ANNUAL REPORT 2017
CORPORATE DIRECTORY
DIRECTORS
Peter Newton (Non-Executive Chairman)
Warren Hallam (Managing Director)
Stephen Robinson (Executive Director)
Simon Heggen (Non-Executive Director)
Milan Jerkovic (Non-Executive Director)
Yimin Zhang (Non-Executive Director)
COMPANY SECRETARY & CFO
Fiona Van Maanen
KEY MANAGEMENT
Allan King (Chief Operating Officer)
Mark Recklies (General Manager – Renison Tin Operations)
Michael Poepjes (Chief Mining Engineer)
REGISTERED OFFICE
Level 5, 197 St Georges Terrace
Perth WA 6000
Phone: +61 8 9220 5700
Fax: +61 8 9220 5757
Email: reception@metalsx.com.au
Web: www.metalsx.com.au
POSTAL ADDRESS
PO Box 7248
Cloisters Square PO WA 6850
SECURITIES EXCHANGE
Listed on the Australian Securities Exchange
ASX Code: MLX
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
CONTENTS
COMPANY PROFILE
REVIEW OF OPERATIONS
DIRECTORS’ REPORT
1
3
9
AUDITOR’S INDEPENDENCE DECLARATION 30
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 30 JUNE 2017
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE YEAR ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
31
32
33
34
35
DIRECTORS’ DECLARATION 82
INDEPENDENT AUDIT REPORT 83
TABLES OF MINERAL RESOURCES & ORE
RESERVES AS AT 30 JUNE 2017
SECURITY HOLDER INFORMATION AS AT
28 AUGUST 2017
89
94
COMPANY PROFILE
Metals X Limited (Metals X or the Company) is a diversified Australian miner with substantial base metals
operations:
•
•
•
•
A globally significant tin miner through its 50% owned Tasmanian Joint Venture, producing
approximately 7,000 tonnes per annum of tin in concentrate and expanding to approximately
8,500 tonnes per annum of tin in concentrate;
A significant copper miner, targeting to produce approximately 40,000 tonnes per annum of
copper in concentrate;
A development-ready, world class nickel-cobalt-scandium project;
A strong balance sheet and fiscal position, with approximately $113 million in cash and working
capital.
Metals X currently has two producing assets; the Renison Tin Operations (50%-owned Joint Venture) in
Tasmania and the Nifty Copper Operations in Western Australia. The Company also owns the Wingellina
nickel-cobalt-scandium deposit (Central Musgrave Nickel Project), one of the world’s largest undeveloped
nickel and cobalt resources. The existing operations provide strong cash flow and organic growth
opportunities.
The Company is in a unique position as the only significant publicly listed tin producer on the ASX, and
remains as one of few publicly listed tin producers in the western world. The Tin Division has aggregated
Mineral Resources containing approximately 316,000 tonnes of tin and aggregated Ore Reserves
containing approximately 173,000 tonnes of tin*. Renison currently is being expanded by approximately
15-20% with the introduction of ore sorting. In addition, an updated feasibility study for the Rentails Project
(tin tailings re-treatment project) has recently been completed which demonstrates a high margin project.
Discussions have commenced with various parties in relation to financing options and establishing the
timing of long lead time items, final approvals and the capacity of suppliers to service Rentails.
through
acquired
The Nifty Copper Operations (Nifty)
were
the
Company’s takeover of Aditya Birla
Minerals Limited (Aditya Birla) that
was completed on 29 August 2016.
Nifty produces a clean copper
concentrate from an underground
copper sulphide mine, with ore
processed through a 2.5 million
copper
tonne-per-annum
concentrator. Nifty has aggregated
Mineral Resources
containing
approximately 770,000 tonnes of
copper and aggregated Ore
Reserves containing approximately
153,500 tonnes of copper**. Metals
X has significantly extended the
Nifty mine to the east, west and
down-plunge with a combination of
underground and surface drill
programs.
Base Metals Location Map
1 |
COMPANY PROFILE
(CONTINUED)
The Copper Division, in addition to Nifty, also has the
Maroochydore Copper Project located approximately 85
kilometres to the south-east of Nifty. Maroochydore
already hosts aggregated Mineral Resources of
approximately 486,000 tonnes of copper and 18,500
tonnes of cobalt, mainly in oxides. A drilling program to
define the extent of sulphides, which are located beneath
the oxides, will commence during the September 2017
quarter.
The Wingellina nickel–cobalt-scandium project, which
forms part of the Company’s Central Musgrave Nickel
is a world-class deposit. Wingellina has
Project,
aggregated Mineral Resources containing approximately
2.0 million tonnes of nickel and over 150,000 of cobalt***.
A feasibility study completed in 2008 proposes a minimum
40 year project producing at an annual rate of 40,000
tonnes of nickel and 3,000 tonnes of cobalt. A current
focus of activity is a drilling campaign targeting high grade
cobalt zones within the orebody.
Metals X has received the required approvals, including
Native Title and Environmental, to proceed with the
development of Wingellina. Development of the project will
be contingent upon nickel price improvement and funding.
* For further details on Total Mineral Resource and Reserve Estimates
for the Renison Tin Operations refer to ASX announcement dated 28
August 2017.
** For further details on Total Mineral Resource and Reserve Estimates
for the Nifty Copper Operations refer to ASX announcement dated 31
May 2017.
*** For further details on Total Mineral Resource and Reserve Estimates
for the Central Musgrave Nickel Project refer to ASX announcement
dated 18 August 2016.
| 2
REVIEW OF OPERATIONS
CORPORATE
On 1 August 2016 Metals X took control of the Nifty Copper Operations and moved to compulsory
acquisition of Aditya Birla. The acquisition was completed on 29 August 2016.
On 4 August 2016 Metals X announced that it would undertake a placement to raise $100,600,000 and a
Share Purchase Plan (SPP) to raise up to $15,000,000. In addition, it announced that it proposed to
demerge its gold business to create a pure gold company Westgold Resources Limited (Westgold) and a
base metals company (Metals X Limited).
The demerger was effective from 1 December 2016 with each shareholder receiving an equivalent
ownership in Westgold.
CAPITAL RAISING
On 9 August 2016 the Company completed an institutional placement of $100,600,000 and issued
68,000,000 new fully paid ordinary shares in the Company at an issue price of $1.48 per share.
On 8 September 2016 the Company completed a capital raising via a Share Purchase Plan (SPP). Under
the SPP, eligible shareholders were invited to invest up to $15,000 at $1.48 per share subject to an overall
cap on the SPP of $15,000,000. The SPP closed oversubscribed and the Company issued 10,134,315
new fully paid ordinary shares in the Company to raise $14,999,413.
WESTGOLD RESOURCES LIMITED DEMERGER
On 24 November 2016 at an Extraordinary General Meeting Metals X shareholders approved the
demerger of Metals X’s gold assets via a capital reduction and in specie distribution of all the shares in
Westgold. The demerger was effective on 1 December 2016 and trading of Westgold commenced
6 December 2016 on the Australian Securities Exchange (ASX).
ADITYA BIRLA MINERALS LIMITED TAKEOVER OFFER
On 15 October 2015 the Company announced an off-market takeover bid to acquire 100% of the ordinary
shares in Aditya Birla. The original offer of 1 Metals X share for every 5 Aditya Birla shares was increased
on 7 December 2015 to 1 Metals X share for every 4.75 Aditya Birla shares.
On 18 July 2016 the Company announced that Aditya Birla’s 51% major shareholder Hindalco Industries
Limited had received regulatory approval from the Reserve Bank of India to accept the Metals X takeover
offer. Accordingly, Metals X increased the Offer consideration to 1 Metals X share for every 4.5 Aditya
Birla shares, plus $0.08 in cash for every Aditya Birla share.
On 20 July 2016 the Company announced it had obtained 85.18% acceptances under the Aditya Birla
off-market takeover offer and that it had gained control of Aditya Birla.
On 21 July 2016 the Company drew down on a $25,000,000 cash advance facility with Citibank N.A. to
pay the cash consideration to Aditya Birla shareholders, which was subsequently repaid on 21 October
2016.
On 22 July 2016 the Company announced it had obtained 90.06% acceptances under the Aditya Birla
off-market takeover offer and that it would proceed to compulsorily acquire the remaining interests in
Aditya Birla.
On 29 July 2016 the Aditya Birla off-market takeover offer closed with the Company obtaining 94.75%
acceptances with the Company compulsorily acquiring the remaining interest to gain 100% ownership.
The acquisition was completed on 29 August 2016.
3 |
COPPER DIVISION
The Copper Division holds two key assets:
1.
2.
Nifty Copper Operations; and
Maroochydore Copper Project.
NIFTY COPPER OPERATIONS
Nifty is an underground copper sulphide mine with an associated
2.5Mtpa copper concentrator. Site infrastructure is extensive,
including a powerhouse, camp and airfield, Processing of
sulphide copper ore is by conventional comminution, grinding
and flotation to produce a clean copper concentrate. A
concentrate storage facility is located at Port Hedland where
concentrate is accumulated before shipping for smelting and
refining.
The focus of the Company since acquisition of Nifty has been to
increase the production rate, returning the process plant to
continuous operation, and to extend the mine life. The objective
is to transform Nifty into a large, long-life mine, with an
annualised production rate in excess of 40,000 tonnes of
contained copper in concentrate. Currently the plant runs on a
campaign basis and has approximately 40% spare capacity.
Metals X is on track to achieve its production objective during
2018. In addition to the productivity improvements there has
been a substantial reduction in operational costs at Nifty.
Over 20,000 meters of underground drilling has been completed
at Nifty since acquisition. Metals X announced updated Mineral
Resource and Ore Reserve estimates at 31 March 2017,
increasing Ore Reserves by 59% and extending the current mine
life to 4 – 5 years. Only a small percentage of the results of the
to be
underground exploration program were available
incorporated into the March 2017 update and a further Mineral
Resource and Ore Reserve update is planned to be completed
in September 2017.
The Copper Division has excellent exploration upside potential,
with a large land holding of approximately 3,220km2 including the
Maroochydore Copper Project. There are a number of defined
copper, cobalt and lead/zinc targets, with minimal expenditure
having been incurred on these targets over the past 20 years.
Metals X has conducted extensive geophysics programs and has
developed and commenced a regional exploration program.
MAROOCHYDORE COPPER PROJECT
The Maroochydore Copper Project is located 85 km’s from Nifty
and manifests as a large copper oxide and secondary chalcocite
blanket of mineralisation. Historic drilling has defined a copper
oxide Mineral Resource estimate with contained copper and
cobalt of approximately 0.5Mt and 19Kt respectively.
A small amount of copper sulphide mineralisation at depth was
identified from historic drilling. However, the area is sparsely
drilled and inadequately defined, with primary copper sulphide
mineralisation remaining open along-strike and down-dip.
Geophysical modelling of high resolution aeromagnetic data
suggests that the Maroochydore deposit lies within a north-
trending structural corridor with the possibility of a structural
repetition of the mineralised horizon occurring to the west of the
current resource area.
A drill program, as well as baseline environmental studies, is
planned to commence at Maroochydore during the September
2017 quarter focused on the sulphide mineralisation.
| 4
REVIEW OF OPERATIONS (CONTINUED)
TIN DIVISION
Metals X is a globally significant tin producer through its 50% ownership of the Renison Joint Venture
(JV) which holds two key assets:
1.
2.
Renison Tin Operations; and
The Renison Tailings Retreatment Project.
RENISON TIN OPERATIONS (50%)
The Renison Tin Operations (Renison) are located approximately 15km north-east of Zeehan on
Tasmania’s west coast. The Renison resource includes over 20 million tonnes of historic tailings, which
will be feed for the proposed Rentails Project, proximate to the processing plant.
The focus of the Company’s activities during the year was to continue to improve productivity to lower
the overall costs at the operation while continuing to achieve further recovery improvements.
During the year ore sorting trials were completed which indicated that approximately 25% of the Renison
underground feed to the processing plant, essentially waste that dilutes ore feed, can be rejected with tin
losses of less than 3%. The ore sorter offers a cost effective expansion at Renison with an increase in
mining production without the requirement to expand the processing plant. Earthworks commenced for
installation of a new crushing circuit and ore sorter in the June 2017 quarter with practical completion
scheduled for April 2018.
The ore sorter will require an increase in annualised mine production to approximately 920,000 tonnes
while maintaining the processing plant at 720,000 tonnes per annum. Underground development has
been ramped up and a significant stockpile of ore created at surface in readiness for commissioning of
the ore sorter. Tin production is expected to increase by approximately 15-20% from current levels of
approximately 7,000 tonnes per annum. The introduction of ore sorting is also expected to facilitate a re-
optimisation of the current resource due to the resulting reduction in overall unit costs for Renison.
RENISON TAILINGS RETREATMENT PROJECT (RENTAILS)
Rentails provides the opportunity to expand production at the Renison Tin Operations through the re-
processing and recovery of tin and copper from the historic tailings at Renison. An updated definitive
feasibility study of Rentails was completed during the year based upon an 11-year project with an
integrated 2Mtpa tin concentrator and tin fumer plant producing approximately 5,400 tonnes of tin and
2,200 tonnes of copper per year.
Based upon the favourable economics of the updated feasibility, Metals X and its joint venture partners
have commenced discussions with various parties in relation to financing options and establishing long
lead time items, final approvals and the capacity of suppliers to service Rentails.
When combined with Rentails and the ore sorter project, production from the Renison Tin Operations is
anticipated to increase to approximately 13,400 - 13,900 tonnes of tin in concentrate per year, which is
approximately 3.75% of the current global primary tin supply. The All-In Sustaining Costs (AISC) for the
combined operations is anticipated to be less than A$17,000 per tonne which compares favourably to
the prevailing tin price of over A$26,000 per tonne.
5 |
NICKEL DIVISION
Metals X’s nickel strategy remains focused on the Central
Musgrave Nickel Project that straddles the triple-point of the
WA/NT/SA borders. The project represents the Company’s
key nickel assets and comprises the globally significant
Wingellina nickel-cobalt-scandium 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.
Wingellina remains one of the largest undeveloped nickel–
cobalt–scandium deposits in the world. Metals X has
defined an Ore Reserve estimate of approximately 168
million tonnes containing 1.56 million tonnes of nickel,
123,000 tonnes of cobalt and a significant inventory of
scandium and iron.
Metals X has completed a feasibility study (+/-25%) and has
signed an agreement with the Traditional Owners which
provides consent to undertake mining activities. Metals X
has also received Environmental Protection Authority (EPA)
approval to develop the project.
Despite the current depressed nickel price environment,
Metals X has been collaborating with POSCO in regard to
applying its propriety Nickel Extraction Process (PosNEP) to
the Wingellina project and has tested ore through the
PosNEP pilot plant in Korea. The purpose of the pilot was to
trial an alternative processing route for high iron, low
magnesium nickel ores. The trials were successful and
discussions are ongoing as to the next steps in the possible
commercialisation of
the
Wingellina project, including a potential modularisation of
the process plant to facilitate a smaller scale start-up project,
at a lower up-front capital cost, with additional trains to be
subsequently added.
the PosNEP process and
During the year Metals X reviewed the potential for high
grade cobalt production from Wingellina. The review
indicated that within the current resources a high grade
cobalt domain of 29.7 million tonnes at 0.14% Co (cut-off
grade of 0.1% Co) or 85.9 million tonnes at a grade of 0.11%
Co (cut-off grade of 0.05% Co) could be mined. The
Company is currently preparing a follow-up drill program
and obtaining approvals to commence drilling the higher
grade cobalt zones.
that resulted
At the end of the period the Company completed a
in an
recoverable amount assessment
impairment of the Central Musgrave Nickel Project of
$73,378,360 (refer to note 42). The Company’s strategy is
to continue to enhance the option value of the project by
continuing to assess metallurgical processing alternatives to
reduce the capital hurdle, and continuing its discussions
with potential joint venture parties for the co-development of
the project.
| 6
REVIEW OF OPERATIONS (CONTINUED)
GOLD DIVISION - DISCONTINUED OPERATION
The gold division was demerged from Metals X effective as of 1 December 2016 via an in-specie
distribution and capital reduction and subsequent ASX listing of Westgold (refer to note 41). The Gold
Division’s key assets were:
1.
2.
3.
4.
5.
The Higginsville Gold Operation (HGO);
The Central Murchison Gold Project (CMGP);
The South Kalgoorlie Operation (SKO);
The Fortnum Gold Project (FGP); and
The Rover Project.
THE HIGGINSVILLE GOLD OPERATION
HGO is centred around the main infrastructure of a modern 1.3Mtpa CIP plant and its infrastructure, and
a 300 person village.
Mining at HGO during the period was from the Trident underground mine (which was closed in December
2016), Mt Henry open pit and the Lake Cowan group of open pits.
THE CENTRAL MURCHISON GOLD PROJECT
The CMGP is centred upon the refurbished 2.0Mtpa process CIP plant and associated infrastructure. The
project has numerous open pit and underground production options.
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.
Mining at CMGP during the period was from the Paddy’s Flat underground mine and a series of open
pits. Development of the Comet underground mine commenced during the period, with dewatering of the
Big Bell underground mine as an additional underground ore source is continuing.
THE SOUTH KALGOORLIE OPERATION
The SKO operations are centred upon a 1.2Mtpa CIP plant and infrastructure. Numerous open pits and
underground deposits have previously been mined within the tenement area since the late 1980’s.
Mining at SKO during the period was from the HBJ underground mine and George’s Reward open pit.
Mining continued at the Cannon open pit mine which was subject to a mine financing and profit sharing
agreement with Southern Gold Limited (SAU).
THE FORTNUM GOLD PROJECT
The FGP is centred upon the historic mining centres of Labouchere, Fortnum, Horseshoe and Peak Hill,
a 1.0M tpa CIL plant and a 100 person village.
Re-permitting was completed and refurbishment of the operation commenced during the period.
Production, initially from low grade stockpiles was scheduled to commence by the end of March 2017.
Open pit mining and the re-establishment of the Starlight underground mine will commence soon
thereafter.
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 tested a small number of anomalies and significant mineralised
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 project area is proximal to a major infrastructure corridor adjacent to
Central Australian Railway, gas pipeline and Stuart Highway.
