ABN 74 632 150 817
Annual Report
31 December 2021
megadogold.com.au
Revision: 1
Date Issued: 00/00/
TABLE OF CONTENTS
Corporate Directory ................................................................................................................................................ 2
Director’s Report .................................................................................................................................................... 3
Consolidated Statement of Profit and Loss and Other Comprehensive Income ................................................. 14
Consolidated Statement of Financial Position ..................................................................................................... 15
Consolidated Statement of Changes in Equity ..................................................................................................... 16
Consolidated Statement of Cash Flows ................................................................................................................ 17
Notes to the Consolidated Financial Statements ................................................................................................. 18
Director’s Declaration ........................................................................................................................................... 35
Auditor’s Independence Declaration ................................................................................................................... 36
Independent Auditor’s Report ............................................................................................................................. 37
ASX Additional Information .................................................................................................................................. 41
Important Information and Disclaimers .............................................................................................................. 44
| 1 | Annual Report - 31 December 2021
CORPORATE DIRECTORY
DIRECTORS
Bradley Drabsch (Non-Executive Chairman)
Michael Gumbley (Managing Director)
Chris Bowden (Executive Director)
Aaron Bertolatti (Finance Director)
Marta Luisa Ortiz Ortega (Non-Executive Director)
COMPANY SECRETARY
Aaron Bertolatti
REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS
Level 12, 197 St Georges Terrace
PERTH WA 6000
SHARE REGISTRY
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
PERTH WA 6000
AUDITORS
Level 9 Mia Yellagonga Tower 2
5 Spring Street
PERTH WA 6000
STOCK EXCHANGE
Australian Securities Exchange (ASX)
(Home Exchange: Perth, Western Australia)
ASX Code: MEG
WEBSITE
www.megadogold.com
| 2 | Annual Report - 31 December 2021
DIRECTORS REPORT
The Directors present their report for Megado Gold Limited (“Megado Gold” or “the Company”) and its subsidiaries (“the
Group”) for the financial year ended 31 December 2021.
DIRECTORS
The names of the Directors of Megado Gold during the financial year and to the date of this report are:
▪ Bradley Drabsch (Non-Executive Chairman)
▪ Michael Gumbley (Managing Director)
▪ Chris Bowden (Executive Director)
▪ Aaron Bertolatti (Finance Director & Company Secretary)
▪ Marta Luisa Ortiz Ortega (Non-Executive Director)
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.
DIRECTORS’ INFORMATION
Bradley Drabsch - BSc (Hons), FSEG, MAIG
Non-Executive Chairman – appointed 1 February 2020
Mr Drabsch is a qualified geologist with over 20 years’ experience in the mineral exploration industry. Mr Drabsch has acted
as Managing Director, Director and Exploration Manager along with technical roles in his earlier career. Mr Drabsch has
previously acted as Managing Director of DiscovEx Resources Limited (ASX:DCX) and Trek Metals Ltd (ASX:TKM), is a
founding Director of Centrepeak Resources Group Pty Ltd (CRG) a niche resources investment company which led the back
door listing of gold development company Capricorn Metals Ltd (ASX:CMM). Mr Drabsch has previously worked as
Exploration Manager for Doray Minerals Ltd (ASX:DRM), Montezuma Mining Company Limited (ASX:MZM) and Duketon
Mining Ltd (ASX:DKM) and in key exploration roles for Ivanhoe Mines Ltd (TSX:IVN) in Mongolia and Independence Group
NL (ASX:IGO).
Michael Gumbley - B.Coms, B.S.F.S, M.Sc.
Managing Director – appointed 8 March 2019
Michael Gumbley holds a Bachelor of Commerce (Sydney), a Bachelor of Science in Foreign Service from Georgetown
University, Washington, USA and has a Masters of Political Science from the Sorbonne University, Paris. Michael has over
18 years international finance experience as Chief Financial Officer and Operations Financial Manager with aid and not-for-
profit organisations. Michael has a deep understanding and experience in negotiating, collaborating and delivering projects
in developing nations in Africa and Asia, including in Ethiopia, where he collaborated with local partners, government, and
other institutions to successfully deploy over US$60 million in developing more than 6,000 charitable water projects.
Chris Bowden - PhD, GCMEE, FAusIMM(CP), FSEG
Executive Director – appointed 1 February 2020
Chris Bowden is a minerals industry professional with over 20 years’ experience globally in exploration, deposit discovery,
resource delineation, feasibility studies, and mining. Chris was the Exploration & General Manager of ASCOM Precious
Metals Mining in East Africa for 5 years, based in Addis Ababa, Ethiopia. The role involved the exploration and development
of orogenic gold, VMS gold and base metal projects in Ethiopia, Sudan and elsewhere in East and North Africa. He was
responsible for the development of the Dish Mountain Gold Deposit from initial discovery, mapping, drilling, modelling,
feasibility studies, and coordination of the overall African portfolio achieving a resource base approaching 2 million ounces
of gold. Chris has had success in numerous roles, including: Exploration Manager in South Korea for Southern Gold Ltd
(ASX: SAU); Senior Geologist for Auzex Resources Ltd (ASX: AZX); and Ivanhoe Mines Ltd throughout Mongolia and China
(TSX: IVN). Chris has a deep understanding of the discovery, exploration and development of gold and mineral projects.
Chris has a Bachelor of Science majoring in Geology and Chemistry, and a PhD in Economic Geology (both from James Cook
University, QLD), as well as postgraduate finance and economics qualifications (GCMEE, Curtin University). Chris is a Fellow
and Chartered Professional of the AusIMM (FAusIMM(CP)), and Fellow of the SEG (FSEG).
| 3 | Annual Report - 31 December 2021
Aaron Bertolatti - B.Com, CA, ACG
Finance Director and Company Secretary – appointed 8 March 2019
Aaron Bertolatti is a qualified Chartered Accountant and Company Secretary with over 15 years’ experience in the mining
industry and accounting profession. Aaron has both local and international experience and provides assistance to a number
of resource companies with financial accounting and stock exchange compliance. Aaron has significant experience in the
administration of ASX listed companies, corporate governance and corporate finance.
Marta Luisa Ortiz Ortega - BA, LLB, Senior Management Program, Instituto de Empresa, Madrid
Non-Executive Director – appointed 27 August 2020
Marta Ortiz has 20 years of international business development experience in the consumer finance and payments industry,
working for major banks in both the USA and Europe. She has a Bachelor of Law (LLB) and a Bachelor of Business
Administration from ICADE, Universidad Pontificia de Comillas in Madrid, Spain (BA).
DIRECTORSHIPS OF OTHER LISTED COMPANIES
Directorships of other listed companies held by current directors in the 3 years immediately before the end of the financial
year are as follows:
Director
Company
Period of Directorship
Bradley Drabsch
Aaron Bertolatti
Trek Metals Limited (ASX: TKM)
Jade Gas Holdings Limited (ASX: JGH)
Discovex Resources Limited (ASX: DCX)
Future Metals NL (ASX: FME)
Director from August 2016 to September 2019
Director since April 2019 to January 2022
Director since December 2019 to April 2021
Director since June 2018
INTERESTS IN THE SECURITIES OF THE COMPANY
As at the date of this report, the interests of the Directors in the securities of Megado Gold are:
Director
Ordinary Shares
Michael Gumbley
Bradley Drabsch
Chris Bowden
Aaron Bertolatti
Marta Luisa Ortiz Ortega
2,305,001
600,000
585,000
2,283,334
3,745,763
Options –$0.20 each, expiring 27-
Oct-2024
1,400,000
750,000
2,500,000
400,000
-
RESULTS OF OPERATIONS
The Company loss after providing for income tax amounted to $1,024,923 for the year ended 31 December 2021 (31
December 2020 $1,217,535).
DIVIDENDS
No dividends were paid or declared. The directors do not recommend the payment of a dividend.
CORPORATE STRUCTURE
Megado Gold is a company limited by shares, which is incorporated and domiciled in Australia.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
Megado Gold Ltd is an ASX listed company with five high-quality gold exploration assets covering 511km2 and one licence
application covering 227km2 in southern and western Ethiopia with the geological potential to host gold deposits of
significant scale. Ethiopia contains a world-class greenstone geological terrane and hosts part of the prolific Arabian-Nubian
Shield (ANS).
| 4 | Annual Report - 31 December 2021
The Megado Belt in southern Ethiopia is hosted within the broader Adola Belt, a granite-greenstone terrane that is part of
the ANS, and is characterised by a dominant N-S trending suite of metamorphosed rocks hosting significant occurrences of
gold mineralisation, including Ethiopia’s only modern gold mines, Lega Dembi and Sakaro (+3.0Moz Au).
Megado has a premium land position immediately along strike to the north and south of the Lega Dembi and Sakaro
deposits covering the same fertile greenstone host rocks and structural setting, in addition to an asset located proximal to
Ethiopia’s next gold mine, the +1.5Moz Tulu Kapi deposit (AIM-listed KEFI Minerals).
REVIEW OF OPERATIONS
Chakata Gold Project
Megado commenced its maiden drilling program at its flagship Chakata Gold Project in February. The initial drill plan was
for ~10 holes for approximately 1,500m.
