MEDUSA MINING LIMITED
ABN 60 099 377 849
Consolidated Entity
ANNUAL REPORT
2019
CONTENTS
Contents
Corporate Directory
Appendix 4E
Highlights of 2019 Financial Year
Chairperson’s Review
Review of Operations
Corporate Governance Statement
Directors’ Report
Independent Auditor’s Declaration
Contents of 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 the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Shareholder Information
Tenement Schedule
Page number
1
2
3
5
7
47
57
77
78
79
80
81
82
83
116
117
121
123
CORPORATE DIRECTORY
DIRECTORS
Andrew Boon San Teo
Non-Executive Chairperson
Roy Philip Daniel
Non-Executive Director
Raul Conde Villanueva
Executive Director
President Philippines subsidiaries
COMPANY SECRETARY
Peter Stanley Alphonso
EXECUTIVE MANAGEMENT
David Angus McGowan
Chief Executive Officer
Peter Stanley Alphonso
Chief Financial Officer
James Piñgul Llorca
General Manager, Geology & Resources
Patrick Chang
Corporate Development Officer & Investor Relations
PRINCIPAL & REGISTERED OFFICE
Suite A, Level 1
1 Preston Street, Como
Western Australia 6152
Postal address:
PO Box 122
South Perth
Western Australia 6951
Telephone: + 618 9474 1330
Facsimile: + 618 9474 1342
Email: admin@medusamining.com.au
Website: www.medusamining.com.au
AUSTRALIAN BUSINESS NUMBER
ABN 60 099 377 849
STOCK EXCHANGE LISTING
Australian Securities Exchange Ltd (ASX)
Trading Code: MML
AUDITORS
Australia:
BDO (WA) PTY LTD
38 Station Street
Subiaco
West Perth WA 6008
Philippines:
RSB & Associates
18 Floor Cityland Condominium 10 - Tower 1
Makati City Philippines 1200
SOLICITORS
Australia:
Ashurst Australia
Level 10, Brookfield II
123 St Georges Terrace
Perth WA 6000
Philippines:
BMD Law Offices
18 Floor Cityland Condominium 10 - Tower 1
Makati City Philippines 1200
BANKERS
Commonwealth Bank
150 St George’s Terrace
Perth WA 6000
SHARE REGISTRY
Computershare Investor Services
Level 11, Reserve Bank Building
172 St George’s Terrace
Perth WA 6000
Telephone: + 618 9323 2000
Facsimile: + 618 9323 2033
Investor enquiries: 1300 557 010
Shareholders who require information
about their shareholdings, dividend
payments or related administrative
matters should contact the Company’s
share registry.
1
APPENDIX 4E
Appendix 4E
Preliminary final report
Period ending 30 June 2019
Name of entity
MEDUSA MINING LIMITED
ABN or equivalent company
reference
Half yearly
(tick)
Preliminary
final (tick)
Half year/ financial ended (“current period”)
60 099 377 849
√
30 June 2019
Results for announcement to the market
Revenues and profits:
US$’000
US$’000
Revenues from ordinary activities
up 4% 124,593
to 129,602
Profit/(Loss) from ordinary activities after tax attributable to members up from
(55,554) to
36,489
Net profit/(loss) for the period attributable to members
up from
(55,554) to
36,489
(All comparisons to the previous period ended 30 June 2018)
Dividends:
Interim dividend
Final dividend
Total dividend paid for the year
Amount per security
Franked amount per security
Nil
Nil
Nil
N/A
N/A
N/A
No dividends were declared and paid for period ended 30 June 2019.
Net tangible assets per share:
The net tangible assets per share as at 30 June 2019 was US$0.593 (30 June 2018: US$0.396)
Change in control of entities:
There has been no change in control, either gained or loss during the current period.
Associates and Joint Venture entities:
The Consolidated Group did not have a holding in any associates or joint venture entities during the
current period.
Un-audited Financial Statements:
This report is based on accounts which are audited.
Other information:
Except for matters noted above, all disclosure requirements pursuant to ASX Listing Rule 4.3A are
contained within the Company’s consolidated financial statements for the year ended 30 June 2019
which accompany this report.
2
HIGHLIGHTS OF 2019 FINANCIAL YEAR
FINANCIALS
Description
Unit
30 June 2019
30 June 2018 (1)
Variance
Revenues
EBITDA (1)
NPAT (1)
EPS (basic)
US$
US$
US$
US$
$129.6M
$124.6M
$51.4M
$36.5M
($25.3M)
($55.6M)
$0.176
($0.267)
(1) includes asset impairment losses of US$81.1M for year ended 30 June 2018.
$5.0M
$76.7M
$92.1M
$0.443
(%)
4%
N/A
N/A
N/A
Revenues of US$129.6 million compared to US$124.6 million for the previous
year, an increase of 4%.
Medusa is an un-hedged gold producer and received an average gold price of
US$1,259 per ounce from the sale of 102,500 ounces of gold for the year (2018:
96,056 ounces at US$1,293 per ounce);
Earnings before interest, tax, depreciation and amortisation (“EBITDA”) of
US$51.4 million (2018: EBITDA of (US$25.3M) including asset impairment
losses of (US$81.1M));
Basic earnings per share (“EPS”) of US$0.176 on a weighted average basis,
based on NPAT of US$36.5 million (2018: EPS of (US$0.267) based on NPAT
of (US$55.6M));
The Company had total cash and cash equivalent in gold on metal account of
US$23.4 million at year end (2018: US$15.1M);
Depreciation of fixed assets and amortisation of capitalised mine development
and mine exploration was US$18.8 million (2018: US$29.2M);
US$6.9 million was expended on capital works associated with the new shaft
construction and infrastructure, mine expansion and sustaining capital at the
mine and mill (2018: US$14.6M);
Exploration expenditure, inclusive of underground diamond drilling was US$8.9
million (2018: US$5.4M);
Capitalised mine development costs totalled US$27.3 million for the year (2018:
US$24.5M); and
Corporate overheads of US$8.7 million (2018: US$7.3M).
3
HIGHLIGHTS OF 2019 FINANCIAL YEAR
OPERATIONS
Description
Ore mined
Ore milled
Head grade
Recovery
Gold produced
Cash costs (1)
Gold sold
Unit
30 June 2019
30 June 2018
Variance
(%)
WMT
DMT
g/t
%
606,675
550,400
544,601
494,989
6.28
94.75
6.33
94.70
ounces
103,307
95,705
US$/oz
$546
ounces
102,500
$562
96,056
$1,293
56,275
49,612
(0.05)
0.05
7,602
16
10%
10%
(1%)
-
8%
3%
6,444
7%
($34)
(3%)
Avg gold price received
US$/oz
$1,259
(1) net of development costs and includes royalties and local business taxes.
The Company produced 103,307 ounces of gold for the year, compared to 95,705
ounces from the previous corresponding period, at an average recovered grade of
6.28 g/t gold (2018: 6.33 g/t gold).
Average cash costs was US$546 per ounce, inclusive of royalties and local business
taxes, which was lower than the previous year’s average cash costs of US$562 per
ounce, and All-in-Sustaining-Costs (“AISC”) for the year was US$1,045 per ounce of
gold (2018: US$1,083 per ounce).
FY2020 OUTLOOK
The production guidance for the 2020 financial year (“FY2020”) is expected to be
between 95,000 to 105,000 ounces at AISC of between US$1,025 to US$1,125 per
ounce of gold produced.
The guided AISC includes cash production costs, royalties and local business taxes,
mine development, capital works and associated sustaining capital, exploration
expenditure and corporate overheads.
CORPORATE
Dividend:
No dividends were declared nor paid during the year.
Board retirements:
• Mr Boyd Timler retired as Managing Director on 6 July 2018; and
• Mr Peter Hepburn-Brown retired as a Non-Executive Director on 3 September
2018
Management changes:
• Mr Andrew Teo assumed the role of interim Chief Executive Officer following the
resignation of Mr Boyd Timler from 6 July 2018 until 28 February 2019; and
• Mr David McGowan, previously Chief Operating Officer was promoted to the role
of Chief Executive Officer on 1 March 2019.
4
CHAIRPERSON’S REVIEW
Dear Shareholder,
I am delighted to present the Annual Report for the 2019 Financial Year (“FY2019”) following
a remarkable year at Medusa Mining Limited (“Medusa” or the “Company”). In FY2019 we
maintained our position as a high-grade, unhedged, sustainable and self-funding gold
producer focussed on growth in the Asia-Pacific region. We concluded FY2019 on a positive
note by achieving the following milestones:
• Net profit after tax of US$36.5 million, our strongest result for three years;
• production of 103,307 ounces, exceeding our initial guidance of between 90,000 to
100,000 ounces;
• All-In-Sustaining-Costs (“AISC”) of US$1,045 per ounce, outperforming guidance of
between US$1,050 to US$1,150 per ounce;
•
increased both the Mineral Resource and Ore Reserve net of depletion at our Co-O
operation in the Philippines;
• successful near-mine exploration resulted in the reporting of a maiden Mineral Resource
at Royal Crowne Vein;
• development of the Company’s culture by ensuring ownership exists at all levels of the
organisation to achieve our goals and vision of sustainable, profitable growth within our
established licence to operate in the Philippines;
• maintained its licence to operate by continuing our high community, safety and
environmental standards; and
• continued project evaluation in the Asia Pacific region with the goal of achieving
operational diversification.
Medusa continued to generate free cash from its operations. At the start of FY2019 the
Company’s cash position (and equivalent in gold on metal account) was US$15.1 million and
by the end of the period had increased to US$23.4 million. This was achieved after all internal
capital requirements, including the completion of construction of the E15 Service Shaft (“E15”),
as well as a US$5.1 million reduction in creditor/borrowings during the year.
Commissioning of the E15 in the December 2018 quarter increased overall skipping capacity
at the Co-O mine and will facilitate the establishment of more optimally located drilling stations
for continued expansion of Mineral Resources and the Ore Reserve. The construction of
winzes to Level 12 continued. This focus will ensure the deeper, high-grade Ore Reserve
blocks are sufficiently developed for exploitation.
As part of Medusa’s long-term strategy to ensure longevity of the Co-O mine and improve
operational efficiencies, the Company continued the evaluation of preferred options to access
deeper part of the mine below Level 12. We anticipate updating shareholders on the outcomes
of the study in FY2020.
The exploration focus has been on defining the resource limits of the Co-O mine. We now
have a greater understanding of the controls on the vein system following completion of the
resource drilling program from Levels 8 and 10 which indicate the epithermal vein system
remains open at depth and to the east. Results show the main Great Hamish vein extends at
depth and to the east on Level 16. Drilling of the other main veins between Level 8 and Level
12 show mineralisation trends to the north and east while remaining open down plunge.
5
CHAIRPERSON’S REVIEW
Drilling in FY2019 resulted in a 2.8% increase in resource ounces to 890,000 ounces and a
7.0% increase in the contained ounces in the Ore Reserve which now sits at 1.58 million
tonnes grading 6.86 g/t gold for 350,000 ounces. This year’s drilling program focused on better
understanding the orebody characteristics to mitigate risk to gain higher levels of resource
confidence. The Measured and Indicated Resources to Ore Reserve conversion remains
strong at 76%.
Our near mine surface exploration program has resulted in the declaration of a maiden Mineral
Resource on Royal Crowne Vein. While the initial endowment of 50,300 ounces is modest
compared to our existing inventory at Co-O, the resource has only been drilled to a shallow
depth of 150 metres and remains open down plunge at depth. Follow up exploration is
scheduled in FY2020 to test the extensions of the mineralisation. The prospect is located
within a 3km radius of our processing facility and is on a granted MPSA, thereby significantly
enhancing the potential to contribute to mill feed should exploration be successful.
Business development activities in the Asia-Pacific region for additional opportunities
increased during FY2019. Our strategy remains to leverage our expertise in exploring
epithermal gold deposits, underground narrow vein mining and operating in the region with a
strong social licence.
The Company continued its enviable record of partnering with our host communities and
providing a number of community-based projects. These programs include providing
education, health care, infrastructure and livelihood projects to our host communities. Our
effort has been acknowledged by municipal and regional governments, and at a national level.
We concluded FY2019 with outperformance on production and cost guidance, improved gold
inventory at Co-O and an enhanced cash and bullion position. I am confident we are on the
right path of continued and sustainable success. On behalf of the Board and all employees, I
would like to thank all our valued shareholders for your continued and ongoing investment in
Medusa and I look forward to the Company’s next phase of growth in FY2020.
Yours sincerely,
Andrew Teo
Non-Executive Chairperson
6
REVIEW OF OPERATIONS
Contents of Review of Operations
Page number
Highlights
• Co-O Operations
• Group Ore Reserves and Mineral Resources
• Exploration Activities
Co-O Operations
• Co-O Gold Production
• Co-O Mill
• Co-O Mine
• Co-O Mine Geology
Group Ore Reserves and Mineral Resources
• Co-O Mine Mineral Resources
• Co-O Mine Ore Reserves
Exploration Activities
• Exploration - Philippines
o Co-O Underground Exploration
- Resource and Definition Drilling
o Co-O Surface Exploration
- Royal Crowne Vein Project (MPSA 262-2008-XIII Parcel 2)
- Durian Project
- TSF #1 Tailings Project
- West Road 17 Gold Project (MPSA 299-2009-XIII)
o
Regional Projects
- Bananghilig Gold Deposit
- Saugon Gold Deposit
• Exploration - Other Areas
o Queensland Epithermal Gold and Copper Project
- Mt Clarke West Copper Project (EPM 26008)
- Hill 212 Epithermal Gold (EPM 26217)
• Rationalisation of Tenement
Sustainability
• Health and Safety
• Environmental Protection, Management and Monitoring
• Community Participation, Development Programmes and Benefits
• Employment, Local Suppliers and Payment of Local Taxes and Wages
JORC 2012 Compliance - Consents of Competent Persons
7
8
8
9
11
15
15
15
17
22
24
25
25
27
27
27
27
32
33
34
34
35
36
36
36
37
37
37
37
38
39
39
41
44
45
46
REVIEW OF OPERATIONS
HIGHLIGHTS
Co-O OPERATIONS:
“The Company continues to improve production, achieving
103,307 ounces for the financial year ending 30 June 2019,
an increase of 8% on the previous year.”
Annual gold production totalled 103,307 ounces, with annual gold sales of
102,500 ounces at cash costs of US$ 546 per ounce;
The annual AISC was US$1,045 per ounce, an improvement of 3% from the
previous year. The ASIC includes continued capital costs portions related to the
infrastructure projects progressed and exploration expenditure in FY 2018/19;
Mill recoveries remained high at 94.8% for the year;
The E15 Service Shaft was completed and commissioned in November 2018
allowing the L8 Shaft to be utilised more for hoisting;
The sinking of the 35E internal inclined shaft from level 8 to level 12, is 81%
completed. Connections have been established on levels 9 and 10, and plats
developed on level 11;
Level 10 development has advanced with all internal shafts now connected to
the E15 Service Shaft.
8
REVIEW OF OPERATIONS
GROUP ORE RESERVES AND MINERAL RESOURCES:
“The Company’s Ore Reserves increased by 7% to 350,000
ounces after mining depletion, compared to the previous
year’s estimate of 327,000 ounces.””
Table I: Total Mineral Resources and Ore Reserves estimates as at 31 December 2018 (as per ASX announcement dated 9
April 2019). The JORC 2012 Table 1 can all be referenced through the ASX announcements.
Deposit
MINERAL RESOURCES (1,2)
Co-O Resources (1) (JORC 2012)
Total Co-O Resources
Category
Tonnes (4)
Grade (4)
(g/t gold)
Gold (4)
(ounces)
Measured
Indicated
96,000
9.57
29,000
1,385,000
11.03
491,000
Measured & Indicated
1,481,000
10.93
520,000
Inferred
1,179,000
9.75
369,000
Measured, Indicated
& Inferred
2,660,000
10.41
890,000
Bananghilig Resources (2) (JORC 2012)
Indicated
Inferred
7,580,000
200,000
Total Bananghilig Resources
Indicated & Inferred
7,780,000
1.66
4.42
1.73
7.00
4.60
6.00
1.72
1.72
5.03
5.03
9.57
3.05
8.18
406,000
29,000
435,000
10,700
5,000
15,700
28,200
28,200
50,300
50,300
29,000
935,900
453,300
47,500
34,000
81,500
510,000
510,000
311,300
311,300
96,000
9,522,500
1,724,300
Saugon Resources (3) (JORC 2004)
Indicated
Inferred
Total Saugon Resources
Indicated & Inferred
TSF#1 Tailings Resources (JORC 2012)
Indicated
Total TSF#1 Tailings Resources
Indicated
Royal Crowne Vein
Inferred
Total Royal Crowne Vein (JORC 2012)
Inferred
Measured
Indicated
Inferred
TOTAL RESOURCES
TOTAL RESOURCES
ORE RESERVES (2)
Co-O Reserves (2) (JORC 2012)
Measured, Indicated
& Inferred
11,342,800
3.88
1,418,200
Proven
Probable
93,000
1,491,000
9.62
6.68
29,000
321,000
TOTAL RESERVES
Proven and Probable
1,585,000
6.86
350,000
9
REVIEW OF OPERATIONS
Notes:
(1) Mineral Resources are inclusive of Ore Reserves.
(2) Co-O and Bananghilig Mineral Resources and Co-O Ore Reserves estimated under guideline of JORC 2012.
(3) Saugon Mineral Resources were previously prepared and first disclosed under the JORC 2004 and have not been
updated to comply with JORC 2012 on the basis that the information has not materially changed since it was last
reported.
(4) Rounding to the nearest 1,000 may result in some slight apparent discrepancies in totals used in all tables.
(5) Broken stocks and pillars have been declared as Measured Resources and Proven Reserves in 2019.
Mineral Resources:
Co-O:
- a minimum lower block cut-off of 3.2 gram*metres/tonne accumulation, which incorporates minimum mining widths of
1.25 metres or 1.5 metres (depending on vein attitude) above cut-off grade, in its derivation;
- various high cut gold grades, up to 300 g/t gold, have been applied to different veins; and
- a gold price of US$1,500 per ounce has been applied.
Bananghilig:
-
-
Indicated Resource: a lower block cut-off of 0.75 g/t gold has been applied to mineralisation within a US$1,500 per
ounce Whittle pit shell, reflective of open pit mining costs;
Inferred Resource: a lower block cut-off of 3.0 g/t gold has been applied to mineralisation outside of the US$1,500 per
ounce Whittle pit shell, to a maximum depth of 100 metres below the pit shell walls and base, reflective of underground
mining costs;
- a high cut of 40 g/t gold has been applied to all mineralisation;
- Allowance for artisanal mining depletion of 18,300 ounces gold applied within the Whittle pit shell; and
- a gold price of US$1,500 per ounce has been applied.
Saugon:
- a lower cut-off of 2.0 g/t gold has been applied; and
- a gold price of US$1,500 per ounce has been applied.
TSF#1 Tailings:
- a lower cut-off of 0.85 g/t gold has been applied;
- a Bangka drilling was undertaken using grid spacing of 25 by 25 meters; and
- a gold price of US$1,500 per ounce has been applied.
Royal Crowne Vein:
Inferred Resource estimated only from all available drill holes as at 31 January 2019;
-
- a lower cut-off of 0.3 g/t gold has been applied to define the mineralisation; and
- a bulk density of 2.55 g/cm3 was used based on the average density measurements.
Ore Reserves:
Ore Reserves are a subset of Mineral Resources.
Co-O:
- minimum mining widths of 1.25 metres (stopes ≥50°) and 1.5 metres (stopes <50°) have been applied, and where the
vein width was equal to, or greater than, the minimum mining width, an extra 0.25 metres dilution was added to the
hanging wall;
- a further 10% dilution has been allowed for slabbing in mining of low angle stopes under draw;
- shape dilution of 7% of extra tonnage at 2 g/t gold applied, to reflect pinch and swell of veins, and faulting;
- an allocation for extra development ‘on-vein’ at a grade of 2 g/t gold has been applied;
- an allocation for extra development ‘off-vein’ at a grade of 1 g/t gold has been applied;
- 85% mining recovery for stopes <10 g/t gold;
- 90% mining recovery for stopes ≥10 g/t gold;
- all pillars in the mine were manually assessed and a 50% recovery factor was applied to the tonnage of all pillars;
- stopes containing <500 tonnes were removed to account for ore loss;
- a cut-off grade of 4.0 g/t gold has been applied to all stopes; and
- a gold price of US$1,275 per ounce has been applied.
10
REVIEW OF OPERATIONS
EXPLORATION ACTIVITIES:
“The Company’s exploration activities achieved success
with the announcement of a maiden Mineral Resource of
50,300 ounces at its Royal Crowne Vein Project and also
broadened is exploration area with commencement of
Earn-in-Agreements at Mt Clarke West and Hill 212 in
Central Queensland.”
Figure 1. Eastern Mindanao tenement location plan, showing consolidated tenement outlines Deposits and Projects.
11
REVIEW OF OPERATIONS
Figure 2. Location diagram of the Company’s main project areas in relation to the significantly mineralised belts of the Philippines.
12
REVIEW OF OPERATIONS
EXPLORATION - PHILIPPINES
Co-O MINE
The drilling program continued to focus on understanding and defining the geological limits of the main epithermal
veins, particularly at the eastern and down plunge of the Great Hamish Vein (“GHV”) as well as the other major
vein systems (Don Pedro, Central, and Jereme veins).The drilling program sucessfully shows the veins are
returning economic grade intercepts at and below Level 12, and remaining open to the east and down dip. Current
and future drilling campaigns are to prove the downdip extension of the vein system and develop the resource
base.
Co-O SURFACE EXPLORATION
Exploration activities for FY2019 focused on the evaluation of prospects within the Co-O and Royal Crowne Vein
(Old Sinug-ang) areas, as well as review of Philsaga Mining Corporation (“PMC”) granted tenements and
applications.
ROYAL CROWNE VEIN PROJECT (OLD SINUG-ANG)
The Royal Crowne Vein (“RCV”) Project corresponds to a 200+ metres projected vein segment along the northern
portion of the 1,500 metres long Sinug-ang vein system that has not been fully tested by drilling.
A 2-phase 22-hole, 6,020 metre drilling program was implemented commencing 15 August 2018 to validate the
continuity of gold mineralisation along the 500 metre long projected strike length of the NNW-trending RCV. By
the end of FY2019, a total of 20 holes were completed with a cumulative metreage of 5,086 metres.
Geological interpretation and modelling were completed as input and basis to the subsequent maiden resource
estimation. The mineralisation extends from surface to 150 metres below surface and is open along strike and
at depth.
The maiden Inferred Resources estimation at a nominated 2.0 g/t gold cut-off gave 311,300 tonnes @ 5.03 g/t
gold for 50,300 ounces gold. The full ASX announcement of the resources was published on 16 April 2019.
Further drilling is planned in FY2020 to upgrade the resource category and extend the resource base.
DURIAN PROJECT
The Durian Project is located about 1km north of the Co-O Mine and is defined by an oblong-shaped moderate
to high IP chargeability anomalous zone with coincident low resistivity anomalous zones. The geometry of the IP
anomaly suggests the potential presence of a structurally-controlled vein-style mineralisation associated with a
diatreme structure and/or shallow intrusion.
Scout drilling of the Durian Project aimed at validating observed IP chargeability anomalies associated with
outcropping moderate grade (i.e. 1 to 3 g/t gold) veins and stockworks, and moderate to high grade (i.e. > 5.0 g/t
gold) historical drill intercepts, was concluded 9 March 2019. 4 drill holes (EXP’s 244, 245, 246 and 247) with a
total metreage of 1,618 metres were completed to test the SW and NE blocks of the IP anomaly.
The 2 drill holes in the SW block intercepted weak mineralised structure with narrow width. Of the 149 core
samples, 7 samples returned grades above 1.0 g/t gold, and peak assay at only 2.42 g/t gold. Based on these
initial results, drilling has been discontinued while the best approach going forward is being re-evaluated.
At the NE block of the Durian IP anomaly, EXP 246 validated the interpreted diatreme-related structure, but failed
to intercept significant mineralised vein structure. Host rocks exhibited localised weak to moderate argillic
alteration with associated 1% to 5% disseminated pyrite. The drill holes also failed to intercept significant
mineralised vein structures related to a NW trending linear ridge anomaly with associated minor outcropping
stockworks. Based on the poor results achieved, drilling of the last proposed hole in this NE sector of the Durian
Project was also discontinued.
TSF #1 TAILINGS PROJECT
The Tailings Storage Facility (“TSF”) #1 was the TSF utilised by the original processing plant since the 1980’s.
The TSF #1 material is from the earlier higher gold grade Co-O mine ore and coupled with old extraction
techniques used at that time. Previous assessment completed on October 2015, focused on metallurgical testing
using samples collected from auger drill holes.
13
REVIEW OF OPERATIONS
TSF #1 TAILINGS PROJECT (continued)
The drilling results were modelled in Surpac and a resource estimation using a lower cut-off grade of 0.85 g/t gold
gave 510,169 tonnes with 1.72 g/t gold containing 28,200 ounces of gold in the Indicated category that is
compliant to the JORC 2012 code reporting standard. The geological model interpretation reveals that
concentration of the higher grades at the upper portion of the tailings section will simplify mining, minimising the
need of disturbing the lower grade basal tailings material.
Metallurgical testing to date, has confirmed the potential for preg-robbing and identified options for neutralising
this effect and improving recoveries. However, a more detailed study is underway into the feasibility of mining
and processing this material, including more detailed metallurgical testing to identify the optimal flow sheet for
processing the material. The objective of this work is to determine the best option for gaining value from TSF #1
resource.
BANANGHILIG GOLD DEPOSIT
There has been no development or material change on the Bananghilig Deposit since the Company completed
an exhaustive 2 year (FY2015 and FY2016) review of the Bananghilig B1 (“Bananghilig”) gold deposit which
resulted in a Mineral Resource estimate reported in 2016 in accordance with the guidelines of JORC 2012.
The total Indicated and Inferred Mineral Resources for the Bananghilig Gold Deposit, at a block cut-off grade of
0.75 g/t gold for Indicated (open-pit material), and 3.0 g/t gold for Inferred (underground material), is estimated at
7.78 million tonnes at a grade of 1.73 g/t gold (435,000 ounces contained gold). The details of the study have
been reported by the Company in September 2016.
SAUGON GOLD DEPOSIT
The Saugon Inferred Mineral Resource (81,500 tonnes at a grade of 5.97 g/t gold for a total of 15,700 ounces
contained gold) has remained unchanged from 2013. This information was prepared and first disclosed under
JORC 2004. It has not been updated since to comply with the JORC 2012 on the basis that the information has
not materially changed since it was last reported.
EXPLORATION - OTHER AREAS
QUEENSLAND EPITHERMAL GOLD & COPPER PROJECT
The Company announced on 5 July 2018 that it has entered into an Earn-in-Agreement (“EIA”) with Ellenkay Gold
Pty Limited (“Ellenkay”) regarding two exploration projects in Central Queensland, Australia.
The Hill 212 (EPM 26217) exploration project is an epithermal gold-silver opportunity approximately 30km east of
Mt Coolon. The Mt Clark West (EPM 26008) exploration project is a copper-gold opportunity approximately 24km
north-west of Nebo. Both projects have well defined drill targets generated through previously completed
geochemical and geophysical work programs.
Ellenkay currently has a 100% interest in both projects and under the terms of the EIA, Medusa may earn an
equity position of up to 90% in either or both projects by managing and funding work programs through to the
completion of a Pre-Feasibility Study.
Mt Clarke West Copper Project (EPM 26008)
A 4-hole drilling program aggregating 1,288 metres was completed during May. This is the first drilling for minerals
in the vicinity of Mt Clark. The initial drilling has intercepted 100’s of metres of moderate to intense stockworks
with predominantly pyrite in-fills. Alteration shows propylitic (chlorite, epidote) to phyllic (sericite vein selvages,
with patchy tentatively identified potassic (biotite) alteration.
The assays from the 4 drill holes returned low values for copper and gold. The Company is now reviewing its
options on the way forward with respect to this Project.
Hill 212 Epithermal Gold (EPM 26217)
A fully executed Conduct and Compensation Agreement has been finalised with landholders in late June. Future
works are planned for preparation of the initial drilling program, which is expected to commence in early FY2020.
14
REVIEW OF OPERATIONS
Co-O OPERATIONS
The Co-O Gold Mine (Figures 1 and 2) is operated by Philsaga Mining Corporation under Mineral Production
Sharing Agreement (“MPSA”) 262-2008-XIII, which covers 2,539 hectares.
Co-O GOLD PRODUCTION
Table II: Co-O gold production statistics for financial years ended 30 June 2018 and 2019.
Description
Ore mined
Ore milled
Head grade
Recovery
Gold produced
Cash costs (1)
Gold sold
Unit
30 June 2019
30 June 2018
Variance
WMT
DMT
g/t
%
606,675
550,400
544,601
494,989
6.28
94.75
6.33
94.70
ounces
103,307
95,705
US$/oz
$546
ounces
102,500
$562
96,056
$1,293
56,275
49,612
(0.05)
0.05
7,602
16
6,444
($34)
(%)
10%
10%
(1%)
0%
8%
3%
7%
(3%)
Avg gold price received
US$/oz
$1,259
Notes:
(1) net of development costs and includes royalties and local business taxes.
• The Company produced 103,307 ounces of gold for the year at an average recovered grade of 6.28 g/t
gold which was above the upgraded production guidance (June 2018: 95,705 ounces at an average
recovered grade of 6.33 g/t gold);
• The average cash costs of US$546 per ounce, inclusive of royalties and local business taxes, was lower
than the previous year’s average cash costs of US$562 per ounce; and
• All-in-Sustaining-Costs (“AISC”) for the year was US$1,045 per ounce of gold (2018: US$1,083 per
ounce).
FY2020 Production Guidance
The production guidance for the 2020 financial year (“FY2020”) at the Co-O mine is expected to be between
95,000 to 105,000 ounces at AISC of between US$1,025 to US$1,125 per ounce.
The guided AISC includes cash production costs, royalties and local business taxes, mine development, capital
works and associated sustaining capital, exploration expenditure and corporate overheads.
Co-O MILL
The Co-O Processing Plant is a conventional gold mill, comprising a single stage jaw crusher, SAG mill and
conventional CIL circuit, with a gravity gold & intense cyanide leach system. Tailings are treated and thickened
before discharge to a multi-celled tailings storage facility.
15
REVIEW OF OPERATIONS
Co-O Gold Project
Processing Plant Flowsheet
Direct Feed
ILR
LEGENDS
Slurry
Carbon
Water
Eluate
Diagram 1. Co-O Processing Plant flow sheet.
Tailings
Cyanide Detoxification
The Co-O mine is 6km from the process plant, with a 12km haulage route due to the local topography.
The processing plant is powered from the regional grid, with emergency generators installed with sufficient
capacity to run the plant at full capacity.
The Co-O Mill performed efficiently throughout the fiscal year with mill recovery of 94.8%, with head grades of
6.28 g/t gold.
Mill throughputs were restricted by availability of ore from the mine, resulting in low utilisation of the processing
plant. Cost reductions were achieved through the optimisation of the processing plant operation and
maintenance including utilisation of onsite personnel in lieu of contract labour for mill relines and major
shutdowns as these were completed during scheduled down time.
Low processing plant utilisation is expected to continue into FY2020.
The Mill does not require any major works, upgrades or refurbishments under the current life-of-mine plan
(“LOMP”). Tailings storage facility (“TSF”) # 5 was completed during FY2017 and is expected to provide
adequate TSF capacity for next 2 years. Work has progressed on the planning and design of the next TSF with
aim of starting construction at the beginning of next year.
16
REVIEW OF OPERATIONS
Picture 1. Co-O Processing Plant
Co-O MINE
The Co-O Mine is a shaft access, underground track mine, utilising battery powered locomotives and mine cars.
Air-leg mining is used to extract the ore and waste is hauled to surface via the main L8 Production Shaft, two 60-
degree inclined shafts; Baguio and Agsao, and through the original portals. The primary infrastructure of the Co-
O mine is represented in Diagram 2.
