Metalicity Limited
For the year ended 30 June 2019
Corporate Directory
Directors
Mathew Longworth – Non-executive Chairman
Jason Livingstone – Managing Director
Justin Barton – Finance Director
Andrew Daley – Non-executive Director
Company Secretary
Neil Hackett
Auditors
Stantons International
Level 2
1 Walker Avenue
WEST PERTH WA 6005
Solicitors
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
PERTH WA 6000
Bankers
ANZ
Cnr Hay and Outram Street
WEST PERTH WA 6005
Registered Office
6 Outram Street
WEST PERTH WA 6005
Telephone:
Facsimile:
+61 8 9324 1053
+61 8 9324 3366
Share Registry
Link Market Services Limited
Level 14
152 St Georges Terrace
PERTH WA 6000
Investor Enquiries:
Facsimile:
1300 554 474
(02) 9287 0303
Securities Exchange Listing
Securities of Metalicity Limited are listed on the Australian Securities Exchange (ASX).
ASX Code: MCT
Web Site: www.metalicity.com.au
1
Contents
Directors’ report
Auditor’s independence declaration
Independent auditor’s report
Directors’ declaration
Annual financial statements
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Australian Securities Exchange (ASX) Additional Information
Page
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61
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Directors’ Report
The Directors of Metalicity Limited submit herewith the annual financial report of the Company and its
subsidiaries (the “Group”) for the financial year ended 30 June 2019.
Officers and Directors
The names and particulars of the Directors of the Company during or since the end of the financial year
are:
Name
Particulars
Mathew Longworth Non-Executive Chairman (appointed Chairman on 1 July 2019)
Jason Livingstone Managing Director (appointed 1 July 2019)
Justin Barton
Finance Director
Andrew Daley
Non-Executive Director (resigned as Chairman on 1 July 2019)
Mathew Gauci
Managing Director (appointed 26 September 2012 – resigned 10 January 2019)
The above-named Directors held office during and since the financial year, except as otherwise
indicated.
Principal Activities
The Group’s principal activity as at the date of this report is mineral exploration and development.
Review of Operations and Results
Throughout the year the Company completed a strategic review of its mineral project operations and
refocussed Metalicity’s activities to drive value to shareholders. As part of this review, the Company
identified and executed acquisitions of some key projects in Western Australia, with a strong primary focus
on the Kookynie and Yundamindra gold projects, where exploration has yielded immediate and highly
encouraging results.
Kookynie & Yundamindra Gold Projects
On the 6th May 2019 the Company announced it had entered into a farm-in agreement with Nex Metals
(ASX: NEX) for the Kookynie and Yundamindra projects, which has seen Metalicity enter the Eastern
Goldfields region to explore for precious metals.
Under the agreement with Nex Metals the Company has the right to farm-in to the projects for an initial
spend of $500,000 within the first 12 months with the right to earn a 51% interest in the projects by
spending an additional $5 million within five years.
As of 31st August 2019, the Company had spent a total of $379,658 at the projects through an exploration
program as well as the purchase of (i) an additional prospecting tenement adjacent to the Champion Lease
and (ii) two farm in agreements.
The Kookynie and Yundamindra Projects are located approximately 180km north of the town of Kalgoorlie,
and present the opportunity to develop a high-grade gold resource based off historic exploration within the
region.
The Kookynie project hosts the historical mining centres of Diamantina-Cosmopolitan-Cumberland, known
as the DCC trend, as well as McTavish, Leipold, Champion and Altona.
Each of the historic mining operations were highly successful, with the Cosmopolitan gold mine producing
360,000 ounces of gold from discovery from 1895 to 1922. During the early part of last century, the
Cosmopolitan mine ranked as one of the largest and most profitable gold mines in Western Australia.
These former mining operations have remained untested by modern exploration, particularly the potentially
rich plunge extensions of the main mineralised shoots.
3
A JORC 2012 compliant Exploration Target has been developed based off previous production and
exploration work.
Directors’ Report
Project: Kookynie
Grade Range
Tonnage Range
Ounces
Prospect
Diamantina-Cosmopolitan-Cumberland (DCC) Trend
The Champion Prospect
The McTavish Prospect
The Leipold Prospect
Lower g/t Au Upper g/t Au Lower tonnes Upper Tonnes Lower ounce range Upper Ounce Range
250,000
60,000
100,000
100,000
500,000
300,000
500,000
750,000
Table 1 – Kookynie Gold Project Exploration Target(1)
250,000
120,000
80,000
500,000
150,000
20,000
30,000
30,000
15.0
6.0
4.0
4.0
10.0
3.6
1.8
1.5
(1) Please note the “Exploration Target” cautionary statement: The potential quantity and grade is
conceptual in nature and there has been insufficient exploration to estimate a Mineral
Resource. It is uncertain if further exploration will result in the estimation of a Mineral
Resource.
Based on the above tabulation the Kookynie Gold Project has a total Exploration Target of between 230,000
and 510,000 ounces.
At Cosmopolitan, the mineralisation is extrapolated some 150 metres to 200 metres down dip from historic
workings to estimate the Exploration Target. No mineralisation is assumed within the area of historic
workings. The upper end grade is estimated to be the historic mined grade.
At Diamantina and Cumberland, mineralisation is extrapolated up to 250 metres to 350 metres down dip and
500 metres along strike. The maximum grade is assumed to be the historically mined grade of Cosmopolitan
as the Diamantina and Cumberland are strike continuations of that mineralisation.
At Champion, McTavish and Leipold, the mineralisation is extrapolated between 100 metres to 120 meters
down dip and along strike. The upper grade is assumed to be between 4 g/t Au and 6 g/t Au based on
averages of significant drill hole intersections within the structures hosting mineralisation.
Preliminary Kookynie Exploration
Post the financial year end Metalicity completed an initial round of exploration drilling at Kookynie to test
plunge extensions at the historic mining centres, with a series of highly prospective results confirming
significant mineralisation potential (See ASX Announcement “Metalicity Confirms Mineralisation” dated
31/07/19).
Results included:
• Cosmopolitan – 2 metres @ 22.1 g/t Au from 76 metres.
• McTavish – 4 metres @ 6.4 g/t Au from 67 metres, including 1m @ 15.47 g/t Au from 67m.
• Cumberland – 2 metres @ 1.4 g/t Au from 72 metres
• Diamantina – mineralised zone over 9 metres with:
o 0.72 metres @ 3.1 g/t Au from 167 metres,
o 0.21 metres @ 8.8 g/t Au from 173.07 metres
o 1.15 metres @ 1.5 g/t Au from 174.85 metres.
• Channel sampling of the exposed DCC Trend structure in the Cumberland Pit returns 1.85 metres
@ 4.3 g/t Au, including 0.68 metres at 7.1 g/t Au.
The table below summarises the significant intercepts returned from this recent drilling programme.
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Directors’ Report
MGA94_Zone 51 South
Prospect
Hole ID
Tenement
Hole
Type
Collar
Easting
Collar
Northing
Collar
RL
Dip
Magnetic
Azimuth
Final
Depth
(m)
From
(m)
To (m)
McTa vi s h McTRC0001 M40/77
RC
350,647
6,754,118
423
-60
270
94
i ncl udi ng
67
67
71
68
Down
Hole
Width
4
1
Grade
(Au g/t)
6.4
15.47
Comments
4m @ 6.4 g/t Au from 67m
Cha mpi on CPRC0001
M40/27
RC
352,224
6,757,503
417
-60
270
112
Stope fi l l i nters ected - s tructure pres ent, but mi ned out.
DCC Trend CDRCDD0001 M40/61
RC/DD
tai l
354,377
6,753,209
427
-60
270
186.33
173.07
173.28
167
167.72
0.72
0.21
1.15
2
3.1
8.8
1.5
1.4
0.72m @ 3.1 g/t Au from 167m
0.21m @ 8.8 g/t Au from 173.07
1.15m @ 1.5 g/t Au from 174.85m
2m @ 1.4 g/t Au from 72m
174.85
72
176
74
Structure di l uted by Proterozoi c Dol eri te Dyke
DCC Trend CLRC0001
M40/61
RC
354,153
6,754,058
429
-90
DCC Trend CDDD0001
E40/332 DD
354,728
6,753,398
432
-60
270
270
136
529.5
DCC Trend CDRC0001 M40/61
RC
354,284
6,753,513
430
78
270
Table 2 – Significant Drill Hole Intercepts
148
-60
76
2
22.1
2m @ 22.1 g/t Au from 76m
This preliminary programme tested the DCC Trend, as well as a single hole into McTavish and Champion.
Please refer to Figure 1 for Prospect, tenure and drill hole collar locations.
The DCC Trend was inspected by four holes: CDRC0001, CDDD0001, CLRC0001, and CDRCDD0001.
Figure 1 – Kookynie Prospect Locality Map with recent drill holes and mineralised trends.
CDRC0001 was designed to test the area between Diamantina and Cosmopolitan. Historically, reports
show that drive development occurred in this area, The Exploration Target completed by the Company
assumed that areas of historical workings have zero potential and the location was chosen to test this
concept.
The drill hole was highly successful in not only intersecting the structure but showing that underground
development in this area is restricted to drive development only. Significant mineralisation still exists in this
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Directors’ Report
area. Given the reasonably shallow depth of the intercept and the lack of historical drilling in the drill hole
vicinity, CDRC0001 has demonstrated that a sizeable portion of this structure is present and remains
available for mineral resource definition.
Similarly, CDRCDD0001 and CLRC0001 which were designed to test the down plunge aspect of the
Diamantina and Cumberland areas respectively, also intersected the DCC Trend structure returning
mineralised zones.
The Company completed a single Reverse Circulation (RC) drill hole at the McTavish Prospect
(McTRC0001) to a depth of 94 metres in an area that is below the known historical workings and
significantly down dip from historical drilling.
The drill hole intersected the structure, demonstrating the down dip continuance of mineralisation beyond
the previously defined limits of drilling, and returned an intercept of 4 metres @ 6.4 g/t Au from 67 metres
which is highly encouraging.
Channel sampling from the Cumberland Pit vein exposure returned up to 7.1 g/t Au, and 1.85 metres at 4.3
g/t Au from a vertical depth of 28 metres. The Cumberland Pit was mined by Golden Valley Mines NL in
1989 to a vertical depth of 36 metres. Channel sampling results are available in Table 3.
Channel sample start coordinate (MGA94 Z51S) - *354,035mE, 6754161mN 399RL
Location
Cumberland Pit
Cumberland Pit
Cumberland Pit
Cumberland Pit
Cumberland Pit
Cumberland Pit
From (m)
To (m)
Sample Type
0
0.52
1.2
2.37
3.86
4.75
0.52 Channel
1.2 Channel
2.37 Channel
3.86 Channel
4.75 Channel
5.56 Channel
Comments
Footwall
Footwall lode - true width 48cm
Inter-Lode Zone
Inter-Lode Zone
Hanging wall lode - true width 56cm
Hanging wall lode - true width 56cm
Au g/t
0.3
7.1
2.7
0.9
0.7
0.7
*Note – handheld GPS location, zone is approximately 28 metres below the natural land surface.
Table 3 – Cumberland Pit Channel Sample
Fraser Range North
During the financial year, the Company also acquired two projects in the northern Fraser Range (E69/3676
and E69/3677), which are prospective for magmatic Copper-Nickel mineralisation.
Historic diamond drilling by Kennecott was conducted at these sites in 1980 targeting Olympic Dam-style
mineralisation. Although the exploration was not viewed as successful at the time, it did intersect mafic
intrusive rocks with trace chalcopyrite. Chalcopyrite is a copper sulphide mineral and a common component
of Fraser Range-style VMS nickel copper deposits.
The Company immediately sought to further inspect the drill cores, with samples for polished thin sections
taken from both drill holes (N3-1 and N1-1) to understand the mineralogy of specific fractions within the
layered mafic.
A total of 39 samples (four from N1-1 on E69/3676 and 35 from N3-1 on E69/3677) were submitted to Intertek
Genalysis for further analysis so as to understand the mineralogy of specific fractions within the layered mafic.
The samples were also subjected to a Nickel Sulphide Collection Fire Assay and Comprehensive
lithogeochemical characterisation analysis.
While the test work returned sub-economic grade intercepts, the Company is very excited by
the results. They demonstrate the presence of anomalous mineralisation in an area which was not
originally targeting Fraser Range style nickel-copper and thus received no further modern base metals
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Directors’ Report
exploration. It is notable that this discovery has also been made in a region which has delivered globally
significant nickel-copper projects, such as the Nova-Bollinger mine and the Silver Knight deposit.
Whilst the core sampling work illustrates that the geological model of an anomalous layered mafic intrusion
is present, geophysical modelling was also conducted to better understand the nature of the anomalous
intrusions.
The Company has reprocessed publicly available gravity data to understand the structural framework of the
region. Results illustrated that both E69/3676 and E69/3677 host deep seated structures/gravity ridges
which represent regional conduits for potential mineralisation. 3D magnetic inversion techniques were also
applied to these results, see Figure 2 and 3.
Figure 2 – E69/3677 Magnetic Inversion Cross Section with Kennecott Drill Hole Annotated.
Figure 3 – E69/3676 Magnetic Inversion Cross Section with Kennecott Drill Hole Annotated.
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Directors’ Report
The modelling highlighted that the two drill holes completed by Kennecott Explorations (Australia) Ltd. did
not adequately test the gravity or the magnetic anomalies with regards to magmatic Cu-Ni layered mafic
intrusives. The work also highlighted that the possible location of sulphidic bodies within or on the edges of
the 3D magnetic inversion model.
Paterson Range
Metalicity also holds a strong presence in the prolific Paterson Range region of Western Australia, increasing
its landholding with a series of project applications prospective for nickel, copper, gold and possible PGM
mineralisation.