Previous fieldwork by the Company had uncovered outcropping quartz veins with visible gold. At the GT prospect, historical
trench sampling returned 47m @ 1.55g/t Au, including 25m @ 2.57g/t Au (Trench TR-1). In Q3, Megado received
encouraging gold results at its GT Prospect. Assay results received from the diamond drill core included:
• CKDD010: 11m @ 2.88 g/t Au from 22m (including 5m @ 3.42 g/t Au)
• CKDD008: 4m @ 0.75 g/t Au 23m (including 1m @ 2.24 g/t Au) and 1m @ 1.45 g/t Au from 34m
• CKDD009: 1m @ 1.47 g/t Au from 69m
• CKDD011: 1.1m @ 0.72 g/t Au from 22m
Figure 1 - Megado’s drilling activities and results at the GT Prospect, in the Chakata Gold Project’s south-east corner
Limited historical drilling elsewhere within the Chakata Gold Project area returned highly significant results including 2m @
11.15g/t Au from 48.25m (WCDH01) and 0.6m @ 6.47g/t Au from 190.8m (DDH5).
| 5 | Annual Report - 31 December 2021
The drilling program at Chakata progressed through March with encouraging visual drill intercepts. The following month,
Megado reported that visual mineralisation was intersected, including copper (chalcopyrite, bornite, azurite) and quartz-
tourmaline veining. The Company was encouraged by this as gold rich zones at the nearby Lega Dembi and Sakaro gold
deposits (>3Moz) display a similar assemblage and mineralisation.
In Q1, ongoing systematic fieldwork identified a highly prospective new area, the Dragon Prospect, in the northern zone of
the Chakata. Field observations showed sheared and highly altered metagranodiorite with amphibolite and mica schists
hosting 20-30m wide shear zone related quartz veins with tourmaline-pyritechalcopyrite-(+/-bornite, +/- azurite) -galena
mineralisation. (See Figure 2.)
The Company followed up this fieldwork with trenching operations in April: trenching was completed at the Dragon Target
with visible gold evidenced in the first trench. Trench observations made in June continued to note broad zones of up to
20m wide of strongly sheared, altered and quartz veined intercepts, with occurrences of visible gold. Rocks from this newly
defined Prospect have returned an impressive 5.94g/t Au, 4.21g/t Au, and 2.35g/t Au.
Figure 2 - Dragon Target: several metre-wide quartz vein with significant tourmaline and hematite within highly oxidised and
kaolinized metagranodiorite
The Megado field team continued its extensive canvassing of the Chakata tenement and in April. A new target, the Elle
Prospect, in the west of the tenement was identified, with first pass trenching and rock sampling completed. Two trenches
totalling 221m were excavated at Elle and 136 rock chips were sampled and sent to Perth for testing.
Initial drilling at Contact Prospect concluded in June with seven holes for a total of 1,208m. Drilling repeatedly intercepted
broad zones of quartz veins, which at surface have returned significant gold in rocks, up to 15.55g/t Au – analogous to the
geological setting at the Sakaro Gold Mine. In June, Megado received extremely encouraging results in which peak rock
results returned 15.55g/t Au, 5.10g/t Au, and 3.73g/t Au. This is also where a historical drill program from the 1990’s
returned 2m @ 11.15g/t Au.
Babicho Gold Project
At its other flagship project, Babicho, the Company reported significant gold intercepts from its maiden drilling program in
May. The peak drilling result returned: 11m @ 0.81g/t Au (inc. 4.1m @ 1.97g/t Au) from BBDD001 (from 98m), underneath
Megado trench BBTR001 that ran 11.1m @ 3.21g/t Au; and peak trenching returned: 30m @ 1.27g/t Au (inc. 11.1m @
3.21g/t Au) from BBTR002, along strike from historical trench TR-C6 which returned 10m @ 3.5g/t Au.
| 6 | Annual Report - 31 December 2021
Geological observations from drillholes indicate similar alteration and mineralisation to that observed at Lega Dembi and
Sakaro deposits to the south. Quartz veining and shear zones with gold mineralisation at surface were continuous and open
over a 3km strike length.
In Q3, Babicho’s second phase trenching program returned significant gold mineralisation, highlighted by:
• BBTR011 - 10m @ 2.04g/t Au (within 30m @ 0.84g/t Au)
• BBTR012 – 11m @ 2.55g/t Au (within 21m @ 1.46g/t Au) & 6m @ 1.75g/t Au
• BBTR016 - 6m @ 3.03g/t Au (within 30m @ 1.06g/t Au)
• BBTR015 - 6m @ 2.13g/t Au (within 14m @ 1.09g/t Au)
• BBTR025: 2m @ 7.14g/t Au (within 12m @ 1.24g/t Au)
• BBTR018: 6m @ 1.34g/t Au (within 16m @ 0.77g/t Au)
Quartz veining with visible sulphides (pyrite) up to 7m wide within broad alteration zones 20-30m wide were observed in
all trenches of the campaign. The Company expects its second phase drilling program to commence post-rainy season.
Figure 3 - Phase 2 trenching results at the Babicho Gold Project
| 7 | Annual Report - 31 December 2021
Situation in Ethiopia
In November, the Company acknowledged the State of Emergency announced by the Federal Democratic Republic of
Ethiopia. Despite this announcement, Megado continued to advance exploration activities unhindered across its four gold
projects in the Adola Gold Belt (Babicho, Chakata, Dawa, and Mormora). These tenements are several days’ drive from the
principal points of conflict. Megado’s workforce is almost entirely comprised of Ethiopian experts who are embedded in,
and supported by, the communities in which we work. The Company continues to monitor the situation as it pertains to
Megado’s operations while pursuing an uncompromising commitment to safety.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There have been no significant changes in the state of affairs of the Group during the financial year, other than as set out
in this report.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE
No other matter or circumstance has arisen since 31 December 2021 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in
future financial years.
ENVIRONMENTAL ISSUES
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State Law. The
operations of the Group are presently subject to environmental regulation under the laws of Ethiopia. The Group is, to the
best of its knowledge, at all times in full environmental compliance with the conditions of its licences.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has made an agreement indemnifying all the Directors and officers of the Company against all losses or
liabilities incurred by each Director or officer in their capacity as Directors or officers of the Company to the extent
permitted by the Corporations Act 2001. The indemnification specifically excludes wilful acts of negligence.
INDEMNIFICATION AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the financial period, indemnified or agreed to indemnify the auditor of
the Company or any related entity against a liability incurred by the auditor. During the financial period, the Company has
not paid a premium in respect of a contract to insure the auditor of the company or related entity.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility
on behalf of the company for all or part of those proceedings.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
The Directors have excluded from this report any further information on the likely developments in the operations of the
Company and the expected results of those operations in future financial years, as the Directors believe that it would be
speculative and prejudicial to the interests of the Company.
| 8 | Annual Report - 31 December 2021
MEETINGS OF DIRECTORS
During the year, in addition to frequent Board discussions, the Directors met regularly to discuss all matters associated with
the Ethiopian Projects, and other Company matters on an informal basis. Circular resolutions were passed as necessary to
execute formal Board decisions.
Name
Michael Gumbley
Bradley Drabsch
Chris Bowden
Aaron Bertolatti
Marta Luisa Ortiz Ortega
Number Eligible to Attend
3
3
3
3
3
Number Attended
3
3
3
3
3
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Megado Gold
support and adhere to the principles of sound corporate governance. The Board recognises the recommendations of the
Australian Securities Exchange Corporate Governance Council, and considers that Megado Gold complies to the extent
possible with those guidelines, which are of importance and add value to the commercial operation of an ASX listed
resources company.
The Company has established a set of corporate governance policies and procedures and these can be found on the
Company’s website: www.megadogold.com.
AUDITORS INDEPENDENCE DECLARATION
Section 307C of the Corporations Act 2001 requires the Company’s auditors to provide the Directors of Megado Gold with
an Independence Declaration in relation to the audit of the financial report. A copy of that declaration is included within
the annual report. There were no non-audit services provided by the Company’s auditor.
Officers of the Company who are Former Partners of BDO Audit (WA)
There are no officers of the company who are former partners of BDO Audit (WA) Pty Ltd
Auditor
BDO Audit (WA) Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
AUDITED REMUNERATION REPORT
This report, which forms part of the Directors’ report, outlines the remuneration arrangements in place for the key
management personnel of Megado Gold for the financial year ended 31 December 2021. The information provided in this
remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001.
The remuneration report details the remuneration arrangements for KMP who are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly,
including any Director (whether executive or otherwise) of the Group.
