2015
ANNUAL
REPORT
CORPORATE
DIRECTORY
DIRECTORS
Peter Newton (Non-Executive Chairman)
Peter Cook (Executive Director & Chief Executive Officer)
Warren Hallam (Executive Director)
Paul Cmrlec (Non-Executive Director)
Andrew Ferguson (Non-Executive Director)
Simon Heggen (Non-Executive Director)
Xie Penggen (Non-Executive Director)
Yimin Zhang (Alternate Director for Xie Penggen)
COMPANY SECRETARY & CFO
Fiona Van Maanen
KEY MANAGEMENT
Paul Hucker (Chief Operating Officer – Gold Division)
Allan King (General Manager – Bluestone Mines Tasmania Joint Venture)
Michael Poepjes (Chief Mining Engineer)
Jake Russell (Chief Geologist)
REGISTERED OFFICE
Level 3, 18-32 Parliament Place
West Perth WA 6005
Phone: +61 8 9220 5700
Fax:
+61 8 9220 5757
E-mail: reception@metalsx.com.au
Website: www.metalsx.com.au
POSTAL ADDRESS
PO Box 1959
West Perth WA 6872
SECURITIES EXCHANGE
Listed on the Australian Securities Exchange
ASX Code: MLX
OTCQX Code: MLXEF
SHARE REGISTRY
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross WA 6153
Phone: 61-8-9315 2333
Fax:
61-8-9315 2233
E-mail: registrar@securitytransfer.com.au
DOMICILE AND COUNTRY OF INCORPORATION
Australia
TABLE OFCONTENTS
COMPANY PROFILE
GROUP ANNUAL HIGHLIGHTS
CHAIRMAN’S LETTER
CEO’S REPORT
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CORPORATE GOVERNANCE STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2015
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION FOR THE YEAR ENDED 30 JUNE 2015
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 30 JUNE 2015
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE YEAR ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
DIRECTORS’ DECLARATION
INDEPENDENT AUDIT REPORT
SECURITY HOLDER INFORMATION AS AT
25 SEPTEMBER 2015
TABLES OF MINERAL RESOURCES AND ORE
RESERVES
4
5
6
7
9
37
38
54
55
56
57
58
116
117
119
121
[Central Murchison Gold Project - Bluebird Plant]
COMPANY
PROFILE
Metals X Limited (Metals X or the Company) is an Australian based diversified metals producer and explorer.
Metals X is focused on identifying, developing and bringing into production high quality mining projects. Metals
X currently operates in three divisions, representing the three priority metals: gold, tin and nickel.
Metals X’s gold division is based on three gold production projects. The combined output of the Higginsville Gold
Operations and the South Kalgoorlie Gold Operations in Western Australia make Metals X an Australian Top 10
producer of gold. The Central Murchison Gold Project came online in October 2015 and is set to dramatically lift
Metals X’s gold production.
Metals X’s tin assets in Tasmania make the company unique as the only producing tin company in Australia with
the largest Mineral Resources and Ore Reserves and one of the few publicly listed companies in the world with
significant exposure to tin.
The Company’s nickel assets include the massive Wingellina Nickel Project, one of the world’s largest undeveloped
nickel-cobalt limonite deposits. The Wingellina Project is supported by a substantial amount of development and
feasibility work, has significant further upside exploration potential and has attracted the attention of international
partners.
ROVER
CLAUDE HILLS
MT DAVIES
CMGP
WINGELLINA
HIGGINSVILLE
SOUTH KALGOORLIE
MT BISCHOFF
RENISON
4
COMPANY PROFILE
GROUP ANNUAL
HIGHLIGHTS
The 2014/2015 FY was an excellent year for the Company.
Key financial highlights for the year were:
• Revenue of $315.2M, up 32%.
» Gold Division Revenue
$232.8M, up 45%.
» Tin Division Revenue
$79.6M, up 5%.
» Other Revenue
$2.8M, up 49%.
•
EBITDA of $82.6M, up 15%.
• Net Profit of $40.9M, up 9%.
• Net Operating Cash Flow of $82.8M, up 13%.
•
Annual Dividend declared of 2.95cps (26% franked) - record date of 2 September 2015.
• Return on Equity of 12%.
• Net cash at bank at 30 June 2015 of $99.0M.
• Cash and working capital at 30 June 2015 $94.9M.
• Net Debt at 30 June 2015 of $4.9M.
• Net Assets increased to $346.3M, up by 11%.
• Capital and exploration works funded of $73.7M, up 51%.
GROUP ANNUAL HIGHLIGHTS
5
CHAIRMAN’S
LETTER
Dear Shareholders
It is my pleasure to report on what has been an excellent year for the Company.
Despite the continuation of very tight capital and investment markets, your Company has shone through with
excellent growth, appreciation in our share price, higher profits and another significant dividend.
We have further expanded our Gold Division. The highlights being the commencement of mining at the HBJ
underground mine at our South Kalgoorlie Operations and the commencement of preproduction activities, including
mining at the Central Murchison Gold Project.
Our executive management team have made several new gold acquisitions during the year, some accretive and
in support of our existing plant and infrastructure and some which are entirely new projects, that will, over the
ensuing years, expand our group gold production.
The strength of our balance sheet and the experience of our executive team lead by CEO & Executive Director
Peter Cook, Executive Director Warren Hallam and CFO & Company Secretary Fiona Van Maanen continue to win
us excellent rewards in the identification and management of gold projects that have transformed the Company in
recent years. Metals X is now a significant player in the Australian gold scene under the stewardship of our Chief
Operating Officer – Gold Division, Paul Hucker.
Our tin operations in Tasmania have continued to deliver a steady and viable operating performance despite much
lower tin prices. Our Bluestone Mines Tasmania Joint Venture team have continued to deliver improvements across
the entire business including extraordinary exploration success in continuing to expand our Tin Division’s mineral
resources and ore reserves.
Our massive Wingellina Nickel-Cobalt-Iron Project continued to progress toward development despite large falls
in the nickel price. The project is world class in size and is ready to take advantage of the next upswing in nickel
market.
Pleasingly, in all measures of fiscal performance we have continued to show improvements despite the depressed
market and our shares have been one of the best performers this year. Our group EBITDA was up 15% over the
previous year to $82.6 million, our underlying profit up 9% to $40.9 million and our annual dividend also rose 9% to
2.95 cents per share (26% franked).
In closing, I would like to thank our shareholders, our staff and our stakeholders for your loyalty and continued
support in the Company for another year. We enter the ensuing year in good shape with exciting things to come.
Peter J Newton
Non-Executive Chairman
6
CHAIRMAN’S LETTER
CEO’S REPORT
Dear Shareholders
I am delighted to report on what has been a pleasing year for the Company.
Our Board’s strategy of a few years ago was to build a gold division within the group, and more importantly in
combining gold with our base metals to create additional diversification has been well accepted by investors and
the market in general.
Whilst the malaise of metal markets continues, the falling Australian dollar exchange rate has provided respite
for our operations. The general downturn and lower oil prices have both coincided to create a more competitive
operating environment which is translating into lower cost inputs across our operations.
As I said last year, falling metal prices and oppressive equity markets always create opportunity for the brave,
the willing and the capable. There are always assets at reasonable prices and opportunities to grow if you have
capacity to take advantage of those. I am pleased to say that we have taken advantage of this with some additional
value-add acquisitions in the past year, although not all were successfully completed.
In the past 12 months we have acquired projects that add capacity and life to our existing operations such as:
1. The Southern Gold Management and Profit sharing agreement at Bulong (the Cannon Mine) which adds to the
South Kalgoorlie Operations (“SKO”).
2. The outright acquisition of the Georges Reward Project which abuts the Cannon Mine and will also add
substantial ore previously locked-up by the lease boundary constraints.
3. The Mt Henry Project at Norseman which has ore that could add substantial additional life to our Higginsville
Gold Operations (“HGO”).
We have also signed a legally binding agreement to acquire the Grosvenor (Fortnum) Gold Project (expected to
be finalised in October) which provides for another future, stand-alone gold operation anticipated to commence
in April 2016. In keeping with our operating style this has resulted in the acquisition of another capital asset at a
fraction of its replacement costs, providing significant opportunity to develop good-margin gold production without
exposing our shareholders to significant debt risk. However, as shareholders may recall, this strategy has some
risk, another potential acquisition consisting of the Central Tanami assets was gazumped by a post-agreement,
competing offer, and supposed processes of shareholder approval. The matter of this transaction remains in the
courts.
Our operations have been steady performers during the year with our gold operations in particular generating
strong profits with HGO being the operational standout. The milestone of re-establishing the HBJ underground mine
and bringing it back into production was the key task at SKO. Whilst this resulted in significant capital investment
through the year, the base-load feed for gold production for SKO for many years into the future has now been
established.
The key development task in our Gold Division during the year was the completion of an operating strategy and
its implementation at the Central Murchison Gold Project (“CMGP”). We commenced open pit mining in June 2015,
mobilised our underground contractor for Paddy’s Flat underground in August 2015 and we are on schedule to
commence ore processing and gold production in October 2015. We expect that the CMGP will build to be our
flagship gold project over the next few years with long run expected production of over 200,000 ounces per year.
CEO’S REPORT
7
In all our gold acquisitions we have bought substantial capital, plant, infrastructure and resources at a fraction of
their replacement cost and put these assets to work to generate excellent profits and future growth opportunity.
Our strategy of diversification across metals and revenue streams has created stability as our cashflows are not
linked to a single commodity. That said, we wait in joyful hope of the coming of a higher nickel price and with it the
opportunity to see our ‘world-class’ Wingellina Nickel-Cobalt-Iron deposit developed. This massive project is a game
changer for the Company and it dwarfs all our other assets in the group.
The quiet achiever in our portfolio, at least on a technical and operating basis has been our Tin Division. Our 50%
owned Renison tin mine has achieved large increases in overall mineral resource and ore reserves and the mine
is perfectly positioned for long term sustainable tin production. The operating performance at the mine has been
outstanding, only being held back by lower world tin prices. Despite a large shortfall in revenue from lower than
expected prices, the mine remains viable and profitable.
The Nickel Division also had to weather a storm of lower nickel prices driven mainly by an oversupply from an
explosion of pig nickel production. Nickel stocks have built upto record highs but now appear to be coming off. Our
massive Wingellina Project which underwent a feasibility study some years ago proposing a high pressure acid leach
(“HPAL”) is a capital intensive project and development requires higher prices. However, this boom in ferro-nickel
does have some silver lining and new less capital intensive and lower cost processing techniques for Wingellina
type ores are rapidly changing the future potential. In this regard we continued to advance environmental and
development permitting and have sent several bulk samples to Korea which have been successfully processed.
We are hoping a recovery in nickel prices and advancements in further ore testing can provide some long-awaited
value for our shareholders in the ensuing year.
Our team at Metals X have a solid understanding that we work for our shareholders and the only true measure of
our performance is our share price and shareholder returns. I am pleased to say that our share price has performed
strongly during the year. We have made good profits and we have again shared an increased dividend with our
shareholders.
We remain a progressive company with many development and capital projects which should provide good long
term and hopefully sustainable outputs for our shareholders.
On behalf of our management and operating teams I thank our shareholders for their belief and backing of the
Company. We go to work every day and try our hardest for you.
Peter Cook
CEO & Executive Director
8
CEO’S REPORT
DIRECTORS’ REPORT
The Directors submit their report together with the financial report of Metals X Limited (“Metals X” or “the Company”)
and of the Consolidated Entity, being the Company and its controlled entities, for the year ended 30 June 2015.
DIRECTORS
The names and details of the Company’s Directors in office during the financial period and until the date of this
report are as follows. Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Peter Newton – Non-Executive Chairman
Mr Newton was a stockbroker for 25 years until 1994. Since then he has been a significant participant in the
Australian resource industry as an investor and a director of a number of listed companies. In past years he has
been the Chairman of both Hill 50 Limited and Abelle Limited. Mr Newton is also the Chairman of the Company’s
Remuneration & Nomination Committee.
Mr Newton has held no public company directorships in the past three years.
Peter Cook – Chief Executive Officer and Executive Director
Mr Cook is a Geologist (BSc (Applied Geology)) and a Mineral Economist (MSc (Min. Econ), MAusIMM with over
30 years of experience in the fields of exploration, project, operational and corporate management of mining
companies.
During the past three years he has served as a director of the following public listed companies:
• Westgold Resources Limited* (Appointed 19 March 2007);
• Pacific Niugini Limited* (Appointed 31 August 2009);
• Kingsrose Mining Limited (Appointed 10 October 2010 – Resigned 21 August 2012); and
•
Aziana Limited* (Appointed 30 May 2011).
Warren Hallam - Executive Director
Mr Hallam is a Metallurgist (B. App Sci (Metallurgy)), a Mineral Economist (MSc (Min. Econ)), holds a Graduate
Diploma in finance and has around 30 years of technical and commercial experience within the resources industry.
During the past three years he has served as a director of the following public listed companies:
• Westgold Resources Limited* (Appointed 18 March 2010); and
•
Aziana Limited (Appointed 30 May 2011 – Resigned 11 April 2014).
Xie Penggen – Non-Executive Director
Mr Xie Penggen is a minerals processing engineer with over 25 years of experience in the mining industry. Mr Xie
commenced his career within the Jinchuan Group where he has undertaken various operational, technical and
management roles. He is currently an executive in Jinchuan’s global investment group which is responsible for the
Group’s international investments.
Mr Penggen has held no public company directorships in the past three years.
DIRECTOR’S REPORT
9
DIRECTORS’ REPORT
Yimin Zhang – Alternate Non-Executive Director
Mr Zhang joined the Board to act as an alternate director for Xie Penggen. Mr Zhang is the Chief Representative for
Jinchuan Australia and is also an Executive Director of Sino Nickel Pty Limited. Mr Zhang has worked for Jinchuan
since 1981 and has been posted to several overseas positions to which he has been involved in numerous Jinchuan
co-operative ventures. Mr Zhang holds a Diploma from the Metallurgical and Architectural Institute of Chung Chan.
During the past three years he has served as a director of the following public listed company:
•
Albidon Limited (Appointed 9 September 2009 – Resigned 2 August 2013).
Andrew Ferguson - Non-Executive Director
Mr Ferguson is an Executive Director and the Chief Executive Officer of APAC Resources Limited. Mr Ferguson holds a
Bachelor of Science Degree in Natural Resource Development and has 15 years of experience in the finance industry
specialising in global natural resources. Mr Ferguson also serves on the Company’s Audit and Remuneration &
Nomination Committees.
During the past three years he has served as a director of the following public listed company:
•
ABM Resources Limited* (Appointed 9 July 2012).
Simon Heggen - Non-Executive Director
Mr Heggen holds Bachelor of Economics and Bachelor of Laws Degrees from the Australian National University and
has around 30 years proven experience in strategic planning, corporate development, M&A and corporate finance
within the Resources sector. Mr Heggen is Chairman of the Company’s Audit Committee and also serves on the
Remuneration & Nomination Committee.
During the past three years he has served as a director of the following public listed company:
• Resource Star Limited (Appointed 9 July 2012 – Resigned 5 April 2013).
Paul Cmrlec – Independent Non-Executive Director
Mr Cmrlec holds a Bachelor of Mining Engineering degree from the University of South Australia. He has considerable
experience in feasibility studies, project development and operational management. Mr Cmrlec also serves on the
Company’s Audit and Remuneration & Nomination Committees.
During the past three years he has served as a director of the following public listed company:
• Pacific Niugini Limited* (Appointed 3 June 2010).
* Denotes current directorship.
10
DIRECTOR’S REPORT
INTERESTS IN THE SHARES OF THE COMPANY
As at the date of this report, the interests of the Directors in the shares and options of Metals X Limited were:
Director
PM Cmrlec
PG Cook
AC Ferguson
WS Hallam
S D Heggen
P J Newton
X Penggen (1)
Y Zhang (Alt Director)
Total
Fully Paid Ordinary Shares
Performance Rights
89,463
18,034,250
-
1,587,500
5,000
13,525,000
44,000,000
-
77,241,213
-
384,616
-
282,692
-
-
-
-
667,308
(1) X Penggen is a director of Jinchuan Group Limited which holds 44,000,000 fully paid ordinary shares in the Company.
COMPANY SECRETARY
Fiona Van Maanen – Chief Financial Officer and Company Secretary
Mrs Van Maanen is a CPA, holds a Bachelor of Business (Accounting) degree and a Graduate Diploma in Company
Secretarial Practice. Mrs Van Maanen has significant experience in accounting and financial management in the
mining and resources industry.
PRINCIPAL ACTIVITIES
The principal activities during the year of the Consolidated Entity were:
•
•
•
exploration, development and operation of tin and gold mines in Australia;
exploration and development of nickel projects in Australia; and
exploration and development of precious and base metals projects in Australia.
EMPLOYEES
The Consolidated Entity had 301 employees at 30 June 2015 (2014: 254).
DIRECTOR’S REPORT
11
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW
OPERATING RESULTS
The Consolidated Entity’s net profit after income tax for the period was $40,949,201 (2014: $37,451,737), an
increase of 9% as compared to the previous financial year.
The results reflect:
• Higher revenue (45%) from gold sales of $232,776,237 (2014: $161,051,109) for the year reflecting a longer
period of operating ownership (12 months in current year compared to 9 months in the previous year) of the
Higginsville Gold Operation (“HGO”) and the South Kal Gold Operation (“SKO”).
•
•
•
•
Increased revenue (4%) from tin sales of $78,334,875 (2014: $75,246,131) for the year from the Renison Tin
Project (50% owned) reflecting higher (14%) tin production despite a lower (9%) tin price.
A group total cost of sales of $254,907,936 (2014: $186,298,890) and increased cash flows from operating
activities of $82,813,166 (2014: $73,396,482) reflecting a larger scale of operations compared to the previous
period.
Impairment losses on mine properties and development of $4,717,594 (2014: Nil) mainly due to the closure of
the Chalice underground mine at HGO.
Exploration and evaluation expenditure write off of $6,110,660 (2014: $6,974,352) due to a review of each
area of interest to determine the appropriateness of continuing to carry forward costs in relation to those
areas of interest.
REVIEW OF FINANCIAL CONDITION
Liquidity and Capital Resources
The consolidated statement of cash flows illustrates that there was an increase in cash and cash equivalents in the
year ended 30 June 2015 of $41,928,974 (2014: $4,344,249 decrease). The increase in cash inflow in comparison
with the prior year was due to the factors detailed below:
•
•
•
•
There has been an increase in the amount of cash generated from operating activities to $82,813,166 (2014:
$73,396,482), which reflects a longer operation period for the gold production assets as well as an increase in
revenue from the Renison Tin Project.
There has been a decrease in the amount of cash outflow on investing activities of $74,350,983 (2014: outflow
$77,975,994). Expenditure in the current period relates to capital re-investment in the gold and tin projects as
part of their sustainability. In the previous year cash outflows were mainly attributable to acquisition of gold
assets (HGO and SKO and Meekatharra Gold Operation).
Financing activities resulted in a cash inflow of $33,466,791 (2014: $235,263). This is due to a cash inflow
from a gold prepayment facility ($40.5M), an inflow from the extinguishment of environmental bonds ($3.2M)
and an outflow for annual dividend payments ($9.5M).
The Consolidated Entity’s debt has increased by $4,750,092 (2014: $14,286) to $4,923,079 (2014: $172,987)
over the last year due to the acquisition of the mining equipment for the Central Murchison Gold Project under
a finance lease. Of the Consolidated Entity’s debt, 34% ($1,657,552) is repayable within one year of 30 June
2015, compared to 68% ($116,865) in the previous year.
Capital Expenditure
Capital expenditure used to purchase property, plant and equipment in 2015 decreased to $8,005,660 from
$12,195,847 in 2014. Capital commitments of $2,383,726 (2014: $431,880) existed at the reporting date,
principally relating to the purchase of plant and equipment.
12
DIRECTOR’S REPORT
SHARE ISSUES DURING THE YEAR
Share Placements
There were no share placements during the financial year.
Share Buy-Back
There were no share buy-backs during the financial year.
Option Conversions
During the financial year 440,000 options were converted to acquire fully paid ordinary shares in the Company
refer to note 27(f) for further details.
Dividend Reinvestment Plan
During the year 2,053,753 shares were issued as part of the dividend reinvestment plan which entitled investors
to convert their dividend into shares at a 5% discount to the 5 day VWAP after the record date.
DIVIDENDS
Dividends paid to Members during the 2015 financial year were as follows:
Dividend Rate
Record Date
2.715 cents per share
16 December 2014
Payment Date
7 January 2015
Franking
100% franked
After balance date the following dividend was proposed by the Directors:
Dividend Rate
Record Date
2.95 cents per share
2 Sept 2015
Payment Date
25 Sept 2015
Franking
DRP Discount
26% franked
5% to 5 day VWAP
The financial effect of this dividend has not been brought to account in the financial statement for the period ended
30 June 2015 and will be recognised in subsequent financial reports.
Refer to note 10 for available franking credits.
CORPORATE INFORMATION
CORPORATE STRUCTURE
TIN DIVISION
100%
BLUESTONE
AUSTRALIA PTY LTD
ACN 108 490 820
100%
BLUESTONE MINES
TASMANIA PTY LTD
ACN 108 492 628
50%
BLUESTONE MINES
TASMANIA JOINT
VENTURE PTY LTD
ACN 141 265 974
RENISON
RENTAILS
MT BISCHOFF
ACN 110 150 055
GOLD DIVISION
NICKEL DIVISION
100%
WESTGOLD
RESOURCES PTY LTD
ACN 009 260 306
100%
METALS
EXPLORATION PTY LTD
ACN 005 483 009
100%
100%
100%
100%
100%
HILL 51 PTY LTD
ACN 147 473 970
100%
AVOCA RESOURCES
PTY LTD
ACN 097 083 282
BIG BELL GOLD
OPERATIONS PTY LTD
ACN 090 642 809
ARAGON
RESOURCES PTY LTD
ACN 114 714 662
CASTILE
RESOURCES PTY LTD
ACN 124 314 085
CMGP
ROVER PROJECT
100%
AVOCA MINING PTY
LTD
ACN 108 547 217
SOUTH KALGOORLIE
HIGGINSVILLE
100%
DIORO EXPLORA-
TION PTY LTD
ACN 009 271 532
100%
HBJ MINERALS PTY
LTD
ACN 127 026 519
100%
HAMPTON GOLD
MINING AREAS LTD
ARBN 009 473 054
METEX NICKEL
PTY LTD
ACN 108 243 358
HINCKLEY RANGE
PTY LTD
ACN 052 098 496
AUSTRAL NICKEL
PTY LTD
ACN 092 816 558
WINGELLINA
PROJECT
CLAUDE HILLS
PROJECT
During the period the shares in Big Bell Gold Operations Pty Ltd were transferred from Fulcrum Resources Pty Ltd
(“Fulcrum”) to Westgold Resources Pty Ltd and Fulcrum was subsequently deregistered (refer to note 39).
DIRECTOR’S REPORT
13
DIRECTORS’ REPORT
REVIEW OF OPERATIONS
TIN DIVISION
Metals X is a globally significant tin producer through its 50% ownership of the Renison Tin Project which holds
three key assets:
1. The world class Renison Tin Mine with a 700,000tpa tin concentrator;
2. The Renison Expansion Project (Rentails Project); and
3. The Mount Bischoff Project.
RENISON TIN MINE (50%)
The Renison Tin Project is located approximately 15km north-east of Zeehan on Tasmania’s west coast. The Rentails
tailings resources sit nearby whilst the Mount Bischoff open pit mine (not operational) is located approximately
80km north.
The Renison Tin Mine continued with a steady improvement in productivity and output during the period.
Significant advances were made in the development of the core mineralised zone in the new Central Federal
Bassett (CFB) area. Ore stoping from this area is planned to commence in August which will then provide a further
long-term and fourth key production area for the mine allowing additional flexibility and contingency to future
production schedules.
Resource extension work has been very successful over the year with upgrades to both the Mineral Resource
and Ore Reserve estimates. The mine is in a strong position with fully developed ore stocks (capital and normal
development) of 2,200,000 tonnes at 1.3% Sn (equivalent to 3 years of processing). In addition capitally developed
ore stocks of 1,000,000 tonne at 1.3% Sn exist.
The Renison Tin Mine has a Total Mineral Resource Estimate of 12.9Mt at 1.46% tin, containing 188Ktn of tin metal
with a Total Ore Reserve Estimate of 6.7Mt at 1.29% tin, containing 86Ktn of tin metal*.
Renison Project Operating Results 2015
The operating results for Metals X’s 50% share of the Renison Project are summarised below:
2015
2014
Renison Underground Mine
Ore Hoisted
Grade
Tin Concentration
Tonnes Processed
Grade
Recovery
Tin Concentrate Grade
Tin Metal Produced
Tin Metal Sold
322,467 tonnes
1.56% Sn
320,742 tonnes
1.57% Sn
70%
54.0% Sn
3,536 tonnes
3,523 tonnes
317,538 tonnes
1.45% Sn
317,168 tonnes
1.45% Sn
68%
56% Sn
3,108 tonnes
3,075 tonnes
The key fiscal outcomes for the period (50% equitable share) of the Renison Tin Project is summarised below:
Tin Price Received ($/t Sn)
Depreciation & Amortisation ($/t Sn)
Cost of Sales ($/t Sn)
14
DIRECTOR’S REPORT
2015
$22,662
$1,887
$19,304
2014
$21,569
$2,727
$21,569
Renison Project Tin Concentrator
The tin concentrator performance showed excellent availabilities and utilisation. Additional equipment installed
within the tin concentrator towards the end of the period had an immediate and positive impact on throughput and
recoveries due to a reduction in recirculating loads. This will begin to have a positive impact on future tin production.
Renison Expansion Project (“Rentails Project”)
The Renison tin concentrator has generated a significant quantity of process tailings accumulated over its lifetime
of operation. The Rentails Project aims to re-process and recover tin and copper from the tailings by the application
of modern processing technology in flotation, gravity and tin-fuming methods. A Definitive Feasibility Study (“DFS”)
of the mining and re-processing of the tailings for the project was completed in 2009. The DFS concluded that
a 10-year project could be established using an integrated 2Mtpa tin concentrator and tin-fumer plant could be
constructed to produce approximately 5,300 tonnes of tin and 2,000 tonnes of copper contained in concentrate
per annum.
The Project partners continued to review the development options for the Rentails Project including the re-
assessment of the technical and construction parameters of the tin fumer plant with a view to lowering the capital
cost and efficiency of the process.
The Rentails Project has a Total Mineral Resource Estimate of 21.8Mt at 0.45% tin containing 98Kt of tin metal with
a Total Ore Reserve Estimate of 20.9Mt at 0.45% tin containing 94Kt of tin metal*.
Mt Bischoff Project
The Mt Bischoff Project is located approximately 80km north of the Renison mine. Mt Bischoff was a significant
historical tin operation, producing some 60,000 tonnes of tin metal since the late 1800’s. Open pit mining by
Metals X between 2009 and 2011 produced a further 5,000 tonnes of tin metal before the initial open pit mine was
depleted. Whilst the mine remains on care and maintenance, significant resources remain at depth and numerous
historically mined areas remain underexplored and offer future development opportunity at higher tin prices.
The Mt Bischoff Project has a Total Mineral Resource Estimate of 1.7Mt at 0.54% tin, containing 9Ktn of tin metal*.
GOLD DIVISION
Metals X began the process of building a Gold Division three years ago. The first step was the consolidation of
ownership of Westgold Resources Limited by scheme of arrangement. This gave Metals X full ownership of the
Rover and Central Murchison Gold Projects (“CMGP”). The gold division took another huge leap forward on 29
October 2013 when Metals X completed the acquisition of the Higginsville Gold Operations and the South Kal Gold
Operations from Alacer Gold Corp (“Alacer”) bringing gold production to the fold. In June 2014, Metals X acquired
the Meekatharra operations form GMK Exploration Pty Ltd offering an expansion option and processing plant to
its planned CMGP. The process of bringing the CMGP back into production has been the main objective of the gold
division during the year. Open pit mining started at the CMGP in June, underground mining is planned to commence
in September 2015 and the plant is on track for commissioning in October 2015.
Subsequent to the year end Metals X has made three additional acquisitions:
1. The Georges Reward gold prospect at Bulong for $4,500,000 which will add additional ore feed to the South
Kalgoorlie Operations. The transaction was completed on 17 July 2015.
2. The Mt Henry Gold Project located approximately 75km south of the Higginsville Gold Operations for 22,000,000
shares in the Company. This will add substantial additional life to the Higginsville Gold Operations. The
transaction is anticipated to be completed in September 2015.
3. The Grosvenor Project from RNI which is a stand-alone gold project with all plant and infrastructure in place
and which Metals X believes can be brought back into operation by mid 2016 at a rate of circa 70,000ozpa.
The acquisition price is 18,000,000 shares in Metals X. The transaction is anticipated to be completed in
September 2015.
DIRECTOR’S REPORT
15
DIRECTORS’ REPORT
REVIEW OF OPERATIONS (CONTINUED)
The Higginsville Gold Operations (“HGO”)
Consists of a modern 1.3Mtpa CIP plant, a 300 person village, the Trident Underground Mine, numerous open pits
and requisite mine and process infrastructure.
Mining at HGO is mainly focused on the Trident Underground Mine and the Lake Cowan group of open pits.
Early in the year the Chalice Underground Mine was closed as economic ores were depleted. Ore from the Chalice
Underground Mine was replaced with ores from the Lake Cowan group of open pits located approximately 10 km
north-east of the process plant.
The process plant operated on a campaign basis (9 days on/5 days off) until June 2015 when it recommenced
operating on a full time basis. Production from the open pits was greater than the processing plant capacity on the
campaign basis resulting in significant ore stocks at period end (173,000 tonnes at 2.75 g/t Au). Some excess ore
stocks were sent to the South Kal Operations for processing in 2015.
Resource development and mining studies commenced at the Atreides and Fairplay prospects to replace the open
pit feed component when the Lake Cowan open pits deplete by the end of 2015.
Exploration work has also continued, with a renewed focus on conceptual target generation and early-stage testing
to expand the resource base of the tenement package.