Typical strike length of any of the current 10 extraction levels is approximately 1,000 metres, running west to
east. Levels are developed 50 metres apart vertically, with Level 10 being approximately 500 metres below
surface.
There are 4 winzes operating between Level 8 and Level 9 with three of these also servicing Level 10. Another
winze, the 35E internal shaft, is being developed from Level 8 to service Levels 9, 10, 11 and 12. When complete
the other winzes will be systematically deepened to also service Levels 11 and 12.
The E15 Shaft, a man and materials shaft, was completed in November 2018. The shaft is used for transporting
people and materials underground enabling increased utilisation of the L8 Shaft for hoisting of ore.
As Ore Reserves are diminished from the upper levels, the utilisations of the Portals, Agsao and Baguio shafts
for hoisting of ore will reduce partially offsetting the increased skipping expected from L8 Shaft.
17
REVIEW OF OPERATIONS
Diagram 2. Shows location of major infrastructure in the Co-O mine.
Underground hoisting capacity has improved since the operation of E15 Service Shaft commenced in November
2018, with ongoing works to optimise existing hoisting systems. The resources in the upper levels are being
diminished, reducing the number of available production areas. This will reduce hoisting from the Agsao shaft,
Baguio shaft and the portals over time.
Several projects were implemented during the year to improve access to resources down to Level 12 and to
gain the most from the hoisting system. Some the key improvement projects were;
•
•
•
•
•
•
•
•
Expansion of the Level 8 pump station. With increased number of working areas below level 7, the
pumping requirements also increased, necessitating the expansion of the Level 8 pump station.
Planned major maintenance on the L8 winder and loading pocket was completed during periods of low
productivity such as Christmas, New Year and Easter. This work was successfully planned and
executed, minimising disruption to scheduled mine production.
L8 Shaft structure refurbishment. Inspections on the L8 shaft structures have identified work required
to maintain the long-term functionality of the shaft. A plan has been developed and commenced to
progressively replace section of the shaft structures. This work is being conducted during weekends
when there is minimal disruption to hoisting operations.
L8 shaft productivity improvement project. Work continued to identify and improve traffic congestion
on Level 8, this improves the availability of ore for hoisting in the L8 shaft which results in improving
hoisting productivity of the shaft. Significant gains have been made to date and further work will
continue.
Development of Internal shaft to Level 12. To maintain production into the future requires Levels 11
and 12 to be developed in a timely manner. The 35E Internal Shaft is being developed to Level 12.
When completed, development will commence on Level 12 to extend the other internal shafts to level
12 also. The work is ongoing.
Improved loading of internal shaft skips. An improved ore-pass and skip loading arrangements were
implemented on the 43E and 48E internal shafts which has reduced level congestion and improved
shaft hoisting productivity. A similar system will be implemented on 12E and 35E shafts in the future.
Integration of the long-range planning, short-range planning and mine geology data has improved the
planning and scheduling process of the mine. This is being expanded to include project management
to improve the design, planning and implementation of future infrastructure projects.
Commenced a study to determine the best option for accessing and extracting the resources below
Level 12. This study is expected to be completed in the first half of FY2020.
18
REVIEW OF OPERATIONS
Graph 1. Co-O Mine dry tonnes hoist for FY 18/19 by month
The mine tonnes hoisted in the first half of the year was consistently above 48,000 tonnes per month, this
increased to 54,000 tonnes per month in the second half FY2019. The exceptions were the months of December
and January when miners attendance at the mine were low due to the Christmas/New Year holidays. Major
shaft maintenance work was carried out during this period.
The increase in hoisting in the second half of the year is a result of improved utilisation of the L8 shaft for
hoisting of rock.
Stoping methods
Two mining methods are currently utilised at the Co-O Mine:
Diagram 3. Schematic diagram of a shrink stope.
Diagram 4. Schematic diagram of a room and pillar (slot) stope.
19
REVIEW OF OPERATIONS
Stoping methods (continued)
(i) Shrink stope mining
This method is predominantly used on steeply dipping veins with a minimum mining width of 1.25 metres.
(Diagram 3). Mining commences from the bottom and progresses upwards and the broken ore is left in
the stope to provide ground support. The volume of ore expands after blasting by about 30% and this
material needs to be progressively drawn from the stope during operation. Once blasting has reached the
crown pillar, the remaining 70% of ore can be drawn quickly at low cost.
(ii) Room and pillar (slot) mining
This method is used on the low-angle veins where the ore would not naturally flow to the draw points.
(Diagram 4). The broken ore needs to be scraped to the haulage Level by mechanical slushers, and pillars
need to be left behind for ground support. The minimum mining width for low angle veins is 1.5 metres,
hence the higher dilution is partly responsible for the overall lower than average grade achieved from the
upper parts of the mine where the low angle veins are prominent. The ratio of room and pillar stopes to
shrink stopes will likely decrease with depth.
Development
Development and stoping continued on Levels 2, 4, 5, 6, 7, 8, 9 and 10 during the year, as well as winzes
(internal shafts) from Level 8 down to Levels 9, 10 and 12. Most development is conducted on ore with waste
development being confined to cross-cuts, ventilation raises, internal shafts and infrastructure requirements.
A total of 30,142 metres of horizontal and vertical development was completed in FY2019. This was an increase
of 16% over the previous year. The focus is on the development of the lower sections of the mine (Levels 7, 8,
9 and 10).
Graph 2 shows the distribution of both horizontal and vertical development through the year.
Graph 2. FY2019 mine development (horizontal and vertical) by month.
20
REVIEW OF OPERATIONS
L8 Shaft
Major planned maintenance on the shaft and the winder were carried out during scheduled maintenance days
(Sundays) and over the festive periods, Christmas/New Year and Easter. This work included rope changeout,
change out of winder braking components, and replacements of worn components in the shaft. Inspections of
the shaft structures have identified the shaft is functional but will require some refurbishment in the future to
maintain functionality. A plan has been developed and commenced to progressively replace section of the shaft
structures. This work is being conducted during weekends when there is minimal disruption to hoisting
operations. This disciplined approach to inspections and planned maintenance has seen the shaft maintenance
down time reduce.
With the completion of the E15 Service Shaft in November 2018 the utilisation of the L8 Shaft for rock hoisting
has increased, resulting in increased hoisting.
E15 Service Shaft
The E15 Service Shaft (“E15”) was built for the transportation of manpower and materials to Levels 4, 5, 6, 7,
8, 9 and 10. Its completion in November 2018 has allowed the L8 Shaft to be utilised more for hoisting.
The E15 has also improved access to the levels giving improved efficiencies to the operations and mine
planning.
Picture 2. E15 service shaft in use: Miners disembarking on level 10
21
REVIEW OF OPERATIONS
Internal Winzes (shafts) from Level 8 to Level 10
During FY2019, 5 primary winzes (internal inclined shafts) were in operation hoisting from Levels 9 and 10 to
Level 8, the 17E, and 29E winzes service Level 9 while the 12E, 43E and 48E winzes service both Level 9 and
10.
An improved ore-pass and skip loading arrangements were implemented on the 43E and 48E internal shafts
which has reduced level congestion and improved shaft hoisting productivity. A similar system will be
implemented on 12E shaft in the future.
Development of Level 10 has now connected all internal shafts and the E15 on the level. This has improved
access and ventilation to work areas on the level improve utilisation of the internal shafts.
Two diamond drill stations were developed on level 10 and are being utilised to for resource drilling of the areas
below Level 10.
The 35E internal shaft is being developed to Level 12 and is currently below Level 11. Once complete the other
winzes will systematically be extended to Level 12.
Primary Ventilation
The second phase of the primary ventilation upgrade project has commenced with the development of cross
cuts on Level 8 and Level 5, and the commencement of raising from Level 8. The system is designed to increase
the airflow in the lower levels and to move the primary ventilation circuit further east allowing better distribution
of ventilation around the working areas as the ore body plunges to the east.
Co-O MINE GEOLOGY
The detailed discussions and interpretations of the Co-O geology and mineralisation were initially reported on
14 August 2012 and were progressively updated to contain plans and sections, in the 2012 to 2018 Annual
Reports.
Figure 3: Co-O Mine composite longitudinal projection showing the locations of reported significant drill intercepts (since 2010), underground
development, E15 Shaft. The 2019 Measured, Indicated and Inferred resource model (light green) is also shown, demonstrating
the potential for down plunge extensions at depth.
22
REVIEW OF OPERATIONS
During the past year, the Company has continued its resource drilling campaign with a concentrated review of
the Great Hamish Vein (“GHV”) and Jereme Veins with particular attention to the identification of structures and
vein textures and their relationships with mineralisation and gold grades in the eastern extension. The key points
from the extensive review, re-interpretations and re-modelling of the Co-O Mine underground geology achieved
a number of key objectives:
• Maintained the high level of confidence in the Co-O resources as per the high conversion rate of Measured
and Indicated Resource to Ore Reserves despite the depletion of high-grade broken stocks and pillars.
• Defined the eastern geologic extension to the main GHV between Levels 12 and 16;
• Greater understanding of the structural controls on the epithermal gold system created by the diatreme
intrusive contact as indicated on geology map of Co-O deposit (Figure 5). Figure 4 indicates the geological
complexity of the Co-O vein system, its primary veins and the numerous associated splay veins.
• The GHV at Level 16 is returning economic intercepts open to the east and down dip;
• The Jereme Vein is open to the east and down dip; and
• Further drilling has shown that an improved continuity of these veins can be achieved by the addition of
internal dilution.
The total Mineral Resources inclusive of the Ore Reserves is presented in the longitudinal section (Figure 3)
above. Drilling information revealed that there are ore shoots extension beyond the initially projected ore
boundaries.
Figure 4: Isometric and Orthogonal views of the Co-O Mine’s 2019 resource model, major veins (GHV, Jereme, Central and Don Pedro Veins)
in colour and associated sub-parallel and link veins in translucent grey, plus underground development and production shafts.
23
REVIEW OF OPERATIONS
GROUP ORE RESERVES AND MINERAL RESOURCES
The Annual Mineral Resources Update Statement and Annual Ore Reserves Update Statements for the Company
were released on 09 April 2019, and include Material Information for the individual deposits, including a Material
Information Summary pursuant to ASX Listing Rules 5.8 and 5.9 and the Assessment and Reporting Criteria in
accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves (“JORC 2012”).
The Mineral Resources and Ore Reserves Statements have been prepared in accordance with the JORC 2012
for the Co-O Mine and the Bananghilig B1 deposit, however the Saugon Mineral Resources was prepared and
first disclosed under JORC 2004 and has not been updated to comply with JORC 2012 on the basis that the
information has not materially changed since it was last reported.
Refer to the Company’s Annual Update Statement of Mineral Resources and Ore Reserves dated 9 April 2019
for background information and material information relating to the resources and reserves estimates.
The Company conducts regular internal and external reviews of Mineral Resource and Ore Reserve estimation
procedures to validate the quality and integrity of these procedures. External consultants are also regularly
contracted to conduct independent reviews of Mineral Resource and Ore Reserve estimation procedures and
results. The reviews have not identified any material issues with these procedures or results.
The Co-O Mine has a long history of Ore Reserve replacement by way of diamond drilling and conversion of
Measured and Indicated Resources (Graph 3). The Company remains confident in the long-term future of the Co-
O Mine given the current Mineral Resource inventory, the nature of the geology and mineralisation and the historic
conversion rate (~70%), after allowance for mining recovery, of Measured and Indicated Mineral Resources to
Ore Reserves. The Co-O Mine continues to maintain a minimum plus three-year mine plan, for Measured and
Indicated Resources, and more than a 5-year life, considering the resource endowment. This is typical of the way
these types of narrow-vein, high-grade gold mines have operated for many years.
Mineral Resource and Ore Reserve Assumptions
Mineral Resources are reported inclusive of Ore Reserves and includes all exploration and resource definition
drilling information up to 31 December 2018 and has been depleted for mining to 31 December 2018.
Gold price assumptions used to estimate Mineral Resources and Ore Reserves are:
• Mineral Resources - US$1,500 per ounce gold
• Ore Reserves - US$1,275 per ounce gold
Co-O MINE PRODUCTION HISTORY
Cumulative Production
Reserves
6
7
3
6
4
6
7
2
4
8
3
5
0
7
5
0
5
4
0
8
3
0
4
4
8
6
5
8
1
3
2
0
5
8
5
2
5
0
5
7
5
1
0
0
5
7
6
9
4
2
1400
1200
1000
)
0
0
0
(
S
E
C
N
U
O
800
600
400
200
19
0
0
5
3
7
2
3
5
4
3
7
2
7
9
9
7
2
9
8
2008
2009
2010
2011
2012
2013
2014
2015
2016 Apr-17 Dec-17 2018
FISCAL YEAR
Graph 3. Production, Ore Reserves and Mineral Resources status since 2007, demonstrating the Co-O Mine’s history of increasing resources
and replacing mine depletion.
Notes:
FY2008 to FY2013 - Ore Reserve ounces are classified under JORC 2004 guidelines;
FY2014 to FY2018 - Mineral Resource and Ore Reserve ounces are classified under JORC 2012 guidelines; and
FY2019
- Ore Reserves estimated using gold price of $1,275 per ounce, the same as for FY2018.
24
REVIEW OF OPERATIONS
Co-O MINE MINERAL RESOURCES
Total Measured, Indicated and Inferred Mineral Resources for the Co-O Mine are now estimated at 2.66 million
tonnes at a grade of 10.41 g/t gold for a total 890,000 ounces contained gold (Table I), compared to the 31
December 2017 estimate of 2.53 million tonnes at a grade of 10.65 g/t gold for a total 865,000 ounces contained
gold (Table III).
There has been a slight increase in the total number of ounces in the Co-O Mine's Mineral Resources even though
there has been a mining depletion of 93,000 ounces.
While the ounces in the Measured and Indicated Resource category have increased by 6.6%, the grade remained
the same at 10.93 g/t gold. In the Inferred Resource category there has been an increase in the ounces of 3.3%
with a grade reduction of 5.3%. Overall the total ounces have increased by 2.8% while the grade has reduced by
2.2%. The grade reduction is primarily the result of:
• mining depletion;
•
the conversion of a component of higher grade Inferred Resource to the Indicated category as a result of
drilling and development;
• drilling and development resulting in information which shows that there is an improved continuity of previously
interpreted narrow veins. This enhanced continuity has been achieved through the addition of internal dilution,
which will make the resource more amendable to mining; and
• drilling which has also delineated additional lower grade veins (above cut-off grade) that have been included
in the estimate as they are proximal to higher grade veins.
Table II: Comparison summary of total undiluted Co-O Mineral Resource estimates for 31 Dec 2017 & 31 Dec 2018.
Mineral
Resource
Category (1)
Measured
Indicated (2)
Inferred (2)
Total
31 December 2017
31 December 2018
Variance
Tonnes
Gold (g/t)
Gold (oz)
Tonnes
Gold (g/t)
Gold (oz)
Tonnes
Gold (g/t) Gold (oz)
Not reported
96,000
9.57
29,000
100%
100%
100%
1,389,000
10.93
488,000
1,385,000
11.03
491,000
-0.29%
0.91%
0.61%
1,141,000
10.30
378,000
1,179,000
9.75
369,000
3.33%
-5.33%
-2.38%
2,530,000
10.65
865,000
2,660,000
10.41
890,000
5.14%
-2.25%
2.77%
Notes:
(1) Mineral Resources are reported inclusive of Ore Reserves;
(2) Resources are reported to Level 16 (-595m RL).
Co-O MINE ORE RESERVES
A detailed review of all Co-O Mine and milling production data, including mining and metallurgical performances
to determine appropriate physical mining parameters, cut-off grades and dilutions has been completed for this
latest update to the Mineral Resource and Ore Reserve statement (see ASX Announcement dated 9 April 2019).
The Co-O Mine Proven and Probable Ore Reserves are now estimated at 1.585 million tonnes at a grade of 6.86
g/t gold for a total 350,000 ounces contained gold, compared to the 31 December 2017 estimate of 1.52 million
tonnes at a grade of 6.69 g/t gold for a total 327,000 ounces contained gold.
The drilling program and mine development, as at 31 December 2018 has resulted in a Proven and Probable
Reserve of 350,000 ounces.
This Proven and Probable Reserve represents a 125% replenishment of the ounces mined. This is because in
2018 a large proportion of the mined ore has come from outside of the previously stated Resources and Reserves
due to underground drilling locating Resource areas which were mined during the 2018 calendar year and
development of previously discounted Resource areas also being mined and milled at grades higher than
anticipated. There has been an increase in total ounces of 7% when compared to the 31 December 2017
Probable Reserve of 327,000 ounces. Moreover, the 31 December 2018 Proven and Probable Reserve grade
has increased slightly by 2.5% to a grade of 6.86 g/t gold.
25
REVIEW OF OPERATIONS
The changes in the Co-O Mine Ore Reserves are primarily due to:
• mining depletion; and
• modified vein interpretations through increased geological knowledge of the different vein sets obtained by
further underground development, mapping and drilling.
The basal cost assumptions are from the previous year’s actual costs, with adjustments relating to the expansion
capital improvements. The conversion of Indicated Resource to Ore Reserve stands at approximately 70%. This
conversion rate indicates a high level of resource confidence when costs and scheduling are applied to the
resource. The Co-O Ore Reserves are reported using a gold price of US$1,275 per ounce.
Table IV: Comparison summary of Co-O Mine’s Ore Reserve estimate for 31 Dec 2017 & 31 Dec 2018.
Ore
Reserve
Category
Proven
Probable (1)
31 December 2017
31 December 2018
Variance
Tonnes
Gold (g/t)
Gold (oz)
Tonnes
Gold (g/t)
Gold (oz)
Tonnes
Gold (g/t) Gold (oz)
Not reported
93,000
9.62
29,000
100%
100%
100%
1,520,000
6.69
327,000
1,491,000
6.68
321,000
-1.90%
-0.15%
-1.83%
Total
1,520,000
6.69
327,000
1,585,000
6.86
350,000
4.21%
2.54%
7.03%
Note:
(1) Ore Reserves are reported to Level 13 (-454m RL), with very limited Reserves below Level 12 (-395m RL).
26
REVIEW OF OPERATIONS
EXPLORATION ACTIVITIES
EXPLORATION - PHILIPPINES
Co-O UNDERGROUND EXPLORATION
“The underground drilling during FY2019 continued to focus
on the definition and conversion of wide-spaced intersections
between Levels 8 to 16 into resources, and to develop
additional mineral resources.”
RESOURCE AND DEFINITION DRILLING
In FY2019, continued focus on the underground drilling and development was primarily to probe the eastern and
downdip extensions of GHV, Jereme Vein as well as upgrade Inferred Resources, into the Indicated Resources
category. In the course of FY2019, drilling was carried out at Levels 4, 5, 6,7,8,9 and 10.
The significant drill intercepts from are presented in Figure 3; this includes results from prior to July 2018 (grey
dots).
Table III: Summary of Co-O Mine underground drilling for FY2019.
Project
Purpose
Levels
Number of Holes
Meterage
Co-OMine Underground
Definition drilling
4,5,6,7,8 and 9
Resource drilling
8 and 10
TOTAL DRILLING
74
89
163
31,254
12,313
43,567
Details of significant intersection results obtained during the FY2019 have been reported in the September 2018,
December 2018, March 2019 and June 2019 quarterly reports.
Table V below summarises the more significant drill intersections obtained in FY2019.
Table IV: Co-O Mine - significant underground drill hole results of ≥ 3 gram-metres.
Hole
Number
East
North
RL
Depth
(metres)
Azim
(°)
Dip
(°)
From
(metres)
To
(metres)
Width
(metres)
Gold
(g/t)
Accumulations
(gm*m)
UNDERGROUND RESOURCE DRILLING - LEVEL 5
L5-37E-002
614357
912922
L5-37E-003
614359
912920
-45
-45
250.3
234.5
10
55
L5-37E-004
614360
912922
L5-37E-006
614357
912921
-45
-44
227.70
250.00
35
356
-1
1
4
0
166.35
166.80
183.00
184.10
184.95
186.80
Including
119.95
120.50
68.80
69.15
183.10
183.70
UNDERGROUND RESOURCE DRILLING - LEVEL 6
L6-30E-002
614313
912981
-93
120.10
152
-1
L6-67E-002
614644
912786
-88
150.10
211
2
91.10
92.25
93.50
0.20
8.65
91.80
93.05
94.15
0.45
9.60
0.45
1.10
1.85
1.00
0.85
0.55
0.35
0.60
0.70
0.80
0.65
0.25
0.95
46.53
14.70
4.14
5.47
4.38
12.61
11.33
63.39
39.93
44.43
9.47
37.24
18.57
20.94
16.17
7.66
5.47
3.72
6.94
3.97
38.03
27.95
35.54
6.16
9.31
17.64
27
REVIEW OF OPERATIONS
Hole
Number
East
North
RL
Depth
(metres)
Azim
(°)
Dip
(°)
From
(metres)
To
(metres)
Width
(metres)
Gold
(g/t)
Accumulations
(gm*m)
L7-17W-002
613815
912931
-136
L7-19W-001
613773
912852
-138
140.00
150.10
327
199
0
-1
0.00
1.00
93.15
96.70
UNDERGROUND RESOURCE DRILLING - LEVEL 7
Including
L7-19W-003
613773
912852
-137
L7-30W-001
613658
912849
-135
150.20
150.50
220
173
-1
4
116.80
117.55
78.40
79.70
L7-61E-002
614631
912936
-138
151.40
38
0
L7-61E-003
614630
912933
-138
100.90
155
2
L7-63E-002
614664
912931
-138
150.30
L7-71E-002
614679
912762
-135
150.40
L7-30W-005
613657
912848
-135
150.40
L7-37E-003
614295
912731
-140
70.10
53
48
208
352
1
0
-2
0
Including
42.15
46.00
42.45
46.80
150.00
150.35
43.50
97.00
44.50
98.55
Including
31.20
79.95
96.50
69.00
28.85
31.65
80.15
97.10
69.50
30.05
including
UNDERGROUND RESOURCE DRILLING - LEVEL 8
L8-2W-034
613992
913099
-189
L8-45E-053
614466
913037
-191
550.60
551.10
196
168
-46
-39
300.25
301.25
132.25
132.85
468.60
469.30
L8-45E-054
614465
913037
-191
551.10
181
-41
122.30
123.05
181.60
182.10
183.60
184.60
401.10
401.90
L8-45E-055
614465
913037
-191
551.10
195
-44
36.50
37.55
157.80
159.30
Including
236.40
236.80
237.80
239.10
Including
317.70
318.70
321.35
321.75
L8-72E-001
614699
912850
-188
550.10
333
-17
54.65
56.00
Including
160.05
160.35
264.35
265.35
54.60
49.20
54.80
50.40
Including
208.10
208.70
177.35
177.70
L8-72E-002
614699
912850
-188
L8-72E-005
614700
912850
-188
550.10
551.10
338
348
-21
-20
28
1.00
3.55
0.45
1.00
1.10
1.00
0.75
1.30
0.30
0.35
0.25
0.40
0.30
0.80
0.35
1.00
1.55
1.00
0.55
0.45
0.20
0.60
0.50
1.20
1.00
0.20
1.00
0.60
0.70
0.75
0.50
1.00
0.80
1.05
1.50
1.00
0.50
0.40
1.30
0.30
1.00
1.00
0.40
1.35
1.00
0.35
0.30
1.00
0.20
1.20
0.20
1.00
0.60
0.35
15.83
60.28
33.20
62.43
15.83
213.99
14.94
62.43
115.03
126.53
10.10
8.91
63.85
42.95
50.60
124.70
53.10
12.73
8.13
21.83
16.93
6.23
5.57
7.44
20.00
142.90
29.20
112.90
5.92
3.23
19.34
24.80
39.73
10.10
6.68
83.01
12.89
17.71
31.18
21.24
3.82
6.50
7.64
16.93
9.66
5.57
4.09
9.00
28.58
17.52
56.45
7.10
3.23
3.87
24.80
23.84
425.27
297.69
12.00
20.18
10.60
24.60
8.87
14.88
18.43
7.77
40.82
15.14
42.52
6.93
7.97
26.73
32.45
15.87
79.83
40.97
11.97
210.40
29.40
140.07
7.27
18.20
37.47
9.00
10.09
10.60
19.68
9.31
22.32
18.43
3.88
16.33
19.68
12.76
6.93
7.97
10.69
43.81
15.87
27.94
12.29
11.97
42.08
35.28
28.01
7.27
10.92
13.11
REVIEW OF OPERATIONS
Hole
Number
East
North
RL
Depth
(metres)
L8-2W-037
613993
913099
-189
550.60
L8-72E-006
614700
912850
-188
550.10
Azim
(°)
186
353
Dip
(°)
-53
-14
L8-72E-007
614700
912850
-188
550.10
359
-21
From
(metres)
To
(metres)
Width
(metres)
442.10
442.50
43.95
63.30
46.10
44.15
64.10
46.80
Including
144.90
145.90
161.10
162.10
L8-72E-009
614700
912850
-188
550.10
3
-18
173.45
175.05
Including
L8-72E-010
614701
912850
-188
550.00
14
-24
45.50
47.70
L8-72E-011
614701
912850
-188
551.10
19
-20
L8-72E-012
614702
912850
-188
L8-72E-013
614700
912850
-189
L8-72E-014
614698
912850
-188
550.10
551.10
550.10
L8-72E-015
614699
912850
-188
550.00
24
30
330
344
-25
-19
-24
-26
L8-72E-016
614699
912850
-189
550.10
335
-27
L8-72E-018
614700
912850
-188
L8-72E-020
614701
912850
-188
L8-67E-003
614711
912980
-188
551.10
551.10
100.80
352
15
200
-32
-31
-1
L8-72E-021
614699
912850
-188
550.10
343
-32
Including
92.70
44.80
45.55
93.30
45.00
46.75
Including
113.00
113.90
145.05
145.50
165.00
165.55
167.35
169.35
including
59.70
60.90
53.60
59.90
61.60
53.80
107.70
107.90
5.05
83.90
56.75
5.90
84.20
58.15
including
L8-72E-023
614698
912850
-189
550.60
330
-32
67.95
69.25
L8-72E-024
614701
912845
-189
551.10
158
-65
including
151.25
151.95
155.50
157.40
including
173.05
175.05
including
196.60
198.10
including
63.15
67.20
64.00
68.55
including
441.80
443.65
including
L8-72E-027
614700
912845
-188
601.10
197
-72
69.10
69.65
29
Gold
(g/t)
47.83
165.20
10.43
198.26
53.60
256.13
13.35
18.94
12.56
4.43
26.10
7.47
5.19
16.17
8.00
64.00
47.30
36.64
38.33
5.64
9.03
18.27
18.27
8.72
8.00
9.43
100.37
9.40
52.13
94.61
8.51
30.18
29.13
19.97
32.80
35.12
140.26
3.58
17.89
11.28
17.96
3.85
4.68
6.33
3.03
15.64
10.71
18.92
Accumulations
(gm*m)
19.13
33.04
8.34
138.79
10.72
128.07
13.35
18.94
20.09
4.43
15.66
16.42
5.19
3.23
8.00
38.40
9.46
43.97
7.67
5.64
8.13
8.22
10.05
17.43
8.00
9.43
20.07
6.58
10.43
18.92
7.23
9.05
40.79
7.99
32.80
45.66
42.08
3.58
12.52
21.43
17.96
3.47
9.36
6.33
3.03
23.45
6.43
17.03
171.78
146.01
42.90
65.16
5.05
11.22
4.34
19.32
81.18
57.91
55.39
2.53
20.76
4.34
16.42
44.65
0.40
0.20
0.80
0.70
0.20
0.50
1.00
1.00
1.60
1.00
0.60
2.20
1.00
0.20
1.00
0.60
0.20
1.20
0.20
1.00
0.90
0.45
0.55
2.00
1.00
1.00
0.20
0.70
0.20
0.20
0.85
0.30
1.40
0.40
1.00
1.30
0.30
1.00
0.70
1.90
1.00
0.90
2.00
1.00
1.00
1.50
0.60
0.90
0.85
1.35
0.85
0.50
1.85
1.00
0.85
0.55
REVIEW OF OPERATIONS
Hole
Number
East
North
RL
Depth
(metres)
Azim
(°)
Dip
(°)
From
(metres)
To
(metres)
Width
(metres)
Gold
(g/t)
Accumulations
(gm*m)
UNDERGROUND RESOURCE DRILLING - LEVEL 9
L9-22E-001
614137
913010
-240
L9-22E-002
614141
913010
-240
250.00
200.10
253
221
-1
0
123.50
124.50
83.80
84.60
UNDERGROUND RESOURCE DRILLING - LEVEL 10
L10-25E-001
614177
912696
-292
551.10
6
-10
42.25
42.80
L10-25E-002
614178
912695
-292
L10-50E-001
614525
913101
-288
550.10
551.10
354
160
-9
-12
318.65
319.90
Including
484.70
485.70
267.00
267.80
97.10
99.10
Including
126.15
135.90
Including
L10-50E-002
614524
913104
-288
551.10
167
-29
78.95
80.10
L10-50E-003
614524
913104
-288
550.10
184
-28.9
73.40
74.55
Including
254.10
254.80
434.60
435.60
L10-25E-003
614177
912696
-293
L10-25E-004
614178
912696
-292
L10-50E-004
614524
913101
-289
550.50
550.00
551.10
360
21
162
-20
-10
-25
Including
243.60
244.60
311.80
312.30
425.15
425.65
138.75
139.65
290.50
291.50
210.70
211.10
211.65
211.90
L10-50E-005
614524
913101
-288
550.10
180
-18
321.80
322.35
L10-50E-006
614525
913101
-288
535.60
155
-17
344.75
345.75
397.40
397.80
96.50
98.10
97.50
98.85
213.95
215.70
including
216.95
217.35
344.80
345.70
L10-50E-007
614525
913102
-289
551.10
153
-32
87.55
87.80
L10-50E-008
614524
913102
-288
L10-25E-010
614178
912696
-292
L10-25E-012
614175
912696
-293
L10-25E-014
614176
912696
-293
551.10
550.10
550.10
551.10
179
20
334
355
-24
-21
-22
-23
237.90
238.30
328.00
328.40
433.90
434.10
236.40
237.40
57.20
58.25
212.30
214.35
30
1.00
0.80
0.55
1.25
0.50
0.75
1.00
0.80
2.00
1.00
1.00
9.75
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
0.75
1.15
0.40
0.75
0.70
1.00
1.15
0.40
0.75
1.00
0.50
0.50
0.90
1.00
0.40
0.25
0.55
1.00
0.40
1.00
0.75
1.75
0.75
1.00
0.40
0.90
0.25
0.40
0.40
0.20
1.00
1.05
2.05
6.16
9.47
6.16
7.58
23.52
12.94
7.27
4.33
9.23
8.46
22.27
10.52
10.67
10.37
11.76
19.47
23.97
7.50
4.77
32.23
3.84
13.60
3.36
3.17
3.63
6.57
9.50
5.01
19.83
83.00
29.92
3.41
44.06
6.22
25.87
25.57
32.03
7.33
15.33
71.23
16.40
6.06
16.00
27.23
18.67
11.30
20.80
4.17
18.47
9.40
37.94
29.50
48.66
109.21
28.71
14.38
14.00
9.09
2.17
6.92
8.46
17.82
21.04
10.67
10.37
114.63
19.47
23.97
7.50
4.77
32.23
3.84
13.60
3.36
3.17
2.72
7.56
3.80
3.76
13.88
83.00
34.41
1.36
33.05
6.22
12.94
12.79
28.83
7.33
6.13
17.81
9.02
6.06
6.40
27.23
14.00
19.77
15.60
4.17
7.39
8.46
9.49
11.80
19.46
21.84
28.71
15.10
28.71
REVIEW OF OPERATIONS
Hole
Number
East
North
RL
Depth
(metres)
Azim
(°)
Dip
(°)
From
(metres)
To
(metres)
Width
(metres)
L10-25E-014
614176
912696
-293
551.10
355
-23
including
L10-50E-009
614524
913101
-289
551.10
175
-32
231.30
231.95
L10-50E-010
614523
913102
-289
551.10
195
-35
71.90
72.65
505.60
506.45
L10-50E-011
614525
913102
-289
L10-50E-012
614524
913104
-289
L10-50E-013
614524
913102
-289
L10-50E-014
614523
913102
-289
551.10
551.10
551.10
551.10
159
148
183
194
-40
-42
-47
-44
227.95
228.70
362.10
362.70
142.05
142.80
452.20
452.75
298.15
298.75
71.70
72.50
291.30
291.75
1.00
1.05
0.65
0.85
0.75
0.75
0.60
0.75
0.55
0.60
0.80
0.45
Notes:
1. Composited intercepts’ 'weighted average grades' calculated by using the following parameters:
(i) no upper gold grade cut-off applied;
(ii) ≥ 6 gram*metres; and
(iii) a maximum of 1.0 metre of down-hole internal dilution at ≤ 3 g/t gold.
