Annual Report
MRG Metals Ltd
ABN: 83 148 938 532
For the Year ended 30 June 2020
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Contents
Review of Operations
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Statement of Financial Position
Statement of Profit or Loss and Other Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Directory
2
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
3
Review of Operations
Highlights
The year ended 30 June 2020 saw MRG Metals Ltd (“MRG” or “Company”) explore its highly prospective Heavy
Mineral Sands (“HMS”) project in Mozambique. Exploration to date has shown excellent results.
The Company’s Swedish joint venture (“JV”) Norrliden project continues to be marketed for sale.
Projects
MOZAMBIQUE HMS Project
During the year, the Company continued extensive exploration on its Mozambique HMS project on the granted
Corridor Central and Corridor South tenements.
Following on from its Airborne Magnetic Survey conducted in 2019, 13 discrete targets were identified. These targets
are Koko Massava, Poiombo, Nhacutse, Bungane, Zulene, Saia, Rio Chegua, Malahice, Mabanjane, Norte
and Trez.
Figure 1: HMS Targets at Corridor Central and Corridor South tenements.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
4
The Company initially used cost effective wide spaced Auger drilling to test HMS grade close to surface (down to 12
metres).Two Aircore drill programs were conducted during the year at the Koko Massava and Poiombo targets as a
follow up to high grade HMS results achieved from Auger drilling.
An extensive Aircore drill program at the Koko Massava target resulted in a maiden JORC Resource of 1,423 Million
Tonnes @ 5.2% total heavy mineral (THM) using a cut-off grade of 4% THM
Figure 2: Regional overview map of the Company’s Corridor projects, showing relative locations to nearby deposits.
Koko Massava
• Hand Auger drilling at Koko Massava identified a massive target with very good grades to +10m depth over
+20km2.
• Wide spaced Aircore drilling (mainly 50 metres deep - see Announcements 16 December 2019, 20 January 2020,
3 February 2020 and 18 February 2020) delivered the following achievements:
o Definition of an approximate 20km2 highly mineralised zone (excluding townships) with assay results averaging
>4.5% Total Heavy Minerals (THM) from surface to end of hole; and
o A high grade zone of 5km x 1km averaging >5% THM from surface to end of hole.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
5
Figure 3: Location map of Koko Massava Aircore drillholes reported previously and new holes included in this update, plus hand auger
holes, showing summary laboratory data for THM% grades. Aircore drillhole names are shortened for map presentation, but are all
prefixed by ‘19CC’.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
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Figure 4: Location map of Koko Massava aircore and hand Auger drillholes showing the surface footprint of high grade (>5% THM
downhole average) zones now defined with the complete data set.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
7
Maiden Mineral Resource Estimate (MRE) for Koko Massava prospect completed and announced on 22
April 2020 and included:
- A total JORC Mineral Resource of 1,423 Million Tonnes @ 5.2% total heavy mineral (THM) using a cut-off
grade of 4% THM (refer Table 1).
- An Exploration Target at Koko Massava in the range of 650 - 967 Million Tonnes @ 4.5 – 5.0%THM using cut-
off grades 3% and 4%THM (refer Table 2).
Main attributes:
- The entire Mineral Resource lies outside of local townships and villages (refer Figure 1).
-
Inclusive of 32 composite mineralogy samples processed by CSIRO.
Significant tonnages at grades well above cut-off (refer Figure 3 - Grade Tonnage Curve):
• 593Mt @ 6.2% THM (5.0% cut-off)
• 252Mt @ 7.3% THM (6.0% cut-off)
• 113Mt @ 8.3% THM (7.0% cut-off)
A valuable heavy mineral (VHM) assemblage comprising Ilmenite 42%, low Ti Ilmenite/titanomagnetite 7%,
Zircon 2%, Rutile 1%, Leucoxene 1% and Monazite 0.2%. Several zones show sub-sets of higher VHM
assemblage indicating further potential for optimization. Significant proportions of titanomagnetite is not
included within the valuable heavy mineral assemblage.
Table 1: Summary of JORC (2012) Mineral Resource Estimate for Koko Massava.
Table 2: Summary of Exploration Target for Koko Massava.
Summary of Mineral Resources(1)THM Assemblage(2)AreaMineral Resource MaterialIn Situ THMBDTHMSLIMESOSILMAILMLTILMLTILMTMRUTLXZIRTIMAGKYASILCHRMMOTHNMOTH(Mt)(Mt)(gcm3)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)Koko MassavaIndicated289141.744.92011127381112734114Koko MassavaInferred1,133601.755.31611128371122734113Total1,423741.745.21711128371122734113Notes: (1) Mineral resources reported at a cut-off grade of 4% THM (2) Mineral assemblage is reported as a percentage of in situ THM content.Summary of Exploration Target (1)THM Assemblage(2)MaterialIn Situ THMBDTHMSLIMESOSILMAILMLTILMLTILMTMRUTLXZIRTIMAGKYASILCHRMMOTHNMOTH(Mt)(Mt)(gcm3)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)(%)Koko MassavaExploration Target650 - 96732 - 441.744.5 - 5.0 1511127 - 2837112272 - 34114TotalExploration Target650 - 96732 - 441.744.5 - 5.0 1511127 - 2837112272 - 34114Notes:AreaMineral Resource Category (1) Exploration Target reported at a cut-off grades of 3% - 4% THM (2) Mineral assemblage is reported as a percentage of in situ THM content.For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
8
Figure 5: Grade-tonnage curve showing material tonnes versus THM grade (and Slime) at various cut-off grades for the global mineral
resource at Koko Massava. Cut-off grade is shown in the top row of the table, with corresponding tonnage, average THM% grade and
Slime % grade in the column below it.
Metallurgical Testwork:
Subsequent to defining a maiden JORC Resource, the Company carried out Metallurgical Testwork, which was
concluded after year end and reported on 26 August 2020.
Key Highlights:
• Metallurgical testwork was undertaken on an initial 100kg bulk sample from Koko Massava and delivered a sizeable
upgrade in Ilmenite product.
• Ultra Low Temperature Roasting (ULTR) under reduced conditions produced a quality upgraded Ilmenite product
with 47.1% TiO2, 0.9% SiO2, 0.5% Al2O3, 0.1% Cr2O3 and <20ppm U+Th.
• The resultant upgraded TiO2 Ilmenite product has potential to be used as a direct feedstock for sulphate pigment
manufacture or as a feedstock for titanium slag manufacture.
• Further upgrade potential to an Ilmenite product approaching 50% TiO2 exists with next step optimization.
• This metallurgical result supports the maiden JORC Resource of 1.423 billion tonnes at 5.2% total heavy mineral
(THM) and establishes Koko Massava as a globally significant HMS asset.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
9
Poiombo
Hand Auger drilling at Poiombo identified a target footprint of up to 5km east-west and at least 2.5km wide in the
central portion, representing a mineralised footprint of >12 km2.
Figure 6: Location map of hand Auger holes in the Poiombo target area showing new summary laboratory data (white halo) for THM
grades. Certain hole numbers are shortened (e.g. HA237) for presentation but are prefixed by ‘20CS’
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
10
Aircore drilling at Poiombo resulted in the following:
- Assay results show consistent high grades, with some holes showing exceptional grades:
o Hole 20CSAC355 – 36m @ 7.09% THM from surface
o Hole 20CSAC349 – 36m @ 5.93% THM from surface
o Hole 20CSAC356 – 51m @ 5.40% THM from surface
- A significant high grade Strandline deposit is apparent.
- A large zone of high grade HMS, measuring greater than 5km * 2.7km is now confirmed by Auger and Aircore
drilling and is still open at >5% THM to the northeast and southeast.
Figure 7: Location map of Poiombo target reconnaissance Aircore drillholes included in this update showing summary laboratory data for
THM% grades.
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Consolidated Financial Statements
30 June 2020
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Nhacutse and Bungane
Hand Auger drilling at Nhacutse identified a high grade THM target footprint of up to 2.5km * 1.5km wide. Best
result was Hole 20CSHA288 – 12m @ 5.98% THM.
Hand Auger drilling at Bungane identified the highest grade THM Auger result for Hole 20CSHA312 of 12m @
7.79% THM.
Figure 8: Location map of hand auger holes in the Nhacutse and Bungane target areas showing summary laboratory data for THM
grades. Hole numbers have been shortened for presentation, but are all prefixed by “20CS”.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
12
Zulene, Viaria and Saia
Hand Auger drilling at Zulene identified a high grade THM target footprint of up to 2.0km * 1.5km wide. Best
result was Hole 20CSHA413 – 12m @ 6.30% THM.
Hand Auger drilling at Viaria had a best result from Hole 20CSHA425 of 12m @ 4.52% THM.
Hand Auger drilling at Saia had a best result from Hole 20CSHA399 of 12m @ 4.03% THM.
Figure 9: Location map of hand auger holes in the Zulene, Viaria and Saia target areas showing summary laboratory data for THM
grades. Hole numbers have been shortened for presentation, but are all prefixed by “20CS”.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Mineralogy:
Bulk sampling returned high quality mineral assemblage from multiple targets in the Corridor Heavy Minerals Sand
Targets, key results including:
Target
Nhacutse
Combined Ilmenite
/ leucoxene
Up to 68.29%
Koko Massava East
Poiombo
50.45%
46.50%
Rutile
2.17%
0.84%
0.75%
Zircon
2.91%
1.93%
1.78%
These results indicate a higher unit value assemblage occurs in heavy mineral sand on the eastern side of MRG’s
Corridor tenements.
Linhuane Tenement:
This Project is under application and is located in Gaza Province covering an area of 113km2 including a 20km strike
of a prospective palaeodune feature, adjacent to the present coast. Open file reports indicate Rio Tinto conducted
shallow reconnaissance exploration drilling within the licence. Auger drill holes were reportedly 500m apart on drill
traverses 3km apart. Subsequent to year end, the Company submitted further information to the National Mining
Institute (“INAMI”) and awaits advice that it is approved and forwarded to the Minister of the Ministry of Mineral
Resources (“MIREME”) for final approval.
Marao & Marruca Tenements:
This project covers an ancient Heavy Mineral strandline. The Marao licence was previously drilled by Rio Tinto and
the Marruca application along strike is untested. Open file reports show Rio Tinto undertook shallow reconnaissance
exploration on a small portion of the Marao licence 6842L. Surface mineralisation extends up to 7km along strike with
drill holes 1km apart. Combined prospective palaeodune strike length of 75km, inland from an interpreted
palaeoshoreline. The extent of the mineralisation has never been systematically tested at depth or along strike.
Subsequent to year end, the Company was advised that INAMI had approved and forwarded Mara0 and Marruca
tenementa applications to the Minister of the Ministry of Mineral Resources (“MIREME”) for final approval.
SWEDEN
Norrliden
Norrliden has a JORC Mineral Resource Estimate (“MRE”) and a preliminary mine optimisation has been complete
for its Norra and Bjurfors polymetallic sulphide deposits following a review and validation of historic diamond
drilling data from across the project area.
Highlights from the MRE include:
•
•
•
Norra: 3.1Mt @ 2.3% Zn, 0.7% Cu, 0.2% Pb, 0.47g/t Au 39g/t Ag (1% ZnEq cut-off, 3.33t/m³ density)
Bjurfors: 2.1Mt @ 1.9% Zn, 0.1% Cu, 0.1% Pb, 0.15g/t Au, 15g/t Ag (1% ZnEq cut-off, 3.33t/m³ density)
Global: 5.2Mt @ 2.1% Zn, 0.4% Cu, 0.2% Pb, 0.3g/t Au, 29g/t Ag (1% ZnEq cut-off, 3.33t/m³ density)
The addition of 2.1Mt of resource material extensional to the previously mined open-pit at Bjurfors deposits
(Mellersta & Västra) has increased the global MRE for Norrliden, albeit diluting the global grade. A previous MRE
for the Norra deposit reported in 2012 was 1.497Mt @ 4.4% Zn, 0.8% Cu, 0.4% Pb, 0.8 g/t Au, 59.9 g/t Ag
(Wheeler, 2012).
Highlights from the mine optimisation include:
Norra: 1.8Mt @ 4.13% ZnEq
•
Bjurfors: 118Kt @ 5.29% ZnEq
•
•
Optimisation analysis has demonstrated that the Norra ore body is economically robust if mined by open pit
methods. Main attributes include its shallow depth, good metal grades over consistent thicknesses, sufficient mass
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Consolidated Financial Statements
30 June 2020
14
Optimisation analysis has demonstrated that the Norra deposit is not significantly sensitive to price changes.
There is also a new resource addition at Burfors deposit, where a minable pit is also possible at lower prices
and metallurgy which is amenable to reasonable recoveries and successful production of copper and zinc
concentrates.
•
•
with the appropriate strip ratios and as long as capital investment could be kept to a minimum by running the
Bjurfors deposits as satellite pits to the main processing facilities at Norra or through contract mining.
