28 Richardson Street, West Perth, WA 6005
Telephone: +61 (8) 9324 1061
Facsimile: +61 (8) 9324 1014
Email:
Web:
info@musgraveminerals.com.au
www.musgraveminerals.com.au
ABN 12 143 890 671
28 Richardson Street, West Perth, WA 6005
Telephone: +61 (8) 9324 1061
Facsimile: +61 (8) 9324 1014
Email:
Web:
info@musgraveminerals.com.au
www.musgraveminerals.com.au
ABN 12 143 890 671
AnnuAl RepoRt 2017 Annual
Annual
Report
Report
Legal advisors
o’Loughlins Lawyers
Level 2, 99 Frome Street
adelaide Sa 5000
Share registry
Computershare investor Services pty Ltd
Level 11, 172 St. Georges terrace
perth Wa 6000
phone: +61 (8) 9323 2000
+61 (8) 9323 2033
Fax:
Securities exchange Listing
the Company is listed on the australian Securities
exchange Ltd (“aSX”)
Home exchange: perth, Western australia
aSX Code: MGV
Corporate DireCtory
Directors
Graham ascough
Non-Executive Chairman
robert Waugh
Managing Director
Kelly ross
Non-Executive Director
John percival
Non-Executive Director
Company Secretary
patricia (trish) Farr
registered office & principal
place of Business
28 richardson Street
West perth Wa 6005
phone: +61 (8) 9324 1061
+61 (8) 9324 1014
Fax:
email:
info@musgraveminerals.com.au
Web: www.musgraveminerals.com.au
auditors
Grant thornton audit pty Ltd
Chartered accountants
Level 1, 10 Kings park road
West perth Wa 6005
MUSGraVe MiNeraLaS LtD
Musgrave Minerals Limited is an Australia
focused gold and base metal exploration
company.
Musgrave plans to grow through the
discovery and development of gold and base
metal resources.
A description of the Company’s operations
and principal activities is included in the
Review of Operations and the Directors’
Report.
Cover photo:
Panned gold from the Break of Day deposit,
Cue Project in the Murchison region of
Western Australia. Drill hole 17MORC002
(99-100mdh, assaying 244.1g/t Au)
contents
chairman’s Letter ................................................................. 2
Review of operations ........................................................ 3
tenement schedule ...........................................................14
Directors’ Report ..............................................................15
Auditor’s Independence Declaration .....................24
Financial statements ..........................................................25
Directors’ Declaration ......................................................55
Independent Auditor’s Report ....................................56
Additional Information .....................................................60
1
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11 chAIRmAn’s LetteR
Dear Fellow Shareholders,
On behalf of the Board of Directors, it is my pleasure to
present the 2017 Annual Report for Musgrave Minerals
Limited (“Musgrave” or “Company”).
The year under review was exciting and progressive for the
Company, with exploration success and results from the Cue
Project supporting our aim to develop a low-cost future
operation capable of delivering strong financial returns for
shareholders.
The Cue Project is located in the well-endowed historical
gold producing Murchison region of Western Australia that is
host to three operating gold plants (and potentially a fourth
in Tuckabianna) all of which are within trucking distance of
our Project.
Building on the identification of high-grade gold
mineralisation at Break of Day in 2016, aggressive drilling
during the year culminated in a significant Mineral Resource
increase at both Break of Day and Lena that together are
now estimated to host over 352,000oz of gold. These
Mineral Resource estimates will be used as the basis for
development studies and the potential to further increase
these resources remains strong.
Drilling continues at Break of Day to expand the high-grade
mineralisation identified to date and our exploration team
continues to identify high priority targets with the potential
for new discoveries. For example, the Louise target, only
600m south of Break of Day, has the potential to be another
high grade gold discovery and drilling is underway. In addition,
initial drilling on base metal targets on the Northern portion
of the Cue Project has returned high-grade zinc intersections
along with elevated copper and gold.
Metallurgical test results from both Lena and Break of Day
have been excellent and indicate high recoveries across a
range of ore types using conventional processing techniques
compatible with operating gold plants in the region.
The Company was pleased to increase its interest in the
Cue Project by exercising its pre-emptive right to acquire
Silver Lake Limited’s remaining interest in the Project on
equivalent terms to those proposed by Westgold Resources
Ltd subsequent to the end of the year. As a result Musgrave
now holds 100% of the core tenure that hosts all the gold
and copper Mineral Resources on the Project.
Significant upside remains for further discoveries in both
gold and copper-zinc at the Cue Project where the Company
will continue to advance targets through discovery and
extensional drilling programs. In this regard, the Company will
2
continue its focus on Break of Day where drilling to date has
confirmed a substantial, multi-vein, high-grade gold system
that remains untested at depth and along strike.
Musgrave successfully completed two capital raisings during
the year to support its aggressive exploration program at
Cue. Both attracted new investors to the Company and
a concurrent Share Purchase Plan (“SPP”) offered eligible
shareholders the opportunity to acquire further shares in
the Company on the same terms as the initial Placement. It
was very pleasing to see strong participation in the SPP from
existing shareholders and I take this opportunity, on behalf of
the Board, to thank all of our shareholders for their ongoing
support.
I would like to thank the staff, management, contractors
and my fellow Directors for their ongoing efforts. We are
committed to progressing the Company by advancing targets
towards development through high-quality exploration and
technical studies for the benefit of all Musgrave shareholders.
2018 should be transformative for Musgrave as we expand
our resource base, identify new discovery opportunities
and advance on our objective to develop a low-cost future
operation capable of delivering strong financial returns for
shareholders.
Graham Ascough
Chairman
Break of Day
AnnualReport mUSGRAVE mINERALAS LTD RevIew oF opeRAtIons
Musgrave Minerals Ltd (“Musgrave” or “the Company”)
(ASX:MGV) is an Australian gold and base metal exploration
company focused on growth through the discovery and
development of gold and base metal resources within
Australia.
Exploration activities for the financial year have been focused
on the Company’s Cue Project (“Cue Project” or “Project”)
in the Murchison region of Western Australia. The Company
made significant progress following the discovery of high-
grade gold at the Break of Day prospect and announced a
significant Mineral Resource upgrade in July 2017.
Musgrave has completed more than 22,000m of drilling on
the Project and has estimated a total Indicated and Inferred
Mineral Resource at Break of Day and Lena of:
3.55Mt @ 3.09g/t Au for 352,000 ounces of gold
(see ASX announcement 14 July 2017, “Resource Estimate
Exceeds 350koz Gold”).
This initial estimate is a significant increase on the previous
Lena (76koz Au) and Break of Day (21koz Au) Mineral
Resource estimates (see ASX announcement 26 October
2016, “2016 Annual Report – Replacement Report”) and
continues to support the Company’s aim of developing
a low-cost future operation capable of delivering strong
financial returns for its shareholders. The Break of Day and
Lena Mineral Resource estimates will be used as the basis for
development studies.
Figure 1: Musgrave Minerals’ Project Location Map
Further, the Company believes there is significant potential to
extend existing mineralisation and also discover new high-
grade mineralisation within the Project area as shown by
recent drilling success.
The base metal potential of the northern part of the Cue
Project has been highlighted by the recent discovery of high-
grade zinc, copper, gold and silver mineralisation intersected
near surface at the Mt Eelya prospect.
Musgrave also has projects in the Musgrave Geological
Province and Southern Gawler Craton regions of South
Australia (Figure 1).
Corporate
During the past year, Musgrave spent $3.9 million on
exploration activities.
On 6 July 2016, the Company completed a placement to
sophisticated and professional investors of 12,711,864 shares
at an issue price of 5.9 cents per share raising $750,000
before costs.
In July 2016 the Company also announced a fully
underwritten Share Purchase Plan (“SPP”) at the same issue
price as the placement. The SPP was strongly supported
by Shareholders and was heavily oversubscribed with the
Company receiving applications totalling $1,984,000. In
light of the strong demand from shareholders, the Board of
Directors elected to increase the original SPP target which
had been set at $1,250,000 and accepted all valid applications
from eligible shareholders. A total of 33,627,084 new shares
were issued under the SPP at a price of 5.9 cents per share
on 11 August 2016.
Under the terms and conditions of the SPP, on 16 August
2016 the Company completed a top-up placement to
sophisticated and professional investors of 8,474,576 shares
at an issue price of 5.9 cents per share raising $500,000
before costs.
On 19 May 2017, the Company completed a placement to
sophisticated and professional investors of 40,000,000 shares
at an issue price of 7.5 cents per share raising $3,000,000
before costs. Details of the changes in equity are disclosed in
note 15 to the financial statements.