7 |
INVESTMENTS
Metals X’s current investment holdings are:
•
•
•
Nelson Resources Limited (formerly Mongolian Resource Corporation Limited) (ASX:NES) 21.77%
(2016: 14.76%);
Brainchip Holdings Limited (ASX:BRN) 6.69% (2016: 7.10%); and
Auris Minerals Limited (formerly RNI NL) (ASX:AUR) 0.85% (2016: 1.22%).
CORPORATE STRUCTURE
| 8
DIRECTORS’ REPORT
The Directors submit their report together with the financial and annual report of Metals X Limited and of
the Consolidated Entity, being the Company and its controlled entities, for the year ended 30 June 2017.
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 – Independent 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 and serves on the Audit & Risk
Committee.
During the past three years he has served as a director of the following public listed companies:
• Westgold Resources Limited *.
Warren Hallam - Managing 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 – Resigned 2 February 2017).
Stephen Robinson – Executive Director (Appointed 25 November 2016)
Mr Robinson holds a BSc and is an experienced Australian mining executive and a Rhodes Scholar. Mr
Robinson has extensive international experience at senior executive levels within the mining industry and
was recently the Non-Executive Chairman of Sumatra Copper and Gold Plc Previously he has been the
Director of Business Development & Strategy at Barrick (Australia Pacific) Limited, Non-Executive
Director of Orrex Resources Ltd and Bulletin Resources Ltd. Mr Robinson also served as Group Manager
Planning with the leading Australian mineral sands producer Iluka Resources Ltd and was a senior
manager in the gold business unit at WMC Resources Ltd.
During the past three years he has served as a director of the following public listed companies:
• Sumatra Copper & Gold Plc (Appointed 8 July 2013 - Resigned 30 June 2017).
Simon Heggen – Independent Non-Executive Director
Mr Heggen holds a Bachelor of Economics and a 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 companies:
• Auris Minerals Limited (formerly RNI NL) (Appointed 31 October 2015 – Resigned 25 November
2015).
Yimin Zhang – Non-Executive Director (Appointed 9 January 2017)
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 Chang Chun. Mr Zhang served as an
Alternative Non-Executive Director for Mr Xie Penggen until 9 January 2017, at that time Mr Zhang was
appointed a Non-Executive Director of the Company.
Mr Zhang has held no public company directorships in the past three years.
9 |
Xie Penggen – Non-Executive Director (Resigned 9 January 2017)
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.
Milan Jerkovic – Independent Non-Executive Director (Appointed 1 May 2017)
Mr Jerkovic has over 30 years of experience in the mining industry involving resource evaluation,
operations, financing, acquisition, project development and general management. Mr Jerkovic is a
Geologist with post graduate qualifications in Mineral Economics and Mining, is a Fellow of the Australian
Institute of Mining and Metallurgy and a member of the Australasian Institute of Company Directors. He
was previously the CEO of Straits Resources Limited and was the founding Chairman of Straits Asia
Resources Limited which was listed on the Singapore Stock Exchange. Mr Jerkovic has also held
positions with WMC, BHP, Nord Pacific, Hargraves, and Tritton. Mr Jerkovic is currently Chairman of both
Geopacific Resources Limited and Blackham Resources Limited. Mr Jerkovic 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 companies:
• Blackham Resources Limited * and:
• Geopacific Resources Limited *.
Peter Cook – Chief Executive Officer and Executive Director (Resigned 2 February 2017)
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. Upon the demerger of Westgold Resources Limited Mr Cook resigned
as an Executive Director and was appointed as a Non-Executive Director on 1 December 2016. Mr Cook
resigned as a Non-Executive Director on 2 February 2017.
Westgold Resources Limited;
During the past three years he has served as a director of the following public listed companies:
•
•
•
Brainchip Holdings Limited (Appointed 30 May 2011 – Resigned 10 September 2015).
Pantoro Limited (Appointed 31 August 2009 – Resigned 5 October 2016) and:
Paul Cmrlec – Independent Non-Executive Director (Resigned 5 October 2016)
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.
During the past three years he has served as a director of the following public listed company:
• Pantoro Limited *.
* Denotes current directorship
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
WS Hallam
SD Heggen
PJ Newton
M Jerkovic
SD Robinson
Y Zhang
Total
Fully Paid
Ordinary Shares
2,121,209
6,689
13,883,311
-
13,500
-
Options
2,000,000
-
-
-
-
-
16,024,709
2,000,000
| 10
DIRECTORS (CONTINUED)
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:
•
•
operation of tin and copper mines in Australia; and
exploration and development of base metals projects in Australia.
EMPLOYEES
The Consolidated Entity had 384 employees at 30 June 2017 (2016: 424).
DIVIDENDS
No cash dividends were paid to members during the 2017 financial year.
The demerger of Metals X’s gold assets via a capital reduction and in specie distribution of all the shares
in Westgold resulted in an in-species dividend of $171,204,652 (refer to note 29). For Australian taxation
purposes part of an in-specie distribution can be treated as a dividend. The dividend component is the
amount by which the market value of the in-specie distribution exceeded the capital reduction amount.
Demerger taxation relief was grant by the Australian Taxation Office and this dividend is not assessable
to Metals X shareholders.
Dividends paid to members during the 2016 financial year:
Dividend Rate
Record Date
Payment Date
Franking
DRP Discount
2.95 cents per share
2 Sep 2015
25 Sep 2015
26% franked
5% to 5 day VWAP
Dividend Reinvestment Plan
The Company operates a dividend reinvestment plan (DRP) which allows eligible shareholders to elect
to invest dividends in ordinary shares. The DRP is based on a 5% discount to the 5 day volume weighed
average price (VWAP) after the record date. During the year no shares (2016: 2,170,099) were issued as
part of the dividend reinvestment plan
After the balance date the following dividend has been proposed by the Directors.
Dividend Rate
Record Date
Payment Date
Franking
DRP Discount
1.00 cents per share
7 Sep 2017
19 Sep 2017
Nil
5% to 5 day VWAP
Refer to note 10 for available franking credits.
SHARE OPTIONS
Unissued shares
As at the date of this report, there were 7,250,000 ordinary shares under options, refer to note 28(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
There were no option conversions during the financial year refer to note 28(f) for further details.
11 |
RESULTS OF OPERATIONS
•
Consolidated total profit after income tax - $134,012,244 (2016: loss $23,624,193);
•
•
•
•
•
•
•
•
Total consolidated revenue of continuing operations - $266,315,113 (2016: $71,962,785);
Total cost of sales of continuing operations - $257,159,645 (2016: $62,496,576);
Gain on distribution of controlled entities - $228,503,915 (2016: Nil);
Impairment losses - $72,682,408 (2016: $105,000);
Exploration and evaluation expenditure write off - $1,243,736 (2016: $26,816,554)
Cash flow from operating activities - $26,836,655 (2016: $62,040,162);
Cash flows used in investing activities - $122,637,730 (2016: $132,027,646); and
Cash flows from financing activities - $106,741,458 (2016: $10,134,426).
Key results for the period are:
COPPER DIVISION
•
•
Revenue from the Nifty Copper Operations was $180,085,727 (2016: nil). The Company took
control of the Nifty Copper Operations on 1 August 2016.
The cost of sales was $196,793,442 (2016: nil).
Performance of the Copper Division from 1 August 2016 when operational control was assumed
is summarised below:
30 June 2017
30 June 2016
Physical Summary
UG Ore Mined
UG Grade Mined
Ore Processed
Head Grade
Recovery
Copper Produced
Copper Sold
Achieved Copper Price
Cost Summary
Mining
Processing
Admin
Stockpile Adj
C1 Cash Cost (produced oz) *
Royalties
Marketing/Cost of sales
Sustaining Capital
Reclamation & other adj.
All-in Sustaining Costs **
Project Startup Capital
Exploration Holding Cost
All-in Cost ***
Units
t
% Cu
t
g/t
% Cu
t
t
A$/t Cu
A$/t Cu
A$/t Cu
A$/t Cu
A$/t Cu
A$/t Cu
A$/t Cu
A$/t Cu
A$/t Cu
A$/t Cu
A$/t Cu
A$/t Cu
A$/t Cu
A$/t Cu
1,390,007
1.76
1,397,534
1.77
93.87
23,264
24,828
7,168
2,797
1,379
1,114
55
5,345
313
1,135
387
165
7,345
-
64
7,409
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
•
•
•
•
* C1 Cash Cost (C1): represents the cost for mining, processing and administration after accounting for movements in inventory (predominantly ore stockpiles). It
includes net proceeds from by-product credits, but excludes the cost of royalties and capital costs for exploration, mine development and plant and equipment.
** All-in Sustaining Cost (AISC): is made up of the C1 cash cost plus royalty expense, sustaining capital expense and general corporate and administration expenses.
*** All-in Cost (AIC): is made up of the AISC plus growth (major project) capital and discovery expenditure.
C1, AISC and AIC are non-IFRS financial information and are not subject to audit. These are widely used “industry standard” terms that certain investors use to evaluate
company performance.
| 12
RESULTS OF OPERATIONS (CONTINUED)
TIN DIVISION
•
•
Revenue from the 50% owned Renison Tin Operations was $84,376,130 (2016: $70,682,179). The
revenue was higher than the previous year as a result of higher production and tin prices.
The cost of sales was $60,405,718 (2016: $62,496,576) with costs decreasing due to a reduction
in costs associated with efficiencies introduced in both mining and processing and the change from
contractor to owner-operator mining.
Performance of the Tin Division (50% share) is summarised below:
30 June 2017
30 June 2016
Physical Summary
UG Ore Mined
UG Grade Mined
Ore Processed
Head Grade
Recovery
Tin Produced
Tin Sold
Achieved Tin Price
Cost Summary
Mining
Processing
Admin
Stockpile Adj
C1 Cash Cost (produced oz)
Royalties
Marketing/Cost of sales
Sustaining Capital
Reclamation & other adj.
Corporate Costs
All-in Sustaining Costs
Project Startup Capital
Exploration Holding Cost
All-in Cost
NICKEL DIVISION
Units
t
% Sn
t
g/t
% Sn
t
t
A$/t
A$/t
A$/t
A$/t
A$/t
A$/t
A$/t
A$/t
A$/t
A$/t
A$/t
A$/t
A$/t
A$/t
A$/t
376,276
1.28%
368,843
1.29%
73.24%
3,486
3,218
26,581
6,385
4,620
1,052
(246)
11,810
1,297
2,227
3,228
5
21
18,589
815
-
19,404
342,138
1.29%
344,759
1.29%
71.22%
3,181
3,236
21,316
9,112
4,424
952
174
14,662
570
2,170
2,482
42
25
19,951
741
-
20,692
•
A recoverable amounts assessment undertaken at the end of the period resulted in an impairment
of the Central Musgraves Nickel Project of $73,378,360 (2016: $1,984,216) (refer to note 42).
13 |
RESULTS OF OPERATIONS (CONTINUED)
GOLD DIVISION – DISCONTINUED OPERATION
•
•
Total revenue from the Gold Operations for the period was $163,126,024 (2016: $280,317,331).
The revenue was lower than the previous year due to the demerger of the Gold Division on
1 December 2016.
Total cost of sales was $155,480,427 (2016: $279,295,243).
Performance of the Gold Division for the period 1 July 2016 – 30 November 2016 is summarised below:
Five months
Higginsville
South Kal
CMGP
Group
Physical Summary
UG Ore Mined
UG Grade Mined
OP BCM Mined
OP Ore Mined
OP Grade Mined
Ore Processed
Head Grade
Recovery
Gold Produced
Gold Sold
Achieved Gold Price
Cost Summary
Mining
Processing
Admin
Stockpile Adj
C1 Cash Cost (produced oz)
Royalties
Marketing/Cost of sales
Sustaining Capital
Corporate Costs
All-in Sustaining Costs
Project Startup Capital
Exploration Holding Cost
All-in Cost
Units
t
g/t
BCM
t
g/t
t
g/t
%
oz
oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
288,010
4.06
1,000,080
188,787
2.40
508,329
2.87
93.74%
40,150
41,937
1,677
726
289
104
(133)
986
178
2
59
8
1,233
61
67
1,361
104,726
2.58
533,187
61,753
2.70
207,210
2.52
90.85%
15,355
16,665
1,677
1,129
74
44
36
1,283
46
2
155
21
1,507
363
143
2,013
165,785
3.50
558,521
3.61
2,256,078
3,789,344
499,452
1.81
669,224
2.06
89.24%
39,453
38,431
1,677
783
320
162
(178)
1,087
84
0
0
5
1,176
453
125
1,754
749,992
2.03
1,384,763
2.42
91.14%
94,957
97,034
1,677
815
267
118
(125)
1,075
117
1
50
9
1,252
273
103
1,628
Performance of the Gold Division for the year ended 30 June 2016 is summarised below:
Twelve months
Higginsville
South Kal
CMGP
Group
Physical Summary
UG Ore Mined
UG Grade Mined
OP BCM Mined
OP Ore Mined
OP Grade Mined
Ore Processed
Head Grade
Recovery
Gold Produced
Gold Sold
Achieved Gold Price
Cost Summary
Mining
Processing
Admin
Stockpile Adj
C1 Cash Cost (produced oz) *
Royalties
Marketing/Cost of sales
Sustaining Capital
Corporate Costs
All-in Sustaining Costs **
Project Startup Capital
Exploration Holding Cost
All-in Cost **
Units
t
g/t
BCM
t
g/t
t
g/t
%
oz
oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
672,732
3.35
1,409,986
342,727
1.78
1,114,145
2.78
91.07%
91,371
95,461
1,614
700
310
114
30
1,154
146
2
53
8
1,363
109
42
1,514
427,136
2.35
1,437,269
261,072
1.98
884,854
1.76
90.49%
45,403
44,520
1,614
877
288
57
(73)
1,149
34
2
98
18
1,301
436
105
1,842
203,815
2.25
5,909,584
892,848
1.26
925,069
1.36
91.94%
37,182
33,757
1,614
746
390
187
(68)
1,255
60
0
109
12
1,436
1,394
324
3,154
1,303,682
2.85
8,756,839
1,496,648
1.50
2,924,068
2.02
91.17%
173,956
173,738
1,614
756
322
114
(18)
1,174
98
2
77
12
1,363
469
119
1,951
| 14
RESULTS OF OPERATIONS (CONTINUED)
CAPITAL INVESTMENT ACTIVITIES
Cash flows used in investing activities across the group totalled $122,637,730, which was lower than the
previous period (2016: $132,027,646), mainly due to the cash acquired on the acquisition of the Copper
Division ($39,078,178), which was offset by a cash injection into the Gold Division prior to its demerger
($96,323,551). Other capital re-investment during the period:
•
•
•
•
Gold Operations $45,157,428;
Tin Operations $11,430,117;
Copper Operations $9,756,875; and
Nickel Project $1,021,233.
REVIEW OF OPERATIONS
A full review of the operations of the Consolidated Entity during the year ended 30 June 2017 is set out
on page 3 of this report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Total equity decreased by approximately 50% ($196,162,180) to $198,746,153 (2016: $394,908,333). The
movement was mainly due to the demerger of the Gold Division during the period.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 26 July 2017 the Company entered into hedges for 1,500 tonnes of copper per month for ten months
from October 2017 to July 2018. The Company has granted calls up to A$8,255 per tonne of LME copper
and brought puts as low as A$7,600 per tonne of LME copper. Refer to ASX announcement dated 27 July
2017.
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 in Australia, and will continue the development of its nickel
exploration projects. These are described in more detail in the Review of Operations on page 3.
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.
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.
15 |
REMUNERATION REPORT (AUDITED)
This remuneration report for the year ended 30 June 2017 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
7. Additional statutory disclosures
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 Managing Director (MD),
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 (NEDs)
PJ Newton
PM Cmrlec
SD Heggen
M Jerkovic
X Penggen
Y Zhang
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
14 Dec 2012
23 Jul 2013
25 Oct 2012
1 May 2017
9 Feb 2012
9 Jan 2017
-
5 Oct 2016
-
-
9 Jan 2017
-
(ii) Executive Directors
WS Hallam
PG Cook
SD Robinson
(iii) Other Executives (KMPs)
Managing Director
Executive Director
Executive Director
1 Mar 2005
23 Jul 2004
25 Nov 2016
-
2 Feb 2017
-
AH King
JG Brock
PD Hucker
MR Poepjes
M Recklies
JW Russell
FJ Van Maanen
Chief Operating Officer
Chief Operating Officer - CMGP
Chief Operating Officer - SKO & HGO
General Manager - NCP
General Manager - Renison
Chief Geologist
CFO & Company Secretary
24 Feb 2014
21 Mar 2016
17 Oct 2012
8 Aug 2011
24 Mar 2017
17 Oct 2012
1 Jul 2005
-
1 Dec 2016
1 Dec 2016
-
-
1 Dec 2016
-
2. REMUNERATION GOVERNANCE
Remuneration and Nomination Committee
The remuneration and nomination committee comprises three 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.
| 16
REMUNERATION REPORT (AUDITED) (CONTINUED)
2. REMUNERATION GOVERNANCE (CONTINUED)
Remuneration approval process
The Board approves the remuneration arrangements of the Managing Director (MD) 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 MD, 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 FY16 AGM
The FY16 remuneration report received positive shareholder support at the FY16 AGM with a vote of 81%
in favour.
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 2017 and 30 June
2016 is detailed in Table 1 and Table 2 respectively of this report.
17 |
REMUNERATION REPORT (AUDITED) (CONTINUED)
4. EXECUTIVE REMUNERATION ARRANGEMENTS
Remuneration Policy
The Company’s executive remuneration strategy is designed to attract, motivate and retain high
performing individuals and align to 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 2017 and 30 June 2016 are set out in Table 1 and Table 2.
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, 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 2017 and 30 June 2016
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 MD 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
$23,614 were awarded in respect of the 2017 financial year and no STI cash bonuses were paid in respect
of the 2016 financial year. No discretionary STI cash bonuses relating to the 2017 or 2016 financial years
will become payable in future financial years.
| 18
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 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 two 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 three months of ceasing employment.