Figure 4 – Metalicity Limited’s Project Locations.
The most recent Project Area Applications include a priority target at Warburton, as well as other anomalies
at Paterson South and Pandora.
Warburton covers a large copper horizon spanning approximately 80km. Analysis conducted by the Company
has highlighted this horizon as a priority-one target and the Company has moved to acquire approximately
1,200km2 of this highly prospective area.
8
Directors’ Report
Previous exploration within the Warburton area extends back to the 1960’s with a major exploration campaign
conducted by WMC from 1966 to 1971. During this time, WMC identified some 200 copper mineral
occurrences and geochemically anomalous soils over a significant strike length. The Company believes
modern geophysical and geochemical methods, coupled with data collection processing capabilities offers a
unique opportunity to refine and add to the collected data to develop a successful exploration campaign.
The Paterson South Project, has several strong discrete magnetic anomalies coincident with basement highs
and gravity ridges. The Company believes these coincident geophysical anomalies are analogous to
Greatland Gold’s Haverion Prospect. Given the similarities to known mineralisation and the strong correlation
of these coincident gravity and magnetic anomalies, Metalicity has sought to expanded its footprint with
~1,200km2 of exploration license applications.
The Pandora Project is a large cluster of magnetic highs which coincides with known mineralisation at the
Pandora Ni-Cu-PGE-Au prospect. The Pandora Prospect was first drilled by Cassini Resources in 2013,
which noted highly anomalous copper and nickel results. Whilst sub-economic grades were returned,
Metalicity believes, given the Company’s interrogation of available datasets, that the work was not optimised
for the target styles and a more relevant work program should be adopted.
The Company has also applied for exploration licenses at Mandora and Desert Queen, covering a total area
of 2,166 km2. Initial project evaluation was undertaken using geophysical and geological data compilation
which revealed four target areas for further inspection.
Admiral Bay
Metalicity is the largest shareholder in Canadian company Kimberley Mining Limited (KML), (81.1%), KML
holds the Admiral Bay Zinc Project and incidental zinc assets.
KML’s strategy has been to list on the TSXV. Capital markets in North America and in particular Canada have
been exceptionally difficult leading to the deferral of the listing on several occasions. KML is undertaking a
strategic review, with a view to raising interim capital and considering the most supportive exchange for the
revised direction.
Metalicity continues to provide limited assistance on commercial terms to KML through this period with a view
to maximising benefits to all shareholders.
Disclaimer and Forward Looking Statements
This report is not a prospectus nor an offer of securities for subscription or sale in any jurisdiction nor a
securities recommendation. The information in this report is an overview and does not contain all information
necessary for investment decisions. In making investment decisions, investors should rely on their own
examination of Metalicity Limited and consult with their own legal, tax, business and/or financial advisers in
connection with any acquisition of securities. The information contained in this report has been prepared in
good faith by Metalicity Limited. However, no representation or warranty, express or implied, is made as to
the completeness or adequacy of any statements, estimates, opinions or other information contained in this
report. To the maximum extent permitted by law, Metalicity Limited, its directors, officers, employees and
agents disclaim liability for any loss or damage which may be suffered by any person through the use of, or
reliance on, anything contained in or omitted from this report. Certain information in this report refers to the
intentions of Metalicity Limited, but these are not intended to be forecasts, forward looking statements, or
statements about future matters for the purposes of the Corporations Act (Cth, Australia) or any other
applicable law. The occurrence of events in the future are subject to risks, uncertainties and other factors
that may cause Metalicity Limited’s actual results, performance or achievements to differ from those referred
to in this report to occur as contemplated. The report contains only a synopsis of more detailed information
to be published in relation to the matters described in this document and accordingly no reliance may be
placed for any purpose whatsoever on the sufficiency or completeness of such information and to do so could
potentially expose you to a significant risk of losing all of the property invested by you or incurring by you of
additional liability. Recipients of this report should conduct their own investigation, evaluation and analysis of
the business, data and property described in this document. In particular, any estimates or projections or
9
opinions contained herein necessarily involve significant elements of subjective judgment, analysis and
assumptions and you should satisfy yourself in relation to such matters.
Directors’ Report
Competent Person Statement
Competent Person Statement Regarding Napier Range Zinc Project
See Metalicity Announcement 30/10/17
Competent Person Statement Regarding Admiral Bay Project
See Metalicity ASX Announcement 19/04/2017.
10
Directors’ Report
Tenement Schedule
The following table shows the tenements the Group has an interest in at 30 June 2019:
Project
TEN ID
Admiral Bay(1)
ML04/244
Admiral Bay(1)
ML04/249
Admiral Bay(1)
EL04/1610
Munglinup
Madoonia Downs
Emanuel Range(1)
Pilbara East(1)
Napier(1)
Napier Range(1)
Napier Range(1)
EL74/550
E15/1611
E04/2259
E04/2453
G04/0020
M04/0161
M04/0162
Holder
Kimberley Mining Australia Pty Ltd
100%
Kimberley Mining Australia Pty Ltd
100%
Kimberley Mining Australia Pty Ltd
100%
Metalicity Energy Limited 100%
Metalicity Energy Limited 100%
Ridgecape Holdings Pty Ltd 100%
Ridgecape Holdings Pty Ltd 100%
Ridgecape Holdings Pty Ltd 100%
Ridgecape Holdings Pty Ltd 100%
Ridgecape Holdings Pty Ltd 100%
Granted
Expires
21/03/1991
20/03/2033
21/03/1991
20/03/2033
04/09/2007
03/09/2019
22/01/2015
30/01/2018
04/07/2016
13/09/2017
03/03/1989
31/12/1987
31/12/1987
21/01/2020
29/01/2023
03/07/2021
12/09/2022
02/03/2031
30/12/2029
30/12/2029
(1)Tenements vended into subsidiary, Kimberly Mining Limited, during year ended 30 June 2019.
Results
The loss after income tax for the year ended 30 June 2019 was $4,410,376 (30 June 2018: loss $2,302,570).
Significant changes in state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Environmental regulations
The Group is aware of its environmental obligations with regards to its exploration activities and ensures that
it complies with all regulations when carrying out exploration work.
Dividends
No dividends have been paid or declared since the beginning of the financial year and none are
recommended.
Subsequent events
Other than the following, the directors are not aware of any significant events since the end of the reporting
period which significantly affect or could significantly affect the operations of the consolidated entity in future
financial years:
On 27 August 2019, the Company announced a placement to raise $123,000 and a rights issue to raise up
to $936,634 , proposed to close on 26 September 2019. On 16 September 2019, the Company announced
and extension of Closing Date of the rights issue to 2 October 2019.
Likely developments and expected results of Operations
The Group will continue to explore and assess its mineral projects.
11
Directors’ Report
Information on Directors
Jason Livingstone - Managing Director – appointed 1 July 2019
Experience and Expertise
Mr Livingstone is a geologist with 20 years’ experience across exploration through to production environments
on four continents. Mr Livingstone holds a Bachelor of Science (Geology) from the West Australian School
of Mines, a Masters of Business Administration from the Curtin Graduate School of Business, is a member
of the Australian Institute of Geoscientists and the Australian Institute of Mining and Metallurgy, and has
completed the Company Directors Course at the Australian Institute of Company Directors.
Other Current Directorships
None
Former Directorships in the Last Three Years
None
Special Responsibilities
None
Interests in Shares and Options
4,000,000 unlisted options
Mathew Longworth - Non-executive Chairman – appointed 1 July 2019 (previously Chief Executive
Officer since 10 January 2019 and Non-executive Board member since 29
September 2014)
Experience and Expertise
Mr Longworth is a geologist with 30 years’ experience across exploration, project evaluation/development,
operations and corporate management. He previously held roles as Exploration Manager, COO and
CEO/Managing Director with Australian listed companies, and mining analyst with a boutique investment
fund. In his senior corporate roles, Mathew led multidisciplinary project evaluation and development teams.
Mr. Longworth is a member of the Australasian Institute of Mining and Metallurgy.
Other Current Directorships
None
Former Directorships in the Last Three Years
None
Special Responsibilities
Chair of the Audit Committee
Interests in Shares and Options
634,167 ordinary shares and 10,200,000 unlisted options
12
Directors’ Report
Justin Barton –
Finance Director – appointed 1 January 2018
Experience and Expertise
Mr Barton is a Chartered Accountant with over 20 years experience in accounting, international finance, M&A
and the mining industry. He worked for over 13 years in the Big 4 Accounting firms in Australia and Europe
and advised many of the worlds largest mining, oil & gas companies and financial institutions, including Rio
Tinto, Chevron, Macquarie, Merrill Lynch, Morgan Stanley and Deutche Bank. Justin also worked for 4 years
at Paladin Energy Limited as Group Tax and Finance Manager. More recently, he has worked as the CFO
and has been a Board Member of a number of junior exploration companies.
Other Current Directorships
None
Former Directorships in the Last Three Years
Eneabba Gas Limited (appointed 1 March 2017, resigned 10 October 2017)
Interposed Holdings Limited (appointed 10 January 2017, resigned 11 December 2017)
Special Responsibilities
Finance Director, member of the Audit Committee and the Remuneration and Nomination Committee.
Interests in Shares and Options
777,778 ordinary shares and 13,500,000 unlisted options
Andrew Daley -
Non-executive Director – appointed 1 July 2019 (previously Non-executive
Chairman since 19 August 2013)
Experience and Expertise
Mr Daley is a Mining Engineer and Investment Banker. He has a Bachelor of Science (Honours), is a
Chartered Engineer (UK), a Fellow of the Australasian Institute of Mining and Metallurgy and Member
of IOM3 (UK). He has over 45 years’ experience in resources having worked with Anglo American Corp,
Rio Tinto, Conoco Minerals and Fluor Australia in mining operations, project evaluation and mining
development. Mr Daley then moved into resource project finance with National Australia Bank, Chase
Manhattan and from 1999 was a Director of the Mining Team at Barclays Capital in London.
Subsequently, Mr Daley was a Director of Investor Resources Finance Pty Limited, a company based
in Melbourne which provided financial advisory services to the resources industry globally.
Other Current Directorships
None
Former Directorships in the Last Three Years
None
Special Responsibilities
Chairman of the Audit and Risk Committee and the Remuneration and Nomination Committee.
Interests in Shares and Options
3,678,036 ordinary shares and 12,750,000 unlisted options.
Company Secretary
The company secretary is Neil Hackett. Neil was appointed to the position of company secretary on 4
December 2014. Neil has over 20 years of company secretarial, compliance and company directorship
experience, including 10 years with the ASIC and seven years as an ASX 200 listed company secretary. He
is currently Chairman, Director and Company Secretary of various ASX listed and private entities. Neil holds
a Bachelor of Economics, is a Fellow of FINSIA, and is a Graduate and Facilitator with the Australian Institute
of Company Directors.
13
Directors’ meetings
Directors’ Report
The number of meetings of the Company’s board held during the year ended 30 June 2019 that each director
was eligible to attend, and the number of meetings attended by each director were:
Director
Number of Meetings
Eligible to attend
Attended
Matthew Gauci
Andrew Daley
Justin Barton
Mathew Longworth
13
20
20
20
5
20
20
20
Remuneration Report (Audited)
The Remuneration Report is set out under the following main headings:
(1) Principles used to determine the nature and amount of remuneration;
(2) Details of remuneration;
(3) Service agreements;
(4) Share-based compensation; and
(5) Share and option holdings of Key Management Personnel (KMP)
The information provided in this Remuneration Report has been audited as required by Section 308(3C) of
the Corporations Act 2001.
1
Principles used to determine the nature and amount of remuneration
The objective of the Group’s executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with achievement of
strategic objectives and the creation of value for shareholders, and conforms to market best practice for
delivery of reward. The board ensures that executive reward satisfies the following key criteria for good
reward governance practices:
(i) competitiveness and reasonableness;
(ii) acceptability to shareholders;
(iii) performance linkage / alignment of executive compensation;
(iv) transparency; and
(v) capital management.
The Group has structured an executive remuneration framework that is market competitive and
complimentary to the reward strategy of the organisation.
Alignment to shareholders’ interests:
focuses on sustained growth in shareholder wealth; and
(i)
(ii) attracts and retains high calibre executives.
Alignment to program participants’ interests:
(i)
rewards capability and experience; and
(ii) provides a clear structure for earning rewards.
14
Directors’ Report
Remuneration Report (audited) (continued)
2
Details of remuneration
Executive fees
The fees and payments to the executive reflect the demands which are made on, and the responsibilities of
the executive, and are in line with market. The executives’ remuneration is reviewed annually by the board
to ensure that the fees and payments remain appropriate and in line with the market.
The remuneration packages of the Executives are detailed below under “Service agreements”.
Non-executive directors
Fees to the non-executive directors are determined by the Remuneration Committee as appropriate having
regard to the market and the aggregate remuneration specified in the Company’s Constitution and determined
by the shareholders in general meeting. The fees are reviewed annually.
Retirement allowances and benefits
There are no retirement or termination allowances, or benefits paid to directors.
The amount of remuneration of the directors of the Company (as defined in AASB 124 Related Party
Disclosures) and other key management personnel is set out in the following table.