•
profit margin of US$111M for Norra and US$2.4M for Bjurfors.
•
demonstrated that a purely open-cut operation remains the more profitable option until such time as the
mineralisation at Norra can be shown to be open at depth; further deep diamond drilling is required to determine if
the mineralisation at Norra is open at depth.
This early stage study, with numerous go-forward risks needing to be taken into account, returned a total
An underground stope development analysis was also completed for both deposits although results
Resource
Category
Measured
Indicated
Inferred
TOTAL
Tonnes
(Mt)
1.3
1.8
2.1
5.2
Zn Grade
(%)
2.6
2.4
1.6
2.1
Cu Grade
(%)
0.7
0.3
0.4
0.4
Pb Grade
(%)
0.2
0.2
0.1
0.2
Au Grade
(%)
0.6
0.3
0.2
0.3
Ag Grade
(%)
40
30
22
29
Table 1: Global MRE for the Norrliden Project. Calculated via Ordinary Kriging using a 1% ZnEq cut-off and a density of 3.33 t/m
The Company, together with their Joint Venture Partner, Mandalay Resources, continue to market the Project for
sale. If a sale was to be made, it would factor in the Company’s right to 50% ownership under the joint venture
agreement. The Company is expected to receive reimbursement for its exploration expenditure before any balance is
split between the Company and Mandalay per their respective shares.
TENEMENTS:
The Tenements held by the Company at reporting date are as follows:
Project
Norrliden
Malanaset
Malanaset
Corridor Central
Corridor South
Linhuane
Marao
Marruca
Tenement
K nr 1
nr 100
nr 101
EL 6620
EL 6621
7423L
6842L
6846L
% Owned
10
10
10
100
100
100
100
100
Note
Application
Application
Application
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Consolidated Financial Statements
30 June 2020
15
Directors’ Report
The Directors of MRG Metals Ltd present their Report together with the financial statements of the consolidated
entity, being MRG Metals Ltd (‘MRG’ or ‘the Company’) and its controlled entities, MRG Metals (Australia) Pty Ltd,
MRG Metals (Exploration) Pty Ltd, Sofala Resources Pty Ltd, Trophosys Pty Ltd, Sofala Mining & Exploration Lda,
Sofala Mining & Exploration I Lda, Sofala Mining & Exploration II Lda, Sofala Mining & Exploration III Lda and
Sofala Mining & Exploration IV Lda, (‘the Group’) for the year ended 30 June 2020 and the Independent Auditor’s
Report thereon.
Director details
The following persons were directors of MRG Metals Ltd during or since the end of the financial year.
Mr Andrew Van Der Zwan
BE Chemical Engineering (hons)
Independent Non Executive Director since 07/01/2013
Chairman since 08/10/2013
Director since 14/02/2011
Andrew has over 30 years engineering and commercial experience, both local and international. He was a Non
Executive Director of Gulfx Ltd for 11 years and was employed in various senior positions within the worldwide
operations of Exxon Mobil for 17 years.
Other current directorships:
Argo Exploration Ltd (ASX: AXT) since 19/03/2013
JVG Global Ltd (ASX: JVG) since 12/05/2019
Previous directorships (last 3 years):
None
Interests in shares:
31,906,679 shares
Interest in options:
3,590,000 August 2020 options
15,933,179 December 2020 options
Mr Shane Turner
CA, Bachelor of Business
Independent Non-Executive Director
Director since incorporation 24/01/2011
Shane is a Chartered Accountant and has over 30 years financial and accounting experience. He has been employed
with KPMG, a large regional public accounting practice, operated his own public accounting practice and now is
employed with RSM Australia. He has been Company Secretary and CFO of White Rock Minerals (ASX: WRM)
since August 2015. He was a Non Executive Director and Company Secretary for Metminco (ASX: MNC) for 2
years.
Other current directorships:
None
Previous directorships (last 3 years):
None
Interests in shares:
21,815,842 shares
Interest in options:
1,520,000 August 2020 options
8,010,042 December 2020 options
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Mr Christopher Gregory
BSc Geology, MAusIMM, MAIG, FSEG, MAICD
Independent Non-Executive Director since 12/08/2013
Director since 12/08/2013
16
Chris has extensive global minerals industry experience over 38 years, at both technical and executive levels. Career
foundation of 22 years in the Asia-Pacific region with Rio Tinto. Past Vice President – Operational Geology at
Mandalay Resources (TSX: MND). Founding Partner and Director of Sasak Minerals and SensOre (Private).
Other current directorships:
None
Previous directorships (last 3 years):
None
Interests in shares:
60,563,986 shares
Interest in options:
8,300,000 August 2020 options
26,664,186 December 2020 options
Company secretary
Shane Turner is a Chartered Accountant and the Group Chief Financial Officer. Shane has held senior positions
with a number of professional accounting firms and has a degree in Business. Shane has held the role of Company
Secretary at White Rock Minerals (ASX: WRM) since August 2015. Shane has previously held the role of Company
Secretary for Metminco (ASX: MNC) for 2 years. He has been the Company Secretary of MRG since incorporation
on 24/01/2011.
Principal activities
During the period, the principal activities of entities within the Group were exploration and development of heavy
mineral sands within Mozambique. There have been no significant changes in the nature of these activities during the
period.
Review of operations and financial results
The operating result of the Group for the year ended was a loss of $1,897,244 (2019 loss $4,089,395). This loss was
significantly due to an impairment of the Norrliden project held for sale. Refer detailed Review of Operations that
follows this report.
Earnings per share (0.19) cents (2019 (0.58) cents).
Further information on the detailed operations of the Group during the year is included in the Review of Operations
Report.
Significant changes in the state of affairs
During the year, the Company carried out exploration on its Heavy Mineral Sands project in Mozambique and
announced a significant maiden JORC Resource.
During the year, the Company and its Joint Venture Partner on the Norrliden project, Mandalay Resources
Corporation, continued to market the Norrliden project for sale.
The outbreak of the Coronavirus disease (COVID-19) is impacting global economic markets. The nature and extent
of the effect of the outbreak on the performance of the Company remains unknown. The Company’s Share price may
be adversely affected in the short to medium term by the economic uncertainty caused by COVID-19. Further, any
governmental or industry measures taken in response to COVID-19 may adversely impact the Company’s operations
and are likely to be beyond the control of the Company.
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Consolidated Financial Statements
30 June 2020
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COVID-19 safe work practices have and will continue to be adopted in relation the Company’s operations, however,
COVID-19 restrictions on movement and activities may adversely affect the Company’s operations.
The Directors are monitoring the outbreak of COVID-19 closely and have considered the impact of COVID-19 on
the Company’s business. However, the situation is continually evolving, and the consequences are therefore inevitably
uncertain.
In compliance with its continuous disclosure obligations, the Company will continue to update the market in regard
to the impact of COVID-19 on the Company.
Dividends
There were no dividends declared or paid during the financial period.
Events arising since the end of the reporting period
On 31 August 2020, 72,978,404 MRQOA options expired.
On 16 September 2020, the Company completed a $660,000 equity raising that will enable it to expand aircore
drilling currently underway at its 100% owned Corridor Central and Corridor South Mozambique HMS Projects,
project development and for working capital.
The Company issued 110 million ordinary shares at $0.006, together with 110 million free attaching MRQOB
options, which have an exercise price of $0.01 and an expiry date of 20 December 2020; to sophisticated and
professional investors and retail private clients. Also, the Company issued 5.8 million ordinary shares and 17.8
million MRQOB options to Managers of the equity raising.
During the financial year the Covid-19 pandemic has had a significant impact on the local and international
economies. Subsequent to balance date, Victoria has experienced a second wave of the COVID-19 pandemic.
The longer term impacts on the operations of the Group remain uncertain and cannot be quantified at this time.
Since the end of the year no further significant events have occurred other than those noted in the Review of
Operations Report.
Likely developments
Explore Mozambique HMS project.
Pursue a sale of Norrliden.
Directors’ meetings
The number of meetings of directors held during the period and the number of meetings attended by each director
were as follows:
Name
Board meetings
Mr A Van Der Zwan
Mr S Turner
Mr C Gregory
A
11
11
11
B
11
11
11
Where:
A is the number of meetings the Director was entitled to attend
B is the number of meetings the Director attended
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Consolidated Financial Statements
30 June 2020
Movements in options:
2020
Issue of options – entitlement issue
Issue of options – entitlement issue
Issue of options – entitlement issue
shortfall
Issue of options - placement
Issue of options - corporate
mandate
Issue of options - placement
Issue of options - acquisition of
HMS project
Issue of options - placement
Issue of options - corporate
mandate
Issue of options - placement
Issue of options - placement
Issue of options - corporate
mandate
Options conversion
Issue of options - placement
Movements in rights:
2020
Issue of rights – acquisition of HMS
project
Issue of rights – directors &
consultant
Rights conversion
Rights conversion
Rights conversion
18
No. options
30 June 2020
72,978,404
130,838,298
69,551,582
Ex. price
(cents)
Expiry
date
15.0 31/08/2020
1.0 20/12/2020
1.0 20/12/2020
86,000,000
5,000,000
30,000,000
90,000,000
1.0 20/12/2020
1.0 20/12/2020
1.0 20/12/2020
1.0 20/12/2020
-
-
-
-
-
-
No. options 1
July 2019
Issued/
(converted)
Date of issue
15/09/2015
23/01/2018
25/01/2018
72,978,404
130,838,298
69,551,582
12/02/2018
12/02/2018
86,000,000
5,000,000
17/04/2018
22/01/2019
30,000,000
90,000,000
14/08/2019
08/10/2019
08/10/2019
10/12/2019
10/12/2019
15/01/2020
13/02/2020
-
-
-
-
-
94,500,000
16,237,000
94,500,000
16,237,000
1.0 20/12/2020
1.0 20/12/2020
28,500,000
62,500,000
3,437,500
28,500,000
62,500,000
3,437,500
-
-
484,368,284
(11,870,000)
3,000,000
(11,870,000)
3,000,000
680,672,784
1.0 20/12/2020
1.0 20/12/2020
1.0 20/12/2020
20/12/2020
1.0 20/12/2020
Date of
issue/conver
sion
22/01/2019
No. rights 1
July 2019
Issued/
(converted)
No. rights 30
June 2020
Expiry
date
480,000,000
480,000,000
21/07/2021
10/12/2019
-
32,000,000
32,000,000
09/12/2024
09/01/2020
06/05/2020
06/05/2020
-
-
-
480,000,000
(16,000,000)
(16,000,000)
(160,000,000)
(16,000,000)
(16,000,000)
(160,000,000)
320,000,000
09/12/2024
09/12/2024
21/07/2021
Remuneration Report (audited)
The Directors of MRG Metals Ltd (‘the Group’) present the Remuneration Report prepared in accordance with the
Corporations Act 2001 and the Corporations Regulations 2001.
The remuneration report is set out under the following main headings:
a. Principles used to determine the nature and amount of remuneration
b. Details of remuneration
c. Service agreements
d. Share-based remuneration
e. Bonuses included in remuneration
f. Other information
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Consolidated Financial Statements
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(a) Principles used to determine the nature and amount of remuneration
The principles of the Group’s executive strategy and supporting incentive programs and frameworks are:
• To align rewards to business outcomes that deliver value to shareholders;
• To drive a high performance culture by setting challenging objectives and rewarding high performing
individuals; and
• To ensure remuneration is competitive in the relevant employment market place to support the attraction,
motivation and retention of executive talent.
MRG Metals Ltd has structured a remuneration framework that is market competitive and complementary to the
reward strategy of the Group.
The Board, in accordance with its charter as approved by the Board, is responsible for determining and reviewing
compensation arrangements for the directors and the executive team.
The remuneration structure that has been adopted by the Group consists of the following components:
• Fixed remuneration being annual salary; and
• Superannuation to meet statutory obligations.
The Board assesses the appropriateness of the nature and amount of remuneration on a periodic basis by reference
to recent employment market conditions with the overall objective of ensuring maximum stakeholder benefit from
the retention of a high quality Board and executive team.
The payment of bonuses, share options and other incentive payments are reviewed by the Board annually as part of
the review of executive. All bonuses, options and incentives must be linked to pre-determined performance criteria.
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Consolidated Financial Statements
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20
(b) Details of remuneration
Details of the nature and amount of each element of the remuneration of each key management personnel (‘KMP’) of MRG Metals Ltd are shown in the table
below.
