Mithril Resources Limited
ABN 30 099 883 922
Annual Report - 30 June 2020
Mithril Resources Limited
Contents
30 June 2020
Corporate directory
Directors' report
Auditor's independence declaration
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members of Mithril Resources Limited
Shareholder information
2
3
18
19
20
21
22
23
4(cid:28)
(cid:24)(cid:19)
5(cid:23)
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Mithril Resources Limited
Corporate directory
30 June 2020
Directors
Mr Dudley Leitch (Non-Executive Director)
Mr John Skeet (Managing Director)
Mr Stephen Layton (Non-Executive Director)
Mr Adrien Wing (Non-Executive Director)
Mr Garry Thomas (Non-Executive Director)
Company secretary
Mr Adrien Wing
Registered office
Principal place of business
Level 2
480 Collins Street
MELBOURNE VIC 3000
Level 2
480 Collins Street
MELBOURNE VIC 3000
Share register
Auditor
Solicitors
Bankers
Computershare Investor Services Pty Ltd
Level 5, 115 Grenfell Street
ADELAIDE SA 5000
Grant Thornton Audit Pty Ltd
Level 3, 170 Frome Street
ADELAIDE SA 5000
Quinert Rodda & Associates
Level 6, 400 Collins Street
MELBOURNE VIC 3000
National Australia Bank
800 Bourke Street
MELBOURNE VIC 3008
Stock exchange listing
Mithril Resources Limited shares are listed on the Australian Securities Exchange
(ASX code: MTH)
Website
www.mithrilresources.com.au
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Mithril Resources Limited
Directors' report
30 June 2020
The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter
as the 'Group') consisting of Mithril Resources Limited (referred to hereafter as the 'Company' or 'Parent Entity') and the
entities it controlled at the end of, or during, the year ended 30 June 2020.
Information on Directors
The following persons were Directors of Mithril Resources Limited during the whole of the financial year and up to the date
of this report, unless otherwise stated:
Name:
Title:
Qualifications:
Experience and expertise:
John Skeet (Appointed 8 September 2020)
Chief Executive Officer / Managing Director
B.App.Sc
Mr. Skeet has over 30 years experience in gold-silver mining, both in management at
operations and developing projects in Australia, Republic of Georgia and Mexico. He
successfully developed Ballarat East, Quartzite Gold in Georgia, and Palmarejo Silver
Gold Mine in Mexico, prior to the Coeur Mining takeover and was COO of Cerro
Resources prior to its takeover by Primero Mining. He has 16 years experience in
Mexico. He founded Sun Minerals in 2017 and acquired the option to purchase the
Copalquin Project in Mexico.
Other current directorships:
N/A
Former directorships (last 3 years): N/A
Interests in shares:
221,663,615 ordinary shares
Name:
Title:
Qualifications:
Experience and expertise:
Mr Stephen Layton
Non-Executive Director
MSAFAA
Mr Layton has over 35 years' experience in equity capital markets in the UK and
Australia. Mr Layton has worked with various stockbroking firms and/or AFSL
regulated corporate advisory firms. Mr Layton specialised in capital raising services
and opportunities, corporate advisory, facilitation of ASX listings and assisting
companies grow.
Other current directorships:
Speciality Metals Int Ltd
Former directorships (last 3 years): New Age Exploration Ltd
Interests in shares:
110,500,000 ordinary shares
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Mr Adrien Wing
Non-Executive Director
BA(Acc), CPA
Mr Wing is a certified practicing accountant. He previously practiced in the audit and
corporate advisory divisions of a chartered accounting firm before working with a
number of public companies listed on the ASX as a corporate and accounting
consultant and company secretary.
Red Sky Energy Ltd
High Grade Metals Ltd
New Age Exploration Limited
Former directorships (last 3 years): N/A
Interests in shares:
110,500,000 ordinary shares
Name:
Title:
Qualifications:
Experience and expertise:
Mr Dudley Leitch (Appointed 27 May 2020)
Non-Executive Director
BSc
Mr Leitch is a geologist and mining entrepreneur with over 40 years developing
mining projects and running ASX mining/exploration companies with projects in
Australia, Mexico, USA. He has previously held directorships in a number of
Australian and international mining companies.
Other current directorships:
N/A
Former directorships (last 3 years): N/A
Interests in shares:
124,051,195 ordinary shares
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Mithril Resources Limited
Directors' report
30 June 2020
Name:
Title:
Qualifications:
Experience and expertise:
Mr Garry Thomas (Appointed as Alternate-Director 15 June 2020) (Appointed Non-
Executive Director 17 August 2020)
Non-Executive Director
B.Eng
Mr Thomas is a civil engineer with over 35 years’ experience in civil construction,
mine development and operations. He has been involved in the implementation of
mining operations in Australia, Indonesia, Laos, Russia, Zimbabwe, Ghana, Zambia,
South Africa, Algeria, Mexico and Mali. He has managed the construction and
commissioning of over 20 CIL/CIP, flotation and heap leach plants in Australasia,
Russia and Africa as well as many plant upgrades including construction of at
Palmarejo, Mexico prior to the Coeur Mining take over. Mr Thomas founded Intermet
Engineering which he sold to Sedgman Metals.
Oakajee Corporation Ltd
Other current directorships:
Former directorships (last 3 years): N/A
Interests in shares:
285,685,273 ordinary shares
Name:
Title:
Qualifications:
Experience and expertise:
Mr David Hutton (Resigned 29 May 2020)
Former Managing Director
BSc
David Hutton is a geologist who has spent the last 25 years working in both
exploration and mining throughout Australia and overseas. After graduation, he spent
7 years with the MIM Group before joining Forrestania Gold NL / LionOre Australia,
where he was involved in gold exploration throughout the WA Goldfields. He worked
at Western Metals as Chief Geologist of the Lennard Shelf Operations prior to re-
joining LionOre Australia where he was responsible for management of the East
Kimberley Nickel Joint Venture. Prior to commencing with the Company in June 2012,
David worked at Breakaway Resources where he was most recently Managing
Director from May 2010 to June 2012. David is a Fellow of the AusIMM and a
Member of the AIG.
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Principal activities
During the financial year the principal continuing activities of the Group consisted of:
●
●
●
to carry out exploration of mineral tenements, both on a joint venture basis and by the Group in its own right;
to continue to seek extensions of areas held and to seek out new areas with mineral potential; and
to evaluate results achieved through surface sampling, drilling and geophysical surveys carried out during the year.
There have been no significant changes in the nature of those activities during the year.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the Group after providing for income tax amounted to $3,300,596 (30 June 2019: $1,287,491).
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Mithril Resources Limited
Directors' report
30 June 2020
Corporate overview
Mithril announced on the 25th November, 2019, its transformative acquisition of private Australian exploration company Sun
Minerals Pty Ltd. Sun Minerals held an exclusive option to earn up to a 100% interest in the high-grade Copalquin Gold
Silver Project located in the Sierra Madre Trend, Durango State, western Mexico. The Copalquin Project is prospective for
high-grade gold and silver mineralisation where there are 32 known historic gold and silver underground mines and surface
workings plus historic drill intercepts, with highlights outlined in ASX release 25th November 2019.
The acquisition by Mithril of all issued share capital of Sun Minerals was subject to a number of conditions precedent
including:
(cid:120) Due diligence (completed on 20th December 2019);
(cid:120) Formal documentation by way of a Share Sale Agreement (executed on 24th January 2020);
(cid:120) Shareholder approvals (approved at a General Meeting of shareholders on 12th February 2020);
(cid:120) Board and management changes, with Sun Minerals having the right to nominate an individual to be appointed as a
Director of Mithril and to nominate an individual to be appointed to a lead management role in Mithril in respect of
the exploration of the Copalquin Project; and
(cid:120) Capital raising to raise approximately A$4.9 million, before costs (activities in May and July 2020 raised a total of
A$5.92 million, before costs).
The impact of Covid-19 on market conditions, meant that in April 2020, Mithril and Sun Minerals executed a variation to the
original Share Sale Agreement to raise a minimum of A$1.5 million in order to satisfy the condition precedent to the
transaction. Mithril obtained shareholder approval for all changes within the varied Share Sale Agreement at a General
Meeting held on 13th May 2020.
The capital raising was conducted by Mithril in May 2020, by way of a non-renounceable entitlement issue to shareholders
with a record date of 6 April 2020, on the basis of one (1) new fully paid ordinary Mithril share for every one (1) existing fully
paid ordinary Mithril share held at an issue price of A$0.005 (0.5 cent) to raise up to A$2.46 million (before costs). Funds
raised were targeted to be primarily used to complete a maiden drill program at Copalquin.
Post year-end, Mithril completed a further placement to sophisticated and professional investors, comprising 194,444,444
fully paid ordinary shares in the Company at an issue price of 1.8 cents to raise A$3.5m (before costs). The placement was
conducted by Taylor Collison as lead manager and within the Company’s placement capacity under ASX Listing Rule 7.1
(149,444,444 shares). As part of this Placement, Directors of the Company committed A$414k in the offer prior to launch
and the holder of the concessions forming the Copalquin Gold Silver Project committed A$396k. Related party participation
in the placement (45,000,000 shares) was subject to shareholder approval that was subsequently sought at a General
Meeting held in August 2020.
As part of the acquisition of Sun Minerals, Board and management changes included:
(cid:120) Mr John Skeet (CEO) and Mr Hall Stewart (Chief Geologist), the founders of Sun Minerals and highly experienced
project exploration and development team;
(cid:120) Mr John Skeet appointed as Managing Director and CEO on 8 September 2020.
(cid:120) Mr Dudley Leitch as a Director of the Company, nominated by Sun Minerals to join the Board which was Mithril
shareholders at the meeting on 12 February 2020;
(cid:120) Mr Garry Thomas (Non-Executive Director), a civil engineer with significant international mining experience,
effective 17th August 2020; and
(cid:120) Resignation of Mr David Hutton, as a Director of Mithril and its subsidiaries effective Friday 29th May 2020. Mr
Hutton was instrumental in advancing the Australian exploration projects over his 8 year tenure.
These changes marked the final stage of Mithril’s transformational acquisition of Sun Minerals.
Overall, the Company successfully completed capital raisings for a total of $5.92M (before costs) to fully fund the maiden
drilling program at the flagship Copalquin Gold Silver Project, through:
(cid:120) Non-Renounceable Rights Issue with shareholders which raised $2.46M; and
(cid:120) Share Placement for $3.5M post year-end, with the Board and Copalquin Concession holder participating.
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Mithril Resources Limited
Directors' report
30 June 2020
Exploration overview
Mexican operations
Copalquin Gold Silver Project in Durango, Mexico
The Copalquin Gold Silver Project is located in Durango State, Mexico and covers an entire mining district of 70km2
containing over 32 historic gold and silver mines and workings. The district is within the Sierra Madre Gold Silver Trend
which extends north-south along the western side of Mexico and hosts many world class gold and silver deposits. Multiple
mineralisation events, young intrusives thought to be system-driving heat sources, widespread alteration together with
extensive surface vein exposures and dozens of historic mine workings, identify the Copalquin mining district as a major
epithermal centre for gold and silver.