Details of Directors and Key Management Personnel
▪
Bradley Drabsch (Non-Executive Chairman)
▪ Michael Gumbley (Managing Director)
▪
Chris Bowden (Executive Director)
▪ Aaron Bertolatti (Finance Director & Company Secretary)
▪ Marta Luisa Ortiz Ortega (Non-Executive Director)
| 9 | Annual Report - 31 December 2021
Remuneration Policy
The Board is responsible for determining and reviewing compensation arrangements for the Directors. The Board assesses
the appropriateness of the nature and amount of emoluments of such officers on a yearly basis by reference to relevant
employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of
a high-quality board and executive team. The expected outcome of this remuneration structure is to retain and motivate
Directors. As part of its Corporate Governance Policies and Procedures, the board has adopted a formal Remuneration
Committee Charter and Remuneration Policy. The Board has elected not to establish a remuneration committee based on
the size of the organisation and has instead agreed to meet as deemed necessary and allocate the appropriate time at its
board meetings.
Fees and payments to non‑executive directors reflect the demands which are made on, and the responsibilities of, the
directors. Non‑executive directors’ fees and payments are reviewed annually by the Board. The Chair’s fees are determined
independently to the fees of non‑executive directors based on comparative roles in the external market. Non‑executive
directors do not receive performance-based pay.
Level
Chairman
Managing Director
Executive Director
Non-Executive Director
Cash Remuneration
Short Term Incentive
Long Term Incentive
FY2021
$60,000
$250,000
Up to $150,000
$30,000
-
Up to 40% of cash remuneration
Up to 30% of cash remuneration
-
-
-
-
-
Additional Fees
A Director may also be paid fees or other amounts as the Directors determine if a Director performs special duties or
otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed for
out-of-pocket expenses incurred as a result of their directorship or any special duties.
Details of Remuneration
Details of the nature and amount of each element of the remuneration of each Director of the Group for the year ended
31 December 2021 are as follows:
Name
Michael Gumbley
Bradley Drabsch
Chris Bowden
Aaron Bertolatti
Marta Luisa Ortiz Ortega
Total
Directors’
Fees
$
Short term
Consulting
Fees
$
Incentive
Award
$
-
60,000
-
-
30,000
90,000
250,000
-
132,000
150,000
-
532,000
-
-
-
-
-
-
Share -Based Payments
Equity
$
Options
$
-
-
-
-
-
-
-
-
-
-
-
-
Share and
Option
related
%
-
-
-
-
-
-
Total
$
250,000
60,000
132,000
150,000
30,000
622,000
There were no other executive officers of the Company during the financial year ended 31 December 2021.
| 10 | Annual Report - 31 December 2021
Details of the nature and amount of each element of the remuneration of each Director of the Group for the year ended
31 December 2020 are as follows:
Name
Michael Gumbley
Bradley Drabsch1
Chris Bowden1
Aaron Bertolatti
Marta Luisa Ortiz Ortega2
Anthony Hall3
Total
Directors’
Fees
$
-
38,000
-
-
10,000
-
48,000
Short term
Consulting
Fees
$
214,500
115,500
115,000
15,000
460,000
Incentive
Award
$
-
-
-
-
-
-
-
Share -Based Payments
Equity
$
31,2504
-
16,5004
-
-
-
47,750
Options
$
38,318
-
-
8,843
-
20,633
67,794
Share and
Option
related
%
24.5
-
12.5
7.1
-
57.9
Total
$
284,068
38,000
132,000
123,843
10,000
35,633
623,544
1 Bradley Drabsch and Chris Bowden were appointed on 1 February 2020.
2 Marta Luisa Ortiz Ortega was appointed on 27 August 2020.
3 Anthony Hall resigned on 27 August 2020.
4 Chris Bowden and Michael Gumbley agreed to reduce Director’s fees for the period from 1 April to 30 September 2020.
As a result, Messrs Bowden and Gumbley received shares in lieu of cash equal to the amount of the fee reduction for the
period based on a share price of $0.10 per share.
There were no other executive officers of the Company during the financial year ended 31 December 2020.
Shareholdings of Directors
The number of shares in the Company held during the financial year by Directors of the Group, including their personally
related parties, is set out below.
Name
Michael Gumbley
Bradley Drabsch
Chris Bowden
Aaron Bertolatti
Marta Luisa Ortiz Ortega
Balance at the
start of the
year
2,305,001
600,000
585,000
2,283,334
3,745,763
Granted during
the year as
compensation
-
-
-
-
-
On exercise of
share options
-
-
-
-
-
Other changes
during the year
-
-
-
-
-
Balance at the
end of the year
2,305,001
600,000
585,000
2,283,334
3,745,763
All equity transactions with Directors other than those arising from the exercise of remuneration options have been entered
into under terms and conditions no more favourable than those the Company would have adopted if dealing at arm’s
length.
| 11 | Annual Report - 31 December 2021
Option Holdings of Directors
The numbers of options over ordinary shares in the Company held during the financial year by each Director of the Group,
including their personally related parties, are set out below:
Name
Michael Gumbley
Bradley Drabsch
Chris Bowden
Aaron Bertolatti
Marta Luisa Ortiz Ortega
Balance
at the
start of
the year
1,400,000
750,000
2,500,000
400,000
-
Granted
during the
year as
compensation
-
-
-
-
-
Exercised
during
the year
-
-
-
-
-
Other
changes
during
the year
Balance
at the end
of the
year
- 1,400,000
-
750,000
- 2,500,000
400,000
-
-
-
Exercisable
1,400,000
750,000
2,500,000
400,000
-
Un-
exercisable
-
-
-
-
-
No option holder has any right under the options to participate in any other share issue of the Company or any other entity.
Options granted as part of remuneration have been valued using the Black Scholes option pricing model that takes into
account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price
volatility of the underlying share and the risk-free interest rate for the term of the option.
Options granted under the plan carry no dividend or voting rights. For details on the valuation of options, including models
and assumptions used, please refer to note 16.
Service Agreements
Managing Director, Michael Gumbley, is engaged under the terms of an Executive Employment Agreement dated 14 July
2020. Under the agreement Mr. Gumbley is paid an annual fee of $250,0000. Mr. Gumbley also has the opportunity to
participate in short term and long-term incentive schemes that the Company may put in place in the future. The Agreement
may be terminated by the Company without notice or without cause by giving three months’ notice in writing or payment
in lieu of notice. The Agreement may also be terminated by Mr. Gumbley by providing three months’ notice in writing.
Executive Director, Chris Bowden, is engaged under an Executive Consulting Agreement dated 1 June 2020. Under the
agreement Dr. Bowden is paid an annual fee of $120,000. Dr. Bowden also has the opportunity to participate in short term
and long-term incentive schemes that the Company may put in place in the future.
Finance Director, Aaron Bertolatti, is engaged under an Executive Consulting Agreement dated 8 March 2019. Under the
agreement Mr. Bertolatti is paid an annual fee of $150,000. Mr. Bertolatti also has the opportunity to participate in short
term and long-term incentive schemes that the Company may put in place in the future.
Non-Executive Directors
On appointment to the Board, all non-executive directors enter into a service agreement with the Group in the form of a
letter of appointment. The letter summarises the Board policies and terms, including compensation, relevant to the
Director. The aggregate remuneration for Non-Executive Directors has been set at an amount not to exceed $500,000 per
annum. This amount may only be increased with the approval of Shareholders at a general meeting.
Loans to Directors and Executives
There were no loans to Directors and key management personnel during the financial year ended 31 December 2021.
| 12 | Annual Report - 31 December 2021
Additional Information
The earnings of the consolidated entity since incorporation to 31 December 2021 are summarised below:
Interest income
EBITDA
EBIT
Profit/(loss) after income tax
2021
$6,644
($1,024,923)
($1,024,923)
($1,024,923)
2020
$1,488
($1,217,535)
($1,217,535)
($1,217,535)
2019
$48
($1,390,118)
($1,390,118)
($1,390,118)
The factors that are considered to affect total shareholders return (“TSR”) are summarised below:
Share price at financial year end ($)
Total dividends declared (cents per share)
Basic earnings per share (cents per share)
2021
$0.083
-
(1.43)
2020
$0.205
-
(3.59)
20191
-
-
-
1 Megado Gold was incorporated in Australia on 8 March 2019 and commenced trading on the Australian Securities
Exchange on 27 October 2020.
END OF AUDITED REMUNERATION REPORT
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
Signed on behalf of the Directors.