Only down-hole intercepts with composited grades ≥ 6 gram*metres are reported in the above table.
2. Intersection widths are down-hole drill widths not true widths;
Gold
(g/t)
10.07
17.75
12.03
Accumulations
(gm*m)
10.07
18.64
7.82
169.44
144.02
11.20
44.19
14.92
18.90
12.90
15.76
9.56
49.97
8.40
33.14
8.95
14.18
7.10
9.46
7.65
22.49
3. Analysis by Classical Fire Assay technique and AAS finish and carried out by Philsaga Mining Corporation’s on-site laboratory;
4. Some results reported above may differ slightly from those previously reported, as a result of the inclusion of subsequent additional
check analyses, which forms part of the Company’s ongoing QAQC protocols; and
5. Grid coordinates and elevation in metres relative to the Mine Datum.
31
REVIEW OF OPERATIONS
Co-O SURFACE EXPLORATION
Exploration activities for FY2019 focused on the evaluation of prospects within the Co-O tenements, review of
Philsaga Mining Corporation (“PMC”) granted tenements and applications. Exploration highlights of these
exploration initiatives are as follows:
Figure 5. Active surface exploration projects within the company tenements.
32
REVIEW OF OPERATIONS
ROYAL CROWNE VEIN PROJECT (MPSA 262-2008-XIII PARCEL 2)
In FY2019, a 20-hole 5,087 metres scout drilling program (i.e. Phase 1 and Phase 2) was successfully completed
at the Royal Crowne Vein (“RCV”) project in the old Sinug-ang area (Figure 8). The drilling program validated the
continuity of mineralisation along the projected 500 metre+ long strike length of the RCV vein system where a
maiden JORC 2012 Inferred Mineral Resource estimated at 311,204 tonnes with a grade of 5.03 g/t gold,
equivalent to 50,300 ounces gold was announced in 16 April 2019.
Figure 6. Map showing the location of completed holes, significant drill intercepts (ie above 3.0 g/t gold) and interpreted veins validated by the
drilling campaign.
A follow-up (Phase 3) resource infill drilling program is proposed to increase and upgrade the current mineral
resource. The drill program will target the strike length and depth extensions illustrated in Figures 6 and 7
33
REVIEW OF OPERATIONS
Figure 7. Isometric and orthogonal views of the RCV 2019 resource model.
DURIAN PROJECT
Scout drilling of the Durian Project aimed at validating observed IP chargeability anomalies associated with
outcropping moderate grade (i.e. 1 to 3 g/t gold) veins and stockworks, and moderate to high grade (i.e. > 5.0 g/t
gold) historical drill intercepts, was concluded on 9 March 2019. 4 drill holes (EXP’s 244, 245, 246 and 247) with
a total metreage of 1,618 metres were completed to test the SW and NE blocks of the IP anomaly (Figure 8).
The 2 drill holes in the SW block intercepted weak mineralised structure with narrow width. Of the 149 core
samples, 7 samples returned grades above 1.0 g/t gold, and peak assay at only 2.42 g/t gold. Based on these
initial results, drilling has been discontinued while the best approach going forward is being re-evaluated.
At the NE block of the Durian IP anomaly, EXP 246 validated the interpreted diatreme-related structure, but failed
to intercept significant mineralised vein structure. Host rocks exhibited localised weak to moderate argillic
alteration with associated 1% to 5% disseminated pyrite. The drill holes also failed to intercept significant
mineralised vein structures related to a NW trending linear ridge anomaly with associated minor outcropping
stockworks. Based on the poor results achieved, drilling of the last proposed hole in this NE sector of the Durian
Project was also discontinued.
TSF #1 TAILINGS PROJECT
The Tailings Storage Facility (“TSF”) #1 was the TSF utilised by the original processing plant since the 1980s.
The TSF #1 material is from the earlier higher gold grade Co-O mine ore and coupled with old extraction
techniques used at that time. Previous assessment completed on October 2015, focused on metallurgical testing
using samples collected from auger drill holes.
The drilling results were modelled in Surpac and a resource estimation using a lower cut-off grade of 0.85 g/t gold
gave 510,169 tonnes with 1.72 g/t gold containing 28,200 ounces of gold in the Indicated category that is
compliant to the JORC 2012 code reporting standard. The geological model interpretation reveals that
concentration of the higher grades at the upper portion of the tailings section will simplify mining, minimising the
need of disturbing the lower grade basal tailings material.
Metallurgical testing to date, has confirmed the potential for preg-robbing but has identified options for neutralising
this effect and improving recoveries. However, a more detailed study is underway into the feasibility of mining
and processing this material, including more detailed metallurgical testing to identify the optimal flow sheet for
processing the material. The objective of this work is to determine the best option for gaining value from TSF #1
resource.
34
REVIEW OF OPERATIONS
WEST ROAD 17 GOLD PROJECT (MPSA 299-2009-XIII)
Exploration activities in the West Road 17 prospect delineated a 300 metres roughly E-W and NE trending and
steeply dipping to the north vein system. A total of 21 grab and channel samples returned grades above 1.0 g/t
gold with a peak grade of 31.3 g/t gold from a 0.5 metre channel sample (Figure 9). The West Road 17 vein
system appears to be contiguous to a similar E-W trending vein system mapped at the Road-17 prospect.
Figure 8. Geologic map showing the location of on-going and proposed drill holes at the West Road 17 prospect, and assay results of surface
channel and grab samples.
35
REVIEW OF OPERATIONS
Figure 9. Map showing the IP chargeability anomaly at a depth slice of -45m, and the location of
completed drill holes of the Durian Scout Drilling Program.
REGIONAL PROJECTS
BANANGHILIG GOLD DEPOSIT
There has been no development or material change on the Bananghilig Deposit since the Company completed
an exhaustive 2 year (FY2015 and FY2016) review of the Bananghilig B1 (“Bananghilig”) gold deposit which
resulted in a mineral resource estimate reported in 2016 in accordance with the guidelines of JORC 2012.
The total Indicated and Inferred Mineral Resources for the Bananghilig Gold Deposit, at a block cut-off grade of
0.75 g/t gold for Indicated (open-pit material), and 3.0 g/t gold for Inferred (underground material), is estimated at
7.78 million tonnes at a grade of 1.73 g/t gold (435,000 ounces contained gold). The details of the study have
been reported by the Company in September 2016.
SAUGON GOLD DEPOSIT
The Saugon Inferred Mineral Resource (81,500 tonnes at a grade of 5.97 g/t gold for a total of 15,700 ounces
contained gold) has remained unchanged from 2013. This information was prepared and first disclosed under
JORC 2004. It has not been updated since to comply with the JORC 2012 on the basis that the information has
not materially changed since it was last reported.
36
REVIEW OF OPERATIONS
EXPLORATION - OTHER AREAS
QUEENSLAND EPITHERMAL GOLD & COPPER PROJECT
The Company announced on 5 July 2018 that it has entered into an Earn-in-Agreement (“EIA”) with Ellenkay Gold
Pty Limited (“Ellenkay”) regarding two exploration projects in Central Queensland, Australia (Figure 10).
Ellenkay currently has a 100% interest in both projects and under the terms of the EIA, Medusa may earn an
equity position of up to 90% in either or both projects by managing and funding work programs through to the
completion of a Pre-Feasibility Study.
Medusa must spend a combined minimum of A$1 million on exploration activities across both projects in the first
year. Following this minimum expenditure commitment, Medusa can increase its interest in the projects by
electing to meet and satisfying the following expenditure and development milestones:
Milestone
Year 2
Year 3
Pre-Feasibility Study
Mt Clark West
Hill 212
Medusa project equity
Expenditure
Medusa project equity
Expenditure
49%
70%
90%
A$750,000
A$750,000
Fund study
49%
70%
90%
A$750,000
A$750,000
Fund study
Following the completion of a Pre-Feasibility Study, Medusa can elect to sole fund a Feasibility Study on either
or both projects.
Due to the delays in securing a Conduct and Compensation Agreements with the land owners, drilling activities
in both projects commenced late in the fiscal year. It has been agreed by both parties that in consideration of the
project commencement delays, to extend the Year 1 deadline to 1 November 2019.
The Hill 212 (EPM 26217) exploration project is an epithermal gold-silver opportunity approximately 30km east of
Mt Coolon. The Mt Clark West (EPM 26008) exploration project is a porphyry copper-gold opportunity
approximately 24km northwest of Nebo. Both projects have defined drill targets generated through previously
completed geochemical and geophysical work programs.
Figure 10. Location map showing the two projects (red dots).
Mt Clarke West Copper Project (EPM 26008)
A 4-hole drilling program aggregating 1,288 metres was completed during May. This is the first drilling for
minerals in the vicinity of Mt Clark. The initial drilling has intercepted 100’s of metres of moderate to intense
stockworks with predominantly pyrite in-fills. Alteration shows propylitic (chlorite, epidote) to phyllic (sericite
vein selvages, with patchy tentatively identified potassic (biotite) alteration.
The assays from the 4 drill holes returned low values for copper and gold. The Company is now reviewing its
options on the way forward with respect to this Project.
Hill 212 Epithermal Gold (EPM 26217)
A fully executed Conduct and Compensation Agreement has been finalised with landholders in late June.
Future works are planned for preparation of the initial drilling program, which is expected to commence in
early FY2020.
37
REVIEW OF OPERATIONS
RATIONALISATION OF TENEMENT
At the start of FY2019, the Company had a tenement portfolio comprising of 17 tenement holdings with a
combined area of 412km2 (Figure 11). This includes 4 granted tenements and 13 tenement applications. Of
the granted tenements, 3 are currently in the exploration stage, and 1 covering the Co-O Mine area are in the
operation stage.
Figure 11. Status of tenement holdings at end June 2019.
Exploration activities during FY2019 focused on the Co-O district (Figure 11) within the Co-O Mine tenement
grounds (i.e. MPSA 262-2008-XIII Parcel 1) and adjacent granted tenements (i.e. MPSA 262-2008-XIII Parcel 2
and MPSA 299-2009-XIII).
The 2 year exploration permit covering MPSA 262-2008-XIII Parcel 2 (MPSA 262 P2) expired last 17 January
2019, and an application for the renewal of its exploration permit has been submitted to the Mines and
Geosciences Bureau (“MGB”). By the end of the fiscal year two granted tenements are still under review by MGB
for the renewal of their exploration permits. These are MPSA 262 P2 and EP-00017-XIII (EP-17) where the
Company’s Royal Crowne Vein and Saugon Gold Projects are located, respectively. Communications with the
MGB has possitivelty assured the company of granting approval to these licenses.
38
REVIEW OF OPERATIONS
SUSTAINABILITY
The Company continues to believe that its business should be founded on four key components that encompass
our commitment to all stakeholders. Improvements are still being made to organisational coherence, proper
internal procedures, regular checks and balances, performance and efficiencies. The four key components are:
Health and Safety;
Environmental Protection, Management and Monitoring;
Community Participation, Development Programmes and Benefits; and
Employment, Local Suppliers and Payment of Local Taxes and Wages.
HEALTH AND SAFETY
Safety and Health Programs have been implemented at all our sites to manage the Safety and Health of all
personnel working on those sites.
The majority of the people involved in our operations and projects are based at the Philsaga Mining Corporation
sites.
These Safety and Health programs include;
• comprehensive and continued safety awareness;
• comprehensive emergency preparedness planning and training and programs at mine and mill sites,
including fire and earthquake responsiveness drills;
•
regular comprehensive health checks for all employees;
• expanded mining and safety training activities for all underground personnel, including bi-annual refresher
training;
• hazard prevention and control, through improved hazard awareness training, program of workplace
inspections, conducting Job Hazard Analysis, thorough investigation of incidents, continual communication
with the workforce and implementation of the corrective/improvement actions;
• continued regular training for the Emergency Response Team (“ERT”) like chemical spill, mine rescue and
firefighting, with the teams participating in annual national competitions;
• development and implementation of a system and operational audits;
•
implementation of more systematic planned inspections; and
• greater focus on completion of improvement action plans.
The 12 month Total Reportable Injury Frequency Rate for FY2019 was 2.0 per million-man hours which is
significantly down from last year (4.3 per million man hours).
Exploration activities at Mt Clarke and Hill 212 in Central Queensland recorded no reportable injuries during the
year.
Unfortunately, one person was fatally injured at the Co O mine when he fell down an internal shaft. As a result of
this incident, a system of audits is being implemented and greater emphasis placed on education, communication
and training for all employees and contractors.
The Company hospital has been operating as a fully staffed and functional hospital during the year with services
available for all Company personnel, their families and local residents.
39
REVIEW OF OPERATIONS
Picture 4. PMC ERT participants to the 1st BFP CARAGA Ultimate Fire Competition, Surigao City; 3 May 2019.
Picture 5. Behaviour-based Safety training, Co-O Mine; 20 May 2019.
40
REVIEW OF OPERATIONS
Picture 6. Competing in ERT competition 17-18 November 2018.
ENVIRONMENTAL PROTECTION, MANAGEMENT AND MONITORING
The Company is committed to its environmental protection, management and to complying with all applicable
statutory and regulatory environmental obligations.
Code of Conduct
Environmental responsibility forms an important part of the Company's Code of Conduct. The Code of Conduct
outlines the Company's commitment to appropriate and ethical corporate practices and describes how the
Company expects its Directors and employees to behave in the conduct of the Company's business activities.
In accordance with the Code of Conduct, the Company:
•
is fully aware of its obligations to comply with relevant statutory and regulatory requirements with respect to
the environment; and
• monitors appropriately its environmental management and performance and is committed to ensuring proper
rehabilitation of the sites where the Company has been conducting its exploration or operational activities.
Safety, Health and Environment Committee
On 27 August 2010, as part of its commitment to environmental performance, the Board approved the
establishment of a Safety, Health and Environment Committee. The role and responsibility of the Safety, Health
and Environment Committee is set out in a formal charter adopted by the Board, which is summarised in the
Corporate Governance Statement of this Annual Report.
The charter reflects the Company's commitment to achieving continuous improvement in targeting high
environmental performance and best practice.
41
REVIEW OF OPERATIONS
Picture 7. Seedlings.
Co-O Gold Project Environmental Conditions
The Company's flagship Co-O Gold Project has established processing facilities which are subject to regular
inspections by the various authorities and which have achieved a high Level of recognition for adherence to
statutory requirements.
The Company's mining operations are underground resulting in very small surface footprints for each operation.
Rehabilitation of any disturbed areas around new operations is part of the Company's normal operating
procedure. Water samples are taken on a daily basis to monitor water quality in and around the Company's
facilities and the samples collected were analysed, with the results submitted to the relevant authorities.
Picture 8. Composting.
42
REVIEW OF OPERATIONS
In compliance to the conditions set in the Environmental Compliance certificate (ECC), the company has crafted
and implemented an Environmental Protection and Enhancement Program (EPEP) which covers management
of the land and water resources, air and noise quality, management of solid and hazardous wastes generated
from the operation. The program also embodies activities that will support ecosystem conservation as well as
relevant trainings and capacity enhancement of the personnel overseeing the EPEP implementation.
In order to support the Company’s continuous reforestation activities, a one hectare Agro – forest Nursery is
maintained with a seedling capacity of 150,000. Various forest trees and fruit trees were raised within the facility
with stock balance of 88,485 at the end of June 2019. The facility includes potting shed, transplanting chambers,
herbal gardens and vermicomposting facility producing organic fertilizer for in-house plantation.
During the year, the company has established 10 hectares enhancement area at the mine site and 5 hectares in
the mill site. The existing vegetation at the mine site were intercropped with indigenous forest trees such as lauan
(Shorea contorta), bagtikan (Shorea palosapis), molave (Vitex parviflora), narra (Pterocarpus indicus) and
kamagong (Diospyrus blancoi) while in the mill site Palawan Cherry, bagras (Eucalyptus deglupta) and agoho
(Casuarina equisitifolia) were planted.
The company engaged with the local communities to establish agroforest at the open cultivated areas. Assistance
with seedlings, technical support and some financial support were provided to establish fruit tree plantation within
their cultivated lands. Grafted Rambutan (Nephelium lappaceum), Lansones (Lansium domesticum), Durian
(Durio zebithenus) were planted at the 100 hectares land area covering Brgy, Bunawan Brook in the Municipality
of Bunawan and Brgy. Wasian in the Municipality of Rosario. Support will continue for three after which the
plantations should be self-sustaining. Since commencement of this promgram in 2015, a total of 450 hectares
has been planted assisting 260 beneficiaries.
Continuing its support of the Philippine Government’s National Greening Program the Company continued to
provide forest trees and fruits tree for planting. The company also continued the mangrove reforestation located
at Barangays Wakat and Talisay Surigao del Sur.
The Company is also involved in supporting Rubber Plantation program by providing budded rubber seedlings to
the locals with legitimate areas for planting.
Picture 9. Mangrove Reforestation at Brgy. Wakat and Talisay, Surigao del Sur.
Adopt-a-Creek Program
In support to the Environmental Management Bureau’s flagship program in the protection of the water bodies, the
company subscribe to its Adopt-a-Creek Program by adopting three (3) water bodies traversing within the mill
and mine operation as well as to its adjacent area namely- Agsao Creek, Bayugan 3 Creek and Co-o Creek.
Activities to maintain and enhance water quality includes creek clean up and riparian enhancement by planting
narra and bamboo along the embankment or the waterbody. Information Education Communication (IEC)
campaign were conducted to the community and/resident near the water body to reiterate the value of water
resources.
The Company working in close collaboration with Government Departments (Local and National) and with local
Tribal groups has prepared a program for the preservation, protection and enhancement Linayapan – Timay
Waterfalls. This area is one of the major water sources in the area and is a potential tourist destination. The
program includes the enhancement of a 20 hectare buffer zone by planting indigenous forest trees.
43
REVIEW OF OPERATIONS
Regional Wildlife Rescue Centre
The Company’ has supported the Department of Environment and Natural Resources (DENR) – CARAGA
Region, launch its program in the restoration of the Regional Wildlife Rescue Centre, located at Kitcharao, Agusan
del Sur. The objective of this program is to preserve, restore, extend and multiply our inhabiting and remaining
wildlife in the area.
ISO 14001
On 29 March 2018, the operating companies, Philsaga Mining Corporation and Mindanao Mineral Processing
and Refining Corporation, renewed their ISO 14000 commitment, both were issued Certificates of compliance
with the standards of ISO 14001:2015, demonstrating continued compliance with good environmental
management systems as well as good environmental controls and protection.
COMMUNITY PARTICIPATION, DEVELOPMENT PROGRAMMES
AND BENEFITS
Since 2001, Philsaga Mining Corporation has established an enviable record in the local communities in which it
operates. This record is acknowledged by municipal and regional governments, and at a national Level.
It is the Company’s objective to build on this record and strengthen reciprocal relationships between the Company
and other organisations and the communities in which it operates.
EDUCATION
Scholarships
The company continued its commitment to provide opportunities to less privileged students who wish to pursue
their tertiary courses from its host and neighbouring communities. The program provides assistance to scholars
through Full Scholarship grants, Half Scholarship grants and Educational Assistance.
Several of the scholars that graduated have already began working in Philsaga Mining Corporation or teaching
at Philsaga High School Foundation, excellent results for the individual, the local communities and the Company.
Company schools and Adopt-a-School programme
As in past years, the Company supported the Philsaga High School Foundation at the mill and the Upper Co-O
Elementary School at the Co-O Mine. In addition, it continued its “adopt-a-school” programme, in July 2018
extended it program to support for 13 schools in the Rosario and Bunawan municipalities until 2021.
Picture 10. MOA signing and Launching of Adopt- A- School Program last July 24, 2018.
44
REVIEW OF OPERATIONS
HEALTH
Supplemental Feeding
Philsaga Mining Corporation through it Social Development and Management Program conducted Supplemental
Feeding which caters 60 undernourished children aging 6-71 months old benefited the feeding program. The
activity was conducted with the coordination of the Municipal Nutrition Officer of Bunawan and Rural Health Unit
Office of the municipality.
Medical Mission
Philsaga Mining Corporation provided medical support to different barangays of Bunawan, Agusan del Sur. The
activity was conducted with the coordination of the Municipal Nutrition Officer of Bunawan and Rural Health Unit
Office of the municipality.
The MMPRC continued to support the Annual Medical Outreach Activities conducted in Barangays Bayugan 3 &
Wasian. These services included providing Medical Consultation, Dental Extraction, Circumcision or Operation
Tuli, Blood Letting & Health Profiling in partnership with the Rural Health Unit of Rosario and Philippine Red
Cross. More than 950 people benefiting from this support. Further support is provided with health supplies i.e.
medicines & equipment to Barangay Cabawan with 300 individuals served.
LIVELIHOOD AND SKILLS DEVELOPMENT PROGRAM
PMC’s and MMPRC’s Livelihood Programs are focused on building partnerships, empowering individuals, and
promoting stakeholder accountability to help build self-reliant and sustainable communities. Projects implemented
under the Livelihood Program varies from animal husbandry, agronomy to establishing cooperatives to small-
scale trading. This allows stakeholders the opportunity to live their dreams on entrepreneurship while being
supported by the technical expertise provided or facilitated by the company.
These program involve working with Local, Regional and National authorities, local Associations and local people
to assist them to develop knowledge and skills and setting up and establishing small businesses.
This includes providing training in value formation, business enterprise development, project management, simple
bookkeeping and specialised production and business training.
New businesses assisted this year include coconut oil production, expanding water distribution network, ballot
production, tilapia production, goat meat production, cacao production, abaca production, bakery, amakan
weaving, fashion and jewellery design and beauty care saloon.
INFRASTRUCTURE/FACILITY CONSTRUCTION AND IMPROVEMENT
PMC and MMPRC have supported programs that have improved the infrastructure and facilities within the
communities surrounding their operations. In addition to previously mentioned projects the company has assisted
in;
• the improvement and expansion of water of Purok 5, 5A & 6. Since the facility is being improved, water
service expansion will serve to at least 800 households. Other household not connected have been provided
access to stand posts for water are installed in every Puroks.
•
Installation of seven solar powered street lights being installed in Barangays Tagbayagan & Sta. Cruz. This
will surely make their economy boost as well as maintaining their safety and peaceful order to the
community.
EMPLOYMENT, LOCAL SUPPLIERS AND PAYMENT OF LOCAL
TAXES & WAGES
The Company is one of the largest taxpayers in the district and the province of Agusan del Sur. The annual local
government budgets of the Municipality of Bunawan, Municipality of Rosario and the Province of Agusan del Sur
are supported the annual taxes and fees paid by the operating companies.
The Company has a strong policy of “buy and manufacture locally” whenever possible for the provision of goods
and services to the projects and operations to maximise the multiplier effect locally.
45
REVIEW OF OPERATIONS
JORC 2012 COMPLIANCE - CONSENTS OF COMPETENT PERSONS
Medusa Mining Limited
Information in this report relating to Exploration Results and all geological work on Co-O Mineral Resources and
Bananghilig Mineral Resources, Saugon and TSF #1 Tailings Project has been reviewed by Mr James Llorca,
and is based on information compiled by Philsaga Mining Corporation's Co-O mine-site and exploration technical
personnel.
Mr Llorca is a Fellow of The Australian Institute of Geoscientists (AIG), a Fellow of the Australasian Institute of
Mining and Metallurgy (AusIMM), and a Chartered Professional in Geology with the AusIMM. Mr Llorca is General
Manager, Geology and Resources, and is a full-time employee of Medusa Mining Ltd, and has more than 30
years of sufficient experience which is relevant to the styles of mineralisation and type of deposit under
consideration and to the activities for which he is undertaking to qualify as a “Competent Person” as defined in
the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves.”
Mr Llorca consents to the inclusion in the report of the matters based on his information in the form and context
in which it appears.
Carras Mining Pty Ltd
Information in this report relating to Co-O Mineral Resources, Co-O Ore Reserves and Bananghilig Mineral
Resources is based on information compiled by Dr Spero Carras of Carras Mining Pty Ltd, who worked at the
Co-O mine-site with Philsaga geologists and engineers. Philsaga's mine planning engineers also worked at
Carras' Perth office.
Dr Carras is a Fellow of the Australasian Institute of Mining & Metallurgy and has more than 30 years of experience
which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which
he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves”.
Dr Carras consents to the inclusion in the report of the matters based on his information in the form and context
in which it appears. During 2016, Dr Carras was retained by Medusa Mining Ltd to assist in defining the
requirements of Co-O underground infrastructure and its implementation.
FORWARD LOOKING STATEMENTS
This report contains certain forward-looking statements. The words 'anticipate', 'believe', 'expect', 'project', 'forecast', 'estimate',
'likely', 'intend', 'should', 'could', 'may', 'target', 'plan' and other similar expressions are intended to identify forward-looking
statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking
statements.
Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties
and other factors, many of which are beyond the control of Medusa, and its officers, employees, agents and associates, that
may cause actual results to differ materially from those expressed or implied in such statements.
Actual results, performance or outcomes may differ materially from any projections and forward-looking statements and the
assumptions on which those assumptions are based.
You should not place undue reliance on forward-looking statements and neither Medusa nor any of its directors, employees,
servants or agents assume any obligation to update such information
46
CORPORATE GOVERNANCE
Medusa Mining Limited ("Medusa" or "the Company"), as a listed entity, must comply with the Corporations Act
2001 (Cth) ("Corporations Act"), the Australian Securities Exchange ("ASX") Listing Rules ("ASX Listing Rules")
and other Australian and international legal, regulatory and governance requirements.
The Board of Directors of the Company ("Board") is committed to achieving and maintaining high standards of
corporate governance. The Board operates in accordance with a set of corporate governance principles that take
into account relevant practice recommendations, having regard to the particular circumstances of the Company’s
business, operations and the interests of its shareholders and other stakeholders. These include the ASX
Corporate Governance Council’s ("ASXCGC") third edition of the Corporate Governance Principles and
Recommendations ("ASX Principles").
The Company's practices are largely consistent with the recommendations set out in the ASX Principles and,
except as disclosed below, the Company believes it complied with each of those recommendations throughout
the financial year ended 30 June 2019 and to the date of this statement. Details of the Company's compliance
with the ASX Principles are set out below, including details of specific disclosures required by the ASX
Principles.
This statement is current as at 30 August 2019 and has been approved by the Board. Further information on the
Company’s corporate governance policies and practices is publicly available on the Corporate Governance page
of the Company’s website at www.medusamining.com.au.
1.
BOARD OF DIRECTORS
Role and Responsibilities of the Board
ASX Principles, Recommendations 1.1, 1.3
The Board has adopted a Board Charter that sets out, among other things, its specific powers, duties and
responsibilities, as well as matters delegated to the Chief Executive Officer or Managing Director (as
applicable) and those specifically reserved for the Board.
The Board’s primary role is to guide and monitor the business and affairs of the Group on behalf of the
shareholders by whom the Board is elected and to whom it is accountable.
In addition to matters required by law to be approved by the Board, the following key duties and
responsibilities are reserved for the Board under the Board Charter:
•
•
•
•
•
•
oversight of the Company, including its control and accountability systems;
appointing and removing the Chief Executive Officer or Managing Director (as applicable) in respect
of his or her executive role;
ratifying the appointment and removal of the Company Secretary;
providing input into and final approval of the Company’s corporate strategy;
providing input into and final approval of the annual operating and capital budget of the Company;
approving and monitoring the progress of acquisitions and divestments (as applicable);
• monitoring compliance with the Company’s legal and regulatory obligations;
•
reviewing and ratifying systems of risk management and internal compliance and controls, codes of
conduct, continuous disclosure, legal compliance and other significant corporate policies;
• monitoring senior management's performance and implementation of strategy and policies, and
ensuring appropriate resources are available to senior management; and
•
approving and monitoring financial and other reporting to the market, shareholders, employees and
other stakeholders.
The Board has delegated responsibilities for the day to day operational, corporate, financial and
administrative activities of the Group to the Chief Executive Officer or Managing Director (as applicable)
and the Chief Financial Officer.
A copy of the Company's Board Charter is available on the Corporate Governance page of the Company’s
website at www.medusamining.com.au.
47
CORPORATE GOVERNANCE
Agreements with Directors and Senior Executives
The Board Charter provides that:
•
•
a new Director will receive a formal letter of appointment setting out the key terms and conditions
relative to their appointment; and
the Chief Executive Officer must have a formal employment agreement describing their term of office,
duties, rights and responsibilities, among other things.
Composition of the Board
ASX Principles, Recommendations 2.2 and 2.5
In assessing the composition of the Board, the Directors have regard to the following principles:
•
•
•
•
•
the Chairperson should be an independent Non-Executive Director;
the role of the Chairperson and the Managing Director should not be exercised by the same person;
the Board should comprise of at least three Directors, increasing where additional expertise is
considered desirable in certain areas, when an outstanding candidate is identified, or to ensure a
smooth transition between outgoing and incoming Non-Executive Directors;
the majority of the Board should comprise independent Non-Executive Directors who satisfy the
criterion for independence (see below for the criterion for determining when a Director is considered
to be independent); and
the Board should comprise Directors with an appropriate range of skills, qualifications, expertise and
experience.
For the time being, the Board has determined that following the passing of Peter Hepburn-Brown in
September last year, the number of Directors on the Board shall be three, currently comprising two Non-
Executive Directors (Andrew Teo and Roy Daniel) and one Executive Director (Raul Villanueva). The Board
will appoint an additional Director when an appropriate replacement is found.
The Board reviews its size and composition annually to ensure that it has the appropriate balance of skills,
qualifications, expertise and experience. When a vacancy exists, or where the Board considers that it
would benefit from the services of a new Director with particular skills, qualifications, expertise and
experience, the Board will endeavour to select and appoint appropriate candidates with the relevant skills,
qualifications, expertise and experience.
The Board seeks to ensure that it comprises Directors having the appropriate mix of skills, qualifications,
expertise and experience to operate effectively and efficiently, and so that it can adequately discharge its
responsibilities and duties. The Board considers that this is achieved by the Directors having substantial
skills and experience in the following:
•
•
•
industry knowledge - mineral exploration and marketing, mine development and geology;
accounting, finance and investments - financial reporting, tax and governance;
legal - legal, risk and regulatory knowledge; and
• business management - management experience, other relevant board experience and business
administration.
Collectively, the Directors have a broad range of skills, qualifications, expertise and experience relevant to
the business and operations of the Company, as identified above - details relevant to the position of each
Director who is in office at the date of this statement, and the period of office held by each Director, is
included in the Directors’ Report on pages 57 to 58.
Section 3 of this Corporate Governance Statement provides further information on the mix of skills and
diversity the Board seeks to achieve in membership of the Board.
Directors appointed by the Board are subject to election by shareholders at the next annual general
meeting following their appointment. All Directors (other than the Managing Director, if applicable) are
subject to re-election in accordance with the Company's constitution.
48
CORPORATE GOVERNANCE
Board independence and length of service
ASX Principles, Recommendations 2.3, 2.4 and 2.5
The Board has determined that Andrew Teo and Roy Daniel are independent Non-Executive Directors.