Director and other Key Management Personnel Remuneration
Short term employee benefits
Post-
employment
benefits
Long-term
benefits
Termination
benefits
Share-based
payments
Name
Cash salary
and fees ($)
Cash bonus
($)
Superannuation
($)
Long-term
bonus ($)
Termination
payments ($)
Performance
Rights ($) (1)
Total ($)
% of
remuneration
that is
performance
based
Non-executive directors
Mr A Van Der Zwan
Mr S Turner
Mr C Gregory
2020 Total
Non-executive directors
Mr A Van Der Zwan
Mr S Turner
Mr C Gregory
2019 Total
100,000
100,000
100,000
300,000
100,000
100,000
100,000
300,000
-
-
-
-
-
-
-
-
7,125
9,500
7,125
23,750
4,750
9,500
4,750
19,000
-
-
-
-
-
-
-
-
-
-
-
68,160
68,160
68,160
175,285
177,660
175,285
-
204,480
528,230
-
-
-
-
12,160
12,160
12,160
116,910
121,660
116,910
36,480
355,480
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
(1) Non-monetary benefits include Performance Rights that will lapse if they have not vested within 5 years of grant date (22 November 2016) and vest upon Company achieving a 5 day VWAP
of $0.05 per share. The amount for each Non-executive director was $12,160 for the year based on the Monte-Carlo valuation model. In addition, each Director was granted Performance
Rights at the 2019 Annual General Meeting. These Performance Rights converted during the year. The amount for each Non-executive director was $56,000.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
21
(c) Service agreements
Remuneration and other terms of employment for Executive Directors and other Key Management Personnel are
formalised in a service agreement. The major provisions of the agreements relating to remuneration are set out
below:
Base salary
Name
Mr A Van Der Zwan
50,000
Mr A Van Der Zwan - Consultant 50,000
50,000
Mr C Gregory
50,000
Mr C Gregory - Consultant
50,000
Mr S Turner - Director
50,000
Mr S Turner - Secretary
Notice period
Term of agreement
Rotation per Corporations Act 2001 Nil
Nil
No fixed term
Rotation per Corporations Act 2001 Nil
No fixed term
Nil
Rotation per Corporations Act 2001 Nil
Nil
No fixed term
(d) Share based remuneration
During the year, share based remuneration comprised the share based payments expense in connection with the
performance rights granted on 22 November 2016 and at the 2019 Annual General Meeting.
(e) Bonuses included in remuneration
No short-term incentive cash bonuses were awarded as remuneration during the financial year.
(f) Other information
Loans to key management personnel (KMP) – there were no loans from the Company to KMP’s during the financial
year (2019: nil).
The Group used the accounting and taxation services of RSM Australia, an entity associated with Mr. Turner and
Mr. Turner. The amounts billed were based on normal market rates and amounted to $38,000 to Mr. Turner (2019
$41,000 to Mr. Turner and RSM).
Shares held by key management personnel
The number of ordinary shares in the Company held by each of the Group’s key management personnel, including
their related parties, is set out below:
2020
Key
Management
Person
Van Der Zwan
Turner
Gregory
2019
Key
Management
Person
Van Der Zwan
Turner
Gregory
Balance at
start of year
14,835,250
9,958,700
37,349,700
62,143,650
Balance at
start of year
14,835,250
9,958,700
37,349,700
62,143,650
Received
on
exercise
8,000,000
8,000,000
8,000,000
24,000,000
Other
changes
-
-
-
-
Additions
9,071,429
3,857,142
15,214,286
28,142,857
Received
on
exercise
-
-
-
-
Other
changes
-
-
-
-
Additions
-
-
-
-
Held at the
end of the
reporting
period
31,906,679
21,815,842
60,563,986
114,286,507
Held at the
end of the
reporting
period
14,835,250
9,958,700
37,349,700
62,143,650
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
22
Options held by key management personnel
The number of options to acquire shares in the Company held by each of the key management personnel of the
Group; including their related parties are set out below.
2020
Key
Management
Person
Van Der Zwan
Turner
Gregory
2019
Key
Management
Person
Van Der Zwan
Turner
Gregory
Balance at start
of year
11,201,750
6,172,900
20,749,900
38,124,550
Deleted
on
Additions
8,321,429
3,357,142
14,214,286
25,892,857
exercise Ceased/Lapsed
-
-
-
-
-
-
-
-
Balance at start
of year
11,201,750
6,172,900
20,749,900
38,124,550
Deleted
on
Additions
-
-
-
-
exercise Ceased/Lapsed
-
-
-
-
-
-
-
-
Held at
the end of
the
reporting
period
19,523,179
9,530,042
34,964,186
64,017,407
Held at
the end of
the
reporting
period
11,201,750
6,172,900
20,749,900
38,124,550
End of audited remuneration report.
Environmental legislation
The Group’s projects are subject to environmental regulation under laws in Sweden and Mozambique; specifically
the Group is required to comply with terms of the grant of the tenement and all directions given to it under those
terms of the tenement which it holds. There have been no known breaches of the tenement conditions, and no such
breaches have been notified by any government agency during the period ended 30 June 2020.
Indemnities given and insurance premiums paid to auditors and officers
During the year, MRG Metals Ltd negotiated a premium to insure officers of the Group. The officers of the Group
covered by the insurance policy include all directors.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be
brought against the officers in their capacity as officers of the Group, and any other payments arising from liabilities
incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct
involving a wilful breach of duty by the officers or the improper use by the officers of their position or of
information to gain advantage for themselves or someone else to cause detriment to the Group.
Details of the amount of the premium paid in respect of the insurance policies are not disclosed as such disclosure is
prohibited under the terms of the contract.
The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnity any current or former officer or auditor of the Group against a liability incurred
as such by an officer or auditor.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
23
Non-audit services
During the previous period, Grant Thornton Audit Pty Ltd, the Group’s auditors, performed no other services in
addition to their statutory audit duties.
Details of the amounts paid to the auditors of the Group, Grant Thornton Audit Pty Ltd, and its related practices
for audit and non-audit services provided during the year are set out in note 15 to the Financial Statements.
A copy of the auditor’s independence declaration as required under s307C of the Corporations Act 2001 is included
on page 24 of this financial report and forms part of this Directors’ Report.
Proceedings of behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of
taking responsibility on behalf of the Company for all or part of those proceedings.
Signed in accordance with a resolution of the directors.
Andrew Van Der Zwan
Chairman
30 September 2020
For personal use only
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of MRG Metals Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of MRG Metals
Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
T S Jackman
Partner – Audit & Assurance
Melbourne, 30 September 2020
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
24For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
25
Corporate Governance Statement
MRG Metals Ltd has adopted comprehensive systems of controls and accountability as the basis for the administration
of corporate governance. To the extent that they are applicable, MRG has adopted the Corporate Governance
Principles and Recommendations as published by ASX Corporate Governance Council on 27 March 2014 and became
effective for financial years beginning on or after 1 July 2014. The Corporate Governance Statement is current at 30
June 2020 and has been approved by the Board of Directors.
ASX Corporate Governance Council
Recommendation
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1: Companies should establish
functions reserved to the board and those delegated to
senior executives and disclose those functions.
MRG policy
The Company's Corporate Governance framework
includes a Board Charter, which details the specific
responsibilities of the Board and identifies those
areas of authority delegated to senior executives.
The Company's Board Charter provides
that
appropriate checks should be undertaken before the
appointment of a director.
If checks reveal any information that is relevant , then
the Company will disclose that information to
Shareholders.
The Company's Board Charter sets provides that all
directors and senior executives, at the time of their
appointment, should execute a written agreement
that sets out the key terms of their appointment.
The Company's Board Charter sets out the role of
the Company Secretary and ensures that the
Company Secretary is accountable to the Board,
through the Chairman.
The Company's Diversity Policy requires the Board
to set out measurable objectives for achieving gender
diversity. The Diversity Policy requires the Board to
annually assess its diversity objectives and report on
the Company's progress
those
objectives. At the end of each reporting period, the
Diversity Policy requires the Company to report on
its progress and set out the respective proportion of
men and women across the whole of the Company
(including their representation in key management
positions)
in achieving
Recommendation 1.2: Companies should:
-
undertake appropriate checks before appointing
a person, or putting forward to security holders
a candidate for election as a director; and
- provide security holders with all material
information it its possession relevant to a
decision on whether or not to elect or re-elect a
director.
Recommendation 1.3: Companies should have a
written agreement with each director and senior
executive setting out the terms of their appointment.
Recommendation 1.4: Company Secretaries should be
accountable directly to the Board, through the Chair, on
all matters to do with the proper functioning of the
Board.
Recommendation 1.5: Companies should:
- have a diversity policy which includes
-
-
requirements for the Board or a relevant
committee of the Board to set measurable
objectives for achieving gender diversity and to
access annually both the objectives and the
progress in achieving them;
disclose the diversity policy or a summary of the
policy;
disclose, at the end of each reporting period, the
measurable objectives for achieving gender
diversity set by the Board or a relevant
committee of the Board, in accordance with the
diversity policy, and its progress towards
achieving them, and either:
-
the respective proportions of men and
women on the Board, in senior executive
positions and across the whole organisation
(including how the company has defined
"senior executive" for these purposes); or
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
ASX Corporate Governance Council
Recommendation
-
if the Company is a "relevant employer"
under the Workplace Gender Equality Act,
the Company's most recent "Gender
Equality Indicators" as defined in and
published under that Act.
Recommendation 1.6: Companies should:
- have and disclose a process for periodically
evaluating the performance of the Board, its
committees and individual directors;
disclose, in relation to each reporting period,
whether a performance evaluation was
undertaken in the reporting period in accordance
with that process.
-
Recommendation 1.7: Companies should:
- have and disclose a process for periodically
evaluating the performance of its senior
executives; and
disclose, in relation to each reporting period,
whether a performance evaluation was
undertaken in the reporting period in accordance
with that process
-
Principle 2: Structure the board to add value
Recommendation 2.1: Companies should:
- have a nominations committee which:
- has at least three members, a majority of
whom are independent directors; and
is chaired by an independent director.
-
The Company should disclosed:
- The charter of the nomination committee;
- The members of the nomination committee; and
-
as at the end of each reporting period, the
number of times the nomination committee met
through the period and the individual
attendances of the members at those meetings;
or
if the Company does not have a nomination committee
disclose, that fact, and the process it employs to address
Board successions issues and to ensure that the Board
has appropriate balance of skills knowledge, experience,
independence and diversity to enable it to discharge its
duties and responsibilities effectively
Recommendation 2.2: Companies should have and
disclose a Board skills matrix setting out the mix of
skills and diversity that the Board currently has or is
looking to achieve in its membership.
26
MRG policy
The Company Secretary plays an integral role in
monitoring the conduct and activities of Board,
ensuring the Board has an appropriate mix of skills
and experience and reviewing individual director's
performance.
The Chairman is responsible for reviewing the
performance of the Company Secretary.
The Chairman is responsible for reviewing the
individual performance of senior executives.
The Company does not currently have a nomination
committee. The Board does not consider it necessary
given the size of the Company's current operations.
Board appointments will be decided by the Board as
a whole, taking into consideration the needs of the
Company at the relevant time. Where the Company
considers there is a need to review the skills and
competencies of the existing Directors and to
supplement that experience, the Company would
consider engaging appropriately qualified third
parties to assist with the review. The Company's
Board Charter requires the Board to develop
succession plans for the future management of the
Company.
The Company's Board Charter sets out the directors'
obligations to prepare and disclose a Board skills
matrix.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
ASX Corporate Governance Council
Recommendation
Recommendation 2.3: Companies should disclose:
-
-
-
the names of directors considered by the Board
to be independent directors;
If a director has an interest, position, association
or relationship of a type set out in Box 2.3 of the
Third Edition of the Recommendations, but the
Board is of the opinion that it does not
compromise the independence of the director,
the nature of the interest, position, association
or relationship in question and an explanation of
why the Board is of that opinion; and
the length of service of each director.
Recommendation 2.4: The majority of the Board of a
Company should be independent directors.
Recommendation 2.5: The Chairman of the Board
should be an independent director and, in particular,
should not be the same person as the CEO of the
Company.
Recommendation 2.6: Companies should have a
program for inducting new directors and provide
appropriate professional development opportunities
for directors to develop and maintain the skills and
knowledge needed to perform their role as directors
effectively.
27
MRG policy
The Company's Board Charter sets out the directors'
obligations in relation to conflicts of interests and the
disclosure requirements of the Board.
All of the Company's current directors, being Chris
Gregory, Andrew Van Der Zwan and Shane Turner,
are independent directors.
Andrew Van Der Zwan, an independent director, is
the Chairman of the Board.
The Company's Board Charter requires the Board to
implement an induction procedure to assist newly
appointed directors to gain an understanding of the
Company's policies and procedures. In addition, the
Board Charter requires the Board to develop
continuing education opportunities in order to
provide the directors with the ability to enhance their
skills.
Principle 3: Promote ethical and responsible decision making
Recommendation 3.1: Companies should:
- have a code of conduct for its directors, senior
executives and employees; and
disclose that code or a summary of it.