With the Company funded and permitted to begin exploration activities, Mithril appointed John Skeet as the new Chief
Executive Officer, and Hall Stewart as Chief Geologist in June 2020. Both were the founders of Sun Minerals Pty Ltd and
combined a highly experienced project exploration and development team.
The Copalquin Exploration Plan for CY2020 comprises:
Identification of future drill targets;
(cid:120) 5,000 metre diamond core drill program;
(cid:120) Continued mapping and sampling of known mine areas;
(cid:120)
(cid:120) Site visit of unexplored areas in the northern and western areas of the mining concession area;
(cid:120) Metallurgical test work; and
Infrastructure studies.
(cid:120)
Preparations began in early June 2020, for the Company’s maiden drill program at Copalquin. Drilling and supporting
equipment contracts were executed, with mobilisation of this equipment to site. The maiden drilling program at Copalquin
commenced post year-end, announced on 27th July 2020. The expanded drilling program is fully funded and expected to
run until the end of CY2020. Under the drilling program, work consists of approximately 5,000 metres of diamond core
drilling, and has a six stage plan, which includes:
(cid:120) Target 1 - La Soledad with some further follow up holes;
(cid:120) Target 2 - El Refugio;
(cid:120) Target 3 - El Cometa;
(cid:120) Target 4 - Los Pinos;
(cid:120) Target 5 - Los Reyes; and
(cid:120) Target 6 - the multi-level mines of San Manuel and La Constancia.
The majority of the drilling will be focussed on targets 1 – 3 for the maiden drill program.
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Mithril Resources Limited
Directors' report
30 June 2020
Figure 1 - Geologic Map of the central 4.8km2 of 70km2 Copalquin Mining Concession Area showing the planned maiden
drill targets
The Company received a promising set of first assay results, announced 26th August 2020, for the first two holes which
successfully intercepted the La Soledad vein confirming historically reported bonanza grades. These results included:
(cid:120) 3m @34.72 g/t gold and 3,129.0 g/t silver from 112 metres (CDH-001)
(including 1m @ 88.4 g/t gold and 6,750.0 g/t silver from 114 metres);
(cid:120) 4.55m @ 5.64 g/t gold and 325.0 g/t silver from 91.95 metres (CDH-002)
(including 1.5m @ 9.82 g/t gold and 574.0 g/t silver from 95 metres); plus
(cid:120) 0.5m @ 9.27 g/t gold and 825.0 g/t silver from 141.2 metres (CDH-002)
(cid:120) Subsequent drill holes continued to intersect the La Soledad vein, assay results pending
Drilling at target 1, La Soledad has been completed and all assays for La Soledad expected before the end of September
2020. Drilling is currently progressing at El Refugio and will be completed during September 2020 with assay results due by
the end of October 2020. Drilling of the near surface target of El Cometa will be completed in October 2020. In addition to
the drill holes at targets 4 - 6, some further holes are scheduled for La Soledad following review of the first round of holes.
Australian operations
During the first half of the year, Mithril continued to progress exploration activities on the Billy Hills, Kurnalpi, Limestone
Well, and the Lignum Dam Projects. On the 25th November, 2019, the Company announced its intention to acquire private
Australian exploration company Sun Minerals Pty Ltd which had an exclusive Option to earn up to 100% of the high-grade
Copalquin Gold Silver Project in Durango, Mexico.
To ensure the Company maintained its focus on the Copalquin Gold Silver Project, Mithril introduced exploration partners to
sole fund and operate exploration activities on all of its Australian assets. This includes:
(cid:120) Great Boulder Resources (GBR.ASX) at the Lignum Dam Project;
(cid:120) Auteco Minerals (AUT.ASX) at the Limestone Well Project;
(cid:120) Carnavale Resources (CAV.ASX) at the Kurnalpi Project, and
(cid:120) CBH Resources Limited (“CBH”) at the Billy Hills Zinc Project.
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Mithril Resources Limited
Directors' report
30 June 2020
Having exploration partners solely fund all exploration costs, ensures that the Mithril tenements are kept in good standing for
the duration of the respective partnership agreements with the potential to benefit from prospectivity and exploration upside.
Billy Hills Zinc (Billy Hills)
(cid:120) Mithril 100%; and
(cid:120) CBH Resources Limited earning up to 80% interest by completing expenditure of A$4M over 5 years
The binding farm-in Heads of Agreement (Agreement) is conditional upon Mithril obtaining a Heritage Clearance to drill the
Firetail Prospect. Mithril worked with the traditional owners of Billy Hills to obtain the necessary clearance however due to
the outbreak of COVID-19, all dealings with Aboriginal communities in the area ceased for an indefinite period in order to
protect the health of the local population. Mithril and CBH remain committed to the Project and agreed to extend the period,
to satisfy the Agreement’s Condition Precedent, from May 2020 to November 2020 in recognition of the current
circumstances.
Highlights include:
(cid:120) High-grade surface mineralisation identified over 350 metres strike length at Firetail Zinc Prospect with rock chip
assay results up to 30.3% zinc, 127g/t silver and 3.0% lead; and
(cid:120) Firetail’s prospectivity reinforced by a large surface soil anomaly that overlies northern end of the mineralisation,
extends to the west and remains open along strike to the north.
Kurnalpi Project (Kurnalpi)
(cid:120) Mithril 100%; and
(cid:120) Carnavale Resources earning an initial 80% interest by keeping the tenements in good standing over three years
and paying Mithril A$250,000 cash
Carnavale carried out Fixed Loop Electromagnetic (FLEM) geophysical surveying over ultramafic/mafic sequences
prospective for Kambalda style nickel sulphide, similar to the nearby Black Swan and Silver Swan Nickel Mines (see
Carnavale’s ASX Announcement 3rd June 2019).
The survey successfully defined two high priority conductors within Mithril’s tenements which will be tested by drilling
scheduled for the September 2020 Quarter.
Lignum Dam Project (Lignum)
(cid:120) Mithril 100%; and
(cid:120) Great Boulder Resources earning up to 80% by completing expenditure of A$1M over four years.
Great Boulder Resources continued a program of bottom-of-hole sampling on historic drill holes. The purpose of the
program was to obtain chips of fresh or transitional material for multi-element sampling, which will be used for
lithogeochemical mapping.
The Company is also hoping to identify distal alteration footprints associated with primary gold mineralisation by looking at
the distribution of pathfinder elements. The sampling program is ongoing, on a campaign basis.
Limestone Well Project (Limestone)
(cid:120) Mithril 100%; and
(cid:120) Auteco Minerals can earn up to an 80% interest in the project by completing exploration expenditure of A$2.5 million
over five years
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Mithril Resources Limited
Directors' report
30 June 2020
Highlights include:
(cid:120) Maiden RC drill programme by Mithril’s JV partner – Auteco Minerals (AUT.ASX) intersects multiple broad zones of
shallow high-grade vanadium-titanium, including;
o 20m @ 0.48% V2O5 & 6.5% TiO2 from 12 metres and 72m @ 0.46% V2O5 & 8.6% TiO2 from 52 metres
inLWRC003;
o 12m @ 0.72% V2O5 & 8.5% TiO2 from 12 metres and 24m @ 0.50% V2O5 & 6.2% TiO2 from 48 metres,
and 56m @ 0.46% V2O5 & 6.1% TiO2 from 164 metres in LWRC005; and
o 20m @ 0.50% V2O5 & 6.5% TiO2 from 64 metres and 116m @ 0.36% V2O5 & 11.0% TiO2 from 104
meters in LWRC006.
(cid:120) Follow the successful drilling, Auteco has elected to continue sole-funding the exploration work at Limestone Well
by completing exploration expenditure of $1.5M by August 2021 to earn an initial 60% interest
Competent Persons Statement
The information in this report that relates to sampling techniques and data, exploration results and geological interpretation
for the Copalquin Project, Mexico has been compiled by Mr Hall Stewart, who is Mithril’s Chief Geologist. Mr Stewart is a
certified professional geologist of the American Institute of Professional Geologists, which is a Recognised Professional
Organisation (RPO) under the Joint Ore Reserves Committee (JORC) Code. Mr Stewart has sufficient experience of
relevance to the styles of mineralisation and the types of deposits under consideration, and to the activities undertaken, to
qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Stewart consents to the inclusion in
this report of the matters based on information in the form and context in which it appears. The Australian Securities
Exchange has not reviewed and does not accept responsibility for the accuracy or adequacy of this release.
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Mithril Resources Limited
Directors' report
30 June 2020
Significant changes in the state of affairs
On 27 May 2020 the Company completed the acquisition of Sun Mineral Pty Ltd (Sun Minerals). Sun Minerals holds the
exclusive option to earn up to a 100% interest in the high-grade Copalquin Gold Silver Project in Durango, Mexico.
Further information on the acquisition is set out in note 11.
There were no other significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
Capital Raising
In early July 2020 the Company announced that it had received binding commitments for a placement to sophisticated and
professional investors, comprising 154,444,444 fully paid ordinary shares in the Company at an issue price of 1.8 cents to
raise approximately $3.5 million before costs. The placement shares were issued on 16 July 2020.
Related parties of the Company also committed to participating in the placement with shareholder approval granted on 14
August 2020. The directors of the Company committed to $414K and a holder of the concessions forming the Copalquin
Gold Silver Project committed to $396K for a total of 45,000,000 placement shares. The placement shares to related
parties were issued on 19 August 2020.
Performance rights conversion milestone achieved
Mithril achieved a market capitalisation equal to or greater than A$40,000,000 for a period of 20 consecutive trading days.
This was a milestone condition for the performance rights and consequently 224,999,999 shares were issued on 14 August
2020.
Director appointments
On 17 August 2020 Mr Garry Thomas was appointed as a non-executive director.
On 8 September 2020 Mr John Skeet, the current CEO of the Company was appointed to the additional role of Managing
Director of the Company.
No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect
the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Environmental regulation
The Group is aware of its responsibility to impact as little as possible on the environment, and where there is any
disturbance, to rehabilitate sites. During the year under review the majority of work carried out was in the Northern
Territory, Western Australia and Durango (Mexico) and the Group followed procedures and pursued objectives in line with
guidelines published by the Australian and Mexican Governments. These guidelines are quite detailed and encompass the
impact on owners and land users, heritage, health and safety and proper restoration practices. The Group supports this
approach and is confident that it properly monitors and adheres to these objectives, and any local conditions applicable
wherever it explores.
The Group is committed to minimising environmental impacts during all phases of exploration, development and production
through a best practice environmental approach. The Group shares responsibility for protecting the environment for the
present and the future. It believes that carefully managed exploration programs should have little or no long-lasting impact
on the environment and the company has formed a best practice policy for the management of its exploration programs.
The Group properly monitors and adheres to this approach and there were no environmental incidents to report for the
year under review. Furthermore, the Group is in compliance with the state and/or commonwealth environmental laws for
the jurisdictions in which it operates.
Occupational Health, Safety and Welfare
In running its business, Mithril aims to protect the health, safety and welfare of employees, contractors and guests. The
Group reviews its OHS&W policy at regular intervals to ensure a high standard of OHS&W, and to reflect best practice in
injury and accident prevention.