The performance rights vest over a period of three years subject to meeting performance measures or as
determined by the Board of Directors. 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 over the service period of three years, 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 comparator group of companies for FY15 Performance Rights comprises:
Evolution Mining Limited
Independence Gold Limited
Kingsgate Consolidated Limited
Kingsrose Mining Limited
Medusa Mining Limited
Northern Star Resources Ltd
Oceana Gold Corporation
Ramelius Resources Limited
Regis Resources Limited
Saracen Mineral Holdings Limited
Silver Lake Resources Limited
Norton Goldfields Limited
The comparator group of companies for FY16 Performance Rights comprises:
Oz Minerals Limited
Northern Star Resources Ltd
Independence Group NL
Sirius Resources NL
Alacer Gold Corp
Western Areas Limited
Sandfire Resources NL
Oceana Gold Corporation
Regis Resources Limited
Evolution Mining Limited
CuDeco Limited
Orocobre Limited
Saracen Mineral Holdings Limited
Resolute Mining Limited
Beadell Resources Limited
Perseus Mining Limited
Medusa Mining Ltd
Kingsgate Consolidated Limited
Tiger Resources Limited
Silver Lake Resources Limited
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.
19 |
REMUNERATION REPORT (AUDITED) (CONTINUED)
4. EXECUTIVE REMUNERATION ARRANGEMENTS (CONTINUED)
Long Term Incentive (LTI) – Share options and Performance Rights
Pursuant to the demerger of Westgold the Board determined on 24 November 2016 that the 3,388,155
FY15 and FY16 Performance Rights on issue would vest and be exercisable prior to the Demerger. The
performance rights vested and were converted into shares in the Company on 25 November 2016. The
Metals X share price on the date of vesting was $1.51 per share. The cost of accelerating the vesting of
the Performance Rights of $3,744,376 was recognised in the consolidated statement of comprehensive
income.
Table 3 and Table 4 provide details of LTI options and performance rights granted, exercised and lapsed
during the year.
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 retain, 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 retention and/or performance incentive which allows executives to share in the
rewards and success of the Company.
30 June 13
30 June 14
30 June 15
30 June 16
30 June 17
Closing share price
Profit/(loss) per share (cents)
Net tangible assets per share
Total Shareholder Return
Dividend paid per shares (cents)
$0.39
2.24
$0.66
(32%)
-
$1.04
9.06
$0.75
165%
2.715
$1.38
9.87
$0.72
35%
2.950
$1.40
(5.21)
$0.82
4%
-
$0.67
22.51
$0.33
12%
1.00
6. EXECUTIVE CONTRACTUAL ARRANGEMENTS
Remuneration arrangements for KMP are formalised in employment agreements. Details of these
contracts are provided below:
Managing Director
The MD, 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:
•
•
•
The MD 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 MD’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 MD 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 executive directors
Mr Robinson is employed under an annual salary employment contract and receives a fixed remuneration
of $410,625 (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.
| 20
REMUNERATION REPORT (AUDITED) (CONTINUED)
6. EXECUTIVE CONTRACTUAL ARRANGEMENTS (CONTINUED)
•
•
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 Robinson 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 Robinson 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.
Use of remuneration advisors
The Remuneration Committee approved the engagement of Ernst & Young in the prior year to provide
remuneration recommendations regarding long term incentives for executives. Both Ernst & Young and
the Committee were satisfied the advice received from Ernst & Young was free from undue influence from
the KMP to whom the remuneration recommendations apply. The remuneration recommendations were
provided to the Committee as an input into decision making only. The Remuneration Committee
considered the recommendations, along with other factors, in making its remuneration decisions. In the
current year, there were no fees paid to Ernst & Young for the remuneration recommendations (2016:
$25,750).
Share trading policy
The Metals X trading policy applies to all non-executive directors and executives. The policy prohibits
employees from dealing in Metals X securities while in possession of material non-public information
relevant to the Consolidated Entity. Executives must not enter into any hedging arrangements over
unvested long term incentives under the Consolidated Entity’s long term incentive plan. The Consolidated
Entity would consider a breach of this policy as gross misconduct, which may lead to disciplinary action
and potentially dismissal.
21 |
REMUNERATION REPORT (AUDITED) (CONTINUED)
6. EXECUTIVE CONTRACTUAL ARRANGEMENTS (CONTINUED)
Table 1: Remuneration for the year ended 30 June 2017
Remuneration of key
management personnel of the
Consolidated Entity
Non-executive Directors
PJ Newton
PM Cmrlec *
SD Heggen
M Jerkovic
X Penggen *
Y Zhang **
Executive Directors
PG Cook *
WS Hallam
SD Robinson ***
Other key management personnel
PD Hucker ****
JG Brock ****
AH King
MR Poepjes
M Recklies **
JW Russell ****
FJ Van Maanen
Totals
Short Term
Post
employment
Long term
benefits
Share based
Payment
Total
Salary and
Fees
Cash
Bonus
Non
monetary
benefits
Superannuation
Long service
leave
Performance
Rights
Options
% Performance
related
% that
consists of
performance
rights and
options
110,000
21,087
80,000
13,333
-
38,485
262,905
265,751
469,967
97,372
133,181
178,794
250,257
288,000
71,286
93,750
-
-
-
-
-
-
-
-
-
-
-
-
23,614
-
-
-
348,560
2,196,918
2,459,823
-
23,614
23,614
-
-
-
-
-
-
-
3,588
5,656
2,828
4,422
-
-
1,994
-
4,676
7,939
31,103
31,103
10,450
2,003
7,600
1,267
-
3,656
24,976
13,474
33,733
9,250
12,652
-
26,018
27,360
6,772
8,906
25,439
163,604
188,580
-
-
-
-
-
-
-
120,064
13,730
-
9,833
-
819
20,545
-
32,377
9,532
206,900
206,900
-
-
-
-
-
-
-
826,935
592,268
-
341,421
-
-
221,973
-
217,895
402,250
2,602,742
2,602,742
-
-
-
-
-
-
-
-
120,450
23,090
87,600
14,600
-
42,141
287,881
1,229,812
188,984
1,304,338
-
-
-
113,390
56,695
-
-
109,450
501,509
178,794
414,098
616,567
78,058
357,604
113,390
472,459
472,459
907,110
5,697,340
5,985,221
-
-
-
-
-
-
67
60
-
68
-
33
45
-
61
57
-
-
-
-
-
-
67
60
-
68
-
27
45
-
61
57
* PM Cmrlec, X Penggen, PG Cook resigned on 5 October 2016, 9 January 2017 and 2 February 2017 respectively.
** Y Zhang, M Recklies and M Jerkovic were appointed on 9 January 2017, 24 March 2017 and 1 May 2017 respectively.
*** SD Robinson was appointed as a Non-Executive Director on 25 November 2016 and was subsequently employed as an Executive Director on 1 May 2017.
**** PD Hucker, JD Brock and JW Russell were transferred to Westgold Resources Limited on 1 December 2016 as part of the demerger.
| 22
REMUNERATION REPORT (AUDITED) (CONTINUED)
6. EXECUTIVE CONTRACTUAL ARRANGEMENTS (CONTINUED)
Table 2: Remuneration for the year ended 30 June 2016
Remuneration of key
management personnel of the
Consolidated Entity
Salary and
Fees
Cash
Bonus
Non
monetary
benefits
Superannuation
Long service
leave
Performance
Rights
Options
% Performance
related
Short Term
Post
employment
Long term
benefits
Share based
Payment
Total
% that
consists of
performance
rights and
options
Non-executive Directors
PJ Newton
PM Cmrlec
AC Ferguson *
SD Heggen
X Penggen
Y Zhang (Alt Director)
Executive Directors
PG Cook **
WS Hallam
Other key management personnel
PD Hucker
JG Brock ***
AH King
MR Poepjes
JW Russell
FJ Van Maanen
Totals
110,000
80,000
60,000
80,000
-
-
330,000
599,803
468,701
319,635
108,000
160,000
235,000
225,000
287,139
2,403,278
2,733,278
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,536
6,265
6,099
-
-
5,502
6,464
7,557
37,423
37,423
10,450
7,600
-
7,600
-
-
25,650
29,941
34,999
30,365
-
15,200
22,325
21,375
27,278
181,483
207,133
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23,939
14,990
124,842
88,772
12,914
51,557
-
9,392
9,796
9,287
10,423
90,741
90,741
-
-
33,072
32,288
60,605
391,136
391,136
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120,450
87,600
60,000
87,600
-
-
355,650
784,061
613,727
420,570
108,000
184,592
305,695
294,414
393,002
3,104,061
3,459,711
-
-
-
-
-
-
16
14
12
-
-
11
11
15
-
-
-
-
-
-
16
14
12
-
-
11
11
15
* AC Ferguson resigned on 23 March 2016.
** PG Cook was a Director of Brainchip during the period until 10 September 2015 and Metals X was paid $5,356 for director's fees in relation to Brainchip director duties. These amounts represent the net employment
expense to Metals X.
*** JG Brock was appointed on 21 March 2016.
23 |
REMUNERATION REPORT (AUDITED) (CONTINUED)
7. ADDITIONAL STATUTORY DISCLOSURES
This section sets out the additional disclosures required under the Corporations Act 2001.
Table 3: Options granted and vested during the year (Consolidated)
Year
Options
granted
during the
year (No.)
Grant
date
Fair value
per option
at grant
date
Value of
options at
grant date
$
Vesting
date
Exercise
price
Expiry
date
Options
vesting
during the
period
Options
lapsed during
the year
WS Hallam *
2017
2,000,000
24 Nov 2016
$0.19
188,984
20 Jan 2018
$0.76
20 Jan 2020
WS Hallam
AH King
AH King
MR Poepjes
MR Poepjes
2016
2017
2016
2017
2016
-
-
-
-
-
1,200,000
20 Jan 2017
$0.19
113,390
20 Jan 2018
$0.76
20 Jan 2020
-
-
-
-
-
600,000
20 Jan 2017
$0.19
56,695
20 Jan 2018
$0.76
20 Jan 2020
-
-
-
-
-
FJ Van Maanen
2017
1,200,000
20 Jan 2017
$0.19
113,390
20 Jan 2018
$0.76
20 Jan 2020
FJ Van Maanen
2016
-
-
-
-
-
* Grant of options was subject to shareholder approval at the Annual General Meeting, which occurred on 24 November 2016.
For details on vesting conditions and valuation of the performance rights, including models and assumptions used, please refer to note 31.
The value of the share based payments granted during the period is recognised in compensation over the vesting period of the grant.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
| 24
REMUNERATION REPORT (AUDITED) (CONTINUED)
7. ADDITIONAL STATUTORY DISCLOSURES (CONTINUED)
Performance Rights
Table 4: Performance rights granted and vested during the year (Consolidated)
PG Cook
PG Cook *
WS Hallam
WS Hallam *
PD Hucker
PD Hucker
MR Poepjes
MR Poepjes
JW Russell
JW Russell
FJ Van Maanen
FJ Van Maanen
Year
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Performance
rights granted
during the year
(No.)
-
Grant
date
-
Value of
performance rights
at grant date $
Vesting
date
Expiry
date
Performance
rights vested
during the period
**
Performance
rights lapsed
during the year
-
-
-
709,092
324,476
23 Nov 2015
218,372
1 Jul 2018
1 Jul 2018
-
-
225,175
-
134,113
-
82,168
-
78,761
-
156,465
-
-
-
-
507,867
23 Nov 2015
151,543
1 Jul 2018
1 Jul 2018
-
-
23 Nov 2015
-
23 Nov 2015
-
23 Nov 2015
-
-
90,258
-
55,299
-
52,946
-
-
-
292,767
1 Jul 2018
1 Jul 2018
-
-
-
190,341
1 Jul 2018
1 Jul 2018
-
-
-
186,934
1 Jul 2018
1 Jul 2018
-
-
-
344,927
23 Nov 2015
105,301
1 Jul 2018
1 Jul 2018
-
-
-
-
-
-
-
-
-
-
-
-
-
* Grant of performance rights was subject to shareholder approval at the Annual General Meeting, which occurred on 23 November 2015.
** No consideration was paid by Metals X employees for the underlying shares upon vesting of the performance rights.
For details on vesting conditions and valuation of the performance rights, including models and assumptions used, please refer to note 31.
The value of the share based payments granted during the period is recognised in compensation over the vesting period of the grant.
25 |
REMUNERATION REPORT (AUDITED) (CONTINUED)
7. ADDITIONAL STATUTORY DISCLOSURES (CONTINUED)
Table 5: Shareholdings of key management personnel (including nominees)
Ordinary shares held in Metals X Limited (number)
30 June 2017
Balance
held at
1 July 2016
Performance
rights vested
On exercise
of options
Net change
other ^
Balance
held at
30 June 2017
Directors
PJ Newton
PG Cook
WS Hallam
PM Cmrlec
SD Heggen
M Jerkovic
X Penggen
SD Robinson
Y Zhang
Executives
PD Hucker
JG Brock
AH King
MR Poepjes
M Recklies
JW Russell
FJ Van Maanen
13,874,697
18,361,237
1,587,500
91,521
5,000
-
44,000,000
-
-
19,375
-
54,113
-
-
38,649
517,500
-
709,092
507,867
-
-
-
-
-
-
292,767
-
-
190,341
-
186,934
344,927
Total
78,549,592
2,231,928
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,614
(19,070,329)
25,842
(91,521)
1,689
-
(44,000,000)
13,500
-
13,883,311
-
2,121,209
-
6,689
-
-
13,500
-
(312,142)
-
16,014
-
1,467
(225,583)
8,614
-
-
70,127
190,341
1,467
-
871,041
(63,623,835)
17,157,685
^ Represents acquisitions and disposals of shares on market and shares issued under the dividend reinvestment
plan, as well as departures and appointments.
| 26
REMUNERATION REPORT (AUDITED) (CONTINUED)
7. ADDITIONAL STATUTORY DISCLOSURES (CONTINUED)
Table 6: Performance right and option holdings of key management personnel (including nominees)
30 June 2017
Options balance
at beginning of
period
1 July 2016
Performance
rights balance at
beginning of
period
1 July 2016
Performance
rights vested
Options
granted as
remuneration
Options
balance at end
of period
30 June 2017
Performance
rights balance
at end of
period
30 June 2017
Options not
vested and
not
exercisable
Options
vested and
exercisable
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
709,092
507,867
-
-
-
-
-
-
292,767
-
-
190,341
-
186,934
344,927
-
(709,092)
(507,867)
-
-
-
-
-
-
(292,767)
-
-
(190,341)
-
(186,934)
(344,927)
-
-
2,000,000
-
-
-
-
-
-
-
-
1,200,000
600,000
-
-
1,200,000
-
-
2,000,000
-
-
-
-
-
-
-
-
1,200,000
600,000
-
-
1,200,000
2,231,928
(2,231,928)
5,000,000
5,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
-
-
-
-
-
-
-
-
1,200,000
600,000
-
-
1,200,000
5,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Directors
PJ Newton
PG Cook
WS Hallam
PM Cmrlec
SD Heggen
M Jerkovic
X Penggen
SD Robinson
Y Zhang
Executives
PD Hucker
JG Brock
AH King
MR Poepjes
M Recklies
JW Russell
FJ Van Maanen
Total
End of Audited Remuneration Report.
27 |
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
Remuneration &
Nomination Committee
No of meetings held:
No of meetings attended:
PG Cook
PM Cmrlec
WS Hallam
SD Heggen
M Jerkovic
PJ Newton
X Penggen
SD Robinson
Y Zhang
12
9
3
12
12
-
12
-
5
12
2
-
1
-
2
1
2
-
-
-
All Directors were eligible to attend all meetings held except:
•
•
•
•
•
– resigned 2 February 2017
PG Cook
– resigned 5 October 2016;
PM Cmrlec
– appointed 1 May 2017;
M Jerkovic
X Penggen
– resigned 9 January 2017; and
SD Robinson – appointed 25 November 2016.
Committee Membership
1
-
-
-
1
-
1
-
1
-
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
SD Heggen *
PJ Newton
M Jerkovic
Notes:
Remuneration and Nomination Committee
PJ Newton *
SD Heggen
M Jerkovic
* Designates the Chairman of the Committee.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of
the Company support and have adhered to the principles of Corporate Governance. The Company’s corporate
governance statement is available at the Company’s website at http://metalsx.com.au/about us/corporate
governance/.
| 28
AUDITOR’S INDEPENDENCE AND NON-AUDIT SERVICES
AUDITOR INDEPENDENCE
The Directors’ received the Independence Declaration, as set out on page 30, 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
$
428,158
Signed in accordance with a resolution of the Directors.