-
The Board has established a Code of Conduct as to
the practices necessary to maintain confidence in the
Company's integrity, practices necessary to take into
account the Company's legal obligations and the
reasonable expectations of shareholders and the
responsibility and accountability of individuals for
reporting and investigating reports of unethical
practices.
The Code of Conduct will be available on the
Company's website.
The Company does not currently have an audit
committee. The Board does not consider it necessary
given the size of the Company's current operations.
The functions of this committee will be carried out
by the whole Board. The Company Secretary has
significant experience in financial and accounting
matters and will be primarily responsible for
monitoring and preparing the financial reports.
External resources will be commissioned where
necessary.
The Company's process and practices comply with
the Recommendation. In particular, the CFO of the
Principle 4: Safeguard integrity in financial reporting
Recommendation 4.1: The Board should establish an
audit committee. If the Company does not have an
audit committee, disclose that fact, and the process it
employs to independently verify and safeguard the
integrity of its corporate reporting, including the
process for the appointment and removal of the
external auditor and the rotation of the audit
engagement partner.
Recommendation 4.2: The Board should, before it
approves the company’s financial statements for a
For personal use only
28
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
ASX Corporate Governance Council
Recommendation
financial period, receive from its CEO and CFO a
declaration that, in their opinion, the financial records
of the company have been properly maintained and that
the financial statements comply with the appropriate
accounting standards and give a true and fair view of
the financial position and performance of the company
and that the opinion has been formed on the basis of a
sound system of risk management and internal control
which is operating effectively.
Recommendation 4.3: Companies that have AGMs
should ensure that their external auditors attend their
AGMs and are available to answer questions from
security holders relevant to the audit
Principle 5: Make timely and balanced disclosure
Recommendation 5.1: Companies should:
-
- have a written policy for compliance with its
continuous disclosure obligations under the
ASX Listing Rules; and
disclose that policy or a summary of it.
Principle 6: Respect the rights of shareholders
Recommendation 6.1: Companies should provide
information about itself and its governance to investors
via its website.
Recommendation 6.2 Companies should design and
implement an investor relations program to facilitate
effective two-way communication with investors.
Recommendation 6.3: Companies should disclose the
policies and processes it has in place to facilitate and
encourage participation at meetings of security holders
Recommendation 6.4: Companies should give
security holders the option to receive communications
from, and send communications to, the Company and
its security registry electronically.
Principle 7: Recognise and manage risk
Recommendation 7.1: Companies should have a
committee to oversee risk. If a Company does not have
a risk committee, it must disclose that fact, and the
processes it employs for overseeing the Company's risk
management framework.
Recommendation 7.2: Companies should:
-
review their risk management framework at least
annual to satisfy that the continue to be sound;
and
MRG policy
Company provides a declaration in relation to the
Company's financial statements that, in his opinion,
the financial records of the Company have been
maintained and that the financial statements comply
with appropriate accounting standards and give a true
the financial position and
and fair view of
performance of the Company and that the opinion
has been formed on the basis of a sound system of
risk management and internal control which is
operating effectively.
As a matter of practice, the Company invites the
external auditors of the Company to attend the AGM
of the Company. The security holders are provided
with an opportunity to ask questions of the external
auditors at the AGM.
The Company has established a Continuous
Disclosure Policy which applies to all directors and
senior management.
A copy of the Continuous Disclosure Policy has been
made available on the Company's website.
The Company's Continuous Disclosure Policy
requires the Company to include all of its corporate
governance policies on its websites.
The Company's Board Charter sets out the manner
in which the Board should endeavor to communicate
with its shareholders and the manner in which
shareholders can make enquiries to the Company.
The Company's Board Charter sets out
the
Company's goal to encourage participation at general
meetings.
The Company's Board Charter addresses the means
to effectively communicate with shareholders.
Given the size of the Company's current operations,
the Board has formed the view that a separate risk
committee is not necessary. The Board itself
monitors all areas of operational and financial risk
and considers strategies
risk
management arrangements on an ongoing basis. If
considered necessary, external input will be sought to
assess and counteract identified risks.
for appropriate
The Board requires that Andrew Van Der Zwan, as
Chairman undertakes a review of the Company's risk
management framework annually to ensure that the
framework continues to be sound, and disclose, in
relation to each reporting period, whether such a
review has taken place.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
ASX Corporate Governance Council
Recommendation
-
disclose in relation to each reporting period,
whether such a review has taken place.
Recommendation 7.3: Companies should:
-
-
if they have an internal audit function, how the
function is structured and what role it performs;
or
if they do not have an internal audit function,
that fact and the process they employ for
evaluating and continually improving
effectiveness of their risk management and
internal control process.
Recommendation 7.4: Companies should disclose
whether they have any material exposure to economic,
environmental and social sustainability risks and, if it
does, how it manages or intends to manage those risk.
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1: The Board should establish a
remuneration committee.
If the Company does not have a remuneration
committee, disclose that fact and the process it employs
for setting the level and composition of remuneration
for directors and senior executives and ensure that such
remuneration is appropriate and not excessive.
Recommendation 8.2: Companies should separately
disclose
its policies and practices regarding the
remuneration of non-executive directors and the
remuneration of executive directors and other senior
executives.
29
MRG policy
Given the size of the Company's current operations,
the Board has formed the view that the appointment
of an internal auditor is not necessary. The Board
will oversee the risk management and internal control
process. If considered necessary, external input will
be sought to assess and review the effectiveness of
the Company's risk management and internal control
process.
The Board will be responsible for disclosing whether
the Company has any material exposure to economic,
environmental and social responsibility risks and, if it
does, how it intends to manage those risks.
relation
remuneration packages.
The Company does not currently have a
remuneration committee. The Board does not
consider it necessary given the size of the Company's
current operations. The Board is responsible for
making recommendations regarding director and
management
The
Company's Board Charter sets out the principles that
should be considered by the Board in making
to management
in
recommendations
remuneration packages.
The Board
is aware of the need to ensure
remuneration remains competitive and consistent
with competitor companies and that remuneration
reflects the performance of the Company over time.
The directors performing an executive role are
their
remunerated based on
the
responsibilities and
Company.
Non-executive directors are paid fees within the total
as determined by shareholders.
The Company will provide the requisite disclosure
regarding executive remuneration policies in its
annual report.
the performance of
scope of
the
Recommendation 8.3: Companies which have equity
based remuneration schemes should:
-
-
have a policy on whether participants are
permitted to enter into transactions (whether
through the use of derivatives or otherwise)
which limit the economic risk of participating in
the scheme; and
disclose the policy or a summary of it.
The Share Trading Policy of the Company prohibits
employees of the Company from entering into any
transaction which would have the effect of hedging
or otherwise transferring to any person the risk of
any fluctuation in the value of any unvested
entitlement in the Company.
The Board actively monitors the Company's governance framework, related practices and overall culture.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Statement of Financial Position
As of 30 June 2020
30
Notes
Consolidated Consolidated
2019
$
2020
$
Assets
Current
Cash and cash equivalents
Other receivables
Assets held for sale
Total current assets
Non-current
Plant & Equipment
Exploration & Evaluation
Total non-current assets
Total assets
Liabilities
Current
Trade and other payables
Total current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserve
Retained earnings
Total equity
8
7
13
11
12
10
721,248
107,704
-
828,952
425
2,396,058
2.396,483
3,225,435
423,937
14,550
608,596
1,047,083
957
860,315
861,272
1,908,355
92,884
92,884
92,884
3,132,551
114,459
114,459
114,459
1,793,896
9
9
23,589,237
988,932
(21,445,618)
20,389,818
952,452
(19,548,374)
3,132,551
1,793,896
This statement should be read in conjunction with the notes to the financial statements.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
31
Statement of Profit or Loss and other
Comprehensive Income
for the year ended 30 June 2020
Interest income
Other income
Employee benefits expense
Consultants
Promoters fee
Administration expenses
Depreciation expenses
Foreign Exchange Loss
Asset held for sale impairment
Exploration/Tenements write off expenses
(Loss) before tax
Tax expense
(Loss) after tax
Other comprehensive income, net of tax
Total comprehensive (losses)
Earnings per share
Basic earnings per share
Earnings/(loss) from continuing operations
Diluted earnings per share
Earnings/(loss) from continuing operations
Notes
5
12
14
16
Consolidated
2020
$
Consolidated
2019
$
3,038
28,679
(428,249)
(247,628)
(160,000)
(462,118)
(957)
(21,413)
(608,596)
-
(1,897,244)
-
(1,897,244)
-
(1,897,244)
13,270
18,593
(255,499)
(278,265)
(240,000)
(219,974)
(1,106)
-
-
(3,126,414)
(4,089,395)
-
(4,089,395)
-
(4,089,395)
Cents
Cents
(0.19)
(0.58)
(0.19)
(0.58)
This statement should be read in conjunction with the notes to the financial statements.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
32
Statement of Changes in Equity
for the year ended 30 June 2020
Share
Capital
$
Share
based
payments
reserve
$
Retained
earnings
$
Total
equity
$
Balance at 1 July 2018
20,029,818
745,734
(15,468,741)
5,306,811
Issue of share capital
Transaction costs
Share based payments
Forfeited performance rights
Loss after income tax expense for the period
360,000
-
-
-
-
-
-
216,480
(9,762)
-
-
-
-
9,762
(4,089,395)
360,000
-
216,480
-
(4,089,395)
Balance at 30 June 2019
20,389,818
952,452
(19,548,374)
1,793,896
Balance at 1 July 2019
20,389,818
952,452
(19,548,374)
1,793,896
Issue of share capital
Transaction costs
Options exercised
Share based payments
Loss after income tax expense for the period
2,923,409
(114,690)
118,700
272,000
-
-
-
-
36,480
-
-
-
-
-
(1,897,244)
2,923,409
(114,690)
118,700
308,480
(1,897,244)
Balance at 30 June 2020
23,589,237
988,932
(21,445,618)
3,132,551
This statement should be read in conjunction with the notes to the financial statements.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Statement of Cash Flows
for the year ended 30 June 2020
Operating activities
Interest received
Sale of Data
Refunds
Payments to suppliers and employees
Net cash used in operating activities
Investing activities
Payment for exploration & evaluation
Acquisition of tenements
Net cash used in investing activities
Financing activities
Proceeds from issue of capital
Payment of transaction costs
Net cash from financing activities
33
Notes
Consolidated Consolidated
2019
$
2020
$
17
3,204
25,000
3,679
(885,413)
(853,529)
(1,055,751)
(70,609)
(1,126,360)
2,289,700
(12,500)
2,277,200
13,254
5,000
-
(712,080)
(693,826)
(467,783)
(139,024)
(606,807)
-
-
-
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
297,311
(1,300,633)
8
423,937
721,248
1,724,570
423,937
This statement should be read in conjunction with the notes to the financial statements.
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34
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Notes to the consolidated financial statements
Nature of operations
1
The activities of MRG Metals Ltd and its controlled entities, MRG Metals (Australia) Pty Ltd, MRG
Metals (Exploration) Pty Ltd, Sofala Resources Pty Ltd, Trophosys Pty Ltd, Sofala Mining &
Exploration Lda, Sofala Mining & Exploration I Lda, Sofala Mining & Exploration II Lda, Sofala
Mining & Exploration III Lda and Sofala Mining & Exploration IV Lda are exploration and
development of heavy mineral sands in Mozambique.
General information and statement of compliance
2
The consolidated general purpose financial statements of the Group 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. Compliance with
Australian Accounting Standards results in full compliance with the International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
MRG Metals Ltd is the Group's ultimate parent company. MRG Metals Ltd is a public company
incorporated and domiciled in Australia.
The consolidated financial statements for the year ended 30 June 2020 were approved and authorised for
issue by the board of directors on 30 September 2020 (see note 25).
New Accounting Standards and Interpretations adopted
3
The Company has adopted all of the new and revised Standards and Interpretations issued by the
Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for
the current reporting period. AASB 16 Leases became effective for annual reporting periods beginning on
or after 1 January 2019. Accordingly, the Group applied AASB 16 for the year ended 30 June 2020.
New standards adopted as at 1 July 2019:
Leases
AASB 16 leases replaced AASB 117 leases and some lease related interpretations. The new standard has
been applied using the modified retrospective approach. Prior periods have not been restated and there
have been no adjustments to opening retained earnings. AASB 16 requires all leases to be accounted for
“on balance sheet” by lessees, other than short term and low value asset leases. Provides new guidance
on the application of the definition of lease and on sale and lease back accounting. For contracts in place
at the date of initial application, the Group has elected to apply the definition of a lease from AASB 117
and interpretation 4 and has not applied AASB 16 to arrangements that were previously not identified as
leases under AASB 117 and interpretation 4.
The Group has elected not to include initial direct costs in the measurement of the right-of-use asset for
operating leases in existence at the date of initial application of AASB 16, being 1 July 2019. At this date
the Group has also elected to measure the right-of-use assets at an amount equal to the lease liability
adjusted for any prepaid or accrued lease payments that existed at the date of transition.
