could be drawn under its loan facility at 30
June 2019 and $2.1 million of investments
in listed securities that could be sold to raise
cash if required.
Provision for rehabilitation
Our procedures included, but were not limited to:
Discussing the rehabilitation estimation
process with the Group’s internal experts,
if additional
including understanding
exploration and evaluation undertaken
during the year warrants rehabilitation; and
Assessing the qualifications, objectivity,
and experience of the internal expert.
Refer to Notes 3 & 17 (Mine
rehabilitation provision)
The Group had in the prior year acquired the
Red October project including the obligation to
fund the rehabilitation work for the existing
disturbances at the time of acquisition.
The estimated rehabilitation provision is $2.2
million as at 30 June 2019. The Group engaged
an external expert in the prior year to estimate
the costs of the rehabilitation work.
In the current financial year, the internal expert
has reassessed the provision based on the
- 99 -
additional areas of interest that have been
disturbed and warrants rehabilitation.
The assessment of the rehabilitation process is
a key audit matter as the amount is significant
to the balance sheet and requires significant
judgment.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2019, 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, 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.
Directors’ responsibility for the financial report
The directors of the Company are responsible for the preparation of the consolidated 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 consolidated financial report, the directors are responsible for assessing the ability of
the Group to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibility for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Australian
Auditing
at: www.auasb.gov.au/auditors_
Standards
responsibilities/ar2.pdf .This description forms part of our auditor’s report.
Board website
Assurance
and
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
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Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 38 to 45 of the Directors’ Report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Matsa Resources Limited., for the year ended 30 June
2019, 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.
Nexia Perth Audit Services Pty Ltd
Muranda Janse Van Nieuwenhuizen
Director
Perth
27 September 2019
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MATSA RESOURCES LIMITED
ASX ADDITIONAL INFORMATION
The following additional information is required by the Australian Securities Exchange Ltd in respect
of listed public companies only.
SHAREHOLDING
Distribution of Shareholders as at 20 September 2019
Category (size of holding)
Number of
Shareholders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
87
192
250
697
203
1,429
The number of shareholdings held in less than marketable parcels is 125.
Twenty Largest Shareholders as at 20 September 2019
Name
No.
%
JP Morgan Nominees Australia Pty Limited
BNP Paribas Nominees Pty Ltd
HF Resources Pty Ltd
Mr Paul Poli
RASL AU LLC
Saracen Mineral Holdings Limited
Mr Paul Poli & Mrs Sonya Kathleen Poli