WS Hallam
Managing Director
Perth, 31 August 2017
29 |
AUDITOR’S INDEPENDENCE DECLARATION
| 30
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2017
Continuing operations
Revenue
Cost of sales
Gross profit
Other income
Other expenses
Finance costs
Fair value change in financial assets
Impairment loss on available-for-sale financial assets
Impairment loss on mine properties and development
Exploration and evaluation expenditure written off
Loss before income tax from continuing operations
Income tax (expense)/benefit
(Loss)/profit for the period from continuing operations
Discontinued operations
Profit/(loss) from discontinued operations
Profit/(loss) for the period
Other comprehensive income
Notes
2017
2016
5
7(a)
6
7(b)
7(d)
7(c)
17
19
20
8
41
266,315,113
(257,159,645)
9,155,468
71,962,785
(62,496,576)
9,466,209
3,015,539
(17,602,822)
(686,933)
12,371,917
(416,758)
(72,250,650)
(1,243,736)
(67,657,975)
(36,094,768)
(103,752,743)
127,863
(8,787,581)
(130,019)
364,853
(105,000)
-
(1,984,216)
(1,047,891)
4,285,058
3,237,167
237,764,988
134,012,245
(26,861,360)
(23,624,193)
Items that may be reclassified subsequently to profit or loss
Reclassification of cumulative fair value changes in available-for-sale
financial assets previously recognised in equity to the profit and loss
on gaining control of the investee, net of tax
Changes in the fair value of available-for-sale financial assets, net of
tax
Other comprehensive profit for the period, net of tax
Total comprehensive profit/(loss) for the period
30
Profit/(loss) attributable to:
Members of the parent
Total comprehensive profit/(loss) attributable to:
Members of the parent
(8,660,342)
(546,195)
(9,206,537)
124,805,708
-
9,745,369
9,745,369
(13,878,824)
134,012,245
134,012,245
(23,624,193)
(23,624,193)
24,805,708
124,805,708
(13,878,824)
(13,878,824)
Profit/(loss) per share for the profit/(loss) attributable to the
ordinary equity holders of the parent (cents per share)
Basic profit/(loss) per share
Continuing operations
Discontinued operations
Total operations
Diluted profit/(loss) per share
Continuing operations
Discontinued operations
Total operations
9
9
9
9
(17.43)
39.94
22.51
(17.43)
39.94
22.51
0.71
(5.92)
(5.21)
0.71
(5.92)
(5.21)
31 |
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 30 JUNE 2017
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Other financial assets
Total current assets
NON-CURRENT ASSETS
Derivative financial instruments
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
Notes
2017
2016
11
12
13
14
15
16
17
18
19
20
21
22
24
26
23
25
27
28
29
30
30
50,125,170
45,046,603
43,638,521
1,250,872
10,858,049
39,184,787
15,799,458
52,173,412
528,564
5,802,625
150,919,215
113,488,846
99,000
9,300,778
40,466,982
77,370,210
4,892,164
-
43,238,834
79,343,202
197,832,376
165,083,986
132,129,134
485,498,398
283,048,349
598,987,244
29,306,601
5,723,077
3,187,557
-
68,289,529
5,347,668
5,201,279
22,493,125
38,217,235
101,331,601
40,776,282
5,308,678
-
86,692,744
10,242,066
5,812,500
46,084,960
102,747,310
84,302,195
204,078,911
198,746,154
394,908,333
252,511,413
(82,858,477)
25,331,051
3,762,167
407,029,190
(45,666,070)
20,576,509
12,968,704
198,746,154
394,908,333
| 32
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 30 JUNE 2017
OPERATING ACTIVITIES
Receipts from customers
Interest received
Other income
Payments to suppliers and employees
Interest paid
Notes
2017
2016
384,989,576
333,778,610
1,796,414
4,817,730
1,368,321
1,918,640
(364,084,914)
(682,151)
(274,723,364)
(302,045)
Net cash flows from operating activities
11
26,836,655
62,040,162
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
Payments for available-for-sale financial assets
Proceeds from sales of available-for-sale financial assets
Advances in relation to interest bearing receivables
Net cash inflow on acquisition of subsidiary
Net cash outflow on disposal 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
Payments for performance bond facility
Net cash flows from financing activities
(18,561,268)
(31,698,923)
(14,098,029)
270,862
(804,999)
-
(500,000)
39,078,178
(96,323,551)
(15,688,911)
(86,476,897)
(26,405,423)
409,903
(2,574,234)
299,400
(1,591,484)
-
-
(122,637,730)
(132,027,646)
40
41
(3,706,810)
(1,588)
115,639,413
(5,256,827)
-
(2,890,872)
(10,057,734)
-
(116,968)
23,250,000
67,270
(50,000)
106,741,458
10,134,426
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
10,940,383
(59,853,058)
39,184,787
99,037,845
Cash and cash equivalents at the end of the period
11
50,125,170
39,184,787
33 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR
ENDED 30 JUNE 2017
2016
At 1 July 2015
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
Dividends paid
Share based payments
Issue of share capital
Share issue costs
At 30 June 2016
2017
At 1 July 2016
Loss 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
Dividend on demerger of Westgold (refer to note 41)
Share based payments
Issue of share capital
Share issue costs
At 30 June 2017
Issued
capital
Accumulated
losses
Share based
payments
reserve
Fair value
reserves
Total
Equity
332,851,798
(9,769,564)
19,961,005
3,223,335
346,266,574
-
-
-
(23,624,193)
-
(23,624,193)
-
-
-
-
(23,624,193)
9,745,369
9,745,369
9,745,369
(13,878,824)
-
-
74,294,360
(116,968)
(12,272,313)
-
-
-
-
615,504
-
-
-
-
-
-
(12,272,313)
615,504
74,294,360
(116,968)
407,029,190
(45,666,070)
20,576,509
12,968,704
394,908,333
407,029,190
(45,666,070)
20,576,509
12,968,704
394,908,333
-
-
-
134,012,245
-
134,012,245
-
-
-
-
134,012,245
(9,206,537)
(9,206,537)
(9,206,537)
124,805,708
-
-
(149,260,950)
(171,204,652)
-
-
-
4,754,542
-
(5,256,827)
-
-
-
-
-
-
(171,204,652)
4,754,542
(149,260,950)
(5,256,827)
252,511,413
(82,858,477)
25,331,051
3,762,167
198,746,154
| 34
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1. CORPORATE INFORMATION
The financial report of Metals X Limited for the year ended 30 June 2017 was authorised for issue in accordance with
a resolution of the Directors on 24 August 2017.
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 5, 197 St Georges Terrace, Perth WA 6000.
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 authoritive
pronouncements of the Australian Accounting Standards Board.
The financial report has been prepared on a historical cost basis, except for available-for-sale investments,
derivatives and copper trade receivables, 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 2016.
Adoption of these Standards and Interpretations, which included the following new and amended standards, did not
have any effect on the financial position or the performance of the Consolidated Entity.
Reference
Title
Application date of
standard*
Application date for the
Consolidated Entity*
AASB 2014-3
AASB 2014-4
AASB 2014-9
AASB 2015-1
Amendments to Australian Accounting Standards – Accounting for
Acquisitions of Interests in Joint Operations
1 January 2016
1 July 2016
Amendments to Australian Accounting Standards – Clarification of
Acceptable Methods of Depreciation and Amortisation
1 January 2016
1 July 2016
Amendments to Australian Accounting Standards – Equity Method
in Separate Financial Statements
1 January 2016
1 July 2016
Amendments to Australian Accounting Standards – Annual
Improvements to Australian Accounting Standards 2012–2014
Cycle
1 January 2016
1 July 2016
AASB 2015-2
Amendments to Australian Accounting Standards – Disclosure
Initiative: Amendments to AASB 101
1 January 2016
1 July 2016
*
Designates the beginning of the applicable annual reporting period unless otherwise stated.
35 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Adoption of new accounting standards (Continued)
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017
reporting periods. These standards and interpretations have not been early adopted.
Reference
Title
Summary
Impact on
Metals X
Application date
of standard*
Application
date for
Consolidated
Entity*
1 January 2018
1 July 2018
The Company
has
determined that AASB 9
will have no material
impact on the way the
Consolidated
Entity
accounts for its financial
instruments as it does
not
hedge
accounting and does not
believe that the credit
risk associated with its
receivables is material.
The Company
is still
assessing whether there
will be any material
impact on classification.
apply
Financial Instruments
AASB 9, and
relevant
amending
standards
AASB 9 replaces AASB 139 Financial
Instruments:
and
Measurement.
Recognition
Except for certain trade receivables, an
entity initially measures a financial
asset at its fair value plus, in the case
of a financial asset not at fair value
through profit or loss, transaction costs.
Debt
instruments are subsequently
measured at fair value through profit or
loss (FVTPL), amortised cost, or fair
value through other comprehensive
income (FVOCI), on the basis of their
contractual cash
the
business model under which the debt
instruments are held.
flows and
There is a fair value option (FVO) that
allows
initial
financial assets on
recognition to be designated as FVTPL
that eliminates or significantly
if
reduces an accounting mismatch.
Equity
instruments are generally
measured at FVTPL. However, entities
have an irrevocable option on an
instrument-by-instrument
to
present changes in the fair value of
non-trading
in other
instruments
comprehensive income (OCI) without
subsequent reclassification to profit or
loss.
basis
in credit
For financial liabilities designated as
FVTPL using the FVO, the amount of
change in the fair value of such
financial liabilities that is attributable to
changes
risk must be
presented in OCI. The remainder of the
change in fair value is presented in
profit or loss, unless presentation in
OCI of the fair value change in respect
of the liability’s credit risk would create
or enlarge an accounting mismatch in
profit or loss.
requirements
All other AASB 139 classification and
for
measurement
financial liabilities have been carried
forward into AASB 9, including the
embedded derivative separation rules
and the criteria for using the FVO.
The incurred credit loss model in AASB
139 has been
replaced with an
expected credit loss model in AASB 9.
for
requirements
The
hedge
accounting have been amended to
more closely align hedge accounting
with risk management, establish a
to
more principle-based approach
address
hedge
inconsistencies
hedge
accounting model in AASB 139.
accounting
in
and
the
| 36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
Reference
Title
Summary
Impact on
Metals X
Application date
of standard*
Application
date for
Consolidated
Entity*
AASB 15, and
relevant
amending
standards
Revenue from
Contracts with
Customers
AASB 16
Leases
1 January 2018
1 July 2018
1 January 2019
1 July 2019
to
as
streams
The
is
Company
currently evaluating all
to
revenue
determine the potential
impact related
the
adoption of AASB 15, as
well
potential
disclosures required by
the standard. Based on
our analysis within the
adoption plan completed
to date, the Company
preliminarily does not
believe
there will be
significant change in the
revenue
amount
of
the
recognised under
new standard.
this
In
respect, particular focus
has been place on the
point
revenue
recognition as well as
of
the
classification
quotational
pricing
adjustments within the
profit and loss.
of
AASB 15 replaces all existing revenue
requirements in Australian Accounting
Standards (AASB 111 Construction
Contracts, AASB 118 Revenue, AASB
Interpretation 13 Customer Loyalty
Programmes, AASB Interpretation 15
Agreements for the Construction of
Real Estate, AASB Interpretation 18
Transfers of Assets from Customers
and AASB Interpretation 131 Revenue
– Barter Transactions
Involving
Advertising Services) and applies to all
revenue arising from contracts with
customers, unless the contracts are in
the scope of other standards, such as
AASB 117 (or AASB 16 Leases, once
applied).
The core principle of AASB 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
an entity expects to be entitled in
exchange for those goods or services.
An entity
in
recognises
accordance with the core principle by
applying the following steps:
► Step 1: Identify the contract(s)
revenue
with a customer
► Step 2: Identify the performance
obligations in the contract
► Step 3: Determine the transaction
price
► Step 4: Allocate the transaction
performance
price
obligations in the contract
the
to
► Step 5: Recognise revenue when
the entity satisfies a
(or as)
performance obligation.
AASB 16 requires lessees to account
for all leases under a single on-
balance sheet model in a similar way to
leases under AASB 117
finance
Leases. The standard includes two
recognition exemptions for lessees –
leases of
’low-value’ assets (e.g.,
personal computers) and short-term
leases (i.e., leases with a lease term of
the
12 months
commencement date of a lease, a
lessee will recognise a liability to make
lease payments (i.e., the lease liability)
and an asset representing the right to
use the underlying asset during the
lease term (i.e., the right-of-use asset).
less). At
or
Lessees will be required to separately
recognise the interest expense on the
lease liability and the depreciation
expense on the right-of-use asset.
has
relation
As at 30 June 2017, the
non-
Company
operating
cancellable
to
in
leases
rentals.
office
Management
is
continuing to determine
the extent
these
operating leases will be
recognised as assets
the
liabilities on
and
Company’s statement of
financial position,
the
impact on profit and
classification
the
related cash flows.
that
of
Lessees will be required to remeasure
the lease liability upon the occurrence
of certain events (e.g., a change in the
lease term, a change in future lease
payments resulting from a change in an
index or rate used to determine those
payments). The lessee will generally
the
recognise
remeasurement of the lease liability as
an adjustment to the right-of-use asset.
amount
the
of
Lessor accounting
is substantially
unchanged from today’s accounting
under AASB 117. Lessors will continue
to classify all leases using the same
classification principle as in AASB 117
and distinguish between two types of
leases: operating and finance leases.
37 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(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
The Consolidated Entity’s voting rights and potential voting rights
Rights arising from other contractual arrangements
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.
(e) Foreign Currency Translation
(i) Functional and presentation currency
Both the functional and presentation currency of the Company and its Australian subsidiaries is Australian dollars
(A$).
(ii) 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”.
| 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(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.
(h) Trade and Other Receivables
On initial recognition copper trade receivables are designated at fair value through profit and loss (refer to note 2(y)),
accordingly these trade receivables are measured at fair value as at reporting date. Credit balances are reclassified
to trade and other payables. The majority of copper sales revenue is invoiced and received in US dollars. In the case
of copper concentrate, on presentation of documents the customer settles 90% of the provisional invoice value within
3-5 days of receipt of consignment and the remaining 10% is settled within 3-5 days of presentation of the final
invoice at the end of the quotational period.
Tin trade receivables and other receivables 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 tin trade receivable 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.
Assets, including its share of any assets held jointly
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:
•
•
•
•
•
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
Liabilities, including its share of liabilities 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.
39 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(l) 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.
(m) 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.
(n) 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.
(o) 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 assesses 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.
| 40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(o) Business Combinations (CONTINUED)
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.
(p) 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 and useful life. Useful life
ranges from 2 to 10 years.
Buildings – the shorter of life of mine and 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.
(q) 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)
ii)
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;
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 profit or loss
in the period when the new information becomes available.
41 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(r) 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.
(s) 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.
(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. 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.
| 42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(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.
(v)
Interest-Bearing Loans and Borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly
attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using
the effective interest 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.
(w) 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.
(x) 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) 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.
(ii) 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.
(y) 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:
Copper sales
Revenue from copper production is recognised when the significant risks and rewards of ownership have passed to
the buyer. Sales revenue is subject to adjustment based on final assay results. In addition, the terms of the sales
contracts for copper concentrate contain provisional pricing arrangements. Adjustments to the sales price are based
on movements in metal prices up to the date of final pricing. Final settlement is between 2 and 4 months after the
date of delivery (the “quotational period”) with pricing based on the average LME copper price for the month of
settlement. The revenue adjustment mechanism embedded within the sales contract has the characteristics of a
commodity derivative which significantly modifies the cash flows under the contract. The Consolidated Entity has
decided to designate the trade receivables arising on initial recognition of these sales transaction as a financial asset
at fair value through profit and loss and not separately account for the embedded derivative. Accordingly, the fair
value of the receivable is re-estimated continuously and changes in fair value recognised as an adjustment to revenue
in the consolidated statement of comprehensive income.
43 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(y) Revenue (CONTINUED)
Tin and Gold sales
Revenue from tin and 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.
(z) 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.
(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) 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 31.
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.
| 44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(ac) Employee Benefits
(i) Wages, salaries, sick leave and other short-term benefits
Liabilities for wages and salaries, including non-monetary benefits, accumulating sick leave and other short term
benefits 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.
(ad) 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
lesser of the present value of the expected net cost of continuing with the lease and any amount agreed between the
lessor and the lessee to terminate the lease.
(ae) 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.
(af)
Income Tax
The Consolidated Entity entered into a tax Consolidated Entity as of 1 July 2004.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted at the reporting date in the countries where the Group operates and generates taxable income.
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.
•
45 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(af)
Income Tax (CONTINUED)
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
group continue to account for their own current and deferred tax amounts. The Consolidated Entity has applied the
group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to
members of the tax consolidated group.
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.
(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.
| 46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)
(ii) Significant accounting estimates and assumptions (continued)
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(m). In determining an appropriate level of provision, consideration is given
to the expected future costs to be incurred, the timing of those future costs (largely dependent on the life of
mine) and the estimated level of inflation. The ultimate rehabilitation costs are uncertain, and cost estimates
can vary in response to many factors, including estimates of the extent and costs of rehabilitation activities,
technological changes, regulatory changes, cost increases as compared to the inflation rates, and changes
in discount rates. The expected timing of expenditure can also change, for example in response to changes
in reserves or to production rates. These uncertainties may result in future actual expenditure differing from
the amounts currently provided. Therefore, significant estimates and assumptions are made in determining
the provision for mine rehabilitation. As a result, there could be significant adjustments to the provisions
established which would affect future financial result. The provision at reporting date represents
management’s best estimate of the present value of the future rehabilitation costs required.
•
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(r) for further discussion on the impairment assessment process undertaken
by the Consolidated Entity.
•
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) (i.e. 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
other relevant cash inflows and outflows.
47 |
3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)
(ii) Significant accounting estimates and assumptions (continued)
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.
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 Higginsville
and Central Murchison Gold Operations are 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. Refer to note 19 for discussion on change in estimates in current year.
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Consolidated Entity’s principal financial instruments comprise receivables, payables, finance lease and hire
purchase contracts, cash and short-term deposits, and available-for-sale investments.
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 24 and 25. 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 cash balances.
| 48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
At 30 June 2017, if interest rates had moved by a reasonably possible 0.25%, 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)
2017
2016
2017
2016
Judgements of reasonably possible
movements:
+ 0.25% (25 basis points)
- 0.25% (25 basis points)
46,883
(46,883)
67,992
(67,992)
-
-
-
-
A sensitivity of +%0.25 or -0.25% 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 higher in 2017 than 2016 due to an increase in the balance
of cash and cash equivalents held in variable interest rate accounts in 2017.
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.
2017
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)
2016
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)
(b) Credit Risk
Floating
interest rate
Fixed
interest
Non-Interest
bearing
Total carrying
amount
26,790,352
-
-
26,790,352
65,000
-
10,858,049
10,923,049
-
45,046,603
-
45,046,603
-
-
-
-
(8,496,235)
(8,496,235)
(29,306,601)
-
(29,306,601)
26,855,352
45,046,603
10,858,049
82,760,004
(29,306,601)
(8,496,235)
(37,802,836)
44,957,168
Floating
interest rate
Fixed
interest
Non-Interest
bearing
Total carrying
amount
38,852,221
-
-
38,852,221
332,566
-
5,802,625
6,135,191
-
15,799,458
-
15,799,458
39,184,787
15,799,458
5,802,625
60,786,870
-
-
-
-
(15,443,345)
(68,289,529)
-
(15,443,345)
(68,289,529)
(68,289,529)
(15,443,345)
(83,732,874)
(22,946,004)
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 and loans. 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
$10,858,049 (2016: $3,305,319) in relation to other financial assets (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.
49 |
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(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 2017, 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)
2017
2016
2017
2016
Judgements of reasonably possible
movements:
Price + 20%
Price - 20% *
-
(1,302,109)
-
-
1,302,109
-
6,053,437
(6,053,437)
* Provided the decline is below cost and is significant or 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(n)). The overall sensitivity for post-tax profits and equity in 2017 is
higher due to increases in the market value of the underlying securities during the financial year (refer to note 17).
(d) Foreign Currency Risk
As a result of tin and copper 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.