The group has benefited from the use of hindsight for determining lease term when considering options
to extend and terminate the leases.
At 1 July 2019, the initial adoption of AASB 16 did not have a material impact on the transactions and
balances recognised in the financial statements. The majority of the leases were excluded from AASB 16
under the short term or low value exemptions. Leases not exempt under AASB 16 were not material to
the financial statements.
Interpretation 23 Uncertainty over Income Tax Treatment
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35
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Interpretation 23 requires that assessment of whether the effect of uncertainty over income tax
treatment should be included in the determination of taxable profit (tax loss), tax bases, unused tax
losses, unused tax credits and tax rates. The interpretation outlines the requirements to determine
whether an entity considers uncertain tax treatments separately, the assumptions an entity makes about
the examination of tax treatments by taxation authorities, how an entity determines taxable profit (tax
loss), tax basis, unused tax losses, unused tax credits and tax rates and how an entity considers changes
in facts and circumstances.
The Group has adopted Interpretation 23 from 1 July 2019, based on an assessment of whether it is
“probable” that a taxation authority will accept an uncertain tax treatment. This assessment takes into
account that for certain jurisdictions in which the Company operates, a local tax authority may seek to
open a company’s books as far back as inception of the Company. Where it is probable, the Company
has determined tax balances consistently with the tax treatment used or planned to be used in its income
tax filings. Where the Group has determined that it is not probable that the taxation authority will accept
an uncertain tax treatment, the most likely amount or expected value has been used in determining
taxable balances (depending on which method is expected to better predict the resolution of the
uncertainty). There has been no impact from the adoption of interpretation 23 in this reporting period.
ASX Listing Rules Guidance Note 23
On 1 December 2019, the Australian Stock Exchange issued Guidance Note 23. This requires Auditors
of the Company to compare previously issued quarterly cashflow reports (Appendix 5B’s) with
information reported in half year and full year reports. As a result of this review and as result of the
accounting policy adopted at the end of the period to capitalise payments for exploration and evaluation,
it is now identified that payments for exploration and evaluation were incorrectly shown under “Cash
flows from operating activities” and should have been shown under “Cash flows from investing
activities” in the 30 September, 31 December 2019, 31 March 2020 and 30 June 2020 quarterly cashflow
reports.
Summary of accounting policies
Overall considerations
4
4.1
The significant accounting policies that have been used in the preparation of these consolidated financial
statements are summarised below.
The consolidated financial statements have been prepared using the measurement bases specified by
Australian Accounting Standards for each type of asset, liability, income and expense. The measurement
bases are more fully described in the accounting policies below.
Presentation of financial statements
4.2
AASB 101 requires two comparative periods to be presented for the statement of financial position in
certain circumstances.
4.3 Basis of measurement
Going Concern
The Group recorded a loss after tax of $1,897,244 and net cash outflows from operating and investing
activities were $1,979,889 for the year ended 30 June 2020. The Group’s financial position as at 30 June
2020 was as follows:
• The Group had available cash reserves of $721,248;
• The Group’s current assets of $828,952 exceed current liabilities of $92,884 by $736,068;
• The Group’s main activity is exploration and as such it does not presently have a source of operating
income, rather it is reliant on equity raisings or funds from other external sources to fund its activities.
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36
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Current forecasts indicate that cash on hand as at 30 June 2020 will not be sufficient to fully fund the
planned exploration and operational activities during the next twelve months. The Company did raise
$660,000 on 18 September 2020.
The Group’s position as at 31 August 2020 was as follows:
• The Group had available cash reserves of $460,472;
• The Group raised $660,000 on 18 September 2020;
• The Group continued to have a positive working capital position; and
• There have been no material changes to the Group’s liabilities or non-cancellable commitments since
30 June 2020.
Upon completion of the equity raising on 18 September 2020, the Company had on issue 735,494,380
MRQOB Options that have an exercise price of $0.01 and expiry of 20 December 2020. The Directors
believe that there is a good possibility of these being exercised. Should all of these Options be exercised,
this will raise $7,354,944.
The Directors are confident that if the MRQOB Options are not exercised and if required, the Group will
be able to secure sufficient funds or reduce or defer expenditure to ensure that the Group can meet
essential operational and expenditure commitments for at least the next twelve months.
Accordingly, the financial statements for the year ended 30 June 2020 have been prepared on a going
concern basis as, in the opinion of the Directors, the Group will be in a position to continue to meet its
essential operating costs and pay its debts as and when they fall due for at least twelve months from the
date of this report.
However, the Directors recognise that if further funding is required and is not subsequently secured, the
outcome of which is uncertain until such funding is secured, there is a material uncertainty as to whether
the going concern basis of accounting is appropriate. As a result, the Group may be required to relinquish
title to certain tenements, significantly curtail further expenditures and may have to realise its assets and
extinguish its liabilities other than in the ordinary course of business and at amounts different from those
stated in the financial report.
The Coronavirus (COVID-19) pandemic may impact on the Company’s ability to continue on a going
concern basis. However, no significant COVID-19 impacts have been felt by the Company to date. The
Company has been able to continue exploration and raise equity.
Basis of consolidation
4.4
The Group financial statements consolidate those of the parent company and its subsidiary undertakings
drawn up to 30 June 2020. The parent controls a subsidiary if it is exposed, or has rights, to variable
returns from its involvement with the subsidiary and has the ability to affect those returns through its
power over the subsidiary. All subsidiaries have a reporting date of 30 June.
All transactions and balances between Group companies are eliminated on consolidation, including
unrealised gains and losses on transactions between Group companies. Amounts reported in the
financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year
are recognised from the effective date of acquisition, or up to the effective date of disposal, as
applicable.
Segment reporting
4.5
Operating segments are presented using the ‘management approach’, where information is presented on
the same basis as the internal reports provided to chief operating decision makers, being the Board of
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37
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Directors. The Board of Directors are responsible for the allocation of resource to operating segments
and assessing their performance.
Revenue
4.6
Interest income is recognised on an accrual basis using the effective interest method.
Operating expenses
4.7
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their
origin.
Exploration and evaluation
4.8
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of
interest. These costs are only carried forward to the extent that they are expected to be recouped
through the successful development of the area or where activities in the area have not yet reached a
stage that permits reasonable assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the
year in which the decision to abandon the area is made.
A regular review for impairment is undertaken of each area of interest to determine the appropriateness
of continuing to carry forward costs in relation to that area of interest.
Income taxes
4.9
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not
recognised in other comprehensive income or directly in equity.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian
Taxation Office (ATO) and other fiscal authorities relating to the current or prior reporting periods, that
are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or
loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have
been enacted or substantively enacted by the end of the reporting period.
Deferred income taxes are calculated using the liability method on temporary differences between the
carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on
the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary
differences associated with investments in subsidiaries and joint ventures is not provided if reversal of
these temporary differences can be controlled by the Group and it is probable that reversal will not
occur in the foreseeable future.
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to
apply to their respective period of realisation, provided they are enacted or substantively enacted by the
end of the reporting period. Deferred tax liabilities are always provided for in full.
Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised
against future taxable income.
Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off
current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in
profit or loss, except where they relate to items that are recognised in other comprehensive income (such
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38
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
as the revaluation of land) or directly in equity, in which case the related deferred tax is also recognised
in other comprehensive income or equity, respectively.
Cash and cash equivalents
4.10
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term,
highly liquid investments that are readily convertible into known amounts of cash and which are subject
to an insignificant risk of changes in value.
Other Receivables
4.11
Other receivables are recognised at amortised cost, less any impairment.
Trade Payables
4.12
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial period and which are unpaid. Due to their short term nature they are measured at amortised
cost and not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Earnings per share
4.13
Basic earnings per share is calculated by dividing the profit attributable to the owners of MRG Metals
Ltd, excluding any costs of servicing equity other than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial period, adjusted for bonus elements in ordinary
shares issued during the financial period.
Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of shares assumed to have been issued for
no consideration in relation to dilutive potential ordinary shares.
Equity
4.14
Share capital represents the nominal value of shares that have been issued. Any transaction costs
associated with the issuing of shares are deducted from share capital, net of any related income tax
benefits.
Retained earnings include all current and prior period retained profits.
4.15
The Group provides post employment benefits through various accumulation funds.
Post employment benefits
An accumulation fund is a superannuation fund under which the Group pays fixed contributions into an
independent entity. The Group has no legal or constructive obligations to pay further contributions
after its payment of the fixed contribution. Contributions to the funds are recognised as an expense in
the period that relevant employee services are received.
Provisions, contingent liabilities and contingent assets
4.16
Provisions are recognised when present obligations as a result of a past event will probably lead to an
outflow of economic resources from the Group and amounts can be estimated reliably. Timing or
amount of the outflow may still be uncertain. Provisions are not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on
the most reliable evidence available at the reporting date, including the risks and uncertainties associated
with the present obligation. Where there are a number of similar obligations, the likelihood that an
outflow will be required in settlement is determined by considering the class of obligations as a whole.
Provisions are discounted to their present values, where the time value of money is material.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
39
Possible inflows of economic benefits to the Group that do not yet meet the recognition criteria of an
asset are considered contingent assets.
Goods and Services Tax (GST)
4.17
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as
part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables
in the statement of financial position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST
components of investing and financing activities, which are disclosed as operating cash flows.
4.18
Significant management judgement in applying accounting policies
The following are significant management judgements in applying the accounting policies of the Group
that have the most significant effect on the financial statements.
Deferred tax assets/Tax losses
The assessment of the probability of future taxable income in which deferred tax assets can be utilised is
based on the Group's latest approved budget forecast, which is adjusted for significant non-taxable
income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the
numerous jurisdictions in which the Group operates are also carefully taken into consideration. If a
positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it
can be utilised without a time limit, that deferred tax asset is usually recognised in full. The recognition
of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed
individually by management based on the specific facts and circumstances.
The Group has not recognised a deferred tax asset with regard to unused tax losses and other temporary
differences, as it has not been determined whether the Company will generate sufficient taxable income
against which the unused tax losses and other temporary differences can be utilised in the foreseeable
future.
Estimation uncertainty
When preparing the financial statements management undertakes a number of judgements, estimates
and assumptions about recognition and measurement of assets, liabilities, income and expenses.
The actual results may differ from the judgements, estimates and assumptions made by management,
and will seldom equal the estimated results.
Information about significant judgements, estimates and assumptions that have the most significant
effect on recognition and measurement of assets, liabilities, income and expenses is provided below.
Share based payments
Share based payments involve assumptions made by management regarding the date of recognition and
application of market price. Refer Note 4.23.
Coronavirus (COVID-19) pandemic
In March 2020, the World Health Organisation declared the outbreak of a novel coronavirus (COVID-
19) as a pandemic, which continues to spread throughout Australia. The spread of COVID-19 has
caused significant volatility in Australia and International markets. There is significant uncertainty
around the breadth and duration of business disruptions related to COVID-19, as well as its impact on
the Australia and international economies. The longer term impacts of COVID-19 on the operations of
the Group remain uncertain and cannot be quantified at this time.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
40
Exploration and evaluation assets
At each reporting date, the directors review the carrying amount of each area of interest, with reference
to the indicators of impairment outlined in AASB 6 Exploration for and Evaluation of Mineral
Resources.
One or more of the following facts and circumstances indicate that an entity should test exploration and
evaluation assets for impairment (the list is not exhaustive):
(a)
the period for which the entity has a right to explore in the specific arear has expired during
the period or will expire in the near future and is not expected to be renewed.
(b) substantive expenditure on further exploration for and evaluation of mineral resources in the
specific area is neither budgeted nor planned.
(c) exploration for and evaluation of mineral resources in the specific area have not led to the
discovery of commercially viable quantities of mineral resources and the entity has decided
to discontinue such activities in the specific area.
(d) sufficient data exist to indicate that, although a development in the specific area is likely to
proceed, the carrying amount of the exploration and evaluation asset is unlikely to be
recovered in full from successful development or by sale.
4.19 Other intangible assets
Recognition of other intangible assets
When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference
between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within
other income or other expenses.
4.20 Impairment testing of goodwill, other intangible assets and property, plant and
equipment
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units). As a result, some assets are tested individually for
impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-
generating units that are expected to benefit from synergies of the related business combination and
represent the lowest level within the Group at which management monitors goodwill.
All individual assets or cash-generating units are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit's carrying
amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-
use. To determine the value-in-use, management estimates expected future cash flows from each cash-
generating unit and determines a suitable interest rate in order to calculate the present value of those
cash flows. The data used for impairment testing procedures are directly linked to the Group's latest
approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset
enhancements. Discount factors are determined individually for each cash-generating unit and reflect
management’s assessment of respective risk profiles, such as market and asset-specific risks factors.
Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to
that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the
cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for
indications that an impairment loss previously recognised may no longer exist. An impairment charge is
reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
41
4.21 Government incentives and grants
Government incentives and grants comprise assistance by the Government in the form of transfers of
resources to the Group in return for past or future compliance with certain conditions relating to the
activities of the Group. Government incentives and grants are recognised when there is reasonable
assurance that the Group will comply with the conditions attaching to them and the grants will be received.
Government incentives and grants are recognised in profit or loss on a systematic basis over the periods in
which expenses are recognised for the related costs for which grants are intended to compensate.
4.22 Asset held for sale
When the Group intends to sell a non-current asset or a group of assets (a disposal group), and if sale
within 12 months is highly probable, the asset or disposal group is classified as ‘held for sale’ and presented
separately in the statement of financial position.
Assets classified as ‘held for sale’ are measured at the lower of their carrying amounts immediately prior to
their classification as held for sale and their fair value less costs to sell. Once classified as ‘held for sale’, the
assets are not subject to depreciation or amortization.
Any profit or loss arising from the sale or re-measurement of discontinued operations is presented as
part of a single line item, profit or loss from discontinued operations.
If an asset held for sale has not been sold within 12 months and a sale is not certain, then an impairment is
charged against that asset.
4.23 Share based payments
All share-based remuneration is ultimately recognised as an expense in profit or loss with a
corresponding credit to share option reserve. If vesting periods or other vesting conditions apply, the
expense is allocated over the vesting period, based on the best available estimate of the number of
share options expected to vest.
In addition equity settled share based payment transactions, the company shall measure the goods or
services rendered and the corresponding increase in equity, directly at fair value of the goods or
services received, unless that fair value cannot be estimated reliably.
The Company issued shares and options to a Manager in consideration for corporate advisory
services, calculated on the same basis as the Placement (6,237,000 shares @ $0.007 and 6,237,000 free
attaching options and 10,000,000 options).
The Company issued shares to a Consultant, calculated on the market price on date of issue
(6,000,000 @ $0.008).
The Company issued shares to Directors and a Consultant upon the conversion of performance
rights, calculated on the market price on the date the performance rights were decided (32,000,000 @
$0.007).
The Company issued shares upon the conversion of performance rights that were issued in
connection with the acquisition of the HMS project calculated on the market price on date the
performance rights were granted (160,000,000 @ $0.004).
4.24 Business combinations
The acquisition method in accounting is used for business combinations. The consideration transferred by
the Company to obtain control of a subsidiary is calculated as the sum of the acquisition date fair values of
assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair
value of any assets or liability arising from a contingent consideration arrangement. Acquisition cost are
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
42
expensed as incurred. In order to be classified a business combination, the operations of the company
acquired must constitute a “business” under this standard.
5
Revenue
Interest
Consolidated
2020
$
3,038
3,038
Consolidated
2019
$
13,270
13,270
Segment reporting
6
The Group is organised into one operating segment, which is the exploration and development of heavy
mineral sands within Mozambique. This operating segment is based on the internal reports that are
reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers)
in assessing performance and in determining the allocation of resources.
All items of Revenue and Expense are allocated to the Australian segment except for expenses of $180,417
that are allocated to the Mozambique segment.
All items of Assets and Liabilities are allocated to the Mozambique segment, except for cash $716,400, trade
payables of $11,390 and accrued expenses of $40,000, which are allocated to Australia.
7
Other receivables
GST receivables
Other (a)
Other receivables
The receivables noted above are not impaired nor past due.
(a) Recoverable Mozambique taxes.
Cash and cash equivalents
8
Cash and cash equivalents include the following components:
Cash at bank and in hand:
- AUD
- USD
- MZN
Consolidated
2020
$
18,032
89,672
107,704
Consolidated
2019
$
9,081
5,469
14,550
Consolidated
2020
$
693,985
3,799
1,048
22,416
721,248
Consolidated
2019
$
381,910
20,025
143
21,859
423,937
Short term deposits (AUD) (a)
Cash and cash equivalents
The effective interest rate on short-term bank deposits is 1.6%(2019: 2.55%); these deposits have an average
maturity of 365 days.
(a) The $22,416 is restricted cash as it is security for Company credit cards.
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MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
43
Equity
Share capital & reserves
9
9.1
The share capital of MRG Metals Ltd consists of fully paid ordinary shares and options, the shares do not
have a par value. All shares are equally eligible to receive dividends and the repayment of capital and
represent one vote at the shareholders' meeting of MRG Metals Ltd.
Details
SHARES
Total at 1 July 2019
Additions during the year
Costs of raising
Total share capital at 30 June 2020
OPTIONS RESERVE
Total at 1 July 2019
Additions during the year
Total issued options at 30 June 2020
SHARE BASED PAYMENTS
RESERVE
Total at 1 July 2019
Created during the year
Total reserve at 30 June 2020
PERFORMANCE RIGHTS
Total at 1 July 2019
Additions during the year (a)
Deletions during the year (b)
Total rights at 30 June 2020
SHARE CAPITAL & RESERVES
Details
SHARES
Total at 1 July 2018
Additions during the year
Total share capital at 30 June 2019
OPTIONS RESERVE
Total at 1 July 2018
Additions during the year
Total issued options at 30 June 2019
Consolidated
2020
$
20,389,818
3,314,109
(114,690)
23,589,237
857,402
-
857,402
95,050
36,480
131,530
-
-
-
Quantity
757,169,639
476,982,000
-
1,234,151,639
484,368,284
196,304,500
680,672,784
480,000,000
32,000,000
(192,000,000)
320,000,000
24,578,169
Consolidated
2019
Quantity
$
667,169,639
90,000,000
757,169,639
20,029,818
360,000
20,389,818
394,368,284
90,000,000
484,368,284
677,402
180,000
857,402
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
44
SHARE BASED PAYMENTS
RESERVE
Total at 1 July 2018
Created during the year
Lapsed during the year
Total reserve at 30 June 2019
PERFORMANCE RIGHTS
Total at 1 July 2018
Additions during the year (Note 12)
Total rights at 30 June 2019
SHARE CAPITAL & RESERVES
68,332
36,480
(9,762)
95,050
-
-
-
21,342,270
-
480,000,000
480,000,000
(a) 16,000,000 Class C and 16,000,000 Class D Performance Rights were issued to Directors and a
Consultant of the Company after approval at the Company’s 2019 Annual General Meeting.
(b) 16,000,000 Class C Performance Rights converted during the year. Further, 160,000,000 Class A
(issued to Vendors of HMS project in 2019) and 16,000,000 Class D Performance Rights
converted during the year.
(i) Movements in issued capital:
Opening balance at 1 July 2019
Capital Raising - placement
Capital Raising - placement
Issue of Ordinary Shares – corporate
mandate
Issue of Ordinary Shares – consultant
Capital Raising - placement
Issue of Ordinary Shares – corporate
mandate
Issue of Ordinary Shares – rights conversion
Issue of Ordinary Shares – options conversion
Capital Raising - placement
Issue of Ordinary Shares – rights conversion
Issue of Ordinary Shares – rights conversion
Less costs associated with capital raisings
Closing balance at 30 June 2020
Date of
issue
14/08/2019
08/10/2019
08/10/2019
08/10/2019
10/12/2019
10/12/2190
09/01/2020
15/01/2020
13/02/2020
06/05/2020
06/05/2020
No of shares
757,169,639
94,500,000
28,500,000
6,237,000
6,000,000
125,000,000
6,875,000
16,000,000
11,870,000
6,000,000
16,000,000
160,000,000
-
1,234,151,639
Issue price
(cents)
0.7
0.7
0.7
0.8
1.0
1.0
0.7
1.0
1.0
0.7
0.4
-
Opening balance at 1 July 2018
Issue of Ordinary Shares – acquisition of HMS project
Closing balance at 30 June 2019
Date of
issue
22/01/2019
Issue price
(cents)
0.4
No of shares
667,169,639
90,000,000
757,169,639
$
20,389,818
661,500
199,500
43,659
48,000
1,250,000
68,750
112,000
118,700
60,000
112,000
640,000
(114,690)
23,589,237
$
20,029,818
360,000
20,389,818
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
(ii) Movements in options:
2020
Issue of options – entitlement issue
Issue of options – entitlement issue
Issue of options – entitlement issue
shortfall
Issue of options - placement
Issue of options - corporate
mandate
Issue of options - placement
Issue of options - acquisition of
HMS project
Issue of options - placement
Issue of options - corporate
mandate
Issue of options - placement
Issue of options - placement
Issue of options - corporate
mandate
Options conversion
Issue of options - placement
45
No. options
30 June 2020
72,978,404
130,838,298
69,551,582
Ex. price
(cents)
Expiry
date
15.0 31/08/2020
1.0 20/12/2020
1.0 20/12/2020
86,000,000
5,000,000
30,000,000
90,000,000
1.0 20/12/2020
1.0 20/12/2020
1.0 20/12/2020
1.0 20/12/2020
-
-
-
-
-
-
No. options 1
July 2019
Issued/
(converted)
Date of issue
15/09/2015
23/01/2018
25/01/2018
72,978,404
130,838,298
69,551,582
12/02/2018
12/02/2018
86,000,000
5,000,000
17/04/2018
22/01/2019
30,000,000
90,000,000
14/08/2019
08/10/2019
08/10/2019
10/12/2019
10/12/2019
15/01/2020
13/02/2020
-
-
-
-
-
94,500,000
16,237,000
94,500,000
16,237,000
1.0 20/12/2020
1.0 20/12/2020
28,500,000
62,500,000
3,437,500
28,500,000
62,500,000
3,437,500
-
-
484,368,284
(11,870,000)
3,000,000
(11,870,000)
3,000,000
680,672,784
1.0 20/12/2020
1.0 20/12/2020
1.0 20/12/2020
20/12/2020
1.0 20/12/2020
2019
Issue of options – entitlement issue
Issue of options – entitlement issue
Issue of options – entitlement issue
shortfall
Issue of options - placement
Issue of options - corporate
mandate
Issue of options - placement
Issue of options - acquisition of
HMS project
Date of issue
15/09/2015
23/01/2018
25/01/2018
No. options 1
July 2018
Issued/
(lapsed)
72,978,404
130,838,298
69,551,582
12/02/2018
12/02/2018
86,000,000
5,000,000
No. options
30 June 2019
72,978,404
130,838,298
69,551,582
Ex. price
(cents)
Expiry
date
15.0 31/08/2020
1.0 20/12/2020
1.0 20/12/2020
86,000,000
5,000,000
1.0 20/12/2020
1.0 20/12/2020
-
-
-
-
17/04/2018
22/01/2019
30,000,000
-
-
90,000,000
30,000,000
90,000,000
1.0 20/12/2020
1.0 20/12/2020
394,368,284
484,368,284
(iii) Movements in rights:
2020
Issue of rights – acquisition of HMS
project
Issue of rights – directors &
consultant
Rights conversion
Rights conversion
Rights conversion
Date of
issue/conver
sion
22/01/2019
No. rights 1
July 2019
Issued/
(converted)
No. rights 30
June 2020
Expiry
date
480,000,000
480,000,000
21/07/2021
10/12/2019
-
32,000,000
32,000,000
09/12/2024
09/01/2020
06/05/2020
06/05/2020
-
-
-
480,000,000
(16,000,000)
(16,000,000)
(160,000,000)
(16,000,000)
(16,000,000)
(160,000,000)
320,000,000
09/12/2024
09/12/2024
21/07/2021
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
46
2019
Issue of rights – acquisition of HMS
project
No. rights 1
July 2018
Date of issue
22/01/2019
-
-
Issued/
(lapsed)
480,000,000
No. rights 30
June 2019
480,000,000
Expiry
date
21/01/2021
480,000,000
Dividends
9.2
No dividends were declared or paid during the year. There are no franking credits outstanding at period
end.
Trade and other payables
10
Trade and other payables recognised in the Statement of Financial Position can be analysed
as follows:
Current
- Trade payables
- Other payables and accrued expenses
11
Plant and equipment
Plant & Equipment
Accumulated Depreciation
12
Exploration and evaluation assets
Cost as at 1 July 2019
Other exploration costs
Acquisition costs HMS project (i)
Cost as at 30 June 2020
(i) Conversion of Class A Performance Rights (refer Note 9).
Cost as at 1 July 2018
Reclassification of Norrliden to asset held for sale (Note 13)
Acquisition costs HMS project
Other exploration costs
Relinquishments
Cost as at 30 June 2019
Consolidated
2020
$
23,002
69,882
92,884
Consolidated
2019
$
9,350
105,109
114,459
Consolidated
2020
$
6,205
(5,780)
425
Consolidated
2019
$
5,780
(4,823)
957
Consolidated
2020
$
860,315
1,055,743
480,000
2,396,058
Consolidated
2019
$
3,628,518
(608,596)
509,633
457,174
(3,126,414)
860,315
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
47
The recoverability of the carrying amount of the exploration and evaluation assets is dependent on
successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.