Michael Gumbley
Managing Director
Brooklyn, New York
18 March 2022
| 13 | Annual Report - 31 December 2021
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE
INCOME
For the year ended 31 December 2021
Continuing Operations
Interest income
Expenses
Professional and consulting fees
Director and employee costs
Other expenses
Share-based payments expense
Loss on foreign exchange
Travel and accommodation
Impairment of exploration expenditure
Loss before income tax
Income tax expense
Net loss for the year
Other comprehensive income
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
Loss for the year attributable to:
Members of the parent entity
Non-controlling interests
Total comprehensive loss for the year attributable to:
Members of the parent entity
Non-controlling interests
Note
31-Dec-21
$
31-Dec-20
$
6,644
1,488
16(a)
(228,343)
(515,320)
(209,803)
(44,356)
(13,050)
(20,695)
-
(1,024,923)
(284,899)
(496,907)
(122,426)
(166,156)
(22,258)
(35,385)
(90,992)
(1,217,535)
-
(1,024,923)
-
(1,217,535)
(472,011)
(472,011)
(1,496,934)
276,683
276,683
(940,852)
(1,024,923)
-
(1,024,923)
(1,217,535)
-
(1,217,535)
(1,386,097)
(110,837)
(1,496,934)
(940,852)
-
(940,852)
Loss per share
Basic and diluted loss per share (cents)
13
(1.43)
(3.59)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
| 14 | Annual Report - 31 December 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
Current Assets
Cash and cash equivalents
Other assets
Receivables
Total Current Assets
Non-Current Assets
Deferred exploration and evaluation expenditure
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Capital and Reserves Attributable to Owners of the parent entity
Non-controlling interest
Total Equity
Note
31-Dec-21
$
31-Dec 20
$
4
5
6
7
8
9
10
11
1,238,301
38,167
20,961
1,297,429
5,021,401
34,275
67,136
5,122,812
6,034,352
6,034,352
7,331,781
3,855,566
3,855,566
8,978,378
164,616
164,616
164,616
358,635
358,635
358,635
7,167,165
8,619,743
9,389,259
971,319
(3,632,576)
6,728,002
439,163
7,167,165
9,389,259
1,288,137
(2,607,653)
8,069,743
550,000
8,619,743
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
| 15 | Annual Report - 31 December 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Balance at 1 January 2020
Total comprehensive loss for the year
Loss for the period
Foreign currency translation
Total comprehensive loss for the year
Transactions with owners in their capacity as owners
Non-controlling interest recognised on acquisition
Shares issued during the year
Cost of issue
Share-based payments (note 16(a))
Balance at 31 December 2020
Balance at 1 January 2021
Total comprehensive loss for the year
Loss for the period
Foreign currency translation
Total comprehensive loss for the year
Transactions with owners in their capacity as owners
Share-based payments (note 16(a))
Balance at 31 December 2021
Issued capital
$
866,003
Accumulated
losses
$
(1,390,118)
(1,217,535)
-
-
-
- (1,217,535)
-
9,269,250
(745,994)
-
9,389,259
-
-
-
-
(2,607,653)
Foreign
exchange
translation
reserve
$
-
-
276,683
276,683
-
-
-
-
276,683
Total
attributable
to owners of
the parent
entity
$
105,933
Share option
reserve
$
630,048
-
-
-
(1,217,535)
276,683
(940,852)
Non-
controlling
interest
$
-
-
-
-
Total
$
105,933
(1,217,535)
276,683
(940,852)
-
(2,750)
218,000
166,156
1,011,454
-
9,266,500
(527,994)
166,156
8,069,743
550,000
-
-
-
550,000
550,000
9,266,500
(527,994)
166,156
8,619,743
9,389,259
(2,607,653)
276,683
1,011,454
8,069,743
550,000
8,619,743
-
-
-
(1,024,923)
-
(1,024,923)
-
(361,174)
(361,174)
-
-
-
(1,024,923)
(361,174)
(1,386,097)
-
(110,837)
(110,837)
(1,024,923)
(472,011)
(1,496,934)
-
9,389,259
-
(3,632,576)
-
(84,491)
44,356
1,055,810
44,356
6,728,002
-
439,163
44,356
7,167,165
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
| 16 | Annual Report - 31 December 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Net cash used in operating activities
Cash flows from investing activities
Payments for exploration expenditure
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payments for share issue costs
Net cash provided by financing activities
Note
31-Dec-21
31-Dec-20
(1,007,804)
6,644
(1,001,160)
(1,098,889)
1,488
(1,097,401)
(2,768,890)
(2,768,890)
(463,965)
(463,965)
-
-
-
6,891,414
(527,994)
6,363,420
4,802,054
241,605
(22,258)
5,021,401
Net (decrease)/ increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash
Cash and cash equivalents at the end of the year
(3,770,050)
5,021,401
(13,050)
1,238,301
4
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
| 17 | Annual Report - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Corporate Information
The financial report of Megado Gold Limited (“Megado Gold” or “the Company”) for the year ended 31 December 2021
was authorised for issue in accordance with a resolution of the Directors on 18 March 2022. Megado Gold is a company
limited by shares incorporated in Australia whose shares commenced public trading on the Australian Securities Exchange
on 27 October 2020. The nature of the operations and the principal activities of the Company are described in the
Directors’ Report.
2. Summary of Significant Accounting Policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
a) Basis of Preparation
The financial statements are general-purpose financial statements, which have been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements
of the Australian Accounting Standards Board. The financial statements have also been prepared on a historical cost
basis. The presentation currency is Australian dollars.
b) Compliance Statement
The financial report complies with Australian Accounting Standards, which include Australian equivalents to
International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report,
comprising the financial statements and notes thereto, complies with International Financial Reporting Standards
(IFRS).
c) Basis of Consolidation
The consolidated financial statements comprise the financial statements of Megado Gold Limited (‘the Company’) and
its subsidiaries (‘the Group’). Subsidiaries are those entities over which the Company has the power to govern the
financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential
voting rights that are currently exercisable or convertible are considered when assessing whether a Company controls
another entity.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses
and profit and losses resulting from intra-company transactions have been eliminated in full. Unrealised losses are also
eliminated unless costs cannot be recovered. Non-controlling interests in the results and equity of subsidiaries are
shown separately in the Statement of Profit or Loss and Other Comprehensive Income and Consolidated Statement of
Financial Position respectively.
d) Going Concern
As disclosed in the financial statements, the Company incurred a loss of $1,024,923 (2020: $1,217,535) and had net
cash outflows from operating and investing activities of $1,001,160 (2020: 1,097,401) and $2,768,890 (2020: 463,965)
respectively for year ended 31 December 2021. As at that date, the Company had net current assets of $1,132,813.
The ability of the entity to continue as a going concern is dependent on the Company successfully raising capital in the
near future to fund ongoing operations. This condition indicates a material uncertainty that may cast a significant
doubt about the entity’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets
and discharge its liabilities in the normal course of business. The financial statements have been prepared on the basis
that the entity is a going concern, which contemplates the continuity of normal business activity, realisation of assets
and settlement of liabilities in the normal course of business.
The entity has prepared the financial statements on a going concern basis. The Group may need to raise additional
capital via an equity raising from investors and if need be, reduce current levels of expenditure.
| 18 | Annual Report - 31 December 2021
Should the entity not be able to continue as a going concern, it may be required to realise its assets and discharge its
liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial
statements. The financial report does not include any adjustments relating to the recoverability and classification of
recorded asset amounts or liabilities that might be necessary should the entity not continue as a going concern.
e) Foreign Currency Translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Company’s controlled entities are measured using the
currency of the primary economic environment in which the entity operates (‘the functional currency’). The
functional and presentation currency of Megado Gold Limited is Australian dollars. The functional currency of the
US subsidiary is the US Dollar. The functional currency of the Ethiopian subsidiaries is the Ethiopian Birr.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the statement of profit or loss and other comprehensive income.
(iii) Group entities
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
▪
assets and liabilities for each statement of financial position presented are translated at the closing rate at
the date of that statement of financial position;
income and expenses for each statement of profit or loss and other comprehensive income are translated at
average exchange rates (unless this is not a reasonable approximation of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of equity.
▪
▪
On consolidation, exchange differences arising from the translation of any net investment in foreign entities are taken
to shareholders’ equity. When a foreign operation is sold or any borrowings forming part of the net investment are
repaid, a proportionate share of such exchange differences are recognised in the statement of profit or loss and other
comprehensive income, as part of the gain or loss on sale where applicable.
f) Segment Reporting
Operating segments are identified and segment information disclosed on the basis of internal reports that are regularly
provided to, or reviewed by, the Group’s chief operating decision maker which, for the Group, is the board of directors.
In this regard, such information is provided using different measures to those used in preparing the Statement of Profit
or Loss and Other Comprehensive Income and Statement of Financial Position. Reconciliations of such management
information to the statutory information contained in the annual financial report have been included.
g) Changes in accounting policies and disclosures
The Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are
relevant to the Company’s operations and effective for future reporting periods. It has been determined by the
Directors that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the
Company and therefore, no change will be necessary to Company accounting policies.
h) Exploration and evaluation expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration
and evaluation asset in the year in which they are incurred where the following conditions are satisfied:
(i)
the rights to tenure of the area of interest are current; and
(ii) at least one of the following conditions is also met:
| 19 | Annual Report - 31 December 2021
(a)
(b)
the exploration and evaluation expenditures are expected to be recouped through successful development
and exploration of the area of interest, or alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not at the balance date reached a stage which
permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and
active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies,
exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and
amortisation of assets used in exploration and evaluation activities. General and administrative costs are only included
in the measurement of exploration and evaluation costs where they are related directly to operational activities in a
particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying
amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the
exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than
the relevant area of interest) is estimated to determine the extent of the impairment loss (if any).
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate
of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset in previous years.
Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant
exploration and evaluation asset is tested for impairment and the balance is then reclassified to development. Where
an area of interest is abandoned, any expenditure carried forward in respect of that area is written off.
i) Income Tax
The income tax expense or benefit for the year is the tax payable on the current year’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary difference and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting year. Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Current tax assets and liabilities for the current and prior years 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 by the balance date.