Operating results of the HGO are summarised below:
Mine Production
Underground - Ore Tonnes
Underground - Grade (g/t Au)
Open Pit - Ore Tonnes
Open Pit - Grade (g/t Au)
Total Mine Production – Ore Tonnes
Total Mine Production – Grade (g/t Au)
Processing
Tonnes Processed at HGO
Tonnes Processed at SKO
Tonnes Processed
Head Grade (g/t Au)
Recovery %
Gold Produced (oz)
2015
659,957
5.59
480,547
1.98
1,140,504
4.06
877,239
149,786
1,027,025
4.27
92.9%
131,406
The key fiscal outcomes for the HGO are summarised below:
Gold Price Received ($/oz)
Depreciation & Amortisation ($/oz)
Cost of Sales ($/oz)
2015
$1,473
$239
$1,117
2014
724,616
5.56
-
-
724,616
5.56
710,769
-
710,769
5.63
95.8%
123,361
2014
$1,400
$196
$1,009
HGO has a Total Mineral Resource Estimate of 13.7Mt at 2.68 g/t Au, containing 1.2Moz of gold with a Total Ore
Reserve Estimate of 3.6Mt at 2.95 g/t, containing 339Koz of gold*.
16
DIRECTOR’S REPORT
The South Kalgoorlie Operations (“SKO”)
The SKO consists of a 1.2Mtpa CIP plant and infrastructure. Numerous open pits and underground options have
previously been mined within the tenement area since the late 1980’s.
Operations continued during the year with the processing of ore sourced from the small cluster of short-life open
pits near the processing plant which has been blended with existing low-grade ore stocks. This was complimented
by some minor toll processing of HGO open pit ore and a small amount of underground development ore from the
HBJ underground.
Development of HBJ underground advanced significantly during the period with new decline development and
refurbishment of the previous development in the central and southern parts of the mine. The cross cut into the
first level on the Southern Ore Zones (“SOZ”) was completed and ore development on the three parallel drives
commenced. The second level of development on the SOZ will commence in the ensuing period to be quickly
followed by the onset of stoping on these lodes and also on remnants in the Central Ore Zone.
With the return to full-scale underground mining at HBJ, underground geological focus has been concentrated on
improving the definition of the HBJ resource in the zones scheduled for development over the coming financial
year. Work will also continue to focus on open pit mining, with definition drilling undertaken at Resolution-Belterre,
Mutooroo and Lanarkshire Porphyry. Exploration work has concentrated on early-stage target generation and
testing in this heavily endowed region.
During the period a mine financing and profit sharing agreement was reached with Southern Gold Limited for the
development of the Cannon open pit mine and potentially an underground mine developed at Bulong. Under the
agreement, Metals X’s staff will operate and manage the mine and the ore will be batch processed in parcels of
approximately 40,000 tonnes through the SKO process plant which is scheduled to commence later in the 2016
financial year.
Operating results of the SKO are summarised below:
Mine Production
Underground - Ore Tonnes
Underground - Grade (g/t Au)
Open Pit - Ore Tonnes
Open Pit - Grade (g/t Au)
Total Mine Production – Ore Tonnes
Total Mine Production – Grade (g/t Au)
Processing
Tonnes Processed
Head Grade (g/t Au)
Recovery %
Gold Produced (oz)
2015
10,687
1.88
225,842
1.44
236,529
1.46
766,238
0.90
84.3%
19,496
The key fiscal outcomes for the HGO are summarised below:
Gold Price Received ($/oz)
Depreciation & Amortisation ($/oz)
Cost of Sales ($/oz)
2015
$1,409
$228
$1,411
2014
-
-
59,230
3.22
59,230
3.22
317,126
1.62
88.6%
14,832
2014
$1,401
$167
$684
SKO has a Total Mineral Resource Estimate of 45.7Mt at 2.25 g/t, containing 3.3Moz gold with a Total Ore Reserve
Estimate of 2.2Mt at 2.49 g/t, containing 174Koz of gold*.
DIRECTOR’S REPORT
17
DIRECTORS’ REPORT
REVIEW OF OPERATIONS (CONTINUED)
The Central Murchison Gold Project (“CMGP”)
The CMGP has a refurbished 2.0 Mtpa process CIP plant and associated infrastructure with a number of open pit
and underground options. In the previous period Metals X advanced its strategy to re-commence mining at the
CMGP with the acquisitions of the Meekatharra Gold Operations and the Nannine tenements.
The refurbished Bluebird 2.0 Mtpa process plant and infrastructure provides an immediate process option for
the ores in the region. The overall consolidated CMGP project area has a number of historic gold mining centres
and an aggregated gold production of nearly 10 million ounces. These include the Day Dawn, Cuddingwarra, Big
Bell, Reedy, Nannine, Yaloginda, Paddy’s Flat and Meekatharra North gold mining centres with the bulk of historic
production being sourced from a handful of larger underground mines.
The revised Feasibility Study and Development Plan for the expanded CMGP was released to the ASX on 29 January
2015. A robust project producing approximately 200,000oz per annum at all in sustaining costs of $1,180 per
ounce with an initial 13 year life is proposed.
Significant progress has been made toward bringing the CMGP into production during the period:
•
The owner/operator open pit mining fleet, associated infrastructure and mining crews arrived at site in mid-
June 2015.
• Open pit mining commenced in late June 2015 with ore being stockpiled.
• Mine dewatering and re-establishment of the Paddy’s Flat portal position has been achieved.
• Underground mine design and tendering has advanced for the Paddy’s Flat with underground mining scheduled
to commence in September 2015.
•
•
The accommodation village has been re-commissioned and is operating, and scheduled FIFO flights for the
operations have commenced.
The accommodation village has been re-commissioned and is operating, and scheduled FIFO flights for the
operations have commenced.
•
The majority of the technical workforce have been recruited and have commenced work at the site.
• Works on minor plant refurbishment and re-fit commenced and the plant is planning to re-start on 1 October
•
•
2015.
The revised power supply contract was finalised.
Exploration and development drilling continued on a number of known deposits and new targets with excellent
results.
•
The final mining approvals for the whole site development plan is expected in the ensuing weeks.
The CMGP has a Total Mineral Resource Estimate of 126.6Mt at 2.07 g/t, containing 8.4Moz of gold with a Total Ore
Reserve Estimate of 20.5Mt at 2.58 g/t, containing 1.7Moz of gold.*
18
DIRECTOR’S REPORT
The Rover Project
The Rover Project is a postulated undercover repetition of the rich Tennant Creek goldfield 80km to the north-east.
Exploration to date has so far fully tested a small number of anomalies and significant mineralised IOCG (“Iron Oxide
Copper Gold”) systems have been discovered at the Rover 1 and Explorer 142 prospects. In addition significant
lead-zinc-silver discoveries have been made at Explorer 108 and recently at the Curiosity Prospect to its south.
The Rover 1 Prospect is a virgin IOCG discovery and has a Total Mineral Resource Estimate of 6.8Mt at 1.73g/t
Au, 1.2% Cu, 0.14% Bi and 0.06% Co although drilling is continuing. The Explorer 108 prospect has a Total Mineral
Resource Estimate of 11.9Mt at 3.24% Zn, 2.00 pb and 11.14g/t Ag*.
The project area is proximal to a major infrastructure corridor adjacent to Central Australian Railway, gas pipeline
and Stuart Highway.
Work in the Tennant Creek district continues to be focused on defining the optimal development pathway for the
Rover 1 deposit.
Drilling completed during the period successfully infilled and extended zones of bonanza copper and gold assays
within the Jupiter zone of the Rover 1 orebody.
NICKEL DIVISION
Metals X’s nickel strategy is focused on the Central Musgrave Project (“CMP”) which straddles the triple-point
of the WA/NT/SA borders. The project represents the Company’s key nickel assets and comprises of the globally
significant Wingellina Ni–Co-Fe rich Limonite deposit, the similar Claude Hills deposit and the Mt Davies exploration
prospects. The project encompasses a large tract of prospective exploration tenure encompassing the whole of the
Wingellina layered intrusive sub-set of the Giles Complex rocks in Western and Southern Australia.
The key focus of the Nickel Division is to bring the Wingellina Nickel–Cobalt Project into production.
The Board had previously reached a decision to defer the expenditure on the updated feasibility due to the continuum
of a depressed nickel market.
Whilst the engineering works for an updated feasibility study by HPAL (high pressure acid leach) technology has
been halted, Metals X continues to use its internal resources to complete other long lead-time studies required
for the DFS, including infrastructure, roads, rail and ports studies, and the completion of the Public Environmental
Review (“PER”) documentation which is required for final EPA approvals.
Interaction with the State and Federal Governments in relation to infrastructure requirements within central
Australia continued with strong co-operation and a desire to assist with the development of the project.
The depressed nickel market resulting from an oversupply of pig-nickel and iron has generated some technological
advances in ferronickel processing. In this regard, Metals X has been discussing the application of POSNEP
technology with Korean giant, POSCO.
A representative 100 tonne sample of Wingellina ore was mined, containerised and shipped to Korea for pilot plant
testing. The sample was received in early December 2014, and the pilot testing procedure commenced in late
December. Preliminary results indicated high recoveries of Ni and Co, with fast reaction kinetics.
Metals X continues to discuss development options using alternate technology and scales which have significantly
changed the game in this lower nickel price environment.
Within the CMP, Total Mineral Resource Estimates (0.5% cut-off) of the nickeliferous limonite are 216.5Mt at 0.95%
Ni, 0.07% Co and 45% Fe2O3, containing 2.1Mt nickel metal*.
DIRECTOR’S REPORT
19
DIRECTORS’ REPORT
REVIEW OF OPERATIONS (CONTINUED)
OTHER EXPLORATION ASSETS
Warumpi Joint Operation
Warumpi is a significant exploration holding at the base of the Arunta province in the Northern Territory, which has
recently been identified as being geologically, tectono-thermally and temporally similar to Proterozoic basins in
Eastern Australia that host five of the world’s ten largest stratabound Pb-Zn deposits (Broken Hill, Hilton-George
Fisher, Mount Isa, MacArthur River and Century). Metals X is undertaking the first modern exploration program in
this highly underexplored region.
During the period on ground reconnaissance discovered an outcropping gossan at the Huron Prospect with rock
chip results at surface returning results up to 120g/t Ag, 9.89% Cu and 4.73% Zn (WR0343). Further reconnaissance
revealed a cluster of gossanous outcrops with high anomalous base and precious metal results (silver, copper and
zinc). Infill sampling surrounding this zone was completed during the quarter with results showing up to 182g/t
Ag (WR0381), 7.72%Cu (WR0373) and 8.55% Zn (WR0351) (announcement ASX:MLX 22 December 2014).Metals
X completed follow-up geophysics to define drill targets and is now in detailed discussions with the Central Land
Council to get approval for drill testing.
* For further details on Total Mineral Resource and Reserve Estimates refer to ASX announcement dated 25 August
2015.
INVESTMENTS
Over three years ago Metals X made a number of smaller investments in opportunities that suit its future plans or
are within emerging markets with growth opportunities.
This investment strategy allowed Metals X to fund and finance exploration and development activities in dedicated
entities without competition with the capital requirements of our own operations.
Metals X’s current investment holdings are:
• Mongolian Resource Corporation Limited (“MRC”) (ASX:MUB) 14.76% (2014: 14.76%); and
•
Aziana Limited (“Aziana”) (ASX:AZK) 13.37% (2014: 13.73%).
Metals X abandoned this investment strategy some time ago and is working on exit strategies for its remaining
share investments.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Total equity increased by 11% ($34,607,401) to $346,266,574 (2014: $311,659,173). The movement was largely a
result of profits earned during the period.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Neometals Limited Lithium Agreement
On 7 July 2015 the agreement entered into by the Company and Neometals on 22 January 2015 regarding the
Company’s lithium rights was completed. Under the agreement Neometals Limited has agreed to lease lithium
rights and to purchase the tenement and associated infrastructure that adjoins their Mt Marion Lithium Project
from the Company. Consideration for the transaction is a lease fee of $90,000 per annum indexed to the CPI,
$250,000, a royalty of $2/t of ore mined and processed and a 1.5% NSR on the sale of any downstream products
generated from the land area.
20
DIRECTOR’S REPORT
Georges Reward Project Acquisition
On 10 July 2015 the Company announced that it had entered into an agreement with Northern Mining Limited
(79%) and Balagundi Pty Ltd (21%) to acquire their interests in the Georges Reward Project at Bulong in Western
Australia for $4,500,000 in cash. The Georges Reward Project is contiguous with the Cannon Project of Southern
Gold Limited with which Metals X has a contract management and profit sharing agreement from the mining of the
Cannon deposit.
Mt Henry Gold Project Acquisition
On 31 July 2015 the Company announced that it had entered into an agreement to acquire the Mt Henry Gold
Project from Panoramic Resources Ltd and Matsa Resources Limited.
The Mt Henry Gold Project is located approximately 15 km south of Norseman and 75 km south of HGO. The project
consists of three known deposits being North Scotia, Selene and Mt Henry, which the Company intends to mine and
cart to HGO for processing.
The consideration for the acquisition is 22,000,000 new fully paid ordinary shares in Metals X. Settlement is subject
to FIRB approval, regulatory and statutory approvals and consent to assign the native title agreements if required.
At the date of this report these conditions remain outstanding.
Grosvenor Gold Project Acquisition
On 31 July 2015 the Company announced that it had entered into an agreement with RNI NL to acquire the
Grosvenor Gold Project. The Grosvenor Project is located approximately 150 km north of Meekatharra in the Bryah
Basin of Western Australia. The project includes:
•
•
The gold prospects and resources of the Grosvenor, Horseshoe and Peak Hill areas which host a resource base
of over 2 million ounces (refer to numerous public disclosures by RNI).
The Grosvenor Gold process plant – a 1.0Mtpa CIL plant with substantial infrastructure including a 100 person
village, air strip and borefield.
Consideration for the acquisition is as follows:
•
•
•
The allotment of 18,000,000 new fully paid ordinary shares in Metals X.
A $300,000 interest free loan to RNI for working capital during the sales process which is convertible into
shares in RNI at the price of its next capital raising.
Settlement is subject to FIRB approval, regulatory and statutory approvals and consent to assign the native
title agreements if required.
In addition to the acquisition of RNI’s Grosvenor Gold Project, the Company agreed to sell its CMGP Chunderloo
copper-gold project to RNI for a consideration of 25,000,000 new fully paid RNI shares.
At the date of this report these conditions remain outstanding.
There are no other matters or circumstances that have arisen since 30 June 2015 that have or may significantly
affect the operations, results, or state of affairs of the Group in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
It is expected that the Consolidated Entity will continue its exploration, mining, processing, production and
marketing of tin and copper concentrates and gold bullion in Australia, and will continue the development of its
nickel and gold exploration projects. These are described in more detail in the Review of Operations above.
DIRECTOR’S REPORT
21
DIRECTORS’ REPORT
REVIEW OF OPERATIONS (CONTINUED)
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Consolidated Entity’s operations are subject to the relevant environmental protection legislation (Commonwealth
and State legislation). The Consolidated Entity holds various environmental licenses issued under these laws,
to regulate its mining and exploration activities in Australia. These licenses include conditions and regulations
in relation to specifying limits on discharges into the air, surface water and groundwater, rehabilitation of areas
disturbed during the course of mining and exploration activities and the storage of hazardous substances.
All environmental performance obligations are monitored by the board of directors and subjected from time to
time to Government agency audits and site inspections. There have been no material breaches of the Consolidated
Entity’s licenses and all mining and exploration activities have been undertaken in compliance with the relevant
environmental regulations.
SHARE OPTIONS
Unissued shares
As at the date of this report, there were no unissued ordinary shares under options, refer to note 27(e).
Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or
any related body corporate.
Shares issued as a result of exercising options
During the financial year 440,000 options were converted to acquire fully paid ordinary shares in the Company,
refer to note 27(f) for further details.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, the Company paid a premium in respect of a contract of insurance to insure Directors
and officers of the Company and related bodies corporate against those liabilities for which insurance is permitted
under section 199B of the Corporations Act 2001. Disclosure of the nature of the liabilities and the amount of the
premium is prohibited under the conditions of the contract of insurance.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified
amount). No payment has been made to indemnify Ernst & Young during or since the financial year.
22
DIRECTOR’S REPORT
DIRECTORS’ MEETINGS
The number of meetings of Directors’ (including meetings of committees of Directors) held during the year and the
number of meetings attended by each Director was as follows:
Directors Meetings
Audit Committee
No of meetings held:
No of meetings attended:
PG Cook
PM Cmrlec
AC Ferguson
WS Hallam
SD Heggen
PJ Newton
X Penggen
Y Zhang (Alt Director)
9
8
9
8
9
9
8
-
7
2
-
2
2
-
2
2
-
-
Remuneration &
Nomination Committee
1
-
1
1
-
1
1
-
-
All Directors were eligible to attend all meetings held.
COMMITTEE MEMBERSHIP
As at the date of this report, the Company had an Audit Committee and a Remuneration and Nomination Committee
of the Board of Directors.
Members acting on the committees of the Board during the year were:
Audit Committee
Remuneration & Nomination Committee
SD Heggen *
PJ Newton
AC Ferguson
PM Cmrlec
PJ Newton *
SD Heggen
AC Ferguson
PM Cmrlec
Notes:
* Designates the Chairman of the Committee.
DIRECTOR’S REPORT
23
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
This remuneration report for the year ended 30 June 2015 outlines the remuneration arrangements of the
Consolidated Entity in accordance with the requirements of the Corporations Act 2001 (“the Act”) and its regulations.
This information has been audited as required by section 308(3C) of the Act.
The remuneration report is presented under the following sections:
Introduction
1.
2. Remuneration governance
3. Non-executive Director remuneration arrangements
4. Executive remuneration arrangements
5. Company performance and the link to remuneration
6. Executive contractual arrangements
Additional statutory disclosures
7.
1. INTRODUCTION
The remuneration report details the remuneration arrangements for Key Management Personnel (“KMP”) who
are defined as those persons having authority and responsibility for planning, directing and controlling the
major activities of the Consolidated Entity.
For the purposes of this remuneration report, the term ‘executive’ includes the Chief Executive Officer (“CEO”),
executive directors, senior executives, general managers and secretary of the Consolidated Entity.
Details of KMP of the Consolidated Entity are set out below:
Name
Position
Appointed
Resigned
(i) Non-Executive Directors
PJ Newton
PM Cmrlec
AC Ferguson
SD Heggen
X Penggen
Y Zhang
Non-Executive Chairman
14 December 2012
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
23 July 2013
10 May 2012
25 October 2012
9 February 2012
Alternate for Mr Xie Penggen
3 October 2007
(ii) Executive Directors
PG Cook
WS Hallam
CEO & Executive Director
Executive Director
23 July 2004
1 March 2005
(iii) Other Executives (KMPs)
AH King
PD Hucker
MP Poepjes
JW Russell
General Manager - Tin Operations
24 February 2014
Chief Operating Officer
17 October 2012
Chief Mining Engineer
Chief Geologist
8 August 2011
17 October 2012
FJ Van Maanen
CFO & Company Secretary
1 July 2005
-
-
-
-
-
-
-
-
-
-
-
-
-
There are no other changes of the key management personnel after the reporting date and the date the
financial report was authorised for issue.
24
DIRECTOR’S REPORT
2. REMUNERATION GOVERNANCE
Remuneration and Nomination Committee
The remuneration and nomination committee comprises four NEDs.
The remuneration and nomination committee is responsible for making recommendations to the Board on the
remuneration arrangements for non-executive directors and executives.
The remuneration and nomination committee assesses the appropriateness of the nature and amount
of remuneration of non-executive directors and executives on a periodic basis by reference to relevant
employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the
retention of a high performing director and executive team.
Remuneration approval process
The Board approves the remuneration arrangements of the CEO and executives and all awards made under the
long-term incentive plan, following recommendations from the remuneration and nomination committee. The
Board also sets the aggregate remuneration of non-executive directors which is then subject to shareholder
approval.
The remuneration and nomination committee approves, having regard to the recommendations made by the
CEO, the level of the Consolidated Entity’s short-term incentive pool.
Remuneration Strategy
The Company’s remuneration strategy is designed to attract, motivate and retain employees and non-executive
directors by identifying and rewarding high performers and recognising the contribution of each employee to
the continued growth and success of the Consolidated Entity.
To this end, the company embodies the following principles in its remuneration framework:
•
•
•
retention and motivation of key executives;
attraction of quality management to the Consolidated Entity; and
performance incentives which allow executives to share the rewards of the success of the Consolidated
Entity.
Remuneration Structure
In accordance with best practice corporate governance, the structure of non-executive director and senior
executive remuneration is separate and distinct.
Remuneration report at FY14 AGM
The FY14 remuneration report received positive shareholder support at the FY14 AGM with a vote of 97% in
favour.
DIRECTOR’S REPORT
25
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
3.
NON-EXECUTIVE DIRECTOR REMUNERATION ARRANGEMENTS
Remuneration Policy
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to
attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is reviewed
annually against fees paid to non-executive directors of comparable companies. The Board may consider
advice from external consultants, however none were engaged during the year. The board also considers fees
paid to non-executive directors of comparable companies when undertaking the annual review process.
The Company’s constitution and the ASX listing rules specify that the non-executive director fee pool shall be
determined from time to time by a general meeting. The last determination was at the annual general meeting
held on 26 November 2014 when shareholders approved an aggregate fee pool of $600,000 per year.
Structure
The remuneration of non-executive directors consists of director’s fees. Non-executives are entitled to receive
retirement benefits and to participate in any incentive programs. There are currently no specific incentive
programs.
The non-executive Chairman receives a base fee of $110,000 and each other non-executive director receives
a base fee of $80,000 for being a director of the Consolidated Entity. There are no additional fees for serving
on any board committees.
Non-executive directors have long been encouraged by the Board to hold shares in the Company and align
their interests with the Company’s shareholders. The shares are purchased by the directors at the prevailing
market share price.
The remuneration report for the non-executive directors for the year ending 30 June 2015 and 30 June 2014 is
detailed in Table 1 and Table 2 respectively of this report.
4.
EXECUTIVE REMUNERATION ARRANGEMENTS
Remuneration Policy
The Company’s executive remuneration strategy is designed to attract, motivate and retain high performing
individuals and align the interests of executives and shareholders.
Structure
In determining the level and make-up of executive remuneration, the remuneration and nomination committee
engages external consultants as needed to provide independent advice.
Remuneration consists of the following key elements:
•
•
Fixed remuneration (base salary and superannuation); and
Variable remuneration (share options, performance rights and cash bonus).
The proportion of fixed remuneration and variable remuneration for each executive for the period ending 30
June 2015 and 30 June 2014 are set out in Table 1 and Table 2.
26
DIRECTOR’S REPORT
Fixed Remuneration
Executive contracts of employment do not include any guaranteed base pay increase. Fixed remuneration
is reviewed annually by the remuneration and nomination committee. The process consists of a review of
the Company, business unit and individual performance, relevant comparative remuneration internally and
externally and, where appropriate, external advice independent of management.
Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms
including cash and fringe benefits such as motor vehicles. It is intended that the manner of payment chosen
will be optimal for the recipient without creating undue cost for the Company.
The fixed remuneration component for executives for the period ending 30 June 2015 and 30 June 2014 are
set out in Table 1 and Table 2.
Variable Remuneration
Short Term Incentive (“STI”) – cash bonus
The objective of the STI is to link the increase in shareholder value over the year with the remuneration
received by the executives charged with achieving that increase. Executives may from time-to-time receive
a discretionary cash bonus approved by the Board as a retrospective reward for exceptional performance
in a specific matter of importance. The total potential STI cash bonus available is set at a level so as to
provide sufficient incentive to the executives to achieve the performance goals and such that the cost to the
Consolidated Entity is reasonable in the circumstances.
Annual STI payments granted to each executive depends on their performance over the year and are based on
recommendations from the CEO following collaboration with the Board. Typically included are measures such
as contribution to strategic initiatives, risk management and leadership/team contribution.
The aggregate of annual STI payments available for executives across the Consolidated Entity is subject to the
approval of the Board. The Board has no pre-determined performance criteria against which the amount of a
STI is assessed and there are no pre-determined maximum possible values of award under the STI scheme. In
assessing the value of an STI award to be granted the Board will give consideration to the contribution of the
action being rewarded to the success of the Consolidated Entity. Based on the performance of the individuals
and the Consolidated Entity, discretionary STI cash bonuses totaling $421,000 were awarded in respect of
the 2015 financial year and $346,041 STI cash bonuses were paid in respect of the 2014 financial year. No
discretionary STI cash bonuses relating to the 2015 or 2014 financial years will become payable in future
financial years.
DIRECTOR’S REPORT
27
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
4.
EXECUTIVE REMUNERATION ARRANGEMENTS (CONTINUED)
Long Term Incentive (“LTI”) – Share options and Performance Rights
The objective of the LTI plan is to reward executives in a manner that aligns remuneration with the creation
of shareholder wealth. As such LTI’s are made to executives who are able to influence the generation of
shareholder wealth and thus have an impact on the Consolidated Entity’s performance.
LTI awards to executives are made under the Metals X Limited Long Term Incentive Plan and are delivered in
the form of options and performance rights over unissued ordinary shares of the Company. The number of
options and performance rights issued are determined by the policy set by the remuneration and nomination
committee and is based on each executive’s role and position with the Consolidated Entity.
The performance rights vest over a period of three years subject to meeting performance measures, with no
opportunity to retest. Where a participant ceases employment prior to the vesting of their performance rights,
the performance rights are forfeited. The performance rights have the following performance hurdles:
•
•
The Absolute Total Shareholder Return (“TSR”) performance rights (50% of total performance rights) will
vest subject to the compound annual growth rate of the Company’s TSR being not less than 15% over the
three year service period.
The Relative TSR performance rights (50% of total performance rights) are measured against a defined
peer group of companies which the Board considers compete with the Company for the same investment
capital, both in Australia and overseas, and which by the nature of their business are influenced by
commodity prices and other external factors similar to those that impact on the TSR performance of the
Company.
The Board considers that TSR is an appropriate performance hurdle because it ensures that a proportion of
each participant’s remuneration is explicitly linked to shareholder value and ensures that participants only
receive a benefit where there is a corresponding direct benefit to shareholders.
The Absolute and Relative TSR’s are monitored by an independent external advisor at 30 June each year, with
the vesting outcomes ultimately determined at the end of the three year performance period.
The share options will vest after one year or as determined by the Board of Directors and Executives are able
to exercise the share options for up to three years after vesting before the options lapse. Where a participant
ceases employment prior to the vesting of their share options, the share options are forfeited. Where a
participant ceases employment after the vesting of their share options, the share options automatically lapse
after six months of ceasing employment.
Table 3 and Table 4 provide details of LTI options and performance rights granted, exercised and lapsed during
the year.
28
DIRECTOR’S REPORT
5.
COMPANY PERFORMANCE AND THE LINK TO REMUNERATION
STI remuneration is linked to the performance of the Company. In the current financial year cash bonuses were
awarded to executives based on the Company’s performance in the preceding financial year.
LTI remuneration has been designed to motivate and incentivise executives to drive the Company’s long term
performance to deliver greater returns to shareholders. The granting of performance rights and/or share options
is a performance incentive which allows executives to share in the rewards and success of the Company.
Closing share price
Profit/(loss) per share (cents)
Net tangible assets per share
Total Shareholder Return
30 June
2011
$1.02
17.94
$0.77
166%
Dividend paid per shares (cents)
-
30 June
2012
$0.58
-13.24
$0.62
-43%
-
30 June
2013
$0.39
2.24
$0.66
-32%
-
30 June
2014
$1.04
9.06
$0.75
165%
2.7151
30 June
2015
$1.38
9.87
$0.83
35%
2.952
1. Paid on 7 January 2015.
2. Declared on 24 August 2015 but not accrued at 30 June 2015.
6.
EXECUTIVE CONTRACTUAL ARRANGEMENTS
Remuneration arrangements for KMP are formalised in employment agreements. Details of these contracts
are provided below:
Chief Executive Officer
The CEO, Mr Cook is employed under an annual salary employment contract. The current employment contract
commenced on 1 January 2014. Under the terms of the present contract:
• Mr Cook receives a fixed remuneration of $635,100 (including superannuation) per annum.
• Mr Cook may resign from his position and thus terminate this contract by giving three months written
notice. On resignation any unvested options and performance rights will be forfeited.
•
•
The Company may terminate this employment agreement by providing three months written notice or
providing payment in lieu of notice period (based on the fixed component of Mr Cook’s remuneration). On
termination on notice by the Company Mr Cook will still be entitled to any LTI options and performance
rights that have vested or that will vest during the notice period. LTI options and performance rights that
have not yet vested will be forfeited.
The Company may terminate the contract at any time without notice if serious misconduct has occurred.
Where termination with cause occurs the CEO is only entitled to that portion of remuneration that is fixed,
and only up to the date of termination. On termination with cause by the Company Mr Cook will still be
entitled to any LTI options and performance rights that have vested. LTI options and performance rights
that have not yet vested will be forfeited.
DIRECTOR’S REPORT
29
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
6.
EXECUTIVE CONTRACTUAL ARRANGEMENTS (CONTINUED)
Other executive directors
Mr Hallam is employed under an annual salary employment contract and receives a fixed remuneration of
$503,700 (including superannuation) per annum.
The other terms of Executive Director’s employment contracts are:
•
•
•
Executive Directors may resign from their position and thus terminate their contract by giving three
months written notice. On resignation any unvested options and performance rights will be forfeited.
The Company may terminate the employment agreement by providing three months written notice or
providing payment in lieu of notice period (based on the fixed component of the executive director’s
remuneration). On termination on notice by the Company Mr Hallam will still be entitled to any LTI
options and performance rights that have vested or that will vest during the notice period. LTI options and
performance rights that have not yet vested will be forfeited.
The Company may terminate the contract at any time without notice if serious misconduct has occurred.
Where termination with cause occurs the executive director is only entitled to that portion of remuneration
that is fixed, and only up to the date of termination. On termination with cause by the Company Mr
Hallam will still be entitled to any LTI options and performance rights that have vested. LTI options and
performance rights that have not yet vested will be forfeited.
Other KMP
All other executives have standard employment contracts. The other terms of the employment contracts are:
•
•
•
Executives may resign from their position and thus terminate their contract by giving one to three months
written notice. On resignation any unvested options and performance rights will be forfeited.
The Company may terminate the employment agreement by providing one to three months written
notice or providing payment in lieu of notice period (based on the fixed component of the executive’s
remuneration). On termination on notice by the Company other KMP will still be entitled to any LTI
options and performance rights that have vested or that will vest during the notice period. LTI options and
performance rights that have not yet vested will be forfeited.
The Company may terminate the contract at any time without notice if serious misconduct has occurred.