Short term benefits
Post
employment
benefits
Equity settled
share based
payments
2019
Salary,
fees &
leave
Annual
leave
Other
Super-
annuation
Options
Total
Performance
related %
Executive director
Matthew Gauci(a)
Justin Barton
Non-executive directors
Andrew Daley (b)
Mathew Longworth (c)
Other executives
Jason Livingstone (d)
Leonardo Romero (e)
Neil Hackett (f)
Totals
162,003
182,656
-
6,556
140,000
-
21,771
17,352
-
5,894
323,774
212,458
83,750
55,833
67,732
19,433
54,400
625,807
-
-
-
143,909
5,269
-
-
11,825
-
-
-
283,909
-
-
6,435
1,846
-
47,404
-
-
83,750
199,742
10,795
-
-
16,689
90,231
21,279
54,400
985,634
0.0%
2.8%
0.0%
0.0%
12.0%
0.0%
0.0%
15
Remuneration Report (audited) (continued)
Directors’ Report
Short term benefits
Post
employment
benefits
Equity settled
share based
payments
2018
Salary,
fees &
leave
Annual
leave
Other
Super-
annuation
Options
Total
Performance
related %
Executive director
Matthew Gauci
Justin Barton
Non-executive directors
Andrew Daley (b)
Mathew Longworth (c)
Chris Bain (g)
Other executives
Leonardo Romero
Pip Darvall (h)
Neil Hackett (f)
Totals
275,000
173,516
(5,645)
4,448
-
-
90,000
60,000
27,397
182,648
78,870
48,000
935,431
-
-
-
2,107
-
-
910
-
7,500
-
-
-
7,455
14,955
26,125
16,484
-
-
2,603
17,352
-
-
62,564
-
-
-
-
-
295,480
194,448
90,000
67,500
30,000
259,970
57,863
78,870
-
15,360
70,815
73,223 1,087,083
0.0%
0.0%
0.0%
0.0%
0.0%
22.3%
0.0%
21.7%
The fees paid to director related entities were for the provision of services of the particular director to the
Company are as follows:
(a) Matthew Gauci resigned on 9 January 2019 and was paid a termination payment of $137,500. An
associated entity of Mr Gauci, Macro Capital Partners, has a post termination consultancy agreement
for $500 a month for 18 months, of which $2,500 was paid during the year.
(b) Dalenier Enterprises Pty Ltd, an entity associated with Andrew Daley, was paid or is payable $83,750
(2018: $90,000) for director’s fees.
(c) Mat Mining Pty Ltd, an entity associated with Mathew Longworth, was paid $199,742 (2018: $67,500)
for director’s fees and consultancy services.
(d) Jason Livingstone was appointed as Exploration Manager on 18 February 2019 and Managing Director
on 1 July 2019.
(e) Leonardo Romero resigned on 31 August 2018.
(f) Corporate Starboard Pty Ltd, an entity associated with Neil Hackett, was paid or is payable $54,400
(2018: $70,815).
(g) Chris Bain resigned as Non-executive Director on 1 January 2018.
(h) Pip Darvel’s contract ended in October 2017.
Short term incentives
Short term incentives (STI) are an ‘at risk’ component of senior employees remuneration packages and are
awarded based on annual review of past year’s performance against specific goals.
No STI’s were paid during the year ended 30 June 2019.
Long term incentives
Long term incentives (LTI) are “at risk” benefits awarded to the Managing Director and potentially senior
executives for achieving certain specified goals related to the long term growth and development of the
Group.
LTI’s were awarded to Jason Livingstone and Justin Barton during the year ended 30 June 2019.
16
Directors’ Report
Remuneration Report (audited) (continued)
Service agreements
3
Directors
There is an Executive Contract with Jason Livingstone, to perform the function of Managing Director from 1
July 2019 until termination in accordance with the contract. The details are:
1. Remuneration of $230,000 per annum (including superannuation and directors fees) subject to an
annual review;
2. The Company may pay a performance based bonus of up to 50% over and above the salary;
3. The Company reimburses costs and expenses reasonably incurred;
4. Either party can terminate the agreement on six months (6) months written notice.
There was an Executive Contract with Matthew Gauci, to perform the function of Managing Director from 1
October 2013 until resignation on 9 January 2019. The details are:
1. Remuneration of $275,000 per annum (excluding superannuation but including directors fees)
subject to an annual review;
2. The Company may pay a performance based bonus of up to 50% over and above the salary;
3. The Company reimburses costs and expenses reasonably incurred;
4. Either party can terminate the agreement on three months (3) months written notice.
There are letters of director appointment with each director which set out the annual fixed fee and terms and
conditions of the appointment including compliance with the Company’s Constitution and Corporate
Governance Policies; re-election, retirement and office vacancy; duties; remuneration; insurance and
indemnity; disclosure of interests; and confidentiality. They serve until they resign, are removed, cease to be
a director or prohibited from being a director under the provisions of the Corporations Law 2001, or are not
re-elected to office. They are remunerated on a monthly basis with no termination payments payable.
It is the Group’s policy that service contracts for non-executive directors are unlimited in term and capable of
termination by either party upon written notice.
Key Management Personnel
There is a Consultancy Agreement with Corporate Starboard Pty Ltd for Neil Hackett to perform the function
of Company Secretary, commencing 1 December 2014 until the termination of the contract. The details are:
1. Monthly retainer of $4,000 exclusive of GST per month. Additional time to be charged at $175/hr;
and
2. Either party can terminate the agreement by giving two weeks written notice
In the case of wilful or fraudulent misconduct, the Group retains the right to terminate all service contracts
without notice.
Key management personnel are entitled to receive on termination of employment their statutory entitlements,
including any accrued annual and long service leave, together with any superannuation benefits. Each service
contract outlines the components of compensation paid to the key management personnel but does not
prescribe how compensation levels are modified year to year.
17
Directors’ Report
Remuneration Report (audited) (continued)
4
Share-based compensation
During the financial year, the following options for Directors and key management personnel were granted:
During the financial year
Name
Exercise price
No. granted
Grant date
Expiry Date
Justin Barton
Justin Barton
Justin Barton
Jason Livingstone
Jason Livingstone
$0.06
$0.08
$0.10
$0.025
$0.035
2,500,000
2,500,000
2,500,000
2,000,000
2,000,000
27/07/2018
27/07/2018
27/07/2018
10/04/2019
10/04/2019
26/08/2021
26/08/2021
26/08/2021
14/01/2022
14/01/2022
Value of
options
granted at
grant date (a)
$3,725
$1,526
$643
$5,961
$4,834
No options issued to directors or key management personnel were exercised during the year. No options
issued to directors or key management personnel were cancelled during the year.
5
Share and option holdings of Key Management Personnel (KMP)
(i) Option and performance right holdings
The numbers of options over ordinary shares in the Company held during the financial year by each KMP,
including their personally related parties, are set out below:
Granted
during the
year
Exercised
during the
year
Other
changes
during the
year
Balance at
the end of
the year
Vested and
exercisable
at the end
of the year
Vested but
not
exercisable
at end of
year
2019
Directors
Matthew Gauci
Andrew Daley
Justin Barton
Balance at
the start
of the
year
33,500,000
12,750,000
-
-
6,000,000
7,500,000
Mathew Longworth
10,200,000
-
Other executives
Jason Livingstone
-
4,000,000
Leonardo Romero
6,000,000
Neil Hackett
6,000,000
-
-
74,450,000 11,500,000
-
-
-
-
-
-
-
-
-
-
33,500,000
33,500,000
12,750,000
12,750,000
13,500,000
6,000,000
-
10,200,000
10,200,000
-
-
-
-
4,000,000
4,000,000
6,000,000
6,000,000
6,000,000
6,000,000
85,950,000
78,450,000
-
-
-
-
-
-
-
-
18
Directors’ Report
Remuneration Report (audited) (continued)
2018
Balance at
the start
of the
year
Granted
during
the year
Exercised
during the
year
Other
changes
during the
year
Balance at
the end of
the
year/date
of
resignation
Vested and
exercisable
at the end
of the
year/date
of
resignation
Vested but
not
exercisable
at end of
year
Options
Directors
Matthew Gauci
Andrew Daley
Justin Barton
33,500,000
12,750,000
6,000,000
Mathew Longworth
10,200,000
Chris Bain
10,200,000
Other executives
Leonardo Romero
Pip Darvall
Neil Hackett
6,000,000
6,000,000
6,000,000
90,650,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,500,000
33,500,000
12,750,000
12,750,000
6,000,000
6,000,000
10,200,000
10,200,000
10,200,000
10,200,000
6,000,000
6,000,000
6,000,000
6,000,000
6,000,000
6,000,000
90,650,000
90,650,000
-
-
-
-
-
-
-
-
-
The numbers of performance rights over ordinary shares in the Company held during the financial year by each
KMP, including their personally related parties, are set out below:
2019
Performance Rights
Leonardo Romero
Neil Hackett
2018
Performance Rights
Leonardo Romero
Neil Hackett
Balance at
the start
of the
year
Granted
during
the year
Exercised
during the
year
Other
changes
during the
year
Balance at
the end of
the
year/date
of
resignation
Vested and
exercisable
at the end
of the
year/date
of
resignation
Vested but
not
exercisable
at end of
year
1,506,846
400,000
1,906,846
-
-
-
-
-
-
-
-
-
1,506,846
400,000
1,906,846
-
-
-
-
-
-
Balance
at the
start of
the year
Granted
during the
year
Exercised
during the
year
Other
changes
during the
year
Balance at
the end of
the
year/date
of
resignation
Vested and
exercisable
at the end
of the
year/date
of
resignation
Vested but
not
exercisable
at end of
year
-
-
-
1,506,846
400,000
1,906,846
-
-
-
-
-
-
1,506,846
400,000
1,906,846
-
-
-
-
-
-
19
Remuneration Report (audited) (continued)
Directors’ Report
5
Share and option holdings of Key Management Personnel (KMP) (continued)
(ii) Share holdings
The numbers of shares in the Company held during the financial year by each director, including their
personally related parties, are set out below:
2019
Directors
Matthew Gauci
Andrew Daley
Justin Barton
Mathew Longworth
Other executives
Jason Livingstone
Leonardo Romero
Neil Hackett
2018
Directors
Matthew Gauci
Andrew Daley
Justin Barton
Mathew Longworth
Chris Bain
Other executives
Leonardo Romero
Neil Hackett
Pip Darvall
Balance at the
start of the year
Received during the
year on the
exercise of options
Other changes during
the year
Balance at the
end of the year
11,739,033
2,588,682
277,778
634,167
-
-
340,801
15,580,461
-
-
-
-
-
-
-
-
(397,000)
1,089,354
500,000
-
-
-
-
11,342,033
3,678,036
777,778
634,167
-
-
340,801
1,192,354
16,772,815
Balance at the
start of the year
Received during the
year on the exercise
of options
Other changes during the
year
11,456,428
2,172,015
-
217,500
870,000
-
339,801
-
15,055,744
-
-
-
-
-
-
-
-
-
Balance at the
end of the
year/date of
resignation
11,739,033
2,588,682
277,778
634,167
870,000
-
340,801
-
282,605
416,667
277,778
416,667
-
-
1,000
-
1,394,717
16,450,461
(End of Remuneration Report)
20
Directors’ Report
Additional Information
(a) Shares under option
At the date of this report, the Company had 175,538,837 options and 2,274,713 performance rights over
ordinary shares under issue. These options are exercisable as follows:
Details
Management incentive options
Other options
Details
No of
Options
9,500,000
8,100,000
11,500,000
8,050,000
8,050,000
8,050,000
13,000,000
13,000,000
13,000,000
2,000,000
2,500,000
2,500,000
2,500,000
2,000,000
2,000,000
1,500,000
3,000,000
1,000,000
3,000,000
5,000,000
12,766,670
26,265,023
11,257,144
3,000,000
3,000,000
175,538,837
No of
Options
Grant Date
Date of Expiry Conversion Price $
02/07/2015
02/07/2015
02/07/2015
27/11/2015
27/11/2015
27/11/2015
29/11/2016
29/11/2016
29/11/2016
29/11/2016
27/07/2018
27/07/2018
27/07/2018
10/04/2019
10/04/2019
17/02/2016
17/02/2016
18/04/2016
17/02/2016
16/01/2017
18/08/2017
21/02/2018
10/06/2019
15/03/2018
15/03/2018
23/07/2020
23/07/2020
23/07/2020
10/12/2020
10/12/2020
10/12/2020
31/12/2019
31/12/2019
31/12/2019
31/12/2019
26/08/2021
26/08/2021
26/08/2021
14/01/2022
14/01/2022
31/12/2019
31/12/2019
31/12/2019
31/12/2019
16/01/2020
18/08/2020
14/02/2023
51/05/2022
12/03/2021
12/03/2021
0.025
0.03
0.04
0.03
0.04
0.05
0.06
0.08
0.10
0.12
0.06
0.08
0.10
0.025
0.035
0.04
0.08
0.10
0.12
0.08
0.08
0.08
0.02
0.06
0.08
Grant Date
Date of Expiry Conversion Price $
Performance Rights
2,274,713
15/03/2018
15/03/2021
0.00
Refer to note 15 for details of options cancelled and exercised during the year.
At the date of this report, Kimberly Mining Limited, a Canadian subsidiary of the Company, had the following
warrants on issue:
Details
Founder Warrants
Special Warrants
Brokers Special Warrants
No of
Options
5,818,450
8,279,750
273,370
14,371,570
(b)
Insurance of officers
Grant Date
Date of Expiry Conversion Price $
29/08/2018
29/08/2018
29/08/2018
None
28/09/2023
28/09/2020
0.40
0.05
0.40
During the financial year, the Group paid a premium in respect of a contract insuring the directors of the
Company, the Company Secretary, and any executive officers of the Company and of any related body
corporate against a liability incurred as such a director, secretary or executive officer to the extent permitted
by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and
the amount of the premium.
21
Directors’ Report
Additional Information (continued)
(c) Agreement to indemnify officers
The Group has entered into agreements with the directors to provide access to Group records and to
indemnify them. The indemnity relates to any liability as a result of being, or acting in their capacity as, an
officer of the Company to the maximum extent permitted by law; and for legal costs incurred in successfully
defending civil or criminal proceedings.
No liability has arisen under these indemnities as at the date of this report.