Deferred income tax is provided on all temporary differences at the balance 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 that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint
ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that
the temporary difference 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 credits 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; or
| 20 | Annual Report - 31 December 2021
▪
the deductible temporary difference is associated with investments in subsidiaries, associates or interests in
joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the
temporary difference will reverse in the foreseeable future and taxable profit will be available against which the
temporary difference can be recognised.
The carrying amount of deferred income tax assets is reviewed at each balance 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 recognised.
Unrecognised deferred income tax assets are reassessed at each balance 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 recognised
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or 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.
j) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is
not recoverable from the Government. In these circumstances the GST is recognised as part of the cost of acquisition
of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are
shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the Government is included as part of receivables or payables
in the statement of financial position. Cash flows are presented in the statement of cash flows on a gross basis, except
for the GST component of investing and financing activities, which is receivable from or payable to the Government,
are disclosed as operating cash flows.
k) Impairment of non-financial assets other than goodwill
The Company assesses at each balance date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the
asset’s recoverable amount.
An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for
an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other
assets or Company of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases
the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount
of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit 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. Impairment
losses relating to continuing operations are recognised in those expense categories consistent with the function of the
impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a
revaluation decrease).
An assessment is also made at each balance date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used
to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset
in prior years.
| 21 | Annual Report - 31 December 2021
Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is
treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future years to allocate
the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
l) Cash and cash equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts
are shown within borrowings in current liabilities in the statement of financial position. 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.
m) Financial Instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions
of the financial instrument. Financial instruments (except for trade receivables) are measured initially at fair value
adjusted by transactions costs, except for those carried “at fair value through profit or loss”, in which case transaction
costs are expensed to profit or loss. Where available, quoted prices in an active market are used to determine the fair
value. In other circumstances, valuation techniques are adopted. Subsequent measurement of financial assets and
financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when
the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
Financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the
transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for
transaction costs (where applicable).
For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging
instruments, are classified into the following categories upon initial recognition:
▪
▪
▪
amortised cost;
fair value through other comprehensive income (FVOCI); and
fair value through profit or loss (FVPL).
Classifications are determined by both:
▪
▪
the contractual cash flow characteristics of the financial assets; and
the entities business model for managing the financial asset.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as
FVPL):
▪
▪
they are held within a business model whose objective is to hold the financial assets and collect its contractual
cash flows; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is
omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other
receivables fall into this category of financial instruments.
Financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
| 22 | Annual Report - 31 December 2021
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the
Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured
at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVPL,
which are carried subsequently at fair value with gains or losses recognised in profit or loss. All interest-related charges
and, if applicable, gains and losses arising on changes in fair value that are recognised in profit or loss.
Impairment
The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried
at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant
increase in credit risk.
n) Issued capital
Ordinary shares are classified as equity.
o) Current and Non-Current Classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or
consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be
realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are
classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is
held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there
is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All
other liabilities are classified as non-current.
p) Other Income
Interest income
Interest income is recognised on a time proportionate basis that takes into account the effective yield on the financial
asset.
q) Earnings per share
Basic earnings/loss per share is calculated as net profit/loss attributable to members, 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/loss attributable to members, adjusted for:
▪
▪
▪
costs 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 as expenses; and
other non-discretionary changes in revenues or expenses during the year 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.
r) Share-based payment transactions
(i) Equity settled transactions:
The Company provides benefits to individuals acting as, and providing services similar to employees (including
Directors) of the Company in the form of share-based payment transactions, whereby individuals render services
in exchange for shares or rights over shares (‘equity settled transactions’).
| 23 | Annual Report - 31 December 2021
There is currently an Employee Share Option Plan (ESOP) in place, which provides benefits to Directors and
individuals providing services similar to those provided by an employee. 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 the Black Scholes formula.
The cost of the equity settled transactions is recognised, together with a corresponding increase in equity, over
the year in which the performance conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (‘vesting date’).The cumulative expense recognised for equity settled
transactions at each reporting date until vesting date reflects (i) the extent to which the vesting year has expired
and (ii) the number of awards that, in the opinion of the Directors of the Company, will ultimately vest. This
opinion is formed based on the best available information at balance date.
No adjustment is made for the likelihood of the market performance conditions being met as the effect of these
conditions is included in the determination of fair value at grant date. The Statement of Profit or Loss and Other
Comprehensive Income charge or credit for a year represents the movement in cumulative expense recognised
at the beginning and end of the year. No expense is recognised for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition. Where the terms of an equity settled award are
modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense
is recognised for any increase in the value of the transaction as a result of the modification, as measured at the
date of the modification.
Where an equity settled award is cancelled, it is treated as if it had vested on the date of the 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 cost of equity-settled transactions with non-employees is measured by reference to the fair value of goods
and services received unless this cannot be measured reliably, in which case the cost is measured by reference to
the fair value of the equity instruments granted. The dilutive effect, if any, of outstanding options is reflected in
the computation of loss per share.
(ii) Cash settled transactions:
The Company may also provide benefits to employees in the form of cash-settled share-based payments, whereby
employees render services in exchange for cash. The cost of cash-settled transactions is measured initially at fair
value at the grant date using the Black-Scholes formula taking into account the terms and conditions upon which
the instruments were granted. This fair value is expensed over the year until vesting with recognition of a
corresponding liability. The liability is remeasured to fair value at each balance date up to and including the
settlement date with changes in fair value recognised in profit or loss.
s) Critical accounting estimates and judgements
The application of accounting policies requires the use of judgements, estimates and assumptions about carrying
values of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions are recognised in the year in which the estimate is revised if it affects only that year, or in the year of the
revision and future years if the revision affects both current and future years.
Share-based payment transactions
The Company measures the cost of equity-settled transactions and cash-settled share-based payments with
employees and third parties by reference to the fair value of the equity instruments at the date at which they are
granted. The fair value at the grant date is determined using the Black and Scholes option pricing model taking into
account the terms and conditions upon which the instruments were granted. During the period the group issued
performance options with non-market based vesting conditions. As such management have used significant judgement
in assessing the probability of the performance criteria being met.
| 24 | Annual Report - 31 December 2021
Deferred Exploration and evaluation Expenditure
The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable
or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves.
While there are certain areas of interest from which no reserves have been extracted, directors are of the continued
belief that such expenditure shouldn’t be written off since feasibility studies in such areas have not concluded.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may
have, on the consolidated entity based on known information. Other than as addressed in specific notes, there does
not currently appear to be either any significant impact upon the financial statements or any significant uncertainties
with respect to events or conditions which may impact the consolidated entity unfavourably as at the reporting date
or subsequently as a result of the COVID-19 pandemic.
t) New and amended standards adopted by the Group
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board that are mandatory for the current reporting period. The impact on the financial
performance and position of the Company from the adoption of the new or amended Accounting Standards and
Interpretations was not material. Any new or amended Accounting Standards or Interpretations that are not yet
mandatory have not been early adopted.
3. Income tax
(a) Income tax expense
Major component of tax expense for the year:
Current tax
Deferred tax
(b) Numerical reconciliation between aggregate tax expense recognised in
the statement of profit or loss and other comprehensive income and
tax expense calculated per the statutory income tax rate.
A reconciliation between tax expense and the product of accounting loss
before income tax multiplied by the Company’s applicable tax rate is as
follows:
Loss from continuing operations before income tax expense
Tax at the Australian rate of 30%
Share-based payments
Share issue costs
Non-deductible legal expenses
Unavailable tax loss
Income tax benefit not brought to account
Income tax expense
(c) Deferred tax
The following deferred tax balances have not been bought to account:
Assets
Losses available to offset against future taxable income
Unrealised foreign exchange
Share issue costs
Accrued expenses
Tax losses
Net deferred tax asset not recognised
| 25 | Annual Report - 31 December 2021
31-Dec-2021
$
31-Dec-2020
$
-
-
-
-
-
-
(1,024,923)
(307,477)
13,307
(13,428)
1,448
-
306,150
-
(1,217,535)
(365,261)
49,847
(13,428)
37,913
283,352
7,577
-
10,592
40,284
7,200
526,379
584,454
-
6,677
53,712
3,300
-
63,689
4. Cash and cash equivalents
Reconciliation of cash
Cash comprises of:
Cash at bank
Reconciliation of operating loss after tax to net cash flow from
operations
Loss after tax
Non-cash items
Exploration expenditure written off
Foreign exchange loss
Share based payments
Change in assets and liabilities
(Increase)/decrease in trade, other receivables and other assets
Increase/(decrease) in trade and other payables
Net cash flow used in operating activities
5. Other assets – current
Prepayments - Insurance
6. Receivables
GST receivable
31-Dec-2021
$
31-Dec-2020
$
1,238,301
5,021,401
(1,024,923)
(1,217,535)
-
13,050
44,356
42,282
(75,925)
(1,001,160)
38,167
38,167
20,961
20,961
90,992
22,258
166,156
(71,601)
(87,671)
(1,097,401)
34,275
34,275
67,136
67,136
Debtors, other debtors and GST receivable are non-interest bearing and generally receivable on 30-day terms. They
are neither past due nor impaired. The amount is fully collectible. Due to the short-term nature of these receivables,
their carrying value is assumed to approximate their fair value.