Company Secretary
Adrien Wing is the Company Secretary. He is also a Non-Executive Director of the Company.
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Mithril Resources Limited
Directors' report
30 June 2020
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Mithril
Resources Limited support and have adhered to the principles of sound corporate governance. The Board recognises the
recommendations of the Australian Securities Exchange Corporate Governance Council, and considers that Mithril
Resources is in compliance to the extent possible with those guidelines, which are of importance to the commercial
operation of a junior listed resources company. During the financial year, shareholders continued to receive the benefit of
an efficient and cost-effective corporate governance policy for the Company.
The Company has established a set of corporate governance policies and procedures and these can be found within the
Company’s Corporate Governance Statement located on the Company’s website:
www.mithrilresources.com.au/corporate-governance
Shares under option
At the date of this report, the following options to acquire ordinary shares in the Company were on issue:
Grant date
17/11/2017
22/06/2017
10/03/2017
17/11/2017
22/06/2017
10/10/2018
Expiry date
17/11/2020
31/12/2020
31/12/2020
31/12/2020
22/06/2020
10/10/2021
Exercise
price
Number
under option
$0.100
$0.100
$0.100
$0.100
$0.100
$0.010
500,000
300,000
1,000,000
1,000,000
300,000
4,000,000
7,100,000
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of
the Company or of any other body corporate.
Shares under performance rights
There were no unissued ordinary shares of Mithril Resources Limited under performance rights outstanding at the date of
this report.
Shares issued on the exercise of options
The following ordinary shares of Mithril Resources Limited were issued during the year ended 30 June 2020 and up to the
date of this report on the exercise of options granted:
Date options granted
10 October 2018
Exercise
price
Number of
shares issued
$0.010
3,000,000
Shares issued on the exercise of performance rights
The following ordinary shares of Mithril Resources Limited were issued during the year ended 30 June 2020 and up to the
date of this report on the exercise of performance rights granted:
Date performance rights granted
13 May 2020
Exercise
price
Number of
shares issued
$0.000
224,999,999
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance
with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors. These are as follows:
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Mithril Resources Limited
Directors' report
30 June 2020
Dudley Leitch
Stephen Layton
Adrien Wing
Garry Thomas
John Skeet
David Hutton
Non-Executive Director (Appointed 27 May 2020)
Non-Executive Director
Non-Executive Director
Alternate-Director / Non-Executive Director (Appointed Alternate-Director 15 June 2020)
(Appointed Non-Executive Director 17 August 2020)
Chief Executive Officer / Managing Director (Appointed Chief Executive Officer 9 June 2020)
(Appointed Managing Director 8 September 2020)
Managing Director (Resigned 29 May 2020)
Principles used to determine the nature and amount of remuneration
The Board is responsible for determining remuneration policies applicable to directors and senior executives of the Group.
The Board policy is to ensure that remuneration properly reflects the individuals' duties and responsibilities and that
remuneration is competitive in attracting, retaining and motivating people with appropriate skills and experience. At the time
of determining remuneration consideration is given by the Board to the Group's financial performance.
The Board currently determines the nature and amount of remuneration for board members and senior executives of the
Group. The policy is to align Director and executive objectives with shareholder and business objectives by providing a
fixed remuneration component and offering specific long‑term incentives.
The Non‑Executive Directors and other executives receive a superannuation guarantee contribution required by the
government, which is currently 9.5%, and do not receive any other retirement benefits. Some individuals, however, may
choose to sacrifice part of their salary to increase payments towards superannuation. All remuneration paid to directors
and executives is expensed as incurred. Executives are also entitled to participate in the Company share option scheme.
Options are valued using the Black‑Scholes methodology.
The Board policy is to remunerate Non‑Executive Directors at market rates based on comparable companies for time,
commitment and responsibilities. The board determines payments to non‑executive Directors and reviews their
remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when
required.
There is no direct relationship between the remuneration policy and the entities performance.
Voting and comments made at the Company's 2019 Annual General Meeting ('AGM')
At the 2019 AGM, more than 99% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2019. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the following tables.
2020
Non-Executive Directors:
Stephen Layton
Adrien Wing
Dudley Leitch (Appointed 27 May 2020)
Garry Thomas*
Executive Directors:
David Hutton (Resigned 29 May 2020)
John Skeet**
Short-term
benefits
Post-
employment
benefits
Share-based
payments
Cash salary
and fees
$
Super-
annuation
$
Performance
Rights
$
Total
$
48,000
96,000
4,000
-
260,996
15,000
423,996
-
-
-
-
355,000
355,000
236,667
-
403,000
451,000
240,667
-
24,795
-
24,795
-
236,667
1,183,334
285,791
251,667
1,632,125
12
Mithril Resources Limited
Directors' report
30 June 2020
*
Mr Thomas was appointed as an Alternate-Director on 15 June 2020 and appointed as a Non-Executive Director on
17 August 2020.
** Mr Skeet was appointed as CEO on 9 June 2020 and appointed Managing Director on 8 September 2020.
2019
Non-Executive Directors:
Graham Ascough*
Donald Stephens*
Stephen Layton
Adrien Wing
Executive Directors:
David Hutton
Short-term
benefits
Post-
employment
benefits
Share-based
payments
Cash salary
and fees
$
Super-
annuation
$
Equity-
settled
$
Total
$
57,488
36,750
4,000
4,000
-
3,491
-
-
-
-
-
-
57,488
40,241
4,000
4,000
281,907
384,145
25,000
28,491
24,250
24,250
331,157
436,886
* Mr Ascough and Mr Stephens resigned as directors on 15 May 2019.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Stephen Layton
Adrien Wing
Dudley Leitch (Appointed 27 May 2020)
Graham Ascough*
Donald Stephens*
Garry Thomas**
Executive Directors:
David Hutton (Resigned 29 May 2020)
John Skeet***
Fixed remuneration
2019
2020
At risk - STI
2020
2019
12%
21%
2%
-
-
-
100%
6%
100%
100%
-
100%
100%
-
100%
-
88%
79%
98%
-
-
-
-
94%
-
-
-
-
-
-
-
-
Mr Ascough and Mr Stephens resigned as directors on 15 May 2019.
*
** Mr Thomas was appointed as an Alternate-Director on 15 June 2020 and appointed as a Non-Executive Director on
17 August 2020.
*** Mr Skeet was appointed as CEO on 9 June 2020 and appointed Managing Director on 8 September 2020.
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
David Hutton
Managing Director (Resigned 29 May 2020)
18 June 2012
Reviewed every three years
Mr Hutton's gross salary, inclusive of 9.5% superannuation guarantee, is $306,907.
The Company or the employee may terminate the employment contract without cause
by providing 6 months written notice or making payment in lieu of notice, based on
the annual salary component. Termination payments are generally not payable on
resignation or dismissal for serious misconduct. In the instance of serious misconduct
the Company can terminate employment at any time.
13
Mithril Resources Limited
Directors' report
30 June 2020
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Share-based compensation
John Skeet
Chief Executive Officer (Appointed Managing Director 8 September 2020)
9 June 2020
Reviewed every two years
Mr Skeet's gross salary, is $180,000. The Company or the employee may terminate
the employment contract without cause by providing 3 months written notice or
making payment in lieu of notice, based on the annual salary component. Termination
payments are generally not payable on resignation or dismissal for serious
misconduct. In the instance of serious misconduct the Company can terminate
employment at any time.
Issue of shares
There were no shares issued to Directors and other key management personnel as part of compensation during the year
ended 30 June 2020.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors and other key
management personnel in this financial year or future reporting years are as follows:
Grant date
22/06/2017
22/06/2017
17/11/2017
10/10/2018
Vesting date and
exercisable date
10/10/2018
22/06/2017
17/11/2017
10/10/2018
Expiry date
31/12/2020
22/06/2022
17/11/2020
10/10/2021
Options granted carry no dividend or voting rights.
Fair value
per option
Exercise price at grant date
$0.100
$0.100
$0.100
$0.010
$0.017
$0.021
$0.016
$0.006
The number of options over ordinary shares granted to and vested by Directors and other key management personnel as
part of compensation during the year ended 30 June 2020 are set out below:
Name
David Hutton
Number of
options
granted
during the
year
2020
Number of
options
granted
during the
year
2019
Number of
options
vested
during the
year
2020
Number of
options
vested
during the
year
2019
-
4,000,000
-
4,000,000
The number of shares and options have been presented on a post shares and option consolidation basis.
Performance rights
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of Directors and
other key management personnel in this financial year or future reporting years are as follows:
Grant date
Performance rights
13 May 2020
Performance rights granted carry no dividend or voting rights.
Expiry date
13 May 2024
Fair value
per right
at grant date
$0.007
14
Mithril Resources Limited
Directors' report
30 June 2020
Details of performance rights over ordinary shares granted, vested and lapsed for Directors and other key management
personnel as part of compensation during the year ended 30 June 2020 are set out below:
Number of
rights
Number of
rights
Value of
rights
Name
Grant date
granted
vested
granted
$
Value of
rights
expensed in
the period
$
Number of
rights
Value of
rights
lapsed
lapsed
$
Stephen Layton
Adrien Wing
Dudley Leitch
John Skeet
13 May 2020
13 May 2020
13 May 2020
13 May 2020
50,000,000
50,000,000
33,333,333
33,333,333
50,000,000
50,000,000
33,333,333
33,333,333
355,000
355,000
236,667
236,667
355,000
355,000
236,667
236,667
-
-
-
-
-
-
-
-
Further information regarding the performance rights can be found in note 27.
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each Director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Ordinary shares
David Hutton (Resigned 29 May 2020)
Stephen Layton
Adrien Wing
Dudley Leitch (Appointed 27 May 2020)
Garry Thomas*
John Skeet**
Balance at
the start of
the year
Received
as part of
remuneration
Acquired
Disposals/
other
Balance at
the end of
the year
4,213,180
21,000,000
21,000,000
-
-
-
46,213,180
-
-
-
-
-
-
-
2,000,000
31,500,000
31,500,000
90,717,862
278,685,273
188,330,282
622,733,417
(6,213,180)
-
-
-
-
-
-
52,500,000
52,500,000
90,717,862
278,685,273
188,330,282
(6,213,180) 662,733,417
*
Mr Thomas was appointed as an Alternate-Director on 15 June 2020 and appointed as a Non-Executive Director on
17 August 2020.
** Mr Skeet was appointed as CEO on 9 June 2020 and appointed Managing Director on 8 September 2020.
Option holding
The number of options over ordinary shares in the Company held during the financial year by each Director and other
members of key management personnel of the Group, including their personally related parties, is set out below:
Options over ordinary shares
David Hutton
Balance at
the start of
the year
4,700,000
4,700,000
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
(4,700,000)
(4,700,000)
-
-
15
Mithril Resources Limited
Directors' report
30 June 2020
Performance rights holding
The number of performance rights over ordinary shares in the Company held during the financial year by each Director and
other members of key management personnel of the Group, including their personally related parties, is set out below:
Performance rights over ordinary shares
Stephen Layton
Adrien Wing
Dudley Leitch
John Skeet
the year
Balance at Granted and
the start of
Vested
During the
year
Expired/
forfeited/
Balance at
the end of
other
the year
-
-
-
-
-
50,000,000
50,000,000
33,333,333
33,333,333
166,666,666
-
-
-
-
-
50,000,000
50,000,000
33,333,333
33,333,333
166,666,666
Loans from key management personnel and their related parties
During the year the following loans from key management personnel were made to the Company:
Key management
personnel:
Date loan granted
Date loan repaid
Adrien Wing
Garry Thomas*
Garry Thomas*
John Skeet*
24/04/2020
27/05/2020
27/05/2020
27/05/2020
27/05/2020
11/06/2020
17/06/2020
17/06/2020
Total loans
made to the
company
during the
year
Total loans
Total loans
payable as at payable as at
30 June 2020 30 June 2019
50,000
70,000
50,000
6,006
176,006
-
-
-
-
-
-
-
-
-
-
*
Garry Thomas and John Skeet granted loans to Sun Minerals Pty Ltd prior to its acquisition by the Group.