(d) Proceedings on behalf of the Group
No person has applied to the court under Section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the
purpose of taking responsibility on behalf of the Group for all or part of those proceedings. No proceedings
have been brought or intervened in on behalf of the Group with leave of the court under Section 237.
(e) Non-audit services
No non-audit services were provided by the auditor or any entity associated with the auditor for the year
ended 30 June 2019 (2018: Nil).
(f)
Corporate Governance
The Directors of the Group support and adhere to the principles of corporate governance, recognising the
need for the highest standard of corporate behaviour and accountability. Please refer to the corporate
governance statement dated 29 September 2016 released to ASX and posted on the Company’s website
www.metalicity.com.au.
(g) Environmental Liabilities
There are no environmental liabilities at the date of this report.
Auditor’s independence declaration
The auditor’s independence declaration is included on page 23 of the annual report.
This Directors’ report is signed in accordance with a resolution of Directors made pursuant to s.298 (2) of the
Corporations Act 2001.
On behalf of the Directors
Jason Livingstone
Managing Director
Perth, Western Australia
30 September 2019
22
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
30 September 2019
The Directors
Metalicity Limited
6 Outram Street
West Perth WA 6005
Dear Sirs
RE: METALICITY LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Metalicity Limited.
As Audit Director for the audit of the financial statements of Metalicity Limited for the year ended 30
June 2019, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
(ii)
any applicable code of professional conduct in relation to the audit.
Yours faithfully,
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Samir Tirodkar
Director
Liability limited by a scheme approved
under Professional Standards Legislation
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
METALICITY LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Metalicity Limited the Company and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of
cash flows for the year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the
Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty Relating to Going Concern
Without modification to the audit opinion expressed above, attention is drawn to the following matter.
As referred to in note 2(a) to the financial report, the financial report has been prepared on a going concern
basis. At 30 June 2019, the Group had net assets of $2,792,073, cash and cash equivalents of $666,560 and
net working capital surplus of $2,586,749. The Group had incurred a loss after income tax for the year ended
30 June 2019 of $4,410,376.
The ability of the Group to continue as a going concern and meet its administration and other commitments is
dependent upon the Company raising further working capital or commercialization of its exploration assets. In
the event the Company is unable to raise further working capital or commercialize its exploration assets, the
company may not be able to meet its liabilities as they fall due, or realise its assets at their stated values.
Liability limited by a scheme approved
under Professional Standards Legislation
Key Audit Matters
In addition to the matter described in the material uncertainty related to going concern, we have determined
the matter described below to be a key audit matter to be communicated in the report.
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.
Key Audit Matters
How the matter was addressed in the audit
Carrying Value of Capitalised Exploration and
Evaluation Expenditure and Related Reversal
of Deferred Income.
Inter alia, our audit procedures
following:
included
the
as Exploration
As at 30 June 2019, Capitalised Exploration and
Evaluation Expenditure totals $2,939,073 of which
$2,734,940 is disclosed as non-current assets held
for sale (refer to Note 10 of the financial report) and
$204,133
and Evaluation
expenditure (refer to Note 11 of the financial
there was a reversal of
report). Additionally,
Deferred Income relating to the Admiral Bay Project
of $7,053,180 (refer to Note 10) following the
Board’s decision to impair Admiral Bay assets and
consequently reverse the related Deferred Income.
Exploration and evaluation expenditure incurred on
granted exploration licences is accumulated in
respect of each identifiable area of interest. These
costs are carried forward where the rights to
tenure of the area of interest are current and to the
extent that they are expected to be recouped
through the successful development of the area or
where activities in the area have not yet reached a
stage that permits reasonable assessment of the
existence of economically recoverable reserves.
The carrying value of Capitalised Exploration and
Evaluation Expenditure and Related Reversal of
Deferred Income is a key audit matter due to:
the
total Capitalised
The significance of
Exploration and Evaluation balance (70% of
total assets);
The significance of the reversal of deferred
income on the consolidated statement of
profit and loss and other comprehensive
income
The necessity
to assess management’s
application of
the
requirements of
the
for and
accounting standard Exploration
Evaluation of Mineral Resources (“AASB 6”),
in light of any indicators of impairment that
may be present; and
The assessment of significant judgements
made by management in relation to the
Capitalised Exploration and Evaluation
Expenditure.
i. Assessing the Group’s right to tenure over
exploration assets by corroborating the
ownership of
for
the relevant
mineral resources to government registries
and relevant third party documentation;
licences
ii. Reviewing the directors’ assessment of the
the exploration and
carrying value of
evaluation expenditure, ensuring
the
veracity of the data presented and that
management has considered the effect of
potential impairment indicators, commodity
the Group’s
the stage of
prices and
projects against AASB 6;
iii. Evaluation of Group documents
for
consistency with the intentions for the
continuing of exploration and evaluation
activities in certain areas of interest, and
corroborated
of
management. Inter alia, the documents we
evaluated included:
enquiries
with
Minutes of meetings of the board and
management;
Announcements made by the Group to
the Australian Securities Exchange;
and
Cash forecasts;
iv. Consideration of
the
standard AASB
requirements of
6. We
accounting
assessed
in
relation to AASB 6 to ensure appropriate
disclosures are made;
financial statements
the
v. Reviewing the director’s assessment to
impair the carrying value of the Admiral
Bay Project, and consequently reverse the
corresponding deferred income; and
vi. Consideration of the related disclosures
regarding the decision to recognise the
deferred income in the current year.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group's annual report for the year ended 30 June 2019, but does not include the financial
report and our auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor's judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the entity's preparation of the financial report that gives a true and
fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity's internal control.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial
report.
We conclude on the appropriateness of the Directors' use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures
in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that achieves
fair presentation.
We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in Internal control that we identify
during our audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit
engagements. We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance
in the audit of the consolidated financial report of the current period and are therefore key audit matters. We
describe these matters in our auditor's report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 20 of the directors’ report for the year
ended 30 June 2019. 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.
Opinion on the Remuneration Report
In our opinion the Remuneration Report of Metalicity Limited for the year ended 30 June 2019 complies with
section 300A of the Corporations Act 2001.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Samir Tirodkar
Director
West Perth, Western Australia
30 September 2019
Directors’ declaration
In the directors’ opinion:
1.
the financial statements and notes set out on pages 29 to 60 are in accordance with the Corporations
Act 2001, including:
(a)
(b)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2019 and
of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as
and when they become due and payable;
the financial statements and notes thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board; and
the audited remuneration disclosures set out on pages 14 to 20 of the Directors’ Report comply with
accounting standard AASB 124 Related Party Disclosures and the Corporations Regulations 2001.
2.
3.
4.
The directors have been given the declarations required by Section 295(A) of the Corporations Act 2001
from the Managing Director and the Company Secretary for the year ended 30 June 2019.
This declaration is made in accordance with a resolution of the directors.
Jason Livingstone
Managing Director
Perth, Western Australia
30 September 2019
28
Consolidated statement of profit or loss and other comprehensive income
for the financial year ended 30 June 2019
Continuing operations
Revenue
Expenses
Loss from continuing operations before income tax
Income tax expense
Loss after income tax from continuing operations
Other comprehensive income
Items that may be reclassified subsequently to profit or
loss
Items that will not be reclassified subsequently to profit
or loss
Foreign currency transalation
Other comprehensive loss for the period, net of tax
Note
4
5
6
Consolidated Group
2018
2019
$
$
327,544
(4,737,920)
(4,410,376)
-
(4,410,376)
520,752
(2,823,322)
(2,302,570)
-
(2,302,570)
-
-
(35,676)
(35,676)
-
-
-
-
Total comprehensive loss for the year
(4,446,052)
(2,302,570)
Loss attributable to:
Owners of the parent
Total comprehensive loss attributable to:
Owners of the parent
Non controlling interest
Basic loss per share (cents)
- Continuing operations
Diluted loss per share (cents)
- Continuing operations
(4,410,376)
(4,410,376)
(2,302,570)
(2,302,570)
(4,446,052)
-
(4,446,052)
(2,302,570)
-
(2,302,570)
23(a)
23(b)
(0.74)
(0.74)
(0.74)
(0.74)
(0.43)
(0.43)
(0.43)
(0.43)
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
29
Consolidated statement of financial position
as at 30 June 2019
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Non-current assets held for sale
Total current assets
Non-current assets
Exploration and evaluation expenditure
Plant & equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Liabilities related to assets held for sale
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Other reserves
Accumulated losses
Total equity
Note
7(a)
8
9
10
11
12
13
10
15
Consolidated Group
2018
2019
$
$
666,560
76,723
499,847
2,734,940
3,978,070
1,866,233
93,961
82,368
9,175,727
11,218,289
204,133
1,191
205,324
2,304,094
2,830
2,306,924
4,183,394
13,525,213
334,310
22,070
1,034,941
1,391,321
546,428
43,406
8,553,180
9,143,014
1,391,321
9,143,014
2,792,073
4,382,199
46,955,647
4,529,358
(48,692,932)
46,638,047
2,026,708
(44,282,556)
2,792,073
4,382,199
The above consolidated statement of financial position should be read in conjunction with the
accompanying notes.
30
Consolidated statement of changes in equity
for the financial year ended 30 June 2019
Issued
capital
$
Share
Based
Payments
Reserve
$
Option
Premium
Reserve
$
Foreign
Currency
Reserve
Accumulated
losses
Total
$
$
Balance at 1 July 2018
46,638,047
2,025,208
1,500
-
(44,282,556)
4,382,199
(Loss) for the year
Other comprehensive loss
Total comprehensive loss for the
year
-
-
-
-
-
-
Transactions with owners in their capacity as owners
Issue of share capital
Issue of special warrants in KML
Issue of employee options
Deferred transaction costs
Total transactions with owners
157,600
-
-
160,000
317,600
-
2,521,637
16,689
-
2,538,326
-
-
-
-
-
-
-
-
-
(35,676)
(4,410,376)
-
(4,410,376)
(35,676)
(35,676)
(4,410,376)
(4,446,052)
-
-
-
-
-
-
-
-
-
-
157,600
2,521,637
16,689
160,000
2,855,926
Balance at 30 June 2019
46,955,647
4,563,534
1,500
(35,676)
(48,692,932)
2,792,073
Issued
capital
$
Share
Based
Payments
Reserve
$
Option
Premium
Reserve
$
Foreign
Currency
Reserve
Accumulated
losses
Total
$
$
Balance at 1 July 2017
41,977,929
1,879,667
1,500
(Loss) for the year
Total comprehensive loss for the
year
-
-
Transactions with owners in their capacity as owners
Issue of share capital
Issue of share capital (options
exercised)
Share based payments
Share issue costs
Total transactions with owners
1,050,000
(302,979)
4,660,118
3,761,097
152,000
-
-
-
-
145,541
-
145,541
-
-
-
-
-
-
-
Balance at 30 June 2018
46,638,047
2,025,208
1,500
-
-
-
-
-
-
-
-
-
(41,979,986)
1,879,110
(2,302,570)
(2,302,570)
(2,302,570)
(2,302,570)
-
-
-
-
-
3,761,097
152,000
1,195,541
(302,979)
4,805,659
(44,282,556)
4,382,199
The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
31
Consolidated statement of cash flows
for the financial year ended 30 June 2019
Cash flows from operating activities
Payments to suppliers and employees
R& D Rebate
Lease income
Interest expense
Interest received
Net cash used in operating activities
Cash flows from investing activities
Payment for plant and equipment
Proceeds from sale of shares
Proceeds from sale of tenements
Payment for exploration and in relation to
tenements
Payments for assets held for sale
Net cash provided by/(used in) investing activities
Cash flows from financing activities
Proceeds from shares issued
KML capital raised
Transaction costs
Net cash provided by financing activities
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at the beginning of
the financial year
Effect of exchange rates on cash holdings in
foreign currencies
Cash and cash equivalents at the end of the
financial year
Note
7(b)
Consolidated Group
2018
$
2019
$
(4,219,170)
80,440
67,992
-
4,426
(4,066,312)
(2,148,325)
258,940
71,300
(113)
2,546
(1,815,652)
-
44,125
1,519,007
(285)
283,377
50,000
(826,872)
(2,142,408)
(500,000)
236,260
-
(1,809,316)
157,600
2,521,637
-
2,679,237
3,913,052
-
(278,995)
3,634,057
(1,150,815)
9,089
1,866,233
1,823,365
(48,858)
33,779
7(a)
666,560
1,866,233
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
32
Notes to Financial Statements for the financial year ended 30 June 2019
1. General information
Metalicity Limited (“the Company” or “MCT”) is a company limited by shares, incorporated and domiciled
in Australia. Its shares are listed on the Australian Securities Exchange. MCT and its wholly owned
subsidiaries, Stuart Town Gold Pty Ltd, Metalicity Energy Pty Ltd, Ridgecape Holdings Pty Ltd, KYM
Mining Pty Ltd, Kimberly Mining Australia Pty Ltd, Kimberly Mining Holdings Pty Ltd and Kimberly Mining
Limited (~81% owned), are referred to as the ‘Group’ or ‘Consolidated Entity’.
The Financial Report of MCT for the year ended 30 June 2019 was authorised for issue in accordance
with a resolution of the board of directors on 30 September 2019.
2.
Significant accounting policies
The principal accounting policies adopted in the preparation of the Financial Report are set out below.
These policies have been consistently applied to the years presented, unless otherwise stated.
(a) Basis of preparation
This general purpose Financial Report has been prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the Australian Accounting Standards Board (AASB),
Australian Accounting Interpretations and the Corporations Act 2001.
It is recommended that this financial report be read in conjunction with the public announcements made
by the Company during the year in accordance with the continuous disclosure requirements arising
under the ASX Listing Rules.
Compliance with IFRS
Australian Accounting Standards include Australian equivalents to International Financial Reporting
Standards (AIFRS). Compliance with AIFRS ensures that the Financial Report of the Group complies
with International Financial Reporting Standards (IFRS).