7. Deferred exploration and evaluation expenditure
Exploration and Evaluation phase - at cost
Opening balance
Acquisition of exploration tenements
Exploration and evaluation expenditure incurred during the year
Foreign exchange translation difference
Capitalisation of prepaid acquisition costs to exploration assets
Closing balance
3,855,566
-
2,578,797
(400,011)
-
6,034,352
-
2,750,000
545,865
276,713
282,988
3,855,566
The ultimate recoupment of costs carried forward for exploration expenditure is dependent on the successful
development and commercial exploitation or sale of the respective mining areas.
8. Trade and other payables
Trade payables
Accruals
140,616
24,000
164,616
347,635
11,000
358,635
Trade creditors and other creditors are non-interest bearing and generally payable on 30-day terms. Due to the short-
term nature of these payables, their carrying value is assumed to approximate their fair value.
| 26 | Annual Report - 31 December 2021
9. Issued Capital
(a) Issued and paid-up capital
Opening balance
Issue of shares - vendor shares
Issue of shares - $0.10 seed shares
Issue of shares - $0.16 seed shares
Issue of shares - $0.20 pre-IPO shares
Issue of shares - Directors
Shares issued as consideration for acquisition
Issue of shares - IPO
Transaction costs on share issue
Closing balance
(b) Ordinary shares
31-Dec-2021
$
31-Dec-2020
$
9,389,259
9,389,259
31-Dec-2021
31-Dec-2020
No. shares
71,500,003
-
-
-
-
-
-
-
-
71,500,003
$
9,389,259
-
-
-
-
-
-
-
-
9,389,259
No. shares
15,435,003
5,500,000
7,587,500
1,000,000
500,000
477,500
11,000,000
30,000,000
-
71,500,003
$
866,003
2,750
758,750
160,000
100,000
47,750
2,200,000
6,000,000
(745,994)
9,389,259
The Company does not have authorised capital nor par value in respect of its issued capital. Ordinary shares have the
right to receive dividends as declared and, in the event of a winding up of the Company, to participate in the proceeds
from sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares
entitle their holder to one vote, either in person or proxy, at a meeting of the Company.
(c) Capital risk management
The Company’s capital comprises share capital, reserves less accumulated losses amounting to a net equity of
$7,167,165 at 31 December 2021 (2020: $8,619,743). The Company manages its capital to ensure its ability to continue
as a going concern and to optimise returns to its shareholders.
The Company was ungeared at year end and not subject to any externally imposed capital requirements. Refer to note
17 for further information on the Company’s financial risk management policies.
(d) Share options
As at 31 December 2021, there were 17,050,000 unissued ordinary shares under options. The details of the options
are as follows:
Number
Exercise Price $
10,450,000
3,800,000
1,000,000
1,000,000
800,000
17,050,000
$0.20
$0.25
$0.25
$0.30
$0.30
Expiry Date
on or before 27 October 2024.
on or before 27 October 2022.
on or before 30 June 2023.
on or before 30 June 2023.
on or before 30 June 2025.
No option holder has any right under the options to participate in any other share issue of the Company or any other
entity. 800,000 options lapsed during the reporting period. No options were exercised during or since the period ended
31 December 2021.
| 27 | Annual Report - 31 December 2021
10. Reserves
Share based payment and option reserve
Foreign exchange translation reserve
Movements in Reserves
Share based payment and option reserve
Opening balance
Share-based payments
Cancellation of Performance A and B Options
Transaction costs on share issue
Closing balance
31-Dec-2021
$
31-Dec-2020
$
1,055,810
(84,491)
971,319
1,011,454
276,683
1,288,137
1,011,454
44,356
-
-
1,055,810
630,048
166,156
(2,750)
218,000
1,011,454
The Share capital, share based payment and option reserve is used to record the value of equity benefits provided to
Directors and executives as part of their remuneration and non-employees for their goods and services and to record
the premium paid on the issue of unlisted options.
Foreign exchange translation reserve
Opening balance
Foreign exchange translation difference
Closing balance
276,683
(361,174)
(84,491)
-
276,683
276,683
The foreign exchange differences arising on translation of foreign controlled entities are taken to the foreign currency
translation reserve.
11. Accumulated losses
Movements in accumulated losses were as follows:
Opening balance
Loss for the period
Closing balance
12. Auditor’s remuneration
The auditor of Megado Gold Limited is BDO Audit (WA) Pty Ltd.
Amounts received or due and receivable by the parent auditor for:
- an audit of the financial report
Other services:
- Preparation of Independent Accountant’s Report
(2,607,653)
(1,024,923)
(3,632,576)
(1,390,118)
(1,217,535)
(2,607,653)
40,500
-
40,500
22,500
12,000
34,500
13. Loss per Share
Loss used in calculating basic and dilutive EPS
(1,024,923)
(1,217,535)
Weighted average number of ordinary shares used in calculating basic
loss per share:
Effect of dilution:
Share options
Adjusted weighted average number of ordinary shares used in
calculating diluted loss per share:
Number of Shares Number of Shares
71,500,003
33,930,565
-
71,500,003
33,930,565
| 28 | Annual Report - 31 December 2021
There is no impact from 17,050,000 options outstanding at 31 December 2021 on the earnings per share calculation
because they are anti-dilutive. These options could potentially dilute basic EPS in the future. There have been no
transactions involving ordinary shares or potential ordinary shares that would significantly change the number of
ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of
these financial statements
14. Directors and Key Management Personnel Disclosures
(a) Remuneration of Directors and Key Management Personnel
Details of the nature and amount of each element of the emolument of each Director and key management personnel
of the Company for the financial year are as follows:
Short term employee benefits
Share based payments
Total remuneration
31 Dec 2021
$
31 Dec 2020
$
622,000
-
622,000
508,000
115,544
623,544
(b) Other transactions with key management personnel
Keystone Resources Consulting Pty Ltd, company in which Mr. Chris Bowden is a director, charged the Company
consulting fees of $132,000. The consulting fee is included in note 14(a) “Compensation of key management
personnel”. $13,750 was outstanding at year end (2020: nil).
Geocopter Pty Ltd, company in which Mr. Brad Drabsch is a director, charged the Company consulting fees of $60,000.
The consulting fee is included in note 14(a) “Compensation of key management personnel”. $6,250 was outstanding
at year end (2020: $5,000).
1918 Consulting Pty Ltd, company in which Mr. Aaron Bertolatti is a director, charged the Company consulting fees of
$150,000. The consulting fee is included in note 14(a) “Compensation of key management personnel”. $15,625 was
outstanding at year end (2020: nil).
Transactions with key management personnel were made at arm’s length at normal market prices and normal
commercial terms.
There were no other transactions with key management personnel for the year ended 31 December 2021.
15. Related Party Disclosures
(a) Key management personnel
For Director related party transactions please refer to note 14 “Key Management Personnel Disclosures”.
(b) Subsidiaries
The consolidated financial statements include the financial statements of Megado Gold Limited and the subsidiaries
listed in the following table:
Name of Entity
Megado Gold Inc.
Babicho Mining Plc
Chochi Mining Plc
Country of Incorporation
USA
Ethiopia
Ethiopia
31 December 2021
100%
80%
80%
31 December 2020
100%
80%
80%
Equity Holding
| 29 | Annual Report - 31 December 2021
16. Share based payments
(a) Recognised share based payment transactions
Share based payment transactions recognised either as operational expenses in the statement of profit or loss and
other comprehensive income or as capital raising costs in the equity during the period were as follows:
Employee and Director share based payments
Share based payments to suppliers
31 Dec 2021
$
31 Dec 2020
$
44,356
-
44,356
67,794
316,362
384,156
Share-based payment transactions have been recognised within the consolidated statement of profit or loss and other
comprehensive income and consolidated statement of financial positions as follows:
Share-based payment expense
Issued capital – transaction costs on share issue
44,356
-
44,356
166,156
218,000
384,156
(b) Employee and Director share based payments
The fair value at grant date of options granted during the reporting period was determined using the Black Scholes
option pricing model that takes into account the exercise price, the term of the option, the share price at grant date,
the expected price volatility of the underlying share and the risk-free interest rate for the term of the option.
The table below summarises options granted during the year ended 31 December 2021:
Grant Date Expiry date
Exercise
price per
option
10/05/2021 30/06/2025
$0.30
Balance
at start
of the
year
Number
-
Granted
during the
year
Number
800,000
Exercised
during the
year
Number
-
Expired
during the
year
Number
-
Balance at
end of the
year
Number
800,000
Exercisable at
end of the
year
Number
-1
1 Options vest on 1 July 2022 provided that the employee remains continuously employed during that time.
The expense recognised in respect of the above options granted during the year was $44,356 which represents the fair
value of the options.
The model inputs, not included in the table above, included:
a) Options were issued for nil consideration;
b) expected life of the options is 4 years;
c) share price at grant date was $0.165;
d) expected volatility of 100%;
e) expected dividend yield of nil; and
a risk-free interest rate of 0.75%.