The Board has made this determination having regard to the criteria set out below, and confirms that none
of its independent Directors has any interest, position, association or relationship of the type described
below. In addition, the length of service of each Director is set out in pages 57 to 58 of the Company's
Directors' Report, which forms part of the Annual Report.
The Board is, therefore, comprised of a majority of independent Directors. Further, the Board is chaired
by Andrew Teo, an independent Non-Executive Director.
When determining whether a Director is independent, the Board considers all relevant facts and
circumstances.
The Board considers that a Director will be independent if he or she is a person who:
•
is not a substantial shareholder of the Company, or an officer of, or otherwise associated directly with,
a substantial shareholder of the Company;
• has not, within the last three years, been employed in an executive capacity by the Company or any of
its child entities;
• has not, within the last three years, been a partner, director or senior employee of a provider of material
professional services to the Company or any of its child entities or a material consultant to the
Company, or an employee materially associated with the service provided;
•
is not, and has not within the last three years been, in a material business relationship (eg as a supplier
or customer) with the Company or any of its child entities, or an officer of, or otherwise associated with,
someone with such a relationship;
• has no material contractual relationship with the Company or its child entities, other than as a Director;
• does not have close family ties with any person who falls into a category listed directly above;
• has not been a Director of the Company for such a period that his or her independence may have been
compromised; and
•
is free from any interest and any business or other relationship which could, or could reasonably be
perceived to, materially interfere with the Director's ability to act in the best interest of the Company.
The Board does not consider Raul Villanueva as an independent Director because he is currently employed
in an executive capacity by Medusa as an Executive Director.
The test of whether a relationship or business is material is based on the nature of the relationship or
business and the circumstances and activities of the Director. Materiality is considered from the
perspective of the Company, the persons or organisations with which the Director has an affiliation and
from the perspective of the Director. To assist in assessing the materiality of a supplier or customer the
Board has adopted the following materiality thresholds:
• a material customer is a customer of the Company that accounts for more than 5% of the Group's
consolidated gross revenue; and
• a supplier is material if the Company accounts for more than 5% of the supplier's consolidated gross
revenue.
Chairperson, Managing Director and Company Secretary
ASX Principles, Recommendations 1.4 and 2.5
The roles of Chairperson and Managing Director are separate roles and held by different individuals.
The Chairperson, Andrew Teo, is responsible for, among other things, leadership and effective
performance of the Board and overseeing the provision of information by management to the Board and
ensuring the adequacy of that information. The Managing Director (if applicable) is responsible for the
day-to-day management of the Company.
The Chairperson's and Managing Director's responsibilities are set out in more detail in the Board Charter,
which
the Company’s Website at
www.medusamining.com.au.
the Corporate Governance Page of
is available on
The Company Secretary, Peter Alphonso, is responsible for the corporate secretarial functions of the
Company, financial and statutory reporting and also directing and monitoring all financial aspects of the
Company's overseas operations. The decision to appoint or remove the Company Secretary is to be made
by the Board, as set out in the Board Charter, and the Company Secretary reports and is accountable to
the Board (through the Chairperson).
49
CORPORATE GOVERNANCE
Training and performance evaluation
ASX Principles, Recommendations 1.6, 1.7 and 2.6
Under the terms of the Company's Nomination Committee Charter, the Nomination Committee reviews
potential Board candidates' skills, knowledge, and expertise so that they can add value to the Board. The
Company's Nomination Committee Charter requires the Nomination Committee to establish evaluation
methods of rating the performance of the Directors and to conduct assessments of Directors as to whether
they have devoted sufficient time in fulfilling their duties as Directors.
The Director evaluation methods established by the Company’s Nomination Committee included a review
of the performance of the Board and each of its Committees against the requirements of their respective
charters and the individual performances of the Non-Executive Chairperson and each Director.
During the reporting period, the Nomination Committee met on one occasion to evaluate the performance
of the Board, its Committees and individual Directors in accordance with the above evaluation process.
Details of the process for evaluating the performance of Senior Executives and Directors, and the conduct
of that process in the reporting period, are included in the Remuneration Report, which forms part of the
Directors' Report on pages 62 to 74.
Board access to independent advice
Each Director is entitled to seek such independent professional advice as they consider necessary in the
furtherance of his or her duties as a Director at the Company’s expense. Any Director seeking independent
advice must first discuss the request with the Chairperson, who will facilitate obtaining such advice.
Details of Directors' attendance at Board meetings and Committee meetings are set out in the Directors'
Report on page 59.
2.
BOARD COMMITTEES
Nomination Committee
ASX Principles, Recommendations 1.2 and 2.1
The Board has established a Nomination Committee, which operates under a Nomination Committee
Charter approved by the Board. A copy of the Nomination Committee Charter is available on the Corporate
Governance page of the Company’s website at www.medusamining.com.au, and includes details of,
among other things, the role and responsibilities, composition and structure of the Nomination Committee.
The role of the Nomination Committee Charter is to assist the Board in fulfilling its corporate governance
obligations and responsibilities by:
• monitoring the size and composition of the Board, including giving due consideration to the value of
diversity of backgrounds and experiences among the members of the Board;
•
•
recommending individuals for nomination as members of the Board and Committees; and
reviewing the performance of the Board to ensure that its members remain committed and are
adequately discharging their duties and responsibilities.
In selecting individuals for nomination as a Director, the Nomination Committee Charter provides that the
potential candidate will, among other things, have the required skills, knowledge, and expertise to add
value to the Board. In performing its duties prescribed under its Charter, the Nomination Committee
conducts appropriate checks prior to selecting individuals for nomination, which will include checks such
as the person's character, experience, education, criminal record and bankruptcy history. The Nomination
Committee is empowered to engage external consultants in their search for a new Director.
The Nomination Committee Charter provides that any notice of general meeting where the election or re-
election of a Director (as the case may be) is to be put to Medusa's shareholders should include the
following information, so as to enable shareholders to make an informed decision about their election or
re-election (as the case may be):
• biographical details, including competencies and qualifications and information sufficient to enable an
assessment of the independence of the candidate;
• details of relationship between the candidate and Medusa, as well as Directors of Medusa;
• other Directorships held;
• particulars of other positions which involve significant time commitments;
•
the term of office currently served by any Directors subject to re-election;
• any other particulars required by law.
• Such information is also provided by way of ASX announcement when any appointment is made by
the Board.
50
CORPORATE GOVERNANCE
The Nomination Committee consists of Andrew Teo (as Chairperson of the Nomination Committee), Roy
Daniel and Raul Villanueva. The Nomination Committee, therefore, comprises a majority of independent
Directors and is chaired by an independent chair.
Remuneration Committee
ASX Principles, Recommendations 8.1, 8.2 and 8.3
The Board has established a Remuneration Committee, which operates under a Remuneration Committee
Charter approved by the Board. A copy of the Remuneration Committee Charter is available on the
Corporate Governance page of the Company’s website at www.medusamining.com.au, and includes
details of, among other things, the role and responsibilities, composition and structure of the Remuneration
Committee.
The role of the Remuneration Committee is to assist the Board in fulfilling its corporate governance
responsibilities with respect to remuneration by reviewing and making appropriate recommendations on:
•
the remuneration packages of Executive Directors, Non-Executive Directors and Senior Executives;
• employee incentive plans and benefit programs, including the appropriateness of performance hurdles
and total payments proposed;
•
remuneration, recruitment, retention and termination policies and procedures;
• superannuation arrangements;
• employee equity-based plans and schemes; and
•
remuneration by gender.
The members of the Remuneration Committee, who are all Non-Executive Directors, are Roy Daniel (as
Chairperson of the Remuneration Committee) and Andrew Teo. The Remuneration Committee, therefore,
comprises a majority of independent Directors and is chaired by an independent chair as recommended
by ASXCGC Recommendation 8.1.
The Board's policy is that reviews of remuneration packages and policies applicable to Executive Directors,
Non-Executive Directors and Senior Executives are to be conducted on an annual basis by the
Remuneration Committee.
Details on the Company's remuneration policies, including how the structure of the remuneration of Non-
Executive Directors is distinguished from that of Executive Directors and Senior Executives, are included
in the Remuneration Report, which forms part of the Directors’ Report on page No schemes for the
provision of retirement benefits, other than the provision of superannuation, are provided by the Company
for the benefit of Non-Executive Directors.
Consistent with section 206J of the Corporations Act, it is the Company's policy to prohibit Directors and
Senior Executives from dealing in financial products issued or created over or in respect of the Company's
securities (eg hedges or derivatives), where that dealing has the effect of reducing or eliminating the risk
associated with any equity incentives that the Company may offer from time to time.
A copy of the Company's Share Trading Policy is available on the Corporate Governance page of the
Company’s website at www.medusamining.com.au.
Audit Committee
ASX Principles, Recommendation 4.1
The Board has established an Audit Committee, which operates under an Audit Committee Charter
approved by the Board. A copy of the Audit Committee Charter is available on the Corporate Governance
page of the Company’s website at www.medusamining.com.au, and includes details of, among other
things, the role and responsibilities, composition and structure of the Audit Committee.
The role of the Audit Committee is to assist the Board to meet its oversight responsibilities in relation to the
Company's financial reporting, compliance with legal and regulatory requirements, internal control
framework and audit functions.
The Audit Committee's role also includes assessing the performance of the external auditor and, as
appropriate, making recommendations to the Board on the appointment, re-appointment or replacement
of the external auditor.
The members of the Audit Committee, who are all Non-Executive Directors, are Roy Daniel (Chairperson
of the Audit Committee) and Andrew Teo. The composition of the Audit Committee is entirely made up of
independent Directors and is chaired by an independent chair, who is not the chair of the Board, as
recommended by ASXCGC Recommendation 4.1.
Details of the qualifications of each member of the Audit Committee are included in the Directors’ Report
on page 57.
51
CORPORATE GOVERNANCE
Safety, Health and Environmental Committee
The Board has established a Safety, Health and Environmental Committee, which operates under a Safety,
Health and Environmental Committee Charter approved by the Board.
A copy of the Safety, Health and Environmental Committee Charter is available on the Corporate
Governance page of the Company’s website at www.medusamining.com.au.
The role of the Safety, Health and Environmental Committee is to provide oversight of the Company's
policies and systems relating to safety, health and the environment, as well as target high safety, health
and environmental performance and best practices. The Safety, Health and Environmental Committee is
mandated by the Board to:
•
facilitate company-wide communication of a high-performance safety, health and environmental culture
and an awareness of seeking best practice and measurable goals;
• ensure adequate resources are available to management to implement appropriate safety, health and
environment systems;
• oversee management implementation of a safety, health and environment performance measurement
system that can determine safety, health and environment performance and whether there is
continuous improvement;
• use safety, health and environment performance measures to monitor compliance with legal
requirements and internal targets, as well as to communicate Medusa's safety, health and
environmental commitment to shareholders, stakeholders and employees;
• oversee management implementation of a safety, health and environment compliance audit
programme, including evaluation of risk exposures and control actions and also receive regular reports
of the impact of proposed regulatory changes, material claims and ways to achieve continuous
improvement in the areas of safety, health and environment;
•
receive quarterly safety, health and environment performance reports from management that include
environmental, health and safety issues of a material nature, details of accidents and incidents and
statistics concerning relative performance and continuous improvement; and
• provide feedback to management of safety, health and environment goals, policies, practices and
systems.
The Safety, Health and Environmental Committee consisted of Raul Villanueva (as Chairperson of the
Safety, Health and Environmental Committee), Andrew Teo and Roy Daniel.
3.
PROMOTING ETHICAL AND RESPONSIBLE DECISION MAKING
Code of Conduct
ASX Principles, Recommendation 3.1
The Company has a formal Code of Conduct, which outlines the Company's commitment to appropriate
ethical and responsible decision making and corporate practices.
The Code of Conduct describes how the Company expects its Directors and employees to behave in the
conduct of the Company's business activities. The Code of Conduct covers matters including:
• general principles;
• compliance with laws and regulations;
• political contributions;
• unacceptable payments;
• giving or receiving gifts;
• protection of Company assets;
• proper accounting;
• dealing with auditors;
• unauthorised public statements;
• conflict of interest;
•
•
• alcohol and drug abuse;
• equal opportunity and employee discrimination,
• environmental responsibilities;
• occupational health and safety; and
• economy and efficiency.
the use of inside information;
trading of the Company’s shares;
52
CORPORATE GOVERNANCE
All employees are required to comply with the Code of Conduct. Any breach of applicable laws, prevailing
business ethics or other aspects of the Code of Conduct will result in disciplinary action, which may include,
depending on the severity of the breach, termination of employment. Under the Code of Conduct, all
employees are requested to report immediately any circumstances which may involve deviation from the
Code of Conduct to the Managing Director or Company Secretary of the Company, who are responsible
for investigating and reporting any unethical practices to the Board.
A copy of the Code of Conduct is available on the Corporate Governance page of the Company’s website
at www.medusamining.com.au.
Diversity Policy
ASX Principles, Recommendations 1.5 and 2.2
Recommendation 1.5 of the ASX Principles provides that a company should establish a policy concerning
diversity and disclose that policy or a summary of it. Such a policy is to include requirements for the Board
to establish measurable objectives for achieving gender diversity for the Board to assess annually in
respect of both the objectives and progress in achieving them.
The Board is committed to engaging directors, management and employees with the highest qualifications,
skills and experience to develop a cohesive team that is best placed to achieve business success
regardless of age, nationality, race, gender, religious beliefs, sexuality, physical ability or cultural
background. The Board has not adopted a formal diversity policy as recommended by Recommendation
1.5 of the ASX Principles as it believes its current processes and policies for recruitment and appointment
are appropriate and adequately take into account diversity among a number of factors considered by the
Company in ensuring its Directors and workforce have an appropriate mix of qualifications, experience and
expertise. The Board does, however, recognise that diversity makes an important contribution to corporate
success and the Company considers diversity as one of a number of factors when seeking to appoint
Directors, filling Senior Management roles and positions and reviewing recruitment, retention and
management practices, notwithstanding the absence of a formal diversity policy.
Recommendation 1.5 of the ASX Principles provides that a company should disclose in its annual report
the measurable objectives for achieving gender diversity set by the board in accordance with the diversity
policy and its progress towards achieving them. The Board has not at this stage adopted a formal diversity
policy for the reasons set out above and, consequently, has not set measurable objectives under such a
policy. The Board considers that it is not necessary to set measurable objectives for achieving gender
diversity as recommended by the ASX Principles.
While the Company considers diversity is important, the priority for the Company when recruiting is
ensuring an appropriate mix of qualifications, experience and expertise regardless of age, however,
generally make it clear when seeking to appoint additional Directors, senior management and employees
that women are encouraged to apply for roles and that the Company is an equal opportunity employer.
In accordance with Recommendation 1.5 of the ASX Principles, the Medusa workforce gender profile is
set out in the following table:
Role type
Technical
Supervisory / professional
Middle management
Senior Management
Total
Board members
Female
Female %
Male
Male%
31
34
12
11
88
-
36%
17%
36%
19%
23%
-
57
180
20
44
301
3
64%
83%
64%
81%
77%
100%
For the purposes of the above table, "Senior Management" includes executives as well as senior personnel
that play a significant role in management of the operations.
Share Trading Policy
Whilst the Board encourages its Directors and employees to own securities in the Company, it is also
mindful of the responsibility of the Company, its Directors and employees not to contravene the Corporation
Act's "insider trading" provisions.
The Board has approved a Share Trading Policy that applies to all Directors and all employees of the
Company.
In summary, the policy prohibits Directors and employees from trading in the Company's securities:
• when aware of non-public price sensitive information, until such time as that information has become
generally available; and
•
as part of active trading with a view to deriving profit related income.
A Director or employee wishing to deal in the Company's shares must first notify the Chief Executive Officer
53
CORPORATE GOVERNANCE
or Managing Director (as applicable) and confirm that the employee is not aware of any non-public price
sensitive information. The Share Trading Policy is subject to the overriding application of the insider trading
laws.
A copy of the Share Trading Policy is available on the Corporate Governance page of the Company’s
website at www.medusamining.com.au.
4.
RISK MANAGEMENT
ASX Principles, Recommendations 7.1, 7.2, 7.3 and 7.4
The Board recognises that risk oversight is a core function of the Board that serves in protecting and
enhancing shareholder wealth.
Having regard to the size of the operations of the Company, the nature of its activities and the composition
of the Board, a "Risk Committee" has not been established. However, in order to comply with the spirit of
Recommendation 7.1 (and Recommendation 7.1(b) in particular), the full Board has the responsibility to
perform the functions of the Risk Committee.
The Board has approved a Risk Management Policy that outlines the Company's policies for the oversight
and management of material business risks and the design, implementation and monitoring of an internal
compliance and control framework.
A copy of the Risk Management Policy is available on the Corporate Governance page of the Company’s
website at www.medusamining.com.au.
The Board is ultimately responsible for the oversight and management of material business risks, as
contemplated by the Board Charter. However, the design and implementation of the risk management
policy and the day to day management of risk is the responsibility of the Chief Executive Officer or
Managing Director (as applicable), with the assistance of Senior Management. The Board reviews the
effectiveness of the Company’s system of internal control and risk management framework, including a
review of financial, operational, compliance and risk controls, on a continual basis to satisfy itself that it
continues to be sound. In addition, the Chief Executive Officer also undertakes the monitoring of business
activities to periodically reassess risks and the effectiveness of controls to manage such risks.
The Chief Executive Officer or Managing Director (as applicable) is responsible for reporting directly to the
Board on all matters associated with risk management and in fulfilling his duties, the Chief Executive Officer
or Managing Director (as applicable) has unrestricted access to all Company employees, contractors and
records and may obtain independent expert advice on any matters he deems appropriate.
The Company does not have an Internal Audit Department, however strategy meetings at both corporate
and operational level comprising the Board and Executives and Executives and Divisional Managers
respectively, are held on a frequent basis to discuss and review amongst many items, risk management
and the Company’s internal control framework. Any agreed changes to processes are subsequently
implemented and reported back.
Whilst the Board acknowledges that it is responsible for the overall internal control framework, it is also
cognisant that no cost-effective internal control system will preclude all errors and irregularities.
The Company's main business risks are determined by the nature of its business activities and assets.
There are numerous factors (both external and internal) that could influence the risk profile of the Company.
As required by Recommendation 7.4 the Board has identified the following risk factors that could influence
the risk profile of the Company:
• Economic risks: The Company may be exposed to general economy wide risks, which include the
state or health of the industry sector, foreign exchange and interest rates, equity and commodity
prices and a nation's economic well-being. These risks are specifically contemplated by, and set out
in, the Company's Risk Management Policy.
• Environmental risks: The Company's activities are expected to have an impact on the environment,
and the Company may be responsible for environmental liabilities associated with its mining
activities. The Company aims to monitor environmental risks and obligations so as to remain
compliant with applicable environmental laws. The Company also has a Safety, Health and
Environmental Committee that aims to assist with monitoring and reporting on environmental-related
risks and issues.
• Social sustainability risks: The Company does not believe that it has material exposure to social
sustainability risks. The Company has a Code of Conduct for employees dealing with stakeholders
and ensures integrity and fair dealing in business affairs.
The Company’s risk management system is continuously developing and will evolve with the evolution
and growth of the Company’s activities.
54
CORPORATE GOVERNANCE
Chief Executive Officer or Managing Director (as applicable) and Chief Financial Officer assurance
ASX Principles, Recommendations 4.2, 7.2 and 7.3
Before the adoption by the Board of the Company's financial statements for the year ended 30 June 2019,
the Board receives written declarations from the Chief Executive Officer or Managing Director (as
applicable) and Chief Financial Officer, in accordance with section 295A of the Corporations Act, that the
financial records of the Company have been properly maintained in accordance with section 286 of the
Corporations Act and that the Company’s financial statements and notes comply with the accounting
standards and present a true and fair view of the consolidated entity’s financial position and performance
for the financial period.
The Chief Executive Officer or Managing Director (as applicable) and the Chief Financial Officer have
also to state in writing to the Board that the above declaration is founded on a sound system of risk
management and internal control and that the system is operating effectively in all material respects in
relation to financial reporting risks. In addition, during the reporting period the Chief Executive Officer or
Managing Director (as applicable) and the Chief Financial Officer report to the Board as to the
effectiveness of the Company's management of its material business risks.
5.
CONTINUOUS DISCLOSURE
ASX Principles, Recommendation 5.1
The Company is subject to continuous disclosure obligations under the ASX Listing Rules and the
Corporations Act. Subject to limited exceptions, the Company must immediately notify the market, through
ASX, of any information that a reasonable person would expect to have a material effect on the price or value
of its securities. The Board has approved a Continuous Disclosure Policy to reinforce the Company's
commitment
its continuous disclosure obligations and outline management's
accountabilities and the processes to be followed for ensuring compliance. A copy of the Continuous
Disclosure Policy is available on the Corporate Governance page of the Company’s website at
www.medusamining.com.au.
to complying with
The Chief Executive Officer or Managing Director (as applicable) and Company Secretary are responsible
for ensuring that the Continuous Disclosure Policy is implemented and enforced, and that the Company
complies with its continuous disclosure obligations.
6.
SHAREHOLDER COMMUNICATION
ASX Principles, Recommendations 4.3, 6.1, 6.2, 6.3 and 6.4
The Board recognises the important rights of its Shareholders and strives to effectively communicate with
Shareholders clearly and effectively.
The Board has approved a Shareholder Communications Policy to promote effective communications with
its shareholders and encourage effective participation at general meetings. As contemplated by the
Shareholder Communications Policy, the Company Secretary is charged with ensuring that materials
detailed in the policy (including announcements in accordance with the Company's continuous disclosure
and periodic disclosure obligations) are made available on the Company's website, and that relevant
communications are distributed to shareholders in accordance with the Listing Rules and Corporations Act.
In accordance with the Shareholder Communications Policy the Company maintains a website at
www.medusamining.com.au on which the Company provides, among other things, the following information:
•
information about its Directors;
• a copy of its constitution, Board and other applicable Charters, and other corporate governance
documentation referred to in this Corporate Governance Statement;
• company announcements released to ASX for disclosure and related information (including
presentations and briefings to analysts and media);
• notices of meetings and explanatory materials;
• quarterly reports, containing details of the Company’s activities and consolidated statements of cash
flows;
• half-yearly reports, containing consolidated financial information and a brief overview of the Company’s
activities;
• annual reports, which include a review of the Company’s operations and financial results for the year;
and
• general information about the history of the Company, an overview of its projects and a high-level
summaries of some concepts fundamental to its business.
55
CORPORATE GOVERNANCE
Shareholders may also elect to receive information from, and make contact with, the Company and its share
registry by email. Contact email addresses for the Company and the share registry are set out on the
Company's website.
Annual reports are distributed in hard copy to shareholders who have registered their election with the
Company's share registry to receive the annual report in hard copy.
The Board encourages attendance and participation of shareholders at general meetings of the Company
and Company allows for reasonable opportunity for communication and questions at general meetings. In
addition, the Company’s external auditor attends the Company’s annual general meeting to answer
shareholder questions about the conduct of the audit, the preparation and content of the audit report, the
accounting policies adopted by the Company and the independence of the auditor in relation to the conduct
of the audit.
A copy of the Shareholder Communications Policy is available on the Corporate Governance page of the
Company’s website at www.medusamining.com.au.
56
DIRECTORS’ REPORT
1.
DIRECTORS
The names of Directors in office at any time during or since the end of the financial year are:
Name of Director
Period of Directorship
Non-Executive Directors:
Mr Andrew Boon San Teo (Chairperson)
since 15 February 2010 (Chairperson since 22 Nov 2013)
Mr Roy Philip Daniel
since 25 November 2015
Mr Peter Gordon Hepburn-Brown (1)
from 15 June 2018 to 3 September 2018
Executive Directors:
Mr Boyd Walter Timler (Managing Director) (2)
from 9 January 2017 to 6 July 2018
Mr Raul Conde Villanueva
since 24 January 2013
Notes:
(1) Mr Hepburn-Brown retired from the Board on 3 September 2018; and
(2) Mr Timler retired from the Board on 6 July 2018.
Each of the Directors, unless otherwise stated above, has been in office since the start of the
financial year to the date of this report.
2.
DIRECTORS’ INFORMATION
Mr Andrew Boon San Teo
B.Com, UWA, (CPA)
Independent Non-Executive Chairperson
Mr Teo is an accountant with 40 years of extensive and diversified experience in accounting, treasury,
corporate, legal and business administration across several industries, including the mining industry. He
was, until his retirement in March 2018, Chief Financial Officer/Executive Director of BGC (Australia) Pty
Ltd., one of Australia’s largest privately-owned companies, with annual turnover in excess of $2 billion
and 7,000 plus staff (including sub-contractors). Mr Teo worked in BGC in excess of 35 years and
remains a Non-Executive Director of BGC.
During the past three years, Mr Teo has not served as a Director of any other ASX listed entities.
Mr Teo is Chairperson of the Nomination Committee and also a member of the Audit, Remuneration,
and Safety, Health & Environment Committees.
Mr Roy Philip Daniel
B.Com, UWA
Independent Non-Executive Director
Mr Roy Daniel was appointed Non-Executive Director on 25 November 2015. Mr Daniel’s previous
association with the Company was as the Chief Financial Officer from December 2004 until his
retirement from office in June 2013. He was also an executive member of the Board from April 2006
until June 2011.
Mr Daniel has been associated with the resource and mining industry for over 38 years and has held
various senior management and accounting positions at corporate level with overseas and Australian
companies. His association with the Company since its formative years has proven invaluable, and his
financial business acumen and corporate experience has complemented and strengthened the Board.
During the past three years, Mr Daniel has not served as a Director of any other ASX listed entities.
Mr Daniel is Chairperson of both the Audit and Remuneration Committees and also serves as a member
on the Nomination and Safety, Health & Environment Committee.
57
DIRECTORS’ REPORT
2. DIRECTORS’ INFORMATION (continued)
Mr Peter Gordon Hepburn-Brown
B App Sc - Mining Engineering (1980), Grad Dip Human Resources (1996), Member of Inst of Engineers, Australia
Independent Non-Executive Director
Mr Peter Hepburn-Brown was appointed Non-Executive Director on 15 June 2018. His previous
association with the Company dates back to September 2009 when he was first appointed as a non-
executive member of the Board. In July 2010, Mr Hepburn-Brown assumed the role of Executive Director
(Operations) and served in that position until June 2011, where he was then appointed Managing Director
of Medusa until his retirement from office in August 2014.
Mr Hepburn-Brown had more than 38 years of mining experience, including senior management and
Board positions in Australia and overseas. He has successfully brought many operations into
development, and brings significant and relevant experience, including hands-on shaft sinking and air leg
mining in narrow vein mines.
He was a Non-Executive Director of Calidus Resources Ltd and Focus Minerals Ltd.
Mr Hepburn-Brown was a member of the Audit, Remuneration and Health, Safety & Environment
Committees and sadly passed away on 3 September 2018.
Mr Boyd Walter Timler
B.Sc (Geology), U of A, GAICD.
Managing Director
Mr Boyd Timler joined Medusa as CEO on 21 March 2016, was appointed Managing Director on 09
January 2017 and retired as Managing Director on 6 July 2018.
Mr Timler brought extensive operational experience to Medusa, having spent the first 15 years of his
career working in underground narrow high-grade gold projects culminating at Kinross Gold’s Hoyle Pond
Mine in Canada, and subsequently at Placer Dome following a joint venture between the two. He has held
senior level positions at operations in Canada, USA, Australia, Tanzania, Zambia and Brazil, and has
taken expansion projects from pre-feasibility through board approval to operations.
Previously, Mr Timler also held the positions of Chief Operating Officer of Beadell Resources Limited,
Managing Director at Lumwana Mining Company, in Zambia, and has also served as General Manager
at various mine sites owned in Australia and Africa. Mr Timler holds a B.Sc. Specialization in Geology
from the University of Alberta, and is a GAICD with over 30 years of progressive international experience
in exploration, technical services, operations, project evaluations and senior/executive management.
During the past three years, Mr Timler did not serve as a Director of any other ASX listed entities.
Mr Timler was a member of the Safety, Health and Environment Committee.
Attorney Raul Conde Villanueva
LL.B., Attorney and Counselor-at-Law
Executive Director
Attorney Raul Villanueva was appointed an Executive Director of Medusa on 24 January 2013 following
his appointment as President of the Company’s Philippines operating company, Philsaga Mining
Corporation (“Philsaga”) in December 2012.
Attorney Villanueva who has Bachelor degrees in Economics, Military Science & Tactics, and Law has
been a member of the Integrated Bar of the Philippines and an Attorney and Counselor-at-Law since
1994. He brings a focused approach to improving the operating systems and professionalism of the
Company, based on his education and several years of experience in law as well as managing companies
and will further align the objectives of the Medusa Group of Companies.
During the past three years, Mr Villanueva has not served as a Director of any other ASX listed entities
Attorney Villanueva is Chairperson of the Safety, Health and Environment Committee and a member of
the Nomination Committee.
58
DIRECTORS’ REPORT
3. COMPANY SECRETARY
Mr Peter Stanley Alphonso
B.Com, UWA, (CPA)
Mr Peter Alphonso was appointed Company Secretary on 11 December 2007 and as Chief Financial
Officer on 01 July 2013.
Mr Alphonso has over 36 years of experience with the auditing, engineering and communications
industries, with the majority of his experience centred on the gold and nickel sectors of the mining industry.
Mr Alphonso’s experience has included associations with Coopers and Lybrand, Western Mining
Corporation, Great Central Mines and Ti-west Joint Venture.
As Company Secretary Mr Peter Alphonso is responsible for the corporate secretarial functions of the
Company, financial and statutory reporting of the Company as well as directing and monitoring of all
financial aspects of the Company’s overseas operations.
4. MEETINGS OF DIRECTORS
The number of meetings held during the financial year by Company Directors and the number of
those meetings attended by each Director was:
Name of Director
Andrew Teo
Roy Daniel
Peter Hepburn-Brown (2)
Boyd Timler (3)
Raul Villanueva
Board Meetings
Remuneration
Committee
Number (1) Attended Number (1) Attended Number (1) Attended Number (1) Attended Number (1) Attended
Nomination
Committee
Audit
Committee
SHE
Committee
4
4
1
-
4
4
4
-
-
4
2
2
-
-
-
2
2
-
-
-
2
2
-
-
-
2
2
-
-
-
4
4
-
-
4
4
4
-
-
4
2
2
-
-
2
2
2
-
-
2
Notes:
(1) Number of meetings held during the time the Director held office during the year;
(2) Mr Hepburn-Brown retired from the Board on 3 September 2018; and
(3) Mr Timler retired from the Board on 6 July 2018.
5. PRINCIPAL ACTIVITIES
The principal activities of the Group during the course of the financial year were mineral exploration,
evaluation, development and mining/production of gold. There were no significant changes in the
nature of the activities of the Group during the year.
6. OPERATING RESULTS
The net consolidated profit for the financial year attributable to members of Medusa Mining Limited
after provision of income tax was US$36.5 million [2018: Consolidated loss of (US$55.6) million].
Key financial results:
Description
Revenues
EBITDA (1)
NPAT (1)
EPS (basic)
Notes:
Unit
US$
US$
US$
US$
30 June 2019
30 June 2018
Variance
(%)
$129.6M
$124.6M
$51.4M
$36.5M
$0.176
($25.3M)
($55.6M)
($0.267)
$5M
$76.7M
$92.1M
$0.443
4%
N/A
N/A
N/A
(1)
includes asset impairment losses of (US$81.1M) for year ended 30 June 2018;
Medusa recorded earnings before interest, tax depreciation and amortisation (“EBITDA”) of US$51.4
million for the year to 30 June 2019. EBITDA for the previous year was a loss of (US$25.3) million
including asset impairment losses of (US$81.1M).
Revenues increased by approximately 4% from US$124.6 million in the previous year to US$129.6
million.
Medusa is an un-hedged gold producer and received an average price of US$1,259 per ounce from the
sale of 102,500 ounces of gold for the year (previous year: 96,056 ounces at US$1,293 per ounce).
At year end, the Company had total cash and cash equivalent in gold on metal account of US$23.4 million
(2018: US$15.1M).