Historical cost convention
These financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgment in the process of applying
the Group’s accounting policies. Where these are areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements, these
are disclosed in Note 2(q).
Comparative figures
When required by accounting standards, comparative figures have been adjusted to conform to changes
in presentation for the current year. When the Group applies an accounting policy retrospectively, makes
a retrospective restatement or reclassifies items in its financial statements, a statement of financial
position as at the beginning of the earliest comparative period will be disclosed.
Going concern basis
The financial statements have been prepared on the going concern basis which contemplates the
continuity of normal business activity and the realisation of assets and the settlement of liabilities in the
normal course of business. For the year ended 30 June 2019 the Group incurred a loss after tax of
$4,410,376 (2018: $2,302,570) and a net cash outflow from operations of $4,066,312 (2018:
$1,815,652). At 30 June 2019, the Group has working capital surplus of $2,586,749 (2018: working
capital of $2,075,275) and current cash holding was $666,560 (2018: $1,866,233).
The directors have reviewed the business outlook and cash flow forecasts and are of the opinion that
the use of the going concern basis of accounting is appropriate as they believe the Group will continue
to raise further funds through subsequent capital raisings and will meet its expenditure commitments as
required.
33
Notes to Financial Statements for the financial year ended 30 June 2019
2.
Significant accounting policies (continued)
(a) Basis of preparation (continued)
Should the Group be unable to continue as a going concern, it may be required to realise its assets and
extinguish its liabilities other than in the normal course of business and at amounts different to those
stated in the financial statements. The financial statements do not include any adjustment relating to
the recoverability and classification of liabilities that may be necessary should the Group be unable to
continue as a going concern.
(b) Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of subsidiaries of the
Company as at 30 June 2019 and the results of the subsidiaries for the period then ended.
Stuart Town Gold Pty Ltd, Metalicity Energy Pty Ltd, KYM Mining Pty Ltd, Ridgecape Holdings Pty Ltd,
Kimberly Mining Australia Pty Ltd, Kimberly Mining Holdings Pty Ltd and Kimberly Mining Limited are
the subsidiaries over which the Company has the power to govern the financial and operating policies
as the holder of all of the voting rights. The subsidiaries are fully consolidated from the date of
acquisition of the subsidiary. Consolidation will cease from the date that control of the subsidiary
ceases. Any and all intercompany transactions and balances between the Company and the subsidiary
are eliminated on consolidation.
(c) Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration
transferred in a business combination is measured at fair value which is calculated as the sum of the
acquisition-date fair values of assets less liabilities transferred to the Group, liabilities incurred by the
Group to the former owners of the acquiree and the equity instruments issued by the Group in exchange
for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at
their fair value, except that:
• deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements
are recognised and measured in accordance with AASB 112 ‘Income Taxes’ and AASB 119
‘Employee Benefits’ respectively;
•
liabilities or equity instruments related to share-based payment arrangements of the acquiree or
share-based payment arrangements of the Group entered into to replace share-based payment
arrangements of the acquiree are measured in accordance with AASB 2 ‘Share-based Payment’ at
the acquisition date; and
• Assets (or disposal groups) that are classified as held for sale in accordance with AASB 5
‘Noncurrent Assets Held for Sale and Discontinued Operations’ are measured in accordance with
that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-
controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in
the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and
the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable
assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount
of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest
in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase
gain.
34
Notes to Financial Statements for the financial year ended 30 June 2019
2.
Significant accounting policies (continued)
(d) Revenue recognition
The Group has applied AASB 15 Revenue from Contracts with Customers effective from 1 July 2018
using the cumulative effective method. Therefore, the comparative information has not been restated
and continues to be presented under AASB 118: Revenue. The adoption of AASB 15 does not have a
significant impact on the Group as the Group does not currently have any significant revenues from
customers.
Revenue from rendering goods and services is measured at the fair value of consideration received or
receivable for the sale of goods and services in the ordinary course of the Group’s activities when control
of the asset is transferred to the customer or services rendered.
(e) Cash and Cash Equivalents
For statement of cash flow presentation purposes, cash and cash equivalents includes cash on hand,
deposits held at call with banks, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts.
(f) Income Tax
The income tax expense or revenue for the period is the tax payable on a current period’s taxable
income based on the income tax rate adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
Deferred tax is accounted for using the liability method in respect of temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a
business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is
realised or liability is settled. Deferred tax is credited in the income statement except where it relates to
items that may be credited directly to equity, in which case the deferred tax is adjusted directly against
equity. Deferred income 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 tax losses.
(g) Exploration Expenditure
Exploration and evaluation expenditure incurred on granted exploration licences is accumulated in
respect of each identifiable area of interest. These costs are carried forward where the rights to tenure
of the area of interest are current and to the extent that they are expected to be recouped through the
successful development of the area or where activities in the area have not yet reached a stage that
permits reasonable assessment of the existence of economically recoverable reserves. Accumulated
costs in relation to any abandoned area will be written off in full against profit in the year in which the
decision to abandon the area is made. When production commences, the accumulated costs for the
relevant area of interest will be amortised over the life of the area according to the rate of depletion of
the economically recoverable reserves. A regular review will be undertaken of each area of interest to
determine the appropriateness of continuing to carry forward costs in relation to that area of interest.
(h) Trade and other receivables
Trade and other receivables are initially recognised at fair value and subsequently measured at
amortised costs using the effective interest method, less provision for impairment. Trade and other
receivables are general receivable within 30 days. Collectability of trade receivables is reviewed on an
ongoing basis. Amounts that are known to be uncollectible are written off by reducing the carrying
amount directly
35
Notes to Financial Statements for the financial year ended 30 June 2019
2.
Significant accounting policies (continued)
(i) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial year which are unpaid. The amounts are unsecured and usually paid within 30 days of
recognition.
(j) Borrowings
Loans are carried at their principal amounts, which represent the present value of future cash flows
associated with servicing the debt. Interest is accrued over the period it becomes due and is recorded
as part of other creditors.
(k) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction from the proceeds.
(l) Earnings per share
Basic earnings per share (“EPS”) is calculated by dividing the result attributable to equity holders of the
Company by the weighted number of shares outstanding during the year. Diluted EPS adjusts the
figures used in the calculation of basic EPS to take into account the after income tax effect of interest
and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed or known to have been issued in relation to dilutive potential ordinary shares.
(m) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount
of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables in the statement of financial position are shown exclusive of GST. Cash flows
are presented in the statement of cash flow on a gross basis, except for the GST component of investing
and financing activities, which are disclosed as operating cash flows.
(n) Employee Benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by
employees to balance date. Employee benefits that are expected to be settled within one year have
been measured at the amounts expected to be paid when the liability is settled. Employee benefits
payable later than one year have been measured at the present value of the estimated future cash
outflows to be made for those benefits. Those cash flows are discounted using market yields on national
government bonds with terms to maturity that match the expected timing of cash flows. In calculating
the present value of future cash flows in respect of long service leave, the probability of long service
leave being taken is based on historical data.
(o) Equity-Settled Compensation
The Group operates equity-settled share-based payment share and option schemes to Directors and
employees. The fair value of the equity to which Directors and employees become entitled is measured
at grant date and recognised as an expense over the vesting period, with a corresponding increase to
an equity account. The fair value of shares is ascertained as the market bid price. The fair value of
options is ascertained using a Binomial or Black and Scholes pricing model which incorporates all
market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted
at each reporting date such that the amount recognised for services received as consideration for the
equity instruments granted shall be based on the number of equity instruments that eventually vest.
36
Notes to Financial Statements for the financial year ended 30 June 2019
2.
Significant accounting policies (continued)
(p) Financial Instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the financial instrument. Financial instruments (except for trade receivables)
are measured initially at fair value adjusted by transactions costs, except for those carried “at fair value
through profit or loss”, in which case transaction costs are expensed to profit or loss. Where available,
quoted prices in an active market are used to determine the fair value. In other circumstances, valuation
techniques are adopted. Subsequent measurement of financial assets and financial liabilities are
described below.
Trade receivables are initially measured at the transaction price if the receivables do not contain a
significant financing component in accordance with AASB 15.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and all substantial risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and subsequent measurement
Financial assets
Except for those trade receivables that do not contain a significant financing component and are
measured at the transaction price in accordance with AASB 15, all financial assets are initially measured
at fair value adjusted for transaction costs (where applicable).
For the purpose of subsequent measurement, financial assets other than those designated and effective
as hedging instruments, are classified into the following categories upon initial recognition:
§ amortised cost;
§
§
fair value through other comprehensive income (FVOCI); and
fair value through profit or loss (FVPL).
Classifications are determined by both:
§ The contractual cash flow characteristics of the financial assets; and
§ The entities business model for managing the financial asset.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are
not designated as FVPL):
§
§
they are held within a business model whose objective is to hold the financial assets and collect
its contractual cash flows; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash
equivalents, trade and most other receivables fall into this category of financial instruments.
Financial assets at fair value through other comprehensive income (Equity instruments)
The Group measures debt instruments at fair value through OCI if both of the following conditions are
met:
§ The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding; and
37
Notes to Financial Statements for the financial year ended 30 June 2019
2.
Significant accounting policies (continued)
(p)
Financial Instruments (continued)
§ The financial asset is held within a business model with the objective of both holding to collect
contractual cash flows and selling the financial asset.
For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and
impairment losses or reversals are recognised in the statement of profit or loss and computed in the
same manner as for financial assets measured at amortised cost. The remaining fair value changes are
recognised in OCI.
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity
instruments designated at fair value through OCI when they meet the definition of equity under AASB
132Financial Instruments: Presentation and are not held for trading.
Financial assets at fair value through profit or loss (FVPL)
Financial assets at fair value through profit or loss include financial assets held for trading, financial
assets designated upon initial recognition at fair value through profit or loss, or financial assets
mandatorily required to be measured at fair value. Financial assets are classified as held for trading if
they are acquired for the purpose of selling or repurchasing in the near term.
Financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an
effective hedge, as appropriate.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction
costs unless the Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method
except for derivatives and financial liabilities designated at FVPL, which are carried subsequently at fair
value with gains or losses recognised in profit or loss.
All interest-related charges and, if applicable, gains and losses arising on changes in fair value are
recognised in profit or loss.
Impairment
From 1 July 2018, the Group assesses on a forward looking basis the expected credit losses associated
with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied
depends on whether there has been a significant increase in credit risk. For trade receivables, the Group
applies the simplified approach permitted by AASB, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
Comparative information
The Group has applied AASB 9 Financial Instruments retrospectively, but has elected not to restate
comparative information. As a result, the comparative information provided continues to be accounted
for in accordance with the Group’s previous accounting policy.
Classification
Until 30 June 2018, the group classified its financial assets in the following categories:
§
§
financial assets at fair value through profit or loss;
loans and receivables;
§ held-to-maturity investments; and
§ available-for-sale financial assets.
38
Notes to Financial Statements for the financial year ended 30 June 2019
2.
Significant accounting policies (continued)
(p)
Financial Instruments (continued)
The classification depended on the purpose for which the investments were acquired. Management
determined the classification of its investments at initial recognition and, in the case of assets classified
as held-to-maturity, re-evaluated this designation at the end of each reporting period.
Valuation techniques
In the absence of an active market for an identical asset or liability, the Group selects and uses one or
more valuation techniques to measure the fair value of the asset or liability. The Group selects a
valuation technique that is appropriate in the circumstances and for which sufficient data is available to
measure fair value. The availability of sufficient and relevant data primarily depends on the specific
characteristics of the asset or liability being measured. The valuation techniques selected by the Group
are consistent with one or more of the following valuation approaches:
• Market approach: valuation techniques that use prices and other relevant information generated
•
by market transactions for identical or similar assets or liabilities.
Income approach: valuation techniques that convert estimated future cash flows or income and
expenses into a single discounted present value.
• Cost approach: valuation techniques that reflect the current replacement cost of an asset at its
current service capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use
when pricing the asset or liability, including assumptions about risks. When selecting a valuation
technique, the Group gives priority to those techniques that maximise the use of observable inputs and
minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly
available information on actual transactions) and reflect the assumptions that buyers and sellers would
generally use when pricing the asset or liability are considered observable, whereas inputs for which
market data is not available and therefore are developed using the best information available about
such assumptions are considered unobservable.
Fair value hierarchy
AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which
categorises fair value measurements into one of three possible levels based on the lowest level that an
input that is significant to the measurement can be categorised into as follows:
Level 1
Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities
that the entity can access at the measurement date.
Level 2
Measurements based on inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly or indirectly
Level 3
Measurements based on unobservable inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one
or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of
observable market data. If all significant inputs required to measure fair value are observable, the asset
or liability is included in Level 2. If one or more significant inputs are not based on observable market
data, the asset or liability is included in Level 3.
The Group would change the categorisation within the fair value hierarchy only in the following
circumstances:
(i) if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3)
or vice versa; or
39
Notes to Financial Statements for the financial year ended 30 June 2019
2.
Significant accounting policies (continued)
(p)
Financial Instruments (continued)
(ii) if significant inputs that were previously unobservable (Level 3) became observable (Level 2)
or vice versa.
When a change in the categorisation occurs, the Group recognises transfers between levels of the fair
value hierarchy (i.e. transfers into and out of each level of the fair value hierarchy) on the date the event
or change in circumstances occurred.
(q) Critical Accounting Estimates and Judgements
The Directors evaluate estimates and judgements incorporated into the financial report based on
historical knowledge and best available current information. Estimates assumed a reasonable
expectation of future events and are based on current trends and economic data, obtained both
externally and within the Group.