The Company continued to refine its exploration portfolio
with the application of additional tenements in the Cue
region and the sale for its Mamba Project in the Fraser Range
of Western Australia. The consideration for the sale of the
Mamba Project was 10 million shares and 10 million options
in Legend Mining Ltd.
The Company successfully secured an Exploration Incentive
Scheme (“EIS”) co-funded drilling grant of up to $150,000
for the Cue Project in 2016-17 to drill test new copper-gold
targets.
Musgrave continued its strong links with government and
research organisations throughout the year in the regions
in which it operates through the Centre for Exploration
Targeting at the University of Western Australia.
3
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11 Events since the end of the financial year
In June 2017 Silver Lake Resources Limited (“Silver Lake”)
announced that it had agreed to sell its Murchison assets
(which included its interest in the Cue Project) to a
wholly owned subsidiary of Westgold Resources Limited
(“Westgold”) (ASX: WGX) for total consideration of
approximately $10 million.
On 18 July 2017, the Company announced that it had elected
to exercise its pre-emptive right to acquire Silver Lake’s
remaining interest in the Cue Project on equivalent terms
to those proposed by Westgold. The purchase of the interest
was completed on 4 August 2017 for cash consideration of
$1.5 million.
Musgrave now holds 100% of the core tenure on the Cue
Project (Figure 2) including the tenure hosting all the gold and
copper Mineral Resources (see ASX announcement 4 August
2017, “Musgrave Secures 100% of Key Cue Tenure”).
Exploration Activities
Significant results were achieved at the Cue Project during
2016-17 where exploration by the Company resulted in
the discovery and delineation of a high-grade gold Mineral
Resource at Break of Day and a significant upgrade to the
Mineral Resource at Lena (Table 1 and 3).
The Company intersected high-grade zinc mineralisation at
the Mt Eelya prospect and copper-gold mineralisation at the
Colonel Prospect on the northern tenements of the Cue
Project.
A considerable exploration program is planned for the
coming year with the objective of expanding the high-grade
gold resource at Break of Day and drill testing of other high
priority gold and base metal targets.
Exploration programs were also undertaken on the Corunna
Project in South Australia where the Company has identified
anomalous lead, zinc and silver in shallow aircore drilling.
Murchison
Cue Project - Key tenure now held 100% by Musgrave
In February 2017 the Company completed Stage 1 of the
Cue Project Farm-In and Joint Venture Agreement with Silver
Lake and Cue Minerals Pty Ltd (“CMPL”), a wholly owned
subsidiary of Silver Lake, on the Cue Project in the highly
prospective Murchison province of Western Australia. Under
the Stage 1 terms of the Agreement, the Company earned a
60% interest in the Cue Project by meeting the $1,800,000
exploration expenditure requirement.
The Project is in close proximity to existing road
infrastructure and within trucking distance of four operating
gold plants.
4
Figure 2: Cue Project locations and tenure
In July 2017 the Company completed Stage 2 of the Cue
Project Farm-In and Joint Venture Agreement. Under the
Stage 2 terms of the Agreement, the Company earned an
80% interest in the Cue Project by meeting the $1,800,000
exploration expenditure requirement.
On 4 August 2017 Musgrave Minerals completed the
acquisition of Silver Lake’s interest in the Cue Joint Venture
after exercising its pre-emptive right. Musgrave now holds
100% of the core tenure (Figure 2) on the Cue Project
including the tenure hosting the gold and copper Mineral
Resources (see ASX announcement 4 August 2017, “Musgrave
Secures 100% of Key Cue Tenure”).
Break of Day – High grade gold resource in close
proximity to existing infrastructure
The Break of Day prospect (Figure 2) is part of the Moyagee
Project at Cue that hosts a combined JORC (2012) and
JORC (2004) compliant Mineral Resource of 3.87Mt @
3.07g/t Au for 382,900oz contained gold within four separate
deposits; Break of Day, Lena, Leviticus and Numbers (Table 6).
As a result of recent drilling, Break of Day is currently the
largest and highest grade deposit with a Mineral Resource of
868kt @ 7.15g/t Au for 199koz of contained gold (MGV ASX
announcement 14 July 2017, “Resource Estimate Exceeds 350koz
Gold”). It remains open along strike and down plunge.
AnnualReport mUSGRAVE mINERALAS LTD Figure 3: Schematic image showing Break of Day and Lena Mineral Resource models depicting multiple gold lodes on aerial photo
Table 1: Break of Day Mineral Resource by JORC Classification and reported above a cut-off grade of 3.0 g/t Au
JORC Classification
Tonnage (‘000s)
Au (g/t)
Ounces Au
Indicated
Inferred
Total
445
423
868
7.73
6.54
7.15
111,000
89,000
199,000
* Due to the effects of rounding, the total may not represent the sum of all components
Importantly 55% of the Mineral Resource estimate at
Break of Day is classified at the higher confidence Indicated
category. The majority of the Mineral Resource is comprised
of fresh rock and a 3g/t Au reporting cut-off grade was used
considering the majority of the deposit is more likely to be
developed as an underground mine. The Mineral Resource is
located on a granted mining lease.
Recent drilling has shown that the high-grade gold
mineralisation in both lodes at Break of Day is still open
in all directions (Figure 4). There is significant potential to
the south of Break of Day to extend the mineralisation at
relatively shallow levels. Drilling recommenced in August to
extend the mineralisation in this area and intersected a high
grade gold intercept of 11m @ 54.0g/t Au from 217m down
hole outside the current resource boundary. This intercept
may repreent a new high-grade south plunging shoot.
Break of Day
5
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11 Figure 4: Break of Day schematic long section of the combined Twilight and Velvet gold lodes (a long section or longitudinal section is a
section along the plane of the lode and in this instance shows gold grade x thickness variability with depth of the combined lodes)
and the projected outline of the Lena deposit which is located approximately 130m west of Break of Day
Break of Day
6
AnnualReport mUSGRAVE mINERALAS LTD Significant intersections drilled at Break of Day during the year are summarised in Table 2.
Table 2: Select high-grade gold drill hole intersections from the Break of Day deposit
Drill Hole #
Drill Type
Intersection
16MORC007
16MORC006
16MORC012
16MORC026
16MORC039
16MORC041
16MORC043
16MORC048
16MORC048
17MORC001
17MORC002
17MORC003
17MORC006
17MORC044
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
1m @ 33.5g/t Au
2m @ 36.8g/t Au
4m @ 12.3g/t Au
21m @ 21.5g/t Au including
6m @ 41.4g/t Au
1m @ 32.6g/t Au
3m @ 51.8g/t Au
3m @ 38.6g/t Au including
1m @ 100.5g/t Au
3m @ 54.9g/t Au including
1m @ 142.8g/t Au
5m @ 53.5g/t Au including
1m @ 183.1g/t Au
5m @ 33.0g/t Au including
1m @ 134.4g/t Au
2m @ 41.5g/t Au
11m @ 6.8g/t Au
6m @ 46.5g/t Au including
1m @ 244.1g/t Au
1m @ 117.4g/t Au
2m @ 16.2g/t Au
14m @ 14.4g/t Au including
1m @ 100.2g/t Au
3m @ 22.4g/t Au
17MORC050
RC
15m @ 16.6g/t Au including
17MORC053
17MORC054
17MORC056
17MORC062
17MORC084
16MODD001
16MODD002
RC
RC
RC
RC
RC
Diam
Diam
16MODD003
Diam
7m @ 31.8g/t Au
4m @ 28.5g/t Au including
2m @ 54.1g/t Au
4m @ 15.6g/t Au
4m @ 22.4g/t Au
1m @ 57.7g/t Au
11m @ 54.0g/tAu including
5m @ 109.6g/tAu
4m @ 10.9g/tAu
6.6m @ 7.3g/t Au
3.2m @ 26.6g/t Au including
1.0m @ 61.1g/t Au
4.0m @ 9.6g/t Au including
1.0m @ 63.7g/t Au
Down Hole Depth
(From)
80m
101m
189m
157m
157m
166m
170m
274m
275m
187m
188m
138m
138m
154m
155m
190m
23m
99m
99m
173m
120m
111m
111m
153m
170m
173m
99m
99m
173m
126m
294m
217m
217m
223m
Prospect
Lode
Break of Day
Break of Day
Break of Day
Twilight
Twilight
Twilight
Break of Day
Velvet
Break of Day
Twilight
Break of Day
Twilight
Break of Day
Velvet
Break of Day
Velvet
Break of Day
Twilight
Break of Day
Velvet
Break of Day
Velvet
Break of Day
Break of Day
Twilight
Twilight
Break of Day
Twilight
Break of Day
Twilight
Break of Day
Velvet
Break of Day
Twilight
Break of Day
Break of Day
Break of Day
Twilight
Twilight
Twilight
Break of Day
Twilight
127.35m
Break of Day
Twilight
238.5m
239.5m
231.0m
231.93m
Break of Day
Twilight
Break of Day
Twilight
7
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11 Lena – Significant resource upgrade and room to grow
Drilling continued to intersect high-grade gold at Lena (Table
4) which culminated in a gold Mineral Resource estimate of
2,682kt @ 1.77g/t for 153koz of contained gold (see ASX
announcement 13 July 2017, “Resource Estimate Exceeds 350koz
Gold”).