Where termination with cause occurs the executive is only entitled to that portion of remuneration that is
fixed, and only up to the date of termination. On termination with cause by the Company other KMP will still
be entitled to any LTI options and performance rights that have vested. LTI options and performance rights
that have not yet vested will be forfeited.
30
DIRECTOR’S REPORT
Remuneration of key management personnel of the Consolidated Entity
Table 1: Remuneration for the year ended 30 June 2015
Short Term
Salary and
Fees
Cash
Bonus
Non
monetary
benefits
Post
employ-
ment
Superan-
nuation
Long term
benefits
Long
service
leave
Share-
based
Payment
Options
Total
% Perfor-
mance
related
Non-executive Directors
PJ Newton
PM Cmrlec
AC Ferguson
SD Heggen
X Penggen
Y Zhang (Alt Director)
Executive Directors
PG Cook *
WS Hallam *
110,000
80,000
80,000
80,000
-
-
350,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,450
7,600
-
7,600
-
-
25,650
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120,450
87,600
80,000
87,600
-
-
375,650
580,948
93,575
468,653
72,770
4,721
4,878
21,959
22,400
52,051
775,654
35,047
14,876
38,258
634,482
Other key management personnel
PD Hucker
AH King **
MP Poepjes
JW Russell
320,047
49,775
5,508
30,000
10,069
21,471
436,870
160,000
3,778
230,500
35,000
225,000
30,500
-
4,941
5,508
7,082
15,539
25,223
27,072
-
6,894
8,089
-
179,317
14,639
317,197
14,639
310,808
29,663
22,886
25,505
386,851
FJ Van Maanen
256,215
45,500
-
-
-
-
-
-
-
19
17
16
2
16
15
18
Totals
*
2,241,363
330,898
32,638
184,503
85,214
166,563
3,041,179
2,591,363
330,898
32,638
210,153
85,214
166,563
3,416,829
PG Cook was a Director of Aziana during the period and Metals X was paid $ 34,219 for director’s fees in relation to Aziana director
duties. These amounts represent the net employment expense to Metals X.
DIRECTORS’ REPORT
31
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
6.
EXECUTIVE CONTRACTUAL ARRANGEMENTS (CONTINUED)
Table 2: Remuneration for the year ended 30 June 2014
Short Term
Salary and
Fees
Cash
Bonus
Non
monetary
benefits
Post
employ-
ment
Superan-
nuation
Long term
benefits
Long
service
leave
Share-
based
Payment
Options
Total
% Perfor-
mance
related
-
-
-
-
-
-
17
14
3
14
1
9
9
16
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
92,863
61,734
60,000
65,550
-
-
280,147
599,359
617,559
172,516
358,207
120,042
289,856
288,115
345,835
2,791,489
3,071,636
Non-executive Directors
PJ Newton
PM Cmrlec
AC Ferguson
SD Heggen
X Penggen
Y Zhang (Alt Director)
Executive Directors
PG Cook *
WS Hallam *
85,000
56,507
60,000
60,000
-
-
261,507
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,863
5,227
-
5,550
-
-
18,640
-
-
-
-
-
-
-
454,352
100,000
480,484
84,000
6,042
5,729
22,535
16,430
21,968
25,378
Other key management personnel
154,579
4,471
-
13,466
-
275,438
50,000
2,787
25,000
4,982
108,308
1,570
235,000
25,000
229,327
25,000
-
2,787
2,787
6,261
10,164
24,050
23,125
28,011
-
3,019
7,876
8,741
2,184,310
346,041
26,393
168,319
66,426
2,445,817
346,041
26,393
186,959
66,426
FJ Van Maanen
246,822
56,000
RD Cook **
PD Hucker
AH King **
MP Poepjes
JW Russell
Totals
*
**
RD Cook resigned on 3 January and AH King was appointed on 24 February 2014.
32
DIRECTOR’S REPORT
WS Hallam and PG Cook were Directors of Aziana during the period and Metals X was paid $35,816 and $67,385 respectively for
director’s fees in relation to their Aziana director duties. These amounts represent the net employment expense to Metals X.
7.
ADDITIONAL STATUTORY DISCLOSURES
This section sets out the additional disclosures required under the Corporations Act 2001.
Options
Share options do not carry any voting rights and can be exercised once the vesting conditions have been met
until their expiry date.
No options were granted or vested during the year and all options granted in prior periods had fully vested at
30 June 2015. No options were exercised during the year.
Table 3: Value of options awarded, exercised and lapsed during the yearˆ
Number of
Options *
Exercise
price per
option
Grant date
Vesting
date
Expiry date
Value of options
granted during
the year
$
Value of options
exercised during
the year
$
WS Hallam
PD Hucker
MP Poepjes
JW Russell
312,500
275,000
150,000
275,000
FJ Van Maanen
125,000
$1.20
$0.84
$1.20
$1.04
$1.20
30/11/11
30/11/11
30/11/14
17/10/12
17/10/12
1/11/14
30/11/11
30/11/11
30/11/14
17/10/12
17/10/12
3/07/14
30/11/11
30/11/11
30/11/14
-
-
-
-
-
-
-
-
-
-
^ For details on valuation of the options, including models and assumptions used, please refer to note 30.
* During the period these options lapsed unexercised and were subsequently forfeited.
There were no alterations to the terms and conditions of options granted as remuneration since their grant
date.
Performance Rights
Table 4: Performance rights granted and vested during the year (Consolidated)
30 June 2015
Year
Performance
rights
granted
during the
year (No.)
Grant date
Value of
performance
rights at
grant date $
Vesting
date
Expiry
date
Performance
rights vesting
during the
period
Performance
rights lapsed
during the
year
PG Cook *
WS Hallam *
PD Hucker
MP Poepjes
JW Russell
FJ Van Maanen
2015
2015
2015
2015
2015
2015
384,616
26/11/14
156,154
1/07/17
1/07/17
282,692
26/11/14
114,733
1/07/17
1/07/17
158,654
26/11/14
64,414
1/07/17
1/07/17
108,173
26/11/14
43,918
1/07/17
1/07/17
108,173
26/11/14
43,918
1/07/17
1/07/17
188,462
26/11/14
76,516
1/07/17
1/07/17
-
-
-
-
-
-
-
-
-
-
-
-
* Grant of performance rights was subject to shareholder approval at the Annual General Meeting, which
occurred on 26 November 2014.
For details on vesting conditions and valuation of the performance rights, including models and assumptions
used, please refer to note 30.
The value of the share based payments granted during the period is recognised in compensation over the
vesting period of the grant.
DIRECTORS’ REPORT
33
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
7.
ADDITIONAL STATUTORY DISCLOSURES (CONTINUED)
Table 5: Shareholdings of key management personnel (including nominees)
Shareholdings of Key Management Personnel, ordinary shares held in Metals X Limited (number)
30 June 2015
Balance held at 1
July 2014
Granted as
remuneration
On exercise of
options
Net change other ^
Balance held at 30
June 2015
Directors
PJ Newton
PG Cook
WS Hallam
PM Cmrlec
AC Ferguson
SD Heggen
X Penggen
13,525,000
17,579,176
1,587,500
89,463
-
5,000
44,000,000
Y Zhang (Alternate
Director)
-
Executives
PD Hucker
AH King
MP Poepjes
JW Russell
FJ Van Maanen
19,375
17,500
-
36,203
517,500
Total
77,376,717
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
455,074
-
-
-
-
-
-
-
23,750
-
1,471
-
13,525,000
18,034,250
1,587,500
89,463
-
5,000
44,000,000
-
19,375
41,250
-
37,674
517,500
480,295
77,857,012
^ Represents acquisitions and disposals of shares on market and shares issued under the dividend
reinvestment plan.
34
DIRECTOR’S REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
7.
ADDITIONAL STATUTORY DISCLOSURES (CONTINUED)
Table 6: Performance right and option holdings of key management personnel (including nominees)
Options balance at
beginning of period 1
July 2014
Performance
rights granted as
remuneration
Options net change
other ^
Options exercised
Performance rights
balance at end of
period 30 June 2015
Performance rights
not vested and not
exercisable
Vested and exercisable
30 June 2015
Directors
PJ Newton
PG Cook
WS Hallam
PM Cmrlec
AC Ferguson
SD Heggen
X Penggen
Y Zhang (Alternate
Director)
Executives
PD Hucker
AH King
MP Poepjes
JW Russell
FJ Van Maanen
-
-
312,500
-
-
-
-
-
275,000
-
150,000
275,000
125,000
-
384,616
282,692
-
-
-
-
-
158,654
-
108,173
108,173
188,462
-
-
(312,500)
-
-
-
-
(275,000)
-
(150,000)
(275,000)
(125,000)
Total
1,137,500
1,230,770
(1,137,500)
^ Options lapsed during the period and forfeited.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
384,616
282,692
-
-
-
-
-
158,654
-
108,173
108,173
188,462
-
384,616
282,692
-
-
-
-
-
158,654
-
108,173
108,173
188,462
1,230,770
1,230,770
-
-
-
-
-
-
-
-
-
-
-
-
-
-
DIRECTORS’ REPORT
35
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
7.
ADDITIONAL STATUTORY DISCLOSURES (CONTINUED)
Other transactions and balances with Key Management Personnel
PG Cook is a Director of Aziana, in the current period $34,219 has been charged to Aziana for director’s fees. In 2014
PG Cook and WS Hallam were both Directors of Aziana, $67,385 and $35,816 respectively were charged to Aziana
for director’s fees.
The Consolidated Entity provides accounting, secretarial and administrative services at cost to Aziana. In the
current period $169,339 has been charged to Aziana for these services (2014: $204,426).
At 30 June 2015 there was an outstanding balance of $31,755 (2014: $15,639) for Aziana Limited.
End of Audited Remuneration Report.
AUDITOR’S INDEPENDENCE AND NON-AUDIT SERVICES
AUDITOR INDEPENDENCE
The Directors’ received the Independence Declaration, as set out on page 37, from Ernst & Young.
NON-AUDIT SERVICES
The following non-audit services were provided by the entity’s auditor, Ernst & Young. The directors are satisfied
that the provision of non-audit is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor
independence was not compromised.
Ernst & Young received or are due to receive the following amounts for the provision of non-audit services (refer
to note 34):
Tax and stamp duty compliance services
119,560
$
Signed in accordance with a resolution of the Directors.
PG Cook
CEO & Executive Director
Perth, 25 August 2015
36
DIRECTOR’S REPORT
AUDITOR’S INDEPENDENCE DECLARATION
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s independence declaration to the Directors of Metals X
Limited
In relation to our audit of the financial report of Metals X Limited for the financial year ended 30 June
2015, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional
conduct.
Ernst & Young
D S Lewsen
Partner
25 August 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DL:MetalsX070
AUDITOR’S INDEPENDENCE DECLARATION
37
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Metals X Limited is responsible for the corporate governance of the Consolidated
Entity. The Board guides and monitors the business and affairs of Metals X Limited on behalf of the
shareholders by whom they are elected and to whom they are accountable. This statement reports on
Metals X Limited’s key governance principles and practices.
1.
COMPLIANCE WITH BEST PRACTICE RECOMMENDATIONS
The Company, as a listed entity, must comply with the Corporations Act 2001 and the Australian Securities
Exchange (ASX) Listing Rules. The ASX Listing Rules require the Company to report on the extent to which
it has followed the Corporate Governance Principles and Recommendations published by the ASX Corporate
Governance Council. Where a recommendation has not been followed, that fact is disclosed, together with
the reasons for the departure.
For further information on corporate governance policies adopted by the Company, refer to the corporate
governance section of our website: www.metalsx.com.au.
The table below summaries the Company’s compliance with the Corporate Governance Council’s Principles
and Recommendations:
Principle #
ASX Corporate Governance Council Recommendations
Reference
Comply
Principle 1
Lay solid foundations for management and oversight
1.1
A listed entity should disclose
2(a)
Yes
(a) the respective roles and responsibilities of its board and management; and
(b) those matters expressly reserved to the board and those delegated to management.
1.2
A listed entity should:
2(b), 3(b)
Yes
3(b)
2(f)
6(c)
Yes
Yes
Yes
1.3
1.4
1.5
(a) undertake appropriate checks before appointing a person, or putting forward to
security holders a candidate for election, as a director; and
(b) provide security holders with all material information in its possession relevant to a
decision on whether or not to elect or re-elect a director.
A listed entity should have a written agreement with each director and senior executive
setting out the terms of their appointment
The company secretary of a listed entity should be accountable directly to the board,
through the chair, on all matters to do with the proper functioning of the board.
A listed entity should:
(a) have a diversity policy which includes requirements for the board or a relevant
committee of the board to set measurable objectives for achieving gender diversity and
to assess annually both the objectives and the entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and
(c) disclose as at the end of each reporting period the measurable objectives for
achieving gender diversity set by the board or a relevant committee of the board in
accordance with the entity’s diversity policy and its progress towards achieving them,
and either:
(1) the respective proportions of men and women on the board, in senior executive
positions and across the whole organisation (including how the entity has defined
“senior executive” for these purposes); or
(2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the
entity’s most recent “Gender Equality Indicators”, as defined in and published under
that Act.
38
CORPORATE GOVERNANCE STATEMENT
Principle #
ASX Corporate Governance Council Recommendations
Reference
Comply
1.6
A listed entity should:
2(i), 3(b)
Yes
(a) have and disclose a process for periodically evaluating the performance of the
board, its committees and individual directors; and
(b) disclose, in relation to each reporting period, whether a performance evaluation was
undertaken in the reporting period in accordance with that process.
1.7
A listed entity should:
(a) have and disclose a process for periodically evaluating the performance of its
senior executives; and
(b) disclose, in relation to each reporting period, whether a performance evaluation was
undertaken in the reporting period in accordance with that process.
Principle 2
Structure the Board to add value
2.1
The board of a listed entity should:
(a) have a nomination committee which:
(1) has at least three members, a majority of whom are independent directors; and
3(b) Remunera-
tion Report
Yes
3(b)
Yes
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the number of times the committee met
throughout the period and the individual attendances of the members at those
meetings; or
(b) if it does not have a nomination committee, disclose that fact and the processes
it employs to address board succession issues and to ensure that the board has the
appropriate balance of skills, knowledge, experience, independence and diversity to
enable it to discharge its duties and responsibilities effectively
A listed entity should have and disclose a board skills matrix setting out the mix of skills
and diversity that the board currently has or is looking to achieve in its membership.
A listed entity should disclose:
(a) the names of the directors considered by the board to be independent directors;
(b) if a director has an interest, position, association or relationship of the type described
in Box 2.3 (which appears on page 16 of the ASX Recommendations and is entitled
“Factors relevant to assessing the independence of a director”) but the board is of the
opinion that it does not compromise the independence of the director, the nature of the
interest, position, association or relationship in question and an explanation of why the
board is of that opinion; and
(c) the length of service of each director.
2(b), 2(c)
2(c), 2(e)
A majority of the board of a listed entity should be independent directors.
2(e)
The chair of the board of a listed entity should be an independent director and, in
particular, should not be the same person as the CEO of the entity.
2(c), 2(d), 2(e)
A listed entity should have a program for inducting new directors and provide appropriate
professional development opportunities for directors to develop and maintain the skills
and knowledge needed to perform their role as directors effectively.
3(b)
Yes
Yes
No
Yes
Yes
2.2
2.3
2.4
2.5
2.6
Principle 3
Act ethically and responsibiy
3.1
A listed entity should:
6(a)
Yes
(a) have a code of conduct for its directors, senior executives and employees; and
(b) disclose that code or a summary of it.
CORPORATE GOVERNANCE STATEMENT
39
CORPORATE GOVERNANCE STATEMENT
Principle #
ASX Corporate Governance Council Recommendations
Reference
Comply
Principle 4
Safeguard integrity in financial reporting
4.1
The board of a listed entity should:
(a) have an audit committee which:
3(a)
Yes
(1) has at least three members, all of whom are non-executive directors and a majority
of whom are independent directors; and
(2) is chaired by an independent director, who is not the chair of the board,
and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and experience of the members of the committee; and
(5) in relation to each reporting period, the number of times the committee met
throughout the period and the individual attendances of the members at those
meetings; or
(b) if it does not have an audit committee, disclose that fact and the processes it
employs that independently verify and safeguard the integrity of its corporate reporting,
including the processes for the appointment and removal of the external auditor and
the rotation of the audit engagement partner.
The board of a listed entity should, before it approves the entity’s financial statements
for a financial period, receive from its CEO and CFO a declaration that, in their opinion,
the financial records of the entity have been properly maintained and that the financial
statements comply with the appropriate accounting standards and give a true and fair
view of the financial position and performance of the entity and that the opinion has
been formed on the basis of a sound system of risk management and internal control
which is operating effectively.
5(c)
Yes
A listed entity that has an AGM should ensure that its external auditor attends its AGM
and is available to answer questions from security holders relevant to the audit.
4(a)
Yes
4.2
4.3
Principle 5
Make timely and balanced disclosure
5.1
A listed entity should:
4(b)
Yes
(a) have a written policy for complying with its continuous disclosure obligations under
the Listing Rules; and
(b) disclose that policy or a summary of it.
Principle 6
Respect the rights of shareholders
6.1
6.2
6.3
6.4
A listed entity should provide information about itself and its governance to investors
via its website.
A listed entity should design and implement an investor relations program to facilitate
effective two-way communication with investors.
A listed entity should disclose the policies and processes it has in place to facilitate and
encourage participation at meetings of security holders.
A listed entity should give security holders the option to receive communications from,
and send communications to, the entity and its security registry electronically.
4(a), 4(b)
4(a), 4(b)
4(a), 4(b)
4(a), 4(b)
Yes
Yes
Yes
Yes
40
CORPORATE GOVERNANCE STATEMENT
Principle #
ASX Corporate Governance Council Recommendations
Reference
Comply
Principle 7
Recognise and manage risk
7.1
The board of a listed entity should:
3(a)
No
(a) have a committee or committees to oversee risk, each of which:
(1) has at least three members, a majority of whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the number of times the committee met
throughout the period and the individual attendances of the members at those
meetings; or
(b) if it does not have a risk committee or committees that satisfy (a) above, disclose
that fact and the processes it employs for overseeing the entity’s risk management
framework.
7.2
The board or a committee of the board should:
5(a), 5(b), 5(d)
Yes
(a) review the entity’s risk management framework at least annually to satisfy itself
that it continues to be sound; and
(b) disclose, in relation to each reporting period, whether such a review has taken place.
7.3
A listed entity should disclose:
3(a)
No
(a) if it has an internal audit function, how the function is structured and what role it
performs; or
(b) if it does not have an internal audit function, that fact and the processes it employs
for evaluating and continually improving the effectiveness of its risk management and
internal control processes.
7.4
A listed entity should disclose whether it has any material exposure to economic,
environmental and social sustainability risks and, if it does, how it manages or intends
to manage those risks.
5(a)
Yes
Principle 8
Remunerate fairly and responsibly
8.1
The board of a listed entity should:
(a) have a remuneration committee which:
(1) has at least three members, a majority of whom are independent directors; and
3(b)
Yes
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the number of times the committee met
throughout the period and the individual attendances of the members at those
meetings; or
(b) if it does not have a remuneration committee, disclose that fact and the processes
it employs for setting the level and composition of remuneration for directors and senior
executives and ensuring that such remuneration is appropriate and not excessive.
A listed entity should separately disclose its policies and practices regarding the
remuneration of non-executive directors and the remuneration of executive directors
and other senior executives.
A listed entity which has an equity-based remuneration scheme should:
(a) have a policy on whether participants are permitted to enter into transactions
(whether through the use of derivatives or otherwise) which limit the economic risk of
participating in the scheme; and
(b) disclose that policy or a summary of it.
8.2
8.3
3(b),
Remuneration
Report
6(b),
Remuneration
Report
Yes
Yes
CORPORATE GOVERNANCE STATEMENT
41
CORPORATE GOVERNANCE STATEMENT
2.
THE BOARD OF DIRECTORS
2(A) ROLES AND RESPONSIBILITIES OF THE BOARD
The Board is accountable to the shareholders and investors for the overall performance of the Company and
takes responsibility for monitoring the Company’s business and affairs and setting its strategic direction,
establishing and overseeing the Company’s financial position.
The Board is responsible for:
•
Appointing, evaluating, rewarding and if necessary the removal of the Chief Executive Officer (“CEO”)
and senior management;
• Development of corporate objectives and strategy with management and approving plans, new
investments, major capital and operating expenditures and major funding activities proposed by
management;
• Monitoring actual performance against defined performance expectations and reviewing operating
information to understand at all times the state of the health of the Company;
• Overseeing the management of business risks, safety and occupational health, environmental issues
and community development;
•
•
•
•
•
Satisfying itself that the financial statements of the Company fairly and accurately set out the financial
position and financial performance of the Company for the period under review;
Satisfying itself that there are appropriate reporting systems and controls in place to assure the board
that proper operational, financial, compliance, risk management and internal control process are in
place and functioning appropriately;
Approving and monitoring financial and other reporting;
Assuring itself that appropriate audit arrangements are in place;
Ensuring that the Company acts legally and responsibly on all matters and assuring itself that the
Company has adopted a Code of Conduct and that the Company practice is consistent with that Code;
and other policies; and
• Reporting to and advising shareholders.
Other than as specifically reserved to the Board, responsibility for the day-to-day management of the
Company’s business activities is delegated to the CEO and senior management.
42
CORPORATE GOVERNANCE STATEMENT
2(B) BOARD COMPOSITION
The Directors determine the composition of the Board employing the following principles:
•
•
•
•
•
the Board, in accordance with the Company’s constitution must comprise a minimum of three directors;
the roles of the Chairman of the Board and of the CEO should be exercised by different individuals;
the majority of the Board should comprise directors who are non-executive;
the Board should represent a broad range of qualifications, experience and expertise considered of
benefit to the Company; and
the Board must be structured in such a way that it has a proper understanding of, and competency
in, the current and emerging issues facing the Company, and can effectively review management’s
decisions.
The Company’s constitution requires one-third of the directors (or the next lowest whole number) to retire
by rotation at each Annual General Meeting (AGM). The directors to retire at each AGM are those who have
been longest in office since their last election. Where directors have served for equal periods, they may
agree amongst themselves or determine by lot who will retire. A director must retire in any event at the
third AGM since he or she was last elected or re-elected. Retiring directors may offer themselves for re-
election.
A director appointed as an additional or casual director by the Board will hold office until the next AGM when
they may be re-elected. The CEO is subject to retirement by rotation. Any director appointed as an additional
or casual director, is not to be taken into account in determining the number of directors required to retire
by rotation.
2(C) BOARD MEMBERSHIP
The Board is currently comprised of five non-executive directors and two executive directors. Details of the
Board member’s experience, expertise and qualifications are set out in the Directors’ Report of the Annual
Report under the heading “Directors”.
Name
PJ Newton (Chairman)
P G Cook
W S Hallam
SD Heggen
PM Cmrlec
AC Ferguson
X Penggen
Y Zhang
Position
Chairman & independent non-executive director
CEO & executive director
Executive director
Independent non-executive director
Independent non-executive director
Non-executive director
Non-executive director
Alternate non-executive director to X Penggen
Date Appointed
14 December 2012
23 July 2004
1 March 2005
25 October 2012
23 July 2013
10 May 2012
9 February 2012
3 October 2007
CORPORATE GOVERNANCE STATEMENT
43
CORPORATE GOVERNANCE STATEMENT
2.
THE BOARD OF DIRECTORS (CONTINUED)
2(D) CHAIRMAN AND CEO
The Chairman is responsible for:
•
•
•
•
•
•
leadership of the Board;
the efficient organisation and conduct of the Board’s functions;
the promotion of constructive and respectful relations between Board members and between the
Board and management;
contributing to the briefing of directors in relation to issues arising at Board meetings;
facilitating the effective contribution of all Board members; and
committing the time necessary to effectively discharge the role of the Chairman.
The CEO is responsible for:
•
•
implementing the Company’s strategies and policies; and
the day-to-day management of the Consolidated Entity’s business activities.
The Board specifies that the roles of the Chairman and the CEO are separate roles to be undertaken by
separate people.
2(E) INDEPENDENT DIRECTORS
The Company recognises that independent directors are important in assuring shareholders that the Board
is properly fulfilling its role and is diligent in holding senior management accountable for its performance.
The Board assesses each of the directors against specific criteria to decide whether they are in a position
to exercise independent judgment.
Directors of Metals X Limited are considered to be independent when they are independent of management
and free from any business or other relationship that could materially interfere with, or could reasonably be
perceived to materially interfere with, the exercise of their unfettered and independent judgement.
In making this assessment, the Board considers all relevant facts and circumstances. Relationships that
the Board will take into consideration when assessing independence are whether a director:
•
•
is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a
substantial shareholder of the Company;
is employed, or has previously been employed in an executive capacity by the Company or another
group member, and there has not been a period of at least three years between ceasing such
employment and serving on the Board;
• has within the last three years been a principal of a material professional advisor or a material
consultant to the Company or another group member, or an employee materially associated with the
service provided;
•
is a material supplier or customer of the Company or other group member, or an officer of or otherwise
associated directly or indirectly with a material supplier or customer; or
• has a material contractual relationship with the Company or another group member other than as a
director.
• has been a director of the entity for such a period that his or her independence may have been
compromised.
44
CORPORATE GOVERNANCE STATEMENT
The Board notes that the mere fact that a director has served on a Board for a substantial period does not
mean that he or she has become too close to management to be considered not independent. The Board will
regularly assess the independence of all and any director who serves on the Board.
Family ties and cross-directorships may be relevant in considering interests and relationships which may
affect independence, and should be disclosed to the Board.
The Company does not comply with ASX Recommendation 2.4, there is a majority of non-executive directors
but there is not a majority of independent directors on the Board. In accordance with the definition of
independence above, only three of the directors of the Company are considered to be independent.
The Board believes that the Company is not of sufficient size to warrant the inclusion of more independent
non-executive directors in order to meet the ASX recommendation of maintaining a majority of independent
non-executive directors. The Company maintains a mix of directors from different backgrounds with
complementary skills and experience.
In recognition of the importance of independent views and the Board’s role in supervising the activities of
management the Chairman is a non-executive director.
2(F) COMPANY SECRETARY
The appointment, performance, review, and where appropriate, the removal of the Company Secretary is
a key responsibility of the Board. All directors have access to the Company Secretary who is accountable
directly to the Board, through the Chairman, on all matters to do with the proper functioning of the Board.
2(G) AVOIDANCE OF CONFLICTS OF INTEREST BY A DIRECTOR
In order to ensure that any interests of a director in a particular matter to be considered by the Board are
known by each director, each director is required by the Company to disclose any relationships, duties
or interests held that may give rise to a potential conflict. Directors are required to adhere strictly to
constraints on their participation and voting in relation to any matters in which they may have an interest.
2(H) BOARD ACCESS TO INFORMATION AND INDEPENDENT ADVICE
Directors are able to access members of the management team at any time to request relevant information.
There are procedures in place, agreed by the board, to enable directors, in furtherance of their duties, to
seek independent professional advice at the company’s expense.
2(I) REVIEW OF BOARD PERFORMANCE
The performance of the board and each of its committees is reviewed at least annually by the Chairman.
Performance evaluations are conducted annually which involve an assessment of each board member’s
performance against specific and measurable qualitative and quantitative performance criteria. The
performance criteria against which directors and executives are assessed is aligned with the financial and
non-financial objectives of Metals X Limited. Directors whose performance is consistently unsatisfactory
may be asked to retire.
The performance of each committee is against the requirements of their respective charters.
CORPORATE GOVERNANCE STATEMENT
45
CORPORATE GOVERNANCE STATEMENT
3. BOARD COMMITTEES
The Board has the ability under the Company’s constitution to delegate its powers and responsibilities to
committees of the Board.
To assist the Board in fulfilling its duties and responsibilities, it has established the following committees:
•
Audit and Risk Committee; and
• Remuneration and Nomination Committee.
3(A) AUDIT & RISK COMMITTEE
The Board has established an Audit and Risk Committee comprising four non-executive directors the
majority of whom are independent directors. The Audit and Risk Committee is governed by its charter, as
approved by the Board. It is the Board’s responsibility to ensure that an effective internal control framework
exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency of
significant business processes, the safeguarding of assets, the maintenance of proper accounting records,
and the reliability of financial information as well as non-financial considerations such as the benchmarking
of operational key performance indicators. The Board has delegated responsibility for establishing and
maintaining a framework of internal control and ethical standards to the Audit and Risk Committee.
The Committee also provides the Board with additional assurance regarding the reliability of financial
information for inclusion in financial report.
The Audit and Risk Committee’s main responsibilities include reviewing and monitoring:
• financial reporting;
•
•
•
•
•
internal control framework;
external audit;
internal audit;
risk management;
compliance with the Corporations Act, ASX Listing Rules and Corporate Governance Principles and
Recommendations; and
•
any other matters referred to it by the Board.
The Audit & Risk Committee is comprised of:
Name
SD Heggen (Chairman)
PJ Newton
AC Ferguson
PM Cmrlec
Position
Independent Non-executive Director
Independent Non-executive Director
Non-executive Director
Independent Non-executive Director
The qualifications of the committee are set out in the Directors’ Report of the Annual Report under the
heading “Directors”.
The number of times the Audit and Risk Committee has formerly met and the number of meetings attended
by directors during the financial year are reported in Directors’ Report of the Annual Report under the
heading “Directors’ Meetings”.
46
CORPORATE GOVERNANCE STATEMENT
External Auditors
The Company’s policy is to appoint external auditors who clearly demonstrate quality and independence.
The performance of the external auditor is reviewed annually, taking into consideration assessment of
performance, existing value and tender costs.
An analysis of fees paid to the external auditors, including a breakdown of fees for non-audit services,
is provided in the notes to the financial statements. It is the policy of the external auditors to provide an
annual declaration of their independence to the Board.
The external auditor is requested to attend the Annual General Meeting and be available to answer
shareholder questions about the conduct of the audit and the preparation and content of the audit report.
Internal Audit
The Company does not currently have a formal internal audit function however the Audit and Risk Committee
and the Board oversee the effectiveness of risk management and internal control.
The Board works closely with management to identify and manage operational, financial and compliance
risks which could prevent the Company from achieving its objectives. The Audit and Risk Committee
actively encourages the External Auditor to raise internal control issues, and oversees management’s
timely remediation thereof.