The table below summarises options granted during the year ended 31 December 2020:
Grant Date Expiry date
Exercise
price per
option
23/06/2020 27/10/2024
$0.20
Balance at
start of
the year
Number
-
Granted
during the
year
Number
1,150,000
Exercised
during the
year
Number
-
Expired
during the
year
Number
-
Balance at
end of the
year
Number
1,150,000
Exercisable at
end of the
year
Number
1,150,000
| 30 | Annual Report - 31 December 2021
The model inputs, not included in the table above, included:
a) Options were issued for nil consideration;
b) expected life of the options is 4 years;
c) share price at grant date was $0.10;
d) expected volatility of 100%;
e) expected dividend yield of nil; and
f) a risk-free interest rate of 1.25%.
(c) Share based payment to suppliers
There were no unlisted options issued to suppliers during the year ended 31 December 2021.
The Company issued unlisted options to provide consideration to brokers, consultants and corporate advisors for
services rendered during the year ended 31 December 2020. These options were valued using the Black-Scholes option
pricing model as the value of the work performed could not be reliably determined.
The table below summarises options granted during the year ended 31 December 2020:
Expired
during the
year
Exercised
during
the year
Number Number
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
end of the
year
Number
1,050,000
350,000
250,000
1,000,000
1,000,000
3,650,000
Exercisable at
end of the
year
Number
1,050,000
350,000
250,000
1,000,000
1,000,000
3,650,000
Grant Date Expiry date
Exercise
price per
option
23/06/2020 27/10/2024
23/06/2020 27/10/2022
30/06/2020 27/10/2022
13/08/2020 30/06/2023
13/08/2020 30/06/2023
$0.20
$0.25
$0.25
$0.25
$0.30
Balance at
start of the
year
Number
-
-
-
-
-
-
Granted
during the
year
Number
1,050,000
350,000
250,000
1,000,000
1,000,000
3,650,000
The model inputs, not included in the table above, included:
a) Options were issued for nil consideration;
b) expected life of the options ranged from 3 to 4 years;
c) share price at grant date ranged from $0.10 to $0.20;
d) expected volatility of 100%;
e) expected dividend yield of nil; and
f) a risk-free interest rate of 1.25%.
17. Financial Risk Management
The Group’s activities expose it to a variety of financial risks including interest rate risk, price risk, credit risk and
liquidity risk. The Group’s overall risk management program focuses on the unpredictability of the financial markets
and seeks to minimise potential adverse effects on the financial performance of the Group. The Group does not use
derivative financial instruments; however the Group uses different methods to measure different types of risk to which
it is exposed.
These methods include sensitivity analysis in the case of interest rate and other price risks and aging analysis for credit
risk. Risk management is carried out by the Board of Directors with assistance from suitably qualified external and
internal advisors. The Board provides written principles for overall risk management and further policies will evolve
commensurate with the evolution and growth of the Group.
| 31 | Annual Report - 31 December 2021
(a) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of
funding through an adequate amount of committed credit facilities and the ability to close out market positions. The
Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity
profits of financial assets and liabilities. As at the reporting date the Group had sufficient cash reserves to meet its
requirements. The Group therefore had no credit standby facilities or arrangements for further funding in place.
The financial liabilities of the Group at the reporting date were trade payables incurred in the normal course of
business. These were non-interest bearing and were due within the normal 30-60 days terms of creditor payments.
The Group does not consider this to be material to the Group and have therefore not undertaken any further analysis
of risk exposure.
(b) Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value
of financial instruments. The Company’s exposure to market risk for changes to interest rate risk relates primarily to
its earnings on cash. The Company manages the risk by investing in short term deposits.
Interest rate sensitivity
The following table demonstrates the sensitivity of the Company’s Statement of Profit or Loss and Other
Comprehensive Income to a reasonably possible change in interest rates, with all other variables constant.
Effect on equity
including retained
earnings ($)
Increase/(Decrease)
Effect on equity
including retained
earnings ($)
Increase/(Decrease)
Effect on Post
Tax Loss ($)
Effect on Post
Tax Loss ($)
Change in Basis Points
Increase 75 basis points
Decrease 75 basis points
2021
9,287
(9,287)
9,287
(9,287)
2020
37,661
(37,661)
37,661
(37,661)
A sensitivity of 75 basis points has been used as this is considered reasonable given the current level of both short term
and long-term Australian Dollar interest rates. The change in basis points is derived from a review of historical
movements and management’s judgement of future trends.
(c) Credit Risk Exposures
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Group. The Group has adopted the policy of dealing with creditworthy counterparties and obtaining sufficient
collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The
Group measures credit risk on a fair value basis. The Group does not have any significant credit risk exposure to a single
counterparty or any group of counterparties having similar characteristics.
The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses,
represents the Group’s maximum exposure to credit risk without taking account of the fair value of any collateral or
other security obtained.
Cash and cash equivalents
Receivables
| 32 | Annual Report - 31 December 2021
2021
$
1,238,301
20,961
2020
$
5,021,401
67,136
(d) Capital Risk Management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can
continue to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital. The Group’s capital includes ordinary share capital, partly paid shares and
financial liabilities, supported by financial assets.
The Group’s capital includes mainly ordinary share capital and financial liabilities supported by financial assets. In
order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit
facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Group’s capital risk
management is the current working capital position against the requirements of the Group to meet exploration
programmes and corporate overheads. The Group’s strategy is to ensure appropriate liquidity is maintained to meet
anticipated operating requirements, with a view to initiating appropriate capital raisings as required.
18. Significant events after the reporting date
No other matter or circumstance has arisen since 31 December 2021 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs
in future financial years.
19. Parent Entity Information
The following details information related to the parent entity, Megado Gold Limited, at 31 December 2021. The
information presented here has been prepared using consistent accounting policies as presented in Note 2.
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
31 Dec 2021
$
1,297,333
6,975,110
(164,616)
(164,616)
6,810,494
9,389,259
1,055,810
(3,634,576)
6,810,493
31 Dec 2020
$
5,122,698
8,149,694
(358,635)
(358,635)
7,791,059
9,389,259
1,011,453
(2,609,653)
7,791,059
Loss of the parent entity
Total comprehensive loss of the parent entity
(1,024,923)
(1,024,923)
(1,219,535)
(1,219,535)
Other Commitments and Contingent Liabilities
The Company had no commitments and no contingent liabilities as at 31 December 2021.
20. Segment Information
The Group has identified its operating segments based on the internal reports that are reported to the Managing
Director (the chief operating decision maker) in assessing performance and in determining the allocation of resources.
The Board as a whole will regularly review the identified segments in order to allocate resources to the segment and to
assess its performance.
| 33 | Annual Report - 31 December 2021
The Group operates predominately in one industry, being the exploration of Gold. The main geographic areas that the
entity operates in are Australia and Ethiopia. The parent entity is registered in Australia. The Group’s exploration assets
are located in the Ethiopia. The following table present revenue, expenditure and certain asset and liability information
regarding geographical segments for the year ended 31 December 2021 and 31 December 2020:
Year ended 31 December 2021
Other income
Interest income
Segment revenue
Result
Loss before tax
Income tax expense
Loss for the year
Asset and liabilities
Segment assets
Segment liabilities
Year ended 31 December 2020
Other income
Interest income
Segment revenue
Result
Loss before tax
Income tax expense
Loss for the year
Asset and liabilities
Segment assets
Segment liabilities
Australia
$
Ethiopia
$
Total
6,644
-
6,644
(1,024,923)
-
(1,024,923)
-
-
-
-
-
-
6,644
-
6,644
(1,024,923)
-
(1,024,923)
1,225,115
164,616
6,106,666
-
7,331,781
164,616
1,488
-
1,488
-
-
-
1,488
-
1,488
(1,126,543)
(90,992)
-
-
(1,126,543)
(90,992)
(1,217,535)
-
(1,217,535)
5,115,365
358,635
3,863,012
-
8,978,377
358,635
21. Dividends
No dividend was paid or declared by the Company in the year ended 31 December 2021 or the period since the end of
the financial year and up to the date of this report. The Directors do not recommend that any amount be paid by way
of dividend for the financial year ended 31 December 2021.
22. Contingent assets and liabilities
There are no known contingent assets or liabilities as at 31 December 2021.
23. Commitments
There are no known commitments as at 31 December 2021.
| 34 | Annual Report - 31 December 2021
DIRECTORS DECLARATION
In the directors' opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position
as at 31 December 2021 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors.
Michael Gumbley
Managing Director
Brooklyn, New York
18 March 2022
| 35 | Annual Report - 31 December 2021
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth, WA 6000
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF MEGADO GOLD
LIMITED
As lead auditor of Megado Gold Limited for the year ended 31 December 2021, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Megado Gold Limited and the entities it controlled during the period.