59
DIRECTORS’ REPORT
During the year,
• depreciation of fixed assets and amortisation of capitalised mine development and mine exploration
was US$18.8 million (2018: US$29.2M);
• US$6.9 million was expended on capital works associated with the new shaft construction and
infrastructure, mine expansion and sustaining capital at the mine and mill (2018: US$14.6M);
• exploration expenditure, inclusive of underground diamond drilling was US$8.9 million (2018:
US$5.4M);
• capitalised mine development costs totalled US$27.3 million for the year (2018: US$24.5M); and
• corporate overheads of US$8.7 million (2018: US$7.3M).
7. REVIEW OF OPERATIONS
Description
Ore mined
Ore milled
Head grade
Recovery
Gold produced
Cash costs (1)
Gold sold
Avg gold price received
Unit
30 June 2019
30 June 2018
Variance
WMT
DMT
g/t
%
ounces
US$/oz
ounces
US$/oz
606,675
544,601
6.28
94.75
103,307
$546
102,500
$1,259
550,400
494,989
6.33
94.70
95,705
$562
96,056
$1,293
56,275
49,612
(0.05)
0.05
7,602
16
6,444
($34)
Notes:
(1) net of development costs and includes royalties and local business taxes.
(%)
10%
10%
(1%)
-
8%
3%
7%
(3%)
The Company produced 103,307 ounces of gold for the year, compared to 95,705 ounces from the
previous corresponding period, at an average recovered grade of 6.28 g/t gold (2018: 6.33 g/t gold).
Average cash costs was US$546 per ounce, inclusive of royalties and local business taxes, which was
lower than the previous year’s average cash costs of US$562 per ounce, and All-in-Sustaining-Costs
(“AISC”) for the year was US$1,045 per ounce of gold (2018: US$1,083 per ounce).
A full review and summary information concerning the Group’s operations and exploration activities
for the financial year and the results of those operations are set out in the Chairperson’s Review
which will be available in the Full Annual Report.
8. DIVIDENDS
No dividends were declared during the financial year.
9. SIGNIFICANT CHANGE IN STATE OF AFFAIRS
Significant changes in the state of affairs of the Group during the financial year were as follows:
• Mr Boyd Timler retired as Managing Director on 6 July 2018;
• Mr Peter Hepburn-Brown retired as Non-Executive Director on 3 September 2018;
• Mr Andrew Teo assumed the role of interim Chief Executive Officer following the resignation
of Mr Boyd Timler from 6 July 2018 until 28 February 2019;
•
the appointment of Mr David McGowan (previously Chief Operating Officer) as Chief Executive
Officer of Medusa on 1 March 2019; and
• On 5 July 2018 the Company announced that it had entered into an earn-in agreement
regarding earn in of up to 90% in two exploration projects in Queensland Australia. The earn-
in requires the Company to manage and fund exploration programs through to completion of
a Pre-Feasibility Study. The Company must spend a combined minimum of A$1 million on
both projects before it is able to withdraw
In the opinion of the Directors, there were no other significant changes in the state of the affairs of
the Group that occurred during the financial year.
60
DIRECTORS’ REPORT
10. EVENTS SUBSEQUENT TO BALANCE DATE
Subsequent to Balance Date, there has not arisen in the interval between the end of the financial
year and the date of this report any other item, transaction or event of a material and/or unusual
nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of
the Group, the results of those operations, or the state of affairs of the Group in subsequent financial
years.
11. FUTURE DEVELOPMENTS, BUSINESS STRATEGIES AND PROSPECTS
The Group will continue its focus on organic growth within its landholdings in the Philippines and also
source mineral properties within the Asia Pacific region with a view to developing properties capable
of economic production.
12. DIRECTORS’ INTEREST
The relevant interest of each Director in the share capital of the Company at the date of this report
is as follows:
Name of Director
Andrew Teo
Roy Daniel
Peter Hepburn-Brown (1)
Boyd Timler (2)
Raul Villanueva
No. of fully paid ordinary
shares
No. of options over
ordinary shares
No. of performance rights
over ordinary shares
120,000
815,875
-
-
50,000
-
-
-
-
-
-
-
-
-
-
Notes:
(1) Mr Hepburn-Brown retired from the Board on 3 September 2018; and
(2) Mr Timler retired from the Board on 6 July 2018.
61
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited)
The Directors present the FY2019 Remuneration Report for Medusa Mining Ltd (“the Company”) which
sets out the remuneration information for the Directors and other key management personnel (“KMP”) for
the year ended 30 June 2019.
The information provided in this remuneration report has been prepared in accordance with the
requirements of the Corporations Act 2001 and its regulations.
Introduction
This report outlines the Company’s approach to remuneration for its executives.
In November 2018 the Medusa Mining remuneration report was voted down by shareholders for the 2018
financial year. During FY2019, the Company has sought feedback on its remuneration practices through
communication with key shareholders and proxy advisors. Following feedback in FY2019, the Company
undertook a wholesale review of its executive performance and remuneration framework, which has
resulted in changes to executive remuneration components and structure commencing FY2020.
The Board recognises that the success of the business depends on the quality and engagement of its
people. To ensure the Company continues to succeed and grow, it must attract, motivate and retain skilled
Directors, Executives and employees. The Board delegates responsibility in relation to remuneration to
the Remuneration Committee to ensure that people and performance are a priority.
FY2019 has been an important year for the Company and on 1 March 2019 David McGowan, Medusa’s
Chief Operating Officer, was appointed as Chief Executive Officer.
(a) Details of Key Management Personnel
There were no loans to Key Management Personnel during the period and there were no
transactions or balances with Key Management Personnel other than those disclosed in this
Report.
Directors:
Non-Executive Directors -
Andrew Teo, Chairperson;
Roy Daniel;
Peter Hepburn-Brown (retired from the Board on 3 September 2018).
Executive Directors -
Boyd Timler, Managing Director (retired from the Board on 6 July 2018); and
Raul Villanueva.
Executive Officers:
David McGowan (Chief Executive Officer);
Peter Alphonso (Chief Financial Officer/Company Secretary); and
James Llorca (General Manager, Geology & Resources).
62
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited) (continued)
(b) Key Management Personnel remuneration (Company and consolidated)
The following tables provides the details of the remuneration of all Directors and Executive Officers of the Group and the nature and amount of the elements of their
remuneration (in US$’s) for the year ended 30 June 2019 and the previous financial year.
Name
Year
Short term benefits
Post-
employment
benefits
Salary/ fees
Directors’
fees
Non-
monetary
Bonus (1)
Other (2)
Super
Long-term
benefits
Incentive
plans
LSL(3)
Equity-settled
share-based payments Cash-settled
share-based
payments
Shares/
units
Options/
rights (4)
Termination
benefits
TOTAL
Proportion of
remuneration
performance
related
Value of
options as
proportion of
remuneration
Directors:
Non-Executive
Andrew Teo (5)
Ciceron Angeles (6)
Roy Daniel
Peter Hepburn-Brown (7)
Executive
Boyd Timler (8)
Raul Villanueva
Executive Officers:
Peter Alphonso
David McGowan (9)
James Llorca
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
90,000
105,990
25,134
96,275
-
-
-
-
22,278
22,701
-
-
15,618
385,980
425,000
425,000
251,587
263,937
276,009
238,940
230,388
238,940
-
19,699
52,656
57,833
-
2,488
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
331
36,760
14,511
18,380
-
-
-
14,704
-
-
-
-
-
-
17,520
18,380
-
12,580
17,520
7,352
15,780
18,380
-
2,173
17,520
7,352
13,837
18,380
-
14,753
52,891
66,168
44,128
73,520
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,302
6,469
-
-
-
-
6,302
6,469
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32,077
-
97,201
-
97,201
-
226,479
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
195,990
121,409
-
19,699
74,934
80,534
-
2,488
277,457
293,406
-
-
-
-
-
-
-
-
-
455,631
425,000
425,000
275,409
335,567
306,109
377,653
250,081
375,710
-
-
-
-
-
-
-
-
-
8.1%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.4%
-
9.6%
-
2.0%
25.7%
-
-
2.0%
25.9%
277,457
1,820,929
-
-
-
2,193,691
3.0%
10.3%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
Notes:
2019
1,310,880
158,646
2018
1,600,632
176,295
(1) Bonuses are generally paid in October and relate to the previous year’s financial results. No bonuses were paid out to any Key Management personnel in the reported financial year;
(2) Comprises Annual Leave accrued during the year but not paid;
(3) Comprises Long Service Leave accrued during the year but not paid;
(4) Comprises value of options granted but not yet vested;
(5) Mr Teo assumed the role of Interim Chief Executive Officer (“CEO”) from 7 July 2018 until 28 February 2019;
(6) Mr Angeles retired from the Board on 31 October 2017;
(7) Mr Hepburn-Brown retired from the Board on 3 September 2018;
(8) Mr Timler retired from the Board on 6 July 2018;
(9) Mr McGowan, previously Medusa’s Chief Operating Officer was promoted to the position of CEO on 1 March 2019.
63
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited) (continued)
(b) Key Management Personnel remuneration (Company and consolidated) (continued)
The relative proportions of Remuneration that are linked to performance and those that are fixed are
as follows:
Name
Directors:
Non-Executive
Andrew Teo
Ciceron Angeles
Roy Daniel
Peter Hepburn-Brown
Executive
Boyd Timler
Raul Villanueva
Executive Officers:
David McGowan
Peter Alphonso
James Llorca
Fixed
Remuneration
At Risk: Short Term
Incentives (STI)
At Risk: Options
(LTI)
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(c)
Remuneration options and equity-based instruments
No options or other equity-based instruments or rights over any of them, were granted by the Company
or any entity controlled by the Company as remuneration during or since the end of the financial year;
(d)
Shares issued on exercise of options granted as remuneration
During the financial year, no fully paid ordinary shares were issued on the exercise of options
previously granted as remuneration to Directors and Executives.
(e) Option/rights holdings
The movement during the year in the number of options/rights over ordinary shares in Medusa Mining
Limited held directly, indirectly or beneficially, by each Director and Executive, including their personally
related entities is as follows:
Financial year 2018/2019:
Name
Directors:
Non-Executive
Andrew Teo
Roy Daniel
Peter Hepburn-Brown (3)
Executive
Boyd Timler (4)
Raul Villanueva
Executive Officers:
Peter Alphonso
David McGowan
James Llorca
Notes:
Balance
01/07/18
Options/rights
granted as
remuneration
Options/
rights
exercised
Options/ Rights
not exercised
and lapsed
Balance
held
30/06/19
Vested &
exercisable
30/06/19 (1)
Total not
exercisable
30/06/19 (2)
-
-
-
1,200,000
500,000
330,000
500,000
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(840,000)
360,000
360,000
(500,000)
-
-
-
-
-
-
-
(165,000)
165,000
49,500
115,500
-
-
500,000
150,000
350,000
500,000
150,000
350,000
(1)
(2)
(3)
(4)
Options vested and exercisable are all the options vested at the reporting date;
Options that are not exercisable have not vested at the reporting date;
Mr Hepburn-Brown retired from the Board on 3 September 2018; and
Mr Timler retired from the Board on 6 July 2018.
64
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited) (continued)
(e)
Option/rights holdings (continued)
Financial year 2017/2018:
Name
Directors:
Non-Executive
Andrew Teo
Ciceron Angeles (3)
Roy Daniel
Peter Hepburn-Brown (4)
Executive
Boyd Timler
Raul Villanueva
Executive Officers:
-
-
-
-
1,200,000
500,000
-
-
-
-
-
-
Peter Alphonso
165,000
165,000
David McGowan
James Llorca
-
-
500,000
500,000
Balance
01/07/17
Options/rights
granted as
remuneration
Options/
rights
exercised
Options/ Rights
not exercised
and lapsed
Balance
held
30/06/18
Vested &
exercisable
30/06/18 (1)
Total not
exercisable
30/06/18 (2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,200,000
360,000
840,000
500,000
500,000
-
330,000
165,000
165,000
500,000
500,000
-
-
500,000
500,000
Notes:
(1) Options vested and exercisable are all the options vested at the reporting date;
(2) Options that are not exercisable have not vested at the reporting date;
(3) Mr Angeles retired from the Board on 31 October 2017; and
(4) Mr Hepburn-Brown joined the Board on15 June 2018.
(f)
Share holdings
The movement during the year in the number of ordinary shares in Medusa Mining Limited held directly,
indirectly or beneficially, by each Director and key management personnel, including their personally
related entities are as follows:
Financial year 2018/19:
Name
Directors:
Non-Executive
Andrew Teo
Roy Daniel
Peter Hepburn-Brown (1)
Executive
Boyd Timler
Raul Villanueva
Executive Officers:
Peter Alphonso
David McGowan
James Llorca
Balance
30/06/18
Shares held at
appointment
Bonus
issue of
shares
Shares
purchased
Options
exercised
Shares
sold
Balance
30/06/19
120,000
815,875
-
50,000
50,000
127,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,000)
-
-
-
-
120,000
815,875
-
-
50,000
127,500
-
-
Notes:
(1) Mr Hepburn-Brown retired from the Board on 3 September 2018; and
(2) Mr Timler retired from the Board on 6 July 2018.
65
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited) (continued)
(f)
Share holdings (continued)
Financial year 2017/18:
Name
Directors:
Non-Executive
Andrew Teo
Ciceron Angeles (1)
Roy Daniel
Peter Hepburn-Brown (2)
Executive
Boyd Timler
Raul Villanueva
Executive Officers:
Peter Alphonso
David McGowan
James Llorca
Balance
30/06/17
Shares held at
appointment
Bonus
issue of
shares
Shares
purchased
Options
exercised
Shares
sold
Balance
30/06/18
120,000
-
815,875
-
50,000
50,000
127,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120,000
-
815,875
-
50,000
50,000
127,500
-
-
Notes:
(1) Mr Angeles retired from the Board on 31 October 2017; and
(2) Mr Hepburn-Brown joined the Board on 15 June 2018.
(g)
Executive Remuneration Governance
The information contained within this section provides an overview of executive remuneration
governance at Medusa Mining.
(i) Remuneration Philosophy
The main objective is the retention of a high-quality Board and executive team, to maximise value of
the shareholders’ investment. Remuneration levels are therefore competitively set to attract, retain
and motivate appropriately qualified and experienced Directors and Executives.
In determining the level and make up of remuneration levels for Executives of the Group, the
remuneration policy has been structured to increase goal congruence between shareholders and
Executives and includes the payment of bonuses based on achievement of specific goals related to
the performance of the Group and also the issue of incentive options or equity based instruments to
encourage alignment of personal and shareholder interests.
(ii) Remuneration Committee
The Company’s remuneration policy and structure;
The Remuneration Committee is a sub-committee of the Board, which operates in accordance with
the Remuneration Committee Charter and the requirements of the Corporations Act 2001 and its
regulations. The Remuneration Committee is responsible for making recommendations to the Board
on:
Executive remuneration policy for Key Management Personnel (“KMP”);
Remuneration levels of the Managing Director (if applicable) and KMP;
Operation of incentive plans and key performance hurdles for KMP
Equity based remuneration plans for KMP; and,
Non-Executive Director (“NED”) remuneration;
The Remuneration Committee’s objective is to ensure remuneration policies and structures are fair
and competitive and aligned with the long-term interests of the company. The Remuneration
Committee periodically obtains independent remuneration information to ensure NED fees and
executive remuneration packages are appropriate and in line with the market.
(iii) Use of Remuneration Advisors
In FY2019, the Remuneration Committee appointed BDO Reward WA Pty Ltd (‘BDOR’) as its
external remuneration advisor to assist with the review of the overall executive remuneration
framework resulting in some changes to the Company’s approach to executive pay. The planned
remuneration changes to executive remuneration policy and performance management for FY2020
are covered in section (j) of the remuneration report.
BDOR’s terms of engagement included specific measures designed to protect its independence. The
Remuneration Committee recognises that, to effectively perform its role, it is necessary for BDOR to
interact with members of the Company’s management. However to ensure BDOR remained
independent, members of the Company’s management were precluded from requesting services that
would be considered to be a “remuneration recommendation” as defined by the Corporations
Amendment (improving Accountability on Director and Executive Remuneration) Act 2011.
66
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited) (continued)
(g)
Executive Remuneration Governance (continued)
(iv) Remuneration Report Approval at FY2018 Annual General Meeting (“AGM”)
At the Company’s 2018 AGM, the Remuneration Report for FY2018 was voted down by Shareholders
or their proxies for the following reasons:
(i) payment of cash bonuses on a lagging basis appeared at odds with company performance
and position;
(ii) unacceptable vesting period and insufficiently demanding performance hurdles; and
(iii)
full vesting of options upon a change in control
(h)
Executive Remuneration
The information contained within this section outlines details pertaining to the executive remuneration
policy and structure for FY2019.
The Company’s aim is to ensure Executives perform at a high level by incentivising them with the level and
mix of remuneration commensurate with their position and responsibilities. These incentives include,
• rewarding Executives for individual performances; and
• ensuring total remuneration is competitive by international market standards.
Remuneration is made up of a fixed component as well as a variable component which is performance
linked and only granted when considered appropriate by the Board.
The Remuneration Committee reviews the remuneration of Executives, including the Chief Executive
Officer, annually, with the review taking into consideration the contribution of the individuals commensurate
with the performance of the business unit within their responsibility, the overall performance of the
Company and comparable employment market conditions internationally.
(i) Executive Remuneration Framework
The table below provides an overview of the different remuneration components within the Medusa
Mining framework.
Objective
Attraction and Retention
Remuneration
Component
Purpose
Total Fixed Remuneration
(‘TFR’) consists of base
salary, any non-monetary
benefits and employer
contributions to
superannuation funds.
The level of fixed
remuneration is set to
provide a base level of
remuneration, which is both
appropriate to the position
and is competitive in the
market.
Variable Remuneration is performance linked and designed to reward
key management personnel for meeting or exceeding their financial and
personal objectives.
Current Year Performance
Short-Term Incentive
(“STI”) is an ‘at risk’ bonus
provided in the form of cash
The STI ensures pay for
performance, for
achievement of a
combination of Company
and Individual KPIs.
Long Term Sustainable
Performance
Long-Term Incentive (“LTI”)
provided as options over
ordinary shares or
performance rights to acquire
fully paid ordinary shares in
the Company.
The LTI is focused on the
creation of long-term
shareholder wealth.
At the end of the financial year the Board assesses the actual performance of the Group, the relevant
segment and individual against the KPIs set at the beginning of the financial year. Should the Group
achieve the set KPIs, the Board may reward the Key Management Personnel with a bonus during the
salary review. Any bonus payable must fall within 0.5% of net profit after tax of the Group and not
exceed 50% of an individual’s fixed remuneration. The Board retains absolute discretion over payment
of these bonuses and can adjust payments (within the above caps) to take into account the overall
performance of the Group, personal performance and prevailing market conditions.
This method of assessment was chosen as it provides the Board with an objective assessment of the
Group’s performance against identifiable factors that relate to the group’s profitability and the
sustainability of the Group’s operations.
(ii) Short-term Incentives (“STI”)
No STIs were granted to any key management personnel in the 2018/19 financial period relating to
the previous financial year ended 30 June 2018.
67
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited) (continued)
(h)
Executive Remuneration (continued)
(iii) Long-term Incentives (“LTI”)
An outline of the key elements of the LTI arrangements are provided below:
The primary objective of Medusa’s LTI based remuneration is and will continue to be, to reward key
management personnel in a manner which aligns this element of remuneration with the creation of
shareholder wealth. The Board takes into account and will continue to take into account, appropriate
measures of shareholder wealth and Company performance in setting the performance criteria
applicable to its LTI based remuneration.
Historically, LTI’s granted to key management personnel have been in the form of options over
ordinary shares. The Board is currently considering whether to adopt other LTI measures, including
a performance rights plan in which key management personnel can participate.
(i)
Non-Executive Remuneration
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to
attract and retain Non-Executive Directors of the highest calibre.
Non-Executive Directors’ fees are paid within the aggregate amount approved by shareholders from time
to time. Total remuneration for all Non-Executive Directors, last approved by shareholders on 18
November 2009, is not to exceed A$400,000 per annum. 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 the amount of Director fees being paid by comparable international resource
companies with similar responsibilities, and the experience of each Non-Executive Director when
undertaking the review process.
Directors’ fees cover all main Board activities and membership of Board Committees. No retirement
benefits are provided for any Non-Executive Directors’ retirement or termination and Non-Executive
Directors do not receive performance related compensation remuneration.
Director fees currently paid to Non-Executive Directors are as follows:
Andrew Boon San Teo (Chairperson): A$150,000 per annum and
Roy Daniel: A$75,000 per annum.
(j)
Planned Executive Remuneration Changes for FY2020
As a result of the comprehensive review of the Company’s executive remuneration policy and practice
conducted in FY2019, a number of changes will be implemented for FY2020 with effect from 01 July
2019.
Completed changes and/or progress towards remuneration objectives will be reported in more detail in
the 2020 Remuneration Report, however a summary of the key elements of the planned changes to the
executive remuneration approach and at risk remuneration structure are provided below.
(i) Fixed and Total Remuneration Approach
Total Fixed Remuneration (‘TFR’) acts as a base level reward for a competent level of performance.
It includes cash, compulsory superannuation contributions and any non-monetary benefits. TFR will
be targeted at the market median (50th percentile) with flexibility based on:
The size and complexity of the role;
The criticality of the role to successful execution of the business strategy;
Role accountabilities;
Skills and experience of the individual; and
Market pay levels for comparable roles.
The Total Remuneration Package (being TFR, STI and LTI) will be positioned at the median of the
market (50th percentile), with the opportunity to earn a total remuneration up to the upper quartile (75th
percentile) in the event that both the individual and the business exceed performance targets.
When determining the relevant market for each role, the Company will consider companies which are
similar in size, complexity of operations, sector and risk profile from which it sources talent, and to
whom it could potentially lose talent.
68
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited) (continued)
(j)
Planned Executive Remuneration Changes for FY2020 (continued)
(ii) Executive Remuneration Framework
The total remuneration package will consist of the following elements of pay.
Remuneration Elements
Purpose
Category
Definition of Pay Category
1. Total Fixed
Remuneration (“TFR”)
Pay for meeting role
requirements
Fixed Pay
Pay linked to the present value or market
rate of the role
2. Short Term Incentive
(“STI”)
Incentive for the
achievement of
annual objectives
Short term
Incentive
Pay
Long Term
Incentive
Pay
3. Long Term Incentive
& Reward (”LTI”)
Incentive for
achievement of
sustained business
long term strategies
(non-market
measures)
Reward for
executive
performance over
the long term
(market measures)
Pay for delivering the annual operational
plan for the Company. Short Term
Incentive pay is linked to the achievement
of short term ‘line-of-sight’ performance
goals
It reflects ‘pay for short term performance’.
Pay for delivering long-term business
sustainability for the Company. Long Term
Incentive pay is linked to the achievement
of long term ‘line-of-sight’ performance
goals
It reflects ‘pay for long term performance’
Long Term
Reward
Pay
Pay for creating value for shareholders.
Reward pay is linked to shareholder
returns
It reflects ‘pay for results’
(iii) Short Term Incentive Plan Outline
An outline of the key elements of the proposed Short-Term Incentive Plan as it relates to the
Company’s KMP is provided below.
Purpose
STI opportunity
Performance targets
Performance
assessment
Motivate and reward employees for contributing to the delivery of annual business
performance.
The STI opportunity offered to each Executive as a percentage of TFR will depend
on Company and individual performance but can range from zero to a maximum of
50% for the CEO and 40% for Executives.
STI payments will be awarded 50% cash and 50% zero exercise price options
(ZEPO’s) on above threshold performance against a range of Company and individual
performance objectives.
The payment of a short-term incentive to Executives is an at risk component of the
individuals total remuneration given that a set of performance targets must be met
prior to payment. These targets are based on metrics that are measurable,
transparent and achievable, designed to motivate and incentivise the recipient to
achieve high performance aligned with Company objectives and near-term
shareholder value creation.
The Company employs a system of continuous performance feedback to drive
performance throughout the year, however a final performance assessment occurs
annually following the completion of the financial year for each Executive. Executives
are assessed on their contribution to the achievement of Company performance
objectives and individual performance objectives.
Measurement period
The STI will be an annual plan that operates from 01 July to 30 June each year
STI deferral component
The equity component of the STI will vest on the twelve (12) month anniversary date
of the STI award date.
Cessation of
employment
Board discretion
Vesting of the equity component of the STI granted to Executive KMP is based on a
continuous service condition being met and is designed to act as a driver of
retention and medium-term value creation.
In the event that the Executive’s employment with the Company terminates prior to
vesting of all ZEPO’s, outstanding unvested ZEPO’s will be reviewed by the Board
and may or may not vest depending on the circumstances of the Executive’s
cessation of employment.
The payments of all STI’s are subject to Board approval. The Board has the
discretion to adjust remuneration outcomes higher or lower to prevent any
inappropriate reward outcomes, including reducing (down to zero, if appropriate)
any STI payment.
69
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited) (continued)
(j)
Planned Executive Remuneration Changes for FY2020 (continued)
As part of the annual business planning process the Board will determine the key performance indicators
to reflect targets for the key performance objectives of the business for the following year. At the end of
the year, the Board makes a rigorous assessment, taking into account quantitative and qualitative
measures.
Key Result Area
Example of Annual Measure and Rationale for Inclusion
Individual
performance
Company
financial
performance
Company safety
and
environmental
performance
Company
operational
performance
Growth of
Company future
opportunities
Company critical
strategic
objectives
Measures
Each Executive KMP agrees an individual scorecard of performance objectives at the start of
the year against which their performance is assessed. A maximum of 4 key individual
performance objectives will be set based on the specific responsibilities of each role
annually.
Rationale
Designed to specifically focus individual Executives on key performance elements that align
to the Company’s strategic plan and profitability drivers that are within the Executives control.
Measures
Key financial measures as determined by the Board of Directors
Rationale
Reflects the alignment of business strategy to create sustainable value for shareholders.
Measures
KPI’s for safety and environmental as determined by the Board of Directors.
Rationale
Highlights performance on metrics to effectively manage the risks inherent in the Company’s
operations and to ensuring activities do not have an adverse impact on the environment.
Measures
Key physical measures as determined by the Board of Directors
Rationale
Delivering strong production performance is a key enabler to funding the achievement of the
Company’s strategic plan and ensures management delivers on core initiatives relating to
Company strategy and operating model.
Measures
Mining inventory as determined by the Board of Directors.
Rationale
Demonstrates the Company’s performance in achieving the organic growth of current assets.
Measures
Achievement of critical project on time as determined by the Board of Directors
Rationale
Focuses achievement on key strategic enablers.
In order to participate in the short-term incentive certain performance conditions must be met.
70
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited) (continued)
(j)
Planned Executive Remuneration Changes for FY2020 (continued)
(iv) Long-term Incentive Plan Outline
An outline of the key elements of the proposed Long-Term Incentive (‘LTI’) Plan as it relates to the
Company’s KMP is provided below.
Purpose
Focus Executive attention on driving sustainable long-term growth and align the interests
of Executives with those of shareholders.
LTI opportunity
The LTI opportunity is determined by the Executives role within the business and is
awarded by the offer of a number of performance rights or zero exercise price options
(‘ZEPO’s’) based on a percentage of TFR. The LTI opportunity for the CEO is 90% and for
Executives is 70%.
Performance
hurdles
In FY2020 and going forward, the Company will use a combination of non-market and
market equally weighted performance hurdles utilising the following measures:
1. Non-market measures to be determined by the Board of Directors (50% weighting)
2. Market Measures (50% weighting):
(a) Relative Total Shareholder Return (‘TSR’); and
(b) Absolute Total Shareholder Return
Vesting
Service
conditions
Performance
conditions
Vesting of the performance rights ZEPO’s granted to Executive KMP is based on a
continuous service condition and performance conditions as detailed below
The LTI award is subject to a service condition. This condition is met if the KMP’s
employment with the Company is continuous for three years commencing on or around
the grant date and is aimed at the retention of KMP’s.
Financial and Strategic measures
The Board will determine financial and strategic measures that align with the Company’s
long-term objectives.
Relative TSR
The TSR scorecard for the three-year measurement period is determined based on a
percentile ranking of the Company’s TSR results relative to the TSR of each of the
companies in the peer group over the same three-year measurement period.
The Board considers relative TSR an appropriate performance hurdle because it ensures
that a proportion of each participant’s remuneration is linked to the comparative return
received by shareholders from holding shares in a company in the peer group for the same
period.
Absolute TSR
The increase in the Company’s absolute TSR will be measured over a three-year period.
The Board considers absolute TSR an appropriate performance hurdle because it ensures
KMP performance is rewarded when a year-on-year improvement in shareholder value is
achieved.
Vesting
schedule
The number of ZEPO’s vested after 3 years is subject to achievement of performance
conditions as shown above
Measurement
period
Cessation of
employment
Peer group
Testing occurs three years from 01 July of the relevant financial year.
In the event that the KMP’s employment with the Company terminates prior to the vesting
of all rights/options, outstanding unvested rights/options will be reviewed by the Board and
may or may not vest depending on the circumstances of the cessation of employment.
In the case of changes of control incentives will be awarded on a pro rata basis.
The Company’s TSR performance for rights/options issued during FY2020 will be
assessed against a peer group comprised of members of the ASX 300 Metals and Mining
Index.
71
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited) (continued)
(k)
Statutory Remuneration Disclosures
(i) Executive Contracts
Remuneration and other terms of employment for the Executives are formalised in service
agreements. The service agreements specify the components of remuneration, benefits and
notice periods. Participation in the STI and LTI plans is subject to the Boards discretion. Other
major provisions of the agreements relating to remuneration are set out below.
David McGowan (Chief Executive Officer)
Contract description: Employment contract between the Company and David McGowan (“Employee”).
Term:
Services:
Remuneration:
Termination:
Commencement date of 01 February 2017 until the Employee is terminated.
The Employee is employed as Chief Executive Officer (“CEO”) of the Company and is
responsible for all operational aspects within the Company
Fixed remuneration:
A$450,000 per annum (inclusive of a superannuation), subject to annual review by the
Board. During the review, the Board will consider the progress of the Company and
comparable industry standards.
Variable remuneration - Short term incentive:
The Employee may be entitled to an annual bonus at the discretion of the Board. In
determining eligibility, the Board will consider without limitation, the performance of the
Company, the Employee’s performance and prevailing market conditions.
Variable remuneration - Long term incentive:
The Company may grant the employee share options or performance rights in
accordance with Medusa’s Share option and performance rights plans.
Termination by the Company:
The Employer may terminate the Employee's employment for any reason by giving the
Employee 3 month’s written notice or payment in lieu of notice, or a combination of
notice and payment in lieu of notice.
The Company may immediately terminate the agreement in certain circumstances,
including if the Employee is in default of its obligations and does not remedy that
default in addition to other standard default situations.
Termination by the Employee:
The Employee may terminate the agreement at any time by giving the Company 3
months’ written notice.
James Llorca (General Manager, Geology & Resources)
Contract description: Employment contract between the Company and James Llorca (“Employee”).
Term:
Services:
Remuneration:
Termination:
Commencement date of 10 October 2016 until the Employee is terminated.
The Employee is employed as General Manager, Geology & Resources of the
Company and is responsible all matters pertaining to geology in the Company.
Fixed remuneration:
A$350,000 per annum (inclusive of a superannuation), subject to annual review by the
Board. During the review, the Board will consider the progress of the Company and
comparable industry standards.
Variable remuneration - Short term incentive:
The Employee may be entitled to an annual bonus at the discretion of the Board. In
determining eligibility, the Board will consider without limitation, the performance of the
Company, the Employee’s performance and prevailing market conditions.
Variable remuneration - Long term incentive:
The Company may grant the employee share options or performance rights in
accordance with Medusa’s Share option and performance rights plans.
Termination by the Company:
The Employer may terminate the Employee's employment for any reason by giving the
Employee 3 month’s written notice or payment in lieu of notice, or a combination of
notice and payment in lieu of notice.