The gold mineralisation is open along strike to the north and
down plunge. The Resource is currently outlined over a strike
extent of 1.3km and occurs from surface. The mineralisation
at Lena is defined within 12 lenses which are within 300m
below surface.
46% of the Mineral Resource Estimate at Lena is classified
at the higher confidence Indicated category. The Lena
Mineral Resource occurs from surface and has a significant
component as oxide and transitional material. A 1g/t Au cut-
off grade was used to estimate the resource as the deposit is
most likely to be developed as an open-cut proposition.
Recent drilling has shown that the gold mineralisation is still
open to the north and down plunge (Figure 5). Significant
intersections drilled at Lena during the year are summarised
in Table 4.
Table 3: Lena Mineral Resource by JORC Classification and reported above a cut-off grade of 1.0 g/t Au
JORC Classification
Tonnage (‘000s)
Au (g/t)
Ounces Au
Indicated
Inferred
Total
1,288
1,394
2,682
1.69
1.85
1.77
70,000
83,000
153,000
* Due to the effects of rounding, the total may not represent the sum of all components
Figure 5: Lena schematic long section of all the combined gold lodes (a long section or longitudinal section is a section along the plane of the
lode and in this instance shows gold grade x thickness variability with depth of the combined lodes) and the projected outline of
the Break of Day deposit which is located approximately 130m east of Lena
8
AnnualReport mUSGRAVE mINERALAS LTD
Table 4: Select high-grade gold drill hole intersections from the Lena deposit
Drill Hole #
Drill Type
Intersection
Down Hole
Depth (From)
Prospect
17MORC005
17MORC014
17MORC015
17MORC016
17MORC034
17MORC035
17MORC039
17MORC040
17MORC045
17MORC073
17MORC074
17MORC076
17MORC079
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
16MODD003
Diam
7m @ 6.9g/t Au
3m @ 8.9g/t Au
2m @ 8.9g/t Au
2m @ 8.0g/t Au
8m @ 6.4g/t Au
2m @ 8.9g/t Au
6m @ 4.7g/t Au and
3m @ 7.7g/t Au
2m @ 7.8g/t Au
3m @ 48.6g/t Au
2m @ 7.7g/t Au
2m @ 12.4g/t Au
4m @ 8.0g/t Au
3m @ 7.2g/t Au
13m @ 9.7g/t Au including
1m @ 83.0g/t Au
3.3m @ 19.4g/t Au including
0.5m @ 97.0g/t Au
80m
29m
16m
67m
13m
46m
54m
80m
58m
80m
26m
3m
35m
38m
61m
62m
61.7m
64.5m
Lena
Lena
Lena
Lena
Lena
Lena
Lena
Lena
Lena
Lena
Lena
Lena
Lena
Lena
Metallurgy – Strong gold recoveries from Lena and
Break of Day
Initial metallurgical test work was completed at Break of
Day and Lena with very positive results. Three composite
samples (unweathered, oxide and transitional) were collected
from representative RC drill holes across the strike of the
gold lodes at Lena. The samples were representative of the
various gold lodes, ore types and feed grades for potential
future mining and processing activities.
The test work has demonstrated very rapid leaching kinetics
for all samples and overall recovery of approximately 95%-
97% to produce a maximum leaching of gold before 24 hours.
In addition, high gravity recoveries of between 34% and
73% were achieved from a single pass through the Knelson
Concentrator.
At Break of Day three unweathered composite samples all
returned very positive gold recoveries from preliminary test
work from representative RC drill holes across the strike of
the gold lodes.
The test work has demonstrated very rapid leaching kinetics
for all samples and overall recovery of approximately 96%
to produce a maximum leaching of gold after eight hours.
In addition, high gravity recoveries averaging over 84%
were achieved from a single pass through the Knelson
Concentrator.
The test work was undertaken by ALS Metallurgical
Laboratories in Balcatta, Western Australia and was managed
and reviewed by CPC Project Design.
9
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11
Exploration Upside and Other Targets
Single drill holes at two other gold prospects, Leviticus and Break of Day South, also intersected gold mineralisation (Table 5).
Table 5: Select high-grade gold drill hole intersections from the Break of Day South and Leviticus Prospects
Drill Hole #
Drill Type
Intersection
Down Hole Depth
(From)
16MORC058
16MORC057
RC
RC
4m @ 4.0g/t Au
3m @ 3.5g/t Au
103m
72m
Prospect
Leviticus
Break of Day South
RC drilling recommenced in August to extend the Break
of Day mineralisation to the south of the currently defined
resource and to test the new Louise gold-in soil target
located 600m south of Break of Day (Figure 6).
A review of shallow historical rotary air-blast (“RAB”) and
aircore drilling has defined an 8km long zone of anomalous
gold (>0.1g/t Au) associated with the Lena and Break of Day
shear zones (Figure 6). The Mineral Resources at Lena and
Break of Day occur within this anomalous zone, and there
is excellent potential to discover further high-grade gold
resources along the Lena and Break of Day shears, beyond
those defined to date. Individual targets along the Lena
and Break of Day shears are currently being prioritised for
further drilling.
Base-metals Exploration – Three targets return
significant base metal and gold intercepts
Musgrave intersected significant high-grade zinc, copper,
gold and silver mineralisation at the Mt Eelya and Colonel
Prospects (Figure 7) on the northern Hollandaire area of the
Cue Project.
The base metals and gold focused drilling program was
completed in late May and comprised 16 drill holes for a
total of 2,720m.
Three targets returned significant base metals and gold-silver
intercepts at the Mt Eelya and Colonel prospects. All three
targets are all still open with significant upside potential.
Down hole electromagnetic (DHEM) surveys are currently
being planned to better define the potential extent of the
base metals mineralisation.
Musgrave has secured co-funding for the drilling through
the Western Australian Government Exploration Incentive
Scheme (EIS).
Figure 6: Plan of the Moyagee Project area showing the surface
projection of the Break of Day and Lena Mineral
Resource outlines, prospects and the anomalous gold
corridor
Figure 7: Plan showing locations of the base metals targets,
including Mt Eelya and Colonel on aeromagnetic image
10
AnnualReport mUSGRAVE mINERALAS LTD
Mt Eelya – High-grade Zn intersected
Two RC drill holes were completed at the Mt Eelya prospect
with both intersecting significant shallow zinc, copper, gold
and silver mineralisation (Figure 8).
Colonel East intersected: 6m @ 1.1g/t Au, 0.2% Cu, 1.6%
Zn and 4g/t Ag from 233m down hole. These intersections
are the first drill holes into these EM targets, which cover
a 600m strike extent (Figure 8) and highlight the base metal
potential of the area. The mineralisation is open along strike
and down plunge.
A DHEM survey is planned to better define the conductors
(sulphide mineralisation) along strike and at depth.
Figure 8: Plan showing drill hole locations for the Mt Eelya target
with Zn from pXRF soil geochemistry overlaying aerial
photography
The best intersection was 16m @ 3.1% Zn, 0.2% Cu,
0.1g/t Au and 2g/t Ag from 12m down hole (17EPRC005),
including a very high-grade zone of 2m @ 18.1% Zn and
0.5% Cu from 17m down hole.
Drill hole 17EPRC004 drilled 25 metres northwest of
17EPRC005, intersected: 21m @ 1.9% Zn, 0.4% Cu, 0.5g/t
Au and 6g/t Ag from 21m down hole, including a high-grade
zone of 4m @ 8.1% Zn and 1.5% Cu, 0.6g/t Au and 21g/t
Ag from 30m down hole.
These shallow intersections highlight the near surface base
metals potential at Mt Eelya. The mineralisation is open along
strike and down plunge.
Gossanous float, the weathered product of sulphide
mineralisation, can be traced at surface over a strike of
approximately 500m at Mt Eelya (Figure 8). The gossan
forms intermittent but subparallel zones. A DHEM survey is
planned to better define the conductors and related sulphide
mineralisation along strike and at depth.