Loans from key management personnel were interest-free and were fully repaid as at 30 June 2020.
Other transactions with key management personnel and their related parties
Mr J Skeet is a director of Trimin Pty Ltd (Trimin). During the financial year the Company incurred costs of $3,960 (2019:
$NIL) relating to consultancy services provided by Trimin. No amount was owing to Trimin at 30 June 2020.
This concludes the remuneration report, which has been audited.
Meetings of Directors
The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2020, and
the number of meetings attended by each Director were:
David Hutton*
Adrien Wing
Stephen Layton
Dudley Leitch**
Garry Thomas***
Directors Meetings
Held
Attended
Audit Committee
Attended
Held
10
11
11
1
1
10
11
11
1
1
1
1
1
-
-
1
1
1
-
-
Held: represents the number of meetings held during the time the Director held office.
* Resigned 29 May 2020
** Appointed 27 May 2020
*** Appointed 15 June 2020
16
Mithril Resources Limited
Directors' report
30 June 2020
Indemnity and insurance of officers
The Group has made and agreement indemnifying all the Directors and Officers of the Company against all losses or
liabilities by each Director or Officer in their capacity as Directors or Officers of the Company to the extent permitted by the
Corporations Act 2001, the indemnification specifically excludes wilful acts of negligence.
The Company paid insurance premiums in respect of Directors’ and Officers’ Liability Insurance contracts for current
officers of the Company, including officers of the Company’s controlled entities. The liabilities insured are damages and
legal costs that may be incurred in defending civil or criminal proceeding that may be brought against the officers in their
capacity as officers of entities of the Group. The total amount of insurance premiums paid for the financial year was
$11,850 (2019: $10,500).
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
There were no non-audit services provided during the financial year by the auditor.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this Directors' report.
Auditor
Grant Thornton Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the Directors
______________________
___________________________
t
J h Sk
John Skeet
Managing Director
30 September 2020
17
Level 3, 170 Frome Street
Adelaide SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T +61 8 8372 6666
Auditor’s Independence Declaration
To the Directors of Mithril Resources Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Mithril
Resources Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been:
a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B K Wundersitz
Partner – Audit & Assurance
Adelaide, 30 September 2020
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Mithril Resources Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2020
Income
Other income
Interest received
Profit on sale of tenement
Expenses
Operating expenses
Share-based payments
Employee benefits expense
Depreciation and amortisation expense
Impairment of exploration assets
Finance costs
Loss before income tax expense
Income tax expense
Loss after income tax expense for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Basic earnings per share
Diluted earnings per share
Consolidated
Note
2020
$
2019
$
5
6
11
7
16
72,311
566
20,137
1,079
5,651
50,000
(472,097)
(1,597,500)
(164,552)
(3,162)
(1,155,948)
(351)
(360,817)
-
(203,480)
(4,177)
(775,457)
(290)
(3,300,596)
(1,287,491)
-
-
(3,300,596)
(1,287,491)
(65,233)
(65,233)
-
-
(3,365,829)
(1,287,491)
Cents
Cents
26
26
(0.55)
(0.55)
(0.40)
(0.40)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
19
Mithril Resources Limited
Statement of financial position
As at 30 June 2020
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Exploration and evaluation
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Employee benefits
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
Note
2020
$
2019
$
8
9
10
11
12
13
1,187,589
84,604
-
1,272,193
631,215
50,640
27,146
709,001
-
12,675,125
12,675,125
14,341
1,910,014
1,924,355
13,947,318
2,633,356
170,450
58,306
228,756
34,053
73,777
107,830
228,756
107,830
13,718,562
2,525,526
14
15
16
50,264,467
1,656,763
(38,202,668)
37,303,102
124,496
(34,902,072)
13,718,562
2,525,526
The above statement of financial position should be read in conjunction with the accompanying notes
20
Mithril Resources Limited
Statement of changes in equity
For the year ended 30 June 2020
Consolidated
Balance at 1 July 2018
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with Owners in their capacity as Owners:
Share-based payments (note 27)
Lapsed options
Shares issued during the period (note 14)
Transactions costs
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
36,379,826
152,059
(33,684,581)
2,847,304
-
-
-
-
-
-
(1,287,491)
-
(1,287,491)
-
(1,287,491)
(1,287,491)
-
-
1,110,234
(186,958)
42,437
(70,000)
-
-
-
70,000
-
-
42,437
-
1,110,234
(186,958)
Balance at 30 June 2019
37,303,102
124,496
(34,902,072)
2,525,526
Consolidated
Balance at 1 July 2019
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with Owners in their capacity as Owners:
Share-based payments (note 27)
Shares issued during the period (note 14)
Transactions costs
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
37,303,102
124,496
(34,902,072)
2,525,526
-
-
-
-
(65,233)
(3,300,596)
-
(3,300,596)
(65,233)
(65,233)
(3,300,596)
(3,365,829)
-
13,049,730
(88,365)
1,597,500
-
-
-
-
-
1,597,500
13,049,730
(88,365)
Balance at 30 June 2020
50,264,467
1,656,763
(38,202,668)
13,718,562
The above statement of changes in equity should be read in conjunction with the accompanying notes
21
Mithril Resources Limited
Statement of cash flows
For the year ended 30 June 2020
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Government grants received
Interest and other finance costs paid
Net cash used in operating activities
Cash flows from investing activities
Payments to acquire exploration assets
Payments for exploration activities (capitalised)
Cash on hand arising from Sun Minerals Pty Ltd acquisition
Proceeds from disposal of exploration assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Share issue transaction costs
Repayment of borrowings
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Consolidated
Note
2020
$
2019
$
580
(628,245)
4,777
(545,352)
(627,665)
566
27,496
(286)
(540,575)
5,651
-
(290)
25
(599,889)
(535,214)
14
(763,720)
(730,028)
2,299
70,137
-
(620,617)
-
-
(1,421,312)
(620,617)
2,791,946
50,000
(88,365)
(176,006)
1,110,234
-
(186,958)
-
2,577,575
923,276
556,374
631,215
(232,555)
863,770
Cash and cash equivalents at the end of the financial year
8
1,187,589
631,215
The above statement of cash flows should be read in conjunction with the accompanying notes
22
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 1. General information
The financial statements cover Mithril Resources Limited ('the Company') as a Group consisting of Mithril Resources
Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian
dollars, which is Mithril Resources Limited's functional and presentation currency.
Mithril Resources Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is:
Level 2
480 Collins Street
MELBOURNE VIC 3000
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 30 September 2020.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation
of the financial statements are set out either in the
respective notes or below. These policies have been
consistently applied to all the years presented, unless
otherwise stated.
New or amended Accounting Standards and
Interpretations adopted
The Group has adopted all of the new or amended
Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are
mandatory for the current reporting period.
The adoption of
these Accounting Standards and
Interpretations did not have any significant impact on the
financial performance or position of the Group.
The following Accounting Standards and Interpretations are
most relevant to the Group:
AASB 2018-6 Amendments to Australian Accounting
Standards - Definition of a Business
The Group has early adopted AASB 2018-6 from 1 July
2019. This amendment seeks to clarify the definition of a
to determine whether a
business,
for as a business
transaction should be accounted
combination or as an asset acquisition.
to assist entities
AASB 16 Leases
The Group has adopted AASB 16 from 1 July 2019. The
standard replaces AASB 117 'Leases' and for lessees
eliminates the classifications of operating leases and
finance leases. Except for short-term leases and leases of
low-value assets, right-of-use assets and corresponding
lease liabilities are recognised in the statement of financial
position. Straight-line operating lease expense recognition
is replaced with a depreciation charge for the right-of-use
assets (included in operating costs) and an interest
expense on the recognised lease liabilities (included in
finance costs). In the earlier periods of the lease, the
expenses associated with the lease under AASB 16 will be
higher when compared to lease expenses under AASB
117. However, EBITDA (Earnings Before Interest, Tax,
Depreciation and Amortisation) results improve as the
operating expense is now replaced by interest expense and
depreciation in profit or loss. For classification within the
statement of cash flows, the interest portion is disclosed in
operating activities and the principal portion of the lease
payments are separately disclosed in financing activities.
For lessor accounting, the standard does not substantially
change how a lessor accounts for leases.
The operating lease commitments of the Group during the
year related to the head office tenancy which expired at 30
June 2020 and was not renewed, satisfying the relevant
criteria of a short term lease under AASB 16. Therefore the
adoption of this standard has no impact on the Group.
Interpretation 23 Uncertainty over Income Tax Treatments
The Group has applied Interpretation 23 from 1 July 2019.
Interpretation 23 provides new guidance on the application
of AASB 112 Income Taxes in situations where there is
uncertainty over the appropriate income tax treatment of a
transaction or class of transactions, and about whether a
treatment will be accepted by a tax authority. The Group
has applied
the uncertainty
surrounding the judgements and assumptions required in
the
(Mexico)
operations.
Interpretation given
treatment of
international
taxation
this
its
23
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Going concern
The financial report has been prepared on the basis of a
going concern. The financial report shows the Group
incurred a net loss of $3,300,596 (2019: $1,287,491) and a
net cash outflow from operating and investing activities of
$2,021,201 (2019: $1,155,831) during the year ended 30
June 2020. The Group continues to be economically
dependent on the generation of cashflow from the raising of
additional capital as and when required for the continued
operations
the
provision of working capital.
the exploration program and
including
The Group’s ability to continue as a going concern is
contingent upon generation of cashflow from successfully
raising additional capital. If sufficient additional funds are not
raised, the going concern basis may not be appropriate, with
the result that the Group may have to realise its assets and
extinguish its liabilities, other than in the ordinary course of
business and at amounts different from those stated in the
financial report. The Group continues to receive strong
interest and support from professional investors in its capital
raisings. On 16 July 2020 the Group placed in a capital
raising of approximately $3.5 million before costs. For more
information refer to note 24.
No allowance for such circumstances has been made in the
financial report.
Basis of preparation
These general purpose financial statements have been
prepared
in accordance with Australian Accounting
Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') and the Corporations
Act 2001, as appropriate for for-profit oriented entities.