The relinquishments represent the capitalised amounts written off during the period when ownership of the
tenements is abandoned.
The acquisition of HMS did not constitute a business combination; the acquisition is accounted for under
AASB 2 share based payments. The acquisition is measured at the fair value of the options and shares
provided as consideration to acquire the HMS project.
Contingent consideration in the form of performance rights were provided as part of the HMS acquisition
consideration.
Performance rights were provided as part of the HMS acquisition consideration as follows:
(a)
(b)
(c)
160,000,000 Class A Performance Rights in MRG Metals Limited (MRG), each convertible to 1
fully paid MRG Share on the publishing of a JORC 2012-compliant Mineral Resource suitable
for a scoping study of greater than 350,000,000 tonnes at a minimum of 5% Total Heavy
Mineral (THM) within two years of completion of the Purchase (Completion). These
Performance Rights converted during the year; and
320,000,000 Class B Performance Rights in MRG, each convertible to 1 fully paid MRG Share
following completion of a Scoping Study on the HMS Projects showing positive economics
combined with a MRG Board decision to commence a PFS within 60 days following
completion of the Scoping Study
If the HMS Projects are sold at a valuation greater than $100 million cash or based on
consideration that is valued by an Independent Expert’s Report, prior to the completion of (a)
or (b), then all shares under (a) and (b) will be issued.
At issuance the probability could not be accurately estimated of Class B Performance Rights, as a result a
value was not allocated. Should they convert, a value will be attributed to the shares issued.
The acquisition of the HMS project comprised:
Issue of 50,000,000 shares
Issue of 50,000,000 options
-
-
- Reimbursement of costs
- Tax payable on transaction
$
200,000
100,000
139,024
70,609
509,633
Asset held for sale
13
The Norrliden project is currently being marketed for sale. The Norrliden asset was previously recognised
as a non-current exploration and evaluation asset. The asset held for sale is recognised at lower of the
carrying value and fair value less cost to sell.
Non-current assets held for sale
Less Impairment (a)
2020
608,596
(608,596)
-
2019
608,596
-
608,596
(a) Refer Note 4.22. If an asset held for sale has not been sold within 12 months and a sale is not certain,
then an impairment is charged against that asset. The Company took the view that as a sale was not
achieved in the last 12 months, then an impairment was made against the asset.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
48
Income tax expense
14
The relationship between the expected tax expense based on the tax rate of MRG Metals Ltd and the
reported tax expense in profit or loss can be reconciled as follows, also showing major components of tax
expenses:
Profit/(loss) before tax
Expected tax expense/(benefit) @ 27.5%
Adjustment for non-deductible expenses:
- Movement in accruals
-
Impairment of asset held for sale
Adjustment for non-assessable income:
- Movement in other receivables
Current period tax (loss) not recognised
Deferred tax expense:
- Temporary differences
- Unused tax losses
Deferred tax assets not recognised
Consolidated
2020
$
(1,897,244)
(521,742)
Consolidated
2019
$
(4,089,395)
(1,124,584)
(17,905)
167,364
-
(372,283)
(372,283)
(17,905)
539,647
521,742
12,374
-
(4)
(1,112,214)
(1,112,214)
12,370
1,112,214
1,124,584
The above potential tax benefit has not been recognised as the recovery is uncertain.
The carry forward tax losses at 30 June 2020 were $14,545,744.
The taxation benefit of tax losses and temporary differences not brought to account will only be obtained if:
-
-
-
the Group derives future assessable income of a nature and an amount sufficient to enable the
benefit from the deductions for the losses to be realised;
the Group continues to comply with the conditions for deductibility imposed by law; and
no change in tax legislation adversely affects the Group in realising the benefits from deducting the
tax losses.
15
Auditor remuneration
Audit services
Auditors of MRG Metals Ltd – Grant Thornton Audit Pty Ltd
- Audit and review of the financial reports
Audit services remuneration
Other services
Total Auditor’s remuneration
Consolidated
2020
$
Consolidated
2019
$
47,500
47,500
-
47,500
43,500
43,500
-
43,500
Earnings per share
16
The weighted average number of shares for the purposes of diluted earnings per share can be
reconciled to the weighted average number of ordinary shares used in the calculation of basic
earnings per share as follows:
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Loss after income tax
Weighted average number of shares used in basic earnings per share
Weighted average number of shares used in diluted earnings per share
Earnings Per Share
Diluted Earnings Per Share
49
Consolidated
2020
$
(1,897,244)
985,793,789
985,793,789
Consolidated
2019
$
(4,089,395)
710,073,749
710,073,749
(0.19) cents
(0.19) cents
(0.58) cents
(0.58) cents
The rights to options held by option holders have not been included in the weighted average number of
ordinary shares for the purposes of calculating diluted EPS as they do not meet the requirements for the
inclusion in AASB 133 “Earnings per Share”. The rights to options are non-dilutive as the Group is loss
generating.
17
Reconciliation of cash flows from operating activities
Cash flows from operating activities
(Loss) after income tax expense for the year
Cash flows excluded from loss attributable to operating activities
Non cash flows in loss:
Amortisation/Depreciation
Foreign exchange loss
Share based payments transactions
Write off deferred exploration and evaluation expenditure
Impairment of asset held for sale
Change in other assets and liabilities:
(Increase)/decrease in trade and other receivables
Increase/(decrease) trade and other payables
Net cash used in operating activities
Related party transactions
18
The Parent entity is MRG Metals Ltd.
Consolidated
2020
$
Consolidated
2019
$
(1,897,244)
(4,089,395)
957
21,414
468,480
-
608,596
(93,154)
37,423
(853,529)
1,106
-
216,480
3,126,414
-
21,337
30,232
(693,826)
MRG Metals Ltd owns 100% of the shares of MRG Metals (Australia) Pty Ltd. (2019 100%)
MRG Metals Ltd owns 100% of the shares of MRG Metals (Exploration) Pty Ltd. (2019 100%)
MRG Metals Ltd owns 100% of the shares of Sofala Resources Pty Ltd. (2019 100%)
Sofala Resources Pty Ltd owns 99% of the shares of Sofala Mining & Exploration Lda . (2019 99%), Sofala
Mining & Exploration I Lda, Sofala Mining & Exploration II Lda, Sofala Mining & Exploration III Lda and
Sofala Mining & Exploration IV Lda (Mozambique Companies).
Sofala Mining & Exploration Limitada owns the HMS tenements.
Sofala Mining & Exploration I Lda, Sofala Mining & Exploration II Lda, Sofala Mining & Exploration III
Lda and Sofala Mining & Exploration IV Lda were set up during the year in preparation for granting of
HMS applications and transfer of the Corridor South tenement; such that each Mozambique company will
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
50
hold one tenement as now required by Mozambique law. The Corridor Central tenement will be retained in
Sofala Mining & Exploration Lda.
MRG Metals Ltd owns 100% of the shares of Trophosys Pty Ltd. (2019 100%)
MRG Metals (Australia) Pty Ltd, MRG (Exploration) Pty Ltd and Trophosys Pty Ltd have no Assets or
Liabilities.
The Group's related parties include its key management and others as described in Note 18.2.
Unless otherwise stated, none of the transactions incorporate special terms and conditions and no
guarantees were given or received.
Transactions with related parties
18.1
The following transactions occurred with related parties:
Payment for goods and services:
The Group used the accounting and taxation services of RSM Australia, an entity associated with Mr.
Turner and Mr. Turner. The amounts billed were based on normal market rates and amounted to $38,000
to Mr. Turner (2019 $41,000 to Mr. Turner and RSM).
Receivable from and payable to related parties
There were no trade receivable from or trade payables to related parties.
Loans to/from related parties
There were no loans to or from related parties at the reporting date.
Terms and conditions
All transactions are made on normal commercial terms and conditions and at market rates.
18.2 Transactions with key management personnel
Key management of the Group are the Board of Directors. Key management personnel remuneration is set
out in the Remuneration Report in the Director’s Report.
Short term benefits
Post employment benefits
Share based payments
Total KMP remuneration
Consolidated
2020
$
300,000
23,750
204,480
528,230
Consolidated
2019
$
300,000
19,000
36,480
355,480
Equity instruments held by KMP
18.3
The number of shares in the Company by each of the key management personnel of the Group, including
their related parties are set out below:
Year ended 30 June 2019
Key
Management
Person
Van Der Zwan
Turner
Gregory
Balance at
start of
year
14,835,250
9,958,700
37,349,700
62,143,650
Received
on
exercise
-
-
-
-
Other
changes
-
-
-
-
Additions
-
-
-
-
Held at
the end of
the
reporting
period
14,835,250
9,958,700
37,349,700
62,143,650
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Year ended 30 June 2020
Key
Management
Person
Van Der Zwan
Turner
Gregory
Balance at
start of
year
14,835,250
9,958,700
37,349,700
62,143,650
Received
on
exercise
8,000,000
8,000,000
8,000,000
24,000,000
Additions
9,071,429
3,857,142
15,214,286
28,142,857
51
Held at
the end of
the
reporting
Other
period
changes
31,906,679
-
21,815,842
-
-
60,563,986
- 114,286,507
The number of options in the Company by each of the key management personnel of the Group, including
their related parties are set out below:
Year ended 30 June 2019
Key
Management
Person
Van Der Zwan
Turner
Gregory
Year ended 30 June 2020
Key
Management
Person
Van Der Zwan
Turner
Gregory
Balance
at start of
year
11,201,750
6,172,900
20,749,900
38,124,550
Balance
at start of
year
11,201,750
6,172,900
20,749,900
38,124,550
Deleted
on
Additions
-
-
-
-
exercise Ceased/Lapsed
-
-
-
-
-
-
-
-
Deleted
on
exercise
-
-
-
-
Other
changes
-
-
-
-
Additions
8,321,429
3,357,142
14,214,286
25,892,857
Held at
the end of
the
reporting
period
11,201,750
6,172,900
20,749,900
38,124,550
Held at
the end of
the
reporting
period
19,523,179
9,530,042
34,964,186
64,017,407
19
There were no contingent assets or liabilities.
Contingent assets and contingent liabilities
20
Commitments for expenditure
Exploration and evaluation:
Within 12 months
After 12 months but not later than 5 years
2020
$
2019
$
1,365,217
789,128
1,250,579
1,250,579
Exploration and evaluation:
In order to maintain current rights of tenure for exploration tenements, the Group is required to meet the
minimum exploration requirements of the Mining Department. The Group holds two tenements in
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
52
Mozambique, each year the Mozambique mining regulations require companies to submit exploration
programs which indicate the expected mining expenditure for the year.
Mozambique New Mining Law Regulations require a minimum spend of 60% of the exploration program
submitted for the year. The commitment for FY22 to FY25 is the Groups estimated tenement expenses to
be incurred for each licence at a rate of 60%, which is expected to be the best estimate of the required
commitment.
21
Financial instrument risk
Risk management objectives and policies
The Group is exposed to various risks in relation to financial instruments. The main types of risks are
market risk (including interest rate risk), credit risk and liquidity risk.
The Group's risk management is carried out by the board of directors and focuses on actively securing the
Group's short to medium-term cash flows by minimising the exposure to financial markets.
The Group does not engage in the trading of financial assets for speculative purposes nor does it write
options. The most significant financial risks to which the Group is exposed are described below.
Foreign currency sensitivity
21.1
The Group's transactions during the year have been carried out in Australian Dollars, United States
Dollars (USD), and Mozambican Meticals (MZN).
There is a risk that changes in foreign exchange rates will affect the Group’s income or amounts to be
paid or received arising from its financial obligations. The Group’s objective of foreign currency risk
management is to manage and control foreign currency risk exposures within acceptable parameters, while
optimising the return.
The Group’s exposure to foreign currency risk relates primarily to foreign exchange rates applicable to the
Group’s foreign currency denominated obligations recognised in the balance sheet.
Foreign currency risk refers to the risk that the value of a financial commitment, recognised asset or liability
will fluctuate due to changes in foreign currency rates. The primary foreign currency exposure is to the
MZN and USD.
Management monitors the exposure to foreign exchange risk on an ongoing basis by regularly reviewing
forward foreign exchange rates applicable to its foreign currency denominated obligations.
The Group’s exposure to assets and liabilities to MZN at 30 June 2020 is set out below (Australian dollar
equivalents):
Reported exchange rate
Cash at Bank
Trade and other payables
Total exposure
30 June 2020
47.96
1,048
(70,609)
(69,561)
The Group’s exposure to assets and liabilities to USD at 30 June 2020 is set out below (Australian dollar
equivalents):
Reported exchange rate
Cash at Bank
Total exposure
30 June 2020
0.6863
3,799
3,799
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
53
The table below shows the effect on profit after income tax expense and total equity from MZN currency
exposures, had the rates been 10% higher or lower than the year end rate. Whilst directors cannot predict
movements in foreign currency rates, a sensitivity of 10% is considered reasonable taking in to account
the current level of exchange rates and the volatility observed on a historical basis.