At the balance date the Consolidated Entity had the following exposure to US dollar foreign currency:
Cash and cash equivalents
Trade and other receivables
2017
2016
23,269,818
31,096,630
54,366,448
870
-
870
At 30 June 2017, if foreign currency rates had moved by a reasonably possible 10%, as illustrated in the table below,
with all other variables held constant, post tax profits and equity would have been affected as follows:
Judgements of reasonably possible
movements:
A$/US$ Price +10%
A$/US$ Price -10%
Post tax profit
higher/(lower)
2017
2016
Other Comprehensive
Income
higher/(lower)
2017
2016
5,436,645
(5,436,645)
87
(87)
-
-
-
-
A sensitivity of +10% or -10% has been selected as this is considered reasonable given recent fluctuations in foreign
currency rates and management’s expectations of future movements. The overall sensitivity for post-tax profits in
2017 is higher due to acquisition of the Nifty (refer to Review of Operations).
(e) Commodity Price Risk
The Consolidated Entity’s revenues are exposed to commodity price fluctuations. Periodically the Consolidated Entity
enters into contracts to manage commodity price risk. At the end of the financial period the Consolidated Entity did
not have any contracts outstanding. In the previous period the Consolidated Entity had sales contracts for 187,750
ounces at an average price of $1,652.13 per ounce ending in September 2018, which the Consolidated Entity will
deliver physical gold to settle. These contracts were transferred to Westgold as a part of the demerger.
| 50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(e) Commodity Price Risk (CONTINUED)
Gross value of open copper concentrate
positions (a)
2017
2016
58,584,329
58,584,329
-
-
(a) This relates to the provisional amount of copper tonnes remaining open to price adjustments (gross sales).
Refer to note 12 for the open quantity.
At 30 June 2017, if commodity prices had moved by a reasonably possible 10%, as illustrated in the table below,
with all other variables held constant, post tax profits and equity would have been affected as follows:
Judgements of reasonably possible
movements:
Copper prices +10%
Copper prices -10%
Post tax profit
higher/(lower)
2017
2016
Other Comprehensive
Income
higher/(lower)
2017
2016
5,858,433
(5,858,433)
-
-
-
-
-
-
A sensitivity of +10% or -10% has been selected as this is considered reasonable given recent fluctuations in
commodity prices and management’s expectations of future movements. The overall sensitivity for post-tax profits in
2017 is higher due to acquisition of the Nifty (refer to Review of Operations).
(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 2017.
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
2017
2016
(30,958,079)
(1,660,898)
(5,516,557)
-
(38,135,534)
(70,779,811)
(2,910,280)
(10,634,483)
-
(84,324,574)
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.
51 |
(f) Liquidity Risk (CONTINUED)
2017
<6 months
6-12 months
1-5 years
>5 years
Total
Financial assets
Cash and equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Interest bearing loans
Net inflow/(outflow)
51,087,338
45,046,603
11,066,473
107,200,414
-
-
-
-
-
-
-
-
(29,306,601)
(1,651,478)
(30,958,079)
76,242,335
-
(1,660,898)
(1,660,898)
(1,660,898)
-
(5,516,557)
(5,516,557)
(5,516,557)
51,087,338
-
45,046,603
-
11,066,473
-
- 107,200,414
-
-
-
-
(29,306,601)
(8,828,933)
(38,135,534)
69,064,880
2016
<6 months
6-12 months
1-5 years
>5 years
Total
Financial assets
Cash and equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Interest bearing loans
Net inflow/(outflow)
(g) Fair Values
40,344,106
15,799,458
6,147,331
62,290,895
-
-
-
-
-
-
-
-
(68,289,529)
(2,490,282)
(70,779,811)
(8,488,916)
-
(2,910,280)
(2,910,280)
(2,910,280)
-
(10,634,483)
(10,634,483)
(10,634,483)
-
-
-
-
-
-
-
-
40,344,106
15,799,458
6,147,331
62,290,895
(68,289,529)
(16,035,045)
(84,324,574)
(22,033,679)
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 –
Level 2 –
Level 3 –
the fair value is calculated using quoted prices in active markets.
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).
the fair value is estimated using inputs for the asset or liability that are not based on observable market
data.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in
the table below.
2017
Financial Assets
Available-for-sale financial assets
Listed investments 1
Derivatives
Unlisted investments 2
Copper trade receivables 3
Quoted market
price (Level 1)
Valuation
technique market
observable inputs
(Level 2)
Valuation
technique non
market observable
inputs (Level 3)
Total
9,300,778
-
-
-
9,300,778
99,000
31,096,630
31,195,630
-
-
-
-
9,300,778
99,000
31,096,630
40,496,408
| 52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(g) Fair Values (CONTINUED)
2016
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 investments 1
43,238,834
Derivatives
Unlisted investments 2
Copper trade receivables 3
-
-
43,238,834
-
-
-
-
-
-
-
-
43,238,834
-
-
43,238,834
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 unlisted investments relate to 1,500,000 unlisted options in Brainchip Holdings Limited (Brainchip) acquired
for nil cost as part of a capital raising. The fair value is determined using a Black & Scholes model, which takes
account of factors including the option exercise price, the volatility of the underlying share price, the risk free rate,
the market price of the underlying share at grant date and the expected life of the option (refer to note 16). 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 ($)
2017
80%
1.90%
2.92
$0.23
$0.155
3. The fair value of trade receivables relates to copper provisionally sold at the reporting date. The fair value is
based on the applicable LME prices.
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.
53 |
5. REVENUE
Tin sales
Copper sales (a)
Interest received
Total revenue
2017
2016
84,126,857
180,335,000
1,853,256
266,315,113
69,394,562
1,287,617
1,280,606
71,962,785
(a) Total copper sales for the period was 24,828 tonnes (2016: Nil), out of which 7,868 tonnes (2016: Nil) of
copper, provisionally sold at the reporting date, has been revalued at a weighted average price of US$5,908
(2016: Nil). The net movement in trade receivables due to fair value adjustments is an increase of $9,356,648
(2016: Nil) which has been included in revenue from the sale of copper.
6. OTHER INCOME
Net loss on sale of available-for-sale investment
Other income
Total other income
7. EXPENSES
(a) Cost of Sales
-
3,015,539
3,015,539
(16,637)
144,500
127,863
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 expense
40,750,875
3,871,333
161,375,302
8,536,624
810,980
44,667,319
1,130,360
12,017,091
(1,577,052)
1,855,714
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
12,315,552
502,271
1,475,362
284,049
25,196,861
257,159,645
6,443,580
62,496,576
1,199,865
262,905
153,551
200,411
4,754,542
6,571,274
3,530,555
319,721
918,168
3,403,642
1,155,028
9,327,114
3,018,754
330,000
318,132
66,986
615,504
4,349,376
1,865,639
122,967
947,145
2,901,661
613,465
6,450,877
102,011
16,000,399
141,457
10,941,710
| 54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
7. EXPENSES (CONTINUED)
2017
2016
Other expenses
Net (profit) on sale of assets
Loss/(gain) on derivatives
Other expenses
Total other expenses
(c) Fair Value Change in Financial Instruments
Fair value change in derivatives gain (refer to note 17(c))
Total fair value change in financial instruments
(d) Finance Costs
Interest
Unwinding of rehabilitation provision discount
Total finance costs
INCOME TAX
8.
(a) Major Components of Income Tax Expense:
Income Statement
Current income tax expense
Current income tax (benefit)/expense
Adjustments in respect of current income tax of previous years
Deferred income tax
Relating to origination and reversal of temporary differences in current
year
Derecognition of carry forward losses and other temporary differences
Adjustments in respect of current income tax of previous years
Income tax reported in the income statement
(9,985)
1,612,408
1,602,423
(25,487)
(2,128,642)
(2,154,129)
17,602,822
8,787,581
(12,371,917)
(12,371,917)
(364,853)
(364,853)
423,375
263,558
686,933
114,944
15,075
130,019
2017
2016
6,424,248
(5,951,964)
(18,384,388)
(4,064,917)
(22,821,036)
49,714,897
8,728,624
36,094,769
10,188,700
3,835,795
4,139,752
(4,285,058)
(b) Amounts Charged or Credited Directly to Equity
Deferred income tax related to items charged or credited directly to equity
Unrealised gain on available-for-sale investments
Income tax reported in equity
(3,945,658)
(3,945,658)
4,285,058
4,285,058
(c) 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:
Accounting loss before tax from continuing operations
Profit/(loss) before tax from a discontinued operation
Total accounting profit/(loss) before income tax
(67,657,975)
237,764,988
170,107,013
(1,047,891)
(26,861,360)
(27,909,251)
At statutory income tax rate of 30% (2016: 30%)
51,032,104
(8,372,775)
Non-assessable items
Gain on acquisition of subsidiary
Gain on disposal of subsidiary
Non-deductible items
Acquisition costs
Share-based payments
Sundry items
Other non-deductible items
Deductible items
Prior year tax benefits
Derecognition of deferred tax balances on disposal of subsidiary
Derecognition of tax losses
(3,711,575)
(68,551,175)
1,455,967
1,426,363
28,456
2,055,416
(455,718)
2,776,660
323,374
49,714,897
-
-
167,762
184,652
12,541
-
(187,868)
74,835
-
3,835,795
Income tax expense/(benefit) reported in income the statement of
comprehensive income
36,094,769
(4,285,058)
55 |
INCOME TAX (CONTINUED)
8.
(d) Deferred Income Tax at 30 June relates to the following:
Deferred tax liabilities
Exploration
Deferred mining
Mine properties & development
Derivative held for trading
Available-for-sale financial assets
Consumables
Prepayment
Diesel rebate
Gross deferred tax liabilities
Deferred tax assets
Accelerated depreciation for tax purposes
Available-for-sale financial assets
Inventories
Legal costs
Equity raising costs
Accrued expenses
Provision for employee entitlements
Provision for fringe benefits tax
Provision for rehabilitation
Recognised tax losses
Gross deferred tax assets
Net deferred tax liabilities
Movement in deferred taxes
Closing
Balance
30 June 2017
Income
Statement
Current Period Movement
Equity
Transferred Out Transferred In
(1,200,793)
(21,771,175)
(1,300,527)
-
1,039,176
(8,976,426)
-
(100,275)
(32,310,020)
13,886,165
-
3,195,725
131,760
-
64,530
2,515,579
(50,063)
11,694,202
872,122
32,310,020
-
12,016,357
(2,669,400)
(6,843,839)
-
(125,028)
510,684
6,414
(203,104)
-
-
-
-
(3,945,658)
-
-
-
(39,387,801)
(18,387,250)
(4,185,666)
-
-
(2,763,205)
-
-
715,251
11,234,012
-
-
-
7,714,849
(6,537)
41,981
(15,275,580)
-
(3,419,386)
(114,931)
-
(3,693)
2,263,463
74,832
(309,201)
-
-
-
-
-
-
-
-
-
-
-
-
-
16,080,885
-
1,300,623
-
-
-
1,912,307
-
24,580,612
-
-
(11,414,850)
-
-
-
-
-
(4,455,432)
(20,523)
(10,773,451)
-
-
(14,092,412)
(3,945,658)
(20,849,495)
(6,964,701)
Opening
Balance
30 June 2016
(27,856,984)
(31,593,813)
(12,330,032)
-
(3,031,510)
(3,514,098)
(123)
(261,398)
(78,587,958)
3,276,620
-
1,076,962
16,829
-
60,837
2,235,917
4,246
25,192,161
46,724,386
78,587,958
-
| 56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
8.
INCOME TAX (CONTINUED)
(e) Tax Consolidation and the Tax Sharing Arrangement
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.
(f) 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.
(g) Unrecognised Losses
At 30 June 2017, there are unrecognised losses of $200,166,034 for the Consolidated Entity which are subject to a
restricted rate of utilisation (2016: $154,786,053).
9. EARNINGS PER SHARE
The following reflects the data used in the basic and diluted earnings per share
computations.
(a) Earnings Used in Calculating Earnings per Share
For basic earnings per share:
(Loss)/profit attributable to continuing operations
Profit/(loss) attributable to discontinued operations
Profit/(loss) attributable to ordinary equity holders of the parent
Basic earnings/(loss) per share (cents)
For diluted earnings per share:
(Loss)/profit attributable to continuing operations
Profit/(loss) attributable to discontinued operations
Profit/(loss) attributable to ordinary equity holders of the parent
Fully diluted earnings/(loss) per share (cents)
(b) Weighted Average Number of Shares
2017
2016
(103,752,743)
237,764,988
3,237,167
(26,861,360)
134,012,245
(23,624,193)
22.51
(5.21)
(103,752,743)
237,764,988
3,237,167
(26,861,360)
134,012,245
(23,624,193)
22.51
(5.21)
Weighted average number of ordinary shares for basic earnings per
share
595,353,059
453,392,560
Effect of Dilution:
Share Options
-
-
Weighted average number of ordinary shares adjusted for the effect
of dilution
595,353,059
453,392,560
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year. Diluted EPS is calculated by dividing the profit
attributable to ordinary equity holders of the parent (after adjusting for interest on the convertible preference shares) by
the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary
shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The Company had 7,250,000 (2016: nil) share options on issue that are excluded from the calculation of diluted earnings
per share for the current financial period because they are considered non-dilutive.
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date
and the date of authorisation of these financial statements.
57 |
10. DIVIDENDS PAID AND PROPOSED
2017
2016
Dividends declared and paid during the financial year
Nil dividends for 2017 (2016: $0.0295 partially franked (26%) at 30 per
cent)
Dividends on Demerger of Westgold (refer to note 41)
Total dividends
Dividends proposed but not recognised as a liability
Final dividend for 2017 $0.01 unfranked (2016: Nil)
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%
(2016: 30%)
Franking credits that will arise from the payment of income tax payable
as at the end of the financial year
Franking debits that will arise from the payment of dividends during the
financial year
The amount of franking credits available for future reporting years
-
(171,204,652)
(171,204,652)
12,272,313
-
12,272,313
6,093,409
-
1,842
1,842
-
-
1,842
-
-
1,842
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 less a discount,
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.
11. CASH AND CASH EQUIVALENTS
Cash at bank and in hand - denominated in AUD
Cash at bank and in hand - denominated in USD
Short-term deposits
Total
2017
2016
26,790,352
23,269,818
65,000
50,125,170
38,851,351
870
332,566
39,184,787
CASH FLOW 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
26,790,352
65,000
26,855,352
38,852,221
332,566
39,184,787
Reconciliation of net profit after income tax to net cash flows from operating activities
Profit after income tax
Amortisation and depreciation
Gold prepayment physical deliveries
Gain on demerger
Impairment loss on available-for-sale financial assets
Impairment loss on mine properties and development
Income tax expense
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
Loss on disposal of property, plant and equipment
Changes in assets and liabilities
Decrease in inventories
(Increase)/decrease in trade and other receivables and prepayments
(Decrease)/increase in trade and other creditors
Increase in provisions
Net cash flows from operating activities
(12,298,152)
(19,272,577)
(16,327,636)
198,982
26,836,655
134,012,245
75,138,830
(8,930,625)
(228,503,915)
416,758
72,250,650
36,094,768
4,754,542
420,475
(12,371,917)
1,243,736
-
10,491
74,536,038
(23,624,193)
64,093,026
(22,493,125)
-
-
-
(4,285,058)
615,504
740,569
(259,853)
26,816,554
16,637
215,101
41,835,162
(15,651,830)
600,215
33,910,109
1,346,506
62,040,162
| 58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
12. TRADE AND OTHER RECEIVABLES (CURRENT)
Trade receivables at fair value (a)
Trade receivables at amortised cost (b)
Other debtors (c)
Provision for doubtful debt (d)
2017
31,096,630
4,033,382
9,916,591
-
45,046,603
2016
-
2,901,113
12,898,345
-
15,799,458
(a) As at 30 June 2017 copper sales of 7,868 tonnes (2016: nil) remained open to price adjustments.
(b) Trade receivables at amortised cost are non-interest bearing and are generally on 30 - 90 day terms.
(C) Other debtors primarily relate to cash calls advanced to the Bluestone Mines Tasmania Joint Venture Pty Ltd.
Other debtors are non-interest bearing and are generally on 30 - 90 day terms.
(d) Collectibility 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.
The carrying amounts disclosed above approximate the fair value. Refer to note 4(b) on credit risk of trade
receivables to understand how the Consolidated Entity manages and measures credit quality of trade
receivables that are neither past due or impaired.
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
1,228,402
-
-
85,480
17,613,704
5,441,932
29,921,421
(10,652,418)
43,638,521
11,881,422
13,504,552
-
42,684
13,994,929
3,843,256
11,713,659
(2,807,090)
52,173,412
During the year there were write-downs of $1,130,360 (2016: reversal of write-downs $1,577,052) for the
Consolidated Entity. This is included in cost of sales refer to note 7(a).
14. PREPAYMENTS (current)
Prepayments
15. OTHER FINANCIAL ASSETS (CURRENT)
Cash on deposit - performance bond facility (a)
Loan to Southern Gold Limited (b)
Loan to Nelson Resources Limited (c)
Total other financial assets
1,250,872
528,564
10,858,049
-
-
10,858,049
3,305,319
2,104,548
392,758
5,802,625
(a) The cash on deposit is interest bearing and is used as security for government performance bonds.
(b) The loan to Southern Gold Limited was secured, interest bearing at 8% per annum and matured upon the
demerger of Westgold.
(c) The loan to Nelson Resources Limited was converted into equity (refer to note 17(a)) (2016: was secured and
interest bearing at 20% per annum and repayable on demand).
59 |
16. DERIVATIVE FINANCIAL INSTRUMENTS (non-current)
Derivatives held for trading
2017
2016
99,000
-
The Consolidated Entity holds 1,500,000 unlisted options in Brainchip Holdings Limited (Brainchip). The
options were acquired for nil cost as part of a capital raising. The fair value of the options at 30 June 2017
have been valued using a Black & Scholes model, which takes account of factors including the option
exercise price, the volatility of the underlying share price, the risk free rate, the market price of the
underlying share at grant date and the expected life of the option.
17. AVAILABLE-FOR-SALE FINANCIAL ASSETS (NON-CURRENT)
Shares - Australian listed
9,300,778
43,238,834
(a)
(b)
(c)
(d)
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.
The Company has a 21.77% (2016: 14.76%) interest in Nelson Resources Limited (Nelson) (formerly
Mongolian Resource Corporation Limited), which is involved in the exploration of base metals in Australia.
Nelson was delisted from the Australian Securities Exchange in June 2016. During the period the Company
converted a loan of $392,758 into issued capital in Nelson. At 30 June 2017 Nelson had not recommenced
trading and the Company recognised an impairment of $392,758 (2016: nil). The Company does not have
significant influence over Nelson as it does not have any board representation or the ability to influence
the decision making of Nelson.