Colonel – Strong base metal potential
Three RC drill holes were completed over three separate
conductive EM targets at the Colonel Prospect (Figure 7)
with two drill holes confirming the presence of significant
copper and zinc sulphide and gold mineralisation. The
conductive targets at Colonel and Colonel East (Figure 9)
were identified through airborne and surface EM surveys.
Drill hole 17EPRC001 at Colonel intersected; 6m @ 1.0%
Cu, 1.7g/t Au and 11g/t Ag from 60m down hole. Drill hole
17EPRC002 drilled 300m to the south east of 17EPRC001 at
Figure 9: Colonel long section (vertical section through plane of
mineralisation)
Other Projects
Musgrave currently holds tenements in the central Musgrave
and southern Gawler Craton regions of South Australia.
Only limited field activity was completed on these projects
during the period.
Panned gold 17MORC002, 99-100mdh
11
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11 Table 6: Summary of JORC Resources and Reserves for the Cue Project
Gold Mineral Resources
14 July 2017
Deposit
Moyagee
Break of Day
Lena
Leviticus
Numbers
Total Moyagee
Eelya
Hollandaire
Rapier South
Total Eelya
Tuckabianna
Jasper Queen
Gilt Edge
Indicated Resources
Au
g/t
Tonnes
‘000s
oz. Au
‘000s
Inferred Resources
Au
g/t
Tonnes
‘000s
oz. Au
‘000s
Total Resources
Au
g/t
Tonnes
‘000s
oz. Au
‘000s
445
1,288
7.73
1.69
111
70
1,733
3.24
181
473
473
1.4
1.4
21
21
423
1,393
42
278
2,137
45
171
216
175
96
6.54
1.85
6.0
2.5
2.94
1.1
2.2
1.9
2.6
3.1
89
83
8
22
202
2
12
13
15
9
868
2.682
42
278
3,870
518
171
688.9
175
96
7.15
1.77
6.00
2.46
3.07
1.35
2.15
1.55
2.60
3.06
199
153
8
22
382
22
12
34
15
9
Total Project
2,269
2.84
202
2,623
2.84
234
4,830
2.84
440
Copper Mineral Resources
14 July 2017
Indicated Resources
Inferred Resources
Total Resources
Deposit
Hollandaire
Copper
Silver Mineral Resources
14 July 2017
Deposit
Hollandaire
Silver
Reserves
Copper Ore Reserves
14 July 2017
Deposit
Hollandaire
Copper
Silver Ore Reserves
14 July 2017
Deposit
Hollandaire
Silver
Tonnes
'000s
Grade
%
Tonnes
Cu ‘000s
Tonnes
'000s
Grade
%
Tonnes
Cu
‘000s
Tonnes
'000s
Grade
%
Tonnes
Cu ‘000s
1,891
2.0
38
122
1.4
2
2,013
2.0
40
Indicated Resources
Grade
g/t
oz. Ag
‘000s
Tonnes
'000s
Inferred Resources
Grade
g/t
Tonnes
'000s
oz. Ag
‘000s
Total Resources
Grade
g/t
Tonnes
'000s
oz. Ag
‘000s
1,925
6.3
390
728
4.7
110
2653
5.9
500
Proved Reserves
Probable Reserves
Total Reserves
Tonnes
'000s
Grade
%
Tonnes
Cu ‘000s
Tonnes
'000s
Grade
%
Tonnes
Cu
‘000s
Tonnes
'000s
Grade
%
Tonnes
Cu ‘000s
442
3.3
15
442
3.3
15
Proved Reserves
Grade
g/t
oz. Ag
‘000s
Tonnes
'000s
Probable Reserves
Grade
g/t
Tonnes
'000s
oz. Ag
‘000s
Total Reserves
Grade
g/t
Tonnes
'000s
oz. Ag
‘000s
574
8.2
151
574
8.2
151
* Due to the effects of rounding, the total may not represent the sum of all components
12
AnnualReport mUSGRAVE mINERALAS LTD
Notes to Table 6:
The Break of Day and Lena Mineral Resources at Moyagee are produced in accordance with the 2012 Edition of the Australian Code of
Reporting of Mineral Resources and Ore Reserves (JORC 2012).The remaining Mineral Resources and Ore Reserve estimates were first
prepared and disclosed in accordance with the 2004 Edition of the Australian Code of Reporting of Mineral Resources and Ore Reserves
(JORC 2004) and have not been updated since to comply with JORC 2012 on the basis that the information has not materially changed
since it was last reported. For further details refer to Musgrave Minerals Ltd (MGV) ASX announcement 14 July 2017, “Resource Estimate
Exceeds 350koz Gold” and Silver Lake Resources Limited (SLR) ASX Announcement 26 August 2016, “Mineral Resources and Ore Reserves
Update”.
Mineral Resources and Ore Reserves
The information in this report that relates to Mineral Resources at Break of Day and Lena is based on information compiled by Mr Aaron
Meakin. Mr Meakin is a full-time employee of CSA Global Pty Ltd and is a Member of the Australasian Institute of Mining and Metallurgy.
Mr Meakin has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which
he is undertaking to qualify as Competent Persons as defined in the 2012 edition of the Australasian Code for the Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code). Mr Meakin consents to the disclosure of the information in this report in the
form and context in which it appears.
The information in this report that relates to the Hollandaire, Rapier South, Jasper Queen, Gilt edge, Leviticus and Numbers Mineral Resource
and Ore Reserve Estimates is extracted from the report created by Silver Lake Resources Limited entitled “Mineral Resources and Ore
Reserves Update”, 26 August 2016 and is available to view on Silver lake’s website (www.silverlakeresources.com.au) and the ASX (www.
asx.com.au). The Company confirms that it is not aware of any new information or data that materially affects the information included
in the original market announcement and, in the case of estimates of Mineral Resources and Ore Reserves, that all material assumptions
and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially
changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially
modified from the original market announcement.
Exploration Results
The information in this presentation that relates to Exploration Results is based on information compiled and thoroughly reviewed by
Mr Robert Waugh. Mr Waugh is a Fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM) and a Member of the Australian
Institute of Geoscientists (MAIG). Mr Waugh is Managing Director of Musgrave Minerals Ltd. Mr Waugh has sufficient industry experience
to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Mr Waugh consents to the inclusion in the report of the matters based on his information in the form and
context in which it appears.
Forward Looking Statements
This document may contain certain forward-looking statements. Forward-looking statements include, but are not limited to statements
concerning Musgrave Minerals Limited’s (Musgrave’s) current expectations, estimates and projections about the industry in which Musgrave
operates, and beliefs and assumptions regarding Musgrave’s future performance. When used in this document, words such as “anticipate”,
“could”, “plan”, “estimate”, “expects”, “seeks”, “intends”, “may”, “potential”, “should”, and similar expressions are forward-looking statements.
Although Musgrave believes that its expectations reflected in these forward-looking statements are reasonable, such statements are subject
to known and unknown risks, uncertainties and other factors, some of which are beyond the control of Musgrave and no assurance can be
given that actual results will be consistent with these forward-looking statements.
13
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11 tenement scheDuLe
Project
Musgrave
Corunna
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Cue
Location
South Australia
South Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
72%
72%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Tenement
EL5175
EL5497
E58/507
P58/1709
P58/1710
E21/194
E20/606
E20/608
E20/616
E20/630
E20/659
E20/836
E21/144
E20/629
E20/698
E20/699
E20/700
E21/129
E21/177
E58/335
M20/225
M20/245
M20/277
M21/106
M21/107
M58/224
M58/225
P20/2094
P20/2219
P20/2279
L20/57
14
AnnualReport mUSGRAVE mINERALAS LTD DIRectoRs’ RepoRt
Your Directors present their report on the consolidated
entity consisting of Musgrave Minerals Limited (“the
Company”) and its subsidiary (“the Group” or “the
Consolidated Entity”) at the end of the year ended 30 June
2017.
Directors
The following persons were Directors of the Company
during the whole of the financial year and up to the date of
this report unless noted otherwise:
Graham Ascough, Non-Executive Chairman
Robert Waugh, Managing Director
Kelly Ross, Non-Executive Director
John Percival, Non-Executive Director
Principal activities
During the year the principal continuing activities of the
Group consisted of:
a)
b)
c)
exploration of mineral tenements both on a joint
venture basis and by the Group in its own right;
to continue to seek extensions of areas held and to
seek out new areas with mineral potential; and
to evaluate results achieved through surface sampling,
geophysical surveys and drilling activities carried out
during the year.