Key Estimates – Impairment
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group
that may lead to an impairment of assets. Where an impairment trigger exists, the recoverable amount
of the asset is determined. Value-in- use calculations performed in assessing recoverable amounts
incorporate a number of key estimates. This includes as assessment of the carrying values of
intangibles and capitalised exploration and evaluation costs
Key Estimates – Share based payment transactions
The Group measures the cost of equity-settled transactions with employees (including directors) by
reference to the fair value of the equity instruments at the date at which they are granted. The fair value
is determined by an internal valuation using a Black-Scholes option pricing model, using the
assumptions detailed in Note 15.
Key Estimates – Exploration expenditure
The write-off and carrying forward of exploration acquisition costs is based on an assessment of an area
of interest’s viability and/or the existence of economically recoverable reserves.
Key Estimates – Deferred taxation
Deferred tax assets in respect of tax losses have not been brought to account as it is not considered
probable that future taxable profits will be available against which they could be utilised
(r)
Application of new and revised Accounting Standards
The Group has adopted AASB 15 Revenue from Contracts with Customers and AASB 9 Financial
Instruments which became effective for financial reporting periods commencing on or after 1 January
2018
AASB 15 Revenue from contracts with customers
AASB 15 replaces AASB 118 Revenue, AASB 111 Construction Contracts and several revenue-related
Interpretations. AASB 15 establishes a five-step model to account for revenue arising from contracts
with customers and requires that revenue to be recognised at an amount that reflects the consideration
to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The Group has applied the new Standard effective from 1 July 2018 using the modified retrospective
approach. Under this method, the cumulative effect of initial application is recognised as an adjustment
to the opening balance of retained earnings at 1 July 2018 and comparatives are not restated.
The adoption of AASB 15 does not have a significant impact on the Group as the Group does not
currently have any revenue from customers.
40
Notes to Financial Statements for the financial year ended 30 June 2019
2.
Significant accounting policies (continued)
(r) Application of new and revised Accounting Standards (continued)
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and
Measurement for annual periods beginning on or after 1 January 2018, bringing together all three
aspects of the accounting for financial instruments: classification and measurement, impairment, and
hedge accounting.
As a result of adopting AASB 9 Financial Instruments, the Group has amended its financial instruments
accounting policies to align with AASB 9. AASB 9 makes major changes to the previous guidance on
the classification and measurement of financial assets and introduces an ‘expected credit loss’ model
for impairment of financial assets.
There were no financial instruments which the Group designated at fair value through profit or loss
under AASB 139 that were subject to reclassification. The Board assessed the Group’s (or Company’s)
financial assets and determined the application of AASB 9 does not result in a change in the
classification of the Group’s financial instruments.
The adoption of AASB 9 does not have a significant impact on the financial report.
(s) New Accounting Standards for Application in Future Periods
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together
with an assessment of the potential impact of such pronouncements on the Group when adopted in
future periods, are discussed below:
AASB 16: Leases applies to annual reporting periods beginning on or after 1 January 2019.
Interpretation 4 Determining whether an
This Standard supersedes AASB 117 Leases,
Arrangement contains a Lease, AASB intrpretation 115 Operating Leases-Incentives and AASB
intrpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of lease. AASB
16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and
requires lessees to account for all leases under a single on-balance sheet model similar to the
accounting for finance leases under AASB 117.
The key features of AASB 16 are as follows:
- Lessees are required to recognise assets and liabilities for all leases with a term of
more than 12 months, unless the underlying asset is of low value.
- A lessee measures right-of-use assets similarly to other non-financial assets and
lease liabilities similarly to other financial liabilities.
- Assets and Liabilities arising from the lease are initially measured on a present value
basis. The measurement
(including
includes non-cancellable
inflation-linked payments), and also includes payments to be made in optional
periods if the lessee is reasonably certain to exercise an option to extend to lease,
or not to exercise an option to terminate the lease.
lease payments
- AASB 16 contains disclosure requirements for leases.
Lessor accounting
- AASB 16 substantially carries forward the lessor accounting requirements in AASB
117. Accordingly, a lessor continues to classify its leases as operating leases or finance
leases, and to account for those two types of leases differently.
- AASB 16 also requires enhanced disclosures to be provided by lessors that will
improve information disclosed about a lessor’s risk exposure, particularly to residual
value risk.
41
Notes to Financial Statements for the financial year ended 30 June 2019
2.
Significant accounting policies (continued)
(s) New Accounting Standards for Application in Future Periods (continued)
Due to the adoption of AASB 16, the Group’s operating profit will improve, while its interest expense will
increase. This is due to the change in the accounting for expenses of leases that were classified as
operating leases under AASB 117. At 30 June 2019, the Group has only 6 months remaining on current
leases, therefore impact on current leases will be immaterial but will impact future leases entered into
by the Group.
Other standards not yet applicable
There are no other standards that are not yet effective and that would be expected to have a material
impact on the entity in the current or future reporting periods and on foreseeable future transactions.
3.
Segment information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and
used by the Board of Directors (chief operating decision makers) in assessing performance and
determining the allocation of resources.
The Group has two geographic segment being Australia and Canada and operates in one industry being
the exploration of minerals.
Segment result
Segment revenue
Australia
Canada
Segment expenses
Australia
Canada
Income tax
(Loss) after tax
Consolidated
30 June
2019
$
285,301
42,243
327,544
30 June
2018
$
520,752
-
520,752
(3,140,376)
(1,597,544)
(4,737,920)
(2,823,322)
-
(2,823,322)
-
(4,410,376)
-
(2,302,570)
42
Notes to Financial Statements for the financial year ended 30 June 2019
3.
Segment information (continued)
Segment assets and
liabilities
Australia
Canada
Australia
Canada
Consolidated
Consolidated
Non-current assets
Non-current liabilities
30 June
2019
$
205,324
-
205,324
30 June
2018
$
2,306,924
-
2,306,924
30 June
2019
$
30 June
2018
$
-
-
-
-
-
-
Total assets
Total liabilities
3 June
2019
$
1,385,542
2,797,852
4.183,394
30 June
2018
$
13,525,213
-
13,525,213
30 June
2019
$
226,421
1,164,900
1,391,321
30 June
2018
$
9,143,014
-
9,143,014
4.
Revenue
An analysis of the Group’s revenue for the year is as follows:
R&D Rebate
Lease Income
Interest earned
Gain on sale of shares
Foreign exchange gain
Sale of tenements
Other
Consolidated Group
2019
$
80,440
67,992
4,426
44,125
48,858
-
81,703
327,544
2018
$
258,940
71,300
2,546
74,147
33,779
80,040
-
520,752
43
Notes to Financial Statements for the financial year ended 30 June 2019
5. Expenses
Accounting & audit
ASX
Company secretarial fees
Consulting fees
Depreciation
Employee benefits
Insurance
Interest expense
Impairment of exploration
Investor relations
KML transaction costs
Legal fees
Project work & generation - cash
Rent & office costs
Seminars & conferences
Share based payments
Share registry fees
Travel & accommodation
Impairment of assets held for sale
Reversal of deferred income
Cost of tenements sold
Other
Total expenses
6.
Income tax expense
Consolidated Group
2019
$
100,377
40,261
54,400
68,789
1,640
615,130
26,201
-
634,834
114,116
678,614
152,032
1,372,772
212,878
32,950
16,689
44,022
53,034
6,824,415
(7,053,180)
549,365
198,581
4,737,920
2018
$
92,732
37,805
62,065
114,036
5,827
620,490
20,084
113
454,466
55,948
324,194
108,132
200,190
227,275
25,235
145,541
25,940
150,056
-
-
-
153,193
2,823,322
Consolidated Group
2018
$
2019
$
a) Numerical reconciliation of income tax expense to
prima facie tax payable
Loss from continuing operations before income tax expense
(4,410,376)
(2,302,570)
Tax at the Australian tax rate of 27.5% (2017: 27.5%)
(1,212,853)
(633,207)
Tax effect of amounts which are not deductible in calculating
taxable income
Tax effect of amounts which are non (taxable) in calculating
taxable income
506,027
168,527
(355,994)
(553,170)
R&D Rebate
(Over)/under provision from prior year
Tax losses not recognised
Income tax expense
(22,121)
(110,765)
1,195,706
-
(71,008)
212,491
876,367
-
44
Notes to Financial Statements for the financial year ended 30 June 2019
6.
Income taxes (continued)
b) Tax losses
Unused tax losses for which no deferred tax asset has been
recognised
Potential tax benefit at 27.5%
Consolidated Group
2018
$
2019
$
17,441,969
13,093,947
4,796,541
3,600,836
Tax losses have not been recognised as a deferred tax asset as recoupment is dependent on, amongst
other matters, sufficient future assessable income being earned. That is not considered certain in the
foreseeable future and accordingly there is uncertainty that the losses can be utilised. There are
deferred tax liabilities of approximately $56,136 relating to capitalised exploration costs claimed for tax
as at 30 June 2019 (2018: $3,156,951). These are offset with the deferred tax assets that have been
recognised to the extent of the deferred tax liabilities.
7. Cash and cash equivalents
(a) Reconciliation of cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents includes cash on hand and
in banks and investments in money market instruments. Cash and cash equivalents at the end of the
financial year as shown in the consolidated statement of cash flows are reconciled to the related items
in the consolidated statement of financial position as follows:
Cash and cash equivalents
Consolidated Group
2018
2019
$
$
666,560
1,866,233
A term deposit of $20,197 relating to securing a credit card facility is included in the above (2018:
$20,197).
(b) Reconciliation of loss for the year to net cash flows from operating activities
Loss for the year
Share based payments
Foreign exchange loss/(gain)
Depreciation
Impairment of exploration
and evaluation
Cost of tenements sold
Reversal of deferred income
Impairment of asset held for
sale
Gain on sale of shares
(Increase) in trade and other receivables and other asset
(Decrease) in trade and other payables
(Decrease)/increase in provisions
Net cash (used in) operating activities
(c) Non cash investing and financing activities
For shares issued to acquire exploration tenements, refer to note 16(a).
(4,410,376)
16,689
48,119
1,640
(2,302,570)
195,541
(33,779)
5,827
634,834
454,466
549,365
(7,053,180)
6,824,415
(44,125)
(400,240)
(212,117)
(21,336)
(4,066,312)
-
-
-
-
(39,390)
(98,144)
2,397
(1,815,652)
45
Notes to Financial Statements for the financial year ended 30 June 2019
8.
Trade and other receivables
GST Receivable
Lease fee receivable
Other receivables
None of these receivables are past due or impaired.
9. Other assets
Tenement applications and deposits
Prepayments
Rental security
Shares held for sale
Expenditure incurred
Consolidated Group
2018
2019
$
$
81,112
70,246
4,070
6,477
8,779
-
93,961
76,723
Consolidated Group
2018
2019
$
$
24,713
325,010
19,155
34,196
38,500
38,500
-
102,141
82,368
499,847
10. Non-Current Assets Held for Sale and Liabilities Related to Non-Current Assets
Held for Sale
Non-Current Assets Held for sale
Balance at beginning of the period
Capitalisation of exploration expenditure
Assets reclassified as held for sale (note 11):
- Admiral Bay
- Napier and Emanual Range
Impairment of Assets Held for Sale
Balance of assets held for sale
Liabilities Related to Non-Current Assets Held for Sale
Balance at beginning of the period
Translation difference
Liabilities reclassified:
- Deferred income(1) (Note 14)
- Deferred acquisition costs(2)
(Note 12)
Payment of deferred
acquisition costs(2)
Reversal of deferred income(1)
Balance at period end
Consolidated Group
2018
2019
$
$
9,175,727
383,629
-
-
(6,824,416)
2,734,940
-
-
5,777,436
3,398,291
-
9,175,727
Consolidated Group
2018
2019
$
$
8,553,180
34,941
-
-
-
-
7,053,180
1,500,000
(500,000)
(7,053,180)
1,034,941
-
-
8,553,180
46
Notes to Financial Statements for the financial year ended 30 June 2019
10. Non-Current Assets Held for Sale and Liabilities Related to Non-Current Assets
Held for Sale (continued)
(1) The Company sold a 1% Net Smelter Royalty over the Admiral Bay Project for US$5,000,000
($7,053,180) which was received during the year ended 30 June 2016. The Company has previously
recognised this amount as deferred income and has now reversed the income net against impairment
of assets held for sale upon proposed divestment of the asset. This amount was not refundable.
(2) The deferred acquisition costs at 30 June 2018 relate to the final two payments, of $500,000 and
$1,000,000, for the acquisition of the Napier Range tenements. The first payment of $500,000 was
made during the year ended 30 June 2019.
11. Exploration and evaluation expenditure
Exploration at cost at the beginning of the period
Acquisition costs
Expenditure incurred
Impairment expense
Tenements sold
Reclassification as assets held for sale (see note 10)
Closing balance
Consolidated Group
2018
2019
$
$
2,304,094
-
603,245
(634,834)
(2,068,372)
-
204,133
7,372,235
3,086,875
1,654,367
(454,466)
(179,190)
(9,175,727)
2,304,094
Total expenditure incurred and carried forward in respect of specific projects
- Kookynie and Yundamindra
- Lynas Find and Other
Total carried forward exploration expenditure
204,133
-
204,133
-
2,304,094
2,304,094
12. Trade and other payables
Trade payables and accruals
Superannuation
BAS payable
Reclassification of liabilities related to assets held for sale (see
note 10)
13. Provisions
Consolidated Group
2018
2019
$
$
320,561
-
13,749
2,001,975
20,329
24,124
-
(1,500,000)
334,310
546,428
Consolidated Group
2018
2019
$
$
Employee benefits – annual leave
22,070
43,406
47
Notes to Financial Statements for the financial year ended 30 June 2019
14. Deferred income
Deferred income
Reclassification of liabilities related to assets held for sale (see
note 10)
Consolidated Group
2018
2019
$
$
-
-
-
7,053,180
(7,053,180)
-
The Company sold a 1% Net Smelter Royalty over the Admiral Bay Project for US$5,000,000
($7,053,180) which was received during the year ended 30 June 2016. The Company has previously
recognised this amount as deferred income and has now reversed the income net against impairment
of assets held for sale upon proposed divestment of the asset. This amount was not refundable.