3(B) REMUNERATION AND NOMINATION COMMITTEE
The Board is responsible for determining and reviewing compensation arrangements for the directors
themselves and the CEO and executive team. The Board is also responsible for the selection and appointment
of directors. The Board has established a Remuneration and Nomination Committee, comprising four non-
executive directors the majority of whom are independent directors. The Remuneration and Nomination
Committee is governed by its charter, as approved by the Board.
The Remuneration and Nomination Committee is comprised of:
Name
PJ Newton (Chairman)
SD Heggen
AC Ferguson
PM Cmrlec
Position
Chairman & Independent Non-executive Director
Independent Non-executive Director
Non-executive Director
Independent Non-executive Director
The main functions of the Remuneration and Nomination Committee are:
•
•
Evaluating the necessary and desirable competencies for members of the Board.
Assessing skills, experience and expertise and making recommendations to the Board on candidates
for appointment and re-appointment as directors on the Board.
• Reviewing and making recommendations on processes for evaluating the performance of members of
the Board and its Committees and for assessing and enhancing director competencies.
• Reviewing and monitoring progress of succession plans and making recommendations to the Board.
• Reviewing and making recommendations annually to the Board on the remuneration of the CEO.
• Reviewing and making recommendations annually to the Board, on advice from the CEO, on
remuneration of senior executives of the Company (other than the CEO) and in respect or remuneration
matters generally.
Evaluating and making recommendations to the Board on the Company’s recruitment, retention and
termination policies and procedures.
Assessing and making recommendations to the Board on remuneration policies and practices including
superannuation arrangements, incentive schemes and performance target for senior executive and
other employees of the Company.
•
•
• Reviewing and assessing annually the performance of the Committee and the adequacy of its charter.
CORPORATE GOVERNANCE STATEMENT
47
CORPORATE GOVERNANCE STATEMENT
3(B) REMUNERATION AND NOMINATION COMMITTEE (CONTINUED)
The number of times the Remuneration and Nominations Committee has formerly met and the number of
meetings attended by directors during the financial year are reported in the Directors’ Report of the Annual
Report under the heading “Directors’ Meetings”.
Remuneration
The remuneration received by directors and executives in the current period is contained in the
“Remuneration Report” within the Directors’ Report of the Annual Report.
The Company seeks to attract and retain directors and executives with the appropriate expertise and ability
to create value for shareholders.
The remuneration structure for non-executive directors is not related to performance. Non-executive
directors receive fees which reflect their skills, responsibilities and the time commitments required to
discharge their duties. The Company does not pay retirement benefits to non-executive directors (other
than superannuation contributions in accordance with its statutory superannuation obligations).
The remuneration structure for executive directors and other executives reflects the Company’s
performance culture: there is a direct correlation between the executive’s reward and individual and
Company performance so as to seek to ensure that the Company’s remuneration policy is aligned with its
long term business objectives and the interests of shareholders and other stakeholders.
Nomination
A profile of each director is included within the Directors’ Report of the Annual Report under the heading
“Directors”.
The Company has a written agreement in place with each director setting out the terms of their appointment.
The committee and the Board consider the composition of the Board at least annually, when assessing the
Board’s performance and when considering director election and re-election.
In considering whether the Board will support the election or re-election of incumbent directors, the
committee considers the skills, experience, expertise, diversity and contribution made to the Board by the
director and the contribution that the director is likely to make if elected or re-elected.
When considering appointing new directors, the committee assesses the range of skills, experience,
expertise, diversity and other attributes from which the Board would benefit and to the extent to which
current directors possess such attributes. This assessment allows the committee to provide the Board with
a recommendation concerning the attributes for a new director, such that they balance those of existing
directors.
All material information that is relevant to the decision as to whether or not to elect or re-elect a director
is provided to shareholders in the explanatory notes accompanying the notice of meeting for the Annual
General Meeting at which the election or re-election is to be considered.
48
CORPORATE GOVERNANCE STATEMENT
4.
TIMELY AND BALANCED DISCLOSURE
4(A) SHAREHOLDER COMMUNICATION
The Company believes that all shareholders should have equal and timely access to material information
about the Company including its financial situation, performance, ownership and governance.
The Board aims to ensure that shareholders are informed of all material information relating to the Company
by communicating to shareholders through:
•
•
continuous disclosure reporting to the ASX;
its annual reports; and
• media releases and other investor relations publications on the Company’s website.
The Company provides other information about itself and its governance via its website.
Two-way Communication
The Board is also mindful of the importance of not only providing information, but also enabling two-way
communication between the Company and its shareholders.
The Company encourages direct electronic contact from shareholders – the Company’s website has a
“Contact Us” section which allows shareholders to submit questions or comments. The Company’s website
also allows shareholders to register to receive information updates electronically from the Company.
The Company provides shareholder materials directly to shareholders through electronic means. A
shareholder may request a hard copy of the Company’s annual report to be posted to them. Shareholders
may also communicate via electronic means with the Company’s Share Registry and may register to access
personal shareholding information and receive electronic information.
General Meetings
Shareholders are encouraged to participate in general meetings. Copies of addresses by the Chairman or
CEO are disclosed to the market and posted on the Company’s website.
At the meeting the Chairman encourages questions and comments from shareholders and seeks to ensure
that shareholders are given ample opportunity to participate.
The Company’s external auditor attends the Company’s annual general meeting to answer shareholder
questions about the conduct of the audit, the preparation and content of the audit report, the accounting
policies adopted by the Company and the independence of the auditor in relation to the conduct of the audit.
CORPORATE GOVERNANCE STATEMENT
49
CORPORATE GOVERNANCE STATEMENT
4(B) CONTINUOUS DISCLOSURE POLICY
The Company is committed to ensuring that shareholders and the market are provided with full and timely
information and that all stakeholders have equal opportunities to receive externally available information
issued by the Company.
The Company’s “ASX Disclosure Policy” encourages effective communication with its shareholders by
requiring that Company announcements:
•
•
be factual and subject to internal vetting and authorisation before issue;
be made in a timely manner;
• not omit material information;
•
•
•
be expressed in a clear and objective manner to allow investors to assess the impact of the information
when making investment decisions;
be in compliance with ASX Listing Rules continuous disclosure requirements; and
be placed on the Company’s website promptly following release.
The Company’s “ASX Disclosure Policy” reinforces the Company’s commitment to continuous disclosure
and outline management’s accountabilities and the processes to be followed for ensuring compliance.
The policy also contains guidelines on information that may be price sensitive. The Company Secretary
has been nominated as the person responsible for communications with the ASX. This role includes
responsibility for ensuring compliance with the continuous disclosure requirements with the ASX Listing
Rules and overseeing and coordinating information disclosure to the ASX.
5. RECOGNISING AND MANAGING RISK
The Board is responsible for ensuring there are adequate policies in relation to risk management, compliance
and internal control systems. The Company’s policies are designed to ensure strategic, operational, legal,
reputation and financial risks are identified, assessed, effectively and efficiently managed and monitored
to enable achievement of the Company’s business objectives. Considerable importance is placed on
maintaining a strong control environment.
The Company has exposure to the following risks:
•
Currency: The Company is exposed to fluctuations in the Australian dollar gold price which can impact
on revenue streams from operations. To mitigate downside fluctuations in the gold price, the Board
has instigated a modest hedging program to assist in offsetting variations in the Australian dollar
gold price. The Board reviews the level of hedging at each Board meeting to ensure it fits within the
Company’s hedging policy framework and is deemed appropriate.
• Government Charges: The gold mining industry is the subject to a number of taxes, royalties and
charges levied by various Government departments. Changes to rates of taxes, royalties and charges
can impact on the profitability of the Company. The Company maintains communications with relevant
parties to mitigate potential increases.
•
Environmental: The Company is subject to, and responsible for, existing environmental liabilities
associated with its tenements as well as potential new liabilities through continuation of mining
activities. The Company will continually monitor its ongoing environmental obligations and risks, and
implement rehabilitation and corrective actions as appropriate to remain compliant. These risks may
be impacted by change in Government policy.
50
CORPORATE GOVERNANCE STATEMENT
5(A) BOARD OVERSIGHT OF THE RISK MANAGEMENT SYSTEM
The Board is responsible for approving and overseeing the risk management system. The Board reviews, at
least annually, the effectiveness of the implementation of the risk management controls and procedures.
The principle aim of the system of internal control is the management of business risks, with a view to
enhancing the value of shareholders’ investments and safeguarding assets. Although no system of internal
control can provide absolute assurance that the business risks will be fully mitigated, the internal control
systems have been designed to meet the Company’s specific needs and the risks to which it is exposed.
Annually, the Board is responsible for identifying the risks facing the Company, assessing the risks and
ensuring that there are controls for these risks, which are to be designed to ensure that any identified risk
is reduced to an acceptable level.
Internal control measures currently adopted by the Board include:
• monthly reporting to the Board in respect of operations and the Company’s financial position, with a
comparison of actual results against budget; and
•
regular reports to the Board by appropriate members of the management team and/or independent
advisers, outlining the nature of particular risks and highlighting measures which are either in place or
can be adopted to manage or mitigate those risks.
5(B) RISK MANAGEMENT ROLES AND RESPONSIBILITIES
The Board is responsible for approving and reviewing the Company’s risk management strategy and policy.
Senior management is responsible for implementing the Board approved risk management strategy
and developing policies, controls, processes and procedures to identify and manage risks in all of the
Company’s activities.
The Board and Audit and Risk Committee are responsible for ensuring that management has developed and
implemented a sound system of risk management and internal control.
5(C) CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER CERTIFICATION
The Chief Executive Officer and Chief Financial Officer provide to the Board written certification that in all
material respects:
•
•
•
the Company’s financial statements present a true and fair view of the Company’s financial condition
and operational results and are in accordance with relevant accounting standards;
the statement given to the Board on the integrity of the Company’s financial statements is founded
on a sound system of risk management and internal compliance and controls which implements the
policies adopted by the Board; and
the Company’s risk management an internal compliance and control system is operating efficiently
and effectively in all material respects.
CORPORATE GOVERNANCE STATEMENT
51
CORPORATE GOVERNANCE STATEMENT
6.
ETHICAL AND RESPONSIBLE DECISION MAKING
6(A) CODE OF ETHICS AND CONDUCT
The Board endeavours to ensure that the directors, officers and employees of the Company act with
integrity and observe the highest standards of behaviour and business ethics in relation to their corporate
activities. The “Code of Conduct” sets out the principles, practices, and standards of personal behaviour the
Company expects people to adopt in their daily business activities.
All directors, officers and employees are required to comply with the Code of Conduct. Senior managers are
expected to ensure that employees, contractors, consultants, agents and partners under their supervision
are aware of the Company’s expectations as set out in the Code of Conduct.
All directors, officers and employees are expected to:
•
•
•
•
comply with the law;
act in the best interests of the Company;
be responsible and accountable for their actions; and
observe the ethical principles of fairness, honesty and truthfulness, including prompt disclosure of
potential conflicts.
6(B) POLICY CONCERNING TRADING IN COMPANY SECURITIES
The Company’s “Securities Trading Policy” applies to all directors, officers and employees. This policy sets
out the restrictions on dealing in securities by people who work for, or are associated with the Company
and is intended to assist in maintaining market confidence in the integrity of dealings in the Company’s
securities. The policy stipulates that the only appropriate time for a director, officer or employee to deal
in the Company’s securities is when they are not in possession of price sensitive information that is not
generally available to the market.
As a matter of practice, Company shares may only be dealt with by directors and officers of the Company
under the following guidelines:
• no trading is permitted in the period of one month prior to the announcement to the ASX of the
Company’s quarterly, half year and full year results;
•
•
•
guidelines are to be considered complementary to and not replace the various sections of the
Corporations Act 2001 dealing with insider trading; and
prior approval of the Chairman, or in his absence, the approval of two directors is required prior to any
trading being undertaken.
Senior management are prohibited from entering into transactions which limit the risk of participating
in unvested entitlements under any equity-based remuneration scheme.
6(C) POLICY CONCERNING DIVERSITY
The Company encourages diversity in employment throughout the Company and in the composition of the
Board, as a mechanism to ensure that the Company is able to draw on a variety of skill, talent and previous
experiences in order to maximise the Company’s performance.
The Company’s “Diversity Policy” has been implemented to ensure the Company has the benefit of a diverse
range of employees with different skills, experience, age, gender, race and cultural backgrounds. The
Company reports its results on an annual basis in the Annual Report in achieving measurable targets which
are set by the Board as part of implementation of the Diversity Policy.
52
CORPORATE GOVERNANCE STATEMENT
The table below outlines the diversity objectives established by the Board, the steps taken during the year
to achieve these objectives, and the outcomes.
Objectives
Steps Taken/Outcome
Increase the number of women
in the
workforce, including management and at
board level.
Review gender pay gaps on an annual basis
and
implement actions to address any
variances.
Provide flexible workplace arrangements.
Key senior female appointments during the year include:
• Metals X appointed 1 females in managerial roles.
•
As at 30 June 2015, women represented 18% in
the Consolidated Entity’s workforce (2014: 19%),
2% in senior executive positions (2014: 2%) and Nil
at board level (2014: Nil). Senior executive means
employees or contractors reporting directly to the
CEO.
As a part of the annual remuneration review, the Board
assesses the performance and salaries of all key
management personnel and executive directors. Any
gender pay disparities are addressed.
During the year Metals X employed 11 employees on
flexible work arrangements (2014: 9).
Provide career development opportunities for
every employee, irrespective of any cultural,
gender and other differences.
Whilst Metals X places special focus on gender diversity,
career development opportunities are equal for all
employees.
Promote an inclusive culture that treats the
workforce with fairness and respect.
Be compliant with all mandatory diversity
reporting requirements.
Employees are encouraged to attend professional
development courses/workshops throughout the year.
Metals X has set a zero tolerance policy against
discrimination of employees at all levels. The Company
provides avenues to employees to voice their concerns
or report any discrimination.
No cases of discrimination were reported during the year
(2014: Nil).
In accordance with the Australian Workplace Gender
Equality Act 2012, the Consolidated Entity has submitted
a Workplace Gender Equality Report for the 2014/2015
reporting period which is available on the Company’s
website.
CORPORATE GOVERNANCE STATEMENT
53
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2015
Revenue
Cost of sales
Gross profit
Other income
Other expenses
Fair value change in financial assets
Impairment loss on receivables
Impairment loss on available-for-sale financial assets
Impairment loss on mine properties and development
Exploration and evaluation expenditure written off
Profit before income tax and finance costs
Finance costs
Profit before income tax
Income tax benefit
Net profit after tax
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Fair value changes in available-for-sale financial asset
Other comprehensive profit for the period, net of tax
Total comprehensive profit for the period
Earnings per share for profit attributable to the ordinary equity holders of the company
- basic for profit for the year (cents)
- diluted for profit for the year (cents)
Notes
2015
2014
5
315,250,223
238,599,832
7(a)
(254,907,936)
(186,298,890)
60,342,287
52,300,942
6
7(b)
7(c)
12
16
18
19
1,946,016
4,885,754
(10,134,673)
(9,151,386)
1,244,795
(70,073)
(1,500,000)
-
-
(1,622,700)
(4,717,594)
-
(6,110,660)
(6,974,352)
41,070,171
39,368,185
7(d)
(120,970)
(1,916,448)
40,949,201
37,451,737
-
-
40,949,201
37,451,737
3,223,335
3,223,335
-
-
44,172,536
37,451,737
9.87
9.87
9.06
9.06
8
29
9
9
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
54
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 30 JUNE 2015
Notes
2015
2014
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Other financial assets
Total current assets
NON-CURRENT ASSETS
Available-for-sale financial assets
Property, plant and equipment
Mine properties and development costs
Exploration and evaluation expenditure
Total non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Interest bearing loans and borrowings
Unearned income
Total current liabilities
NON-CURRENT LIABILITIES
Provisions
Interest bearing loans and borrowings
Unearned income
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
Share based payments reserve
Fair value reserve
TOTAL EQUITY
11
12
13
14
15
16
17
18
19
20
21
23
25
22
24
26
27
28
29
29
99,037,845
16,107,764
57,108,871
19,297,623
36,521,582
33,248,694
819,215
5,600,977
812,095
6,481,192
158,087,383
116,948,475
3,783,915
595,582
64,117,187
63,428,294
161,306,883
155,075,197
100,042,283
95,114,871
329,250,268
314,213,944
487,337,651
431,162,419
36,911,968
33,064,474
4,433,329
1,657,552
20,222,500
3,447,676
116,865
-
63,225,349
36,629,015
69,524,576
82,818,109
3,265,527
5,055,625
56,122
-
77,845,728
82,874,231
141,071,077
119,503,246
346,266,574
311,659,173
332,851,798
331,399,336
(9,769,564)
(39,479,827)
19,961,005
19,739,664
3,223,335
-
346,266,574
311,659,173
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015
55
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 30 JUNE 2015
OPERATING ACTIVITIES
Receipts from customers
Interest received
Other income
Payments to suppliers and employees
Transaction cost relating to business combination
Interest paid
Net cash flows from operating activities
INVESTING ACTIVITIES
Payments for property, plant and equipment
Payments for mine properties and development
Payments for exploration and evaluation
Proceeds from sale of property, plant and equipment - other
Proceeds from sales of available-for-sale financial assets
Advances in relation to interest bearing receivables
Net cash outflow on acquisition of subsidiary
Net cash flows used in investing activities
FINANCING ACTIVITIES
Payment of finance lease liabilities
Payments for dividends
Proceeds from share issue
Payments for share issue costs
Proceeds from gold prepayment
Proceeds from performance bond facility
Net cash flows from financing activities
Notes
2015
2014
297,820,029
2,822,419
1,803,200
(219,622,450)
-
(10,032)
82,813,166
238,134,367
2,498,811
668,871
(165,002,231)
(2,884,145)
(19,191)
73,396,482
11
(8,005,660)
(43,637,593)
(22,044,782)
20,226
157,591
(840,765)
-
(74,350,983)
(12,195,847)
(26,261,405)
(10,274,690)
285,548
-
-
(29,529,600)
(77,975,994)
(738,404)
(9,546,275)
88,000
(7,403)
40,445,000
3,225,873
33,466,791
(519,503)
-
357,500
(7,427)
-
404,693
235,263
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
Cash and cash equivalents at the end of the period
41,928,974
57,108,871
99,037,845
(4,344,249)
61,453,120
57,108,871
11
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
56
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE YEAR ENDED 30 JUNE 2015
2014
At 1 July 2013
Profit for the year
Other comprehensive income, net of tax
Total comprehensive (loss)/profit for the year net of
tax
Transactions with owners in their capacity as owners
Issue of share capital
Exercise of options
Share issue costs
At 30 June 2014
Issued capital
Accumulated
losses
Share based
payments
reserve
Fair value
reserves
Total Equity
330,962,263
(76,931,564)
19,739,664
-
-
-
37,451,737
-
37,451,737
87,000
357,500
(7,427)
-
-
-
-
-
-
-
-
-
331,399,336
(39,479,827)
19,739,664
-
-
-
-
-
-
-
-
273,770,363
37,451,737
-
37,451,737
87,000
357,500
(7,427)
311,659,173
2015
At 1 July 2014
Profit for the year
Other comprehensive income, net of tax
Total comprehensive profit for the year net of tax
Transactions with owners in their capacity as owners
Dividends paid
Share based payments
Exercise of options
Issue of share capital
Share issue costs
At 30 June 2015
331,399,336
(39,479,827)
19,739,664
-
311,659,173
-
-
-
40,949,201
-
40,949,201
-
-
-
-
3,223,335
40,949,201
3,223,335
3,223,335
44,172,536
-
-
88,000
1,371,865
(7,403)
332,851,798
(11,238,938)
-
-
-
-
(9,769,564)
-
221,341
-
-
-
19,961,005
-
-
-
-
-
3,223,335
(11,238,938)
221,341
88,000
1,371,865
(7,403)
346,266,574
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
57
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
1.
CORPORATE INFORMATION
The financial report of Metals X Limited for the year ended 30 June 2015 was authorised for issue in
accordance with a resolution of the Directors on 24 August 2015.
Metals X Limited (“the Company or the Parent”) is a for profit company limited by shares incorporated in
Australia whose shares are publicly traded on the Australian Securities Exchange.
The nature of the operations and principal activities of the Consolidated Entity are described in the Directors’
Report.
The address of the registered office is Level 3, 18 – 32 Parliament Place, West Perth, WA 6005.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PREPARATION
The financial report is a general purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001 and Australian Accounting Standards and other authorative
pronouncements of the Australian Accounting Standards Board.
The financial report has been prepared on a historical cost basis, except for derivative financial instruments
and available-for-sale investments, which have been measured at fair value.
The financial report is presented in Australian dollars.
(B) STATEMENT OF COMPLIANCE
The financial report complies with Australian Accounting Standards as issued by the Australian Accounting
Standards Board which include International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
Adoption of new accounting standards
In the current year, the Consolidated Entity has adopted all of the new and revised Standards and
Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its
operations and effective for annual reporting periods beginning on 1 July 2014.
The Australian Standards and Interpretations mandatory for reporting periods beginning on or after 1 July
2014, adopted include the following. Adoption of these Standards and Interpretations did not have any
effect on the financial position or the performance of the Consolidated Entity.
Reference
Title
AASB 2012-3
Amendments to Australian Accounting Standards - Offsetting Financial Assets
and Financial Liabilities
AASB 2012-3 adds application guidance to AASB 132 Financial Instruments:
Presentation to address inconsistencies identified in applying some of the
offsetting criteria of AASB 132, including clarifying the meaning of “currently
has a legally enforceable right of set-off” and that some gross settlement
systems may be considered equivalent to net settlement.
Application date
of standard*
Application date
for Consolidated
Entity*
1 January 2014
1 July 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
58
Reference
Title
AASB 2013-3
Amendments to AASB 136 – Recoverable Amount Disclosures for Non-
Financial Assets
AASB 2013-3 amends the disclosure requirements in AASB 136 Impairment
of Assets. The amendments include the requirement to disclose additional
information about the fair value measurement when the recoverable amount
of impaired assets is based on fair value less costs of disposal.
Application date
of standard*
Application date
for Consolidated
Entity*
1 January 2014
1 July 2014
AASB 1031
Materiality
1 January 2014
1 July 2014
The revised AASB 1031 is an interim standard that cross-references to other
Standards and the Framework (issued December 2013) that contain guidance
on materiality.
AASB 1031 will be withdrawn when references to AASB 1031 in all Standards
and Interpretations have been removed.
AASB 2014-1 Part C issued in June 2014 makes amendments to eight
Australian Accounting Standards to delete their references to AASB 1031. The
amendments are effective from 1 July 2014*.
Annual Improvements to IFRSs 2011–2013 Cycle addresses the following
items:
•
AASB13 - Clarifies that the portfolio exception in paragraph 52 of AASB
13 applies to all contracts within the scope of AASB 139 or AASB 9,
regardless of whether they meet the definitions of financial assets or
financial liabilities as defined in AASB 132.
1 July 2014
1 July 2014
Amendments to Australian Accounting Standards – Conceptual Framework,
Materiality and Financial Instruments
1 January 2014
1 July 2014
AASB 2014-1
Part A -Annual
Improvements
2011–2013
Cycle
AASB 2013-9
1 July 2014
1 July 2014
The Standard contains three main parts and makes amendments to a number
Standards and Interpretations.
Part B makes amendments to particular Australian Accounting Standards to
delete references to AASB 1031 and also makes minor editorial amendments
to various other standards.
AASB 2014-1
Part A -Annual
Improvements
2010–2012
Cycle
AASB 2014-1 Part A: This standard sets out amendments to Australian
Accounting Standards arising from the issuance by the International
Accounting Standards Board (IASB) of International Financial Reporting
Standards (IFRSs) Annual Improvements to IFRSs 2010–2012 Cycle and
Annual Improvements to IFRSs 2011–2013 Cycle.
Annual Improvements to IFRSs 2010–2012 Cycle addresses the following
items:
•
•
•
•
AASB 2 - Clarifies the definition of ‘vesting conditions’ and ‘market
condition’ and introduces the definition of ‘performance condition’ and
‘service condition’.
AASB 3 - Clarifies the classification requirements for contingent
consideration in a business combination by removing all references to
AASB 137.
AASB 8 - Requires entities to disclose factors used to identify the entity’s
reportable segments when operating segments have been aggregated.
An entity is also required to provide a reconciliation of total reportable
segments’ asset to the entity’s total assets.
AASB 116 & AASB 138 - Clarifies that the determination of accumulated
depreciation does not depend on the selection of the valuation
technique and that it is calculated as the difference between the gross
and net carrying amounts.
Interpretation
21
Levies
1 January 2014
1 July 2014
This Interpretation confirms that a liability to pay a levy is only recognised
when the activity that triggers the payment occurs. Applying the going
concern assumption does not create a constructive obligation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
59
The following standards and interpretations have been issued by the AASB but are not yet effective and have not
been adopted by the group for the period ending 30 June 2015. The Directors have not yet determined the impact
of new and amended accounting standards and interpretations.
Application
date of
standard*
Application
date for
Group*
1 January
2018
1 July 2018
Reference
Title
Summary
AASB 9
Financial
Instruments
AASB 9 (December 2014) is a new Principal standard which replaces
AASB 139. This new Principal version supersedes AASB 9 issued in
December 2009 (as amended) and AASB 9 (issued in December 2010)
and includes a model for classification and measurement, a single,
forward-looking ‘expected loss’ impairment model and a substantially-
reformed approach to hedge accounting.
AASB 9 is effective for annual periods beginning on or after 1 January
2018. However, the Standard is available for early application. The own
credit changes can be early applied in isolation without otherwise
changing the accounting for financial instruments.
The final version of AASB 9 introduces a new expected-loss impairment
model that will require more timely recognition of expected credit losses.
Specifically, the new Standard requires entities to account for expected
credit losses from when financial instruments are first recognised and
to recognise full lifetime expected losses on a more timely basis.
Amendments to AASB 9 (December 2009 & 2010 editions and AASB
2013-9) issued in December 2013 included the new hedge accounting
requirements,
including changes to hedge effectiveness testing,
treatment of hedging costs, risk components that can be hedged and
disclosures.
AASB 9 includes requirements for a simpler approach for classification
and measurement of financial assets compared with the requirements
of AASB 139.
The main changes are described below.
a)
b)
c)
Financial assets that are debt instruments will be classified based
on (1) the objective of the entity’s business model for managing
the financial assets; (2) the characteristics of the contractual
cash flows.
Allows an irrevocable election on initial recognition to present
gains and losses on investments in equity instruments that are
not held for trading in other comprehensive income. Dividends
in respect of these investments that are a return on investment
can be recognised in profit or loss and there is no impairment or
recycling on disposal of the instrument.
Financial assets can be designated and measured at fair value
through profit or loss at initial recognition if doing so eliminates or
significantly reduces a measurement or recognition inconsistency
that would arise from measuring assets or liabilities, or recognising
the gains and losses on them, on different bases.
d) Where the fair value option is used for financial liabilities the
change in fair value is to be accounted for as follows:
•
The change attributable to changes in credit risk are presented
in other comprehensive income (OCI)
•
The remaining change is presented in profit or loss
AASB 9 also removes the volatility in profit or loss that was caused
by changes in the credit risk of liabilities elected to be measured at
fair value. This change in accounting means that gains caused by the
deterioration of an entity’s own credit risk on such liabilities are no
longer recognised in profit or loss.
Consequential amendments were also made to other standards as a
result of AASB 9, introduced by AASB 2009-11 and superseded by AASB
2010-7, AASB 2010-10 and AASB 2014-1 – Part E.
AASB 2014-7 incorporates the consequential amendments arising from
the issuance of AASB 9 in Dec 2014.
AASB 2014-8 limits the application of the existing versions of AASB
9 (AASB 9 (December 2009) and AASB 9 (December 2010)) from 1
February 2015 and applies to annual reporting periods beginning on
after 1 January 2015.
Application
date of
standard*
Application
date for
Group*
1 January
2016
1 July 2016
Reference
Title
Summary
AASB 2014-3
AASB 2014-4
Amendments
to Australian
Accounting
Standards –
Accounting for
Acquisitions
of Interests in
Joint Operations
[AASB 1 & AASB
11]
AASB 2014-3 amends AASB 11 to provide guidance on the accounting
for acquisitions of interests in joint operations in which the activity
constitutes a business. The amendments require:
(a) the acquirer of an interest in a joint operation in which the activity
constitutes a business, as defined in AASB 3 Business Combinations, to
apply all of the principles on business combinations accounting in AASB
3 and other Australian Accounting Standards except for those principles
that conflict with the guidance in AASB 11; and
(b) the acquirer to disclose the information required by AASB 3 and
other Australian Accounting Standards for business combinations.
This Standard also makes an editorial correction to AASB 11
Clarification
of Acceptable
Methods of
Depreciation
and
Amortisation
(Amendments
to
AASB 116 and
AASB 138)
AASB 15
Revenue from
Contracts with
Customers
AASB 116 and AASB 138 both establish the principle for the basis
of depreciation and amortisation as being the expected pattern of
consumption of the future economic benefits of an asset.
1 January
2016
1 July 2016
1 January
2018
1 July 2018
The IASB has clarified that the use of revenue-based methods to
calculate the depreciation of an asset is not appropriate because
revenue generated by an activity that includes the use of an asset
generally reflects factors other than the consumption of the economic
benefits embodied in the asset.
The amendment also clarified that revenue is generally presumed to be
an inappropriate basis for measuring the consumption of the economic
benefits embodied in an intangible asset. This presumption, however,
can be rebutted in certain limited circumstances.
In May 2014, the IASB issued IFRS 15 Revenue from Contracts with
Customers, which replaces IAS 11 Construction Contracts, IAS 18
Revenue and related Interpretations (IFRIC 13 Customer Loyalty
Programmes, IFRIC 15 Agreements for the Construction of Real Estate,
IFRIC 18 Transfers of Assets from Customers and SIC-31 Revenue—
Barter Transactions Involving Advertising Services).
The core principle of IFRS 15 is that an entity recognises revenue to
depict the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. An entity recognises
revenue in accordance with that core principle by applying the following
steps:
a)
b)
c)
d)
e)
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance
obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a
performance obligation
Early application of this standard is permitted.
AASB 2014-5 incorporates the consequential amendments to a number
Australian Accounting Standards (including Interpretations) arising
from the issuance of AASB 15.