Financial results
The consolidated loss of the Group after providing for
income tax for the year ended 30 June 2017 was $5,240,475
(2016: $6,105,944).
Dividends
No dividends have been paid or declared since the start of
the financial year. No recommendation for the payment of a
dividend has been made by the Directors.
Operations and financial review
Information on the operations of the Group and its
prospects is set out in the “Review of Operations” section of
this Report.
Exploration and evaluation costs totalling $4,749,163
(2016: $6,191,926) were impaired during the year. The
impaired exploration and evaluation costs primarily
comprise previously capitalised costs in relation to some
Musgrave Project tenements in South Australia which were
relinquished.
As at 30 June 2017 the Group had net assets of $8,775,705
(2016: $7,891,589) including cash and cash equivalents of
$3,560,365 (2016: $2,075,224).
Significant changes in the state of affairs
Significant changes in the state of affairs of the Group during
the financial year were as follows:
On 6 July 2016, the Company completed a placement to
sophisticated and professional investors of 12,711,864 shares
at an issue price of 5.9 cents per share raising $750,000
before costs.
In July 2016 the Company also announced a fully
underwritten Share Purchase Plan (“SPP”). The SPP was
strongly supported by Shareholders and was heavily
oversubscribed with the Company receiving applications
totalling $1,984,000. In light of the strong demand from
shareholders, the Board of Directors elected to increase the
original SPP target which had been set at $1,250,000 and
accepted all valid applications from eligible shareholders. A
total of 33,627,084 new shares were issued under the SPP
at a price of 5.9 cents per share on 11 August 2016 raising
$1,983,998 before costs.
Under the terms and conditions of the SPP, on 16 August
2016 the Company completed a top-up placement to
sophisticated and professional investors of 8,474,576 shares
at an issue price of 5.9 cents per share raising $500,000
before costs.
In February 2017, the Company completed Stage 1 of
the Cue Project Farm-In and Joint Venture Agreement
(“Agreement”) with Silver Lake and Cue Minerals Pty Ltd
(“CMPL”), a wholly owned subsidiary of Silver Lake, on the
Cue Project in the highly prospective Murchison province
of Western Australia. Under the Stage 1 terms of the
Agreement, the Company earned a 60% interest in the Cue
Project by meeting the $1,800,000 exploration expenditure
requirement.
On 19 May 2017, the Company completed a placement to
sophisticated and professional investors of 40,000,000 shares
at an issue price of 7.5 cents per share raising $3,000,000
before costs. Details of the changes in equity are disclosed in
note 15 to the financial statements.
There were no other significant changes in the state of affairs
of the Group during the financial year.
15
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11
Events since the end of the financial year
In June 2017 Silver Lake announced that it had agreed to
sell its Murchison assets (which includes its 40% interest
in the Cue Project with the Company) to a wholly owned
subsidiary of Westgold Resources Limited (“Westgold”)
(ASX: WGX) for total consideration of approximately $10
million.
In July 2017 the Company completed Stage 2 of the Cue
Project Farm-In and Joint Venture Agreement with Silver
Lake and CMPL, a wholly owned subsidiary of Silver Lake,
on the Cue Project. Under the Stage 2 terms of the
Agreement, the Company earned a 80% interest in the Cue
Project by meeting the $1,800,000 exploration expenditure
requirement.
On 18 July 2017, the Company announced that it had elected
to exercise its pre-emptive right to acquire Silver Lake’s
remaining interest in the Cue Project on equivalent terms
to those proposed by Westgold. The purchase of the interest
was completed on 4 August 2017 for cash consideration of
$1.5 million.
Musgrave now holds 100% of the core tenure on the Cue
Project including the tenure hosting all the gold and copper
Mineral Resources (see ASX announcement 4 August 2017,
“Musgrave Secures 100% of Key Cue Tenure”).
There has not arisen in the interval between the end of the
financial year and the date of this report any other item,
transaction or event of a material and unusual nature likely,
in the opinion of the Directors, to affect significantly the
operations, the results of those operations, or the state of
affairs of the Group in future financial years.
Likely developments and expected results
of operations
The Directors are not aware of any developments that might
have a significant effect on the operations of the Group
in subsequent financial years not already disclosed in this
report.
Environmental regulation
The Group is subject to significant environmental regulation
in respect of its exploration activities. Tenements in Western
Australia and South Australia are granted subject to
adherence to environmental conditions with strict controls
on clearing, including a prohibition on the use of mechanised
equipment or development without the approval of the
relevant Government agencies, and with rehabilitation
required on completion of exploration activities. These
regulations are controlled by the Department of Mines and
Petroleum (Western Australia) and the Department of State
Development (South Australia).
16
Musgrave Minerals Limited conducts its exploration activities
in an environmentally sensitive manner and the Group is not
aware of any breach of statutory conditions or obligations.
Greenhouse gas and energy data reporting requirements
The Directors have considered compliance with both the
Energy Efficiency Opportunity Act 2006 and the National
Greenhouse and Energy Reporting Act 2007 which requires
entities to report annual greenhouse gas emissions and
energy use. The Directors have assessed that there are no
current reporting requirements for the year ended 30 June
2017. However reporting requirements may change in the
future.
Information on Directors
Mr Graham Ascough
BSc, PGeo, MAusIMM.
(Non-Executive Chairman), Director since 26 May 2010
Experience and expertise
Graham Ascough is a senior resources executive with more
than 27 years of industry experience evaluating mineral
projects and resources in Australia and overseas. He has
had broad industry involvement ranging from playing a
leading role in setting the strategic direction for significant
country-wide exploration programs to working directly
with mining and exploration companies.
Mr Ascough is a geophysicist by training and was the
Managing Director of ASX listed Mithril Resources Ltd
from October 2006 until June 2012. Prior to joining Mithril
in 2006, Mr Ascough was the Australian Manager of Nickel
and PGM Exploration at the major Canadian resources
house, Falconbridge Ltd (acquired by Xstrata Plc in 2006).
He is a Member of the Australian Institute of Mining and
Metallurgy, and is a Professional Geoscientist of Ontario,
Canada.
Other current directorships
Mithril Resources Ltd (Appointed 9 October 2006)
PNX Metals Ltd (Appointed 10 December 2012)
Sunstone Metals Ltd (Appointed 29 November 2013)
Former directorships in last 3 years
None
Special responsibilities
Chair of the Board
Member of the Audit Committee
Interests in shares and options
Ordinary Shares – Musgrave Minerals
Limited
Unlisted Options – Musgrave Minerals
Limited
849,237
750,000
AnnualReport mUSGRAVE mINERALAS LTD
Mr Robert Waugh
Mrs Kelly Ross
MSc, BSc, FAusIMM, MAIG.
(Managing Director), Director since 6 March 2011
BBus, CPA, AGIA.
(Non-Executive Director), Director since 26 May 2010
Experience and expertise
Experience and expertise
Robert Waugh has over 25 years of experience in the
resources sector and was a critical member of the WMC
Resources Ltd exploration team that discovered the Nebo-
Babel nickel/copper/PGM deposit at West Musgrave in
2000.
He was subsequently Project Manager of the team that
defined the initial resource at Nebo-Babel. Mr Waugh has
held senior exploration management roles in a number
of companies including WMC Resources (“WMC”) and
BHP Billiton Exploration Ltd (“BHP”). Mr Waugh has
extensive exploration and mining experience in a range
of commodities including gold, nickel, copper, uranium and
PGMs.
Mr Waugh holds a Bachelor of Science degree majoring
in geology from the University of Western Australia and
a Master of Science in Mineral Economics from Curtin
University and the Western Australian School of Mines. Mr
Waugh is a Fellow of the Australasian Institute of Mining
and Metallurgy and a Member of the Australian Institute of
Geoscientists.
Mrs Kelly Ross is a qualified accountant holding a Bachelor
of Business (Accounting) and has the designation CPA from
the Australian Society of Certified Practicing Accountants.
Mrs Ross is a Chartered Secretary with over 25 years’
experience in accounting and administration in the mining
industry.
Mrs Ross was a senior accountant at Resolute Ltd from
1987 to 2000 during which time Resolute became a
gold producer in Ghana, Tanzania and at several mines in
Western Australia.
Mrs Ross was the Company Secretary of Independence
Group NL (“IGO”) for 10 years from 2001 to 2011.
IGO listed on the ASX in 2002 and commenced mining
at the Long Nickel Mine during that year. Mrs Ross was a
Director of IGO for 12 years from 2002 to 2014. Mrs Ross
retired from the Board of IGO on 24 December 2014.