These financial statements also comply with International
Financial Reporting Standards as issued by the International
Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the
historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value
through profit or loss, financial assets at fair value through
other comprehensive income, investment properties, certain
classes of property, plant and equipment and derivative
financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use
of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of
applying
the Group's accounting policies. The areas
involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to
the financial statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these
financial statements present the results of the Group only.
Supplementary
is
disclosed in note 22.
the parent entity
information about
Principles of consolidation
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of Mithril Resources Limited
('Company' or 'parent entity') as at 30 June 2020 and the
results of all subsidiaries for the year then ended. Mithril
Resources Limited and its subsidiaries together are referred
to in these financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has
control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated
from the date that control ceases.
Intercompany transactions, balances and unrealised gains
on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies
adopted by the Group.
Foreign currency translation
The financial statements are presented in Australian dollars,
which
functional and
presentation currency.
is Mithril Resources Limited's
transactions. Foreign exchange gains and
Foreign currency transactions
Foreign currency transactions are translated into Australian
dollars using the exchange rates prevailing at the dates of
the
losses
resulting from the settlement of such transactions and from
the translation at financial year-end exchange rates of
monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated
into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign
operations are translated into Australian dollars using the
average exchange rates, which approximate the rates at the
dates of the transactions, for the period. All resulting foreign
are
exchange
other
in
foreign exchange
through
comprehensive
reserve in equity.
differences
income
recognised
the
The foreign exchange reserve is recognised in profit or loss
when the foreign operation or net investment is disposed of.
24
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
The foreign exchange reserve is recognised in profit or loss
when the foreign operation or net investment is disposed
of.
Income
Interest
Interest income is recognised as interest accrues using the
effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating the
interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts
estimated future cash receipts through the expected life of
the financial asset to the net carrying amount of the
financial asset.
Current and non-current classification
Assets and liabilities are presented in the statement of
financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected
to be realised or intended to be sold or consumed in the
Group's normal operating cycle; it is held primarily for the
purpose of trading; it is expected to be realised within 12
months after the reporting period; or the asset is cash or
cash equivalent unless restricted from being exchanged or
used to settle a liability for at least 12 months after the
reporting period. All other assets are classified as non-
current.
A liability is classified as current when: it is either expected
to be settled in the Group's normal operating cycle; it is
held primarily for the purpose of trading; it is due to be
settled within 12 months after the reporting period; or there
is no unconditional right to defer the settlement of the
liability for at least 12 months after the reporting period. All
other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as
non-current.
Joint Arrangement
AASB 11 Joint Arrangements defines a joint arrangement
as an arrangement of which two or more parties have joint
control and classifies these arrangements as either joint
ventures or joint operations.
Mithril Resources Ltd has determined that it has both joint
ventures and joint operations.
In relation to its joint venture operations, where the venturer
has the rights to the individual assets and obligations
arising from the arrangement, Mithril Resources Ltd has
recognised:
● Its assets, including its share of any assets held jointly;
● Its liabilities, including its share of any liabilities incurred
jointly;
● Its revenue from the sale of its share of the output arising
from the joint operation;
● Its share of the revenue from the sale of the output by
the joint operation;
● Its expenses, including its share of any expenses
incurred jointly.
These figures are incorporated into the relevant line item in
the primary statements.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite
useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or
changes in circumstances indicate that they might be
impaired. Other non-financial assets are reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which
the asset's carrying amount exceeds
its recoverable
amount.
Recoverable amount is the higher of an asset's fair value
less costs of disposal and value-in-use. The value-in-use is
the present value of the estimated future cash flows relating
to the asset using a pre-tax discount rate specific to the
asset or cash-generating unit to which the asset belongs.
Assets that do not have independent cash flows are
grouped together to form a cash-generating unit.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is
recognised as part of the cost of the acquisition of the asset
or as part of the expense.
Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the tax authority is
included in other receivables or other payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST
components of cash
investing or
financing activities which are recoverable from, or payable
to the tax authority, are presented as operating cash flows.
flows arising
from
Commitments and contingencies are disclosed net of the
amount of GST recoverable from, or payable to, the tax
authority.
25
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
New Accounting Standards and Interpretations not yet
mandatory or early adopted
Australian Accounting Standards and Interpretations that
have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for
the annual reporting period ended 30 June 2020. The
Group has not yet assessed the impact of these new or
amended Accounting Standards and Interpretations.
26
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will
seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next
financial year are discussed below.
Capitalisation of exploration and evaluation expenditure
The Group's policy for exploration and evaluation is discussed in Note 12. The application of this policy requires
management to make certain assumptions as to future events and circumstances. Any such estimates and assumptions
may change as new information becomes available. If, after having capitalised exploration and evaluation expenditure,
management concludes that the capitalised expenditure is unlikely to be recovered by future sale or exploration, then the
relevant capitalised amount will be written off through the consolidated statement of profit or loss and other comprehensive
income.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using either the Monte Carlo or Black-
Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts
of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.
Acquisition of Sun Minerals Pty Ltd
Key estimates and judgments are applied in the acquisition accounting including determining the type of acquisition, the
fair value of the assets and liabilities acquired and the fair value of the consideration paid. The acquisition was determined
by the directors to be an asset acquisition as detailed in note 11.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Note 4. Operating segments
Identification of reportable operating segments
The Board has considered the requirements of AASB 8 Operating Segments and has determined that the Group has two
operating segments: Mexican operations and Australian operations.
In determining these operating segments, the Board has considered the location of the Group's exploration activities which
represent its principal operations. The results of these operating segments are monitored by the Board and form the basis
for which strategic decisions are made.
The acquisition of the Copalquin Gold Silver Project in Durango, Mexico during the year constitutes a separately
identifiable operating segment to the Group's Australian operations given the Board's intention to regularly review the
financial information from its Mexican operations to determine the future allocation of resources.
The Board concluded that there were no separately identifiable segments during the year ended 30 June 2019.
27
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 4. Operating segments (continued)
Operating segment information
Consolidated - 2020
Revenue
Profit on sale of tenement
Interest revenue
Other income
Total revenue
Operating expenses
Share-based payments
Employee benefits expense
Depreciation and amortisation expense
Impairment of assets
Finance costs
Loss before income tax expense
Income tax expense
Loss after income tax expense
Mexican
operations
$
Australian
operations
$
Total
$
-
-
-
-
20,137
566
72,311
93,014
(35,135)
(436,962)
- (1,597,500)
(164,552)
-
-
(3,162)
- (1,155,948)
(286)
(35,200) (3,265,396)
(65)
20,137
566
72,311
93,014
(472,097)
(1,597,500)
(164,552)
(3,162)
(1,155,948)
(351)
(3,300,596)
-
(3,300,596)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
(65,233)
(65,233)
-
-
(65,233)
(65,233)
Total comprehensive income for the year
(100,433) (3,265,396)
(3,365,829)
Assets
Cash and cash equivalents
Trade and other receivables
Exploration and evaluation
Total assets
Liabilities
Trade and other payables
Employee benefits
Total liabilities
Geographical information
Australia
Mexico
73,175 1,114,414
36,131
48,473
11,506,008 1,169,117
11,627,656 2,319,663
1,187,589
84,604
12,675,125
13,947,318
64,906
-
64,906
105,544
58,306
163,850
170,450
58,306
228,756
Geographical
exploration
assets
2020
$
1,169,117
11,506,008
12,675,125
Accounting policy for operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Board. The Board is responsible for the allocation of resources to operating segments
and assessing their performance.
28
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 5. Other income
Government Boosting Cashflow Payment
Other income
Other income
Consolidated
2020
$
2019
$
41,220
31,091
-
1,079
72,311
1,079
Government Boosting Cashflow Payment
Boosting Cashflow income is recognised when there is reasonable assurance that the Company will comply with the
conditions attached to it, and the grant will be received. The nature of the grant is unconditional and has been presented on
a gross basis.
Other income
Other income is recognised when it is received or when the right to receive payment is established.
Note 6. Operating expenses
Professional fees
Annual report and AGM
ASX and ASIC fees
Audit fees
Communication expenses
Computer expenses
Occupancy costs
Insurance
Legal costs
Office expenses
Share registry charges
Travel expenses
Promotion and advertising
Shareholder Meetings
Other expenses
Transfer (to) exploration assets
Consolidated
2020
$
2019
$
206,002
39,397
29,634
38,124
3,683
8,769
64,896
23,717
19,773
33,224
23,719
967
2,121
-
21,131
(43,060)
85,270
30,356
23,906
30,624
7,677
11,987
59,855
20,077
12,532
11,407
19,473
2,838
7,182
65,050
13,858
(41,275)
472,097
360,817
29
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 7. Income tax
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 27.5% (2019: 30%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Unrealised foreign exchange losses
Expenses not allowable for income tax purposes
Other deductible items
Current year tax losses not recognised
Income tax expense
Consolidated
2020
$
2019
$
(3,300,596)
(1,287,491)
(907,664)
(386,247)
1,057
766,023
(417,549)
-
249,210
(218,914)
(558,133)
558,133
(355,951)
355,951
-
-
The Group has tax losses arising in Australia of $38,711,565 (2019: $36,039,948) that may be available and may be offset
against future taxable profits. In addition, these tax losses can only be utilised in the future if the continuity of ownership
test is passed, or failing that, the same business test is passed.
No deferred tax asset has been recognised because it is not likely future assessable income is derived of a nature and of
an amount sufficient to enable the benefit to be realised.
Accounting policy for income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when
the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
nor taxable profits; or
● When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for
the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
30
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 7. Income tax (continued)
Mithril Resources Ltd and its wholly owned Australian resident entities are part of a tax consolidated group under the tax
consolidation legislation as of 1 July 2007.
The head entity within the tax‑consolidated group is Mithril Resources Ltd. Mithril Resources Ltd and each of its
wholly‑owned controlled entities recognise the current and deferred tax assets and deferred tax liabilities applicable to the
transactions undertaken by it, after elimination of intra‑group transactions. Mithril Resources Ltd recognises the entire
tax‑consolidated group's retained tax losses.
Note 8. Cash and cash equivalents
Cash at bank
Short-term deposits
Consolidated
2020
$
2019
$
1,187,589
-
626,215
5,000
1,187,589
631,215
Cash at bank earns interest at floating rates based on daily bank deposit rates.
During the year ended 30 June 2019 the Company held $5,000 of short-term bank deposits acting as security for visa
cards and the billflex facility. The Company withdrew the deposit after cancelling the visa card and billflex facilities during
the year ended 30 June 2020.
Short-term deposits are made for varying periods of between one day and six months, depending on the immediate cash
requirements of the Company, and earn interest at the respective short-term deposit rates.
Accounting policy for cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Note 9. Trade and other receivables
Trade receivables
Other receivables
GST receivable
Consolidated
2020
$
2019
$
-
13,733
70,871
50,640
-
-
84,604
50,640
Trade receivables are non‑interest bearing and are generally on 30‑90 day terms. An allowance for expected credit loss is
made when there is objective evidence that a trade receivable is impaired. No impairment was recognised in the current
and prior financial year and no receivables are past due at balance date.