The International Accounting Standards Board (IASB) in its July 2015
meeting decided to confirm its proposal to defer the effective date of
IFRS 15 (the international equivalent of AASB 15) from 1 January 2017
to 1 January 2018. The amendment to give effect to the new effective
date for IFRS 15 is expected to be issued in September 2015. At this time,
it is expected that the AASB will make a corresponding amendment to
AASB 15, which will mean that the application date of this standard for
the Group will move from 1 July 2017 to 1 July 2018.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
61
Application
date of
standard*
Application
date for
Group*
1 January
2016
1 July 2016
Reference
Title
Summary
AASB 2014-10
Amendments
to Australian
Accounting
Standards
– Sale or
Contribution of
Assets between
an Investor and
its Associate or
Joint Venture
AASB 2014-10 amends AASB 10 Consolidated Financial Statements and
AASB 128 to address an inconsistency between the requirements in
AASB 10 and those in AASB 128 (August 2011), in dealing with the sale
or contribution of assets between an investor and its associate or joint
venture. The amendments require:
a)
b)
a full gain or loss to be recognised when a transaction involves a
business (whether it is housed in a subsidiary or not); and
a partial gain or loss to be recognised when a transaction involves
assets that do not constitute a business, even if these assets are
housed in a subsidiary.
AASB 2014-10 also makes an editorial correction to AASB 10.
AASB 2014-10 applies to annual reporting periods beginning on or after 1
January 2016. Early adoption permitted.
AASB 2015-1
Amendments
to Australian
Accounting
Standards
– Annual
Improvements
to Australian
Accounting
Standards
2012–2014
Cycle
The subjects of the principal amendments to the Standards are set out
below:
1 January
2016
1 July 2016
AASB 5 Non-current Assets Held for Sale and Discontinued Operations:
•
Changes in methods of disposal – where an entity reclassifies an
asset (or disposal group) directly from being held for distribution
to being held for sale (or visa versa), an entity shall not follow the
guidance in paragraphs 27–29 to account for this change.
AASB 7 Financial Instruments: Disclosures:
•
•
Servicing contracts - clarifies how an entity should apply the
guidance in paragraph 42C of AASB 7 to a servicing contract to
decide whether a servicing contract is ‘continuing involvement’
for the purposes of applying the disclosure requirements in
paragraphs 42E–42H of AASB 7.
Applicability of the amendments to AASB 7 to condensed interim
financial statements - clarify that the additional disclosure required
by the amendments to AASB 7 Disclosure–Offsetting Financial
Assets and Financial Liabilities is not specifically required for all
interim periods. However, the additional disclosure is required
to be given in condensed interim financial statements that are
prepared in accordance with AASB 134 Interim Financial Reporting
when its inclusion would be required by the requirements of AASB
134.
AASB 119 Employee Benefits:
•
Discount rate: regional market issue - clarifies that the high quality
corporate bonds used to estimate the discount rate for post-
employment benefit obligations should be denominated in the
same currency as the liability. Further it clarifies that the depth of
the market for high quality corporate bonds should be assessed at
the currency level.
AASB 134 Interim Financial Reporting:
•
Disclosure of information ‘elsewhere in the interim financial
report’ -amends AASB 134 to clarify the meaning of disclosure
of information ‘elsewhere in the interim financial report’ and to
require the inclusion of a cross-reference from the interim financial
statements to the location of this information.
AASB 2015-2
Amendments
to Australian
Accounting
Standards –
Disclosure
Initiative:
Amendments to
AASB 101
The Standard makes amendments to AASB 101 Presentation of Financial
Statements arising from the IASB’s Disclosure Initiative project. The
amendments are designed to further encourage companies to apply
professional judgment in determining what information to disclose in
the financial statements. For example, the amendments make clear
that materiality applies to the whole of financial statements and that
the inclusion of immaterial information can inhibit the usefulness of
financial disclosures. The amendments also clarify that companies
should use professional judgment in determining where and in what
order information is presented in the financial disclosures.
1 January
2016
1 July 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
62
Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
The Standard completes the AASB’s project to remove Australian
guidance on materiality from Australian Accounting Standards.
1 July 2015 1 July 2015
AASB 2015-3
Amendments
to Australian
Accounting
Standards
arising from
the Withdrawal
of AASB 1031
Materiality
*
Designates the beginning of the applicable annual reporting period unless otherwise stated
(C) CHANGES IN ACCOUNTING POLICY
The accounting policies used in the preparation of these financial statements are consistent with those
used in previous years, except as stated in note 2(b).
(D) BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the parent entity and its
subsidiaries (‘the Consolidated Entity’) as at 30 June each year. Control is achieved when the Consolidated
Entity is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee. Specifically, the Consolidated Entity
controls an investee if and only if the Consolidated Entity has:
• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities
of the investee)
•
•
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns
When the Consolidated Entity has less than a majority of the voting or similar rights of an investee, the
Consolidated Entity considers all relevant facts and circumstances in assessing whether it has power over
an investee, including:
•
The contractual arrangement with the other vote holders of the investee
• Rights arising from other contractual arrangements
•
The Consolidated Entity’s voting rights and potential voting rights
The Consolidated Entity re-assesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary
begins when the Consolidated Entity obtains control over the subsidiary and ceases when the Consolidated
Entity loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired
or disposed of during the year are included in the statement of comprehensive income from the date the
Consolidated Entity gains control until the date the Consolidated Entity ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the equity holders of
the parent of the Consolidated Entity and to the non-controlling interests, even if this results in the non-
controlling interests having a deficit balance. When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into line with the Consolidated Entity’s
accounting policies. All intra-Consolidated Entity assets and liabilities, equity, income, expenses and
cash flows relating to transactions between members of the Consolidated Entity are eliminated in full on
consolidation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
63
(E)
(i)
(ii)
FOREIGN CURRENCY TRANSLATION
Functional and presentation currency
Both the functional and presentation currency of the Company and its Australian subsidiaries is Australian
dollars (A$).
Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange
rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies
are translated at the rate of exchange at the reporting date.
All exchange differences in the consolidated financial report are taken to the profit or loss.
(F) OPERATING SEGMENTS
An operating segment is a component of an entity that engages in business activities from which it may
earn revenues and incur expenses (including revenues and expenses relating to transactions with other
components of the same entity), whose operating results are regularly reviewed by the entity’s chief
operating decision maker to make decisions about resources to be allocated to the segment and assess
its performance and for which discrete financial information is available. This includes start up operations
which are yet to earn revenues. Management will also consider other factors in determining operating
segments such as the existence of a line manager and the level of segment information presented to the
board of directors.
Operating segments have been identified based on the information provided to the chief operating decision
makers – being the executive management team. The Consolidated Entity aggregates two or more operating
segments when they have similar economic characteristics.
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately.
However, an operating segment that does not meet the quantitative criteria is still reported separately
where information about the segment would be useful to users of the financial statements.
Information about other business activities and operating segments that are below the quantitative criteria
are combined and disclosed in a separate category for “all other segments”.
(G) CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and
short-term deposits that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
For the purposes of the Statement of cash flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within
interest bearing loans and borrowings in the current liabilities on the statement of financial position.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
64
(H)
TRADE AND OTHER RECEIVABLES
Trade and other receivables, which generally have 30-60 day terms, are recognised initially at fair value
and subsequently measured at amortised cost using the effective interest rate method, less an allowance
for impairment.
Collectability of trade and other receivables is reviewed on an ongoing basis. Individual debts that are
known to be uncollectible are written off when identified. An impairment allowance is recognised when
there is objective evidence that the Consolidated Entity will not be able to collect the receivable. Financial
difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective
evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to
the present value of estimated future cash flows, discounted at the original effective interest rate.
(I)
INVENTORIES
Inventories are valued at the lower of cost and net realisable value.
Cost includes expenditure incurred in acquiring and bringing the inventories to their existing condition and
location and is determined using the weighted average cost method.
(J) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING
The Consolidated Entity uses derivative financial instruments to manage commodity price exposures.
Such derivative financial instruments are initially recorded at fair value on the date on which the derivative
contract is entered into and are subsequently remeasured to fair value.
Certain derivative instruments are also held for trading for the purpose of making short term gains. None of
the derivatives qualify for hedge accounting and changes in fair value are recognised immediately in profit
or loss in other revenue and expenses.
Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is
negative.
(K)
JOINT ARRANGEMENTS
Joint arrangements are arrangements over which two or more parties have joint control. Joint Control
is the contractual agreed sharing of control of the arrangement which exists only when decisions about
the relevant activities require unanimous consent of the parties sharing control. Joint arrangements are
classified as ether a joint operation or a joint venture, based on the rights and obligations arising from the
contractual obligations between the parties to the arrangement.
To the extent the joint arrangement provides the Consolidated Entity with rights to the individual assets
and obligations arising from the joint arrangement, the arrangement is classified as a joint operation and
as such, the Consolidated Entity recognises its:
•
•
Assets, including its share of any assets held jointly
Liabilities, including its share of liabilities incurred jointly;
• Revenue from the sale of its share of the output arising from the joint operation;
•
•
Share of revenue from the sale of the output by the joint operation; and
Expenses, including its share of any expenses incurred jointly
To the extent the joint arrangement provides the Consolidated Entity with rights to the net assets of the
arrangement, the investment is classified as a joint venture and accounted for using the equity method.
Under the equity method, the cost of the investment is adjusted by the post-acquisition changes in the
Consolidated Entity’s share of the net assets of the joint venture.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
65
(L)
AVAILABLE-FOR-SALE INVESTMENTS
All available-for-sale investments are initially recognised at fair value plus directly attributable transaction
costs.
Available-for-sale investments are those non-derivative financial assets, principally equity securities that
are designated as available-for-sale. Investments are designated as available-for-sale if they do not have
fixed maturities and fixed and determinable payments and management intends to hold them for the
medium to long term.
After initial recognition, available-for-sale investments are measured at fair value. Gains or losses are
recognised in other comprehensive income and presented as a separate component of equity until the
investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired,
at which time the cumulative gain or loss previously reported in equity is included in profit or loss.
The fair value of investments that are actively traded in organised markets is determined by reference to
quoted market bid prices at the close of business on the reporting date.
For investments with no active market, fair value is determined using valuation techniques. Such valuation
techniques include using recent arm’s length transactions; reference to the current market value of another
instrument that is substantially the same; discounted cash flow analysis and option pricing models. Where
fair value cannot be reliably measured for certain unquoted investments, these investments are measured
at cost.
(M)
INVESTMENTS IN ASSOCIATES
The Consolidated Entity’s investment in its associates is accounted for using the equity method of accounting
in the consolidated financial statements. The associates are entities over which the Consolidated Entity has
significant influence and that are neither subsidiaries nor joint ventures.
The Consolidated Entity generally deems it has significant influence if it has over 20% of the voting rights.
Under the equity method, investments in the associates are carried in the consolidated statement of
financial position at cost plus post-acquisition changes in the Consolidated Entity’s share of net assets
of the associates. Goodwill relating to an associate is included in the carrying amount of the investment
and is not amortised. After application of the equity method, the Consolidated Entity determines whether
it is necessary to recognise any impairment loss with respect to the Consolidated Entity’s net investment
in associates. Goodwill included in the carrying amount of the investment in associate is not tested
separately, rather the entire carrying amount of the investment is tested for impairment as a single asset. If
an impairment is recognised, the amount is not allocated to the goodwill of the associate. The Consolidated
Entity’s share of its associates’ post-acquisition profits or losses is recognised in the profit and loss, and
its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-
acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable
from associates reduce the carrying amount of the investment.
When the Consolidated Entity’s share of losses in an associate equals or exceeds its interest in the
associate, including any unsecured long-term receivables and loans, the Consolidated Entity does not
recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
The financial statements of the associate are prepared for the same reporting period as the Consolidated
Entity. When necessary, adjustments are made to bring the accounting policies in line with those of the
Consolidated Entity.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
66
(N) BUSINESS COMBINATIONS
Business combinations are accounted for using the acquisition method. The consideration transferred
in a business combination shall be measured at fair value, which shall be calculated as the sum of the
acquisition-date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to
former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling
interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest
in the acquiree either at fair value or at the appropriate share of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
When the Consolidated Entity acquires a business, it assess the financial assets and liabilities assumed
for appropriate classification and designation in accordance with the contractual terms, economic
conditions, the Consolidated Entity’s operating or accounting policies and other pertinent conditions as at
the acquisition date. This includes the separation of embedded derivatives in the host contracts by the
acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously
held equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or
loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed
to be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or in other
comprehensive income. If the contingent consideration is classified as equity, it shall not be remeasured
and subsequent settlement is accounted for within equity. In instances, where the contingent consideration
does not fall within the scope of AASB 139, it is measured in accordance with the appropriate AASB.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred
and the amount recognised for non-controlling interest over the fair value of the identifiable net assets
acquired and liabilities assumed. If this consideration is lower than the fair value of the identifiable net
assets of the subsidiary acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Consolidated Entity’s cash-generating units that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of,
the goodwill associated with the operation disposed of is included in the carrying amount of the operation
when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance
is measured based on the relative value of the operation disposed of and the portion of the cash-generating
unit retained.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
67
(O) PROPERTY, PLANT AND EQUIPMENT
Plant and equipment is stated at historical cost less accumulated depreciation and any impairment in
value.
Capital work-in-progress is stated at cost and comprises all costs directly attributable to bringing the
assets under construction ready to their intended use. Capital work-in-progress is transferred to property,
plant and equipment at cost on completion.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset, or where
appropriate, over the estimated life of the mine.
Major depreciation periods are:
• Mine specific plant and equipment is depreciated using – the shorter of life of mine or useful life.
Useful life ranges from 2 to 10 years.
• Buildings – the shorter of life of mine or useful life. Useful life ranges from 5 to 40 years.
• Office Plant and equipment is depreciated at 33% per annum for computers and office machines and
20% per annum for other office equipment and furniture.
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined
for the cash-generating unit to which the asset belongs.
If any such indication exists and where the carrying values exceed the estimated recoverable amount, the
assets or cash-generating units are written down to their recoverable amount. Refer to note 2(t) for further
discussion on impairment testing performed by the Consolidated Entity.
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the item) is included in the profit and loss in the period the item is
derecognised.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
68
(P) EXPLORATION AND EVALUATION EXPENDITURE
Expenditure on acquisition, exploration and evaluation relating to an area of interest is carried forward at
cost where rights to tenure of the area of interest are current and;
i.
it is expected that expenditure will be recouped through successful development and exploitation of
the area of interest or alternatively by its sale and/or;
ii. exploration and evaluation activities are continuing in an area of interest but at reporting date have
not yet reached a stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to
carry forward costs in relation to that area of interest. Where uncertainty exists as to the future viability of
certain areas, the value of the area of interest is written off to the profit and loss or provided against.
Impairment
The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment
regularly and if after expenditure is capitalised, information becomes available suggesting that the recovery
of expenditure is unlikely or that the Consolidated Entity no longer holds tenure, the relevant capitalised
amount is written off to the profit or loss in the period when the new information becomes available.
(Q) MINE PROPERTIES AND DEVELOPMENT
Expenditure on the acquisition and development of mine properties within an area of interest are carried
forward at cost separately for each area of interest. Accumulated expenditure is amortised over the life of
the area of interest to which such costs relate on a production output basis.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to
carry forward costs in relation to that area of interest.
Impairment
The carrying value of capitalised mine properties and development expenditure is assessed for impairment
whenever facts and circumstances suggest that the carrying amount of the asset may exceed its
recoverable amount.
Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets or groups of assets. When the carrying amount of
an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to
its recoverable amount. Refer to note 2(t) for further discussion on impairment testing performed by the
Consolidated Entity
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
69
(R) NON-CURRENT ASSETS AND DISPOSAL GROUPS HELD FOR SALE AND DISCONTINUED
OPERATIONS
Non-current assets and disposal groups are classified as held for sale and measured at the lower of their
carrying amount and fair value less costs to sell if their carrying amount will be recovered principally
through a sale transaction. They are not depreciated or amortised. For an asset or disposal group to be
classified as held for sale it must be available for immediate sale in its present condition and its sale must
be highly probable.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group)
to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs
to sell of an asset (or disposal group), but is not in excess of any cumulative impairment loss previously
recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or
disposal group) is recognised as the date of derecognition.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for
sale and that represents a separate major line of business or geographical area of operations, is part of a
single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired
exclusively with a view to resale. The results of discontinued operations are presented separately on the
face of the statement of comprehensive income and the assets and liabilities are presented separately on
the face of the statement of financial position.
(S)
INTANGIBLES
Intangible assets acquired separately or in a business combination are initially measured at cost. The
cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and
any accumulated impairment losses. Internally generated assets, excluding capitalised development
costs, are not capitalised and expenditure is charged against profits or losses in the year the expenditure
is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with
finite lives are amortised over the useful life and assessed for impairment whenever there is an indication
that the intangible asset may be impaired. The amortisation period and the amortisation method for an
intangible asset with a finite useful life is reviewed at least at each financial year-end. Changes in the
expected useful life or the expected pattern of consumption of future economic benefits embodied in the
asset are accounted for by changing the amortisation period or method, as appropriate, which is a change
in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in
profit or loss in the expense category consistent with the function of the intangible asset.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at
the cash-generating unit level. Such intangibles are not amortised. The useful life of an intangible asset
with an indefinite life is reviewed each reporting period to determine whether indefinite life assessment
continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is
accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
70
(T)
IMPAIRMENT OF NON-FINANCIAL ASSETS
The Consolidated Entity assesses, at each reporting date, whether there is an indication that an asset
may be impaired. If any indication exists, or when annual impairment testing for an asset is required,
the Consolidated Entity estimates the asset’s recoverable amount. An asset’s recoverable amount is the
higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use.
Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets or groups of assets. When the carrying amount of
an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to
its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset or CGU. In determining fair value less costs of disposal, recent market transactions are
taken into account. If no such transactions can be identified, an appropriate valuation model is used. These
calculations are corroborated by valuation multiples or other available fair value indicators.
The Consolidated Entity bases its impairment calculation on detailed budgets and forecasts, which are
prepared separately for each of the Consolidated Entity’s CGUs to which the individual assets are allocated,
based on the life-of-mine plans. The estimated cash flows are based on expected future production, metal
selling prices, operating costs and forecast capital expenditure based on life-of-mine plans.
Value in use does not reflect future cash flows associated with improving or enhancing an asset’s
performance, whereas anticipated enhancements to assets are included in fair value less costs of disposal
calculations.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the
profit and loss, except for properties previously revalued with the revaluation taken to other comprehensive
income. For such properties, the impairment is recognised in other comprehensive income up to the
amount of any previous revaluation.
For assets, an assessment is made at each reporting date to determine whether there is an indication
that previously recognised impairment losses no longer exist or have decreased. If such indication exists,
the Consolidated Entity estimates the asset’s or CGU’s recoverable amount. A previously recognised
impairment loss is reversed only if there has been a change in the assumptions used to determine the
asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that
the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at a revalued
amount, in which case, the reversal is treated as a revaluation increase.
(U)
TRADE AND OTHER PAYABLES
Trade payables and other payables are carried at amortised cost and due to their short-term nature they
are not discounted. They represent liabilities for goods and services provided to the Consolidated Entity
prior to the end of the financial year that are unpaid and arise when the Consolidated Entity becomes
obliged to make future payments in respect of the purchase of these goods and services. The amounts are
unsecured and usually paid within 30 days of recognition.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
71
(V) REHABILITATION COSTS
The Consolidated Entity is required to decommission and rehabilitate mines and processing sites at the end
of their producing lives to a condition acceptable to the relevant authorities.
The expected cost of any approved decommissioning or rehabilitation programme, discounted to its net
present value, is provided when the related environmental disturbance occurs. The cost is capitalised
when it gives rise to future benefits, whether the rehabilitation activity is expected to occur over the life
of the operation or at the time of closure. The capitalised cost is amortised over the life of the operation
and the increase in the net present value of the provision for the expected cost is included in financing
expenses. Expected decommissioning and rehabilitation costs are based on the discounted value of the
estimated future cost of detailed plans prepared for each site. Where there is a change in the expected
decommissioning and restoration costs, the value of the provision and any related asset are adjusted and
the effect is recognised in profit or loss on a prospective basis over the remaining life of the operation.
The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in
legislation, technology or other circumstances. Cost estimates are not reduced by potential proceeds from
the sale of assets or from plant clean up at closure.
(W)
INTEREST-BEARING LOANS AND BORROWINGS
All loans and borrowings are initially recognised at the fair value of the consideration received less directly
attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised
cost using the effective interest rate method.
Borrowings are classified as current liabilities unless the Consolidated Entity has the unconditional right to
defer settlement of the liability for at least 12 months after the reporting date.
(X) BORROWING COSTS
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset
(i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use or sale)
are capitalised as part of the cost of that asset. All other borrowing costs are expensed in the period they
occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the
borrowing of funds.
(Y)
PROVISIONS
Provisions are recognised when the Consolidated Entity has a present obligation (legal or constructive) as
a result of a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at the present value of management’s best estimate of the expenditure required
to settle the present obligation at the reporting date. The discount rate used to determine the present value
reflects current market assessments of the time value of money and the risks specific to the liability. The
increase in the provision resulting from the passage of time is recognised in finance costs.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
72
(Z)
LEASES
Leases are classified at their inception as either operating or finance leases based on the economic
substance of the agreement so as to reflect the risks and benefits incidental to ownership.
(i)
(ii)
Operating Leases
The minimum lease payments of operating leases, where the lessor effectively retains substantially
all of the risks and benefits of ownership of the leased item, are recognised as an expense in profit
and loss on a straight-line basis over the lease term.
Contingent rentals are recognised as an expense in the financial year in which they are incurred.
Finance Leases
Leases which effectively transfer substantially all the risks and benefits incidental to ownership
of the leased item to the Consolidated Entity are capitalised at the inception of the lease at the fair
value of the leased property or, if lower, at the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and reduction of the lease liability so
as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges
are charged directly to profit and loss.
Capitalised leased assets are depreciated over the estimated useful life of the asset or where
appropriate, over the estimated life of the mine.
The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold
improvements, and amortised over the unexpired period of the lease or the estimated useful lives of
the improvements, whichever is the shorter.
(AA)
ISSUED CAPITAL
Issued and paid up capital is recognised at the fair value of the consideration received by the Consolidated
Entity. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a
reduction in the proceeds received.
(AB) REVENUE
Revenue is measured at the fair value of the consideration received or receivable to the extent it is probable
that the economic benefits will flow to the Consolidated Entity and the revenue can be reliably measured.
The following specific recognition criteria must also be met before revenue is recognised:
Tin sales
Revenue from tin production is recognised when the significant risks and rewards of ownership have
passed to the buyer.
Copper sales
Revenue from copper production is recognised when the significant risks and rewards of ownership have
passed to the buyer.
Gold sales
Revenue from gold production is recognised when the significant risks and rewards of ownership have
passed to the buyer.
Interest income
Revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
73
(AC) SHARE-BASED PAYMENT TRANSACTIONS
The Consolidated Entity provides benefits to employees (including Directors) in the form of share-based
payment transactions, whereby employees render services in exchange for shares or rights over shares
(equity-settled transactions). The Consolidated Entity has one plan in place that provides these benefits. It
is the Long Term Incentive Plan (“LTIP”) which provides benefits to all employees including Directors.
In valuing equity-settled transactions, no account is taken of any vesting conditions (such as service
conditions), other than conditions linked to the price of the shares of Metals X Limited (market conditions)
if applicable.
The cost of these equity-settled transactions with employees is measured by reference to the fair value at
the date at which they are granted. The fair value is determined by using a Black & Scholes model. Further
details of which are given in note 30.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over
the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on
the date on which the relevant employees become fully entitled to the award (the vesting date).
At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive
income is the product of (i) the grant date fair value of the award; (ii) the current best estimate of the
number of awards that will vest, taking into account such factors as the likelihood of employee turnover
during the vesting period and the likelihood of non-market performance conditions being met; and (iii) the
expired portion of the vesting period.
The charge to profit and loss for the period is the cumulative amount as calculated above less the amounts
already charged in previous periods. There is a corresponding credit to equity.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer
awards vest than were originally anticipated to do so. Any award subject to a market condition is considered
to vest irrespective of whether or not the market condition is fulfilled, provided that all other conditions are
satisfied.
If a non-vesting condition is within the control of the Consolidated Entity, Company or the employee, the
failure to satisfy the condition is treated as a cancellation. If a non-vesting condition within the control
of neither the Consolidated Entity, Company nor employee is not satisfied during the vesting period, any
expense for the award not previously recognised is recognised over the remaining vesting period, unless
the award is forfeited.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the
terms had not been modified. An additional expense is recognised for any modification that increases the
total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as
measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. However, if a new award is substituted
for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled
and new award are treated as if they were a modification of the original award, as described in the previous
paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation
of dilutive earnings per share.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
74
(AD) EMPLOYEE BENEFITS
(i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick
leave expected to be settled wholly within 12 months of the reporting date are recognised in respect of
employees’ services up to the reporting date. They are measured at the amounts expected to be paid when
the liabilities are settled.
(ii) Long service leave
The liability for long service leave is recognised and measured as the present value of expected future
payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experience
of employee departures, and periods of service. Expected future payments are discounted using market
yields at the reporting date on corporate bonds with terms to maturity and currencies that match, as closely
as possible, the estimated future cash outflows.
(iii) Superannuation
Contributions made by the Consolidated Entity to employee superannuation funds, which are defined
contribution plans, are charged as an expense when incurred.
(AE) EARNINGS PER SHARE
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to
exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by
the weighted average number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the parent adjusted for:
•
•
•
cost of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that
have been recognised; and
other non-discriminatory changes in revenues or expenses during the period that would result from
the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted
for any bonus element.
(AF) OTHER TAXES
Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part
of the expense item as applicable; and
•
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash
flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation
authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of amounts of GST recoverable from, or payable to, the
taxation authority.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
75
(AG) INCOME TAX
The Consolidated Entity entered into a tax Consolidated Entity as of 1 July 2004.
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; and
•
in respect of taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, when the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry-forward of unused tax assets and
unused tax losses can be utilised except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
•
in respect of the deductible temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it
is probable that the temporary differences will reverse in the foreseeable future and taxable profit will
be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
Unrecognised income taxes are reassessed at each reporting date and are recognised to the extent that it
has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the
year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the profit
and loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same
taxable entity and the same taxation authority.
Tax consolidation legislation
Metals X Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation as of 1 July 2004. The head entity, Metals X Limited and the controlled entities in the tax
Consolidated Entity continue to account for their own current and deferred tax amounts. The Consolidated
Entity has applied the Consolidated Entity allocation approach in determining the appropriate amount of
current taxes and deferred taxes to allocate to members of the tax Consolidated Entity.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
76
(AH) ONEROUS OPERATING LEASE PROVISION
A provision for an onerous operating lease is recognised when the expected benefits to be derived from
the lease are lower than the unavoidable cost of meeting the obligations under the lease. The provision is
measured at the present value of the expected net cost of continuing with the lease.
3.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and
expenses. Management bases its judgements and estimates on historical experience and on other various
factors it believes to be reasonable under the circumstances, the result of which form the basis of the
carrying values of assets and liabilities that are not readily apparent from other sources.
Management has identified the following critical accounting policies for which significant judgements have
been made as well as the following key estimates and assumptions that have the most significant impact
on the financial statements. Actual results may differ from these estimates under different assumptions
and conditions and may materially affect financial results or the financial position reported in future
periods.
Further details of the nature of these assumptions and conditions may be found in the relevant notes to
the financial statements.
(I)
SIGNIFICANT JUDGMENTS MADE IN APPLYING ACCOUNTING POLICIES
Impairment of available-for-sale-investments
In determining the amount of impairment of financial assets, the Consolidated Entity has made judgments
in identifying financial assets whose decline in fair value below cost is considered “significant” or
“prolonged”. A significant decline is assessed based on the historical volatility of the share price.
The higher the historical volatility, the greater the decline in fair value required before it is likely to be
regarded as significant. A prolonged decline is based on the length of time over which the share price has
been depressed below cost. A sudden decline followed by immediate recovery is less likely to be considered
prolonged compared to a sustained fall of the same magnitude over a longer period.
The Consolidated Entity considers a less than a 10% decline in fair value is unlikely to be considered
significant for investments actively traded in a liquid market, whereas a decline in fair value of greater than
20% will often be considered significant. For less liquid investments that have historically been volatile
(standard deviation greater than 25%), a decline of greater than 30% is usually considered significant.
Generally, the Consolidated Entity does not consider a decline over a period of less than three months to be
prolonged. However, where the decline in fair value is greater than six months for liquid investments and 12
months for illiquid investments, it is usually considered prolonged.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
77
(II) SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS
Determination of mineral resources and ore reserves
The determination of reserves impacts the accounting for asset carrying values, depreciation and
amortisation rates and provisions for mine rehabilitation. The Consolidated Entity estimates its mineral
resource and reserves in accordance with the Australian code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves 2012 (the “JORC code”). The information on mineral resources and ore
reserves were prepared by or under the supervision of Competent Persons as defined in the JORC code. The
amounts presented are based on the mineral resources and ore reserves determined under the JORC code.
There are numerous uncertainties inherent in estimating mineral resources and ore reserves and
assumptions that are valid at the time of estimation may change significantly when new information
becomes available.
Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may
change the economic status of reserves and may, ultimately, result in the reserves being restated.
Mine rehabilitation provision
The Consolidated Entity assesses its mine rehabilitation provision on an annual basis in accordance with
the accounting policy stated in note 2(v). Significant judgement is required in determining the provision
for mine rehabilitation as there are many transactions and other factors that will affect the ultimate liability
payable to rehabilitate the mine site. Factors that will affect this liability include future development,
changes in technology and changes in interest rates. When these factors change or become known in the
future, such differences will impact the mine rehabilitation provision in the period in which they change or
become known.
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of
factors, including whether the Consolidated Entity decides to exploit the related area interest itself or, if not,
whether it successfully recovers the related exploration and evaluation asset through sale.
Factors that could impact the future recoverability include the level of reserves and resources, future
technological changes, which could impact the cost of mining, future legal changes (including changes to
environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in
the future, profits and net assets will be reduced in the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not
yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically
recoverable reserves. To the extent it is determined in the future that this capitalised expenditure should be
written off, profits and net assets will be reduced in the period in which this determination is made.
Impairment of capitalised mine development expenditure
The future recoverability of capitalised mine development expenditure is dependent on a number of factors,
including the level of proved, probable and inferred mineral resources, future technological changes, which
could impact the cost, future legal changes (including changes to environmental restoration obligations)
and changes to commodity prices.