Foreign exchange rates - 10%
Foreign exchange rates + 10%
30 June 2020
Increase/(Decrease)
in profit after
income tax
(6,956)
6,956
Increase/(Decrease)
in Equity
(6,956)
6,956
Interest rate sensitivity
21.2
The Group's only exposure to interest rate risk is in relation to deposits held. Deposits are held with
reputable banking financial institutions.
At 30 June 2020, there was $22,416 on deposit at 1.60% (Note 8).
An increase/decrease by 30% or 0.05 basis points would have a favourable/adverse effect on profit for
the year of $112. The percentage change is based on the expected volatility of interest rates using
market data and analysts’ forecasts.
Credit risk analysis
21.3
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is
exposed to minimal credit risk as its only exposure is to interest receivable and GST refunds.
Liquidity risk analysis
21.4
Liquidity risk is that the Group might be unable to meet its obligations. The Group manages its liquidity
needs by monitoring actual and forecast cash inflows and outflows due in day-to-day business.
The Group's working capital, being current assets less current liabilities, at 30 June 2020 was $736,068.
Further, the Company raised $660,000 on 18 September 2020. Further, the Directors believe that there a
good possibility of the current 735,494,380 MRQOB Options being exercised before their expiry on 20
December 2020. Should all of these Options be exercised, this will raise $7,354,944.
Based on this, the directors are satisfied the Group will have sufficient funds to pay its debts as and
when they fall due.
As at 30 June, the Group's non-derivative financial liabilities have contractual maturities (including
interest payments where applicable) as summarised below:
30 June 2019
Trade and other payables
Total
30 June 2020
Trade and other payables
Total
Current
Non current
Within 6
months
$
114,459
114,459
6 to 12
months
$
-
-
1 to 5 years
$
-
-
Later than 5
years
$
-
-
Current
Non current
Within 6
months
$
92,884
92,884
6 to 12
months
$
-
-
1 to 5 years
$
-
-
Later than 5
years
$
-
-
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
54
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying
values of the liabilities at the reporting date. Unless otherwise stated, the carrying amounts of financial
instruments reflect their fair values due to their short term nature.
Capital risk management
22
The Group’s objectives when managing capital is to ensure the Group's ability to continue as a going
concern so that it can provide an adequate return to shareholders.
The Group would look to raise capital when an opportunity to invest in a business, company or tenement is
seen as value adding.
23
On 31 August 2020, 72,978,404 MRQOA options expired.
Post-reporting date events
On 16 September 2020, the Company completed a $660,000 equity raising that will enable it to
expand aircore drilling currently underway at its 100% owned Corridor Central and Corridor South
Mozambique HMS Projects, project development and for working capital.
The Company issued 110 million ordinary shares at $0.006, together with 110 million free attaching
MRQOB options, which have an exercise price of $0.01 and an expiry date of 20 December 2020; to
sophisticated and professional investors and retail private clients. Also, the Company issued 5.8
million ordinary shares and 17.8 million MRQOB options to Managers of the equity raising.
During the financial year the Covid-19 pandemic has had a significant impact on the local and
international economies. Subsequent to balance date, Victoria has experienced a second wave of the
COVID-19 pandemic.
The longer term impacts on the operations of the Group remain uncertain and cannot be quantified at
this time.
There are no other events occurring since the end of the year that have, or may, significantly affect the
Group’s operations, results of those operations or the state of affairs of the Group.
Parent entity information
24
Information relating to MRG Metals Ltd (‘the parent entity’)
Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Reserves
Retained earnings
Statement of comprehensive income
Profit/(loss) for the period
Total comprehensive income
2020
$
2019
$
828,952
3,225,435
92,884
92,884
1,047,083
1,908,355
114,459
114,459
23,589,237
988,932
(21,445,618)
3,132,551
20,389,818
952,452
(19,548,374)
1,793,896
(1,897,244)
(1,897,244)
(4,089,395)
(4,089,395)
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
55
Authorisation of financial statements
25
The consolidated financial statements for the year ended 30 June 2020 were approved by the board of
directors on 30 September 2020.
Andrew Van Der Zwan
Chairman
Shane Turner
Director/Secretary
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
56
Directors’ declaration
1. In the opinion of the directors of MRG Metals Ltd:
a
the consolidated financial statements and notes of MRG Metals Ltd are in accordance with the
Corporations Act 2001, including
i.
giving a true and fair view of its financial position as at 30 June 2020 and of its performance for
the financial period ended on that date; and
ii.
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
b there are reasonable grounds to believe that MRG Metals Ltd will be able to pay its debts as and
when they become due and payable.
2. The directors have been given the declarations required by Section 295A of the Corporations Act
2001 from the chief executive officer and chief financial officer for the financial period ended 30 June
2020.
3. The consolidated financial statements comply with International Financial Reporting Standards.
Signed in accordance with a resolution of the directors:
Dated at Melbourne, the 30 day of September 2020.
_______________________Andrew Van Der Zwan
Director
For personal use only
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of MRG Metals Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of MRG Metals Limited (the Company) and its subsidiaries (the Group), which
comprises the statement of financial position as at 30 June 2020, the statement of profit or loss and other comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to Note 4.3 in the financial statements, which indicates that the Group incurred a net loss of $1,897,244
during the year ended 30 June 2020, and net outflows from operating and investing activities were $1,979,889 for the year
ended 30 June 2020. As stated in Note 4.3, these events or conditions, along with other matters as set forth in Note 4.3,
indicate that a material uncertainty exists that may cast doubt on the Group’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
57For personal use only
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material uncertainty related to going concern section, we have determined the
matters described below to be the key audit matters to be communicated in our report.
Key audit matter
How our audit addressed the key audit matter
Exploration and evaluation assets – Note 12
At 30 June 2020 the carrying value of exploration and
evaluation assets was $2,396,058.
In accordance with Accounting Standard AASB 6 Exploration
for and Evaluation of Mineral Resources, the Company is
required to assess at each reporting date if there are any
triggers for impairment which may suggest the carrying value
is in excess of the recoverable value.
The process undertaken by management to assess whether
there are any impairment triggers in each area of interest
involves an element of management judgement.
This area is a key audit matter due to the significant
judgement involved in determining the existence of
impairment triggers.
Our procedures included, amongst others:
• Obtaining management’s reconciliation of capitalised
exploration and evaluation expenditure and agreeing to
the general ledger;
• Reviewed expenditures incurred during the period and
evaluated whether capitalised expenses are in
accordance with AASB 6;
• Conducting a detailed review of management’s
assessment of trigger events prepared in accordance
with AASB 6 including;
o
Tracing projects to statutory registers, exploration
licenses and third party confirmations to
determine whether a right of tenure exists;
o
o
Enquiry of management regarding their intentions
to carry out exploration and evaluation activity in
the relevant exploration area, including review of
management’s budgeted expenditure;
Understanding whether any data exists to
suggest that the carrying value of these
exploration and evaluation assets are unlikely to
be recovered through development or sale;
• Evaluating the competence, capabilities and objectivity
of management’s experts in the evaluation of potential
impairment triggers; and
• Assessing the appropriateness of the related financial
statement disclosures.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
58For personal use only
Responsibilities of the Directors’ for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in the Directors’ report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of MRG Metals Limited, for the year ended 30 June 2020 complies with section
300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
T S Jackman
Partner – Audit & Assurance
Melbourne, 30 September 2020
59For personal use only
60
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
ASX Additional Information
Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this
report is set out below. The information is effective as at 19 September 2020.
Substantial Shareholders
Ordinary Shares
Number Held
%of quoted
shares
Nil
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,000 and over
Shareholders
35
18
54
408
899
1,414
There were 352 holders of less than a marketable parcel of ordinary shares.
Ordinary Shares
Twenty largest quoted shareholders
Number Held
10 Bolivianos P/L
CJ & M Gregory S/F A/C
M Alvin
BNP Paribas Nominees P/L
Icon Custodians P/L Cummins Family A/C
KV Van Der Zwan Harleston Family A/C
Kensington Trust Singapore Ltd IS&P (FNS)
Retirement A/C
M Broglio
Rojul Nominees P/L Martin S/F A/C
Samatzo Holdings P/L Hill Family A/C
Silverpeak Nominees P/L RGM Hill A/C
S & E Turner Turner S/F A/C
Jolanza P/L Jolanza A/C
EJ Heymann
J Simpsom
M Fimeri
M Bazdaric
HSBC Custody Nominees (Australia) Ltd
A Swift
J Hondris
42,861,503
42,563,536
40,951,677
27,992,747
26,951,677
24,596,679
20,000,000
20,000,000
20,000,000
19,024,713
19,024,713
18,815,842
18,000,450
17,135,000
16,000,000
15,333,333
15,170,000
12,713,654
12,590,870
12,000,000
441,726,394
%of quoted
shares
3.18
3.15
3.03
2.07
2.00
1.82
1.48
1.48
1.48
1.41
1.41
1.39
1.33
1.27
1.19
1.14
1.12
0.94
0.93
0.89
32.71
For personal use only
61
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Restricted equity securities
Nil
Securities exchange
The Company is listed on the Australian Securities Exchange and shares are quoted under the code
MRQ.
Options
Twenty largest quoted optionholders
Number Held
A Knowles
First Investment Partners P/L
G Jacks
CJ & M Gregory S/F A/C
P Proksa
SG, SD & MB Jacobs Phoenix S/F A/C
A Broadribb
H Shirazi
10 Bolivianos P/L
Harry Fund P/L Golden Autumn S/F A/C
Millwest Investments P/L Millwest A/C
M Bazdaric
Super MSJ P/L MSJ S/F A/C
D Fagan
KV Van Der Zwan Harleston Family A/C
S Sangaranarayanasamy
C Jacks
Allekian Exchange P/L
M Alvin
Icon Custodians P/L Cummins Family A/C
71,500,000
55,185,537
22,491,110
20,664,036
15,000,000
20,000,000
17,474,107
16,600,000
15,100,000
13,950,000
13,300,000
10,000,000
10,000,000
9,255,555
9,163,179
8,939,956
8,433,333
8,333,334
7,926,964
7,926,964
361,244,075
%of quoted
options
9.72
7.50
3.06
2.81
2.72
2.72
2.38
2.26
2.05
1.90
1.81
1.36
1.36
1.26
1.25
1.22
1.15
1.13
1.08
1.08
49.82
Securities exchange
The Company is listed on the Australian Securities Exchange and options are quoted under the code
MRQOB.
For personal use only
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
62
Tenements
The Tenements held by the Company at reporting date are as follows:
Project
Norrliden
Malanaset
Malanaset
Corridor Central
Corridor South
Linhuane
Marao
Marruca
Tenement
K nr 1
nr 100
nr 101
EL 6620
EL 6621
7423L
6842L
6846L
% Owned
10
10
10
100
100
100
100
100
Note
Application
Application
Application
For personal use only
63
MRG Metals Ltd
Consolidated Financial Statements
30 June 2020
Corporate Directory
Directors & Secretary
Andrew Van Der Zwan
Non Executive Chairman
Christopher Gregory
Non Executive Director
Shane Turner
Non Executive Director and Company Secretary
Principal place of business
12 Anderson Street West, Ballarat VIC 3350
Telephone: +61 3 5330 5800 Fax: +61 3 5330 5890
Email: info@mrgmetals.com.au, www.mrgmetals.com.au
Registered office
12 Anderson Street West, Ballarat Victoria 3350
PO Box 237, Ballarat VIC 3353
Telephone: +61 3 5330 5800 Fax: +61 3 5330 5890
Corporate Accountant and Registered ASIC Agent
RSM Australia
12 Anderson Street West, Ballarat VIC 3350
PO Box 685, Ballarat VIC 3353
Telephone: +61 3 5330 5800 Fax: +61 3 5330 5890
www.rsm.com.au
Solicitors
Moray & Agnew
Level 6, 505 Little Collins Street, Melbourne VIC 3000
Telephone: +61 3 9600 0877 Fax: +61 3 9600 0894
www.moray.com.au
Share Registry
Automic Pty Ltd
Level 5, 126 Phillip Street, Sydney NSW 2000
Telephone: 1300 288 664
Auditor
Grant Thornton Audit Pty Ltd
Collins Square, Tower 5
727 Collins Street, Melbourne Vic 3008
Telephone (office): +61 3 8320 2222 Fax: +61 3 8663 6333
Website: www.grantthornton.com.au
Stock Exchange Listing
ASX Codes: MRQ, MRQOB
For personal use only