Mrs Ross was appointed a Director of Musgrave Minerals
on 26 May 2010 and is the Chairman of the Audit
Committee.
Other current directorships
None
Former directorships in last 3 years
Independence Group NL (Retired 24 December 2014)
Other current directorships
None
Former directorships in last 3 years
None
Special responsibilities
Managing Director
Interests in shares and options
Ordinary Shares – Musgrave Minerals
Limited
Unlisted Options – Musgrave Minerals
Limited
RC drill bits – Break of Day
Special responsibilities
Chair of the Audit Committee
Interests in shares and options
Ordinary Shares – Musgrave Minerals
Limited
Unlisted Options – Musgrave Minerals
Limited
815,237
2,000,000
100,847
500,000
17
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11 Mr John Percival.
(Non-Executive Director), Director since 26 May 2010
Experience and expertise
Mr Percival has been involved in investment and merchant
banking for over 25 years including 15 years as Investment
Manager of Barclays Bank New Zealand Ltd. In addition
he has extensive experience in stockbroking, corporate
finance and investment management. In 1995 Mr Percival
was appointed to the Board of Goldsearch Limited and
since 2000 has been an Executive Director. In May 2014
Goldsearch changed direction and Mr Percival resigned his
executive position.
Mr Percival resigned from the Goldsearch Board in April
2017.
Other current directorships
None
Former directorships in last 3 years
Zoono Group Limited (formerly Goldsearch Ltd)
(Resigned 26 April 2017)
Special responsibilities
Member of the Audit Committee
Interests in shares and options
Ordinary Shares – Musgrave Minerals
Limited
Unlisted Options – Musgrave Minerals
Limited
Company Secretary
Mrs Patricia (Trish) Farr,
GradCertProfAcc, GradDipACG, AGIA, ACIS, GAICD.
Appointed 30 June 2015
554,237
500,000
Trish Farr is an experienced Chartered Secretary with
over 17 years’ experience in the exploration and mining
industry in the areas of corporate governance, compliance
and administration. Mrs Farr was previously the Company
Secretary of uranium junior Energy Metals Limited from its
listing in 2005 to 2010 and Fox Resources Ltd from 2013 to
2014. Mrs Farr is also a Director and the Company Secretary
of Jindalee Resources Limited. Mrs Farr is an associate
member of Chartered Secretaries & Administrators and
the Governance Institute of Australia (formerly Chartered
Secretaries Australia) and a graduate member of the
Australian Institute of Company Directors.
18
Meetings of Directors
The numbers of meetings of the Company’s Board of
Directors and of each Board committee held during the year
ended 30 June 2017, and the numbers of meetings attended
by each Director were:
Board of
Directors
Audit
Committee
A
9
9
9
9
B
9
9
9
9
A
2
n/a
2
2
B
2
n/a
2
2
Graham Ascough
Robert Waugh
Kelly Ross
John Percival
A = Number of meetings attended
B = Number of meetings held during the time the Director
held office or was a member of the committee during the
year
Retirement, election and continuation in
office of Directors
Mrs Kelly Ross, being the Director retiring by rotation who,
being eligible, will offer herself for re-election at the 2017
Annual General Meeting.
REMUNERATION REPORT (Audited)
The Directors present the Musgrave Minerals Limited
2017 Remuneration Report, outlining key aspects of our
remuneration policy and framework, and remuneration
awarded this year.
The report contains the following sections:
(a) Key management personnel (KMP) covered in this
report
(b) Remuneration governance and the use of remuneration
consultants
(c) Executive remuneration policy and framework
(d) Relationship between remuneration and the Group’s
performance
(e) Non-executive director remuneration policy
(f) Voting and comments made at the Company’s 2016
Annual General Meeting
(g) Details of remuneration
(h) Service agreements
(i) Details of share-based compensation and bonuses
(j)
Equity instruments held by key management personnel
(k) Loans to key management personnel
(l) Other transactions with key management personnel
AnnualReport mUSGRAVE mINERALAS LTD (a) Key management personnel covered in this
report
Non-Executive and Executive Directors
Graham Ascough Non-Executive Chairman
Robert Waugh Managing Director
Kelly Ross
Non-Executive Director
John Percival
Non-Executive Director
Other key management personnel
Name
Position
All executives receive consulting fees or a salary, part of
which may be taken as superannuation, and from time
to time, options. The Board reviews executive packages
annually by reference to the executive’s performance
and comparable information from industry sectors and
other listed companies in similar industries.
All remuneration paid to specified executives is valued
at the cost to the Group and expensed. Options are
valued using a Black-Scholes option pricing model.
(d) Relationship between remuneration and the
Patricia (Trish) Farr Company Secretary
Group’s performance
(b) Remuneration governance and the use of
remuneration consultants
The Company does not have a Remuneration
Committee. Remuneration matters are handled by the
full Board of the Company. In this respect the Board is
responsible for:
•
•
•
•
the over-arching executive remuneration
framework;
the operation of the incentive plans which apply
to executive directors and senior executives
(the executive team), including key performance
indicators and performance hurdles;
remuneration levels of executives; and
non-executive director fees.
The objective of the Board is to ensure that
remuneration policies and structures are fair and
competitive and aligned with the long-term interests of
the Company.
In addition, all matters of remuneration are handled in
accordance with the Corporations Act requirements,
especially with regard to related party transactions. That
is, none of the Directors participate in any deliberations
regarding their own remuneration or related issues.
Independent external advice is sought from
remuneration consultants when required, however no
advice has been sought during the period ended 30 June
2017.
(c) Executive remuneration policy and framework
In determining executive remuneration, the Board aims
to ensure that remuneration practices are:
•
•
•
•
competitive and reasonable, enabling the
Company to attract and retain key talent;
aligned to the Company’s strategic and business
objectives and the creation of shareholder value;
transparent and easily understood; and
acceptable to shareholders.
Emoluments of Directors are set by reference to
payments made by other companies of similar size and
industry, and by reference to the skills and experience
of Directors. Fees paid to Directors are not linked
to the performance of the Group. This policy may
change once the exploration phase is complete and
the Group is generating revenue. At present the
existing remuneration policy is not impacted by the
Group’s performance including earnings and changes in
shareholder wealth (e.g. changes in share price).
The Board has not set short term performance
indicators, such as movements in the Company’s share
price, for the determination of Director emoluments
as the Board believes this may encourage performance
which is not in the long term interests of the Company
and its shareholders. The Board has structured its
remuneration arrangements in such a way it believes is
in the best interests of building shareholder wealth. The
Board believes participation in the Company’s Employee
Share Option Plan motivates key management and
executives with the long term interests of shareholders.
(e) Non-executive director remuneration policy
On appointment to the Board, all Non-Executive
Directors enter into a service agreement with the
Company in the form of a letter of appointment.
The letter summarises the Board policies and terms,
including remuneration relevant to the office of
Director.
The Board policy is to remunerate Non-Executive
Directors at commercial market rates for comparable
companies for their time, commitment and
responsibilities. Non-Executive Directors receive
a Board fee but do not receive fees for chairing or
participating on Board committees. Board members
are allocated superannuation guarantee contributions
as required by law, and do not receive any other
retirement benefits. From time to time, some individuals
may choose to sacrifice their salary or consulting fees
to increase payments towards superannuation.
19
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11
The maximum annual aggregate Non-Executive Directors’ fee pool limit is $250,000 as disclosed in the Company’s Replacement
Prospectus dated 8 March 2011. Fees for Non-Executive Directors are not linked to the performance of the Group. Non-
Executive Directors’ remuneration may also include an incentive portion consisting of options, subject to approval by
shareholders.
(f) Voting and comments made at the Company’s 2016 Annual General Meeting
Musgrave Minerals Limited received more than 92% of “yes” votes on its remuneration report for the 2016 financial year.
The Company did not receive any specific feedback at the AGM on its remuneration practices.
(g) Details of remuneration
The following tables show details of the remuneration received by the Group’s key management personnel for the current
and previous financial year.