Accounting policy for trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within
30 days.
31
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 9. Trade and other receivables (continued)
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is
objective evidence that the Group will not be able to collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payments (more than 90 days overdue) are considered indicators that the
trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows
relating to short-term receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Note 10. Other assets
Accrued revenue
Prepayments
Note 11. Exploration and evaluation
Tangible exploration assets
Exploration and evaluation - Copalquin Gold Silver Project (Mexico)
Inangible exploration assets
Exploration and evaluation - joint operations (Australia)
Exploration and evaluation - other (Australia)
Exploration and evaluation - Copalquin Gold Silver Project (Mexico)
Consolidated
2020
$
2019
$
-
-
-
32
27,114
27,146
Consolidated
2020
$
2019
$
64,315
64,315
-
-
22,398
1,146,719
11,441,693
12,610,810
1,114,703
795,311
-
1,910,014
12,675,125
1,910,014
32
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 11. Exploration and evaluation (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2018
Additions through expenditures capitalised
Impairment of tenements
Balance at 30 June 2019
Copalquin Gold Silver Project (Mexico)
Additions through expenditures capitalised
Relinquished tenements*
Transfers in/(out)
Joint
Operations
$
Other
$
Copalquin
Gold Silver
Project
$
Total
$
1,331,395
93,523
(83,467)
733,459
527,094
(691,990)
-
-
-
2,064,854
620,617
(775,457)
1,341,451
-
24,149
(1,116,454)
(226,748)
568,563
-
390,902
(39,494)
226,748
-
10,953,771
552,237
-
-
1,910,014
10,953,771
967,288
(1,155,948)
-
Balance at 30 June 2020
22,398
1,146,719
11,506,008
12,675,125
*
write-off of capitalised exploration expenditures for the tenements that were relinquished during the year, included in
impairment of exploration assets expense.
The recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development
and commercial exploitation, or alternatively, sale of the respective areas of interest.
The recoverable amount of development expenditure is determined as the higher of its fair value less costs to sell and its
value in use.
Exploration and Evaluation expenditure has been carried forward to the extent that they are expected to be recouped
through the successful development or sale of the area or where activities in the area have not yet reached a stage that
permits reasonable assessment of the existence of economically recovered reserves. Management assessment of carried
forward expenditure resulted in impairment charges of $1,155,948 arising from relinquished tenements (2019: $775,457 ).
Acquisition of Copalquin Gold Silver Project (Mexico)
On 27 May 2020 the Company completed the acquisition of Sun Mineral Pty Ltd (Sun Minerals). Sun Minerals holds the
exclusive option to earn up to a 100% interest in the high-grade Copalquin Gold Silver Project in Durango, Mexico as set
out below:
(a) At the completion of the Transaction Sun Minerals will hold a 10% interest in the concessions forming Copalquin.
(b)
If, on or before 7 August 2023, Sun Minerals:
(i) incurs expenditure of US $4 million on Copalquin, Sun Minerals will hold a 25% interest in the concessions forming
Copalquin; and
(ii) incurs further expenditure of US $4 million (aggregate expenditure of US $8 million) on Copalquin, Sun Minerals
will hold a 50% interest in the concessions forming Copalquin.
(c) At any time on or before 7 August 2023, Sun Minerals may make a cash payment of US $10 million to CMC (and/or
its nominee) to acquire the remaining interests then held by CMC. CMC may elect to receive the US $10 million
through the issue of fully paid Mithril shares at a deemed issue price per share that is the higher of:
(i) a 10% discount for the 20-day VWAP of fully paid Mithril shares on ASX, ending on the trading day immediately
before any such election; or
(ii) $0.01 (1 cent).
Following payment of the US $10 million (in cash, fully paid Mithril shares or a combination of both) the Group will
hold a 100% interest on the concessions forming Copalquin.
33
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 11. Exploration and evaluation (continued)
As consideration for the acquisition of Sun Minerals:
●
●
●
●
●
The Company made an Exclusivity Payment of $150,000 AUD to Sun Minerals Pty Ltd to be used solely for, and form
part of expenditure on Copalquin.
The Company issued an aggregate of 673,852,281 fully paid ordinary shares to the shareholders of Sun Minerals for
the acquisition of all the issued capital of Sun Minerals.
The Company issued 10,000,000 fully paid ordinary shares to Compania Minera Copalquin S.A de S.V. (CMC) and
paid $200,000 USD ($303,674 AUD) in accordance with the Company's completion requirements.
The fair value of the shares issued is $0.015 per share, being the market value of the equity instruments on the
measurement date of 27 May 2020.
The total consideration paid to acquire Sun Minerals Pty Ltd was $10,711,458.
The acquisition of Sun Minerals falls outside of the scope of AASB3 Business Combinations. It is the acquisition of a group
of assets that do not constitute a business.
A reconciliation to the fair value of the Copalquin Gold Silver Project as at 30 June 2020 is set out below:
Fair value of asset acquired:
673,852,281 shares issued to Sun Minerals shareholders at $0.015 per share
10,000,000 shares issued to Compania Minera Copalquin (CMC) at $0.015 per share
$200,000 USD ($303,674 AUD) paid to Compania Minera Copalquin (CMC)
Exclusivity Payment of $150,000 AUD paid to Sun Minerals Pty Ltd
Capitalised transaction costs
Less: identifiable assets/(liabilities) acquired:
Cash
Trade and other receivables
Trade and other payables
Additions through expenditures capitalised
Copalquin
Gold Silver
Project
10,107,784
150,000
303,674
150,000
108,143
10,819,601
(2,299)
(3,189)
139,658
134,170
552,237
11,506,008
Accounting policy for exploration and evaluation assets
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and
evaluation asset in the year in which they are incurred where the following conditions are satisfied:
the rights to tenure of the area of interest are current; and
(a)
(b) at least one of the following conditions is also met:
(i) the exploration and evaluation expenditures are expected to be recouped through successful development and
exploration of the area of interest, or alternatively, by its sale; or
(ii) exploration and evaluation activities in the area of interest have not at the balance date reached a stage which
permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and
significant operations in, or in relation to, the area of interest are continuing.
34
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 11. Exploration and evaluation (continued)
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies,
exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of
assets used in exploration and evaluation activities.
General and administrative costs are only included in the measurement of exploration and evaluation costs where they are
related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying
amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the
exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the
relevant area of interest) is estimated to determine the extent of the impairment loss (if any).
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of
its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset in previous years.
Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant
exploration and evaluation asset is tested for impairment and the balance is then reclassified to development. Where an
area of interest is abandoned, any expenditure carried forward in respect of that area is written off as an impairment loss.
Note 12. Trade and other payables
Trade payables
Other payables
Consolidated
2020
$
2019
$
88,815
81,635
22,154
11,899
170,450
34,053
Refer to note 17 for further information on financial instruments.
Accounting policy for trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Note 13. Employee benefits
Annual leave
Long service leave
Consolidated
2020
$
2019
$
2,415
55,891
17,585
56,192
58,306
73,777
Accounting policy for employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
35
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 14. Issued capital
Consolidated
2020
Shares
2019
Shares
2020
$
2019
$
Ordinary shares - fully paid
1,664,630,703
422,389,211
50,264,467
37,303,102
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Shares issued via placement
Shares issued via rights issue
Transaction costs (net of tax)
Balance
Shares issued via private placement
Shares issued via rights issue
Shares issued to shareholders of Sun Minerals Pty
Ltd (note 11)
Shares issued to Compania Minera Copalquin S.A de
C.V. (note 11)
Transaction costs (net of tax)
1 July 2018
21 November 2018
20 December 2018
30 June 2019
18 September 2019
21 May 2020
200,342,380
30,051,357
191,995,474
-
422,389,211
68,000,000
490,389,211
$0.005
$0.005
$0.000
$0.005
$0.005
36,379,826
150,257
959,977
(186,958)
37,303,102
340,000
2,451,946
27 May 2020
673,852,281
$0.015
10,107,784
27 May 2020
10,000,000
-
$0.015
$0.000
150,000
(88,365)
Balance
30 June 2020
1,664,630,703
50,264,467
Ordinary shares
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 and the
Company does not have a limited amount of authorised capital.
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.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce
the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
Proceeds from share issues are used to maintain and expand the Company’s exploration activities and fund operating
costs.
Accounting policy for issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
36
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 15. Reserves
Foreign exchange reserve
Share options reserve
Performance rights reserve
Consolidated
2020
$
2019
$
(65,233)
124,496
1,597,500
-
124,496
-
1,656,763
124,496
Foreign exchange reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars.
Share-based payments reserves
The share options reserve and the performance rights reserve are used to recognise the value of equity benefits provided
to employees and Directors as part of their remuneration, and other parties as part of their compensation for services.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2018
Issue of options
Lapsed options
Balance at 30 June 2019
Issue of performance rights
Movement in foreign exchange reserve
Share options
reserve
$
Performance
rights reserve
$
Foreign
exchange
reserve
$
Total
$
152,059
42,437
(70,000)
124,496
-
-
-
-
-
-
-
-
152,059
42,437
(70,000)
-
1,597,500
-
-
-
(65,233)
124,496
1,597,500
(65,233)
Balance at 30 June 2020
124,496
1,597,500
(65,233)
1,656,763
Note 16. Accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax expense for the year
Transfer from options reserve
Accumulated losses at the end of the financial year
Note 17. Financial instruments
Consolidated
2020
$
2019
$
(34,902,072)
(3,300,596)
-
(33,684,581)
(1,287,491)
70,000
(38,202,668)
(34,902,072)
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group's overall
risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse
effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to
which it is exposed. These methods include sensitivity analysis in the case of interest rate and ageing analysis for credit
risk.
37
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 17. Financial instruments (continued)
Risk management is carried out by the Board of Directors ('the Board'). These policies include identification and analysis of
the risk exposure of the Group and appropriate procedures, controls and risk limits. The Board identifies, evaluates and
hedges financial risks within the Group's operating units.
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The Board has determined that the current level of
foreign currency risk resulting from its operations in Mexico is not significant to the Group.
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group is not exposed to any significant interest rate risk.
The effective weighted average interest rates on classes of financial assets and financial liabilities is as follows:
Consolidated
Cash and cash equivalents
Trade and other payables
2020
2019
Weighted
average
interest rate
%
Balance
$
Weighted
average
interest rate
%
0.01%
-
1,187,589
(170,450)
0.76%
-
Net exposure to cash flow interest rate risk
1,017,139
Balance
$
631,217
(34,053)
597,164
The following table illustrates the sensitivity of the net result for the year and equity to a reasonably possible change in
interest rates with effect from the beginning of the year. These changes are considered to be reasonably possible based on
observation of current market conditions but are not expected to have a significant impact on the Group's operating result.