15.
Issued capital
624,422,475 (2018: 592,463,745) fully paid ordinary shares
46,955,647
46,638,047
2019
$
2018
$
(a) Movement in ordinary share capital
Date
Details
01/07/2017 Opening balance
18/08/2017 Share placement at $0.036
07/09/2017 Share purchase plan at $0.036
07/11/2017 Share placement at $0.036
20/09/2017
Issued as consideration for acquisition of
Ridgecape at $0.036 (tranche 1)
15/01/2018 Exercise of options at $0.03
25/01/2018 Exercise of options at $0.025 and $0.03
21/02/2018 Share placement at $0.045
16/03/2018 Share placement at $0.045
16/03/2018
16/03/2018
Issued as consideration for advisory services at
$0.038
Issued as consideration for acquisition of
Ridgecape at $0.036 (tranche 2)
Share issue costs
30/06/2018 Balance at the end of the year
Number of
shares
464,544,654
25,233,333
14,661,149
1,000,000
13,888,888
2,000,000
3,400,000
$
41,977,929
908,400
527,800
36,000
500,000
60,000
92,000
52,530,042
2,288,852
1,000
45
1,315,791
50,000
13,888,888
500,000
-
(302,979)
592,463,745
46,638,047
48
Notes to Financial Statements for the financial year ended 30 June 2019
15.
Issued capital (continued)
(a) Movement in ordinary share capital (continued)
Date
Details
01/07/2018 Opening balance
12/11/2018 Deferred consideration(1)
10/06/2019 Share placement at $0.06
30/06/2019 Reversal of prior year shares incorrectly issued(2)
30/06/2019 Balance at the end of the year
Number of
shares
592,463,745
10,000,000
22,514,285
(555,556)
624,422,474
$
46,638,047
160,000
157,600
-
46,955,647
(1)During the year ended 30 June 2018, 10,000,000 shares were issued to FMG in satisfaction of
deferred consideration on acquisition of assets.
(2)During the year ended 30 June 2018, 555,556 shares were incorrectly issued as part of a placement
and were subsequently reversed on reconciliation.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the
Company in proportion to the number of and amounts paid on the shares held. On a show of hands or
on a poll every holder of ordinary shares present at a meeting in person or by proxy is entitled to one
vote.
(b) Options
At year end 30 June 2019, the Company had 175,538,837 options over ordinary shares under issue (30
June 2018: 156,781,693). These options are exercisable as follows:
Grant Date
Date of Expiry Exercise Price $
Details
Management incentive options
Other options
No of
Options
9,500,000
8,100,000
11,500,000
8,050,000
8,050,000
8,050,000
13,000,000
13,000,000
13,000,000
2,500,000
2,500,000
2,500,000
2,000,000
2,000,000
2,000,000
1,500,000
3,000,000
1,000,000
3,000,000
5,000,000
12,766,670
26,265,023
11,257,144
3,000,000
3,000,000
175,538,837
02/07/2015
02/07/2015
02/07/2015
27/11/2015
27/11/2015
27/11/2015
29/11/2016
29/11/2016
29/11/2016
27/07/2018
27/07/2018
27/07/2018
10/04/2019
10/04/2019
29/11/2016
17/02/2016
17/02/2016
18/04/2016
17/02/2016
16/01/2017
18/08/2017
21/02/2018
10/06/2019
15/03/2018
15/03/2018
23/07/2020
23/07/2020
23/07/2020
10/12/2020
10/12/2020
10/12/2020
31/12/2019
31/12/2019
31/12/2019
26/08/2021
26/08/2021
26/08/2021
14/01/2022
14/01/2022
31/12/2019
31/12/2019
31/12/2019
31/12/2019
31/12/2019
16/01/2020
18/08/2020
14/02/2023
31/05/2022
12/03/2021
12/03/2021
The weighted average exercise price of the above options is $0.062 (2018: $0.065)
0.025
0.03
0.04
0.03
0.04
0.05
0.06
0.08
0.10
0.06
0.08
0.10
0.025
0.035
0.12
0.04
0.08
0.10
0.12
0.08
0.08
0.08
0.02
0.06
0.08
49
Notes to Financial Statements for the financial year ended 30 June 2019
15.
Issued capital (continued)
(a) Options (continued)
Balance at beginning of the year
Granted during the year (see note 16(a))
Exercised during the year
Forfeited/expired/cancelled during the year
Balance at the end of the year
(b) Performance Rights
2019
No.
156,781,693
22,757,144
-
(4,000,000)
175,538,837
2018
No.
117,150,000
45,031,693
(5,400,000)
156,781,693
At the date of this report, the Company had 2,274,713 performance rights over ordinary shares under
issue (30 June 2018: 2,274,713). These performance rights are exercisable as follows:
Details
No of
Options
Grant Date
Date of Expiry Exercise Price $
Performance rights
2,274,713
31/01/2018
15/03/2021
0.000
Balance at beginning of the year
Granted during the year (see note 16(a))
Exercised during the year
Forfeited/expired/cancelled during the year
Balance at the end of the year
(c) Capital Management
2019
No.
2,274,713
-
-
-
2,274,713
2018
No.
-
2,274,713
-
-
2,274,713
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio,
generate long-term shareholder value and ensure that the Group can fund its operations and continue
as a going concern.The Group’s debt and capital include ordinary share capital and financial liabilities,
supported by financial assets.
The Group is not subject to any externally imposed capital requirements. Management effectively
manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure
in response to changes in these risks and in the market. These responses include the management of
debt levels, distributions to shareholders and share issues.
16.
Share Based Payments
(a) Recognised share-based payment expense
The expense recognised for options and shares issued during the year is shown in the table below:
Expense arising from equity-settled share-based payment
transaction:
- Shares issued as consideration for corporate advisory
-
50,000
Consolidated Group
2018
2019
$
$
services (reported as consulting expenses)
- Options issued as consideration for advisory services
- Performance rights issued to employees/contractors
- Options issued to employees
Total
-
-
16,689
16,689
58,192
87,349
-
195,541
50
Fair Value
at Grant
Date
$0.0015
$0.0006
$0.0003
$0.0030
$0.0024
Fair Value
at Grant
Date
$0.00(1)
$0.00(1)
$0.01055
$0.0089
Notes to Financial Statements for the financial year ended 30 June 2019
16.
Share Based Payments (continued)
(a) Recognised share-based payment expense (continued)
The following option and performance right arrangements were issued during the current and prior
reporting periods:
30 June 2019
Option Series
Number
Grant
Date
Expiry
Date
Exercise
Price
Issued 29/08/2018
Issued 29/08/2018
Issued 29/08/2018
Issued 10/04/2019
Issued 10/04/2019
2,500,000
2,500,000
2,500,000
2,000,000
2,000,000
27/07/2018
27/07/2018
27/07/2018
10/04/2019
10/04/2019
26/08/2021
26/08/2021
26/08/2021
14/01/2022
14/01/2022
0.06
0.08
0.10
0.025
0.035
30 June 2018
Option
Series/Performance
Rights
Options
Issued 18/08/2017
Issued 19/02/2017
Issued 15/03/2018
Issued 15/03/2018
Performance rights(2)
Issued 15/03/2018
Number
Grant
Date
Expiry
Date
Exercise
Price
12,766,670
26,265,023
3,000,000
3,000,000
45,031,693
18/08/2017
21/02/2017
15/03/2018
15/03/2018
108/08/202
14/02/2023
12/03/2021
12/03/2021
0.08
0.08
0.06
0.08
2,274,713
31/01/2018
15/03/2021
0.00
$0.03840
(1) No fair value is attributable to these options as they are free attaching options issued in relation to
the Placements completed on 18 August 2017 and 21 February 2018.
(2)Performance rights, with zero exercise price, were issued to employees on 15 March 2018, which
vest when share price of the Company is $0.06.
51
Notes to Financial Statements for the financial year ended 30 June 2019
16.
(b)
Share Based Payments (continued)
Types of share-based payment plans
(i)
There were $16,689 share based payments relating to options in 2019 (2018: $145,541).
Options
The following tables lists the inputs to the model used to value the options issued during the financial
year ended 30 June 2019:
No of options
Grant date
Share price
Exercise price
Risk-free interest rate
Vesting Conditions and Period
Expiry date
Volatility
Fair value at grant date (cents)
Discount for vesting condition
Discount for being unlisted
Fair value after discounts (cents)
2,500,000
2,500,000
2,500,000
2,000,000
2,000,000
27/07/18
$0.022
$0.06
1.975%
6 months if
20day
VWAP
exceeds
exercise
price
26/08/21
85%
0.745
80%
0.0%
0.149
27/07/18
$0.022
$0.08
1.975%
6 months if
20day
VWAP
exceeds
exercise
price
26/08/21
85%
0.610
90%
0.0%
0.061
27/07/18
$0.022
$0.10
1.975%
6 months if
20day
VWAP
exceeds
exercise
price
26/08/21
85%
0.514
95%
0.0%
0.026
10/04/19
$0.01
$0.025
1.49%
Nil
10/04/19
$0.01
$0.035
1.49%
Nil
14/01/22
94%
0.373
Nil
20%
0.298
14/01/22
94%
0.302
Nil
20%
0.242
Shares
(ii)
There was $1,000,000 of share based payments relating to shares in the financial year ended 30 June
2019 (2018: $1,050,000), being $1,000,000 for deferred acquisition consideration of Lynas Find assets
from FMG.
Summary of share based payment options granted
(c)
The following table illustrates the number and weighted average exercise price (WAEP) of, and
movements in, share options issued during the year:
2019
No
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Expired/forfeited/cancelled during the year
156,781,693
22,757,144
-
(4,000,000)
Outstanding at the end of the year
175,538,837
2019
WAEP
0.0646
0.0415
-
0.06
0.062
2018
2018
No WAEP
117,150,000
45,031,693
(5,400,000)
-
0.0582
0.0787
0.0324
-
156,781,693
0.0646
(d) Weighted average of remaining contractual life
The weighted average remaining contractual life for the share options outstanding as at 30 June 2019
is 1.56 years (2018: 2.37 years).
The weighted average remaining contractual life for the performance rights outstanding as at 30 June
2019 is 1.70 years (2018: 2.70 years)
52
Notes to Financial Statements for the financial year ended 30 June 2019
16.
Share Based Payments (continued)
Range of exercise price
(e)
The range of exercise prices for options outstanding at the end of the year was $0.025-$0.12 (2018:
$0.025-$0.12).
The performance rights do not have an exercise price.
Weighted average fair value
(f)
The weighted average fair value of options granted during the year, excluding free attaching options,
was approximately $0.0884 (2018: $0.0097).
The weighted average fair value of performance rights granted during the year was Nil (2018:
$0.0384)
(g)
The following options were exercised during the year.
Share options exercised during the year
2019
Nil
2018
Option Series
Number
Grant
Date
Expiry
Date
Exercise
Price
Issued 23/07/2015
Issued 23/07/2015
Issued 11/12/2015
2,000,000 23/07/2015 23/07/2020
2,000,000 23/07/2015 23/07/2020
1,400,000 11/12/2015 10/12/2020
5,400,000
$0.03
$0.025
$0.03
Fair Value
at Grant
Date
0.00384
0.00568
0.00315
(h)
Kimberly Mining Limited Warrants
As at 30 June 2019, there were 14,371,570 in issued ordinary shares in Kimberly Mining Limited under
warrants (30 June 2018: Nil). These warrants are exercisable/convertable as follows:
Details
Special Warrants
Special Warrants – Tranche 2
No of Warrants Date of Expiry
5,323,500
2,956,250
8,279,750
23/08/2023
23/09/2023
Conversion Price $
0.40
0.40
Special warrants were issued for $0.40 per warrant and converted to 1.1 special warrants in Kimberly
Mining Limited on 1 January 2019.
Details
Founder Warrants
No of Warrants Date of Expiry
5,818,450
N/A
Conversion Price $
0.05
Founders warrants are convertible to 1 ordinary share in Kimberly Mining Limited upon exercise.
Founders warrants are only able to be exercised 18 months following listing of Kimberly Mining Limited
on TSX-V Exchange.
Details
Broker Warrants
Broker Warrants – Tranche 2
No of Warrants Date of Expiry
176,620
96,750
273,370
29/08/2020
28/09/2020
Conversion Price $
0.40
0.40
Founders warrants are convertible to 1 ordinary share in Kimberly Mining Limited upon exercise.
53
Notes to Financial Statements for the financial year ended 30 June 2019
17. Financial Risk Management
Risk management is the role and responsibility of the board. The Group's current activities expose it to
minimal risk. However, as activities increase there may be exposure to interest rate, market, credit, and
liquidity risks.
Interest Rate Risk
(a)
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will
fluctuate as a result of changes in market rates and the effective weighted average interest rates on
classes of financial assets and financial liabilities, is as follows:
30 June 2019
Financial Assets
Cash and deposits
Trade and other receivables
Weighted average interest
rate
Financial liabilities
Trade and other payables
30 June 2018
Financial Assets
Cash and deposits
Trade and other receivables
Weighted average interest
rate
Financial liabilities
Trade and other payables
Floating
interest
rate
$
1 year
or
less
$
Over 1
year to
5 years
$
More
than 5
years
$
Non
interest
bearing
$
Total
$
80,487 20,197
-
80,487 20,197
-
0.81%
2.45%
-
-
-
-
767,600 20,197
-
767,600 20,197
-
0.39%
2.45%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
565,876
76,723
642,599
666,560
76,723
743,283
0.04%
334,310
334,310
334,310
334,310
1,078,436
93,961
1,172,397
1,866,233
93,961
1,960,194
-
-
2,046,428
2,046,428
2,046,428
2,046,428
The Group has interest bearing assets and therefore income and operating cash flows are subject to
changes in the market rates. However, market changes in interest rates will not have a material impact
on the profitability or operating cash flows of the Group. A movement in interest rates of +/- 100 basis
points will result in less than a +/- $800 (2018: $7,900) impact on the Group’s income and operating
cash flows. At this time, no detailed sensitivity analysis is undertaken by the Group.