Phillip Murdoch
Director
BDO Audit (WA) Pty Ltd
Perth, 18 March 2022
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth, WA 6000
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Megado Gold Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Megado Gold Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 31 December 2021, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an
Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form
part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Material uncertainty relating to going concern
We draw attention to Note 2(d) in the financial report which describes the events and/or conditions
which give rise to the existence of a material uncertainty that may cast significant doubt about the
Group’s ability to continue as a going concern and therefore the Group may be unable to realise its
assets and discharge its liabilities in the normal course of business. Our conclusion is not modified in
respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Accounting for Exploration and Evaluation Assets
Key audit matter
How the matter was addressed in our audit
At 31 December 2021, we note that the carrying value
Our procedures included, but were not limited to:
of the Deferred Exploration and Evaluation Asset is
significant to the financial statements, as disclosed in
note 7.
(cid:127)
Obtaining a schedule of the areas of interest held
by the Group and assessing whether the rights to
tenure of those areas of interest remained current
As a result, we considered it necessary to assess
at balance date;
whether any facts or circumstances exist to suggest
that the carrying amount of this asset may exceed its
recoverable amount.
(cid:127)
Considering the status of the ongoing exploration
programmes in the respective areas of interest by
holding discussions with management, and
Judgement is applied in determining the treatment of
reviewing the Group’s exploration budgets, ASX
exploration expenditure in accordance with Australian
announcements and directors’ minutes;
Accounting Standard AASB 6 Exploration for and
Evaluation of Mineral Resources. In particular:
(cid:127) Whether the conditions for capitalisation are
satisfied;
(cid:127)
(cid:127)
Considering whether any such areas of interest had
reached a stage where a reasonable assessment of
economically recoverable reserves existed;
Verifying, on a sample basis, exploration and
(cid:127) Which elements of exploration and evaluation
evaluation expenditure capitalised during the year
expenditures qualify for recognition; and
for compliance with the recognition and
(cid:127) Whether facts and circumstances indicate that the
measurement criteria of AASB 6;
exploration and evaluation assets should be tested
(cid:127)
Considering whether any facts of circumstances
for impairment.
existed to suggest impairment testing was
required; and
(cid:127)
Assessing the adequacy of the related disclosures
in Note 7 of the Financial Report.
2
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 31 December 2021, but does not include
the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
3
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 9 to 12 of the directors’ report for the
year ended 31 December 2021.
In our opinion, the Remuneration Report of Megado Gold Limited, for the year ended 31 December
2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Phillip Murdoch
Director
Perth, 18 March 2022
4
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as
follows. The information is current at 11 March 2022.
Distribution of Share Holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
TOTAL
Number of Holders
15
70
91
229
135
540
Ordinary Shares
Number of Shares
2,624
242,998
754,475
10,215,252
60,284,654
71,500,003
There were 98 holders of ordinary shares holding less than a marketable parcel.
Top Twenty Share Holders (excluding restricted securities)
The names of the twenty largest holders of quoted equity securities are listed below:
%
0.00
0.34
1.06
14.29
84.31
100.00
Name
PROFUSION DISCOVERY FUND LTD
MRS MARTA LUISA ORTIZ ORTEGA
JAWAF ENTERPRISES PTY LTD
MR PABLO ARTINANO DEL RIO
SOL SAL INVESTMENTS PTY LTD
MR MICHAEL KENNETH FRANCIS GUMBLEY
MR AARON DEAN BERTOLATTI
CROWN LUGGERS PTY LTD
ALSTER INVESTMENT LLC
MS LILLIAN RUTH RODRIGUEZ SIMS + MR PEDRO RODRIGUEZ FERNANDEZ
NORFOLK BLUE PTY LTD
FLOURISH SUPER PTY LTD
MR ANDRES ARTINANO
CRAU MINING SL
FIKRU BIRHANU MOTUMA
DORRAN PTY LTD
E & E HALL PTY LTD
LILLIAN RUTH RODRIGUEZ SIMS
MS PATRICIA FERNANDEZ-SANCHO BERNAL
MR BRADLEY JAMES DRABSCH
Total quoted top twenty share holders
Total remaining quoted holders balance
Quoted Shares
4,000,000
3,745,763
3,162,103
3,138,164
2,821,500
2,305,001
2,283,334
2,008,667
1,860,955
1,400,000
1,340,558
1,296,500
1,141,314
1,100,781
1,012,816
1,000,000
833,333
795,889
710,980
600,000
36,557,658
34,942,345
%
5.59
5.24
4.42
4.39
3.95
3.22
3.19
2.81
2.60
1.96
1.87
1.81
1.60
1.54
1.42
1.40
1.17
1.11
0.99
0.84
51.12
48.88
| 41 | Annual Report - 31 December 2021
Restricted Securities
The Company has the following Restricted Securities on issue as at the date of this report.
Securities restricted for 24 months from date of quotation
Securities
Restriction Period
28,451,205 Ordinary Fully Paid Shares
24 months from date of quotation
15,400,000 Options1
24 months from date of quotation
Notes:
1. 10,450,000 Options exercisable at $0.20 each and with an expiry date of 4 years from the date that the company lists on the
ASX, 2,950,000 Options exercisable at $0.25 each and with an expiry date of 2 years from the date that the company lists on
the ASX, 1,000,000 options exercisable at $0.25 each and with an expiry date of 30 June 2023 and 1,000,000 options
exercisable at $0.30 each and with an expiry date of 30 June 2023.
Substantial Shareholders
Name
PROFUSION DISCOVERY FUND LTD
MRS MARTA LUISA ORTIZ ORTEGA
Unlisted Options
Class
Options over ordinary shares exercisable at
$0.20 on or before 27 October 2024.
Shares
4,000,000
3,745,763
%
5.59
5.24
Number
Holders with more than 20%
10,450,000 Keystone Resources Pty Ltd 2,500,000 Options
Options over ordinary shares exercisable at
$0.25 on or before 27 October 2022.
3,800,000 N/A
Options over ordinary shares exercisable at
$0.25 on or before 30 June 2023.
Options over ordinary shares exercisable at
$0.30 on or before 30 June 2023.
Options over ordinary shares exercisable at
$0.30 on or before 30 June 2025.
On-Market Buy Back
There is no current on-market buy back.
1,000,000
CG Nominees (Australia) Pty Ltd 1,000,000 Options
1,000,000
CG Nominees (Australia) Pty Ltd 1,000,000 Options
800,000 Ms Kirmat Noormohamed 1,000,000 Options
Voting Rights
All ordinary shares carry one vote per share without restriction. Options have no voting rights.
Use of Proceeds
In accordance with listing rule 4.10.19, the Company confirms that it has used cash and assets in a form readily
convertible to cash in a way consistent with its business objectives during the financial year ended 31 December
2021.
| 42 | Annual Report - 31 December 2021
LICENCE
NUMBER
80%
100%
80%
100%
100%
100%
Schedule of Tenements
TENEMENTS
LICENCE NUMBER
GRANT DATE
REGIONAL STATE
LAND AREA
EL\00106\2019
26/09/2019
MOM\EL\00556\2019
19/08/2020
Oromia
Oromia
131.96
62.08
MOM\EL\2013\276
06/01/2014
Benishangul-Gumuz
137.28
BABICHO
CHAKATA
CHOCHI
DAWA
Oromia
Oromia
Oromia
41.22
227.32
138.98
MOM\EL\00813\2019
19/08/2020
DERMI DAMA
MOM\EL\00175\2020
In Application
MORMORA
EL\00313\2019
26/09/2019
Ethiopian Project Locations
| 43 | Annual Report - 31 December 2021
IMPORTANT INFORMATION AND DISCLAIMERS
Forward Looking Statements
This announcement contains ‘forward-looking information’ that is based on the Company’s expectations, estimates and
projections as of the date on which the statements were made. This forward-looking information includes, among other
things, statements with respect to the Company’s business strategy, plans, development, objectives, performance,
outlook, growth, cash flow, projections, targets and expectations, mineral reserves and resources, results of exploration
and related expenses. Generally, this forward-looking information can be identified by the use of forward-looking
terminology such as ‘outlook’, ‘anticipate’, ‘project’, ‘target’, ‘potential’, ‘likely’, ‘believe’, ‘estimate’, ‘expect’, ‘intend’,
‘may’, ‘would’, ‘could’, ‘should’, ‘scheduled’, ‘will’, ‘plan’, ‘forecast’, ‘evolve’ and similar expressions. Persons reading this
announcement are cautioned that such statements are only predictions, and that the Company’s actual future results or
performance may be materially different. Forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the Company’s actual results, level of activity, performance or
achievements to be materially different from those expressed or implied by such forward-looking information.
Competent Person Statement
Information in this “ASX Announcement” relating to Exploration Targets, Exploration Results, Mineral Resources or Ore
Reserves has been compiled by Dr Chris Bowden who is a Fellow and Chartered Professional of the Australian Institute of
Mining and Metallurgy and is an Executive Director of Megado Gold Ltd.
He has sufficient experience that is relevant to the types of deposits being explored for and qualifies as a Competent
Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves” (JORC Code 2012 Edition). Dr Bowden has consented to the release of the announcement.
| 44 | Annual Report - 31 December 2021
megadogold.com.au
Level 12, 197 St Georges Terrace,
Perth, Western Australia 6000
Info@megadogold.com.au
Revision: 1
Date Issued: 00/00/