The Consolidated Entity regularly reviews the carrying values of its mine development assets in the context
of internal and external consensus forecasts for commodity prices and foreign exchange rates, with the
application of appropriate discount rates for the assets concerned.
To the extent that capitalised mine development expenditure is determined not to be recoverable in
the future, this will reduce profit in the period in which this determination is made. Capitalised mine
development expenditure is assessed for recoverability in a manner consistent with property, plant and
equipment as described below. Refer to Note 2(t) for further discussion on the impairment assessment
process undertaken by the Consolidated Entity.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
78
(II) SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS (CONTINUED)
Impairment of property, plant and equipment
Property, plant and equipment is reviewed for impairment if there is any indication that the carrying amount
may not be recoverable. Where a review for impairment is conducted, the recoverable amount is assessed
by reference to the higher of “value in use” (being net present value of expected future cash flows of the
relevant cash generating unit) and “fair value less costs to sell”.
In determining the value in use, future cash flows for each cash generating unit (CGU) (ie each mine site)
are prepared utilising managements latest estimates of:
•
•
•
•
•
•
the quantities of ore reserves and mineral resources for which there is a high degree of confidence of
economic extraction;
royalties and taxation;
future production levels;
future commodity prices;
future cash costs of production and capital expenditure; and
other relevant cash inflows and outflows.
Cash flow scenarios for a range of commodity prices and foreign exchange rates are assessed using
internal and external market forecasts, and the present value of the forecast cash flows is determined
utilising a pre-tax discount rate.
The Consolidated Entity’s cash flows are most sensitive to movements in commodity price, expected
quantities of ore reserves and mineral resources and key operating costs. In particular the Renison Tin
Project’s forecasted cash flows are most sensitive to variations in the commodity prices and the South
Kalgoorlie Operation is most sensitive to expected quantities of ore reserves and mineral resources to be
extracted and therefore the estimated future cash inflows resulting from the sale of product produced is
dependent on these assumptions.
Variations to the expected cash flows, and the timing thereof, could result in significant changes to any
impairment losses recognised, if any, which in turn could impact future financial results. Refer to Note 2(t)
for further discussion on the impairment assessment process undertaken by the Consolidated Entity.
Life of mine method of amortisation and depreciation
The Consolidated Entity applies the life of mine method of amortisation and depreciation to its mine specific
plant and to mine properties and development based on ore tonnes mined. These calculations require the
use of estimates and assumptions. Significant judgement is required in assessing the available reserves
and the production capacity of the plants to be depreciated under this method. Factors that are considered
in determining reserves and production capacity are the Consolidated Entity’s history of converting
resources to reserves and the relevant time frames, the complexity of metallurgy, markets and future
developments. When these factors change or become known in the future, such differences will impact pre
tax profit and carrying values of assets.
Share-based payment transactions
The Consolidated Entity measures the cost of equity-settled transactions with employees by reference to
the fair value of the equity instruments at the date at which they are granted. The fair value is determined by
using an appropriate valuation, using the assumptions as discussed in note 30. The accounting estimates
and assumptions relating to equity-settled share-based payments would have no impact on the carrying
amounts of assets and liabilities in the next annual reporting period but may impact expenses and equity.
79
4.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Consolidated Entity’s principal financial instruments comprise receivables, payables, unsecured loans,
finance lease and hire purchase contracts, cash and short-term deposits, available-for-sale investments
and derivatives.
Risk exposures and responses
The Consolidated Entity manages its exposure to key financial risks in accordance with the Consolidated
Entity’s financial risk management policy. The objective of the policy is to support the delivery of the
Consolidated Entity’s financial targets while protecting future financial security.
The Consolidated Entity enters into derivative transactions, principally zero cost collar put and call options.
The purpose is to manage the commodity price risks arising from the Consolidated Entity’s operations. These
derivatives provide economic hedges, but do not qualify for hedge accounting and are based on limits set
by the board. The main risks arising from the Consolidated Entity’s financial instruments are interest rate
risk, foreign currency risk, commodity risk, credit risk, equity price risk and liquidity risk. The Consolidated
Entity uses different methods to measure and manage different types of risks to which it is exposed. These
include monitoring levels of exposure to interest rate, foreign exchange risk and assessments of market
forecasts for interest rate, foreign exchange and commodity prices. Ageing analysis of and monitoring of
receivables are undertaken to manage credit risk, liquidity risk is monitored through the development of
future rolling cash flow forecasts.
The board reviews and agrees policies for managing each of these risks as summarised below.
Primary responsibility for identification and control of financial risks rests with the Board. The Board reviews
and agrees policies for managing each of the risks identified below, including for interest rate risk, credit
allowances and cash flow forecast projections.
Details of the significant accounting policies and methods adopted, including the criteria for recognition,
the basis of measurement and the basis on which income and expenses are recognised, in respect of each
class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial
statements.
The accounting classification of each category of financial instruments as defined in note 2, and their
carrying amounts, are set out below:
(A)
INTEREST RATE RISK
The Consolidated Entity’s exposure to risks of changes in market interest rates relate primarily to the
Consolidated Entity’s interest bearing liabilities and cash balances. The level of debt is disclosed in notes
23 and 24. The Consolidated Entity’s policy is to manage its interest cost using fixed rate debt. Therefore
the Consolidated Entity does not have any variable interest rate risk on its debt. The Consolidated Entity
constantly analyses its interest rate exposure. Within this analysis consideration is given to potential
renewals of existing positions, alternative financing positions and the mix of fixed and variable interest
rates. The following sensitivity analysis is based on the interest rate risk exposures in existence at the
reporting date. The sensitivity analysis is for variable rate instruments.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
80
At 30 June 2015, if interest rates had moved by a reasonably possible 0.5%, as illustrated in the table below,
with all other variables held constant, post tax profits and equity would have been affected as follows:
Post tax profit
higher/(lower)
Other Comprehensive Income
higher/(lower)
2015
2014
2015
2014
Judgements of reasonably possible movements:
+ 0.5% (50 basis points)
- 0.5% (50 basis points)
132,196
148,629
(132,196)
(148,629)
-
-
-
-
A sensitivity of +%0.5 or -0.5% has been selected as this is considered reasonable given the current level
of short-term and long-term Australian dollar interest rates. The movements in profit are due to possible
higher or lower interest income from variable rate cash balances. The sensitivity is lower in 2015 than 2014
due to a decrease in the balance of cash and cash equivalents held in variable interest rate accounts in
2015.
At the reporting date the Consolidated Entity’s exposure to interest rate risk for classes of financial assets
and financial liabilities is set out below.
2015
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial Liabilities
Trade and other payables
Interest bearing liabilities
Net financial assets/(liabilities)
2014
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Interest bearing liabilities
Net financial assets/(liabilities)
Floating interest rate
Fixed interest
Non-Interest bearing
Total carrying amount
37,770,168
-
-
37,770,168
61,267,677
-
4,162,397
65,430,074
-
16,107,764
-
16,107,764
-
-
-
-
(4,923,079)
(4,923,079)
(36,911,968)
-
(36,911,968)
99,037,845
16,107,764
4,162,397
119,308,006
(36,911,968)
(4,923,079)
(41,835,047)
77,472,959
Floating interest rate
Fixed interest
Non-Interest bearing
Total carrying amount
42,465,511
-
-
42,465,511
14,643,360
-
6,481,192
21,124,552
-
19,297,623
-
19,297,623
-
-
-
-
(172,987)
(172,987)
(33,064,474)
-
(33,064,474)
57,108,871
19,297,623
6,481,192
82,887,686
(33,064,474)
(172,987)
(33,237,461)
49,650,225
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
81
(B) CREDIT RISK
Credit risk arises from the financial assets of the Consolidated Entity, which comprises cash and cash
equivalents, trade and other receivables, other financial assets held as security, loans and receivables
and derivative instruments. Cash and cash equivalents are held with National Australia Bank which is
an Australian Bank with an AA credit rating (Standard & Poor’s). The Consolidated Entity’s exposure to
credit risk arises from potential default of the counter party, with the maximum exposure equal to the
carrying amount of the financial assets (as outlined in each applicable note) as well as $4,162,397 (2014:
$6,481,192) in relation to loans and receivables (refer to note 15).
The Consolidated Entity does not hold any credit derivatives to offset its credit exposure.
The Consolidated Entity trades only with recognised, creditworthy third parties and as such collateral is not
requested nor is it the Consolidated Entity’s policy to securitise its trade and other loans and receivables.
Receivable balances are monitored on an ongoing basis with the result that the Consolidated Entity does
not have a significant exposure to bad debts.
Significant concentrations of credit risk are in relation to cash and cash equivalents with Australian banks.
(C) PRICE RISK
Equity Security Price Risk
The Consolidated Entity’s revenues are exposed to equity security price fluctuations arising from
investments in equity securities.
At 30 June 2015, if equity security prices had moved by a reasonably possible 20%, as illustrated in the
table below, with all other variables held constant, post tax profits and equity would have been affected as
follows:
Post tax profit
higher/(lower)
Other Comprehensive Income
higher/(lower)
2015
2014
2015
2014
Judgements of reasonably possible movements:
Price + 20%
Price - 20% *
-
-
529,748
(529,748)
(83,381)
-
83,381
-
* Provided the decline is below cost and is significant and prolonged
A sensitivity of +20% or -20% has been selected as this is considered reasonable given recent fluctuations in
equity prices and management’s expectations of future movements. The movements in other comprehensive
income are due to possible higher or lower equity security prices from investments in equity securities that
are classified as available-for-sale financial assets (refer to note 2(l)). The overall sensitivity for post-tax
profits and equity in 2015 is higher due to increases in the market value of the underlying securities during
the financial year (refer to note 16).
(D) FOREIGN CURRENCY RISK EXPOSURE
As a result of tin sales receipts being denominated in US dollars, the Consolidated Entity’s cash flows
can be affected by movements in the US dollar/Australian dollar exchange rate. The Consolidated Entity’s
exposure to foreign currency is however not considered to be significant. At 30 June 2015 foreign currency
denominated receivables amounted to $3,774,070 (2014: $5,843,660).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
82
(E) COMMODITY PRICE RISK
The Consolidated Entity’s revenues are exposed to commodity price fluctuations. Periodically the
Consolidated Entity enters into derivative contracts to manage commodity price risk. The Consolidated
Entity did not have any derivative contracts outstanding at the end of the financial period
(F)
LIQUIDITY RISK
Liquidity risk arises from the financial liabilities of the Consolidated Entity and the subsequent ability to
meet the obligations to repay the financial liabilities as and when they fall due.
The Consolidated Entity’s objective is to maintain a balance between continuity of funding and flexibility
through the use of finance and hire purchase leases.
The table below reflects all contractually fixed payables and receivables for settlement, repayment and
interest resulting from recognised financial assets and liabilities, including derivative financial instruments
as of 30 June 2015. For derivative financial instruments the market value is presented, whereas for the
other obligations the respective undiscounted cash flows for the respective upcoming fiscal years are
presented. Cash flows for financial assets and liabilities without fixed amount or timing are based on the
conditions existing as 30 June.
The remaining contractual maturities of the Consolidated Entity’s financial liabilities are:
6 months or less
6 - 12 months
1 - 5 years
Over 5 years
2015
2014
37,791,047
845,107
3,396,800
-
42,032,954
33,101,159
36,685
121,969
-
33,259,813
Maturity analysis of financial assets and liabilities based on management’s expectation.
The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and
outflows. Leasing obligations, trade payables and other financial liabilities mainly originate from the
financing of assets used in our ongoing operations such as property, plant, equipment and investments
of working capital e.g. inventories and trade receivables. To monitor existing financial assets and liabilities
as well as to enable effective controlling of future risks, management monitors its Consolidated Entity’s
expected settlement of financial assets and liabilities on an ongoing basis.
2015
Financial assets
Cash and equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Interest bearing loans
Net inflow/(outflow)
<6 months
6-12 months
1-5 years
>5 years
Total
101,569,699
16,107,764
4,351,945
122,029,408
-
-
-
-
-
-
-
-
(36,911,968)
(879,079)
(37,791,047)
84,238,361
-
(845,107)
(845,107)
(845,107)
-
(3,396,800)
(3,396,800)
(3,396,800)
-
-
-
-
-
-
-
-
101,569,699
16,107,764
4,351,945
122,029,408
(36,911,968)
(5,120,986)
(42,032,954)
79,996,454
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
83
(F)
LIQUIDITY RISK (CONTINUED)
2014
Financial assets
Cash and equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Interest bearing loans
Net inflow/(outflow)
<6 months
6-12 months
1-5 years
>5 years
Total
58,956,569
19,297,623
6,756,947
85,011,139
-
-
-
-
-
-
-
-
(33,064,474)
(36,685)
(33,101,159)
51,909,980
-
(36,685)
(36,685)
(36,685)
-
(121,969)
(121,969)
(121,969)
-
-
-
-
-
-
-
-
58,956,569
19,297,623
6,756,947
85,011,139
(33,064,474)
(195,339)
(33,259,813)
51,751,326
(G) FAIR VALUES
For all financial assets and liabilities recognised in the statement of financial position, carrying amount
approximates fair value unless otherwise stated in the applicable notes.
The methods for estimating fair value are outlined in the relevant notes to the financial statements.
The Consolidated Entity uses various methods in estimating the fair value of a financial instrument. The
methods comprise:
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 - the fair value is estimated using inputs other than quoted prices included in level 1 that are
observable for the asset or liability, either directly (as prices) or indirectly (derived from price).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable
market data.
2015
Quoted market price
(Level 1)
Valuation technique
market observable
inputs (Level 2)
Valuation technique
non market observable
inputs (Level 3)
Total
Financial Assets
Available-for-sale financial assets
Listed investments1
Derivatives2
3,783,915
-
3,783,915
-
1,438,580
1,438,580
-
-
-
3,783,915
1,438,580
5,222,495
2014
Quoted market price
(Level 1)
Valuation technique
market observable
inputs (Level 2)
Valuation technique
non market observable
inputs (Level 3)
Total
Financial Assets
Available-for-sale financial assets
Listed investments1
Derivatives2
595,582
595,582
-
-
-
-
595,582
595,582
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
84
1. Quoted market price represents the fair value determined based on quoted prices on active markets
as at the reporting date without any deduction for transaction costs. The fair value of the listed equity
investments are based on quoted market prices.
2. The derivative relates to the convertible loan issued by Aziana Limited during the year. The fair value
is determined using a Black & Scholes model, which takes into account factors including the exercise
price, the volatility of the underlying share price, the risk-free interest rate, the market price of the
underlying shares at grant date and the expected life of the loan (refer to note 15(d)). Below are the
inputs used to value the derivative:
Expected Volatility (%)
Risk-free interest rate (%)
Expected life of options (yrs)
Options exercise price ($)
Share price at grant date ($)
130%
2.00%
0.2
$0.02
$0.14
The derivative was valued at $193,785 on inception (17 March 2015) and at 30 June 2015 was re-measured
to $1,438,580 through the profit and loss (refer to note 7(c)).
Transfer between categories
There were no transfers between Level 1 and Level 2, and no transfers into and out of Level 3 fair value
measurement.
5. REVENUE
Revenue from sale of tin concentrate
Revenue from sale of copper concentrate
Revenue from sale of gold
Interest received - other corporations
Total revenue
6. OTHER INCOME
Net (loss)/profit on sale of assets
Net gain on sale of available-for-sale investment (refer to note 16b)
Net profit from toll processing
Other income
Total other income
2015
2014
78,334,875
1,294,280
232,776,237
2,844,831
315,250,223
75,246,131
397,429
161,051,109
1,905,163
238,599,832
2015
(302,724)
122,591
1,533,234
592,915
1,946,016
2014
1,130,148
-
2,808,299
947,307
4,885,754
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
85
7. EXPENSES
(a) Cost of sales
Salaries, wages expense and other employee benefits
Superannuation expense
Other production costs
Write down/(reversal of write-down) in value of inventories to estimated net realisable value
Royalty
Depreciation and amortisation expense
Depreciation of non-current assets
Property, plant and equipment
Buildings
Amortisation of non-current assets
Mine, properties and development costs
Total cost of sales
(b) Other expenses
Administration expenses
Employee benefits expense
Salaries and wages expense
Directors' fees and other benefits
Superannuation expense
Other employee benefits
Share-based payments
Other administration expenses
Consulting expenses
Travel and accommodation expenses
Operating lease costs
Stamp duty compliance costs
Administration costs
Depreciation expense
Depreciation of non-current assets
Property plant and equipment
Total Administration expenses
Other expenses
Care and maintenance costs
Commodity trading (gain)/loss
Total other expenses
(c) Fair value change in financial instruments
Fair value change in derivatives (gain)/loss (refer to note 15(a)).
Total fair value change in financial instruments
(d) Finance costs
Interest
Unwinding of rehabilitation provision discount
Total finance costs
2015
23,912,291
2,271,668
167,814,137
1,778,139
15,151,582
2014
25,019,802
2,314,332
113,032,828
(685,864)
12,633,139
9,609,600
765,900
6,815,889
429,006
33,604,619
254,907,936
26,739,758
186,298,890
3,465,006
350,000
334,163
87,039
221,341
4,457,549
854,718
211,158
777,030
7,511
686,411
2,536,828
4,144,265
261,507
407,534
18,527
-
4,831,833
1,112,029
123,889
569,707
1,766,211
119,903
3,691,739
380,566
7,374,943
313,306
8,836,878
1,271,651
1,488,079
2,759,730
10,134,673
808,309
(493,801)
314,508
9,151,386
(1,244,795)
(1,244,795)
70,073
70,073
97,626
23,344
120,970
261,420
1,655,028
1,916,448
8. INCOME TAX
(a) Major components of income tax expense:
Income Statement
Current income tax expense
Current income tax expense
Recognition of carry forward losses and other temporary differences
Adjustments in respect of current income tax of previous years
Deferred income tax
Relating to origination and reversal of temporary differences in current year
Adjustments in respect of deferred income tax of previous years
Income tax reported in the income statement
2015
2014
5,912,715
283,779
(10,772,048)
(12,188,200)
13,809,840
6,101,423
7,768,545
11,622,414
(16,719,052)
(5,819,416)
-
-
(b)
A reconciliation of income tax benefit and the product of accounting loss before income tax
multiplied by the Consolidated Entity’s applicable income tax rate is as follows:
Total accounting profit before income tax
40,949,201
37,451,737
At statutory income tax rate of 30% (2014: 30%)
12,284,760
11,235,521
Assessable items
Non-deductible items
Acquisition costs
Share-based payments
Sundry items
Deductible items
Derecognition of capital losses incurred in current year
Prior year tax benefits
Recognition of tax losses not previously recognised
Income tax benefit reported in income the statement of comprehensive income
1,207,511
-
-
865,244
66,402
4,608
(332,021)
450,000
-
3,565
(198,138)
-
(2,909,212)
282,008
(10,772,048)
(12,188,200)
-
-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
87
8. INCOME TAX (CONTINUED)
(c) Deferred income tax at 30 June relates to the following:
Statement of financial position
Statement of comprehensive income
2015
2014
2015
2014
Deferred tax liabilities
Exploration
Deferred mining
(24,041,816)
(22,563,590)
(24,644,419)
(14,778,689)
Mine site establishment and refurbishment
(8,118,628)
(6,837,348)
Derivative held for trading
Interest receivable
Consumables
Prepayments
Diesel rebate
Gross deferred tax liabilities
Deferred tax assets
Available-for-sale financial assets
Property, plant and equipment
Inventories
Borrowing costs
Accrued expenses
(395,945)
-
-
-
(2,918,502)
(2,431,237)
-
-
(194,622)
(115,367)
(60,313,932)
(46,726,231)
2,649,158
6,406,694
1,170,794
35,128
70,350
2,743,658
94,500
335,452
(6,071,242)
627,713
60,198
80,250
(543,081)
25,070
9,900
1,478,225
9,865,730
1,281,280
395,945
-
487,265
-
79,255
(2,197,432)
6,840,048
357,920
175,666
(252,244)
1,680,531
(1,097)
125,293
816,660
2,839,718
(189,937)
(47,611)
(37,200)
Provision for employee entitlements
1,827,325
1,689,238
(138,087)
(1,067,634)
Provision for fringe benefits tax
Provision for rehabilitation
Recognised tax losses
Gross deferred tax assets
Net deferred tax liabilities
Deferred income tax benefit
(d)
Tax Consolidation
(2,918)
20,046,524
28,110,877
644
3,562
(1,311)
4,127,695
(15,918,829)
(3,238,372)
37,061,383
60,313,932
46,726,231
-
-
(8,950,507)
5,802,998
The Company and its 100% owned subsidiaries are a tax consolidated group with effect from 1 July 2004. Metals X Limited is the
head entity of the tax consolidated group. Members of the group have entered into a tax sharing agreement that provides for the
allocation of income tax liabilities between the entities should the head entity default on its tax payments obligations. No amounts
have been recognised in the financial statements in respect of this agreement on the basis that the possibility of default is remote.
(e)
Tax effect accounting by members of the tax consolidated group
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement provides for the
allocation of current taxes to members of the tax consolidated group. Deferred taxes are allocated to members of the tax consolidated
group in accordance with a group allocation approach which is consistent with the principles of AASB 112 ‘Income Taxes’.
The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the controlled entities
intercompany accounts with the tax consolidated group head company, Metals X Limited. The nature of the tax funding agreement
is such that no tax consolidation contributions by or distributions to equity participants are required.
(f) Unrecognised Losses
At 30 June 2015, there are unrecognised losses of $134,984,738 for the Consolidated Entity which are subject to a restricted rate of
utilisation (2014: $5,245,036, not subject to a restricted rate of utilisation).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
88
9. EARNINGS PER SHARE
The following reflects the income used in the basic and diluted earnings per share computations.
(a) Earnings used in calculating earnings per share
For basic earnings per share:
Net profit attributable to ordinary equity holders of the parent
Net profit attributable to ordinary equity holders of the parent
Basic earnings per share (cents)
2015
2014
40,949,201
37,451,737
40,949,201
37,451,737
9.87
9.06
For diluted earnings per share:
Net profit attributable to ordinary equity holders of the parent (from basic EPS)
Net profit attributable to ordinary equity holders of the parent
Fully diluted earnings per share (cents)
40,949,201
37,451,737
40,949,201
37,451,737
9.87
9.06
(b) Weighted average number of shares
Weighted average number of ordinary shares for basic earnings per share
414,925,901
413,549,761
Effect of Dilution:
Share Options
-
-
Weighted average number of ordinary shares adjusted for the effect of dilution
414,925,901
413,549,761
In 2014 (2015: Nil) the Company had 3,078,125 shares options on issue that are excluded from the calculation of diluted earnings
per share for the current financial period because they were anti-dilutive.
At 30 June 2015 (2014: Nil) the Company had 1,637,020 performance rights on issue that are excluded from the calculation of
diluted earnings per share for the current financial period because they were anti-dilutive.
There have been no transactions involving ordinary shares or potential ordinary shares since that would significantly change the
number of ordinary shares or potential ordinary shares outstanding between the reporting date and before the completion of these
financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
89
10. DIVIDENDS PAID AND PROPOSED
Dividends declared and paid during the financial year
Fully franked dividend for 2015 $0.02715 (2014: nil) (fully franked at 30 per
cent)
11,238,938
2015
2014
Dividends proposed but not recognised as a liability
Final dividend for 2015 $12,284,760 (2014: $11,238,938)
12,284,760
11,238,938
The amount of franking credits available for the subsequent financial year are:
•
•
•
•
•
Franking account balance as at the end of the financial year at 30% (2014:
30%)
Franking credits that will arise from the payment of income tax payable as
at the end of the financial year
Franking credits that will arise from the acquistion of subsidiary entity
during the financial year
6,186,016
6,071,472
-
-
-
86,436
-
Franking credits that will arise from the payment of dividends received
during the financial year
(4,816,688)
Franking credits that will arise from the receipt of dividends received
during the financial year
-
28,108
The amount of franking credits available for future reporting years
1,369,328
6,186,016
The Company operates a dividend reinvestment plan which allows eligible shareholders to elect to invest dividends in ordinary
shares. All holders of Metals X ordinary shares with addresses in Australia or New Zealand are eligible to participate in the plan. The
allocation price for shares is based on the average of the daily volume weighted average price of Metals X ordinary shares sold on the
Australian Securities Exchange, calculated with reference to a period of not less than five consecutive trading days as determined
by the directors.
An issue of shares under the dividend reinvestment plan results in an increase in issued capital unless the Company elects to
purchase the required number of shares on-market.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
90
11. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Total
CASH FLOWS RECONCILIATION
For the purposes of the statement of cash flows, cash and cash equivalents
comprise the following at 30 June:
Cash at bank and in hand
Short-term deposits
Reconciliation of net profit/(loss) after income tax to net cash flows from
operating activities
2015
2014
37,770,168
61,267,677
99,037,845
42,465,511
14,643,360
57,108,871
37,770,168
61,267,677
99,037,845
42,465,511
14,643,360
57,108,871
Profit after income tax
40,949,201
37,451,737
Amortisation and depreciation
Gold prepayment physical deliveries
Impairment losses
Share based payments
Unwinding of rehabilitation provision discount
Fair value change in financial instruments
Exploration and evaluation expenditure written off
Profit on disposal of available-for-sale financial assets
(Profit)/loss on disposal of property, plant and equipment
Changes in assets and liabilities
Decrease/(increase) in inventories
Decrease/(increase) in trade and other receivables and prepayments
(Decrease)/increase in trade and other creditors
(Decrease)/increase in provisions
Net cash flows from operating activities
44,360,685
(15,166,875)
6,217,594
221,341
23,344
(1,244,795)
6,110,660
(122,591)
302,724
81,651,288
(3,272,889)
1,422,652
3,526,693
(514,578)
82,813,166
34,297,959
-
1,622,700
-
1,655,028
70,073
6,974,352
-
(1,130,148)
80,941,701
(2,339,477)
(2,965,026)
(1,794,466)
(446,250)
73,396,482
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
91
12. TRADE AND OTHER RECEIVABLES (CURRENT)
Trade receivables (a)
Other debtors (b)
Provision for doubtful debt (c)
2015
2014
3,774,070
13,833,694
(1,500,000)
16,107,764
5,843,660
13,453,963
-
19,297,623
(a)
Trade receivables are non-interest bearing and are generally on 30 - 90 day terms.
(b) Other debtors primarily relate to cash calls advanced to the Bluestone Mines Tasmania Joint Venture. Other debtors are non-interest
bearing and are generally on 30 - 90 day terms.
(c)
Collectability of trade and other receivables is reviewed on an ongoing basis at an operating unit level. Individual debts that are
known to be uncollectible are written off when identified. An impairment allowance is recognised when there is objective evidence
that the Consolidated Entity will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts
more than 60 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable
carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate. At
the end of the year there was an allowance of $1,500,000 made for doubtful debts. This is due to the uncertainty of the recoverability
of the deferred consideration on the sale of the Collingwood Tin Project in 2014
The carrying amounts disclosed above approximate the fair value.
13. INVENTORIES (CURRENT)
Ore stocks at net realisable value
Gold in circuit at cost
Gold metal at cost
Tin in circuit at cost
Tin concentrate at cost
Copper concentrate at cost
Stores and spares at cost
Provision for obsolete stores and spares
Total inventories at lower of cost and net realisable value
2015
2014
5,885,061
7,883,128
2,328,351
61,794
12,623,566
37,973
9,728,340
(2,026,631)
36,521,582
1,929,939
9,199,154
1,093,439
76,673
14,538,525
77,644
8,104,123
(1,770,803)
33,248,694
During the year were write-downs of $1,778,139 (2014: $685,864 reversal of write-downs) for the Consolidated Entity. This expense
is included in cost of sales refer to note 7(a).
14. PREPAYMENTS (CURRENT)
Prepayments
2015
2014
819,215
812,095
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
92
15. OTHER FINANCIAL ASSETS (CURRENT)
Financial instruments at fair value through profit and loss
Convertible note derivative (a)
Total financial instruments at fair value through profit and loss
Loans and receivables
Cash on deposit - performance bond facility (b)
Loan to Southern Gold Limited (c)
Loan to Aziana Limited (d)
Loan to Mongolian Resource Corporation Limited (e)
Total loans and receivables
Total other financial assets
2015
2014
1,438,580
1,438,580
3,255,319
532,438
139,949
234,691
4,162,397
5,600,977
-
-
6,481,192
-
-
-
6,481,192
6,481,192
(a)
The Consolidated Entity has entered into a convertible loan with Aziana Limited. The embedded derivative was valued on grant date
and has been separated out from the loan (refer to note 15(d)). The embedded derivative is carried at fair value through profit and
loss (refer to note 7(c)).
(b)
The cash on deposit is interest bearing and is used as security for government performance bonds
(c)
The loan to Southern Gold Limited is secured, interest bearing at 8% per annum and matures in 2016.
(d)
The loan to Aziana Limited is secured, interest bearing at 12% per annum and matures in September 2015. The loan is convertible
into shares in Aziana at the election of the Company.
(e)
The loan to Mongolian Resource Corporation Limited is secured and interest bearing at 20% per annum and repayable on demand.
16. AVAILABLE-FOR-SALE FINANCIAL ASSETS (NON-CURRENT)
Shares - Australian listed
2015
2014
3,783,915
595,582
Available-for-sale investments consist of investments in ordinary shares.
Listed shares
The fair value of listed available-for-sale investments has been determined directly by reference to published price quotations in an
active market.
(a)
The Company has a 14.76% (2014: 14.76%) interest in Mongolian Resource Corporation Limited (“MRC”), which is involved in the
mining and exploration of base metals in Australia and Mongolia. MRC is listed on the Australian Securities Exchange, in 2014 period
due to the prolonged period of suspension from trading the fair value of the Company’s investment was written down to nil. At 30
June 2015 MRC has not recommenced trading.
In 2014 the Company recognised an impairment of $483,000.
(b) During the period the Company disposed of its interest (2014: 0.39%) in Neometals (formerly Reed Resources Limited), which is
involved in the mining and exploration of base metals in Australia. The Company made a profit of $122,591 (refer to note 6) on the
sale). Neometals is listed on the Australian Securities Exchange. In the previous period the Company sold 4.60% of its holding in
exchange for the acquisition of the Meekatharra Gold Operation’s assets (refer to note 37). At the end of 2014 the fair value of the
Company’s investment was $35,000 which was based on Neometals’ quoted share price. At the end of 2014 the market value of the
investment was lower than the cost, and the Company recognised an impairment of $467,000.