Short-term employment benefits
Post-
employment
benefits
Share-
based
payments
Salary
& fees
$
Bonus
$
Non-
Monetary
Benefit
$
Super-
annuation
$
Options
$
Total
$
Options
%
2017
Directors
G Ascough
R Waugh
K Ross
J Percival
Executives
P Farr
65,000
266,055
45,000
45,000
–
53,211
–
–
40,440
6,000
Totals
461,495
59,211
2016
Directors
G Ascough
R Waugh
K Ross
J Percival
Executives
P Farr
I Warland (1)
65,000
264,999
45,000
45,000
35,250
48,145
Totals
503,394
(1) Ceased employment 7 August 2015
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30,330
4,275
4,275
49,460
139,973
32,973
32,973
114,460
489,569
82,248
82,248
43.2
28.6
40.1
40.1
–
–
46,440
38,880
255,379
814,965
–
25,175
4,275
4,275
–
4,574
38,299
–
–
–
–
–
–
–
65,000
290,174
49,275
49,275
35,250
52,719
541,693
–
–
–
–
–
–
–
20
AnnualReport mUSGRAVE mINERALAS LTD
(h) Service agreements
On appointment to the Board, all Non-Executive Directors enter into a service agreement with the Company in the form
of a letter of appointment. The letter summarises the Board policies and terms of appointment, including compensation
relevant to the office of Director. Remuneration and other terms of employment for other members of key management
personnel are formalised in service agreements as summarised below.
R Waugh, Managing Director
Mr Waugh is remunerated pursuant to an Executive Services Agreement. Under the agreement the Company agrees to
employ Mr Waugh as Managing Director of the Company with a base salary of $268,715 plus statutory superannuation.
Either party may terminate the employment contract without cause by providing six (6) months written notice or by making
payment in lieu of notice (in the case of the Company), based on the annual salary component. Termination payments are
generally not payable on resignation or dismissal for serious misconduct. In the instance of serious misconduct the Company
can terminate employment at any time.
P Farr, Company Secretary
Ms Farr is remunerated pursuant to the terms of a Consultancy Agreement to fulfil the duties of the Company Secretary.
Fees paid during the year totalled $40,440 (plus bonus of $6,000) and were charged at usual commercial rates on a daily
basis. The agreement may be terminated by either party on three (3) months’ written notice.
(i) Details of share-based compensation and bonuses
Options
Options over ordinary shares in Musgrave Minerals Limited are granted under the Employee Share Option Plan (“ESOP”).
Participation in the ESOP and any vesting criteria are at the Board’s discretion and no individual has a contractual right to
participate in the scheme or to receive any guaranteed benefits. Any options issued to Directors of the Company are subject
to shareholder approval.
The terms and conditions of each grant of options affecting remuneration in the current or future reporting periods are set
out below.
Option
series
Grant date
Vesting and
exercise date
Expiry date
Exercise price
Value per
option at
grant date
% Vested
F
H
J
L
M
N
O
P
6 Mar 2013
6 Mar 2013
5 Mar 2018
11 Mar 2014
11 Mar 2014
10 Mar 2019
16 Sep 2015
16 Sep 2015
10 Mar 2019
16 Sep 2015
16 Sep 2015
23 Mar 2018
22 Apr 2016
22 Apr 2016
22 Apr 2021
4 Nov 2016
4 Nov 2016
4 Nov 2016
4 Nov 2016
22 Apr 2021
4 Nov 2016
4 Nov 2016
3 Nov 2019
3 Nov 2021
$0.25
$0.12
$0.12
$0.25
$0.045
$0.045
$0.167
$0.195
$0.0431
$0.0522
$0.0046
$0.0010
$0.0194
$0.0923
$0.0659
$0.0628
100%
100%
100%
100%
100%
100%
100%
100%
The fair value of options at grant date are independently determined using a Black-Scholes option pricing model that takes
into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.
Further information on the fair value of share options and assumptions is set out in note 24 to the financial statements.
Bonus
During the year the Board awarded a Discovery Bonus to the Managing Director and staff being 20% of base salary. The
bonus was in recognition of the successful discovery of the high-grade Break of Day gold deposit.
21
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11
(j) Equity instruments held by key management personnel
The following tables detail the number of fully paid ordinary shares and options over ordinary shares in the Company that
were held during the financial year by key management personnel of the Group, including their close family members and
entities related to them.
Options
2017
Directors
G Ascough
R Waugh
K Ross
J Percival
Shareholdings
2017
Directors
G Ascough
R Waugh
K Ross
J Percival
Opening
Balance 1
July
Granted as
Remuneration
Options
exercised
Net change
other
Balance at
30 June
Vested
but not
exercisable
Vested and
exercisable
Vested
during the
year
–
–
–
–
–
750,000
2,000,000
500,000
500,000
3,750,000
–
–
–
–
–
–
–
–
–
–
750,000
2,000,000
500,000
500,000
3,750,000
–
–
–
–
–
750,000
2,000,000
500,000
500,000
3,750,000
–
–
–
–
–
Opening Balance
1 July
Granted as
remuneration
Options
exercised
Net change
other
Balance at 30
June
595,000
561,000
50,000
200,000
1,406,000
–
–
–
–
–
–
–
–
–
–
254,237
254,237
50,847
354,237
913,558
849,237
815,237
100,847
554,237
2,319,558
(k) Loans to key management personnel
There were no loans to individuals or any key management personnel during the financial year or the previous financial year.
(l) Other transactions with key management personnel
There were no other transactions with key management personnel during the financial year or the previous financial year.
End of Remuneration Report (Audited)
22
AnnualReport mUSGRAVE mINERALAS LTD
Shares under option
Unissued ordinary shares of the Company under option at the date of this report are as follows:
Date options granted
Expiry Date
Issue price of shares
Number under option
6 March 2013
16 September 2015
11 March 2014
16 September 2015
22 April 2016
4 November 2016
4 November 2016
4 November 2016
5 March 2018
23 March 2018
10 March 2019
10 March 2019
22 April 2021
22 April 2021
3 November 2019
3 November 2021
$0.25
$0.25
$0.12
$0.12
$0.045
$0.045
$0.167
$0.195
500,000
75,000
300,000
250,000
500,000
400,000
2,550,000
800,000
5,375,000
No option holder has any right under the options to participate in any other share issue of the Company or any other entity.
During the year 200,000 options, previously issued to employees under the Company ESOP, were exercised and 200,000 new
shares issued.
Shares issued on the exercise of options
There were no other shares issued on the exercise of
options during the year and up to the date of this report.
Corporate Governance Statement
The Company’s 2017 Corporate Governance Statement has
been released as a separate document and is located on the
Company’s website at http://www.musgraveminerals.com.au/
corporate-governance.
Proceedings on Behalf of the Group
No person has applied to the Court under section 237 of
the Corporations Act 2001 for leave to bring proceedings on
behalf of the 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.
Indemnification and Insurance of Directors
and Officers
During the financial year, the Company paid a premium to
insure the Directors and Officers of the consolidated entity
against any liability incurred as a Director or Officer to the
extent permitted by the Corporations Act 2001. The contract
of insurance prohibits the disclosure of the nature of the
liabilities covered or the amount of the premium paid.
The Group has not entered into any agreement with its
current auditors indemnifying them against claims by a third
party arising from their position as auditor.
Non-Audit Services
The Company may decide to employ the auditor on
assignments additional to their statutory audit duties where
the auditor’s expertise and experience with the Company
and/or the Group are important.
Details of the amounts paid or payable to the auditor (Grant
Thornton Audit Pty Ltd) for audit and non-audit services
provided during the year are set out in note 19. During
the year ended 30 June 2017 no fees were paid or were
payable for non-audit services provided by the auditor of the
consolidated entity (2016: $Nil).
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as
required under section 307C of the Corporations Act 2001 is
set out on the following page.
Signed in accordance with a resolution of the Directors.
Graham Ascough
Chairman
Perth, 8 September 2017
23
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11
AuDItoR’s InDepenDence DecLARAtIon
Level 1
10 Kings Park Road
West Perth WA 6005
Correspondence to:
PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
to the Directors of Musgrave Minerals Limited
In accordance with the requirements of section 307C of the Corporations Act
2001, as lead auditor for the audit of Musgrave Minerals Limited for the year
ended 30 June 2017, 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
C A Becker
Partner - Audit & Assurance
Perth, 08 September 2017
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘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.