Consolidated - 2020
Basis points increase
Effect on
profit before
tax
Basis points
change
Effect on
equity
Basis points
change
Basis points decrease
Effect on
profit before
tax
Effect on
equity
Cash and cash equivalents
50
5,734
5,734
50
(5,734)
5,734
Consolidated - 2019
Basis points increase
Effect on
profit before
tax
Basis points
change
Effect on
equity
Basis points
change
Basis points decrease
Effect on
profit before
tax
Effect on
equity
Cash and cash equivalents
50
2,952
2,952
(50)
(2,952)
2,952
Credit risk
Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an obligation and cause
the Group to incur a financial loss. The Group's maximum credit exposure is the carrying amounts on the statement of
financial position. The Group holds financial instruments with credit worthy third parties. The credit risk for liquid funds and
other short‑term financial assets is considered negligible, since the counterparties are reputable banks and institutions with
high quality external credit ratings. The Group has no past due or impaired debtors as at 30 June 2020.
38
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 17. Financial instruments (continued)
Liquidity risk
Liquidity risk arises from the Company’s management of working capital and the finance charges and principal repayments
on its debt instruments. It is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall
due.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, whom have built an appropriate
liquidity risk management framework for the management of the Company’s short, medium and long‑term funding and
liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 18. Key management personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2020
$
2019
$
423,996
24,795
1,183,334
384,145
28,491
24,250
1,632,125
436,886
Full details of the remuneration of each director of the Company and each of the other key management personnel are
disclosed in the Remuneration Report contained within the Directors' Report.
Loans from key management personnel and their related parties
During the year the following loans from key management personnel were made to the Company:
Key management
personnel:
Date loan granted
Date loan repaid
Adrien Wing
Garry Thomas*
Garry Thomas*
John Skeet*
01/01/2015
27/05/2020
27/05/2020
27/05/2020
27/05/2020
11/06/2020
17/06/2020
17/06/2020
Total loans
made to the
company
during the
year
Total loans
Total loans
payable as at payable as at
30 June 2020 30 June 2019
50,000
70,000
50,000
6,006
176,006
-
-
-
-
-
-
-
-
-
-
*
Garry Thomas and John Skeet granted loans to Sun Minerals Pty Ltd prior to its acquisition by the Group.
Loans from key management personnel were interest-free and were fully repaid as at 30 June 2020.
Other transactions with key management personnel
Mr J Skeet is a director of Trimin Pty Ltd (Trimin). During the financial year the Company incurred costs of $3,960 (2019:
$NIL) relating to consultancy services provided by Trimin. No amount was owing to Trimin at 30 June 2020.
39
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 19. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Grant Thornton Audit Pty Ltd, the
auditor of the Company:
Audit services - Grant Thornton Audit Pty Ltd
Audit or review of the financial statements
Note 20. Capital and leasing commitments
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Exploration and evaluation*
Lease commitments - operating**
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
Consolidated
2020
$
2019
$
38,124
30,624
Consolidated
2020
$
2019
$
1,721,380
559,000
-
56,153
*
**
In order to maintain current rights of tenure to exploration tenements, the Company is required to meet minimum
expenditure requirements in respect of tenement lease rentals. These obligations are expected to be fulfilled in the
normal course of operations.
The operating lease in place for the Company's head office tenancy expired at 30 June 2020 and was not renewed by
the Company. This was considered in the Company's first time adoption of AASB 16: Leases.
Note 21. Related party transactions
Parent entity
Mithril Resources Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 23.
Transactions between Mithril Resources Ltd and its wholly owned entities during the year consisted of loans advanced by
Mithril Resources Ltd to fund exploration and investment activities.
Key management personnel
Disclosures relating to key management personnel are set out in note 18 and the remuneration report included in the
Directors' report.
Transactions with related parties
There were no transactions with related parties during the current and previous financial year other than those disclosed in
note 18.
40
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 21. Related party transactions (continued)
Payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current payables:
Director's fees payable
Consolidated
2020
$
2019
$
4,000
-
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date other than those disclosed in note
18.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 22. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Other comprehensive income for the year, net of tax
Total comprehensive income
Parent
2020
$
2019
$
(3,264,905)
(2,276,577)
-
-
(3,264,905)
(2,276,577)
41
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 22. Parent entity information (continued)
Statement of financial position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share options reserve
Performance rights reserve
Accumulated losses
Total equity
Parent
2020
$
2019
$
1,150,536
2,619,015
12,797,108
14,341
13,947,644
2,633,356
163,849
107,830
-
-
163,849
107,830
13,783,795
2,525,526
50,264,467
124,496
1,597,500
(38,202,668)
37,303,102
124,496
-
(34,902,072)
13,783,795
2,525,526
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2020 and 30 June 2019.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
42
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 23. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 2:
Name
Minex (Aust) Pty Ltd
Minex (West) Pty Ltd
Mithril Resources Investments Pty Ltd
Sun Minerals Pty Ltd
Drummond Gold
Carlton Gold
Principal place of business /
Country of incorporation
Australia
Australia
Australia
Australia
Mexico
Mexico
Ownership interest
2019
2020
%
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
*
The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries.
Note 24. Events after the reporting period
Capital Raising
In early July 2020 the Company announced that it had received binding commitments for a placement to sophisticated and
professional investors, comprising 154,444,444 fully paid ordinary shares in the Company at an issue price of 1.8 cents to
raise approximately $3.5 million before costs. The placement shares were issued on 16 July 2020.
Related parties of the Company also committed to participating in the placement with shareholder approval granted on 14
August 2020. The directors of the Company committed to $414K and a holder of the concessions forming the Copalquin
Gold Silver Project committed to $396K for a total of 45,000,000 placement shares. The placement shares to related
parties were issued on 19 August 2020.
Performance rights conversion milestone achieved
Mithril achieved a market capitalisation equal to or greater than A$40,000,000 for a period of 20 consecutive trading days.
This was a milestone condition for the performance rights and consequently 224,999,999 shares were issued on 14 August
2020.
Director appointments
On 17 August 2020 Mr Garry Thomas was appointed as a non-executive director.
On 8 September 2020 Mr John Skeet, the current CEO of the Company was appointed to the additional role of Managing
Director of the Company.
No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect
the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
43
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 25. Cash flow information
Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
(3,300,596)
(1,287,491)
Consolidated
2020
$
2019
$
Adjustments for:
Depreciation and amortisation
Impairment of non-current assets
Net gain on disposal of non-current assets
Net loss on disposal of property, plant and equipment
Share-based payments
Foreign exchange differences
Transfers to exploration assets
Change in operating assets and liabilities:
Increase in trade and other receivables
Decrease in accrued revenue
Decrease/(increase) in prepayments
Increase/(decrease) in trade and other payables
Increase/(decrease) in employee benefits
3,162
1,155,948
(20,137)
11,179
1,597,500
3,844
(43,060)
(83,955)
32
27,114
64,551
(15,471)
4,177
775,457
-
-
42,437
-
-
(49,182)
54
(15,913)
(12,960)
8,207
Net cash used in operating activities
(599,889)
(535,214)
Quarterly cash flows
Payments for exploration and evaluation assets activities and acquisitions and receipts from disposal of exploration and
evaluation assets reported in the consolidated statement of cash flows is reported as an investing activity in accordance
with AASB 107 Statement of Cash Flows. This varies from the reporting in the Appendix 5B Quarterly Cash Flow Reports
in which these payments are included in operating activities. Going forward capitalised expenditure and acquisition
expenditure on exploration and development assets will be classified as investing activities in the Appendix 5B.
Note 26. Earnings per share
Loss after income tax
Consolidated
2020
$
2019
$
(3,300,596)
(1,287,491)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
596,041,636
320,141,086
Weighted average number of ordinary shares used in calculating diluted earnings per share
596,041,636
320,141,086
Basic earnings per share
Diluted earnings per share
Cents
Cents
(0.55)
(0.55)
(0.40)
(0.40)
44
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 26. Earnings per share (continued)
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the Owners of Mithril Resources Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Note 27. Share-based payments
The Group established the Mithril Resources Ltd Employee Share Option Plan and a summary of the Rules of the Plan are
set out below:
●
All employees (full and part time) will be eligible to participate in the Plan after a qualifying period of 12 months
employment, although the Board may waive this requirement.
●
●
●
●
●
●
●
Options are granted under the Plan at the discretion of the Board and if permitted by the Board, may be issued to an
employee's nominee.
Each option is to subscribe for one fully paid ordinary share in the Company and will expire 5 years from its date of
issue. An option is exercisable at any time from its date of issue. Options will be issued free. The exercise price of
options will be determined by the Board, subject to a minimum price equal to the market value of the Company's
shares at the time the Board resolves to offer those options. The total number of shares, the subject of options issued
under the Plan, when aggregated with issues during the previous 5 years pursuant to the Plan and any other
employee share plan, must not exceed 5% of the Company's issued share capital.
If, prior to the expiry date of options, a person ceases to be an employee of the Company for any reason other than
retirement at age 60 or more (or such earlier age as the board permits), permanent disability, redundancy or death,
the options held by that person (or that person's nominee) automatically lapse on the first to occur of a) the expiry of
the period of 6 months from the date of such occurrence, and b) the expiry date. If a person dies, the options held by
that person will be exercisable by that person's legal personal representative.
Options can’t be transferred other than to the legal personal representative of a deceased option holder.
The Company will not apply for official quotation of any options issued under the plan.
Shares issued as a result of the exercise of options will rank equally with the Company's previously issued shares.
Option holders may only participate in new issues of securities by first exercising their options.
The Board may amend the Plan Rules subject to the requirements of the Listing Rules.
45
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 27. Share-based payments (continued)
Set out below are summaries of options granted under the plan:
2020
Grant date
Expiry date
31/12/2020
31/12/2020
22/06/2022
17/11/2020
31/12/2020
10/10/2021
10/03/2017
22/06/2017
22/06/2017
17/11/2017
17/11/2017
10/10/2018
2019
Grant date
Expiry date
22/07/2013
20/06/2014
20/06/2014
21/04/2016
10/03/2017
22/06/2017
22/06/2017
17/11/2017
17/11/2017
10/10/2018
21/07/2018
21/07/2018
19/06/2019
21/04/2019
31/12/2020
31/12/2020
22/06/2022
17/11/2020
31/12/2020
10/10/2021
Exercise
price
$0.100
$0.100
$0.100
$0.100
$0.100
$0.010
Balance at
the start of
the year
1,000,000
300,000
300,000
500,000
1,000,000
7,000,000
10,100,000
Exercise
price
Balance at
the start of
the year
-
-
-
-
-
-
-
Granted
Exercised
$0.500
$0.500
$0.150
$0.050
$0.100
$0.100
$0.100
$0.100
$0.100
$0.010
30,000
75,000
140,000
650,000
1,000,000
300,000
300,000
500,000
1,000,000
-
3,995,000
-
-
-
-
-
-
-
-
-
7,000,000
7,000,000
Set out below are the options exercisable at the end of the financial year:
Grant date
Expiry date
10/03/2017
22/06/2017
22/06/2017
17/11/2017
17/11/2017
10/10/2018
31/12/2020
31/12/2020
22/06/2022
17/11/2020
31/12/2020
10/10/2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
300,000
300,000
500,000
1,000,000
7,000,000
10,100,000
Expired/
forfeited/
other
Balance at
the end of
the year
(30,000)
(75,000)
(140,000)
(650,000)
-
-
-
-
-
-
(895,000)
-
-
-
-
1,000,000
300,000
300,000
500,000
1,000,000
7,000,000
10,100,000
2020
Number
2019
Number
1,000,000
300,000
300,000
500,000
1,000,000
7,000,000
1,000,000
300,000
300,000
500,000
1,000,000
7,000,000
10,100,000
10,100,000
The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.08 years
(2019: 1.80 years).