The Company may immediately terminate the agreement in certain circumstances,
including if the Employee is in default of its obligations and does not remedy that
default in addition to other standard default situations.
Termination by the Employee:
The Employee may terminate the agreement at any time by giving the Company 3
months’ written notice.
72
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited) (continued)
(k)
Statutory Remuneration Disclosures (continued)
(i)
Executive Contracts (continued)
Peter Alphonso (Company Secretary/Chief Financial Officer)
Contract description: Employment contract between the Company and Peter Alphonso (“Employee”).
Term:
Role:
No set term and the agreement will continue until Employee is terminated.
The Employee is as Company Secretary/Chief Financial Officer and is responsible for
the day to day management of all financial, administrative and corporate functions of
the Company.
Remuneration:
Fixed remuneration:
Termination:
A$400,000 per annum (inclusive of superannuation), subject to annual review by the
Board. During the review, the Board will consider the progress of the Company and
comparable industry standards.
Variable remuneration - Short term incentive:
The Employee may be entitled to an annual bonus at the discretion of the Board. In
determining eligibility, the Board will consider without limitation, the performance of the
Company, the Employee’s performance and prevailing market conditions.
Variable remuneration - Long term incentive:
The Company may grant the employee share options or performance rights in
accordance with Medusa’s Share option and performance rights plans.
Termination by the Company:
The Employer may terminate the Employee's employment for any reason (other than
as set out below in relation to a “Material Diminution” or default by the Employee) by
giving the Employee 3 month’s written notice or payment in lieu of notice, or a
combination of notice and payment in lieu of notice.
The Company may immediately terminate the agreement in certain circumstances,
including if the Employee is in default of its obligations and does not remedy that
default in addition to other standard default situations.
Termination by the Employee:
The Employee may terminate the agreement at any time by giving the Company 3
months’ written notice.
Termination by reason of Material Diminution:
A “Material Diminution” is a change in the Employee’s status as Company
Secretary/Chief Financial Officer of the Company, including a material change in his
authority in respect of the business of the Company or a change in his reporting
relationship with the Board.
If a Material Diminution occurs, within 3 months of this occurring, the Employee may
give the Company 2 weeks’ written notice of termination of this agreement. Subject to
the Corporations Act, the Company must make a payment to the Employee in lieu of
a notice period equal to 12 months.
Raul Villanueva
(Executive Director of Medusa Mining Limited and President of Philsaga Mining Corporation)
On 10 December 2012, Philsaga Mining Corporation (“PMC”) executed an employment contract
with Raul Villanueva.
Under the terms of the contract, PMC has primarily engaged Mr Villanueva to the position of
President of PMC. His role as President, involves managing the business affairs of PMC,
implementing administrative and operational policies, attending to industrial relation matters and
any other mining activities and associated complimentary services.
Mr Villanueva who is also a Director of Medusa Mining Limited, receives an annual salary of
$425,000 which is subject to annual reviews by the Board. During the review, the Board will
consider the progress of the Company and comparable industry standards.
PMC will additionally reimburse Mr Villanueva for all reasonable expenses incurred in the
performance of his services including entertainment, accommodation, meals, telephone and
travelling.
Apart from the Key Management Personnel related transactions with the Company or its controlled
and affiliated entities disclosed in this note, no Key Management Personnel has entered into a
material contract with the Company since the end of the financial year and there were no material
contracts involving Management Personnel’s’ interests subsisting at year end.
73
DIRECTORS’ REPORT
13. REMUNERATION REPORT (Audited) (continued)
(k)
Statutory Remuneration Disclosures (continued)
(ii) Board policy in relation to limiting exposure to risk in securities.
Under the Company's Securities Trading Policy, Directors and Executives are prohibited from
dealing in financial products issued or created over or in respect of Medusa securities (eg hedges
or derivatives) which have the effect of reducing or eliminating the risk associated with any equity
incentives that Medusa may offer from time to time (for example, a person may be granted an
equity incentive award that vests at a time in the future subject to achieving certain performance
goals; certain financial institutions offer products which act as an insurance policy if the
performance goals are not met, thereby reducing the "at-risk" element of the person's incentive
arrangements).
(l)
Related Parties
Related parties:
Andrew Teo, Roy Daniel, Peter Hepburn-Brown, Boyd Timler, Raul Villanueva, David
McGowan, Peter Alphonso and James Llorca.
Type of transaction: Director and Officers Protection Deed (“Deed”)
Transaction details:
The Deed entered into by the Company with each of the Directors of the Company,
indemnifies the Directors to the extent permitted by law, against any liability, which he may
incur whilst carrying out his duties as a Director of the Company and against any costs and
expenses incurred in defending legal proceedings brought against him as a Director.
The Deed requires the Company to maintain in force Directors’ and Officers’ Liability
Insurance, with an agreed cover level, for the duration of the Directors’ term of office and a
period of 7 years thereafter.
The Deed also provides for the Directors to have access to the Company’s documents
(including Board papers) for a period of 7 years after he ceases to be a Director, subject to
certain confidentiality and other requirements being observed.
End of Remuneration Report
Un-issued shares under options/rights
At the date of this report, details of un-issued ordinary shares of the Company under option are as
follows:
Expiry date
Exercise price
No. of options/rights
No. of shares issued if
options/rights exercised
Employee options
24 November 2020
24 November 2020
24 November 2020
24 November 2020
8 January 2022
8 January 2022
8 January 2022
8 January 2022
TOTAL
A$1.00
A$1.25
A$1.50
A$1.75
A$1.00
A$1.25
A$1.50
A$1.75
90,000
90,000
90,000
90,000
416,250
416,250
416,250
416,250
90,000
90,000
90,000
90,000
416,250
416,250
416,250
416,250
2,025,000
2,025,000
(m) Shares issued on exercise of options/rights
During or since the end of the financial year no options were exercised.
74
DIRECTORS’ REPORT
14.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Indemnification
The Company has agreed to indemnify the following current Directors and Officers of the Company, Messrs
Teo, Daniel, Villanueva, McGowan, Alphonso and Llorca and the following former Directors and Officers
Messrs Davis, Weinberg, Angeles, Timler, Powell and Gregory against all liabilities to another person (other
than the Company or a related body corporate) that may arise from their position as Directors and Officers
of the Company and its controlled entities, except where the liability arises out of conduct involving a wilful
breach of duty or improper use of information to gain a personal advantage.
No amount has been paid under any of these indemnities during the financial year under review.
Insurance premiums
During the year, the Company paid an insurance premium for Directors’ and Officers’ Liability Insurance
policy, which cover all Directors, Company Secretaries and other Officers of the Company and its related
entities. Details of the nature of the liabilities covered and the amount of premium paid in respect of the
Directors’ and Officers’ Liability Insurance policies are not disclosed, as such disclosure is prohibited under
the terms of the policy.
15.
INDEMNIFICATION OF AUDITORS
Medusa Mining Limited (“Medusa”) has agreed to indemnify its auditors, BDO Audit (WA) Pty Limited
(“BDO”) to the extent permitted by law, against any claim by a third party arising from MML’s breach of their
agreement. MML will meet the full amount of any such liabilities including a reasonable amount of legal
costs.
During the financial year, the Company has not paid any premium in respect to any insurance for BDO or a
body corporate related to BDO and there were no officers of the Company who were former partners or
directors of BDO, whilst BDO conducted audits of the Group.
16.
ENVIRONMENTAL REGULATIONS
The Group's operations are subject to a number of environmental regulations in relation to its exploration,
mining and processing activities in the Philippines and Australia. Details of these regulations are set out in
the Review of Operations, under the section titled Environmental Management and Monitoring in the Final
Annual Report.
The Directors are not aware of any significant breaches of environmental regulations during the financial
year.
17.
PROCEEDINGS ON BEHALF OF THE 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 financial year.
18. NON-AUDIT SERVICES
During the year, affiliated entities of BDO Audit (WA) Pty Limited (“BDO”), the Company’s auditors,
performed certain other services in addition to their statutory duties.
The Board has considered and is satisfied that the provision of non-audit services during the year by the
auditor is compatible with and did not compromise, the auditor independence requirements of the
Corporations Act for the following reasons:
a) all non-audit services are reviewed and approved by the Board prior to commencement to ensure they
do not adversely affect the integrity and objectivity of the auditor;
b) the nature of the non-audit services provided do not compromise the general principles relating to auditor
independence as set out in APES 110: Code of Ethics for Professional Accountants set by the Accounting
Professional and Ethical Standards Board;
c) The services of the affiliated entities of the BDO Group have not involved reviewing or auditing BDO’s
own work or acting in a managerial or decision-making capacity within the Group; and
d) There is no reason to question the veracity of BDO’s Independence Declaration.
75
DIRECTORS’ REPORT
18. NON-AUDIT SERVICES (continued)
The following fees were paid affiliated entities of BDO for non-audit services provided during the year ended
30 June 2019.
Item description
Taxation
Remuneration consulting
Other non-audit services
Total
Unit
US$
US$
US$
US$
2019
39,745
5,429
2,874
48,048
2018
6,054
-
34,255
40,309
19. 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 77 of the Annual Report.
20. ROUNDING OFF AMOUNTS
The Group is of a kind referred to in ASIC Legislative Instrument 2016/191 and accordingly, amounts in the
Financial Report and Directors’ Report have been rounded to the nearest $1,000 or in certain cases, to the
nearest dollar to reflect where rounding in ‘000 is not permitted.
Signed in accordance with a resolution of the Board of Directors
Andrew Teo
Chairperson
Dated at Perth this 30th day of August 2019
76
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY NEIL SMITH TO THE DIRECTORS OF MEDUSA MINING LIMITED
As lead auditor of Medusa Mining Limited for the year ended 30 June 2019, I declare that, to the best
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Medusa Mining Limited and the entities it controlled during the period.
Neil Smith
Director
BDO Audit (WA) Pty Ltd
Perth, 30 August 2019
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
77
CONTENTS OF FINANCIAL STATEMENTS
as at 30 June 2019
Contents of Financial Statements
Page number
1.
2.
3.
4.
5.
6.
7.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
79
80
81
82
83
116
117
78
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the year ended 30 June 2019
Revenue
Other income
Cost of sales
Gross Profit
Exploration & Evaluation expenses
Administration expenses
Impairment expense
Other expenses
Profit/(Loss) before income tax expense
Income tax (expense)/benefit
Profit/(Loss) for the year after income tax expense
Consolidated
2019
Note
US$000
2018
US$000
2
2
129,484
124,593
118
-
(75,409)
(83,311)
54,193
41,282
(1,688)
(1,186)
(9,996)
(15,362)
3,12
-
(81,100)
3
4
(11,106)
(955)
31,403
(57,321)
5,086
1,767
36,489
(55,554)
Other comprehensive profit/(loss):
Items that may be reclassified subsequently to profit or loss:
Movement in other reserves
310
-
Exchange differences on translation of foreign operations (net of tax)
5,951
(2,200)
Total comprehensive profit/(loss) attributable to the owners
42,750
(57,754)
Overall operations:
Basic profit/(loss) per share
Diluted profit/(loss) per share
5
5
0.176
0.172
(0.267)
(0.267)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
79
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2019
CURRENT ASSETS
Cash & cash equivalents
Trade & other receivables
Inventories
Other current assets
Total Current Assets
NON-CURRENT ASSETS
Trade & other receivables
Property, plant & equipment
Intangible assets
Mine Rehabilitation
Development expenditure
Deferred tax assets
Total Non-current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade & other payables
Borrowings
Provisions
Total Current Liabilities
NON-CURRENT LIABILITIES
Borrowings
Deferred tax liability
Provisions
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained profits/(accumulated losses)
TOTAL EQUITY
Consolidated
2019
Note
US$000
2018
US$000
23 (a)
6
7
8
9
10
11
16
13
14
15
14
16
15
18
19
22
18,109
5,188
12,739
789
36,825
28,506
15,743
580
1,793
50,193
18,427
115,242
152,067
14,379
6,679
401
21,459
150
778
5,938
6,866
28,325
123,742
11,198
19,462
12,240
792
43,692
21,326
12,957
609
402
29,878
10,059
75,231
118,923
24,797
6,335
386
31,518
170
232
4,160
4,562
36,080
82,843
102,902
102,902
6,779
14,061
1,311
(21,370)
123,742
82,843
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
80
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2019
Share
capital
ordinary
US$000
Retained
profits/
Accumulated
losses
US$000
Share
option
reserves
US$000
Foreign
currency
translation
reserve
US$000
Other
reserves
US$000
Note
Total
US$000
CONSOLIDATED
Balance at 30 June 2017
Net profit/(loss) after tax
Other comprehensive profit/(loss)
Total comprehensive profit/(loss) for the year
Transactions with owners, in their capacity as
owners, and other transfers
Share options expensed
20
Transfer from option reserve
102,902
33,998
1,030
-
-
-
-
-
(55,554)
-
(55,554)
-
-
-
-
150
186
(186)
Balance at 30 June 2018
102,902
(21,370)
994
Balance at 30 June 2018
102,902
(21,370)
994
Change in accounting policy - Note 1(c)
-
(1,982)
-
Balance at 01 July 2018
Net profit/(loss) after tax
Other comprehensive profit/(loss)
Total comprehensive profit/(loss) for the year
Transactions with owners, in their capacity as
owners, and other transfers
Share options expensed
20
Transfer from option reserve
-
-
-
-
-
102,902
(23,352)
994
36,489
-
36,489
-
-
-
-
-
-
-
-
-
-
-
-
-
-
310
310
2,517
140,447
-
(55,554)
(2,200)
(2,200)
(2,200)
(57,754)
-
-
150
-
317
82,843
317
82,843
-
(1,982)
317
80,861
-
36,489
5,950
6,260
5,950
42,749
-
132
924
(924)
-
-
-
-
132
-
Balance at 30 June 2019
102,902
14,061
202
310
6,267
123,742
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Refer Note 1(c) for further details.
81
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers & employees
Payments for exploration & evaluation activities
Interest received
Consolidated
2019
Note
US$000
2018
US$000
129,320
120,966
(78,608)
(1,688)
159
(75,246)
(1,186)
87
Net cash provided by operating activities
23(b)
49,183
44,621
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for non-current assets
Payment for development activities
Net cash provided by/(used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
(Payment of)/receipt from bank loans
Net cash (used in)/provided by financing activities
Net increase/(decrease) in cash held
Cash and cash equivalent at the beginning of the year
Exchange rate adjustment
(6,680)
(36,312)
(14,753)
(27,402)
(42,992)
(42,155)
324
324
6,515
11,198
396
(3,995)
(3,995)
(1,529)
11,214
1,513
Cash and cash equivalent at the end of the year
23(a)
18,109
11,198
The above Consolidated Statement of Cash Flows should be used in conjunction with the accompanying notes.
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
Contents of Notes to the Consolidated Financial Statements
Page number
84
94
94
95
95
96
96
96
96
96
97
98
100
100
100
102
102
103
104
104
106
107
107
108
111
112
112
112
113
115
115
1.
Statement of significant accounting policies
2.
3.
4.
5.
6.
7.
8.
9.
Revenue
Expenses
Taxation
Earnings/(Loss) per share
Current receivables
Inventories
Other current assets
Non-current receivables
10. Property, plant and equipment
11. Development expenditure
12.
Impairment of non-current assets
13. Trade and other payables
14. Borrowings
15. Provisions
16. Deferred tax
17. Auditor’s remuneration
18.
Issued capital
19. Reserves
20. Share-based payments
21.
Investment in subsidiaries
22. Retained profits
23. Notes to the statement of cash flows
24. Financial risk management
25. Commitments
26. Contingent liabilities
27. Related parties
28. Events subsequent to reporting date
29. Segment information
30. Parent company information
31. Company details
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report is a general purpose financial report, which has been prepared in accordance with Australian
Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of
the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a
financial report containing relevant and reliable information about transactions, events and conditions to which
they apply. Medusa Mining Limited is a for profit entity for the purpose of preparing the financial statements.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply
with International Financial Reporting Standards (“IFRS”). Material accounting policies adopted in the
preparation of this financial report are presented below. They have been consistently applied unless otherwise
stated.
The financial report covers the Group of Medusa Mining Limited (“Medusa”) and controlled entities. Medusa is
a listed public company, incorporated and domiciled in Australia.
The separate financial statements of the parent entity, Medusa Mining Limited, have not been presented within
this financial report as permitted by the Corporations Act 2001. A summary of financial information for the parent
is included in note 30.
The financial statements were authorised by the Directors on 29 August 2019.
Basis of preparation
Reporting Basis and Conventions
The financial report has been prepared on an accruals basis and is based on historical costs modified, where
applicable, by the measurement at fair value of selected non-current assets, financial assets and financial
liabilities.
(a)
Principles of consolidation
The Group’s financial statements consolidate those of the Parent Company and all of its subsidiaries as
of 30 June 2019. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from
its involvement with the subsidiary and has the ability to affect those returns through its power over the
subsidiary. All subsidiaries have a reporting date of 30 June.
All transactions and balances between Group companies are eliminated on consolidation, including
unrealised gains and losses on transactions between Group companies. Where unrealised losses on
intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment
from a group perspective. Amounts reported in the financial statements of subsidiaries have been
adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year
are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss
and net assets that is not held by the Group. The Group attributes total comprehensive income or loss
of subsidiaries between the owners of the parent and the non-controlling interests based on their
respective ownership interests.
A list of controlled entities during the year ended 30 June 2019 is presented in note 21.
(b)
New and amended accounting standards and interpretations issued but not yet effective
The following standards, amendments to standards and interpretations have been identified as those
which may impact the entity in the period of initial application. They are available for early adoption at 30
June 2019 but have not been applied in preparing this financial report.
The AASB has issued a number of new and amended Accounting Standards and Interpretations that
have mandatory application dates for future reporting period, some of which are relevant to the Group.
The Group has decided not to early adopt any of the new and amended pronouncements. The Group’s
assessment of the new and amended pronouncements that are relevant to the Group but applicable in
future reporting periods is set out below:
AASB 16 Leases
AASB 16 Leases provides a new lessee accounting model which requires a lessee to recognised assets
and liabilities for all leases with a term of more than 12 months unless the underlying asset is of low
value. The depreciation of the right of use asset and interest on the lease liability will be recognised in
the consolidated income statement.
Transition to AASB 16
The Company plans to adopt the modified retrospective approach on transition, where the lease liability
is measured at the present value of future lease payments on the initial date of application, being 1 July
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
2019. Under this transition method, the Company recognises transition adjustments, if any, in retained
earnings on the date of initial application without restating the prior year financial statements.
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
New and amended accounting standards and interpretations issued but not yet effective (continued)
The Company is still determining the financial impact of transition. The Company will recognise additional
lease liabilities for qualifying leases of buildings and vehicles, which are operating leases under current
accounting standard AASB 117 Leases.
(c)
Adoption of new and amended accounting standards
A number of new or amended standards became applicable for the current reporting period and the
Group had to change its accounting policies and make adjustments as a result of adopting the following
standards:
• AASB 9 Financial Instruments, and
• AASB 15 Revenue from Contracts with Customers.
The impact of the adoption of these standards and the new accounting policies are disclosed below.
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement
that relate to the recognition, classification and measurement of financial assets and financial liabilities.
The adoption of AASB 9 from 1 July 2018 resulted in changes in accounting policies but did not give rise
to any adjustments to the amounts recognised in the financial statements.
Applying AASB 9, the Company has classified and measured its financial instruments as described
below:
• Cash and cash equivalents, restricted cash, term deposits and trade receivables continue to be
classified and measured at amortised cost.
• Accounts payable and accrued liabilities and long-term debts continue to be classified and
measured at amortised cost.
• Derivative asset and liabilities, if any, continue to be classified and measured at fair value through
profit and loss.
Adoption of AASB 9 requires Medusa to apply the expected loss impairment model when assessing the
carrying value of financial assets, this did not result in any material adjustments on transition from the
expected loss model applied under AASB 139.
AASB 15 Revenue from Contracts with Customers
The Company has adopted AASB 15 as of 1 July 2018 using the modified retrospective approach. Under
the modified retrospective approach, the Company recognises transition adjustments, if any, in retained
earnings on the date of initial application (1 July 2018), without restating the financial statements on a
retrospective basis. Accordingly, the comparative information for prior periods have not been restated
and the information presented for 30 June 2018 reflects the requirements of AASB 118 Revenue.
Revenue from the sale of goods is recognised at the point in time when the customer obtains control
when legal title has transferred. The Company reviewed its contract with its customer using the five-step
analysis required by AASB 15. Transfer of control occurs when legal title to the refined gold and silver
occurs. Once legal title has transferred the customer is able to direct the use of and obtain substantially
all of the remaining benefits from the metals. On transfer of control, revenue and related costs can be
measured reliably and it is probable that economic benefits associated with the transaction will flow to
the Company as payment is received on the date of or within a few days of transfer of control.
The Company has concluded that there was a change in the timing of revenue recognition of its sales
under AASB 15 as compared to AASB 118, moving from when the materials left the mine site to when
refined materials and legal title passes to the customer.
The financial impact of the change at 1 July 2018 was as follows:
Item Description
Sale of Goods
Retained Profits
As at 30 June 2018
US$ '000
AASB 15 Adjustment
US$ '000
As at 01 July 2018
US$ '000
124,505
(21,370)
(3,852)
(1,982)
120,653
(23,352)
If Medusa had of applied the prior year accounting policy for the year ended 30 June 2019, the revenue
would be $130.821 million.
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Changes in Accounting Policies
The following explains the impact of the adoption of AASB 9 Financial Instruments and AASB 15 Revenue from
Contracts with Customers on the Group’s financial statements and also discloses the new accounting policies
that have been applied from 1 July 2018, where they are different to those applied in prior periods.
(d)
New policy applied from 1 July 2018 - Revenue Recognition
Sale of refined gold & silver
Revenue is recognised when control of the goods has passed to the buyer based upon agreed delivery
terms. The Company’s metal sales represents sales of refined gold and silver, when control passes to
the customer which is when legal title to the refined metal transfers to the customer. The sales price is
based on prevailing market metal prices.
Judgement is required to determine when transfer of control occurs relating to the sale of the goods to
customers. Management based its assessment on a number of indicators of control, which include, but
are not limited to whether the Company has present right of payment, and whether the significant risks
and rewards and legal title have transferred to the customer.
(e)
Income tax
The income tax expense/ (credit) for the year comprises current income tax expense (credit) and deferred
tax expense/ (credit).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated
using applicable income tax rates enacted, or substantively enacted, as at reporting date. Current tax
liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the
relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances
during the year as well as unused tax losses.
Current and deferred income tax expense/ (income) is charged or credited outside profit or loss when
the tax relates to items that are recognised outside profit or loss.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax
assets also result where amounts have been fully expensed but future tax deductions are available. No
deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a
business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted
at the reporting date. Their measurement also reflects the manner in which management expects to
recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the
extent that it is probable that future taxable profit will be available against which the benefits of the
deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and
joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of
the temporary difference can be controlled and it is not probable that the reversal will occur in the
foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and liability
will occur.
Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred
tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same
taxable entity or different taxable entities where it is intended that net settlement or simultaneous
realisation and settlement of the respective asset and liability will occur in future periods in which
significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(f)
Property, Plant and Equipment
Each class of Property, plant and equipment is carried at cost less, where applicable, any
accumulated depreciation and impairment losses.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Group and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to profit or loss during the financial period in which they are incurred.
Depreciation
Plant and equipment (excluding the Co-O mine) is depreciated applying the straight-line method over
their estimated useful lives, commencing from the time the asset is held ready for use.
Co-O mine’s useful life is estimated to approximate the expected life of the mine, the depreciation rate is
based on a charge proportional to the depletion of estimated recoverable gold ounces contained in
indicated and inferred resources.
Depreciation rates and methods are reviewed annually for appropriateness. When changes are made,
adjustments are reflected prospectively in current and future periods only.
The depreciation rates used for each class of depreciable assets are:
Class of fixed asset
Depreciation method
Depreciation rate (%)
Plant and equipment (excluding Co-O mine)
Office furniture and fittings
Land and building
Straight line
Straight line
Straight line
20.0% to 33%
7.5% to 20%
5.0% to 20%
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
gains and losses are included in profit or loss.
Capital works in progress is included in Property, Plant and Equipment. Depreciation of the asset is
applied when construction is completed and the asset is ready for use.
(g)
Impairment of non-financial assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication
exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell
and value in use i.e. discounted cash flows, is compared to the asset’s carrying value. Any excess of the
asset’s carrying value over its recoverable amount is expensed in profit or loss.
Impairment testing is performed annually for intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
(h)
Operating leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the
lessor, are charged as straight line over the length of the lease.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line
basis over the life of the lease term.
(i)
Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Company prior to the
end of financial year which are unpaid and are carried at amortised cost. The amounts are unsecured and
are usually paid within 30 days of recognition. The carrying amount of trade payables approximates their
fair value.
(j)
Borrowings
All borrowings are initially recognised at fair value less transaction costs. Borrowings are
subsequently carried at amortised cost using the effective interest rate.
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(k)
Trade and other receivables
Trade and other receivables are initially measured at the transaction price and subsequently measured
at amortised cost less an allowance for uncollectable amounts. Uncollectable amounts are determined
using the expected loss impairment model. Collectability and impairment of trade receivables is assessed
on a regular basis.
In the current year, the expected credit loss on trade receivables is considered insignificant as trade
receivables represents refined gold and silver awaiting settlement which is generally expected to settle
within two days.
(l)
Exploration and evaluation expenditure
Exploration and Evaluation expenditure (“E&E”) incurred by or on behalf of the Group was accumulated
separately for each area of interest. Such expenditure comprises direct costs and does not include
general overheads or administrative expenditure not having a specific nexus with a particular area of
interest.
The Company expenses all costs incurred in respect of the acquisition of exploration and evaluation
activities and ongoing exploration activities in the period in which they are incurred. When production
commences, the accumulated development for the relevant area of interest will be amortised over the
life of the area according to the rate of depletion of reserves.
(m) Development expenditure
Development expenditure represents the accumulated exploration, evaluation, land and development
expenditure incurred by or on behalf of the Group in relation to areas of interest in which mining of a
mineral resource has commenced.
When further development expenditure is incurred in respect of a mine property after commencement of
production, such expenditure is carried forward as part of the mine property only when substantial future
economic benefits are thereby established, otherwise such expenditure is classified as part of the cost
of production. All horizontal development drives which include permanent rail and associated
infrastructure, are capitalised.
Amortisation of costs is provided on the unit-of-production method with separate calculations being made
for each mineral resource at an average rate of 22.47% (2018:18.80%). The unit-of-production basis
results in an amortisation charge proportional to the depletion of the estimated recoverable reserves. In
some circumstances, where conversion of resources into reserves is expected, some elements of
resources may be included. Where the life of the assets is shorter than the mine life their costs are
amortised based on the useful life of the assets.
The estimated recoverable reserves and life of the mine and the remaining useful life of each class of
asset is reassessed at least annually. Where there is a change in the reserves/resources amortisation
rates are correspondingly adjusted.
(n)
Rehabilitation costs
Rehabilitation costs that are expected to be incurred are provided for as part of the cost of the exploration,
evaluation, development, construction or production phases that give rise to the need for restoration.
Accordingly, these costs are recognised gradually over the life of the facility as these phases occur. The
costs include obligations relating to reclamation, waste site closure, plant closure and other costs
associated with the rehabilitation of the site.
These estimates of the rehabilitation obligation are based on anticipated technology and legal
requirements and future costs, which have been discounted to their present value. Any changes in the
estimates are adjusted on a progressive basis. In determining the rehabilitation obligations, the entity
has assumed no significant changes will occur in the relevant Federal, State or foreign legislation in
relation to rehabilitation of such minerals projects in the future. At the reporting date, the group does not
consider it has any significant unsatisfied obligations in respect to rehabilitation costs.
(o)
Employee benefits
This provision is made for the Group liability for employee benefits arising from services rendered by
employees to reporting date. Employee benefits expected to be settled within 12 months together with
entitlements arising from wages, salaries and annual leave which will be settled after 12 months, have
been measured at the amounts expected to be paid when the liability is settled plus related on-costs.
Other employee benefits payable later than twelve (12) months have been measured at the present value
of the estimated future cash outflows to be made for those benefits. Contributions are made by the Group
to several employee superannuation funds and are charged as expenses when incurred.
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(p) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”),
except where the amount of GST incurred is not recoverable from the relevant taxing authority. In these
circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item
of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST
recoverable from, or payable to, the taxing authorities is included as a current asset or liability in the
Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross
basis.
The GST components of cash flows arising from investing and financing activities which are recoverable
from, or payable to, the taxing authorities are classified as operating cash flows.
(q) Operating Segments
Operating Segments are identified on the basis of internal management reports that are regularly
reviewed by the entity’s chief operating decision maker, for the purposes of allocating resources and
assessing performance.
Segment revenues and expenses are those directly attributable to the segments. Segment assets consist
principally of cash, receivables, other financial assets, property, plant and equipment, net of allowances
and accumulated depreciation and mineral properties. Segment liabilities consist principally of accounts
payable and provisions.
(r)
Earnings per share
Basic earnings per share ("EPS") is calculated by dividing the net profit or loss attributable to members
of the Company for the reporting period, after excluding any costs of servicing equity (other than ordinary
shares and converting preference shares classified as ordinary shares for EPS calculation purposes),
by the weighted average number of ordinary shares of the Company, adjusted for any bonus issue.
Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after-tax effect of financing
costs associated with potential ordinary shares and the effect on revenues and expenses of conversion
to ordinary shares associated with potential ordinary shares, by the weighted average number of ordinary
shares and potential ordinary shares adjusted for any bonus issue.
(s)
Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the Group’s entities is the currency of the primary economic
environment in which that entity operates. Though the Group’s main functional currencies are the
Australian dollar, US dollar and Philippines Peso, the presentation currency for the Group is US dollar.
The reason for using US dollar as the presentation currency is that the US dollar is the primary currency
used in the global gold market.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing
at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange
rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the
date of the transaction.
Non-monetary items measured at fair value are reported at the exchange rate at the date when fair
values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit before
income tax in the Statement of Profit or Loss and other Comprehensive Income.
Group companies
The financial results and position of foreign operations whose functional currency is different from the
Group’s presentation currency are translated as follows:
- assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
- income and expenses are translated at average exchange rates for the period where this
approximates rate at the transaction date; and
- retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are recognised in other comprehensive
income and accumulated in the foreign currency translation reserve in the Statement of Financial
Position. These differences are reclassified from equity to profit or loss (as a reclassification adjustment)
in the period in which the operation is disposed.
The functional currency of the parent entity, Medusa Mining Limited is Australian dollar, Komo Diti
Traders Limited is United States dollar, Mindanao Mineral Processing and Refining Corporation and
Philsaga Mining Corporation in United States dollar and the remaining entities are Philippine pesos.
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(t)
Cash and cash equivalents
For the purpose of the Statement of Cash Flows, cash and cash equivalents include:
- cash on hand and at call deposits with bank or financial institutions, net of bank overdrafts; and
- investments in money market instruments with less than 30 days to maturity.
These amounts are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
(u)
Financial instruments (previous accounting policy applied for financial year 2018)
Recognition, Initial Measurement and Derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the financial instrument and are measured initially at fair value adjusted by
transactions costs, except for those carried at fair value through profit or loss, which are measured initially
at fair value. Subsequent measurement of financial assets and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and all substantial risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and Subsequent Measurement of Financial Assets
For the purpose of subsequent measurement, financial assets other than those designated and effective
as hedging instruments are classified into the following categories upon initial recognition:
• Loans and receivables
• Financial assets at Fair-Value-Through-Profit-or-Loss (‘FVTPL’)
• Held-To-Maturity (‘HTM’) investments; or
• Available-For-Sale (‘AFS’) financial assets
All financial assets except for those at FVTPL are subject to review for impairment at least at each
reporting date to identify whether there is any objective evidence that a financial asset or a group of
financial assets is impaired. Different criteria to determine impairment are applied for each category of
financial assets, which are described below.