The Company has a 6.69% (2016: 7.10%) interest in Brainchip, which is involved in the development of
artificial intelligence. Brainchip is listed on the Australian Securities Exchange. At the end of the period the
fair value of the Company’s investment was $9,129,778 (2016: $7,292,444) which is based on Brainchip's
quoted share price.
At 30 June 2016 the Company had a 32.60% interest in Aditya Birla which is involved in the mining and
exploration of base metals in Australia. Aditya Birla was listed on the Australian Securities Exchange. The
fair value of the Company’s investment was $35,751,390 which was based on Aditya Birla's quoted share
price. During the period the Company acquired 100% of the issued capital in Aditya Birla via an off-market
takeover (refer to note 40) and recognised a gain on the remeasurement of the Company's investment in
Aditya Birla prior to obtaining control of $12,386,916.
The Company has a 0.85% (2016: 1.22%) interest in Auris Minerals Limited (Auris) (formerly RNI NL),
which is involved in the mining and exploration of base metals in Australia. Auris is listed on the Australian
Securities Exchange. At the end of the period the fair value of the Company’s investment was $171,000
(2016: $195,000) which is based on Auris' quoted share price.
At the end of the period the market value of the investment was lower than the cost, the Company
recognised an impairment of $24,000 (2016: $105,000).
| 60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
18. PROPERTY, PLANT & EQUIPMENT (NON-CURRENT)
2017
2016
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
Transfer from capital in progress
Disposals
Disposal of subsidiary (refer to note 41)
Acquisition of subsidiary (refer to note 40)
Depreciation charge for the year
At 30 June net of accumulated depreciation
Land and buildings
At 1 July net of accumulated depreciation
Transfer from capital in progress
Disposals
Disposal of subsidiary (refer to note 41)
Acquisition of subsidiary (refer to note 40)
Depreciation charge for the year
At 30 June net of accumulated depreciation
Capital work in progress
At 1 July net of accumulated depreciation
Additions
Disposal of subsidiary (refer to note 41)
Acquisition of subsidiary (refer to note 40)
Transfer to mine properties & development
Transfer to plant and equipment
Transfer to land and buildings
At 30 June
54,650,126
(26,749,146)
134,531,738
(77,803,384)
27,900,980
56,728,354
10,787,059
(2,508,328)
33,664,192
(17,631,026)
8,278,731
16,033,166
4,287,271
6,581,682
40,466,982
79,343,202
56,728,354
8,369,170
(281,353)
(40,167,538)
19,208,791
(15,956,444)
27,900,980
16,033,166
66,462
-
(11,632,352)
4,604,471
(793,016)
8,278,731
6,581,682
21,991,311
(14,158,562)
661,677
(2,353,208)
(8,369,167)
(66,462)
4,287,271
48,413,657
18,478,774
(625,005)
-
-
(9,539,072)
56,728,354
11,412,015
5,527,531
-
-
-
(906,380)
16,033,166
4,291,515
29,932,645
-
-
(3,636,168)
(18,478,779)
(5,527,531)
6,581,682
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 30 June
2017 is $7,877,498 (2016: $12,931,643). Value of plant and equipment leased under finance leases and
acquired through hire purchase contracts during the 30 June 2016 financial year is $3,430,039 (2016:
$16,554,150).
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 24 and 25).
61 |
19. MINE PROPERTY AND DEVELOPMENT (non-current)
2017
2016
Development areas at cost
Mine site establishment
Impairment
Net carrying amount
Mine properties
Mine site establishment
Accumulated amortisation
Net carrying amount
Mine capital development
Accumulated amortisation
Net carrying amount
73,996,925
(73,981,925)
15,000
72,639,349
-
72,639,349
29,642,684
(25,205,215)
4,437,469
48,025,820
(28,583,186)
19,442,634
145,903,058
(72,985,317)
72,917,741
296,765,046
(191,014,653)
105,750,393
Total mine properties and development
77,370,210
197,832,376
Movement in mine properties and development
Development areas at cost
At 1 July
Additions
Disposal of subsidiary (refer to note 41)
Impairment
Transfer to mine site establishment
At 30 June
Mine site establishment
At 1 July net of accumulated amortisation
Additions
Disposal of subsidiary (refer to note 41)
Transfer from capital work in progress (refer to note 18)
Transfer from development areas
(Decrease)/increase in rehabilitation provision
Amortisation charge for the year
At 30 June net of accumulated amortisation
Mine capital development
At 1 July net of accumulated amortisation
Additions
Disposal of subsidiary (refer to note 41)
Acquisition of subsidiary (refer to note 40)
Transfer from capital work in progress (refer to note 18)
Adjustment to rehabilitation liability (refer to note 23)
Amortisation charge for the year
At 30 June net of accumulated amortisation
72,639,349
1,357,575
(1,731,274)
(72,250,650)
-
15,000
75,453,011
13,537,355
-
-
(16,351,017)
72,639,349
19,442,634
-
(14,973,486)
2,353,208
-
14,600
(2,399,487)
4,437,469
105,750,393
30,341,348
(61,290,833)
53,509,721
-
596,996
(55,989,884)
72,917,741
3,254,944
-
-
2,402,864
16,351,017
60,004
(2,626,195)
19,442,634
82,598,928
72,939,540
-
-
1,233,304
-
(51,021,379)
105,750,393
During the period the Company completed a recoverable amounts assessment of the CMNP. The value of the
CMNP was written down to nil and an impairment loss of $72,250,650 was recognised in profit or loss (refer to
note 42).
In the previous period, the Consolidated Entity re-estimated key assumptions supporting amortisation
calculations, to ensure that the expense profile reflected the pattern in which the assets’ future economic benefits
are expected to be consumed. This resulted in the amortisation rate of mine development assets increasing.
The impact of the increase in amortisation was approximately $7,300,000 in the previous period amortisation
expense. Future periods profit or loss are expected to be impacted by increased amortisation.
| 62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
20. EXPLORATION EXPENDITURE (NON-CURRENT)
2017
2016
Exploration and evaluation costs carried forward in respect of mining
areas of interest
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
Disposal of subsidiary (refer to note 41)
Adjustment to rehabilitation liability (refer to note 23)
Expenditure written off
At 30 June net of accumulated impairment
4,892,164
-
4,892,164
165,083,986
-
165,083,986
165,083,986
14,098,029
3,137,060
(176,183,175)
-
(1,243,736)
4,892,164
100,042,283
87,103,241
-
-
4,755,016
(26,816,554)
165,083,986
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 $1,243,736 (2016: $26,816,554) was written off to the profit and loss. In the current period the
amount predominantly relates to tenements within the nickel division which were impaired to nil (refer to note
42). In the previous period the amount relates to tenements in the gold division which were written down to nil
as the expenditure did not result in the discovery of commercially viable quantities of mineral resources and as
a result there is no future benefits expected.
21. TRADE AND OTHER PAYABLES (current)
Trade creditors (a)
Sundry creditors and accruals (b)
16,319,500
12,987,101
29,306,601
35,431,298
32,858,231
68,289,529
(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.
22. PROVISIONS (CURRENT)
Provision for annual leave (a)
Provision for sick 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(w) and 2(ac).
(b) The nature of the provisions are described below in note 23.
23. 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(w) and 2(ac).
63 |
3,991,142
113,193
1,618,742
-
-
5,723,077
3,993,898
-
860,122
14,152
479,496
5,347,668
1,795,608
-
38,980,674
40,776,282
2,598,999
119,874
83,973,871
86,692,744
23
PROVISIONS (NON-CURRENT) (CONTINUED)
(b) Provision for onerous lease
On the acquisition of Alacer in 2014, a provision was recognised for the fact that the lease rentals or payments 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 was transferred to
Westgold at the demerger date. The operating lease had 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
At 1 July 2015
Arising during the year
Utilised
Adjustment due to revised conditions
Rehabilitation expenditure
Unwind of discount
At 30 June 2016
At 1 July 2016
Arising during the year
Utilised
Acquisition of subsidiary (refer to note 40)
Disposal of subsidiary (refer to note 41)
Adjustment due to revised conditions
Rehabilitation expenditure
Unwind of discount
At 30 June 2017
Onerous
operating lease
Rehabilitation
1,078,865
-
(581,381)
-
-
101,886
599,370
599,370
-
(242,242)
-
(399,580)
-
-
42,452
-
66,821,746
11,719,911
-
4,755,016
(63,371)
740,569
83,973,871
83,973,871
-
-
35,911,504
(81,935,372)
611,596
(1,400)
420,475
38,980,674
Total
67,900,611
11,719,911
(581,381)
4,755,016
(63,371)
842,455
84,573,241
84,573,241
-
(242,242)
35,911,504
(82,334,952)
611,596
(1,400)
462,927
38,980,674
24.
INTEREST BEARING LOANS AND BORROWINGS (CURRENT)
Lease liability
2017
3,187,557
2016
5,201,279
Represents current portion of finance leases which have repayment terms of 36 months.
25.
INTEREST BEARING LOANS AND BORROWINGS (NON-CURRENT)
Lease liability
5,308,678
10,242,066
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 3.92% per annum.
Financing facilities available
At reporting date, the following financing facilities were available:
Total facilities
- finance lease facility
- cash advance facility
Facilities used at reporting date
- finance lease facility
Cash Advance Facility
-
8,496,235
15,443,345
25,000,000
8,496,235
40,443,345
8,496,235
15,443,345
In 2016 the Consolidated Entity had an undrawn cash advance facility of $25,000,000 with Citibank N.A. which
was drawn down and repaid in full during the current period.
| 64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
25.
INTEREST BEARING LOANS AND BORROWINGS (NON-CURRENT) (CONTINUED)
Assets pledged as security:
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
2017
7,877,498
7,877,498
2016
12,931,643
12,931,643
Plant and equipment assets are pledged against lease liabilities for
the term of the lease period.
26. UNEARNED INCOME (CURRENT)
Gold prepayment (refer to note 27)
27. UNEARNED INCOME (NON-CURRENT)
Gold prepayment
-
-
-
-
22,493,125
22,493,125
5,812,500
5,812,500
In 2014 Metals X established a gold prepayment facility with Citibank N.A (Citi). The loan is repayable in gold
ounces in equal instalments of 1,250 ounces per month between October 2014 and September 2017 inclusive.
During the period 6,250 ounces were delivered to Citi. The facility was transferred to Westgold upon the demerger
on 1 December 2016.
The loan was classified as unearned revenue on the Statement of Financial Position as Citi prepaid Metals X for
a fixed quantity of gold ounces. Metals X had a legal obligation to deliver gold ounces, and subsequently
recognised revenue as and when it made the repayment in gold ounces. Metals X measured revenue based on
the allocation of the nominal amounts of the advance payments corresponding to the goods delivered.
28.
ISSUED CAPITAL
(a) Ordinary Shares
Issued and fully paid
(b) Movements in ordinary shares on issue
At 1 July 2015
Issue share capital
Issue share capital under dividend reinvestment plan
Share issue costs
At 30 June 2016
Capital reduction via demerger (refer to note 41)
Issue share capital
Share issue costs
At 30 June 2017
252,511,413
407,029,190
Number
$
416,010,939
61,504,262
2,170,099
-
479,685,300
-
129,655,603
-
609,340,903
332,851,798
71,817,861
2,476,499
(116,968)
407,029,190
(341,913,378)
192,652,428
(5,256,827)
252,511,413
Dividend Reinvestment Plan
The Company operates a dividend reinvestment plan (DRP) which allows eligible shareholders to elect to invest
dividends in ordinary shares.
2016
The Company paid a partially (26%) franked dividend of 2.95 cents per share with a record date of 2 September
2015 and paid on 25 September 2015. The Company offered a DRP at a 5% discount to the 5 day VWAP. Under
the offer 2,170,099 shares were issued at $1.14095 per share on 25 January 2015.
2017
There were no shares issued under the DRP in 2017.
65 |
28. ISSUED CAPITAL (CONTINUED)
(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 were 7,250,000 shares of the Company under option as the date of this report (2016: Nil).
(f) Option Conversions
There were no option conversions during the financial year (2016: Nil).
(g) Performance Rights Conversions
There were 3,388,155 performance rights that were converted to shares during the financial year (2016: Nil).
29. ACCUMULATED LOSSES
At 1 July
Net profit in current period attributable to members of the parent entity
Dividends paid
Dividends on Demerger of Westgold (refer to note 41)
At 30 June
2017
(45,666,070)
134,012,245
-
(171,204,652)
(82,858,477)
2016
(9,769,564)
(23,624,193)
(12,272,313)
-
(45,666,070)
30. RESERVES
Share based
payments
reserve
$
Fair value
reserve
$
Total
$
At 30 June 2015
Share based payments
Fair value change in available-for-sale financial assets
At 30 June 2016
Share based payments
Fair value change in available-for-sale financial assets
At 30 June 2017
19,961,005
615,504
-
20,576,509
4,754,542
-
25,331,051
3,223,335
-
9,745,369
12,968,704
-
(9,206,537)
3,762,167
23,184,340
615,504
9,745,369
33,545,213
4,754,542
(9,206,537)
29,093,218
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.
31. SHARE-BASED PAYMENTS
2017
2016
(a) Recognised share-based payment expense
The expense recognised for services received during the year is
shown in the table below:
Expense arising from equity-settled share-based payments
4,754,542
615,504
The share-based payment plan is described below. There have been no cancellations or modifications to the
plan during 2017 and 2016.
| 66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
31. SHARE-BASED PAYMENTS (CONTINUED)
(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) 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.
Pursuant to the demerger of Westgold the Board determined that the 3,388,155 performance rights on issue would
vest and be exercisable prior to the Demerger. The performance rights vested and were converted into shares in the
Company on 25 November 2016.
The Metals X share price on the date of vesting was $1.51 per share. The cost of accelerating the vesting of the
Performance Rights of $3,744,376 was recognised in the consolidated statement of comprehensive income.
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.
2017 Number
2016 Number
Outstanding at the beginning of the
year
Granted during the year
Vested during the year
Lapsed/cancelled during the year
Outstanding at the year end
3,388,155
-
(3,388,155)
-
-
1,637,020
1,751,135
-
-
3,388,155
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 nil (2016: $0.673).
Performance rights valuation
The fair value of the performance rights granted are estimated using a Hoadley employee share option pricing
model (Monte Carlo Simulation), taking into account the terms and conditions upon which the performance rights
were granted.
67 |
31. SHARE-BASED PAYMENTS (CONTINUED)
Performance rights
Absolute TSR
Performance
Rights
Relative TSR
Performance
Rights
Absolute TSR
Performance
Rights
Relative TSR
Performance
Rights
Details
2017
2016
Grant date
Share price at grant date ($)
Performance right exercise price
($)
Share price barrier ($)
Vesting conditions
Measurement date
Expected life of performance
rights (yrs)
Expected volatility (%)
Risk-free interest rate (%)
Stock dividend yield per annum
(%)
Fair value at grant date ($)
(ii) Share options
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23 Nov 2015
$1.260
Nil
$2.170
1.153 times 20
day VWAP
1 Jul 2017
3 years
60%
2.17%
2.34%
$0.554
23 Nov 2015
$1.260
Nil
-
-
1 Jul 2017
3 years
60%
2.17%
2.34%
$0.79
Share options are issued for nil consideration. The exercise price of the share options is equal to 125% 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.
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.
2017 Number
2017 WAEP
2016 Number
2016 WAEP
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Lapsed/cancelled during the year
Outstanding at the year end
Exercisable at the year end
-
7,250,000
-
-
7,250,000
7,250,000
-
0.76
-
-
0.76
0.76
-
-
-
-
-
-
-
-
-
-
-
-
The outstanding balance as at 30 June 2017 is represented by the following table:
Grant Date
Vesting
date
Expiry
date
Exercise
Price
Options
granted
Options
lapsed /
cancelled
Options
exercised
Number of options
at end of period
24 Nov 16
20 Jan 17
20 Jan 18
20 Jan 18
20 Jan 20
20 Jan 20
$0.76 2,000,000
$0.76 5,250,000
-
-
Total
7,250,000
On issue
- 2,000,000
- 5,250,000
Vested
-
-
7,250,000
-
| 68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
31. SHARE-BASED PAYMENTS (CONTINUED)
Weighted average remaining contractual life of share options
The weighted average remaining contractual life for the share options outstanding as at 30 June 2017 is 2.56 (2016:
nil).
Range of exercise price of share options
The exercise price for options outstanding at the end of the year is $0.76 (2016: nil).
Weighted average fair value of share options
The weighted average fair value of options granted during the year was $0.19 (2016: nil).
Share option valuation
The fair value of the equity-settled share options granted under the LTIP is estimated at the date of grant using a
Black & Scholes model, which takes into account factors including the options exercise price, the volatility of the
underlying share price, the risk-free interest rate, the market price of the underlying share at grant date, historical and
expected dividends and the expected life of the option.
The following table gives the assumptions made in determining the fair value of the options granted:
Grant date
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (yrs)
Options exercise price ($)
Share price at grant date ($)
Fair value at grant date ($)
24 Nov 16
60%
2.00%
2.5
$0.76
$0.61
$0.19
20 Jan 17
60%
2.00%
2.5
$0.76
$0.61
$0.19
The effects of early exercise have been incorporated into the calculations by using an expected life for the option
that is shorter than the contractual life based on historical exercise behaviour, which is not necessarily indicative of
exercise patterns that may occur in the future. The expected volatility was determined using a historical sample of
the Company’s share price over a 12 month period. The resulting expected volatility therefore reflects the
assumptions that the historical volatility is indicative of future trends, which may also not necessarily be the actual
outcome.
32. CONTINGENT ASSETS AND LIABILITIES
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 $10,858,049 (2016: $3,305,319). These
bank guarantees are fully secured by performance bonds (refer to note 15).
The Renison Tin Operation mining tenement has expired and is in the process of being renewed. As a part of
the renewal process an updated mine closure plan is required to be prepared, which may result in a potential
increase in the rehabilitation liability at the Renison Tin Operation. The Company is currently in discussions
with the Tasmanian Government authorities regarding the mine closure plan and potential increase in
rehabilitation liability.