46
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 27. Share-based payments (continued)
Performance rights granted to directors and key management personnel
At the General Meeting held on 13 May 2020 the shareholders of the Company granted approval for the issue of
166,666,666 performance rights to directors and members of key management personnel. Details of the performance
rights issued can be found in the Notice of General Meeting announcement dated 9 April 2020. The Company also issued
58,333,333 performance rights to corporate advisors and consultants as part of their compensation for services rendered.
The vesting condition for the issue of these performance rights was the completion of Sun Minerals transaction. Details on
the acquisition of Sun Minerals Pty Ltd are disclosed in note 11.
The conversion of the issued performance rights to fully paid ordinary shares of the Company is subject to the satisfaction
of either of the following applicable milestones:
●
Determination by a geological consultant of an Inferred JORC Resource of 5.443Mt at a combined AuEq grade of not
less than 4g/t for 700koz Au (or AuEq) on the Copalquin Project; or
● Mithril achieving a market capitalisation equal to or greater than A$40,000,000 for a period of 20 consecutive trading
days on which the securities of the Company traded. This milestone was achieved post year-end and shares issued
on 14 August 2020.
Fair value of performance rights granted:
The fair value of performance rights granted was independently determined using a Monte Carlo pricing model. This model
simulates share price movements using assumptions of lognormally distributed prices, averages the payoff values over the
range of resultant outcomes, and then discounts the expected payoff at the risk-free rate to get an estimate of the value of
the option or performance right.
For the performance rights granted during the current financial year, the valuation model inputs used to determine the fair
value at the grant date, are as follows:
Grant date
Expiry date
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value
at grant date
13/05/2020
13/05/2024
$0.010
$0.000
95.000%
-
0.240%
$0.007
Share-based payments during the year are:
Options issued to Directors, employees and consultants
Performance rights issued to Directors and key management personnel
Performance rights issued to consultants
Consolidated
2020
$
2019
$
-
1,420,000
177,500
42,437
-
-
1,597,500
42,437
Exploration and evaluation share based payments
During the period the Company made the following share-based payments in accordance with the terms sheet to acquire
100% of the shares of Sun Minerals Pty Ltd:
●
●
Issued 673,852,281 fully paid ordinary shares to the shareholders of Sun Minerals Pty Ltd
Issued 10,000,000 fully paid ordinary shares to Compania Minera Copalquin S.A de C.V
The fair value of the shares issued is $0.015 per share. The amount of the equity settled share-based payment recognised
in the current period in respect of the ordinary shares issued is $10,257,784.
Accounting policy for share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of
cash is determined by reference to the share price.
47
Mithril Resources Limited
Notes to the financial statements
30 June 2020
Note 27. Share-based payments (continued)
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using either the Monte Carlo or Black-Scholes option pricing model that takes into account the exercise price, the term of
the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do
not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken
of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Monte Carlo or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award
was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
48
Mithril Resources Limited
Directors' declaration
30 June 2020
In the Directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2020 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors
______________________
___________________________
t
J h Sk
John Skeet
Managing Director
30 September 2020
49
Level 3, 170 Frome Street
Adelaide SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T +61 8 8372 6666
Independent Auditor’s Report
To the Members of Mithril Resources Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Mithril Resources Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss
and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to Note 2 in the financial statements, which indicates that the Group incurred a net loss of $3,300,596 and a
cash outflow from operating and investing activities of $2,021,201 during the year ended 30 June 2020. As stated in Note 2,
these events or conditions, indicate that a material uncertainty exists that may cast doubt on the Group’s ability to continue as
a going concern. Our opinion is not modified in respect of this matter.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the material uncertainty related to going concern section, we have determined the
matters described below to be the key audit matters to be communicated in our report.
Key audit matter
How our audit addressed the key audit matter
Exploration and evaluation assets - Notes 3 & 11
At 30 June 2020 the carrying value of exploration and
evaluation assets was $12,675,125.
In accordance with AASB 6 Exploration for and Evaluation of
Mineral Resources, the Group is required to assess at each
reporting date if there are any triggers for impairment which
may suggest the carrying value is in excess of the recoverable
value.
The process undertaken by management to assess whether
there are any impairment triggers in each area of interest
involves an element of management judgement.
This area is a key audit matter due to the significant judgement
involved in determining the existence of impairment triggers.
Our procedures included, amongst others:
obtaining the management-prepared reconciliation of
capitalised exploration and evaluation expenditure and
agreeing to the general ledger;
reviewing management’s area of interest considerations
against AASB 6;
conducting a detailed review of management’s
assessment of trigger events prepared in accordance with
AASB 6 including;
tracing projects to statutory registers, exploration
licenses and third party confirmations to determine
whether a right of tenure existed;
enquiry of management regarding their intentions to
carry out exploration and evaluation activity in the
relevant exploration area, including review of
management’s budgeted expenditure;
understanding whether any data exists to suggest that
the carrying value of these exploration and evaluation
assets are unlikely to be recovered through
development or sale;
assessing the accuracy of the impairment recorded for the
year as it pertained to exploration interests and
capitalisation in relation to the relinquished tenements ;
evaluating the competence, capabilities and objectivity of
management’s experts in the evaluation of potential
impairment triggers; and
assessing the appropriateness of the related financial
statement disclosures.
Asset Acquisition Notes 3 & 11
The Group acquired Sun Minerals Pty Ltd and its controlled
entities, which hold options for mining concessions within
Mexico, for total consideration of $10,819,601. Consideration
included $10,257,784 of equity instruments of the Group.
The risk is that the assessment of whether the acquisition falls
within the scope of AASB 3 Business Combinations, or is of
an asset or group of assets that do not constitute a business
and is therefore outside the scope of AASB 3. Another risk is
that the assignment of the initial measurement of the carrying
value of assets and liabilities based on relative fair value is
inappropriate.
This is a key audit matter due to the size of the acquisition
which has a pervasive impact on the Group’s financial
statements.
Our procedures included, amongst others:
assessing whether the transaction should be treated as an
asset acquisition or business combination, in accordance
with Australian Accounting Standards;
reading the relevant purchase agreement to identify
consideration components;
testing the mathematical accuracy of the calculations
prepared by management;
reviewing management’s assessment of the assets
acquired through the transaction and the value attributed
to the assets;
assessing the adequacy of the Groups disclosures within
the financial statements.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar2_2020.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 the Directors’ report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of Mithril Resources Limited, for the year ended 30 June 2020 complies with
section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B K Wundersitz
Partner – Audit & Assurance
Adelaide, 30 September 2020
Mithril Resources Limited
Shareholder information
30 June 2020
The shareholder information set out below was applicable as at 17 September 2020.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
GARRY THOMAS & NANCY-LEE THOMAS
TRIMIN PTY LTD
MR DUDLEY ROY LEITCH
MR HALL HERBERT STEWART
NORTHERN STAR NOMINEES PTY LTD
MR STEPHEN LAYTON
COVENANT HOLDINGS (WA) PTY LTD
JENNINGS FAMILY INVESTMENTS PTY LTD
MIGUEL ANGEL MATAS MARTINEZ
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ALTOR CAPITAL MANAGEMENT PTY LTD
UBS NOMINEES PTY LTD
MGL CORP PTY LTD
PENAUSE PTY LTD
MR ARTHUR CHARLAFTIS
LOCKWOOD SUPERANNUATION FUND PTY LTD
MR DANIEL EDDINGTON & MRS JULIE EDDINGTON
IRX ENTERPRISES PTY LTD
MR ADRIAN MATHEW LIPPI
MR MARK LIPPI & MRS KELLY LIPPI
Share buy-back
There is no current on-market share buy-back.
54
Number
of holders
of options
over
ordinary
shares
Number
of holders
of ordinary
shares
304
328
173
1,424
1,081
3,310
814
-
1
-
-
3
4
1
Ordinary shares
Number held
% of total
shares
issued
285,685,273
221,663,615
124,051,195
114,979,409
110,500,000
110,500,000
60,000,000
34,308,514
32,000,000
31,785,639
20,000,000
19,434,388
18,640,000
18,143,573
14,820,228
12,500,000
10,000,000
10,000,000
10,000,000
10,000,000
1,269,011,834
13.69
10.62
5.94
5.51
5.29
5.29
2.87
1.64
1.53
1.52
0.96
0.93
0.89
0.87
0.71
0.60
0.48
0.48
0.48
0.48
60.78
Mithril Resources Limited
Shareholder information
30 June 2020
Unquoted equity securities
There are no unquoted equity securities.
Substantial holders
Substantial holders in the Company are set out below:
GARRY THOMAS & NANCY-LEE THOMAS
TRIMIN PTY LTD
MR DUDLEY ROY LEITCH
MR HALL HERBERT STEWART
NORTHERN STAR NOMINEES PTY LTD
MR STEPHEN LAYTON
Voting rights
The voting rights attached to equity securities are set out below:
Ordinary shares
Number held
285,685,273
221,663,615
124,051,195
114,979,409
110,500,000
110,500,000
% of total
shares
issued
13.69
10.62
5.94
5.51
5.29
5.29
Ordinary shares
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.
Options
No voting rights.
There are no other classes of equity securities.
Securities subject to voluntary escrow
Class
Fully paid ordinary shares
Expiry date
27 May 2022
Number
of shares
657,523,066
The vendors of Sun Minerals Pty Ltd agreed to a voluntary escrow of 657,523,066 fully paid ordinary shares received as
part of the consideration from its acquisition by the Group.
List of Australian tenements
Project
Huckitta
Kurnalpi Area
Kurnalpi Area
Kurnalpi Area
Kurnalpi Area
Lignum Dam Area
Lignum Dam Area
Lignum Dam Area
Murchison Area
Murchison Area
Neutral Junction
West Kimberley Area
West Kimberley Area
West Kimberley Area
Tenement number
EL26942
E28/2506
E28/2567
E28/2682
E28/2760
E27/538
E27/582
E27/584
E20/846
E57/1069
EL24253
E04/2497
E04/2503
E80/5191
55
Interest
owned %
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
33.30
100.00
100.00
100.00
Mithril Resources Limited
Shareholder information
30 June 2020
Mexican operations
Concession
LA SOLEDAD
EL COMETA
SAN MANUEL
COPALQUIN
EL SOL
EL CORRAL
Concession title number
52033
164869
165451
178014
236130
236131
Interest
owned %
10.00
10.00
10.00
10.00
10.00
10.00
Sun Minerals, a wholly owned subsidiary of Mithril, holds the exclusive option to earn up to a 100% interest in the
concessions forming the Copalquin Gold Silver Project in Durango, Mexico. Further details are disclosed in note 11.
56