(b) Market risk
The Group is not exposed to equity securities price risk as it holds no investments in securities classified
on the balance sheet either as available-for-sale or at fair value through profit or loss; or to commodity
price risk.
(c) Credit risk
The Group has no significant concentrations of credit risk and as such, no sensitivity analysis is
prepared by the Group. Credit risk related to balances with banks is managed by ensuring that the
surplus funds are only invested with counterparties with a Standard & Poor’s rating of at least AA-.
54
Notes to Financial Statements for the financial year ended 30 June 2019
17. Financial Risk Management (continued)
(d) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash to meet commitments as and
when they fall due. The Group manages liquidity risk by preparing forecasts and monitoring actual cash
flows and requirements for future capital raisings. The Group does not have committed credit lines
available, which is appropriate given the nature of its operations. Surplus funds are invested in a cash
management account with ANZ which is available as required.
The material liquidity risk for the Group is the ability to raise equity in the future.
(e) Effective interest rate and repricing analysis
Cash and cash equivalents are the only interest bearing financial instruments of the Group.
(f) Currency risk
Currency risk arises from investments that are denominated in a currency other than the respective
functional currencies of Group entities.
The Group is exposed to foreign currency risk in the form of financial instruments held in US Dollars
(USD). The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in
Australian dollars, was as follows:
Cash and cash equivalents
Total Exposure
2019
USD$
327,015
327,015
2018
USD$
779,383
779,383
Assuming all other variables remain constant, a 10% strengthening of the Australian dollar at 30 June
2019 against the USD would have resulted in an increased loss of $46,600 (2018: $78,000). A 10%
weakening of the AUD would have resulted in a decreased loss of $46,600 (2018: $78,000), assuming
all other variables remain constant. The Group does not currently hedge against currency risk.
18.
Key management personnel disclosures
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share based payments
Consolidated Group
2019
$
921,541
47,404
16,689
985,634
2018
$
951,296
62,564
73,223
1,087,083
Detailed remuneration disclosures are provided in sections 1 to 4 of the Remuneration Report in the
Directors’ Report.
Outside the Company’s directors, the Group had 2 employees as at 30 June 2019 (30 June 2018: 2
employees).
55
Notes to Financial Statements for the financial year ended 30 June 2019
19.
Remuneration of auditors
During the year the following fees (exclusive of GST) were paid or
payable for services provided by the auditor of the Group:
Audit services
- Audit and review of financial report and other
audit work under the Corporations Act 2001
- Under provision of audit fees for prior year
Non-audit services
- Other services provided
Total remuneration for audit and other services
Consolidated Group
2019
$
2018
$
50,673
39,000
-
-
5,040
-
50,673
44,040
The auditors of Metalicity Limited and its subsidiaries is Stantons International.
20. Contingent liabilities and contingent assets
The Company is currently negotiating the amount of duty payable to the Office of State Revenue (OSR)
incurred as a result of a difference in valuation of the dutiable property. The Company incurred, and
paid, stamp duty totalling $581,015 to the OSR on the acquisition of the Admiral Bay Project. This duty
amount was based on a valuation of $11.4 million. Subsequent to the payment of the duty, the OSR
communicated to the Company that a compromise assessment be issued, and that duty of the
transaction be assessed in the amount of $695,715 (based on a dutiable value of $13.4 million plus
costs), being a difference of approximately $114,000. These discussions remain ongoing. There is a
risk that a higher amount may be required by the OSR should potential penalties be applied.
21. Commitments for expenditure
(a) Exploration Commitments
In order to maintain an interest in the mining and exploration tenements in which the Group is involved,
the Group is committed to meet the conditions under which the tenements were granted and the
obligations of any joint venture agreements. The timing and amount of exploration expenditure
commitments and obligations of the Group are subject to the minimum expenditure commitments
required as per the Mining Act, as amended, and may vary significantly from the forecast based upon
the results of the work performed which will determine the prospectivity of the relevant area of interest.
These obligations are not provided for in the financial report and are payable.
56
Notes to Financial Statements for the financial year ended 30 June 2019
21. Commitments for expenditure (continued)
(a) Exploration Commitments (continued
Outstanding exploration commitments are as follows (other than detailed below, no estimate has been
given of expenditure commitments beyond 12 months as this is dependent on the Directors' ongoing
assessment of operations and, in certain circumstances, Native Title negotiations):
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
Consolidated Group
2019
$
1,217,400
-
-
1,217,400
2018
$
1,045,600
-
-
1,045,600
(b) Operating Lease Commitments
The Group has an operating lease commitments for rental of office space of $140,000 plus outgoings
until 31 December 2019.
22.
Related Party transactions
(a) Key management personnel
During the year ended 30 June 2019, there were no related party transactions with key management
personnel.
All other disclosures relating to key management personnel are set out in Note 18 and in the detailed
remuneration disclosures in the Directors’ Report.
(b) Transaction with related parties
There were no transactions with related parties other than with key management personnel as noted
above.
(c) Outstanding balances arising from sales / purchases of goods and services
There are no balances owing to or from related parties at 30 June 2019 (2018: $Nil).
57
Notes to Financial Statements for the financial year ended 30 June 2019
23. Earnings per share
Consolidated Group
(a) Basic earnings
per share
Loss from continuing operations attributable to the ordinary
equity holders of the Company
(b) Diluted earnings/(loss) per share
Loss from continuing operations attributable to the ordinary
equity holders of the Company
(c) Reconciliation of profit/(loss) used in calculating
earnings per share
Basic and diluted profit/(loss) per share
Loss from continuing operations attributable to the ordinary
equity holders of the Company
Loss from discontinued operations
(d) Weighted average number of shares used as the
denominator
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings/(loss) per share
Adjustment for calculation of diluted profit/(loss) per share -
Options
Weighted average number of ordinary shares and potential
ordinary shares used as the denominator in calculating
diluted earnings/(loss) per share
2019
Cents
(0.74)
(0.74)
(0.74)
(0.74)
2019
$
(4,410,376)
-
(4,410,376)
2019
Number
2018
Cents
(0.43)
(0.43)
(0.43)
(0.43)
2018
$
(2,302,570)
-
(2,302,570)
2018
Number
599,998,774
535,036,616
-
-
599,998,774
535,036,616
As the Group made a loss for the years ended 30 June 2019 and 30 June 2018, the options on issue
have no dilutive effect. Therefore, dilutive loss per share is equal to basic loss per share.
24. Group entities
Country of
incorporation
Interest
2019
Interest
2018
Parent entity
Metalicity Limited
Subsidiary
Stuart Town Gold Pty Ltd
Metalicity Energy Pty Ltd
KYM Mining Pty Ltd
Kimberley Mining Limited
Ridgecape Holdings Pty Ltd
Kimberley Mining Australia Pty Ltd
Kimberley Mining Holdings Pty Ltd
Australia
Australia
Australia
Australia
Canada
Australia
Australia
Australia
100%
100%
100%
~81%
~81%
~81%
~81%
100%
100%
-
95%
100%
100%
100%
58
Notes to Financial Statements for the financial year ended 30 June 2019
25. Parent entity information
Statement of financial position
As at 30 June 2019
ASSETS
Total current assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
Total current liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Other reserves
Accumulated losses
TOTAL EQUITY
Profit/(Loss) of the parent entity
Total comprehensive (loss) of the parent entity
Parent
2019
$
1,168,492
5,373,010
6,541,502
220,597
-
220,597
6,320,905
46,955,647
2,043,397
(42,678,139)
6,320,905
1,643,517
1,643,517
Parent
2018
$
2,000,341
9,980,143
11,980,484
584,205
7,053,180
7,637,385
4,343,099
46,638,047
2,026,708
(44,321,656)
4,343,099
(2,873,581)
(2,873,581)
The parent entity has not provided any guarantees, or become responsible for contingent liabilities or
contractual commitments of its subsidiaries, other than those disclosed in this financial report.
59
Notes to Financial Statements for the financial year ended 30 June 2019
26. Subsequent events
Other than the following, the directors are not aware of any significant events since the end of the
reporting period which significantly affect or could significantly affect the operations of the consolidated
entity in future financial years:
On 27 August 2019, the Company announced a placement to raise $123,000 and a rights issue to raise
up to $936,634 , proposed to close on 26 September 2019. On 16 September 2019, the Company
announced and extension of Closing Date of the rights issue to 2 October 2019.
60
ASX Additional Information
Additional Information required by the Australian Securities Exchange Limited Listing Rules and not
disclosed elsewhere in this report is set out below.
The shareholder information was applicable as at 16 September 2019.
(a) Substantial Shareholder
There are no substantial shareholders at the date of this report.
(b) Voting Rights
Ordinary Shares
On a show of hands every member present at a meeting of shall have one vote and upon a poll each
share shall have one vote.
Options
There are no voting rights attached to the options
(c) Distribution of Equity Security Holders
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Ordinary Fully Paid Shares
309,542
817,602
1,099,741
38,236,959
603,925,299
644,389,143
% Issued Capital
0.05
0.13
0.17
5.93
93.72
100.00
There were 30,163,844 unmarketable parcel of ordinary shares.
61
ASX Additional Information
(d) Equity Security Holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
1.
2.
E C DAWSON SUPER PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
3. MR ZHANGHE CHEN
4.
KAGARA LTD
5.
FMG PILBARA PTY LTD
5. MR CHEYNE MICHAEL DUNFORD
6.
SOTIS SUPERANNUATION PTY LTD
CITICORP NOMINEES PTY LIMITED
7.
8. MR RICHARD GORDON WHITE
9.
HISHENK PTY LTD
ELLIOT HOLDINGS PTY LTD
10
11. MR HUGH WARNER & MRS DIANNE WARNER
12.
BNP PARIBAS NOMINEES PTY LTD
13. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
14. VIREYA PTY LTD
15. MACROCON PTY LTD
16.
RANCHLAND HOLDINGS PTY LTD
17. VIMINALE PTY LTD
18. MR SYED MUSHLEH UDDIN
19.
TR6 AUSTRALIA PTY LTD
20. HOLLOWAY COVE PTY LTD
Total
Unquoted equity securities
Options exercisable at 4 cents before 31 December 2019
Options exercisable at 8 cents before 31 December 2019
Options exercisable at 10 cents before 31 December 2019
Options exercisable at 12 cents before 31 December 2019
Options exercisable at 2.5 cents before 1 July 2020
Options exercisable at 3 cents before 1 July 2020
Options exercisable at 4 cents before 1 July 2020
Options exercisable at 3 cents before 26 November 2020
Options exercisable at 4 cents before 26 November 2020
Options exercisable at 5 cents before 26 November 2020
Options exercisable at 6 cents before 31 December 2019
Options exercisable at 8 cents before 31 December 2019
Options exercisable at 10 cents before 31 December 2019
Options exercisable at 12cents before 31 December 2019
Options exercisable at 8 cents before 18 August 2020
Options exercisable at 8 cents before 14 February 2023
Options exercisable at 6 cents before 12 March 2021
Options exercisable at 8 cents before 12 March 2021
Options exercisable at 2.5 cents before 10 April 2022
Options exercisable at 3.5 cents before 10 April 2022
Number
Held
23,000,000
20,961,573
16,544,409
15,806,711
15,000,000
15,000,000
14,583,336
13,191,042
12,755,000
12,000,000
11,800,000
11,145,000
10,640,424
7,738,808
7,000,000
6,539,330
6,492,477
6,388,889
6,000,000
5,990,647
5,698,156
244,275,802
Percentage
of Issued
Shares
3.57
3.25
2.57
2.45
2.33
2.33
2.26
2.05
1.98
1.86
1.83
1.73
1.65
1.20
1.09
1.01
1.01
0.99
0.93
0.93
0.88
37.91
Number on Issue
1,500,000
3,000,000
1,000,000
3,000,000
9,500,000
8,100,000
11,500,000
8,050,000
8,050,000
8,050,000
13,000,000
13,000,000
13,000,000
2,000,000
12,766,670
26,265,023
3,000,000
3,000,000
2,000,000
2,000,000
62
ASX Additional Information
(e) Tenement List:
As at 17 September 2019
Project
TEN ID
Admiral Bay(1)
ML04/244
Admiral Bay(1)
ML04/249
Admiral Bay(1)
EL04/1610
Munglinup
Pilbara East(1)
Napier(1)
Napier Range(1)
Napier Range(1)
EL74/550
E04/2453
G04/0020
M04/0161
M04/0162
Holder
Kimberley Mining Australia Pty Ltd
100%
Kimberley Mining Australia Pty Ltd
100%
Kimberley Mining Australia Pty Ltd
100%
Metalicity Energy Limited 100%
Ridgecape Holdings Pty Ltd 100%
Ridgecape Holdings Pty Ltd 100%
Ridgecape Holdings Pty Ltd 100%
Ridgecape Holdings Pty Ltd 100%
Granted
Expires
21/03/1991
20/03/2033
21/03/1991
20/03/2033
04/09/2007
03/09/2019
22/01/2015
13/09/2017
03/03/1989
31/12/1987
31/12/1987
21/01/2020
12/09/2022
02/03/2031
30/12/2029
30/12/2029
63