69 |
33. COMMITMENTS
(a) Capital commitments
Commitments relating to joint arrangements
At 30 June 2017 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
(b) Operating lease commitments - Company as lessee
2017
2016
1,537,473
2,688,982
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 up to 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
203,612
453,608
657,220
37,053
51,022
88,075
1,518,782
383,592
1,902,374
46,680
23,789
70,469
405,652
671,957
1,119,505
2,197,114
5,763,238
21,405,977
62,054,198
89,223,413
| 70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
33. COMMITMENTS (CONTINUED)
(c) Operating Lease Commitments - Company as Lessor
The Company has entered into a commercial sub-lease on the above mentioned office space.
Future minimum rentals receivable under non-cancellable operating leases as at 30 June are as follows:
(i)
Property Leases as Lessor:
2017
2016
- Within one year
- After one year but not more than five years
(d) Finance Lease and Hire Purchase Commitments
-
-
-
5,838
-
5,838
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:
2017
Minimum lease
payments
Present value
of lease
payments
3,495,056
5,550,511
9,045,567
(549,332)
8,496,235
3,187,557
5,308,678
8,496,235
-
8,496,235
2016
Minimum lease
payments
Present value
of lease
payments
5,757,588
10,716,217
16,473,805
(1,030,460)
15,443,345
5,201,279
10,242,066
15,443,345
-
15,443,345
2017
2016
Current interest-bearing loans and borrowings (note 24)
Non-current interest-bearing loans and borrowings (note 25)
Total included in interest-bearing loans and borrowings
3,187,557
5,308,678
8,496,235
5,201,279
10,242,066
15,443,345
The weighted average interest rate of leases for the Company is 3.92% (2016: 3.83%).
(e) Other Commitments
The Consolidated Entity has obligations for various expenditures such as state government royalties, production
based payments and exploration expenditure. Such expenditures are predominantly related to the earning of
revenue in the ordinary course of business.
71 |
34. AUDITOR'S REMUNERATION
2017
2016
Amounts received or due and receivable by Ernst & Young
(Australia) for:
An audit or review of financial reports of the entity and any other entity
within the Consolidated Entity
335,097
398,055
Other services in relation to the entity and any other entity in the
Consolidated Entity:
- tax compliance
- stamp duty compliance
- investigating accountant's report Westgold demerger
Total auditor remuneration
35.
INTERESTS IN JOINT OPERATIONS
300,918
26,300
100,940
125,890
17,100
-
763,255
541,045
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:
2016
2015
Share of capital commitments (refer to note 33(a))
666,774
1,081,377
Share of operating lease commitments (refer to note 33(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
932
932
3,477
2,202
5,679
57,417
-
-
57,417
932
932
13,085
1,275
14,360
56,658
-
-
56,658
Impairment
During the year reversal of write-downs of inventory of $3,358 (2016: $1,591,216) were recognised in the joint
operation.
| 72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
36. SEGMENTS
Renison Tin Operations:
Wingellina Nickel Project:
Nifty Copper Operations:
Maroochydore Copper Project:
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:
-
-
-
-
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 2017 and 30 June 2016.
Mining, treatment and marketing of tin concentrate.
Exploration and development of nickel assets.
Mining, treatment and marketing of copper concentrate.
Exploration and development of copper assets.
Renison
Tin
Operations
Nifty Copper
Operations
Maroochydore
Copper
Project
Wingellina
Nickel
Project
Higginsville
Gold
Operations
South
Kalgoorlie
Operations
Central
Murchison
Gold
Project
Fortnum
Gold
Project
Northern
Territory
Projects
Adjustments
and
eliminations
Total
DISCONTINUED OPERATION
84,376,130
84,376,130
180,085,727
180,085,727
-
-
-
-
69,697,305
69,697,305
28,721,365
28,721,365
64,707,354
64,707,354
-
-
-
-
- 427,587,881
- 427,587,881
(11,585,569)
(26,353,908)
-
(75,207)
(18,509,467)
(6,837,623)
(11,643,299)
(20,696)
(10,824)
-
(75,036,593)
(4,228)
(112,447)
649
(1,127,710)
-
(72,250,650)
-
-
-
-
-
-
-
-
-
-
(1,243,736)
-
(72,250,650)
Year ended
30 June 2017
Revenue
External
customers
Total revenue
Results
Depreciation
and
amortisation
Exploration and
evaluation
expenditure
written off
Impairment of
assets
Segment profit
23,970,412
(16,707,715)
128
(73,454,999)
5,752,122
(2,381,874)
6,198,161
48,079
(12,776)
(2,641,960)
(59,230,422)
Total assets
90,503,213
118,723,860
2,419,749
317,518
Total liabilities
(18,542,140)
(63,830,223)
-
(182,012)
-
-
-
-
-
-
-
-
-
-
- 211,964,340
-
(82,554,375)
Other disclosures
Capital
expenditure
(11,484,039)
73 |
(9,378,225)
(378,650)
(1,021,233)
(7,499,391)
(10,226,691)
(22,203,007)
(4,892,702)
(336,436)
-
(67,420,374)
36. SEGMENTS (CONTINUED)
Year ended
30 June 2016
Revenue
External
customers
70,682,179
Total revenue
70,682,179
Results
Depreciation and
amortisation
Exploration and
evaluation
expenditure
written off
Impairment of
assets
(8,129,119)
(4,468)
-
Segment profit
8,255,007
Total assets
82,733,985
Total liabilities
(16,259,471)
Other
disclosures
Capital
expenditure
(17,861,736)
Adjustments and eliminations
Renison
Tin
Operations
Nifty Copper
Operations
Maroochydore
Copper
Project
Wingellina
Nickel
Project
Higginsville
Gold
Operations
DISCONTINUED OPERATION
Central
Murchison
Gold
Project
South
Kalgoorlie
Operations
Fortnum
Gold
Project
Northern
Territory
Projects
Adjustments
and
eliminations
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
151,350,329
72,484,117
56,482,885
151,350,329
72,484,117
56,482,885
-
-
-
-
-
-
350,999,510
350,999,510
-
(73,872)
(34,029,491)
(13,896,094)
(7,700,893)
(21,758)
(34,497)
-
(63,885,724)
-
(1,979,741)
(1,798,344)
(3,807,396)
(10,060,284)
(439,383)
(8,726,938)
-
(26,816,554)
-
-
-
-
-
-
-
-
-
(2,053,620)
(9,847,207)
214,611
(7,400,382)
(1,059,608)
(8,769,650)
1,999,499
(18,661,350)
-
72,682,323
75,473,457
48,966,587 176,474,827
36,584,238
17,424,394
-
510,339,811
-
(174,209)
(45,883,925)
(39,060,748)
(58,685,165)
(11,873,268)
(1,428)
-
(171,938,214)
-
(1,781,439)
(45,622,735)
(29,169,224)
(75,104,400)
(36,874,869)
(1,538,964)
-
(207,953,367)
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, cash 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.
| 74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
36. SEGMENTS (CONTINUED)
(a)
Reconciliation of Profit/(Loss)
2017
2016
Segment profit
Corporate administration expenses
Corporate interest income
Corporate other income
Fair value change in financial instruments
Net gains on disposal of available-for-sale investments
Net loss on disposal of assets
Profit/(loss) from discontinued operations
(59,230,422)
(16,000,399)
1,853,256
3,015,539
11,955,159
-
9,985
(9,261,093)
(18,661,350)
(10,941,710)
1,280,606
144,500
259,853
(16,637)
25,487
26,861,360
Total consolidated profit before income tax from continuing
operations
(67,657,975)
(1,047,891)
(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
211,964,340
510,339,811
60,725,031
306,839
102,093
99,000
9,300,778
550,267
283,048,348
41,985,917
2,736,458
112,779
-
43,238,833
573,446
598,987,244
82,554,375
171,938,214
614,990
1,118,618
14,212
84,302,195
23,893,871
1,810,935
6,435,891
204,078,911
Segment revenue
Total revenue
427,587,881
427,587,881
350,999,510
350,999,510
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
163,126,024
264,461,857
427,587,881
280,317,331
70,682,179
350,999,510
The Consolidated Entity has five customers to which it provides tin, copper and gold. The Consolidated Entity
sends its tin and copper concentrates to three South East Asian customers that accounts for 38% of total external
revenue (2016: 20%). The Renison Tin Operations, Customer 1 and Customer 2 provided 6% and 14%
respectively of total external revenue (2016: 6% and 14%). The Nifty Copper Operations, Customer 1 provided
42% of total external revenue (2016: nil). The Consolidated Entity sold its gold to two Australian customers that
accounts for 62% of total external revenue (2016: 80%). The Gold Operations, Customer 1 and Customer 2
provided 21% and 17% respectively of total external revenue (2016: 54% and 26%).
Segment Non-Current Assets, Excluding Financial Assets, are all Located in Australia.
(e)
75 |
37. KEY MANAGEMENT PERSONNEL
(a) Details of Key Management Personnel
(i)
Non-Executive Directors (NEDs)
PJ Newton
PM Cmrlec
SD Heggen
M Jerkovic
X Penggen
Y Zhang
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
(ii) Executive Directors
WS Hallam
PG Cook
SD Robinson
Managing Director
Executive Director
Executive Director
(iii) Other Executives (KMPs)
Appointed
Resigned
14 Dec 2012
23 Jul 2013
25 Oct 2012
1 May 2017
9 Feb 2012
9 Jan 2017
-
5 Oct 2016
-
-
9 Jan 2017
-
1 Mar 2005
23 Jul 2004
25 Nov 2016
-
2 Feb 2017
-
AH King
JG Brock
PD Hucker
MR Poepjes
M Recklies
JW Russell
FJ Van Maanen
Chief Operating Officer
Chief Operating Officer - CMGP
Chief Operating Officer - SKO & HGO
General Manager - NCP
General Manager - Renison
Chief Geologist
CFO & Company Secretary
24 Feb 2014
21 Mar 2016
17 Oct 2012
8 Aug 2011
24 Mar 2017
17 Oct 2012
1 Jul 2005
-
1 Dec 2016
1 Dec 2016
-
-
1 Dec 2016
-
(b) Compensation of Key Management Personnel
Short-term employee benefits
Post employment benefits
Other long-term benefits
Share-based payment
2017
2016
2,514,540
188,580
206,900
3,075,201
5,985,221
2,770,701
207,133
90,741
391,136
3,459,711
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)
Interest held by Key Management Personnel under the Long Term Incentive Plan
Performance rights held by key management personnel under the LTIP:
Grant date
Exercise price $
Test Date
26 Nov 2014
23 Nov 2015
1 Jul 2017
1 Jul 2018
Nil
Nil
Total
2017
2016
-
-
-
1,230,770
1,001,158
2,231,928
Share options held by key management personnel under the LTIP to purchase ordinary shares:
Grant date
Expiry date
Exercise price $
2017
2016
20 Jan 2017
20 Jan 2020
0.76
Total
5,000,000
5,000,000
-
-
| 76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
38. RELATED PARTY DISCLOSURES
(a) Subsidiaries
The consolidated financial statements of the Consolidated Entity include Metals X Limited and the subsidiaries
listed in the following table:
Name
Bluestone Australia Pty Ltd
Metals Exploration Pty Ltd
Cupric Pty Ltd *
Westgold Resources Limited **
Country of
incorporation
Australia
Australia
Australia
Australia
Ownership interest
2017
2016
100%
100%
100%
0%
100%
100%
0%
100%
Subsidiary companies of Bluestone Australia Pty Ltd
Bluestone Mines Tasmania Pty Ltd
Australia
100%
100%
Subsidiary companies of Metals Exploration Pty Ltd
Austral Nickel Pty Ltd
Hinckley Range Pty Ltd
Metex Nickel Pty Ltd
Australia
Australia
Australia
Subsidiary companies of Cupric Pty Ltd
Nifty Copper Pty Ltd *
Maroochydore Copper Pty Ltd *
Australia
Australia
Subsidiary companies of Westgold Resources Limited
Castile Resources Pty Ltd **
Aragon 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 NL **
Hampton Gold Mining Areas Limited **
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
100%
100%
100%
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
100%
100%
0%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Entities acquired in the Aditya Birla Minerals Limited takeover (refer to note 40).
*
** Entities disposed in the Westgold Resources Limited demerger (refer to note 41).
(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 37.
(d) Transactions with related parties
2017
2016
(i)
Jointly controlled operations
Amounts charged by Bluestone Australia Pty Ltd to the joint
operation of Bluestone Mines Tasmania Joint Venture Pty Ltd for
services provided *
339,513
139,880
(ii) Related parties
Amounts charged by Bluestone Australia Pty Ltd to Pantoro for
services provided **
95,287
289,927
*
Subsidiary Bluestone Mines Tasmania Pty Ltd has a 50% interest in the Renison Tin Project accounted for as
a joint operation.
**
PG Cook and PM Cmrlec were directors of Pantoro during the financial period.
77 |
39.
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
2017
59,657,737
158,126,546
438,525
438,525
2016
40,304,185
273,922,057
656,206
656,206
261,791,412
(133,196,610)
25,331,051
3,762,167
416,309,191
(176,588,553)
20,576,509
12,968,704
157,688,020
273,265,851
Profit of the parent entity
Total comprehensive profit of the parent entity
214,596,595
205,390,059
2,308,844
12,054,213
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries.
Pursuant to ASIC Instrument 2016/785, Metals X and its wholly owned subsidiaries (refer to note 38(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
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
| 78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
40.
BUSINESS COMBINATION
Acquisition of Aditya Birla Minerals Limited
On 15 October 2015 the Company announced an off-market takeover offer to acquire 100% of the ordinary
shares in Aditya Birla Minerals Limited (Aditya Birla), a publicly listed Australian company which owns copper
projects in Western Australia. The original offer of 1 Metals X shares for every 5 Aditya Birla share was
increased on 7 December 2015 to 1 Metals X shares for every 4.75 Aditya Birla share. At 30 June 2016 the
Company held 32.6% of Aditya Birla that was valued at $35,751,390. Metals X acquired Aditya Birla to
significantly enlarge the base metals division of the Company.
On 18 July 2016 the unconditional offer was increased to 1 Metals X share for every 4.5 Aditya Birla share,
plus $0.08 in cash for every Aditya Birla share. On 20 July 2016 the Company gained control of Aditya Birla.
On 22 July 2016 the Company obtained over 90% acceptances under the offer and proceeded to compulsory
acquire the remaining interests in Aditya Birla. The Company completed the 100% acquisition on 28 August
2016. There were additional costs of $8,171,746 and 1,194,757 Metals X shares with a fair value of $1,911,611
paid to the Aditya Birla shareholders who accepted the offer prior to the increase in consideration on 22 July
2016 that has been expensed in the profit and loss along with a gain of $22,455,274 relating to the 32.6%
previously held interest in Aditya Birla. The acquisition has been accounted for using the acquisition method.
Assets acquired and liabilities assumed
In accordance with the Accounting Standard AASB 3 ‘Business Combinations’, the Company is able to
provisionally determine the initial accounting for the acquisition. At the date of this report, the fair value of
assets and liabilities have been provisionally determined based on the directors’ best estimate of their likely
fair value. These amounts may be amended when further information to support these values such as the final
tax position is obtained. The provisional fair values of the identifiable assets and liabilities as at the date of
acquisition are:
Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Other financial assets
Inventories
Property, plant and equipment
Mine properties and development costs
Exploration and evaluation expenditure
Liabilities
Trade and other payables
Provisions
Total identifiable net assets as fair value
Fair value of previously held investment in Aditya Birla at date of control of 32.6% *
Fair value of Metals X shares (46,938,925 ordinary shares) **
Cash paid
Purchase consideration transferred
Analysis of cash flows on acquisition:
Cash paid
Cash acquired with the subsidiary
Net cash flow
Provisional fair
value recognised
on acquisition
64,147,982
12,481,931
1,444,469
7,620,000
28,338,961
24,474,940
53,509,723
3,137,063
195,155,069
17,576,870
41,655,605
59,232,475
135,922,594
43,923,135
75,101,401
16,898,058
135,922,594
(16,898,058)
64,147,982
47,249,924
From the date of acquisition, Aditya Birla contributed $180,382,325 of revenue and $16,619,145 to the loss
before tax from continuing operations for the Consolidated Entity. If the combination had occurred on 1 July
2016, revenue from continuing operations would have been $210,826,518 and loss before tax from
continuing operations for the Consolidated Entity would have been $18,071,510.
The fair value of the trade receivables amounts to $12,481,931 which is the gross amount of trade
receivables. None of the receivables have been impaired and it is expected that the full contractual amount
can be collected.
Transaction costs relating to external legal fees, consultant’s fees, technical fees and due diligence costs of
$4,151,562 have been expensed and are included in the profit and loss.
* Fair value was based on Aditya Birla share price on the date control was gained.
** Fair value was based on Metals X share price on the date control was gained.
79 |
41. DISCONTINUED OPERATION
On 1 December 2016, Westgold was demerged from the Metals X Consolidated Group, following approval by
Metals X Shareholders at an Extraordinary General Meeting held on 24 November 2016. Existing Metals X
shareholders received shares in Westgold on a 1 Westgold share for every 2 Metals X shares held (in specie
distribution).
The fair value of Westgold at demerger was $513,118,030, which was determined by multiplying the number of
Westgold shares on issue (304,671,487) by the VWAP ($1.684) over the first five days of trading on the ASX.
The results of the discontinued operation included in the statement of profit or loss and other comprehensive
income are set out below.