(c)
The Company has a 13.37% (2014: 13.73%) interest in Aziana, which is involved in the exploration for base metals in Madagascar.
Aziana is listed on the Australian Securities Exchange. At the end of the period the fair value of the Company’s investment was
$3,783,915 (2014: $560,580) which is based on Aziana’s quoted share price.
At the end of 2014 the market value of the investment was lower than the cost, the Company recognised an impairment of $672,700.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
93
17. PROPERTY, PLANT & EQUIPMENT (NON-CURRENT)
Plant and equipment
At cost
Accumulated depreciation
Net carrying amount
Land and buildings
At cost
Accumulated depreciation
Net carrying amount
Capital work in progress at cost
Total property, plant and equipment
Movement in property, plant and equipment
Plant and equipment
At 1 July net of accumulated depreciation
Additions
Disposals
Acquisition of subsidiary (refer to note 37)
Reversal of impairment
Depreciation charge for the year
At 30 June net of accumulated depreciation
Land and buildings
At 1 July net of accumulated depreciation
Additions
Disposals
Acquisition of subsidiary (refer to note 37)
Depreciation charge for the year
At 30 June net of accumulated depreciation
Capital work in progress
At 1 July net of accumulated depreciation
Additions
Acquisition of subsidiary (refer to note 37)
Transfer to mine properties & development
Transfer to plant and equipment
Transfer to land and buildings
At 30 June
2015
116,979,443
(68,565,786)
48,413,657
2014
108,421,365
(58,870,802)
49,550,563
28,136,662
(16,724,647)
11,412,015
27,990,601
(15,958,748)
12,031,853
4,291,515
64,117,187
1,845,878
63,428,294
49,550,563
9,335,859
(322,949)
(159,650)
-
(9,990,166)
48,413,657
12,031,853
146,061
-
-
(765,899)
11,412,015
1,845,878
13,014,655
-
(1,087,098)
(9,335,859)
(146,061)
4,291,515
380,499
26,257,743
(1,850,227)
31,521,276
370,467
(7,129,195)
49,550,563
11,618,917
290,114
(125,678)
677,506
(429,006)
12,031,853
568,300
27,426,684
1,976,479
(1,577,728)
(26,257,743)
(290,114)
1,845,878
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 30 June 2015 is $5,150,727
(2014: $399,134). Value of plant and equipment leased under finance leases and acquired through hire purchase contracts during
the 30 June 2015 financial year is $5,019,500 (2014: $Nil).
Leased assets and assets under hire purchase contracts are pledged as security for the related finance lease and hire purchase
lease liabilities (refer to notes 23 and 24).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
94
18. MINE PROPERTY AND DEVELOPMENT (NON-CURRENT)
2015
2014
Development areas at cost
Mine site establishment
Net carrying amount
Mine site establishment
Mine site establishment
Accumulated amortisation
Net carrying amount
Mine capital development
Accumulated amortisation
Net carrying amount
75,453,011
75,453,011
71,215,821
71,215,821
29,211,936
(25,956,992)
3,254,944
28,343,367
(25,118,389)
3,224,978
222,592,201
219,500,444
(139,993,273)
(138,866,046)
82,598,928
80,634,398
Total mine properties and development
161,306,883
155,075,197
Movement in mine properties and development
Development areas at cost
At 1 July
Additions
At 30 June
Mine site establishment
At 1 July net of accumulated amortisation
Additions
Transfer from capital work in progress (refer to note 17)
(Decrease)/increase in rehabilitation provision
Amortisation charge for the year
Impairment
At 30 June net of accumulated amortisation
Mine capital development
At 1 July net of accumulated amortisation
Additions
Acquisition of subsidiary (refer to note 37)
Amortisation charge for the year
Impairment
At 30 June net of accumulated amortisation
71,215,821
4,237,190
75,453,011
69,355,370
1,860,451
71,215,821
3,224,978
3,943,041
-
1,087,098
(170,790)
(838,600)
(47,742)
3,254,944
80,634,398
39,400,401
-
(32,766,019)
(4,669,852)
82,598,928
-
1,577,728
167,500
(2,463,291)
-
3,224,978
26,875,612
24,400,954
53,634,299
(24,276,467)
-
80,634,398
During the period the Chalice underground mine at the Higginsville Gold Operation was closed due to the depletion of all economic ore
following a seismic event. The value of the Chalice underground mine was written down to nil and an impairment loss of $4,717,594
(2014: nil) was recognised in profit or loss.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
95
19. EXPLORATION EXPENDITURE (NON-CURRENT)
Exploration and evaluation costs carried forward in respect of mining areas of
interest
2015
2014
Pre-production areas
At Cost
Accumulated impairment
Net carrying amount
Movement in deferred exploration and evaluation expenditure
At 1 July net of accumulated impairment
Additions
Acquisition of subsidiary (refer to note 37)
Adjustment to rehabilitation liability (refer to note 22)
Expenditure written off
At 30 June net of accumulated impairment
100,042,283
95,114,871
-
-
100,042,283
95,114,871
95,114,871
22,044,783
159,650
(11,166,361)
(6,110,660)
100,042,283
81,867,452
10,361,690
-
9,860,081
(6,974,352)
95,114,871
The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development
and commercial exploitation or sale of the respective mining areas. Amortisation of the costs carried forward for the development
phase is not recognised pending the commencement of production.
During the year a review was undertaken for each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest. In assessing the carrying value of all of the Consolidated Entity’s projects certain
expenditure on exploration and evaluation of mineral resources has not led to the discovery of commercially viable quantities of
mineral resources. As a result exploration and evaluation expenditure of $6,110,660 (2014: $6,974,352) was written off to the profit
and loss. These amounts relate to specific tenements within the gold projects which were written down to nil as the expenditure did
not result in the discovery of commercially viable quantities of mineral resources.
20. TRADE AND OTHER PAYABLES (CURRENT)
Trade creditors (a)
Sundry creditors and accruals (b)
2015
2014
15,571,842
21,340,126
36,911,968
12,919,506
20,144,968
33,064,474
(a) Trade creditors are non-interest bearing and generally on 30 day terms.
(b) Sundry creditors and accruals are non-interest bearing and generally on 30 day terms.
Due to the short term nature of these payables, their carrying value approximates their fair value.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
96
21. PROVISIONS (CURRENT)
Provision for annual leave (a)
Provision for long service leave (a)
Provision for fringe benefits tax payable (a)
Provision for onerous lease (b)
(a)
The nature of the provisions are described in note 2(ad).
(b)
The nature of the provisions are described below in note 22.
22. PROVISIONS (NON-CURRENT)
Provision for long service leave (a)
Provision for onerous operating lease (b)
Provision for rehabilitation (c)
(a) Provision for long service leave
The nature of the provisions are described in note 2(ad).
(b) Provision for onerous lease
2015
2014
3,103,439
860,122
(9,728)
479,496
4,433,329
2,966,033
-
2,147
479,496
3,447,676
2015
2014
2,103,461
599,369
66,821,746
69,524,576
2,448,772
1,078,865
79,290,472
82,818,109
On the acquisition of Alacer (refer to note 37(b)), a provision was recognised for the fact that the lease premiums on the operating
lease were significantly higher than the market rate at acquisition. The provision has been calculated based on the difference
between the market rate and the rate paid. The operating lease has a life of four years.
(c) Provision for rehabilitation
Environmental obligations associated with the retirement or disposal of mining properties and/or of exploration activities are
recognised when the disturbance occurs and are based on the extent of the damage incurred. The provision is measured as the
present value of the future expenditure. The rehabilitation liability is remeasured at each reporting period in line with the change
in the time value of money (recognised as an interest expense in the statement of comprehensive income and an increase in the
provision), and additional disturbances/change in the rehabilitation cost are recognised as additions/changes to the corresponding
asset and rehabilitation liability.
(d) Current and non-current movements in provisions
Onerous operating
lease
Rehabilitation
Total
At 1 July 2013
Arising during the year
Utilised
Adjustment due to revised conditions
Rehabilitation expenditure
Unwind of discount
Disposal of a subsidiary
Acquisition of subsidiary (refer to note 37)
At 30 June 2014
At 1 July 2014
Arising during the year
Utilised
Adjustment due to revised conditions
Rehabilitation expenditure
Unwind of discount
Disposal of a subsidiary
At 30 June 2015
-
-
(387,588)
-
-
67,924
-
1,878,025
1,558,361
1,558,361
-
(581,382)
-
-
101,886
-
1,078,865
6,113,412
537,967
-
9,860,081
(1,774)
1,655,028
(1,256,727)
62,382,485
79,290,472
79,290,472
(170,790)
-
(11,166,360)
(1,154,920)
23,344
-
6,113,412
537,967
(387,588)
9,860,081
(1,774)
1,722,952
(1,256,727)
64,260,510
80,848,833
80,848,833
(170,790)
(581,382)
(11,166,360)
(1,154,920)
125,230
-
66,821,746
67,900,611
23. INTEREST BEARING LOANS AND BORROWINGS (CURRENT)
Lease liability
Represents current portion of finance leases which have repayment terms of 36 months
2015
2014
1,657,552
116,865
24. INTEREST BEARING LOANS AND BORROWINGS (NON-CURRENT)
Lease liability
2015
2014
3,265,527
56,122
Represents non-current portion of finance leases which have repayment terms of 36 months from inception.
The carrying amount of the Consolidated Entity’s non-current loans and borrowings approximate their fair value. The weighted
average interest rate is 4.02% per annum.
Financing facilities available
At reporting date, the following financing facilities were available:
Total facilities
- finance lease facility
Facilities used at reporting date
- finance lease facility
Assets pledged as security:
4,923,079
172,987
4,923,079
172,987
The carrying amounts of assets pledged as security for current and non-current interest bearing liabilities are:
Non-current
Finance lease
Plant and equipment
Total non-current assets pledged as security
5,150,727
5,150,727
399,134
399,134
Plant and equipment assets are pledged against lease liabilities for the term of the lease period
25. UNEARNED INCOME (CURRENT)
Gold prepayment (refer to note 26)
26. UNEARNED INCOME (NON-CURRENT)
Gold prepayment
2015
2014
20,222,500
20,222,500
2015
2014
5,055,625
5,055,625
-
-
-
-
In September 2014, Metals X drew down on a newly established $40,445,000 gold pre-pay facility with Citibank N.A (“Citi”). The
loan is repayable in gold ounces in 24 equal instalments of 1,250 ounces per month between October 2014 and September 2016
inclusive. During the period 11,250 ounces were delivered to Citi.
The loan has been classified as unearned revenue on the Statement of Financial Position as Citi has prepaid Metals X $40,445,000
for a fixed quantity of gold ounces. Metals X now has a legal obligation to deliver gold ounces, and will subsequently recognise
revenue as and when it makes the repayment in gold ounces. Metals X will measure revenue based on the allocation of the nominal
amounts of the advance payments corresponding to the goods or services delivered.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
98
27. ISSUED CAPITAL
(a) Ordinary Shares
Issued and fully paid
2015
2014
332,851,798
331,399,336
(b) Movements in ordinary shares on issue
Number
$
At 1 July 2013
Issue share capital
Share issue costs
At 30 June 2014
Issue share capital
Issue share capital under dividend reinvestment plan
Share issue costs
At 30 June 2015
412,941,528
905,000
-
413,846,528
110,658
2,053,753
-
416,010,939
330,962,263
444,500
(7,427)
331,399,336
88,000
1,371,865
(7,403)
332,851,798
Share Consolidation
Metals X completed its one for four share consolidation in December 2014 following approval by shareholders in November 2014.
The share consolidation involved the conversion of every four fully paid ordinary shares on issue into one fully paid ordinary share.
Where the share consolidation resulted in a shareholder having a fractional entitlement to a share, the entitlement was rounded
up to the next whole number of shares. Upon the completion of the share consolidation in December 2014, the number of Metals X
shares on issue reduced from 1,655,826,110 shares to 413,957,186 shares as at that date.
Dividend Reinvestment Plan
The Company operates a dividend reinvestment plan (DRP) which allows eligible shareholders to elect to invest dividends in
ordinary shares. The Company recorded an inaugural fully frank dividend of 2.715 cents per share with a record date of 16 December
2014 and paid on 7 January 2015. The Company offered a DRP at a 5% discount to the 5 day VWAP. Under the offer 2,053,753 shares
were issued at $0.6678 per share on 7 January 2015.
(c)
Terms and conditions of contributed equity
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at
shareholder meetings. In the event of winding up the Company the holders are entitled to participate in the proceeds from the sale
of all surplus assets in proportion to the number of and amounts paid up on shares held.
Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par share values.
Accordingly, the Parent does not have authorised capital nor par value in respect of its issued shares.
(d) Escrow Restrictions
There are no current escrow restrictions on the issued capital of the Company
(e) Options on issue
There we no shares of the Company under option as the date of this report.
(f) Option conversions
Date of option
conversion
22 August 2014
Total
Number of options
Price per option
Expiry date
440,000
440,000
20 cents
24 August 2014
Increase in
contributed equity $
88,000
88,000
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
99
28. ACCUMULATED LOSSES
At 1 July
Net profit in current period attributable to members of the parent entity
Dividends paid
At 30 June
29. RESERVES
2015
(39,479,827)
40,949,201
(11,238,938)
(9,769,564)
2014
(76,931,564)
37,451,737
-
(39,479,827)
Share based payments
reserve
Fair value reserve
$
$
19,739,664
-
-
19,739,664
221,341
-
19,961,005
-
-
-
-
-
3,223,335
3,223,335
Total
$
19,739,664
-
-
19,739,664
221,341
3,223,335
23,184,340
At 30 June 2013
Share based payments
Fair value change in available-for-sale financial assets
At 30 June 2014
Share based payments
Fair value change in available-for-sale financial assets
At 30 June 2015
Nature and purpose of reserves
Fair value reserve
This reserve records the movements in the fair value of available-for-sale investments.
Share based payments reserve
This reserve is used to recognise the fair value of rights and options issued to employees in relation to equity-settled share based
payments.
30. SHARE-BASED PAYMENTS
(a) Recognised share-based payment expense
The expense recognised for services received during the year is shown in the table below:
2015
2014
Expense arising from equity-settled share-based payments
221,341
-
The share-based payment plan is described below. There have been no cancellations or modifications to the plan during 2015 and
2014.
(b)
Long Term Incentive Plan
Under the Long term Incentive Plan (“LTIP”), grants are made to senior executives and other staff members who have made an
impact on the Consolidated Entity’s performance. LTIP grants are delivered in the form of share options or performance rights which
vest over a period of three years subject to meeting performance measures, with no opportunity to retest.
(i)
Share options
Share options are issued for nil consideration. The exercise price of the share options is equal to 120% of the weighted average closing
sale price of the Company’s fully paid ordinary shares on ASX over the 20 trading days immediately preceding the day on which the
options are awarded. Any options that are not exercised by the third anniversary of their grant date will lapse. Upon exercise, these
options will be settled in ordinary fully paid shares of the Company. The options will vest when the senior executive or other staff
member continues to be employed by the Consolidated Entity on the first anniversary of the grant date or as determined by the
Board of Directors.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
100
Summary of options granted under the Long Term Incentive Plan
The following table illustrates the number and weighted average exercise price (WAEP) of, and movements in, share options issued
under the LTIP.
2015 Number
2015 WAEP
2014 Number
2014 WAEP
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
1,187,500
-
-
1.20
-
-
Lapsed/cancelled during the year
(1,187,500)
(1.20)
Outstanding at the year end
Exercisable at the year end
-
-
-
-
There were no share options outstanding at the end of the reporting period.
Weighted average remaining contractual life of share options
1,900,000
-
(687,500)
(25,000)
1,187,500
1,187,500
0.83
-
0.52
0.86
1.20
1.20
The weighted average remaining contractual life for the share options outstanding as at 30 June 2015 is nil (2014: 0.42 years).
Range of exercise price of share options
The exercise price for options outstanding at the end of the year is nil (2014: $1.20).
Weighted average fair value of share options
The weighted average fair value of options granted during the year was nil (2014: nil).
Share option valuation
The fair value of the equity-settled share options granted under the LTIP is estimated at the date of grant using a Black & Scholes
model, which takes into account factors including the options exercise price, the volatility of the underlying share price, the risk-free
interest rate, the market price of the underlying share at grant date, historical and expected dividends and the expected life of the
option.
(ii) Performance Rights
Performance rights are issued for nil consideration. Performance rights vest over a period of three years subject to meeting
performance measures. The Company uses absolute total shareholder return and relative shareholder return as the performance
measures for the performance rights. Any performance rights that do not vest on the third anniversary of their grant date will lapse.
Upon vesting, these performance rights will be settled in ordinary fully paid shares of the Company.
Summary of performance rights granted under the Long Term Incentive Plan
The following table illustrates the number and movements in, performance rights issued under the LTIP.
2015 Number
2014 Number
Outstanding at the beginning of the year
Granted during the year
Vested during the year
Lapsed/cancelled during the year
Forfeited during the year
Outstanding at the year end
Exercisable at the year end
-
1,637,020
-
-
-
1,637,020
-
-
-
-
-
-
-
-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
101
30. SHARE-BASED PAYMENTS (CONTINUED)
Exercise price of performance rights
Performance rights on issue as part of LTIP have a nil exercise price
Performance conditions
The performance rights have the following performance hurdles which will be measured over the vesting period of three years from
grant date:
•
•
The Absolute Total Shareholder Return (“TSR”) performance rights (50% of total performance rights) will vest subject to the
compound annual growth rate of the Company’s TSR being not less than 15% over the three year service period.
The Relative TSR performance rights (50% of total performance rights) are measured against a defined peer group of companies
which the Board considers compete with the Company for the same investment capital, both in Australia and overseas, and
which by the nature of their business are influenced by commodity prices and other external factors similar to those that
impact on the TSR performance of the Company.
Weighted average fair value of performance rights
The weighted average fair value of performance rights granted during the year was $0.406 (2014: nil).
Performance rights valuation
The fair value of the performance rights granted are estimated using a Hoadley employee share option pricing model (Monte Carlo
Simulation), taking into account the terms and conditions upon which the performance rights were granted.
Details
Absolute TSR Performance Rights
Relative TSR Performance Rights
Grant date
Share price at grant date ($)
Performance right exercise price ($)
Share price barrier ($)
Vesting conditions
Test date
Expected life of performance rights (yrs)
Expected volatility (%)
Risk-free interest rate (%)
Stock dividend yield per annum (%)
Fair value at grant date ($)
26 November 2014
$0.772
Nil
$1.572
1.153 times 20 day VWAP
1 July 2017
3 years
60%
2.45%
3.52%
$0.292
26 November 2014
$0.772
Nil
-
-
1 July 2017
3 years
60%
2.45%
3.52%
$0.52
31. COMMITMENTS
(a) Capital commitments
Commitments relating to jointly controlled assets
At 30 June 2015 the Consolidated Entity has capital commitments that relate principally to the purchase and maintenance of plant
and equipment for its mining operations.
Capital expenditure commitments
Estimated capital expenditure contracted for at reporting date, but not recognised as liabilities for the Consolidated Entity:
- Within one year
2015
2,383,726
2014
431,880
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
102
(b) Operating lease commitments - Company as lessee
The Company has entered into commercial property leases on office rental and remote area residential accommodation. The
Company has entered into commercial leases on office equipment. These operating leases have an average life of between one
month and four years with renewal options included in the contracts. The Company also has commercial leases over the tenements
in which the mining operations are located. These tenement leases have a life of between six months and twenty one years. In order
to maintain current rights to explore and mine the tenements the Consolidated Entity is required to perform minimum exploration
work to meet the expenditure requirements specified by the relevant state governing body. There are no restrictions placed on the
lessee by entering into these contracts. The operating lease commitments include Joint Operation commitments as disclosed in
note 35.
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
(i)
Property leases as lessee:
- Within one year
- After one year but not more than five years
(ii) Equipment leases:
- Within one year
- After one year but not more than five years
(iii) Mineral tenement leases:
- Within one year
- After one year but not more than five years
- After more than five years
2015
2014
1,458,838
1,901,442
3,360,280
1,649,914
3,294,437
4,944,351
41,197
40,732
81,929
34,207
42,359
76,566
5,106,336
17,407,855
48,031,862
70,546,053
4,990,395
14,909,580
40,399,769
60,299,744
(c) Operating lease commitments - Company as lessor
The Company has entered into a commercial sub-lease on the above mentioned office space.
(i)
Future minimum rentals receivable under non-cancellable operating leases as at 30 June are as follows:
Property leases as lessor:
- Within one year
- After one year but not more than five years
8,334
-
8,334
133,379
-
133,379
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
103
31. COMMITMENTS (CONTINUED)
Finance lease and hire purchase commitments
(d)
The Company has finance leases and hire purchase contracts for various items of plant and machinery. The leases do have terms
of renewal but no escalation clauses. Renewals are at the option of the specific entity that holds the lease. The finance and hire
purchase contracts have an average term of 36 months with the right to purchase the asset at the completion of the lease term for
a pre-agreed amount.
Future minimum lease payments under finance leases and hire purchase contracts together with the present value of the minimum
lease payments are as follows:
Within one year
After one year but not more than five years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
Within one year
After one year but not more than five years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
Included in the financial statements as:
Current interest-bearing loans and borrowings (note 23)
Non-current interest-bearing loans and borrowings (note 24)
Total included in interest-bearing loans and borrowings
The weighted average interest rate of leases for the Company is 4.02% (2014: 7.35%).
2015
Minimum lease
payments
Present value
of lease
payments
1,823,428
3,398,454
5,221,882
(298,803)
4,923,079
1,657,552
3,265,527
4,923,079
-
4,923,079
2014
Minimum lease
payments
Present value
of lease
payments
119,448
64,550
183,998
(11,011)
172,987
116,865
56,122
172,987
-
172,987
2015
2014
1,657,552
3,265,527
4,923,079
116,865
56,122
172,987
(e) Other commitments
The Consolidated Entity has obligations for various expenditures such as royalties, production based payments and exploration
expenditure. Such expenditures are predominantly related to the earning of revenue in the ordinary course of business.
On 18 May 2015 the Company entered in to an agreement with Aziana Limited to underwrite a capital raising up the value of
$3,500,000. The agreement was subject to shareholder approval which was obtained on 30 July 2015. In accordance with the
underwriting agreement the capital raising price determined on 29 July 2015 to be $0.157 per share.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
104
32. CONTINGENT ASSETS AND LIABILITIES
(i) Bank guarantees
The Consolidated Entity has a number of bank guarantees in favour of various government authorities and service providers. The
bank guarantees primarily relate to environmental and rehabilitation bonds at the various projects. The total amount of these
guarantees at the reporting date is $3,255,319 (2014: $6,481,192). These bank guarantees are fully secured by performance
bonds (refer to note 15).
(ii) Clawback agreement
AngloGold Ashanti holds the right to earn back a 75% interest in any individual resource defined within the tenements acquired from
AngloGold by Westgold (with the exception of Rover 1 and Explorer 108), under specific terms, conditions, specified payments and
performance hurdles.
33. EVENTS AFTER THE BALANCE SHEET DATE
Neometals Limited Lithium Agreement
On 7 July 2015 the agreement entered into by the Company and Neometals on 22 January 2015 regarding the Company’s lithium
rights was completed. Under the agreement Neometals Limited has agreed to lease lithium rights and to purchase the tenement and
associated infrastructure that adjoins their Mt Marion Lithium Project from the Company. Consideration for the transaction is a lease
fee of $90,000 per annum indexed to the CPI, $250,000, a royalty of $2/t of ore mined and processed and a 1.5% NSR on the sale of
any downstream products generated from the land area.
Georges Reward Project Acquisition
On 10 July 2015 the Company announced that it had entered into an agreement with Northern Mining Limited (79%) and Balagundi
Pty Ltd (21%) to acquire their interests in the Georges Reward Project at Bulong in Western Australia for $4,500,000 in cash.
The Georges Reward Project is contiguous with the Cannon Project of Southern Gold Limited with which Metals X has a contract
management and profit sharing agreement from the mining of the Cannon deposit.
Mt Henry Gold Project Acquisition
On 31 July 2015 the Company announced that it had entered into an agreement to acquire the Mt Henry Gold Project from Panoramic
Resources Ltd and Matsa Resources Limited.
The Mt Henry Gold Project is located approximately 15 km south of Norseman and 75 km south of HGO. The project consists of three
known deposits being North Scotia, Selene and Mt Henry, which the Company intends to mine and cart to HGO for processing.
The consideration for the acquisition is 22,000,000 new fully paid ordinary shares in Metals X. Settlement is subject to FIRB
approval, regulatory and statutory approvals and consent to assign the native title agreements if required.
At the date of this report these conditions remain outstanding
Grosvenor Gold Project Acquisition
On 31 July 2015 the Company announced that it had entered into an agreement with RNI NL to acquire the Grosvenor Gold Project.
The Grosvenor Project is located approximately 150 km north of Meekatharra in the Bryah Basin of Western Australia. The project
includes:
•
•
The gold prospects and resources of the Grosvenor, Horseshoe and Peak Hill areas which host a resource base of over 2 million
ounces (refer to numerous public disclosures by RNI).
The Grosvenor Gold process plant – a 1.0Mtpa CIL plant with substantial infrastructure including a 100 person village, air strip
and borefield.
Consideration for the acquisition is as follows:
•
•
•
The allotment of 18,000,000 new fully paid ordinary shares in Metals X.
A $300,000 interest free loan to RNI for working capital during the sales process which is convertible into shares in RNI at the
price of its next capital raising.
Settlement is subject to FIRB approval, regulatory and statutory approvals and consent to assign the native title agreements
if required.
In addition to the acquisition of RNI’s Grosvenor Gold Project, the Company agreed to sell its CMGP Chunderloo copper-gold project to
RNI for a consideration of 25,000,000 new fully paid RNI shares.
At the date of this report these conditions remain outstanding.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
105
34. AUDITOR’S REMUNERATION
Amounts received or due and receivable by Ernst & Young (Australia) for:
2015
2014
An audit or review of financial reports of the entity and any other entity within the Consolidated
Entity
344,356
393,090
Amounts received or due and receivable by Ernst & Young (United Kingdom) for:
An audit or review of financial reports of the entity and any other entity within the Consolidated
Entity
36,969
-
Other services in relation to the entity and any other entity in the Consolidated Entity:
- tax compliance
- stamp duty compliance
Total auditor remuneration
78,700
40,860
500,885
129,800
40,780
563,670
35. INTERESTS IN JOINT OPERATIONS
The Consolidated Entity’s interest in the assets and liabilities of joint operations are included in the consolidated statement of
financial position.
RENISON TIN PROJECT
Subsidiary Bluestone Mines Tasmania Pty Ltd has a 50% interest and participating share in the Renison Tin Project which is operated
and managed by its joint operator Bluestone Mines Tasmania Joint Venture Pty Ltd. The Consolidated Entity is entitled to 50% of the
production. The Renison Tin Project is located in Tasmania.
Commitments relating to the joint operation:
Share of capital commitments (refer to note 31(a))
2015
2014
217,483
431,880
Share of operating lease commitments (refer to note 31(b))
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
(i)
Property leases as lessee:
- Within one year
(ii) Equipment leases:
- Within one year
- After one year but not more than five years
(iii) Mineral tenement leases:
- Within one year
- After one year but not more than five years
- After more than five years
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
106
6,349
6,349
14,664
14,360
29,024
180,780
-
-
180,780
3,551
3,551
11,604
21,984
33,588
182,454
198,119
-
380,573
Impairment
During the year write-downs of inventory of $1,638,724 (2014: Nil) were recognised in the joint operation.
WARUMPI EXPLORATION PROJECT
Subsidiary Castile Resources Pty Ltd has earned a 51% interest in the Warumpi exploration project in the Northern Territory which is
considered a Joint Operation and is currently undertaking an exploration program to earn up to 80% interest in the project.
Commitments relating to the joint operation:
Share of operating lease commitments (refer to note 31(b))
2015
2014
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows
(i) Mineral tenement leases:
- Within one year
- After one year but not more than five years
- After more than five years
-
-
-
-
102,063
69,957
-
172,020
Impairment
Exploration and evaluation expenditure of $541,494 in relation the joint operation was written-off during the year (2014: $407,455).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
107
36. SEGMENTS
For management purposes, the Consolidated entity is organised into operating segments determined by the similarity of the mineral being mined or explored, as these are the sources of the Consolidated Entity’s
major risks and have the most effect on rates of return
The Consolidated Entity comprises the following reportable segments:
•
Renison Tin Project:
Mining, treatment and marketing of tin concentrate.
• Wingellina Nickel Project:
Exploration and development of nickel assets.
•
•
•
•
Higginsville Gold Operation:
Mining, treatment, exploration and development of gold assets.
South Kalgoorlie Operation:
Mining, treatment, exploration and development of gold assets.
Central Murchison Gold Project:
Mining, treatment, exploration and development of gold assets.
Northern Territory Projects:
Exploration and development of gold assets.
Executive management monitors the operating results of its operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is
evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. However, consolidated financing (including finance costs and finance
income) and income taxes are managed on a consolidated basis and are not allocated to operating segments. Inters-segment revenues are eliminated upon consolidation. All other adjustments and eliminations
are part of the detailed reconciliations presented further below.
The following table presents revenue and profit information for reportable segments for the years ended 30 June 2015 and 30 June 2014.