All income and expenses relating to financial assets that are recognised in profit or loss are presented
within finance costs, finance income or other financial items, except for impairment of trade receivables
which is presented within other expenses.
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. After initial recognition, these are measured at amortised cost using the
effective interest method, less provision for impairment. Discounting is omitted where the effect of
discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall
into this category of financial instruments.
Individually significant receivables are considered for impairment when they are past due or when other
objective evidence is received that a specific counterparty will default. Receivables that are not
considered to be individually impaired are reviewed for impairment in groups, which are determined by
reference to the industry and region of a counterparty and other shared credit risk characteristics. The
impairment loss estimate is then based on recent historical counterparty default rates for each identified
group.
Classification and subsequent measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables.
Financial liabilities are measured subsequently at amortised cost using the effective interest method,
except for financial liabilities held for trading or designated at FVTPL, that are carried subsequently at
fair value with gains or losses recognised in profit or loss. All derivative financial instruments that are not
designated and effective as hedging instruments are accounted for at FVTPL.
90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(v)
Inventories
Inventories consisting of ore in stockpiles, metal-in process and finished metal are valued at the lower of
cost and net realisable value. Cost represents the weighted average cost and includes direct costs and
an appropriate portion of fixed and variable production overhead expenditure, including depreciation and
amortisation, incurred in converting materials into finished goods. Net realisable value is the estimated
selling price in the ordinary course of business, less estimated costs of completion and estimated costs
necessary to make the sale.
Consumables are valued at the lower of cost and net realisable value. Any allowance for obsolescence
is determined by reference to stock items identified.
(w)
Share based payments
The fair value of the equity to which employees become entitled is measured at grant date and
recognised as an expense over the vesting period, with a corresponding increase to an equity account.
The fair value of options is ascertained using a Black-Scholes pricing model. The number of shares and
options expected to vest is reviewed and adjusted at each reporting date such that the amount
recognised for services received as consideration for the equity instruments granted shall be based on
the number of equity instruments that eventually vest.
(x)
Defined Benefit Fund
In respect of defined benefit plans, the cost of providing the benefits is determined using the projected
unit credit method. Actuarial valuations are conducted every two years, with valuations performed on an
annual basis. Consideration is given to any event that could impact the funds up to the end of the
reporting period where the interim valuation is performed at an earlier date.
The amount recognised in the Statement of Financial Position represents the present value of the defined
benefit obligations adjusted for any unrecognised actuarial gains and losses and unrecognised past
service costs less the fair value of the plan’s assets. Any asset recognised is limited to unrecognised
actuarial losses, plus the present value of available refunds and reductions in future contributions to the
plan.
Actuarial gains and losses are amortised over the expected average remaining working lives of the
participating employees in the plan. Gains or losses on the curtailment or settlement of a defined benefit
plan are recognised in the profit or loss when the Group demonstrates commitment to the curtailment or
settlement.
Past service costs are recognised when incurred to the extent that benefits are vested and are otherwise
amortised on a straight-line basis over the vesting period.
The Group has a funded non-contributory retirement plan for employees in the Philippines. The cost of
providing benefits is determined using the Projected Unit Credit Method which reflects services rendered
by employees to the date of valuation and incorporates assumptions concerning employees’ projected
salaries.
The retirement benefit obligation recognised in the Statement of Financial Position represents the
present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as
reduced by the fair value of plan assets.
The funding policy is to contribute an amount based on the actuarial valuation report which is carried out
at regular intervals.
(y)
Critical accounting estimates and judgments
The Directors evaluate estimates and judgments incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future
events and are based on current trends and economic data, obtained both externally and within the
Group.
Key estimates - Impairment of non-financial assets
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group
that may lead to impairment of non-financial assets (refer note 1(g)). Where an impairment trigger exists,
the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing
recoverable amounts incorporate a number of key estimates. Refer to details of key elements and
carrying values of non-financial assets at note 12.
Key estimates - E15 Service Shaft
The E15 Service Shaft officially commenced operations on 27 November 2018. Depreciation of this asset
is based on the Life of Mine model which indicates a useful life of 5 years, commencing from 01 January
2019.
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(y)
Critical accounting estimates and judgments (continued)
Key estimates - Recoverability of long-lived assets
Certain assumptions are required to be made in order to assess the recoverability of capitalised
development expenditure. Key assumptions include the future price of gold, future cash flows, an
estimated discount rate and estimates of ore reserves. In addition, cash flows are projected over the life
of mine, which is based on proved and probable ore reserves. Estimates of ore reserves in themselves
are dependent on various assumptions, in addition to those described above, including cut-off grades.
Changes in these estimates could materially impact on ore reserves and could therefore affect estimates
of future cash flows used in the assessment of recoverable amount.
The Group has used the Reserve Statement released on 9th April 2019, taking into account ore utilised
throughout the period and replenished to estimate the recoverable amount of long-lived assets.
Estimates of ore reserves in themselves are dependent on various assumptions, in addition to those
described above, including cut-off grades. Changes in these estimates could impact on ore reserves and
could therefore affect estimates of future cash flows used in the assessment of recoverable amount.
Key estimates - Determination of ore reserves and remaining mine life
The Group estimates its ore reserves and mineral resources based on information compiled on 9th of
April 2019 by Competent Persons (as defined in accordance with the Australian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves as revised June 2012 code (the JORC code)).
Reserves determined in this way are taken into account in the calculation of depreciation of mining plant
and equipment (refer to note 10), amortisation of capitalised development expenditure (refer to note 11),
and impairment relating to these assets (refer to note 12).
In estimating the remaining life of the mine for the purpose of amortisation and depreciation calculations,
due regard is given, not only to the amount of remaining recoverable gold ounces contained in proved
and probable ore reserves, but also to limitations which could arise from the potential for changes in
technology, demand, and other issues which are inherently difficult to estimate over a lengthy time frame.
Where a change in estimated recoverable gold ounces contained in proved and probable ore reserves
is made, depreciation and amortisation is accounted for prospectively,
The determination of ore reserves and remaining mine life affects the carrying value of a number of the
consolidated entity’s assets and liabilities including deferred mining costs and the provision for
rehabilitation.
Key estimates - Development expenditure
Development activities commence after project sanctioning by the appropriate level of management.
Judgement is applied by management in determining when a project is economically viable. In exercising
this judgment, management is required to make certain estimates and assumptions similar to those
described above for capitalised exploration and evaluation expenditure. Any such estimates and
assumptions may change as new information becomes available. If, after having commenced the
development activity, a judgement is made that a development asset is impaired, the impairment change
is included in profit or loss.
Key estimates - Share based payments
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 the Black-Scholes model taking into account the terms and conditions upon which the
instruments were granted. The accounting estimates and assumptions relating to equity-settled share-
based payments would have no impact on the carrying amounts of assets and liabilities within the next
annual reporting period but may impact profit or loss and equity. (Refer to note 20).
Key estimates - GST/VAT
The Group has net GST/VAT of US$32 million that comprises tax credit certificates (“TCC”) and VAT
claimable for cash. The current asset portion of VAT US$4 million comprises amounts that are estimated
to be utilised by TCC to offset various indirect taxes within the current period. The non-current amount
of VAT receivable of US$28 million represents the estimated amount utilised in future periods against
tax liabilities.
92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(y)
Critical accounting estimates and judgments (continued)
Key estimates - Deferred tax asset
Significant judgement is required in determining deferred tax assets and liabilities. There are many
transactions and calculations during the ordinary course of business for which the ultimate tax
determination is uncertain.
In addition, deferred tax assets are recognised for deductible temporary differences and unused tax
losses only if it is probable that future forecast taxable profits are available to utilise those temporary
differences and losses, and the tax losses continue to be available having regard to the relevant tax
legislation associated with their recoupment.
The Group has recognised a deferred tax asset of US$18 million at 30 June 2019. The utilisation of this
deferred tax asset amount depends upon future taxable amounts in excess of profits arising from the
reversal of temporary differences. The Group believes this amount to be recoverable based on taxable
income projections.
(z)
Rounding of amounts
The Group is of a kind referred to in ASIC Legislative Instrument 2016/191 and accordingly, amounts in
the Financial Report and Directors’ Report have been rounded to the nearest $1,000 or in certain cases,
to the nearest dollar to reflect where rounding in ‘000 is not permitted.
93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
2.
REVENUE
Operating activities:
Gold and silver sales
Non-operating activities:
Interest revenue
Foreign exchange
Total revenue
3.
EXPENSES
Profit/(loss) before income tax expense/(income)
has been determined after charging/(crediting) the
following items:
Depreciation & amortisation:
- Depreciation expense
- Amortisation expense
- Mine rehabilitation amortisation
Total depreciation & amortisation
Employee benefits expense
Defined contribution plans
Interest expense
Tax dispute charge - Philippines
Other expenses:
VAT write off
Defined benefit plans
Foreign exchange
Assets written off
Share-based payment expense
Bad debts write off
Total other expenses
Consolidated
2019
Note
US$000
2018
US$000
129,320
124,506
164
118
87
-
129,602
124,593
3,955
14,370
443
18,768
3,703
25,530
-
29,233
15,477
14,569
93
830
2,272
10,357
489
-
86
132
42
11,106
455
2,861
5,161
2
488
88
-
150
227
955
Impairment expense
12
-
81,100
Operating lease rental:
- minimum lease payments
70
63
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
4.
TAXATION
(a) The components of tax expense comprise:
Current tax
Deferred tax
Prior year adjustment
Consolidated
2019
US$000
2018
US$000
3,550
(8,535)
(101)
(5,086)
6,641
(8,408)
-
(1,767)
(b) The prima facie tax on profit before income tax is reconciled to the
income tax as follows:
Operating (loss)/profit before income tax
31,403
(57,321)
Prima facie income tax expense/(credit) at 30% (2018: 30%) on
operating profit
9,421
(17,196)
less - tax effect of:
other non-deductible/(non-assessable) expenses
difference of effective foreign income tax rates
Interest income
-
(41)
248
1,257
-
-
amortisation and depreciation adjustment
(15,089)
13,709
de-recognition of NOLCO
share based payments expense
bad debts
foreign exchange
charitable contribution
representation, professional fees and insurance
under/over
deferred tax assets not brought to account
230
40
13
(51)
112
150
(101)
(18)
-
45
-
-
369
-
(288)
337
Income tax expense/(benefit)
(5,086)
(1,767)
(c) Deferred tax assets not brought to account, the benefits of which will
only be realised if the conditions for deductibility set out in Note 1(e)
occur:
- Temporary differences
- Australian tax losses
Total
17,447
4,701
22,148
75,602
4,411
80,013
The benefit of tax losses will only be obtained if:
(i)
the Group derives future assessable income of a nature & of an amount sufficient to enable the benefit to be realised;
(ii) the Group continues to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the Group in realising the benefit.
5.
EARNINGS/(LOSS) PER SHARE
Profit/(Loss) used to calculate basic and diluted EPS
36,489
(55,554)
Weighted average number of ordinary shares used in the calculation of
the basic earnings per share.
Weighted average unlisted options outstanding
207,794,301
207,794,301
4,030,983
-
Weighted average of ordinary shares diluted as at 30 June 2019
211,825,284
207,794,301
4,030,983 weighted average unlisted options outstanding for 2019 have been included in calculating the
diluted EPS because the effect is anti-dilutive.
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
Consolidated
2019
Note
US$000
2018
US$000
6. CURRENT RECEIVABLES
Gold awaiting settlement
GST/VAT receivables
Other receivables
Total current receivables
Refer ageing analysis in Financial Instruments Note 24(b)
1(c)
1(y)
7.
INVENTORIES
Consumables - net realisable value
Ore stockpile - at cost
Gold Inventory - at cost
Total inventories
8. OTHER CURRENT ASSETS
Prepayments
9. NON-CURRENT RECEIVABLES
GST/VAT receivables
Total non-current receivables
10. PROPERTY, PLANT & EQUIPMENT
Plant & equipment:
At cost
less - provision for impairment
less - accumulated depreciation
Total plant & equipment at net book value
Capital works in progress:
At cost
less - provision for impairment
Total capital works in progress at net book value
Furniture & fittings:
At cost
less - provision for impairment
less - accumulated depreciation
Total furniture & fittings at net book value
Total carrying amount at end of year
Reconciliations:
Plant & equipment:
Carrying amount at beginning of year
plus - additions
plus - net transfer from capital works in progress
less - forex differences on translation
less - disposal
less - impairment
less - depreciation
Carrying amount at end of year
-
3,773
1,415
5,188
4,914
2,665
5,160
3,852
14,311
1,299
19,462
7,954
1,571
2,715
12,739
12,240
789
792
1(y)
28,506
28,506
21,326
21,326
195,854
(132,064)
(50,941)
151,827
(103,360)
(47,046)
12,849
1,421
2,812
-
2,812
1,143
(254)
(807)
82
40,154
(28,705)
11,449
1,088
(254)
(747)
87
15,743
12,957
1,421
4,681
10,819
(171)
(6)
-
(3,895)
12,849
21,253
3,851
353
413
(854)
(20,095)
(3,500)
1,421
12
96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
Consolidated
2019
Note
US$000
2018
US$000
12
12
11,449
2,182
(10,819)
-
2,812
87
51
4
(60)
82
20,260
10,698
(353)
(19,156)
11,449
232
58
-
(203)
87
15,743
12,957
412,103
(246,260)
(116,456)
378,405
(246,260)
(102,267)
49,387
29,878
806
806
-
-
50,193
29,878
29,878
33,692
(14,189)
-
6
49,387
-
806
806
66,439
28,690
(24,552)
(40,969)
270
29,878
-
-
-
50,193
29,878
10. PROPERTY, PLANT & EQUIPMENT (continued)
Reconciliations: (continued)
Capital works in progress:
Carrying amount at beginning of year
plus - additions
less - net transfer to plant and equipment
less - impairment
Carrying amount at end of year
Furniture & fittings:
Carrying amount at beginning of year
plus - additions
plus - forex differences on translation
less - depreciation
Carrying amount at end of year
Total carrying amount at end of year
11. DEVELOPMENT EXPENDITURE
Co-O Development expenditure:
At cost
less - provisions for impairment
less - accumulated amortisation
Net Co-O Development expenditure
Royal Crowne Vein Development expenditure:
At cost
Net Royal Crowne Vein Development expenditure
Total carrying amount at end of year
Reconciliations:
Co-O Development expenditure:
Carrying amount at beginning of year
plus - costs incurred
less - amortisation expense
less - impairment
less - forex differences upon translation
Carrying amount at end of year
Royal Crowne Vein Development expenditure:
Carrying amount at beginning of year
plus - costs incurred
Carrying amount at end of year
Total carrying amount at end of year
97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
12. IMPAIRMENT OF NON-CURRENT ASSETS
In accordance with the Group’s accounting policies and processes, the Group performs its impairment
assessment annually at 30 June. Non-financial assets are reviewed at each reporting period to determine
whether there is an indication of impairment.
When indicators of impairment exist, a formal estimate of the recoverable amount is made. External and internal
indicators of impairment as at 30 June 2019 included;
• long range planning and scheduling meeting the JORC 12 Compliances;
• increased expected future costs of production; and
• under-utilisation of the processing plant.
Due to the indicators above, the Group assessed the recoverable amounts of its major Cash-Generating-Unit
(“CGU”), relating to the Co-O mining operations.
a)
Impairment testing
i) Methodology
Impairment is recognised when the carrying amount exceeds the recoverable amount. The recoverable
amount being the value in use of the CGU has been estimated using the discounted cashflows method
based on the Group’s recoverable minerals.
Value in use is estimated based on discounted cash flows using market-based commodity price,
estimated quantities of recoverable minerals, production
levels, operating costs and capital
requirements. When Life of Mine (“LOM”) plans fully utilise the existing mineral resource and the Group
have demonstrated an ability to replenish resources, an estimated replenishment rate has been applied
to unmined resources.
Estimates of quantities of recoverable minerals, production levels, operating costs and capital
requirements are sourced from the Group planning and budgeting process, mill capacity levels and
mining plans for the following year. The 2019 budget and mine plan were developed in the context of the
current gold price environment.
Significant judgements and assumptions are made by the Group to determine value in use. This includes
assessing variable key assumptions such as gold market prices, cost structures, production utilisation
and capacity, available minerals and discount rates. Any change in these variable assumptions can
cause adverse changes in one or more of the assumptions used to estimate value in use.
ii) Key Assumptions
The table below summarises the key assumptions used in the 30 June 2019 carrying value
assessments. Comparison to the prior period has been provided.
Assumptions
Average gold price
Average AISC
Pre-Tax discount rate (%)
Probable reserves
Production capacity per annum
Unit
US$/ounce
US$/ounce
%
ounces
ounces
2019
(2019 - 2024)
2018
(2018 - 2021)
1,347
1,049
17.3
1,250
1,080
18.3
350,000
327,000
98,000 - 105,000
50,000 - 100,000
Average All-In-Sustaining-Costs (“AISC”) comprises all operating, capital and overheads expenditure
averaged over the period mentioned.
Commodity prices
Commodity prices are estimated with reference to external market forecasts and reviewed at least
annually. The price applied has taken into account observable market data.
Discount rate
The future cash flows of the CGU are discounted by the estimated real after tax weighted average cost
of capital (“WACC”), pursuant to the Capital Asset Pricing Model. The denominal pre-tax WACC has
been derived from comparable company analysis, in addition to the WACC rate of the group’s Co-O
mining operations being the primary CGU.
98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
12. IMPAIRMENT OF NON-CURRENT ASSETS (continued)
a) Impairment testing (continued)
ii) Key Assumptions (continued)
Production activity and operating and capital costs
Life of mine production activity and operating and capital cost assumptions are based on the Group’s
latest budget, including the five-year budget and separately estimated LOM plan. Discounted cash flows
include expected cost improvements and sustaining capital requirements. Estimated production is
assumed consistent with the capacity constraint of the Co-O mill taken into account while assuming a
constant recovery rate.
Resources and reserves
Resource and Reserve ounces were based on the Group’s JORC 2012 compliant Annual Resource and
Reserve Update Statement announced to the Australian Securities Exchange on 9th April 2019.
iii) Impacts
Due to the recoverable amount of the Group’s Co-O mining operations CGU being greater than the
estimated carrying amount, no impairment charge was required for the year ending 2019 (2018: current
US$0.9 million, non-current US$80.2 million):
2019
2018
Description
Note
Carrying amt
($’000)
Impairment
($’000)
Balance
($’000)
Carrying amt
($’000)
Impairment
($’000)
Balance
($’000)
Development
Plant & equipment
Consumables
Total
11
10
7
3
49,387
15,743
12,739
77,869
-
-
-
-
49,387
70,847
(40,969)
29,878
15,743
52,208
(39,251)
12,957
12,739
8,834
(880)
7,954
77,869
131,889
(81,100)
50,789
b) Sensitivity Analysis
Variation movements in any key assumptions may result in a change to the estimated recoverable amount
which may indicate an additional impairment to non-current assets.
The changes to estimated key assumptions would have the following approximate impact on the recoverable
amount of the CGU in its functional currency that has been subject to impairment in the 30 June 2019
statutory accounts:
Assumption changes
2019
2018
Effect on recoverable amount
($’000)
Effect on recoverable amount
($’000)
US $100 per ounce increase/decrease in gold price
1% increase/decrease in the discount rate
5% increase in operating costs
+/- 30,306
+/- 2,226
-18,596
+/- 27,628
+/- 971
-22,341
In addition to the above, the level of production activity is also a key assumption in the determination of
recoverable amount. Should the Group recognise decreases/increases in processing capacity, changes in
recoverable amount estimates may arise. Due to the number of factors that could impact production activity,
assessment to sensitivity has not been determined for these factors.
The sensitivities above assume specific assumption moves are in isolation, whilst all other assumptions are
held constant. In reality, a change in one of the aforementioned assumptions may accompany a change in
another assumption.
99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
13. TRADE & OTHER PAYABLES
Trade creditors
Accruals
Income tax payable
Withholding tax
Other creditors
Total creditors
14. BORROWINGS
Current borrowings:
Unsecured liability - interest bearing loan
Total current borrowings
Non-current borrowings:
Unsecured liability - interest bearing loan
Total non-current borrowings
Total Borrowings
Consolidated
2019
US$000
2018
US$000
8,879
3,195
1,515
618
172
14,978
1,044
5,726
2,810
239
14,379
24,797
6,679
6,679
150
150
6,335
6,335
170
170
6,829
6,505
Secured Borrowing are bank loans secured by transportation equipment of the Group. Interest rates
on the loans range between 6.25% to 7.89% (2018: 3.50% to 4%).
15.
PROVISIONS
Current provisions:
Employee benefits
Total current provisions
Non-current provisions:
Retirement benefit
Mine rehabilitation
Total non-current employee benefits
Retirement Benefit
401
401
2,459
3,479
5,938
386
386
2,515
1,645
4,160
The Retirement benefit in non-current liabilities relates to the Philippine employees defined benefit plan.
The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were
carried out at 30 June 2019 by Actuarial Advisers, Inc. The present value of the defined benefit obligation and
the related current service cost and past service cost was measured using the Projected Unit Credit Method.
The principal assumptions used for the purposes of the actuarial valuations were as follows:
• Discount rate applied - 5.92% (2018: 5.08%);
• Expected rate of salary increase - 3.00% (2018: 3.00%)
Assumptions were developed by management with the assistance of independent actuarial appraisers. Discount
factors are determined close to year-end by reference to high quality Government bonds that are denominated
in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of
the related pension obligation. Other assumptions are based on management’s historical experience.
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
15. PROVISIONS (continued)
Non-current provisions: (continued)
Retirement benefit (continued)
Amounts recognised in profit or loss in respect of these defined benefit plans are as
follows:
Current service cost
Interest on obligation
Total
The amount included in the statements of financial position arising from the entity’s
obligation in respect of its defined benefit plans is as follows:
Present value of defined benefit obligation
Unrecognised actuarial loss
Unamortised past service cost, non-vested
Total
Movements in the present value of the defined benefit obligation in the current period
were as follows:
Opening balance
Current service cost
Interest costs
Benefits paid
Actuarial loss
Closing balance
Consolidated
2019
US$000
2018
US$000
376
114
490
382
89
471
2,459
2,515
-
-
-
-
2,459
2,515
2,515
2,184
376
114
(103)
(443)
382
89
(140)
-
2,459
2,515
The Company has no plan assets held by trustees but an employee retirement fund amounting to US$1,358,361
(2018: US$1,303,428) was held as at June 30, 2019. The employee retirement fund is presented as part of cash
at bank (refer to Note 23 (c).
Mine rehabilitation
Carrying amount at beginning of the year
(less)/plus - increase in provision
Carrying amount at end of year
1,645
1,834
3,479
2,047
(402)
1,645
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
Consolidated
Opening
balance
US$000
Forex on
translation
US$000
Credit/(charged)
to income
US$000
Closing
balance
US$000
16. DEFERRED TAX
Consolidated Group
30 June 2019
Deferred tax liability
Capitalised exploration & evaluation expenditures
Other
Total deferred tax liability
Deferred tax assets
Carried forward tax losses
Other
Total deferred tax asset
30 June 2018
Deferred tax liability
232
-
232
-
10,059
10,059
Capitalised exploration & evaluation expenditures
245
Deferred tax assets
Carried forward tax losses
Other
Total deferred tax asset
1,662
1,662
-
118
118
-
(595)
(595)
-
-
-
-
17. AUDITORS’ REMUNERATION
Remuneration received or due and receivable by the Company’s
auditors, BDO Audit (WA) Pty Limited for:
• auditing or reviewing the financial reports
• other services provided by related practice of auditor:
Taxation
Remuneration consulting
Other non-audits services
Total remuneration of the Company’s auditors
Remuneration of other auditors of the Company’s Philippines and Hong Kong
subsidiaries for:
(232)
660
428
1,826
7,137
8,963
-
778
778
1,826
16,601
18,427
(13)
232
8,397
8,397
10,059
10,059
Consolidated
2019
US$
2018
US$
130,990
189,164
39,745
5,429
2,874
6,054
-
34,255
179,038
229,473
• auditing or reviewing the financial reports
• other services provided by related practice of auditor - taxation & compliance
Total remuneration of other auditors of the Company’s Philippines subsidiaries
73,372
3,883
77,255
60,881
5,788
66,669
102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
18.
ISSUED CAPITAL
207,794,301 ordinary shares (30 June 2018: 207,794,301)
Total issued capital
Ordinary shares
Balance at beginning of year
Ordinary shares issued during the year:
(i) ordinary shares issued - new issues
Balance at end of year
Ordinary shares
Consolidated
2019
2018
US$000
US$000
102,902
102,902
102,902
102,902
102,902
102,902
-
-
102,902
102,902
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the
company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares
have no par value.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon
a poll each share shall have one vote.
No ordinary shares were issued during the year or during the prior year.
Capital Management
Management controls the capital of the Group by monitoring performance against budget to provide the
shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going
concern.
The Group's liabilities and capital includes ordinary share capital, options and financial liabilities, supported
by financial assets.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting
its capital structure in response to changes in these risks and in the market. These responses include the
management of debt levels, distributions to shareholders and share issues.
Capital for the reporting period under review is summarised as follows:
Total equity
Cash and cash equivalents
Capital
Total equity
Borrowings
Overall financing
Capital-to-overall financing ratio
Consolidated
2019
US$000
2018
US$000
123,742
82,843
(18,109)
(11,198)
105,633
71,645
123,742
6,829
130,571
81%
82,843
6,505
89,348
80%
103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
19. RESERVES
Share option reserves
Transfer from option reserve
Other reserves
Foreign currency translation reserve
Total Reserves
(a) Option and performance rights reserve
Consolidated
2019
US$000
2018
US$000
1,126
(924)
310
6,267
6,779
1,180
(186)
-
317
1,311
The option reserve records items recognised as expenses on valuation of share-based payments.
Unlisted options over ordinary shares at 30 June 2019
(unless otherwise stated, all unlisted options and performance rights have full vesting rights)
• 3,200,000 options expiring 16 December 2018 and exercisable at A$1.00 each. During the years
2016, 2017, 2018 and 2019, 459,500, 225,500, nil and 2,515,000 respectively were forfeited resulting
in nil options remaining at reporting date. Refer to note 20 (i). (Nil options were vested at reporting
date (2018: 2,515,000)).
• 1,000,000 options expiring 9 February 2019 and exercisable at A$1.00 each. During the years 2016,
2017, 2018 and 2019, nil, 350,000, nil and 650,000 respectively were forfeited resulting in nil options
remaining at reporting date. Refer to note 20 (ii). (Nil options were vested at reporting date (2018:
650,000)).
• 1,200,000 options expiring 24 November 2020 and are exercisable at various prices as disclosed in
note 20 (iii). (360,000 options were vested at reporting date (2018: 360,000)).
• 1,665,000 options expiring 8 Jan 2022 and are exercisable at various prices as disclosed in note 20
(iv).
(499,500 options were vested at reporting date (2018: nil))
The above unlisted options do not entitle the holders to participate in any share issue of the Company.
(b) Foreign Currency Translation Reserve
The foreign currency translation reserve for the group records exchange differences arising on translation
of foreign controlled subsidiaries.
(c) Transfer from Option Reserve
The transfer from option reserve for the Group relates to the transfer from equity to retained profits for
share options that have been forfeited and expired (refer Note 20).
20.
SHARE BASED PAYMENTS
The following share-based payment arrangements existed during 30 June 2019:
(i) On 16 December 2014, 3,200,000 options were issued to Australian and Philippine based employees.
The options, which hold no voting or dividend rights have an expiry date of 16 December 2018 and are
exercisable at A$1.00 per option.
Under the terms of the Issue the employees would be required to remain in the employment of the
Company at 16 December 2015 to achieve 30% vesting of the options, at 16 December 2016 to achieve
30% vesting of the options, with full vesting if they remain employees of the Company a year later on 16
December 2017.
At reporting date, all options had expired.
(ii) On 9 February 2015, 1,000,000 options were issued to Australian and Philippine based employees. The
options which hold no voting or dividend rights have an expiry date of 09 February 2019 and are
exercisable at A$1.00 per option.
Under the terms of the Issue the employees would be required to remain in the employment of the
Company at 9 February 2016 to achieve 30% vesting of the options, at 9 February 2017 to achieve 30%
vesting of the options, with full vesting if they remain employees of the Company a year later on 9 February
2018.
At reporting date, all options had expired.
104
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
20. SHARE BASED PAYMENTS (continued)
(iii) On 24 November 2016, 1,200,000 options were issued to Boyd Timler, the company’s previous Managing
Director (who retired on 06 July 2018), subject to the rules of Medusa Mining Limited Share Option Plan.
Upon his retirement, the remaining share options yet to be vested were forfeited.
The options which hold no voting or dividend rights have an expiry date of 24 November 2020 and are
exercisable as follows:
Tranche Options
Exercise price Valuation per
option
Terms of issue
A
B
C
D
300,000
300,000
300,000
300,000
A$1.00
A$1.25
A$1.50
A$1.75
A$0.200
A$0.170
A$0.147
A$0.128
Under the terms of the issue, the employee would be required to
remain in the employment of the company at 24 November 2017 to
achieve 30% vesting of options, at 24 November 2018 to achieve 30%
vesting of options with full vesting if Mr Timler remains an employee
of the company a year later on 24 November 2019.
The Options were valued using a Black Scholes pricing model. The valuation per tranche was calculated
under this valuation model (using historical share price volatility measures) and applying the following
inputs:
o Weighted average life of option - 48 months
o Share price volatility - 65%
o Risk free rate - 2.07%
o Dividend Yield - Nil
(Medusa is currently unlikely to pay a dividend during the life of the options).
(iv) On 8 January 2018, 1,665,000 options were issued to Australian and Philippine based employees. The
options which hold no voting or dividend rights have an expiry date of 8 January 2022 and are exercisable
as follows:
Tranche Options
Exercise price Valuation per
option
Terms of issue
A
B
C
D
416,250
A$1.00
416,250
A$1.25
416,250
A$1.50
416,250
A$1.75
A$0.275
A$0.255
A$0.239
A$0.225
Under the terms of the issue, the employees would be required to
remain in the employment of the company at 8 January 2019 to
achieve 30% vesting of options, at 8 January 2020 to achieve 30%
vesting of options with full vesting if they remain an employee of the
company a year later on 8 January 2021. At reporting date, all options
remain unexercised.
The Options were valued using a Black Scholes pricing model. The valuation per tranche was calculated
under this valuation model (using historical share price volatility measures) and applying the following
inputs:
o Weighted average life of option - 48 months
o Share price volatility - 99%
o Risk free rate - 1%
o Dividend Yield - Nil
(Medusa is currently unlikely to pay a dividend during the life of the options).
Share based options
Number of options &
performance rights
Weighted average
exercise price (A$)
Number of options &
performance rights
Weighted average
exercise price (A$)
2019
2018
Outstanding at start of year
6,030,000
1.1782
Granted
Forfeited
Expired
Exercised
Outstanding at year end
Exercisable at year end
-
840,000
3,165,000
-
2,025,000
859,500
-
1.5179
1.0000
-
1.3157
1.0417
4,365,000
1,665,000
1.1031
1.3750
-
-
-
-
-
-
6,030,000
3,325,000
1.1782
1.0406
During the year, 840,000 options were forfeited (2018: nil) and 3,165,000 options expired (2018: nil).
The options outstanding at 30 June 2019 (all of which are unlisted) had a weighted average exercise
price of A$1.3157 and a weighted average remaining contractual life of 28.34 months.
Included under administration expense in the Statement of Profit or Loss and other Comprehensive
Income is US$131,708 (2018:US$149,996) and relates, in full, to equity-settled share-based payment
transactions relating to employees.
105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
21.