Results of the discontinued operations:
Revenue
Expenses
Gross profit/(loss)
Other income
Other expenses
Finance costs
Exploration and evaluation expenditure written off
Gain on distribution of controlled entities
Profit/(loss) before tax
Income tax
30 June 2017
30 June 2016
163,126,231
(155,480,427)
280,318,569
(277,230,121)
7,645,804
2,257,169
(481,057)
-
228,503,915
237,765,008
(20)
3,088,448
3,313,662
(7,467,354)
(963,778)
(24,832,338)
-
(26,861,360)
-
Profit/(loss) for the period from discontinued operations
237,764,988
(26,861,360)
Cash flow information from discontinued operations:
Operating activities
Investing activities
Financing activities
Net cash inflow/(outflow)
Carrying value of net assets of discontinued operations:
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Property, plant and equipment
Mine properties and development costs
Exploration and evaluation expenditure
Liabilities
Trade and other payables
Unearned income
Interest bearing liabilities
Provisions
Deferred tax asset
Net assets and liabilities disposed of
Reduction in share capital
Demerger dividend
Gain on distribution of controlled entities
6,984,139
(44,370,328)
133,231,424
49,627,766
(119,056,979)
64,056,379
95,845,235
(5,372,834)
96,323,551
5,228,674
49,172,005
605,398
65,958,451
77,995,594
176,183,175
471,466,848
(8,789,270)
(19,375,000)
(7,269,709)
(119,269,645)
(32,149,109)
(186,852,733)
284,614,115
(341,913,378)
(171,204,652)
(228,503,915)
Entities disposed were: Westgold Resources Limited, Aragon Resources Pty Ltd, Big Bell Gold Operations Pty
Ltd, Castile Resources Pty Ltd, Hill 51 Pty Ltd, Avoca Resources Pty Ltd, Avoca Mining Pty Ltd, Dioro
Exploration Pty Ltd, HBJ Minerals Pty Ltd and Hampton Gold Mining Areas Limited.
| 80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
42. IMPAIRMENT
In accordance with the Consolidated Entity’s accounting policies and processes, non
financial assets are reviewed
each reporting period to determine whether there is an indication of impairment. Where an indicator of impairment
exists, a formal estimate of the recoverable amount is made. In assessing whether an impairment is required for
the carrying value of an asset, its carrying value is compared to its recoverable amount. The recoverable amount
is the higher of the asset’s fair value less costs of disposal and value in use.
‐
Methodology
The future recoverability of assets is dependent on a number of key factors including; commodity price, discount
rates used in determining the estimated discounted cash flow, foreign exchange rates, the level of proved and
probable reserves and measured, indicated and inferred mineral resources, future technological changes which
could impact the cost of mining, and future legal changes (including changes to environmental restoration
obligations). Impairment is recognised when the carrying amount of the assets exceeds its recoverable amount.
When fair value less cost of disposal (FVLCD) is used, fair value is estimated based on discounted cash flows using
market based commodity price and exchange assumptions, estimated quantities of recoverable minerals,
production levels, operating costs and capital requirements. Consideration is also given to analysts’ valuations, and
the market value of the Company’s securities. The fair value methodology adopted is categorised as Level 3 in the
fair value hierarchy.
30 June 2017 Assessment
As a result of the Consolidated Entity’s 30 June 2017 impairment indicator review, an assessment of the recoverable
amount for all of its cash generating units (CGUs) with impairment indicators was performed. An indicator for the
Central Musgraves Nickel Project (CMNP or Wingellina) CGU was identified, with factors considered including a
lower USD nickel price, increase in market interest rates and other changes to nickel market conditions, which have
impacted the return expected by a market participant. This has resulted in impairment charge for the CMNP based
on FVLCD.
Due to the early development stage and the capital investment required to develop this project, the Consolidated
Entity determined that the value in use method was not appropriate to determine the recoverable amount and
therefore utilised the fair value less cost of disposal method.
The Consolidated Entity utilised a discounted cash flow (DCF) model to determine the fair value of CMNP due to
the absence of market prices and recent transactions for an asset of a similar nature. The Consolidated Entity
developed a DCF model based upon the existing CMNP feasibility study. The DCF was updated to incorporate
current commodity prices, exchange rates, interest rates, debt to equity ratio assumptions and discount rates based
upon the weighted average cost of capital for CMNP. The DCF model indicated a negative cash flow over the life
of the project. An impairment loss of $73,378,360 was therefore recognised to reduce the carrying amount of the
CMNP to nil.
Key Assumptions underpinning the CMNP Impairment Assessment
The table below summarises the key assumptions used in the carrying value assessment, no reasonably possible
changes in key assumptions would change this outcome:
Details
Nickel price (US$ per tonne)
Cobalt price (US$ per tonne)
Exchange rate (AUD/USD)
Discount rate % (pre tax)
30 June 2017
$16,233
$30,000
$0.76
19.5%
Commodity prices and exchange rates
Commodity price and foreign exchange rates are estimated with reference to external market forecasts, and
updated at least twice annually. The rates applied to the valuation have regard to observable market data.
Discount rate
In determining the fair value of assets, the future cash flows were discounted using rates based on the Consolidated
Entity’s estimated real weighted average cost of capital, with an additional premium applied having regard to the
project’s stage of development.
Statement of Financial Position
The impairment charges have been allocated to the Consolidated Entity’s non-current assets as below:
Central Musgraves Nickel Project
Carrying Value
Impairment loss
Recoverable amount
Mine properties and development
$72,250,650
$72,250,650
Exploration and evaluation expenditure
$1,127,710
Total
$73,378,360
$1,127,710
$73,378,360
-
-
-
43. EVENTS AFTER THE BALANCE SHEET DATE
On 26 July 2017 the Company entered into hedges for 1,500 tonnes of copper per month for ten months from
October 2017 to July 2018. The Company has granted calls up to A$8,255 per tonne of LME copper and brought
puts as low as A$7,600 per tonne of LME copper. Refer to ASX Announcement dated 27 July 2017.
81 |
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 2017 and of their performance for the year ended on that date; and
complying with
Interpretations) and Corporations Regulations 2001; and
the Australian Accounting Standards (including
the Australian Accounting
(b)
(c)
(d)
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 2017.
As at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group
identified in note 38 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.
WS Hallam
Managing Director
Perth, 31 August 2017
| 82
INDEPENDENT AUDIT REPORT
| 83
| 84
INDEPENDENT AUDIT REPORT (CONTINUED)
85 |
| 86
INDEPENDENT AUDIT REPORT (CONTINUED)
87 |
| 88
TABLES OF MINERAL RESOURCES & ORE
RESERVES AS AT 30 JUNE 2017
TIN DIVISION
Mineral Resource Estimates – Consolidated Summary & Annual Comparison
Project
kt
TIN
Grade
% Sn
Metal
kt Sn
Tonnes
kt
COPPER
Grade
% Cu
Metal
kt Cu
30 June 2016
Renison Bell
Mt Bischoff
Rentails
Mining Depletion
Renison Bell
Mt Bischoff
Rentails
Resource Adjustments
Renison Bell
Mt Bischoff
Rentails
30 June 2017
Renison Bell
Mt Bischoff
Rentails
11,530
1,667
22,503
35,700
(753)
-
-
(753)
4,196
-
717
4,913
14,973
1,667
23,220
39,860
1.44
0.54
0.45
0.77
1.23
-
-
1.23
1.11
-
0.35
1.00
1.35
0.54
0.44
0.79
166
9
100
275
(9)
-
-
(9)
47
-
3
50
204
9
103
316
10,720
-
22,503
33,223
(753)
-
-
(753)
4,805
-
717
5,522
14,772
-
23,220
37,992
0.31
-
0.22
0.25
0.32
-
-
0.32
0.08
-
0.29
0.11
0.23
-
0.23
0.23
34
-
51
85
(2)
-
-
(2)
4
-
2
6
36
-
53
89
Ore Reserve Estimates – Consolidated Summary & Annual Comparison
The Ore Reserve estimates are a subset of the Mineral Resource estimates
TIN
Grade
% Sn
Metal
kt Sn
Ore
kt
COPPER
Grade
% Cu
Metal
kt Cu
Project
30 June 2016
Renison Bell
Rentails
Mining Depletion
Renison Bell
Rentails
Reserve Adjustments
Renison Bell
Rentails
Ore
kt
5,691
21,628
27,319
(753)
-
(753)
1,883
686
2,569
1.28
0.45
0.62
1.23
-
1.23
0.46
0.35
0.43
74
97
171
(9)
-
(9)
9
2
11
5,396
21,628
27,024
(753)
-
(753)
1,856
686
2,542
6,499
22,314
28,813
Renison Bell, Mount Bischoff and Rentails Resources and Reserves are 50% owned by Metals X.
The geographic region for Tin Mineral Resources and Ore Reserves is Australia.
6,821
22,314
29,135
1.06
0.44
0.59
74
99
173
30 June 2017
Renison Bell
Rentails
Notes:
89 |
0.28
0.23
0.24
0.32
-
0.32
0.25
0.29
0.28
0.27
0.23
0.24
15
49
64
(2)
-
(2)
5
2
7
18
51
69
COPPER DIVISION
Mineral Resource Estimates – Consolidated Summary & Annual Comparison
Project
30 June 2016
Nifty Sulphide *
Nifty Oxide
Nifty Heap Leach
Mining Depletion
Nifty Sulphide
Nifty Oxide
Nifty Heap Leach
Resource Adjustments
Nifty Sulphide **
Nifty Sulphide ***
Nifty Oxide
Nifty Heap Leach
30 June 2017
Nifty Sulphide
Nifty Oxide
Nifty Heap Leach
COPPER
Grade
% Cu
Metal
Kt Cu
2.03
0.86
0.74
1.73
1.84
-
-
1.84
0.95
5.60
-
-
-
1.51
0.86
0.74
1.41
478
37
23
538
(29)
-
-
(29)
235
29
-
-
264
713
37
23
773
kt
23,460
4,330
3,310
31,100
(1,576)
-
-
(1,576)
24,800
516
-
-
25,316
47,200
4,330
3,310
54,840
Notes:
The 2016 Mineral Resource estimate was released by Aditya Birla Minerals Limited with a cut-off grade of
1.2% Cu*. The 2016 Mineral Resource estimate, as released by Aditya Birla Minerals Limited, adjusted to
the Metals X cut-off grade of 0.75% Cu**. Adjustments from 2016 to 2017 at a 0.75% cut-off grade***.
Maroochydore Project
30 June 2016
Maroochydore Oxide
Maroochydore Sulphide
Mining Depletion
Maroochydore Oxide
Maroochydore Sulphide
Resource Adjustments
Maroochydore Oxide
Maroochydore Sulphide
30 June 2017
Maroochydore Oxide
Maroochydore Sulphide
COPPER
Grade
% Cu
kt
43,200
5,430
48,630
0.91
1.66
1.00
-
-
-
-
-
-
-
-
-
-
-
-
Metal
kt Cu
394
90
486
-
-
-
-
-
-
COBALT
Grade
ppm Co
391
292
380
-
-
-
-
-
-
kt
43,200
5,430
48,630
-
-
-
-
-
-
Metal
kt Co
16.9
1.6
18.5
-
-
-
-
-
-
43,200
5,430
48,630
0.91
1.66
1.00
394
90
486
43,200
5,430
48,630
391
292
380
16.9
1.6
18.5
Notes:
The 2016 Mineral Resource estimate is as released by Aditya Birla Minerals Limited.
| 90
TABLES OF MINERAL RESOURCES & ORE RESERVES AS AT
30 JUNE 2017 (CONTINUED)
COPPER DIVISION (CONTINUED)
Ore Reserve Estimates – Consolidated Summary & Annual Comparison
The Ore Reserve estimates are a subset of the Mineral Resource estimates
Project
30 June 2016
Nifty Sulphide
Mining Depletion
Nifty Sulphide
Resource Adjustments
Nifty Sulphide
30 June 2017
Nifty Sulphide
Ore
kt
COPPER
Grade
% Cu
Metal
kt Cu
5,240
1.85
97
(1,576)
1.84
(29)
6,086
1.40
85
9,750
1.58
153
Notes:
The geographic region for Copper Mineral Resources and Ore Reserves is Australia.
91 |
NICKEL DIVISION
Mineral Resource Estimates – Consolidated Summary & Annual Comparison
Project
Kt
NICKEL
Grade
% Ni
30 June 2016
Wingellina
Claude Hills
Mining Depletion
Wingellina
Claude Hills
Resource
Adjustments
Wingellina
Claude Hills
30 June 2017
Wingellina
Claude Hills
182,560
33,277
215,837
0.92
0.81
0.91
-
-
-
-
-
(637)
182,560
33,277
215,837
-
-
-
-
-
17.9
0.92
0.81
0.91
COBALT
Grade
% Co
kt
Metal
kt Co
kt
Fe2O3
Grade
% Fe2O3
182,560
33,277
215,837
0.07
0.07
0.07
-
-
-
-
-
(637)
182,560
33,277
215,837
-
-
-
-
-
1.06
0.07
0.07
0.07
132
22
154
-
-
-
-
-
(7)
132
22
154
182,560
33,277
215,837
45.30
38.73
44.29
-
-
-
-
-
-
-
-
(637)
-
-
519.23
182,560
33,277
215,837
45.30
38.73
44.29
Metal
kt Ni
1,684
269
1,953
-
-
-
-
-
(114)
1,684
269
1,953
Ore Reserve Estimates – Consolidated Summary & Annual Comparison
The Ore Reserve estimates are a subset of the Mineral Resource estimates
NICKEL
Grade
% Ni
Ore
kt
Metal
kt Ni
Ore
kt
COBALT
Grade
% Co
Metal
kt Co
Ore
kt
Fe2O3
Grade
% Fe2O3
168,422
-
168,422
0.93
-
0.93
1,561
-
1,561
168,422
-
168,422
0.07
-
0.07
123
-
123
168,422
-
168,422
45.64
-
45.64
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Project
30 June 2016
Wingellina
Claude Hills
Mining Depletion
Wingellina
Claude Hills
Resource Adjustments
Wingellina
Claude Hills
30 June 2017
Wingellina
Claude Hills
168,422
-
168,422
0.93
-
0.93
1,561
-
1,561
168,422
-
168,422
0.07
-
0.07
123
-
123
168,422
-
168,422
45.64
-
45.64
76,870
-
76,870
Notes:
The geographic region for Nickel Mineral Resources and Ore Reserves is Australia.
| 92
Metal
kt
82,701
12,889
95,590
-
-
-
-
-
(3,306)
82,701
12,889
95,590
Metal
kt
76,870
-
76,870
-
-
-
-
-
-
TABLES OF MINERAL RESOURCES & ORE RESERVES AS AT
30 JUNE 2017 (CONTINUED)
COMPETENT PERSONS STATEMENT
The information in this report that relates to nickel Mineral Resources was 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, at the date of the
Mineral Resource estimate, was 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.
The information in this report that relates to tin Mineral Resources was compiled by Metals X technical employees under the supervision
of Mr. Colin Carter B.Sc., who is a member of the Australian Institute of Geoscientists. Mr. Carter 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. Carter consents to the inclusion in this report of the matters based on
his information in the form and context in which it appears. Mr. Carter is eligible to participate in short and long term incentive plans.
The information in this report that relates to copper Mineral Resources compiled by Metals X technical employees under the supervision
of Mr. Kim Kremer B.Sc., who is a member of the Australian Institute of Geoscientists. Mr Kremer 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 Kremer consents to the inclusion in this report of the matters based on
his information in the form and context in which it appears. Mr Kremer is eligible to participate in short and long term incentive plans.
The information in this report that relate to copper and nickel Ore Reserves has been compiled by Metals X technical employees under
the supervision of Mr Michael Poepjes BEng (Mining Engineering), MSc (Min. Econ) MAusIMM. 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 options over shares in the Company.
The information in this report that relate to tin Ore Reserves has been compiled by Metals X technical employees under the supervision
of Mr. Allan King B App Sc. (Mining Engineering) MAusIMM. Mr. King is a full-time employee of the Company. Mr King 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. King consents to the inclusion in this report of the matters based on his information
in the form and context in which it appears. Mr. King is eligible to participate in short and long term incentive plans and holds options over
shares in the Company.
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.
Senior geological and mining engineering staff of the Company 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 Chief Operating Officer (in consultation with senior staff) 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 four-level compliance process guides the control and assurance activities:
1.
2.
3.
4.
Provision of internal policies, standards, procedures and guidelines;
Mineral Resources and Ore Reserves reporting based on well-founded assumptions and compliance with external standards
such as the Australasian Joint Ore Reserves Committee (JORC) Codes;
Internal review of process conformance and compliance; and
Internal assessment of compliance and data veracity.
The objectives of the estimation process are to promote the maximum conversion of identified mineralisation into JORC 2012 compliant
Mineral Resources and Ore Reserves.
Metals X reports its Mineral Resources and Ore Reserves on an annual basis, in accordance with ASX Listing Rule 5.21 and clause 14
of Appendix 5A (the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC code) 2012
Edition). There have been no material changes to the Mineral Resources and Ore Reserves estimates since the last annual updates.
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.
93 |
SECURITY HOLDER INFORMATION AS AT
28 AUGUST 2017
(a) Top 20 quoted Shareholders
Shareholder
HSBC CUSTODY NOM AUST LTD
J P MORGAN NOM AUST LTD
SUN HUNG KAI INV SVCS LTD
NATIONAL NOM LTD
CITICORP NOM PL
JINCHUAN GRP LTD
ALL-STATES FINANCE PL
AJAVA HLDGS PL
CS THIRD NOM PL
BNP PARIBAS NOMS PL
COOK PETER GERARD
CITICORP NOM PL
BOND STREET CUSTS LTD
BNP PARIBAS NOM PL
NATIONAL NOM LTD
DEBORTOLI WINES PL
UBS NOM PL
MERRILL LYNCH AUST NOM PL
HSBC CUSTODY NOM AUST LTD
AMP LIFE 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
Over 100,000
Total
%
28.77%
10.30%
9.18%
8.81%
7.64%
7.22%
2.28%
1.53%
1.11%
1.09%
0.88%
0.84%
0.77%
0.74%
0.67%
0.38%
0.36%
0.35%
0.32%
0.31%
83.55%
Number of
Shares
175,302,751
62,771,557
55,907,571
53,679,885
46,576,836
44,000,000
13,883,311
9,325,453
6,734,637
6,642,071
5,387,500
5,144,550
4,721,475
4,534,405
4,071,644
2,317,262
2,198,318
2,150,907
1,961,590
1,899,361
509,211,084
Number of
Shareholders
Number of
Shares
983
2,428
1,023
1,458
148
6,040
495,892
6,393,822
7,541,532
41,404,189
553,505,468
609,340,903
(c) Number of holders with less than a marketable parcel of ordinary shares
1 – 100,000
(d) Substantial Shareholders
Shareholder
Blackrock Group
Apac Resources Limited
Jinchuan Group Limited
Ausbil Investment Management Limited
Number of
Shareholders
Number of Shares
576
159,557
%
Number of shares
11.73
9.18
7.22
5.30
71,515,258
55,907,571
44,000,000
32,318,571
| 94
SECURITY HOLDER INFORMATION AS AT 28 AUGUST 2017
(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.
Options
The holders of options have no rights to vote at a general meeting of the company.
(f) Unquoted Equity Securities
Number of Options
Exercise Price
Expiry Date
Number holders
7,250,000
$0.76
20/01/2020
11
95 |
www.metalsx.com.au