Year ended 30 June 2015
Revenue
External customers
Total revenue
Results
Depreciation and amortisation
Exploration and evaluation expenditure
written off
Impairment of assets
Segment profit
Total assets
Total liabilities
Other disclosures
Capital expenditure
Renison Tin
Project
Wingellina Nickel
Project
Higginsville Gold
Operation
South Kalgoorlie
Operation
Central
Murchison Gold
Project
Northern Territory
Projects
Adjustments and
eliminations
Total
79,629,155
79,629,155
-
-
195,812,444
195,812,444
36,963,792
36,963,792
-
-
-
-
(6,668,392)
(77,180)
(31,421,409)
(4,446,557)
(1,271,006)
(95,575)
(5,541)
(130,577)
(418,824)
(728,993)
(2,003,483)
(2,823,242)
-
-
-
-
-
9,866,712
-
(207,757)
(4,717,594)
42,136,886
-
2,594,213
-
(4,540,452)
-
(2,918,817)
-
(1,609,049)
74,954,796
72,964,308
70,775,565
28,166,499
111,823,944
24,705,338
(8,312,130)
(102,595)
(65,396,232)
(32,010,425)
(31,201,205)
(115,465)
(4,303,545)
(2,874,665)
(22,594,584)
(20,882,269)
(20,617,506)
(2,227,024)
-
-
-
312,405,391
312,405,391
(43,980,119)
(6,110,660)
(4,717,594)
45,321,736
383,390,450
(137,138,052)
(73,499,593)
Renison Tin
Project
Wingellina Nickel
Project
Higginsville Gold
Operation
South Kalgoorlie
Operation
Central
Murchison Gold
Project
Northern Territory
Projects
Adjustments and
eliminations
Total
75,643,560
75,643,560
-
-
149,721,065
149,721,065
11,330,044
11,330,044
-
-
-
-
(8,429,069)
(90,766)
(23,226,201)
(2,032,839)
(57,285)
(148,493)
(173,863)
(279,065)
(223,538)
(564,958)
(3,170,690)
(2,562,238)
-
-
-
236,694,669
236,694,669
(33,984,653)
(6,974,352)
10,022,978
(369,831)
42,320,623
(613,649)
(3,227,974)
(2,710,730)
(1,422,647)
43,998,770
76,213,200
70,287,679
87,910,677
11,212,935
92,172,787
25,336,521
(9,654,364)
(118,930)
(46,968,353)
(27,740,397)
(28,506,436)
(18,618)
(13,431,753)
(3,332,884)
(17,074,909)
(2,411,795)
(11,433,174)
(1,033,188)
-
-
-
363,133,799
(113,007,098)
(48,717,703)
Year ended 30 June 2014
Revenue
External customers
Total segment revenue
Results
Depreciation and amortisation
Exploration and evaluation expenditure
written off
Segment profit
Total assets
Total liabilities
Other disclosures
Capital expenditure
Adjustments and eliminations
Finance income and costs, fair value gains and losses on financial assets are not allocated to individual segments as the underlying instruments are managed on a Consolidated Entity basis.
Current taxes, deferred taxes and certain financial assets and liabilities are not allocated to those segments as they are also managed on a Consolidated Entity basis.
Capital expenditure consists of additions of property, plant and equipment, mine properties and development and exploration and evaluation expenditure including assets from the acquisition of subsidiaries.
Corporate charges comprise non-segmental expenses such as head office expenses and interest. Corporate charges are not allocated to operating segments.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
109
36. SEGMENTS (CONTINUED)
(a) Reconciliation of profit/(loss)
Segment profit
Corporate administration expenses
Corporate interest income
Corporate other income
Fair value gain on financial instruments
Impairment loss on receivables
Impairment loss on available-for-sale financial assets
Net gains on disposal of available-for-sale investments
Net gain on disposal of assets
Total consolidated profit/(loss) before income tax
(b) Reconciliation of assets
Segment operating assets
Unallocated corporate assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Other financial assets
Available-for-sale financial assets
Property, plant and equipment
Total consolidated assets
(c) Reconciliation of liabilities
Segment operating liabilities
Unallocated corporate liabilities
Trade and other payables
Provision for employee benefits
Interest bearing loans and borrowings
Total consolidated liabilities
(d) Segment revenue from external customers
Segment revenue
Interest revenue
Total revenue
2015
2014
45,321,736
(7,374,943)
2,844,831
592,915
1,244,795
(1,500,000)
-
122,591
(302,724)
40,949,201
43,998,770
(8,836,878)
1,905,163
947,307
(70,073)
-
(1,622,700)
-
1,130,148
37,451,737
383,390,450
363,133,799
96,538,393
1,210,437
303,943
1,438,580
3,783,915
671,933
487,337,651
63,195,101
3,091,106
195,132
-
595,582
951,699
431,162,419
137,138,052
113,007,098
1,283,338
1,557,991
1,091,696
141,071,077
3,605,369
1,314,278
1,576,501
119,503,246
312,405,391
2,844,832
315,250,223
236,694,669
1,905,163
238,599,832
Revenue from external customers by geographical locations is detailed below. Revenue is attributable to geographical location based
on the location of the customers. The Company does not have external revenues from external customers that are attributable to
any foreign country other than as shown.
Australia
South East Asia
Total revenue
234,070,516
78,334,875
312,405,391
161,448,538
75,246,131
236,694,669
The Consolidated Entity has two customers to which it provides tin, copper and gold. The Consolidated Entity sends its tin and copper
concentrates to one South East Asian customer that accounts for 25% of external revenue (2014: 32%). The Consolidated Entity sells
its gold to one Australian customer that accounts for 75% of external revenue (2014: 68%).
(e) Segment non-current assets, excluding financial assets, are all located in Australia.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
110
37. BUSINESS COMBINATION
Acquisitions in 2014
(a)
Acquisition of Meekatharra Gold Operation
On 27 June 2014 Metals X completed the acquisition of the assets of GMK Exploration Pty Ltd (“GMKE”) from GMKE’s Administrator.
The assets comprise the fully refurbished processing plant, other supporting infrastructure and tenements of the Meekatharra
Gold Operation which is currently under care and maintenance in Western Australia. Metals X acquired the assets to integrate
into its Central Murchison Gold Project with the view to bringing the project back into production in 2015. The consideration for the
acquisition was $9,400,000 and 24,000,000 Reed Resources Limited shares with a fair value of $432,000. The acquisition has
been accounted for using the acquisition method.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities as at the date of acquisition are:
Assets
Property, plant and equipment
Exploration and evaluation expenditure
Liabilities
Provisions
Cash paid
Fair value of Reed Resources Limited shares
Purchase consideration transferred
Analysis of cash flows on acquisition:
Cash paid
Net cash outflow
Fair value recognised on
acquisition (restated)
22,520,659
2,110,177
24,630,836
14,798,836
14,798,836
9,400,000
432,000
9,832,000
9,400,000
9,400,000
The net assets recognised in the 30 June 2014 financial statements were based on a provisional assessment of the their fair value
pending a review of the property, plant and equipment by the Company. During the period the Company completed an assessment
of the fair value of the property, plant and equipment which was determined to be $22,520,659, a decrease of $159,650 from the
provisional value. The comparative information was restated to reflect the adjustment to the provisional amounts. As a result, there
was an increase in exploration and evaluation expenditure of $159,650.
From the date of acquisition to 30 June 2014, the assets did not contributed any revenue or net profit before tax of the Consolidated
Entity.
Transaction costs relating to stamp duty, external legal fees, technical fees and due diligence costs of $596,873 have been expensed
and are included in the profit and loss.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
111
37. BUSINESS COMBINATION (CONTINUED)
(b)
Acquisition of Alacer Gold Pty Ltd
On 29 October 2013 Metals X completed the acquisition of 100% of the shares of Alacer Gold Pty Ltd (“Alacer”), a subsidiary of publicly
listed company Alacer Gold Corp. which owns operating gold projects in Western Australia. The consideration for the acquisition was
$44,000,000. The acquisition has been accounted for using the acquisition method.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities as at the date of acquisition are:
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Property, plant and equipment
Mine properties and development costs
Liabilities
Trade and other payables
Provisions
Purchase consideration transferred
Analysis of cash flows on acquisition:
Cash paid
Net cash acquired with the subsidiary (included in cash flows from investing activities)
Net cash outflow
Fair value recognised on
acquisition
14,470,399
2,156,645
16,266,414
576,780
34,175,261
53,634,299
121,279,798
25,831,035
51,448,763
77,279,798
44,000,000
(44,000,000)
14,470,399
(29,529,601)
From the date of acquisition to 30 June 2014, Alacer contributed $164,551,130 of revenue and $27,228,067 to the net profit before
tax of the Consolidated Entity. If the acquisition had occurred on 1 July 2013, consolidated revenue and consolidated profit before
income tax for the period ended 30 June 2014 would have been $209,204,828 and $52,557,079 respectively.
The fair value of the trade receivables amounts to $2,156,645, which is equal to the gross amount of trade receivables. None of the
trade receivables have been impaired and it is expected that the full contractual amount can be collected.
Transaction costs relating to stamp duty, external legal fees, technical fees and due diligence costs of $2,377,088 have been
expensed and are included in the profit and loss.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
112
38. KEY MANAGEMENT PERSONNEL
(a) Details of Key Management Personnel
(i) Non-Executive Directors
PJ Newton
PM Cmrlec
AC Ferguson
SD Heggen
X Penggen
Y Zhang
(ii) Executive Directors
PG Cook
WS Hallam
(iii) Other Executives (KMPs)
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Alternate for Mr Xie Penggen
Appointed
14 December 2012
23 July 2013
10 May 2012
25 October 2012
9 February 2012
3 October 2007
CEO & Executive Director
Executive Director
23 July 2004
1 March 2005
AH King
PD Hucker
MP Poepjes
JW Russell
FJ Van Maanen
General Manager - Tin Operations
Chief Operating Officer
Chief Mining Engineer
Chief Geologist
CFO & Company Secretary
24 February 2014
17 October 2012
8 August 2011
17 October 2012
1 July 2005
Resigned
-
-
-
-
-
-
-
-
-
-
-
-
-
There are no other changes of the key management personnel after the reporting date and the date the financial report was
authorised for issue.
(b) Compensation of Key Management Personnel
Short-term employee benefits
Post employment benefits
Other long-term benefits
Share-based payment
2015
2,954,899
210,153
85,214
166,563
3,416,829
2014
2,818,251
186,959
66,426
-
3,071,636
The amounts disclosed in the table are the amounts recognised as an expense during the period related to key management
personnel.
(c)
Loans to Key Management Personnel
There were no loans to key management personnel during the current or previous financial year.
(d) Other transactions and balances with Key Management Personnel
PG Cook is a Director of Aziana, in the current period $34,219 has been charged to Aziana for director’s fees. In 2014 PG Cook and WS
Hallam were both Directors of Aziana, $67,385 and $35,816 were charged to Aziana for director’s fees.
The Consolidated Entity provides accounting, secretarial and administrative services at cost to Aziana. In the current period
$169,339 has been charged to Aziana for these services (2014: $204,426).
At 30 June 2015 there was an outstanding balance of $31,755 (2014: $15,639) for Aziana Limited.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
113
38. KEY MANAGEMENT PERSONNEL (CONTINUED)
Interest held by Key Management Personnel under the Long Term Incentive Plan
(e)
Share options held by key management personnel under the long term incentive plan to purchase ordinary shares:
Issue date
Expiry date
Exercise price $
2015
2014
30 November 2011
17 October 2012
17 October 2012
30 November 2014
1 November 2014
3 July 2014
1.20
0.84
1.04
Total
Performance rights held by key management personnel under the long term incentive plan
Grant date
26 November 2014
Test Date
1 July 2017
Exercise price $
Nil
-
-
-
-
2015
1,230,770
1,230,770
587,500
275,000
275,000
1,137,500
2014
-
-
39. RELATED PARTY DISCLOSURES
(a) Subsidiaries
The consolidated financial statements include the financial statements of Metals X Limited and the subsidiaries listed in the
following table:
Ownership Interest
2015
2014
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Name
Bluestone Australia Pty Ltd
Metals Exploration Pty Ltd
Westgold Resources Pty Ltd
Subsidiary Companies of Metals Exploration Pty Ltd
Austral Nickel Pty Ltd
Hinckley Range Pty Ltd
Metex Nickel Pty Ltd
Subsidiary companies of Bluestone Australia Pty Ltd
Bluestone Mines Tasmania Pty Ltd
Subsidiary companies of Westgold Resources Pty Ltd
Castile Resources Pty Ltd
Aragon Resources Pty Ltd
Fulcrum Resources Pty Ltd*
Big Bell Gold Operations Pty Ltd
Hill 51 Pty Ltd
Avoca Resources Pty Ltd
Avoca Mining Pty Ltd
HBJ Minerals Pty Ltd
Dioro Exploration Pty Ltd
Hampton Gold Mining Areas Limited
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
* Fulcrum Resources Pty Ltd was deregistered on 22 October 2014.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
114
(b) Ultimate Parent
Metals X Limited is the ultimate parent entity.
(c) Key Management Personnel
Details relating to key management personnel, including remuneration paid, are included in note 38.
(d)
Transactions with related parties
2015
2014
(i)
Jointly controlled assets
Amounts charged by Bluestone Australia Pty Ltd to the joint operation of Bluestone Mines
Tasmania Joint Venture Pty Ltd for services provided *
165,335
121,905
(ii)
Associates
Amounts charged by Bluestone Australia Pty Ltd to Aziana Limited for services provided **
Convertible loan with Aziana Limited (refer to note 15)
203,558
139,949
307,627
-
*
Subsidiary Bluestone Mines Tasmania Pty Ltd has a 50% interest in the Renison Tin Project accounted for as a joint operation.
**
The Company has a 13.37% interest in Aziana Limited (2014: 13.73%).
40. INFORMATION RELATING TO METALS X LIMITED (“THE PARENT ENTITY”)
Current assets
Total assets
Current Liabilities
Total Liabilities
Issued capital
Accumulated losses
Option premium reserve
Other reserves
Total Equity
Loss of the parent entity
Total comprehensive loss of the parent entity
2015
2014
56,448,126
224,716,670
20,969,991
26,025,616
51,077,828
242,494,262
3,022,995
3,022,995
342,131,798
(166,625,084)
19,961,005
3,223,335
198,691,054
340,679,336
(120,947,733)
19,739,664
-
239,471,267
(34,438,414)
(31,215,079)
(65,224,795)
(65,224,795)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries.
Pursuant to Class Order 98/1418, Metals X and its wholly owned subsidiaries (refer to note 39(a) entered into a deed of cross
guarantee on 11 November 2013. The effect of the deed is that Metals X has guaranteed to pay any deficiency in the event of
winding up of any controlled entity or if they do not meet their obligations under the terms of any debt subject to the guarantee. The
controlled entities have given a similar guarantee in the event that Metals X is wound up or if it does not meet its obligations under
the terms of any debt subject to the guarantee.
The statement of financial position and statement of comprehensive income for the closed group is not materially different to the
Consolidated Entity’s statement of financial position and statement of comprehensive income.
Contingent liabilities of the parent entity.
Contractual commitments by the parent entity for the acquisition of property, plant or
equipment.
Nil
Nil
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
115
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Metals X Limited, I state that:
In the opinion of the Directors:
a.
the financial statements and notes of the Company and of the Consolidated Entity are in accordance with the
Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the Company’s and the Consolidated Entity’s financial position as at 30 June
2015 and of their performance for the year ended on that date; and
complying with the Australian Accounting Standards (including the Australian Accounting Interpretations)
and Corporations Regulations 2001; and
the financial statements and notes also comply with International Financial Reporting Standards as disclosed
in note 2(b) and;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable; and
this declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2015.
b.
c.
d.
As at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group
identified in note 40 will be able to meet any obligations or liabilities to which they are or may become subject, by
virtue of the Deed of Cross Guarantee.
On behalf of the Board.
PG Cook
CEO & Executive Director
Perth, 25 August 2015
116
DIRECTOR’S DECLARATION
INDEPENDENT AUDIT REPORT
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor’s report to the members of Metals X Limited
We have audited the accompanying financial report of Metals X Limited, which comprises the
consolidated statement of financial position as at 30 June 2015, 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, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors' declaration of the
consolidated entity comprising the company and the entities it controlled at the year's end or from
time to time during the financial year.
Directors' responsibility 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 controls as the directors determine are necessary to enable the preparation of
the financial report that is free from material misstatement, whether due to fraud or error. In Note 2,
the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement.
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 judgment, 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 controls relevant to the entity's
preparation and fair presentation of the financial report 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 controls. 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations
Act 2001. We have given to the directors of the company a written Auditor’s Independence
Declaration, a copy of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DL:AJMetalsX071
INDEPENDENT AUDIT REPORT
117
INDEPENDENT AUDIT REPORT
Opinion
In our opinion:
a.
the financial report of Metals X Limited is in accordance with the Corporations Act 2001,
including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June
2015 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001; and
b.
the financial report also complies with International Financial Reporting Standards as
disclosed in Note 2.
Report on the remuneration report
We have audited the Remuneration Report included in the directors' report for the year ended 30
June 2015. 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
In our opinion, the Remuneration Report of Metals X Limited for the year ended 30 June 2015,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
D S Lewsen
Partner
Perth
25 August 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DL:AJMetalsX071
118
INDEPENDENT AUDIT REPORT
SECURITY HOLDER INFORMATION AS AT
25 SEPTEMBER 2015
(a)
Top 20 Quoted Shareholders
SUN HUNG KAI INVESTMENT SERVICES LTD
JINCHUAN GROUP LIMITED
NATIONAL NOMINEES LIMITED
SUN HUNG KAI INVESTMENT SERVICES LTD
JP MORGAN NOMINEES AUSTALIA LIMITED
HSBC CUSTODY NOMINEES AUSTRALIA LIMITED
MT HENRY GOLD PTY LTD
ALL-STATES FINANCE PTY LTD
AJAVA HOLDINGS PTY LTD
RICHARD FARLEIGH
HSBC CUSTODY NOMINEES AUSTRALIA LTD
CITICORP NOMINEES PTY LTD
PETER GERARD COOK
BNP PARIBAS NOMINEES PTY LTD
AUSTRALIAN STRATEGIC & PRECIOUS
BRISPOT NOMINEES PTY LTD
WESTERN BRIDGE PTY LTD
HSBC CUSTODY NOMINEES AUSTALIA LTD
KANGATHARAN RAM SHANKER
CITICORP NOMINEES PTY LTD
Total
(b) Distribution of quoted ordinary shares
Size of parcel
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 999,999,999
Total
%
14.72
10.00
9.52
7.89
7.21
6.61
3.46
3.15
2.43
2.32
2.17
1.61
1.22
1.22
0.91
0.68
0.66
0.53
0.52
0.49
77.32
Number of shares
64,782,571
44,000,000
41,898,044
34,750,000
31,715,873
29,093,841
15,225,000
13,874,697
10,704,982
10,228,517
9,558,872
7,086,780
5,387,500
5,353,751
4,000,000
2,981,416
2,912,982
2,352,944
2,268,000
2,170,847
340,346,617
Number of share
holders
Number of shares
561
2,154
915
1,182
178
4,990
276,002
5,670,076
6,528,076
32,861,074
394,845,810
440,181,038
(c) Number of holders with less than a marketable parcel of ordinary shares
1 – 100,000
216
24,935
(d) Substantial Shareholders
Apac Resources Limited
Jinchuan Group Limited
Blackrock Group
%
22.58
10.00
8.02
Number of shares
99,407,571
44,000,000
35,305,319
SECURITY HOLDER INFORMATION
AS AT 25 SEPTEMBER 2015
119
SECURITY HOLDER INFORMATION AS AT
25 SEPTEMBER 2015 (CONTINUED)
(e)
Voting Rights
The voting rights for each class of security on issue are:
Ordinary fully paid shares
Each ordinary shareholder is entitled to one vote for each share held.
Performance rights
The holders of performance rights have no rights to vote at a general meeting of the company.
(f) Unquoted Equity Securities
Number of Performance
Rights
Exercise Price
1,637,020
Nil
Expiry Date
01/07/2017
Number holders
9
SECURITY HOLDER INFORMATION
AS AT 25 SEPTEMBER 2015
120
TABLES OF MINERAL RESOURCES & ORE RESERVES
TIN DIVISION
MINERAL RESOURCES ESTIMATES
CONSOLIDATED SUMMARY & ANNUAL COMPARISON
(Calculated as at 30 June 2015)
Mineral Resources
Tin
Copper
Tonnes (Kt)
Grade (%Sn)
Sn Metal (Kt)
Tonnes (Kt)
Grade (%Cu)
Cu Metal (Kt)
Project
30 June 2014
Renison Bell
Mt Bischoff
Rentails
Mining Depletion
Renison Bell
Mt Bischoff
Rentails
11,111
1,667
21,192
33,970
(671)
-
-
(671)
Resource Adjustments
Renison Bell
Mt Bischoff
Rentails
2,434
-
650
3,084
30 June 2015
Renison Bell
Mt Bischoff
Rentails
12,874
1,667
21,842
36,383
1.58
0.54
0.45
0.82
1.50
-
-
1.50
0.94
-
0.46
0.84
1.46
0.54
0.45
0.81
175
9
95
279
(10)
-
-
(10)
23
-
3
26
188
9
98
295
10,011
-
21,192
31,203
(671)
-
-
(671)
2,671
-
650
3,321
12,011
-
21,842
33,853
0.34
-
0.21
0.25
0.35
-
-
0.35
0.26
-
0.46
0.30
0.33
-
0.22
0.26
34
-
45
79
(2)
-
-
(2)
7
-
3
10
39
-
48
87
Notes: Renison Bell, Mt Bischoff and Rentails are 50% owned by Metals X.
The geographic region for Tin Resources and Reserves is Australia.
TABLES OF MINERAL RESOURCES & ORE RESERVES
121
TIN DIVISION
MINERAL RESERVES ESTIMATE
CONSOLIDATED SUMMARY & ANNUAL COMPARISON
Mining Reserves are a subset of the Mineral Resource Estimates
Ore Reserves
Tin
Copper
Tonnes (Kt)
Grade (%Sn)
Sn Metal (Kt)
Tonnes (Kt)
Grade (%Cu)
Cu Metal (Kt)
Project
30 June 2014
Renison Bell
Rentails
Mining Depletion
Renison Bell
Rentails
5,911
20,351
26,262
(671)
-
(671)
Reserve Adjustments
Renison Bell
Rentails
1,433
614
2,077
30 June 2015
Renison Bell
Rentails
6,673
20,965
27,638
1.37
0.45
0.66
1.50
-
1.50
1.03
0.49
0.88
1.29
0.45
0.65
81
91
172
(10)
-
(10)
15
3
18
86
94
180
5,763
20,351
26,114
(671)
-
(671)
1,260
614
1,874
6,352
20,965
27,317
0.24
0.21
0.22
0.35
-
0.35
0.48
0.33
0.43
0.29
0.22
0.24
14
44
58
(2)
-
(2)
6
2
8
18
46
64
Notes: Renison Bell, Mt Bischoff and Rentails are 50% owned by Metals X.
The geographic region for Tin Resources and Reserves is Australia.
122
TABLES OF MINERAL RESOURCES & ORE RESERVES
GOLD DIVISION
MINERAL RESOURCES ESTIMATES
CONSOLIDATED SUMMARY & ANNUAL COMPARISON
(Calculated as at 30 June 2015)
Project
30 June 2014
CMGP
HGO
SKO
Mining Depletion
CMGP
HGO
SKO
Resource Adjustments
CMGP
HGO
SKO
30 June 2015
CMGP
HGO
SKO
Mineral Resources
Tonnes kt
Grade (g/t Au)
Au Metal Koz
62,941
13,307
50,368
126,617
-
(1,047)
(757)
(1,804)
63,685
1,490
(3,955)
61,220
126,626
13,750
45,656
186,032
2.48
2.88
1.98
2.33
-
4.41
(0.78)
2.90
1.67
2.11
(0.90)
1.84
2.07
2.68
2.25
2.16
5,020
1,231
3,214
9,465
-
(149)
(19)
(168)
3,414
101
114
3,629
8,434
1,183
3,309
12,926
Notes: The geographic region for Gold Resources and Reserves is Australia.
TABLES OF MINERAL RESOURCES AND ORE RESERVES
123
GOLD DIVISION
MINERALS RESERVES ESTIMATES
CONSOLIDATED SUMMARY & ANNUAL COMPARISON
Mining Reserves are a subset of the Mineral Resource Estimate
Project
30 June 2014
CMGP
HGO
SKO
Mining Depletion
CMGP
HGO
SKO
Resource Adjustments
CMGP
HGO
SKO
30 June 2015
CMGP
HGO
SKO
Ore Reserves
Tonnes kt
Grade (g/t Au)
Au Metal Koz
15,458
4,538
960
20,956
-
(1,047)
(757)
(1,804)
5,008
80
1,974
7,062
20,466
3,571
2,177
26,213
2.36
3.67
0.76
2.57
-
4.41
(0.76)
2.90
3.27
(20.04)
2.68
2.86
2.58
2.95
2.49
2.63
1,174
535
23
1,732
-
(149)
(19)
(168)
526
(47)
170
649
1,700
339
174
2,213
Notes: The geographic region for Gold Resources and Reserves is Australia.
124
TABLES OF MINERAL RESOURCES & ORE RESERVES
TENNANT CREEK –ROVER POLYMETALLIC PROJECTS
MINERAL RESOURCES ESTIMATES
CONSOLIDATED SUMMARY & ANNUAL COMPARISON
(Calculated as at 30 June 2015)
Gold
Grade
%
-
2.42
1.27
1.73
Koz
Metal
-
213
168
381
Copper
Grade
%
-
Kt
-
2,741 1.42%
4,073 1.06%
6,814 1.20%
Kt
Metal
-
59
52
112
Bismuth
Grade
%
-
Kt
-
2,741 0.18%
4,073 0.11%
6,814 0.14%
Kt
Metal
-
5
4
9
Cobalt
Grade
%
-
Kt
-
2,741 0.04%
4,073 0.08%
6,814 0.06%
Kt
Metal
-
1
3
4
Kt
-
2,741
4,073
6,814
Zinc
Lead
Silver
Kt
Grade %
-
8,438
3,429
11,868
-
3.41
2.81
3.24
Koz
Metal
-
287
96
384
Gold
Kt
Grade % Kt Metal
Kt
Grade % Kt Metal
-
8,438
3,429
11,868
-
2.05
1.88
2.00
-
172
64
237
-
8,438
3,429
11,868
-
14.30
3.30
11.14
-
3,879
364
4,243
Kt
-
-
176
176
Grade %
Koz Metal
-
-
0.21
0.21
-
-
1
1
Kt
-
-
172
172
Copper
Grade %
Kt Metal
-
-
5.21
5.21
-
-
9
9
Rover 1
Project
Measured
Indicated
Inferred
Explorer
108
Project
Measured
Indicated
Inferred
Explorer
142
Project
Measured
Indicated
Inferred
Notes: 2.5% Pb + Zn cut-off.
There were no additions or depletions during the year.
The geographic region for Polymetallic Resources and Reserves is Australia.
TABLES OF MINERAL RESOURCES & ORE RESERVES
125
NICKEL DIVISION
MINERAL RESOURCES ESTIMATES
CONSOLIDATED SUMMARY & ANNUAL COMPARISON
(Calculated as at 30 June 2015)
Nickel
Grade % Kt Metal
Kt
Cobalt
Grade % Kt Metal
Kt
Fe203
Grade % Kt Metal
Kt
Wingellina Project
Measured
Indicated
Inferred
68,847
98,623
49,004
216,474
1.00
0.97
0.86
0.95
688
957
422
2,067
68,847
98,623
49,004
216,474
0.08
0.08
0.07
0.07
54
74
34
161
68,847
98,623
49,004
216,474
48.71
46.39
40.02
45.68
33,535
45,751
19,609
98,896
ORE RESERVES ESTIMATE
CONSOLIDATED SUMMARY & ANNUAL COMPARISON
Mining Reserves are a subset of the Mineral Resource Estimate
Nickel
Grade % Kt Metal
Kt
Cobalt
Grade % Kt Metal
Kt
Fe203
Grade % Kt Metal
Kt
Wingellina Project
Proved
Probable
Total
-
167,470
167,470
-
0.98
0.98
-
1,645
1,645
-
167,470
167,470
-
0.08
0.08
-
128
128
-
167,470
167,470
-
47.34
47.34
-
79,287
79,287
Note: There were no additions or depletions during the year.
The geographic region for Nickel Resources and Reserves is Australia.
126
TABLES OF MINERAL RESOURCES & ORE RESERVES
FURTHER INFORMATION
Refer to the Metals X Limited ASX Announcement dated 25 August 2015 for detailed infomation relating to Mineral
Resources & Reserves Estimates.
COMPETENT PERSONS STATEMENTS
The information in this report that relates to Mineral Resources compiled by Metals X technical employees under
the supervision of Mr. Jake Russell B.Sc. (Hons), who is a member of the Australian Institute of Geoscientists. Mr
Russell is a full-time employee of the company, and has sufficient experience which is relevant to the styles of
mineralisation and types of deposit under consideration and to the activities which he is undertaking to qualify as
a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves”. Mr Russell consents to the inclusion in this report of the matters based on
his information in the form and context in which it appears. Mr Russell is eligible to participate in short and long
term incentive plans and holds performance rights in the Company as has been previously disclosed.
The information in this report that relate to Ore Reserves has been compiled by Metals X technical employees
under the supervision of Mr Michael Poepjes BEng (Mining Engineering), MSc (Min. Econ) M.AusIMM. Mr Poepjes
is a full-time employee of the company. Mr Poepjes has sufficient experience which is relevant to the styles of
mineralisation and types of deposit under consideration and to the activities which he is undertaking to qualify as
a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves”. Mr Poepjes consents to the inclusion in this report of the matters based on
his information in the form and context in which it appears. Mr Poepjes is eligible to participate in short and long
term incentive plans and holds performance rights in the Company as has been previously disclosed.
STATEMENT OF GOVERNANCE ARRANGEMENTS AND INTERNAL CONTROLS
Governance of Metals X’s mineral resources and ore reserves development and management activities is a key
responsibility of the Executive Management of the Company.
The Group Chief Geologist and Chief Mining Engineer of Metals X oversee reviews and technical evaluations of
the estimates and evaluate these with reference to actual physical and cost and performance measures. The
evaluation process also draws upon internal skill sets in operational and project management, ore processing and
commercial/financial areas of the business.
The Group Chief Geologist is responsible for monitoring the planning, prioritization and progress of exploratory
and resource definition drilling programs across the company and the estimation and reporting of resources and
reserves. These definition activities are conducted within a framework of quality assurance and quality control
protocols covering aspects including drill hole siting, sample collection, sample preparation and analysis as well as
sample and data security.
A three-level compliance process guides the control and assurance activities:
1. Provision of internal policies, standards, procedures and guidelines;
2. Resources and reserves reporting based on well-founded assumptions and compliance with external standards
such as the Australasian Joint Ore Reserves Committee (JORC) Codes;
3.
Internal assessment of compliance and data veracity.
The objectives of the estimation process are to promote the maximum conversion of identified mineralisation into
JORC compliant Mineral Resources and Ore Reserves.
Metals X reports its mineral resources and ore reserves on an annual basis, in accordance with the Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC code) 2012 Edition.
Mineral resources are quoted inclusive of ore reserves. Competent Persons named by Metals X are members of
the Australasian Institute of Mining and Metallurgy and/or the Australian Institute of Geoscientists, and qualify as
Competent Persons as defined in the JORC Code.
TABLES OF MINERAL RESOURCES & ORE RESERVES
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