INVESTMENT IN SUBSIDIARIES
The following companies are controlled entities of Medusa Mining Limited as at 30 June 2019:
Controlled Entities
Date of
incorporation
Country of
incorporation
% interest held
2019
2018
Medusa Exploration & Development Corporation
29 May 2003
Philippines
Phsamed Mining Corporation
Medusa Overseas Holding Corporation
Philsaga Mining Corporation
23 Apr 2003
Philippines
08 May 2003
Philippines
17 May 2001
Philippines
Mindanao Mineral Processing and Refining Corporation
03 Nov 2005
Philippines
Komo Diti Traders Limited
23 Jan 2017
Hong Kong
40%
40%
40%
40%
100%
100%
40%
40%
40%
40%
100%
100%
ORGANISATION CHART
MEDUSA MINING LIMITED
80%
40%
MMPRC
3 x Filipino
Directors
60%
MEDC
100%
MOHC
20%
100%
100%
100%
KDT
Phsamed
PMC
Philippines entities:
- Mindanao Mineral Processing & Refining Corporation ("MMPRC") - Processing Company
- Medusa Overseas Holding Corporation ("MOHC") - Holding Company
- Medusa Exploration & Development Corporation ("MEDC") - Company providing geological services
- Phsamed Mining Corporation ("Phsamed") - Mining and Exploration Company
- Philsaga Mining Corporation ("PMC") - Mining and Exploration Company
Hong Kong entity:
- Komo Diti Traders Limited ("KDTL") - Trading Company
Medusa Mining Limited ("Medusa") holds 40% of the issued shares of Medusa Exploration and Development Corporation
("MEDC"). As Medusa has various agreements in place and pursuant to local statutory provisions, Medusa has effective
sole rights to the economic returns of MEDC and its subsidiary companies. In such circumstances, the assets and liabilities
of MEDC and its subsidiaries have been attributed 100% to the Consolidated Entity.
106
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
22.
RETAINED PROFITS AND ACCUMULATED LOSSES
Retained profit/(loss) at start of year
Change in accounting policy - Note 1(c)
Net profit/(loss) attributable to members of Company
Transfer from share option reserve
Consolidated
2019
US$000
2018
US$000
(21,370)
(1,982)
36,489
924
33,998
-
(55,554)
186
Retained profits/(accumulated losses) at the end of year
14,061
(21,370)
23.
NOTES TO STATEMENT OF CASH FLOWS
(a) Reconciliation of cash:
For the purposes of the Statement of Cash Flows, cash includes cash on
hand and short-term deposits at call, net of outstanding bank overdrafts.
Cash 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 at bank
Cash on hand
Total cash assets
(b) Reconciliation of profit /(loss) after income tax to net cash
provided by operating activities:
Profit/(Loss) after income tax
add/(less) -
Non-cash items:
- Depreciation/amortisation
- Mine rehabilitation amortisation
- Retirement Benefit
- Gain on asset disposal
- Exploration expenses written off
- Recognition of share-based expenses
- Impairment expense
- VAT write off
- Foreign exchange (gain) / loss
- Bad debts written off
- Inventory write off
- Income tax deferred
- Income tax credit/(expense)
add/(less) -
Changes in assets & liabilities
- (increase)/decrease in trade & other receivables
- (increase)/decrease in prepayments
- (increase)/decrease in inventories
- (decrease)/increase in trade & other payables
- (increase)/decrease in deferred taxes assets
- increase/(decrease) in deferred taxes liabilities
- increase/(decrease) in exploration & evaluation
18,108
1
18,109
11,197
1
11,198
36,489
(55,554)
18,325
29,232
443
489
-
-
132
-
10,357
(118)
42
81
(8,606)
3,520
61,154
7,093
3
1,484
(16,340)
-
(4,211)
-
-
488
1
1,186
150
81,100
1
88
-
-
(8,409)
6,642
54,925
(6,423)
(221)
4,753
1,182
(8,397)
(12)
(1,186)
Net cash provided by operating activities
49,183
44,621
107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
23.
NOTES TO STATEMENT OF CASH FLOWS (continued)
(c) Restricted Funds
The Group’s total cash assets mentioned above include restricted bank accounts as follows:
(i) A rehabilitation fund of US$3,703,399 (2018: US$1,130,409) to be used at the end of life of mine for
environmental rehabilitation.
(ii) An employee retirement fund of US$1,358,361 (2018: US$1,303,428) established to meet employee
entitlements on retirement.
(ii) The Company has a provident fund of US$597,136 (2018: US$1,549,867) that is intended to be used
as payment to employees upon retirement, which is unrestricted as to withdrawal.
Total restricted funds amount to US$5,658,896.
24. FINANCIAL RISK MANAGEMENT
(a) Financial Risk Management Policies
The Group’s financial instruments consist mainly of deposits with banks, local money market instruments,
short-term investments, accounts receivable and payable.
The main purpose of non-derivative financial instruments is to raise finance for Group operations.
The Group does not speculate in the trading of derivative instruments.
(i) Treasury risk management
Senior executives of the Group regularly analyse financial risk exposure and evaluate treasury
management strategies in the context of the most recent economic conditions and forecasts.
The Group’s overall risk management strategy is outlined in the Corporate Governance Statement
in the Director’s Report.
(ii) Financial risk exposures and management
The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign
currency risk, liquidity risk, credit risk and price risk.
Interest rate risk
Interest rate risk is managed by investing cash with major financial institutions in both cash on deposit
and term deposit accounts. Interest rates on major deposits that are re-invested, are at a fixed rate
on a monthly basis.
Price risk
The Group sells its gold produced at spot rate and no forward contracts or hedging is utilised. Whilst
the Group is cognizant of its exposure to fluctuations in the gold price, the current policy of the Board
is not to hedge primarily because the Group produces gold in the current economic environment at
a very low cash cost. The Board’s risk management policy acknowledges that as market factors are
dynamic in nature all risk positions are monitored to ensure that the Group‘s activities are consistent
with the approach and strategy approved by the Board. The Board therefore regularly reviews the
spot price of gold to consider whether it should adopt any measures to mitigate risk.
Liquidity risk
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate
unutilised borrowing facilities are maintained.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or
customer contract, leading to a financial loss to the Company. Credit risk arises from the financial
assets of the Company, which comprise trade and other receivables and deposits with banks and
financial institutions.
The Company manages its credit risk on trade receivables and financial instruments by
predominantly dealing with counterparties with an investment grade credit rating. Customers who
wish to trade on unsecured credit terms are subject to credit verification procedures. Receivable
balances are monitored on an ongoing basis. As a result, the Company’s exposure to bad debts is
not significant. Medusa’s maximum credit risk is limited to the carrying amount of its financial assets.
At 30 June 2019 the Company had a provision for credit loss of nil (2018: nil). Subsequent to 30
June 2019, 100% (2018: 100%) of the trade receivables balance of nil (2018: $3,852,000) has been
received. Credit risk from balance with banks is managed by placing funds with reputable financial
institutions with strong investment grade credit ratings.
108
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
24.
FINANCIAL RISK MANAGEMENT (continued)
(a) Financial Risk Management Policies (continued)
(ii) Financial risk exposures and management (continued)
Foreign currency risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency. The risk can be measured by
performing a sensitivity analysis that quantifies the impact of different assumed exchange rates on the
Group’s forecast cash flows.
Whilst the Group is aware of its exposure to fluctuations in foreign currency, the current policy of the
Board is not to hedge.
(b) Financial instruments
(i) Financial instrument composition and maturity analysis
The tables below reflect the undiscounted contractual settlement terms for financial instruments of a
fixed period of maturity, as well as management’s expectations of the settlement period for all other
financial instruments. As such, the amounts may not reconcile to the Statement of Financial Position.
Consolidated Group
Weighted average Floating interest
Effective interest
rate
Within 1 Year
Within 1 to 5
Years
Non-Interest
Bearing
Total
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
(%)
(US$000)
Financial Assets
Cash & cash equivalent
0.16
0.17
10,412 10,002
Loans and receivables
-
-
-
-
10,412 10,002
-
-
-
-
-
-
-
-
-
Financial Liabilities
Financial liabilities at amortised cost
Bank Loan - Current
Bank Loan - Non-current
Trade & sundry payables
6.29
7.89
-
3.65
3.50
-
-
-
-
-
-
-
-
-
Receivables are expected to be collected as follows:
Less than 6 months
6 months to 1 year
-
-
-
-
7,697
1,196
18,109
11,198
-
5,151
-
5,151
7,697
6,347
18,109
16,349
-
-
-
-
6,679
6,335
150
170
6,679
6,335
-
-
-
-
-
150
170
-
- 14,379 24,797
14,379
24,797
6,679
6,335
150
170 14,379 24,797
21,208
31,302
Consolidated
2019
US$000
2018
US$000
-
-
-
5,151
-
5,151
As at 30 June 2019 and 2018, all receivables were neither past due nor impaired.
Trade and sundry payables are expected to be paid as follows:
Less than 6 months
14,379
24,797
109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
24.
FINANCIAL RISK MANAGEMENT (continued)
(b) Financial Instruments (continued)
(ii) Net fair values
The fair value of cash and cash equivalents and non- interest bearing monetary financial assets and
liabilities approximates their carrying value. The fair value of financial assets and financial liabilities
is based upon market prices where a market exists or by discounting the expected future cash flows
by the current interest rates for assets and liabilities with similar risk profiles.
(iii) Sensitivity analysis
The Group has performed sensitivity analysis relating to its exposure to interest rate risk, foreign
currency risk and price risk at reporting date. This sensitivity analysis demonstrates the effect on the
current year results and equity, which could result from a change in these risks.
Interest Rate Sensitivity Analysis
At 30 June 2019, the effect on profit or equity as a result of changes in the interest rate, with all
other variables remaining constant would be as follows:
Change in profit/(loss) before income tax/equity
- increase in interest rate by 100 basis points
- decrease in interest rate by 100 basis points
Consolidated
2019
US$000
116
(116)
2018
US$000
90
(90)
Foreign currency risk sensitivity analysis
Foreign exchange risk arises from future commercial transactions and recognised assets and
liabilities denominated in a currency that is not the consolidated entity’s functional currency. The
consolidated entity operates internationally and is exposed to foreign exchange risk arising from
the United States dollar. No programs for hedging foreign exchange risk were implemented by the
consolidated entity in the 2018 and 2019 financial years.
The following table shows the foreign currency risk on the financial assets and liabilities of the
Groups operations denominated in currencies other than the functional currency of the operations.
Net Financial Assets/(Liabilities) in US$000
A$
US$
PHP
TOTAL US$
Consolidated
2019
Functional currency of Group Entity
Australian Dollar
US Dollar
Philippine Peso
Total
2018
Functional currency of Group Entity
Australian Dollar
US Dollar
Philippine Peso
Total
Change in profit/(loss) before income tax/equity:
- strengthening of A$ to US$ by 15%
- strengthening of Philippine Peso to US$ by 15%
Total
- weakening of A$ to US$ by 15%
- weakening of Philippine Peso to by 15%
Total
110
-
-
-
-
-
-
-
-
5,805
-
4,209
10,014
531
-
3,420
3,951
-
524
-
524
-
128
-
128
5,805
524
4,209
10,538
531
128
3,420
4,079
Consolidated
2019
US$000
(757)
(630)
(1,387)
757
630
1,387
2018
US$000
(69)
(512)
(581)
69
512
581
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
24. FINANCIAL RISK MANAGEMENT (continued)
(b) Financial instruments (continued)
(iii) Sensitivity Analysis (continued)
Price risk sensitivity analysis
The policy of the Company is to sell gold at spot price and has not entered in hedging contracts. The
Company’s revenues were exposed to fluctuations in the price of gold. If the average selling price of gold
of US$1,264 (2018: US$1,293) for the financial year had increased/decreased by 10% the change in the
profit before income tax for the consolidated group would have been an increase/decrease of US$13.045
million (2018: US$12.391 million). The above interest rate, foreign exchange rate and price risk sensitivity
analysis has been performed on the assumption that all other variables remain unchanged.
25. COMMITMENTS
(a) Exploration commitments:
The Group has certain obligations to perform minimum exploration work to
maintain rights of tenure to its exploration tenements. These obligations may
vary from time to time in accordance with tenements held and are expected to
be fulfilled in the normal course of operations of the Group so as to avoid
forfeiture of any tenement.
These obligations are not provided in the financial report and are payable:
-
no later than 1 year
- 1 year or later and no later than 5 years
Total exploration commitments
(b) Operating lease expense commitments:
Non-cancellable operating lease contracted for but not capitalised in the
financial statements.
The Group leases office premises an operating lease expiring in July 2019.
Under the terms of the operating leases, the Group is provided with a right of
renewal and the lessor has the right to increments in lease payments on an
annual basis based on movements in the Consumer Price Index.
These obligations are not provided in the financial report and are payable:
- no later than 1 year
- 1 year or later and no later than 5 years
Total operating lease expense commitments
(c) Other contractual commitments:
(iii) On 26 March 2008, Philsaga was granted Mineral Production Sharing
Agreement (“MPSA”) number 262-2008-XIII over the Co-O mine. Under
the terms of the Agreement Philsaga is committed to mine related
expenditure in the Philippines as follows:
These obligations are not provided in the financial report and are payable:
- no later than 1 year
- 1 year or later and no later than 5 years
Total other contractual commitments
(iv) On 24 November 2009 Philsaga was granted Mineral Production Sharing
Agreement (“MPSA”) number 299-2009-XIII over the Co-O mine. Under the
terms of the Agreement Philsaga is committed to mine related expenditure in
the Philippines as follows:
These obligations are not provided in the financial report and are payable:
- no later than 1 year
- 1 year or later and no later than 5 years
Total other contractual commitments
111
Consolidated
2019
US$000
2018
US$000
261
1,113
1,374
141
1,134
1,275
85
363
448
1,437
1,013
2,450
76
243
319
63
-
63
54
214
268
186
223
409
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
26. CONTINGENT LIABILITIES
The parent entity on behalf of its subsidiary Komo Diti Traders Limited has provided a performance
guarantee to its customer Heraeus Limited amounting to no more than US$9,800,000 for any deficiency in
the subsidiary’s obligations and liabilities under the Refining & Transportation Agreement with Heraeus
Limited.
The parent entity has a bank guarantee of AUD$83,630 with the Commonwealth Bank of Australia for its
head office premises. In the event that it is unable to fulfil its rental obligation with the landlord, the bank
shall release the funds for settlement.
27. RELATED PARTIES
Related parties’ transactions of Medusa Mining Limited fall into the following categories:
Key Management Personnel related parties
The following were key management personnel of the Group at any time during the reporting period and
unless otherwise indicated were key management personnel for the entire period.
Directors:
Non-Executive Directors -
Andrew Teo, Chairperson;
Roy Daniel;
Peter Hepburn-Brown (retired from the Board on 03 September 2018).
Executive Directors -
Boyd Timler, Managing Director (retired from the Board on 06 July 2018); and
Raul Villanueva.
Executive Officers:
David McGowan (Chief Executive Officer);
Peter Alphonso (Chief Financial Officer/Company Secretary); and
James Llorca (General Manager, Geology & Resources).
Details of Key Management Personnel’s remuneration, shareholdings and option holdings are set out in
the Remuneration Report section of the Directors’ Report.
Key management personnel compensation:
Short term employee benefits
Post-employment benefits
Long-term benefits
Equity-settled share-based payments
Termination benefits
Total
Consolidated
2019
US$000
2018
US$000
1,485
1,887
53
6
-
277
1,821
74
6
226
-
2,193
Detailed remuneration disclosures are provided in the remuneration section of the Directors’ report.
28. EVENTS SUBSEQUENT TO REPORTING DATE
There has not arisen in the interval between the end of the financial year and the date of this report any
other item, transaction or event of a material and/or unusual nature likely, in the opinion of the Directors of
the Company, to affect significantly the operations of the Group, the results of those operations, or the
state of affairs of the Group in subsequent financial years.
112
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
29. SEGMENT INFORMATION
The Consolidated Group has identified its reportable operating segments based on the internal management
reports that are reviewed and used by the Managing Director/Chief Executive Officer (the chief operating
decision maker) and his management team in assessing performance and in determining the allocation of
resources.
The Group segments are structured as Mining, Exploration and Other. Currently the only operational mine is
the Co-O mine. Other incorporates the Parent Entity’s activities
Segment Result, Segment Assets and Segment Liabilities
The measurement of segment results is in line with the basis of information presented to management for
internal management reporting purposes.
Segment Result is based on the net of revenues and expenditure corresponding to the specific segment.
Segment Revenues represent gold and silver sales at spot prices.
Segments Assets are allocated to segments based on their nature and physical location.
Segment Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability
and the operations of the segment. Segment Liabilities include trade and other payables.
income tax expense;
The following items of revenue, expenses, assets and liabilities are not allocated to operating segments, as they
are not considered part of the core operations of any segment:
-
- gain on disposal of assets;
- deferred tax assets and liabilities;
-
-
interest revenue;
intercompany receivables and payables.
-
12 months to June 2019:
Segment Revenue
Reconciliation of segment revenue to group revenue
add:
Interest revenue
Group revenue
Segment Result
Reconciliation of segment result to group result:
add back:
Gain on disposal of asset
Other revenue
Interest revenue
Forex realised
less:
Depreciation
Amortisation
Exploration write off
Bad debts write off
VAT write off
Inventory write off
Asset write off
Impairment
Income tax expense
Group profit/(loss)
Segment Assets
Reconciliation of segment asset to group assets:
plus: Deferred tax assets
Total group assets
Mining
US$000
129,320
-
Exploration
US$000
Other
US$000
Total
US$000
-
-
-
129,320
282
282
129,602
9,329
(767)
1,789
10,351
-
-
3,943
14,813
1,601
43
10,357
80
6
-
-
-
-
-
-
-
-
-
-
-
-
-
40,172
(767)
164
118
12
-
87
-
-
-
-
-
(5,086)
(2,916)
164
118
3,955
14,813
1,688
43
10,357
80
6
-
(5,086)
36,489
126,563
74
7,003
133,640
18,427
-
29
-
-
18,427
152,067
1,108
27,547
-
778
28,325
Segment Liabilities
Reconciliation of segment liabilities to group liabilities
plus: Deferred tax liabilities
26,410
778
Total group liabilities
113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
29. SEGMENT INFORMATION (continued)
12 months to June 2018:
Mining
US$000
Exploration
US$000
Other
US$000
Total
US$000
Segment Revenue
124,506
Reconciliation of segment revenue to group revenue
add:
Interest revenue
Other
Group revenue
Segment Result
Reconciliation of segment result to group
result:
add back:
Gain on disposal of asset
Other revenue
Interest revenue
Forex realised
less:
Depreciation
Amortisation
Exploration write off
Impairment
Income tax expense
Group profit/(loss)
-
-
-
124,506
87
87
124,593
-
(163,426)
(65)
(5,524)
(169,015)
-
-
3,684
25,530
1,186
81,100
-
-
-
2
-
-
-
-
87
88
17
-
-
-
1,767
87
88
3,703
25,530
1,186
81,100
1,767
(51,926)
(63)
(3,565)
(55,554)
Segment Assets
Reconciliation of segment asset to group assets: 106,418
plus: Deferred tax assets
10,059
Total group assets
Segment Liabilities
34,715
Reconciliation of segment liabilities to group liabilities
plus: Deferred tax liabilities
232
Total group liabilities
79
-
23
-
2,367
-
108,864
10,059
118,923
1,110
35,848
-
232
36,080
Revenue and non-current assets by geographical region
Australia
Philippines
Hong Kong
US$000
US$000
US$000
Total
US$000
12 months to June 2019:
Segment Revenue
Non-Current Assets
12 months to June 2018:
Segment Revenue
Non-Current Assets
-
697
-
127
-
129,320
67,651
-
129,320
68,348
-
124,506
53,816
-
124,506
53,943
All gold and silver sales have been produced from the Co-O mine in the Philippines and were sold to one
customer.
Gold and silver sales are recognised in the mining segment as there has been no active trading of gold in the
current year. Sales revenues in the mining segment represent sales of refined product from the Co-O Mine.
In accordance with AASB 8 disclosure requirements Non-Current Assets shown in geographical information
include tangible and intangible assets but exclude financial instruments, deferred tax assets, post-employment
benefit assets and rights arising under insurance contracts.
The Group sells its gold on the open market. Selection of a customer is at the Group’s discretion and there is
no commitment to exclusive sales to a particular customer. During the financial year ended 30 June 2019, all
of the Group's revenues depended on a single customer (2018:100%).
114
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
30. PARENT COMPANY INFORMATION
Parent Entity:
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Net Assets
Issued capital
Option premium reserve
Foreign exchange reserve
Accumulated losses
Dividends paid
Total Equity
Profit/(Loss) for the year
Total Comprehensive Profit/(Loss)
2019
US$000
2018
US$000
6,306
29,299
1,108
1,108
2,241
30,088
1,110
1,110
28,191
28,978
102,902
102,902
202
11,894
(44,538)
(42,269)
994
11,894
(44,544)
(42,269)
28,191
28,977
(918)
(918)
(1,275)
(1,275)
On adoption of AASB 9 Financial Instruments the financial impact of applying the expected loss impairment model
to loans provided to subsidiaries was nil.
31. COMPANY DETAILS
The registered office and principal place of business of the Company is:
Suite A, Level 1
1 Preston Street
Como
Western Australia 6152
115
DIRECTOR’S DECLARATION
for the year ended 30 June 2019
1.
In the opinion of the Directors’ of Medusa Mining Limited:
a) The consolidated financial statements and notes of Medusa Mining Limited are in accordance with the
Corporations Act 2001, including:
(i) Giving a true and fair view of its financial position as at 30 June 2019 and of its performance for the financial
year ended on that date; and
(ii) Complying with Australian Accounting Standards (including the Australian Accounting Interpretations), the
Corporations Regulations 2001 and other mandatory professional reporting requirements: and
b) There are reasonable grounds to believe that Medusa Mining Limited 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
Chairman and Chief Financial Officer for the financial year ended 30 June 2019.
3. Note 1 confirms that the consolidated financial statements also comply with International Financial Reporting
Standards.
Signed in accordance with a resolution of the Directors
Andrew Teo
Chairperson
Dated the 30th day of August 2019
116
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Medusa Mining Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Medusa Mining 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 profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
117
Carrying value of the Group’s Co-O mining operations (CGU) 30 June 2019
Key audit matter
How the matter was addressed in our audit
The Group’s carrying value of its Co-O mining
We evaluated management’s impairment model for
operations (CGU) is included in property, plant and
the Co-O mining operations (CGU) by challenging the
equipment (note 10) and development expenditure
key estimates and assumptions used by management
(note 11).
The carrying value of mine properties is impacted by
in arriving at their assessment. Our work included
but was not limited to the following procedures:
various key estimates and judgements in particular:
·
analysing management’s gold price assumptions
·
·
·
·
·
·
Ore Reserves and estimates;
Amortisation rates;
Discount rate;
Assumed gold price;
Capitalisation of mining costs; and
Mine planning.
The Group is also required to assess for indicators of
impairment at each reporting period. The assessment
of impairment indicators in relation to the mine assets
requires management to make significant accounting
judgements and estimates which includes discount
rates, commodity price and ore reserve estimates.
This is a key audit matter due to the quantum of the
Co-O asset and the significant judgement involved in
management’s assessment of the carrying value of the
CGU. Refer to the significant estimates and
judgements used by management in assessing the
discounted future cash flows as disclosed in note 12.
against external market information and trends,
to determine whether a significant change would
impact the value of the asset;
performing a site visit to the CO-O mine;
challenging the appropriateness of management’s
reserves estimate by assessing the significant
assumptions, methods and source data used by
management’s expert in estimating the reserves.
This included both meeting with management’s
expert and assessing the competency and
objectivity of management’s expert;
evaluating forecasted production and operating
costs against the Board approved mine plan;
challenging the appropriateness of management’s
discount rate used in the impairment model in
conjunction with our internal valuation experts;
·
·
·
·
·
challenging management’s sensitivity assessment
by performing our own sensitivity analysis in
respect of the key assumptions to indicate if
there would be a significant change to the value
of the asset;
·
·
reviewing and challenging management’s
methodology on the amortisation calculation;
assessing the adequacy of the related disclosures
in note 12 to the financial report.
Other information
The directors are responsible for the other information. The other information comprises the
information contained in annual report for the year ended 30 June 2019, but does not include the
financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s
report, and the annual report, which is expected to be made available to us after that date.
118
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed on the other information that we obtained prior to the date
of this auditor’s report, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
When we read the annual report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to the directors and will request that it is corrected. If it is not
corrected, we will seek to have the matter appropriately brought to the attention of users for whom
our report is prepared.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 62 to 74 of the directors’ report for the
year ended 30 June 2019.
119
In our opinion, the Remuneration Report of Medusa Mining, 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.
BDO Audit (WA) Pty Ltd
Neil Smith
Director
Perth, 30 August 2019
120
ADDITIONAL SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 13 September 2019.
1.
Shareholding
(a)
Distribution of shareholders and shares
Distribution of shares
Number of
shareholders
Total number of shares
1
1,001
5,001
- 1,000
- 5,000
- 10,000
10,001
- 100,000
100,001
- 1,000,000
1,000,000 and over
1,215
1,282
476
603
79
16
544,019
3,407,306
3,651,267
18,367,073
20,068,647
161,755,989
Total
3,671
207,794,301
The number of shareholdings held in less than marketable parcels is 770.
(b)
Voting rights
The voting rights attaching to ordinary shares are, on a show of hands, every member present in
person or by proxy shall have one vote and upon a poll, each share shall have a vote.
BNP PARIBAS Nominees Pty Ltd
3,352,567
(c)
Twenty largest shareholders
Total number of ordinary shares on issue - 207,794,301
Name of shareholders
1.
2.
HSBC Custody Nominees (Australia) Limited
CITICORP Nominees Pty Limited
3. Merrill Lynch (Australia) Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
4.
5.
6.
7.
8.
9.
Amalgamated Dairies Limited
National Nominees Limited
Berne No 132 Nominees Pty Ltd <594138 A/C>
Neweconomy Com Au Nominees Pty Limited <900 ACCOUNT>
10. Mr Samuel Gonzales Afdal
11. CS Third Nominees Pty Limited
12. Mr Carl Eric Holt + Mrs Lorraine Holt
13. BNP PARIBAS NOMS PTY LTD
14. Mr Peter Alfred Ternes
15. Merrill Lynch (Australia) Nominees Pty Limited (Equity Finance A/C)
16. Morgan Stanley Australia Securities (Nominee) Pty Limited (No 1 A/C)
17. Ozlexa Pty Ltd
18. National Nominees Limited
19. Riverflow Pty Ltd
20. Piama Pty Ltd
Total: Top 20 holders of Ordinary Fully Paid Shares
Total: Remaining Holder Balance
Total: Ordinary Fully Paid Shares
(d)
On market buy back
There is no current on-market buy back.
121
Number of
shares held
60,045,911
29,963,114
23,555,389
21,706,349
(% held)
28.90
14.42
11.34
10.45
3,296,881
3,051,653
2,591,880
2,398,292
2,260,000
2,077,496
2,007,907
1,920,392
1,350,000
1,154,103
1,024,055
1,000,000
970,488
932,732
850,000
1.61
1.59
1.47
1.25
1.15
1.09
1.00
0.97
0.92
0.65
0.56
0.49
0.48
0.47
0.45
0.41
165,509,209
42,285,092
79.67
20.33
207,794,301
100.00
ADDITIONAL SHAREHOLDER INFORMATION
1.
Shareholding (continued)
(e) Substantial shareholders
An extract of the Company’s register of substantial shareholders is set out below:
Name
Ruffer LLP
Arbiter Partners Capital Management LLP
Mitsubishi UFJ Financial Group
Ordinary shares held
Number
31,045,518
29,851,761
11,087,707
(%)
14.94%
14.36%
5.34%
2. UNQUOTED EQUITY SECURITIES AND RESTRICTED SECURITIES
The following classes of unquoted equity securities and restricted securities are on issue:
Type of securities held
Number
(%)
• 360,000 unquoted options (comprising of four (4) equal tranches of
90,000 options per tranche) to subscribe for ordinary shares
exercisable at the following tranche prices of $1.00, $1.25, $1.50 and
$1.75 per share respectively, with an expiry date of 24 November
2020.
Persons holding 20% or more:
Boyd Timler
• 1,665,000 unquoted options (comprising of four (4) equal tranches of
416,250 options per tranche) to subscribe for ordinary shares
exercisable at the following tranche prices of $1.00, $1.25, $1.50 and
$1.75 per share respectively, with an expiry date of 08 January 2022.
Persons holding 20% or more:
David McGowan
James Llorca
360,000
100%
500,000
500,000
30%
30%
3.
The name of the Company Secretary is:
Mr Peter Stanley Alphonso
4.
The Principal Registered Office of the Company is:
Suite A, Level 1
1 Preston Street
Como, WA 6152
Australia
Telephone: +618 9474 1330
Facsimile: +618 9474 1342
Email:
admin@medusamining.com.au
5.
The Register of the Company’s securities is held at the following address:
Computershare Investor Services Pty Limited
Level 11
172 St George’s Terrace
Perth, WA 6000
Australia
Telephone: +618 9323 2000
Facsimile: +618 9323 2033
Investor enquiries: 1300 557 010
6.
Stock Exchange Listings
Quotation has been granted for all the ordinary shares of the Company on the Australian Stock Exchange.
Trading quote: MML
122
TENEMENT SCHEDULE
Tenement Schedule (as at 30 June 2019)
Name
Tenement ID
Registered
Holder
Company’s Interest at
Royalty (1)
Area (hectares) at
30 June 2018
30 June 2019
30 June 2018
30 June 2019
Philippines:
Co-O Mine
MPSA 262-2008-XIII
PMC
MPSA 299-2009-XIII PMC
Co-O
APSA 00012-XIII
APSA 00088-XIII
APSA 00098-XIII
APSA 00099-XIII
Saugon
EP 017-XIII
EPA 00066-XIII
EPA 00069-XIII (2)
EPA 00087-XIII (2)
BMMRC
Phsamed
Philcord
Philcord
PMC
PMC
Phsamed
PMC
MPSA 344-2010-XIII Philex
Tambis
Apical
Corplex
APSA 00054-XIII
APSA 00056-XIII
APSA 00077-XIII
EPA 00186-XIII
Corplex
Corplex
Corplex
Corplex
Sinug-ang
EPS 00114-XIII
Salcedo/PMC
Australia:
Mt Clark West
Hill 212
Notes:
EPM 26008 (3)
EPM 26217 (3)
Ellenkay
Ellenkay
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
1% NPI
1% NPI
-
-
-
-
7% NSR
100%
100%
100%
100%
100%
0%
0%
100%
100%
100%
100%
100%
0%
0%
3% NSR
-
4% GSR
3% GSR
-
-
-
2,539
2,200
340
4,742
507
592
3,132
6,769
2,519
87
6,208
1,235
2,118
162
810
7,111
190
2,539
2,200
340
4,742
507
592
3,132
6,769
2,519
87
6,208
1,235
2,118
162
810
7,111
190
~2,000
~2,000
~2,000
~2,000
APSA 00028-XIII
Apmedoro
Earning 70% (JV)
-
(1) Royalties payable to registered holders, aside from the prescribed royalties’ payable to the Philippine government and the
indigenous people; and
(2) Awaiting approval and confirmation by MGB of area reduction; and
(3) Properties under an Earn-In-Agreement (ASX Announcement, 5 July 2018)
ABBREVIATIONS:
Tenement Types
MPSA
Granted Mineral Production Sharing Agreement
EP
EPM
Granted Exploration Permit
Exploration Permit for Minerals (only in Qld, Australia)
APSA
EPA
Application for Mineral Production Sharing Agreement
Application for Exploration Permit
Registered Holders
PMC
Philsaga Mining Corporation
BMMRC
Base Metals Mineral & Resources Corporation
Philex
Philex Gold Philippines Incorporated
Phsamed Phsamed Mining Corporation
Das-Agan
Das-Agan Mining Corporation
Philcord Mindanao Philcord Mining Corporation
Apmedoro
APMEDORO Mining Corporation
Corplex
Corplex Resources Incorporated
Salcedo
Neptali P. Salcedo
Ellenkay
Ellenkay Gold Pty Limited
Royalty
NPI
NSR
Net Profit Interest
Net Smelter Royalty
GSR
Gross Smelter Royalty
123