24
AnnualReport mUSGRAVE mINERALAS LTD
Financial
Statements
For the year ended 30 June 2017
25
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11 consolidated statement of profit or Loss
and other comprehensive Income
For the year ended 30 June 2017
Revenue from operating activities
Employee benefits expense
Depreciation expense
Impairment expense
Funds misappropriated
Other expenses
Change in fair value of derivative financial instruments
Loss from continuing operations before income tax
Income tax benefit
Loss after income tax for the period attributable to
the owners of Musgrave Minerals Limited
Other comprehensive income
Items that may be reclassified to profit or loss
Changes in the fair value of available for sale financial
assets
9(b)
Other comprehensive income for the period, net of
tax
Total comprehensive loss for the period attributable
to the owners of Musgrave Minerals Limited
Consolidated
Notes
3 (a)
3 (b)
11
3(c)
3(d)
9(a)
5
2017
$
125,625
(507,247)
(14,630)
(4,749,163)
–
(327,426)
(4,000)
(5,476,841)
236,366
2016
$
76,492
(277,958)
(22,954)
(6,191,926)
100,000
(302,760)
–
(6,619,106)
513,162
(5,240,475)
(6,105,944)
16,789
16,789
–
–
(5,223,686)
(6,105,944)
Cents
per share
Cents
per share
Loss per share attributable to the owners of
Musgrave Minerals Limited
- basic loss per share
- diluted loss per share
18
18
2.92
2.92
4.95
4.95
This Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes
26
AnnualReport mUSGRAVE mINERALAS LTD consolidated statement of Financial position
As at 30 June 2017
Consolidated
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Derivative financial instruments
Total Current Assets
Non-Current Assets
Available for sale financial assets
Property, plant and equipment
Exploration and evaluation
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Short-term provisions
Total Current Liabilities
Non-Current LiabilitiesLong-term provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Notes
6
7
8
9 (a)
9 (b)
10
11
13
14
14
15
16
17
2017
$
3,560,365
435,795
10,307
37,000
4,043,467
140,000
48,810
5,022,031
5,210,841
9,254,308
389,372
78,993
468,365
10,238
10,238
478,603
2016
$
2,075,224
43,512
12,588
–
2,131,324
–
63,440
6,020,245
6,083,685
8,215,009
243,536
47,525
291,061
32,359
32,359
323,420
8,775,705
7,891,589
32,646,322
320,283
(24,190,900)
8,775,705
26,793,899
64,503
(18,966,813)
7,891,589
This Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes
27
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11 consoLIDAteD stAtement oF chAnges In equIty
For the year ended 30 June 2017
Attributable to equity holders of the entity
Issued Capital
$
Options
Reserve
$
Assets Held for
Sale Reserve
$
Accum. Losses
$
Total Equity
$
At 1 July 2015
26,718,899
2,858,705
Total comprehensive loss for
the period
Other comprehensive income
Total comprehensive loss
for the period net of tax
Transactions with owners
in their capacity as
owners
Issue of shares to Silver Lake
Resources Limited
Issue of employee options
Lapse of options
At 30 June 2016
At 1 July 2016
Total comprehensive loss for
the period
Other comprehensive income
Total comprehensive loss
for the period net of tax
Transactions with owners
in their capacity as
owners
Issue of shares
Transaction costs of issuing
shares
Transfer from share option
reserve:
- due to exercise of options
-due to expiry of options
Issue of options to directors
–
–
–
75,000
–
–
26,793,899
26,793,899
–
–
6,242,998
(390,575)
–
–
–
–
14,798
(2,809,000)
64,503
64,503
–
–
–
–
–
–
–
(3,870)
(12,518)
255,379
–
–
–
–
–
–
–
–
–
–
(15,669,869)
13,907,735
(6,105,944)
(6,105,944)
–
–
(6,105,944)
(6,105,944)
–
–
2,809,000
75,000
14,798
–
(18,966,813)
7,891,589
(18,966,813)
(5,240,475)
7,891,589
(5,240,475)
16,789
16,789
(5,240,475)
(5,223,686)
16,789
–
–
–
–
–
–
–
6,242,998
(390,575)
3,870
12,518
–
–
–
255,379
At 30 June 2017
32,646,322
303,494
16,789
(24,190,900)
8,775,705
This Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
28
AnnualReport mUSGRAVE mINERALAS LTD consoLIDAteD stAtement oF cAsh FLows
For the year ended 30 June 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Misappropriated funds recovered
Research and development tax rebate received
NET CASH FLOWS FROM/(USED IN)
Notes
Consolidated
2017
$
(627,092)
68,554
–
–
2016
$
(693,811)
82,483
100,000
513,162
OPERATING ACTIVITIES
25
(558,538)
1,834
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant & equipment
Proceeds from sale of property, plant & equipment
Payments for exploration activities
NET CASH FLOWS USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Proceeds from exercise of options
Share issue costs
NET CASH FLOWS FROM FINANCING
ACTIVITIES
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
–
–
(3,808,744)
(3,808,744)
6,233,998
9,000
(390,575)
5,852,423
1,485,141
2,075,224
(2,468)
7,000
(1,668,545)
(1,664,013)
–
–
–
–
(1,662,179)
3,737,403
6
3,560,365
2,075,224
This Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
29
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11 notes to the consoLIDAteD FInAncIAL stAtements
For the year ended 30 June 2017
New accounting standards and interpretations
1. CORPORATE INFORMATION
The consolidated financial report of Musgrave
Minerals Limited for the year ended 30 June 2017 was
authorised for issue in accordance with a resolution of
the Directors on 8 September 2017.
Musgrave Minerals Limited is a for profit company
incorporated in Australia and limited by shares which
are publicly traded on the Australian Securities
Exchange. The nature of the operation and principal
activities of the consolidated entity are described in the
attached Directors’ Report.
The principal accounting policies adopted in the
preparation of these consolidated financial statements
are set out below and have been applied consistently
to all periods presented in the consolidated financial
statements and by all entities in the consolidated entity.
2.
STATEMENT OF COMPLIANCE
These general purpose financial statements have been
prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the
Australian Accounting Standards Board, Urgent Issues
Group Interpretations and the Corporations Act 2001.
Compliance with IFRS
The consolidated financial statements of Musgrave
Minerals Limited also comply with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
New and amended accounting standards and
interpretations adopted by the group
The following standards relevant to the operations of
the Group and effective from 1 July 2016 have been
adopted. The adoption of these standards did not have
any impact on the current period or any prior period
and is not likely to affect future periods.
•
•
•
AASB 2014-9: Amendments to Australian Accounting
Standards Amendments to – Equity Method in
Separate Financial Statements
AASB 2015-1: Amendments to Australian Accounting
Standards - Annual Improvements to Australian
Accounting Standards 2012 – 2014
AASB 2015-2: Amendments to Australian Accounting
Standards - Disclosure Initiative: Amendments to
AASB 101
30
The following new and amended accounting standards
and interpretations relevant to the operations of the
Group have been published but are not mandatory
for the current financial year. The Group has decided
against early adoption of these standards, and has not
yet determined the potential impact on the financial
statements from the adoption of these standards and
interpretations.
The key new standards which may impact the Group in
future years are detailed below:
AASB 9: Financial Instruments
AASB 9 replaces AASB 139: Financial Instruments:
Recognition and Measurement.
The objective of this Standard is to establish principles
for the financial reporting of financial assets and
financial liabilities that will present relevant and useful
information to users of financial statements for their
assessment of the amounts, timing and uncertainty of an
entity’s future cash flows.
The entity is yet to undertake a detailed assessment of
the impact of AASB 9. However, based on the entity’s
preliminary assessment, the Standard is not expected to
have a material impact on the transactions and balances
recognised in the financial statements when it is first
adopted for the year ending 30 June 2019.
New or revised requirement
Application date of standard
Application date for Group
1 Jan 2018
1 Jul 2018
AASB 15: Revenue from Contracts with Customers
The objective of this Standard is to establish the
principles that an entity shall apply to report useful
information to users of financial statements about the
nature, amount, timing and uncertainty of revenue and
cash flows arising from a contract with a customer.
The entity is yet to undertake a detailed assessment of
the impact of AASB 15. However, the Company does
not recognise any revenue other than interest revenue
and as such the Company does not believe the new
standard will have a material impact.
New or revised requirement
Application date of standard
Application date for Group
1 Jan 2018
1 Jul 2018
AnnualReport mUSGRAVE mINERALAS LTD
AASB 2016-5: Amendments to Australian Accounting
Standards - Classification and Measurement of
Share-based Payment Transactions
This Standard amends AASB 2: Share-based Payment,
clarifying how to account for certain types of share-
based payment transactions. The amendments provide
requirements on the accounting for:
•
•
•
The effects of vesting and non-vesting conditions
on the measurement of cash-settled share-based
payments
Share-based payment transactions with a net
settlement feature for withholding tax obligations
A modification to the terms and conditions
of a share-based payment that changes the
classification of the transaction from cash-settled
to equity-settled
The entity is yet to undertake a detailed assessment
of the impact of AASB 2016-5. However, based on the
entity’s preliminary assessment, the Standard is not
expected to have a material impact on the transactions
and balances recognised in the financial statements
when it is first adopted for the year ending 30 June
2019.
New or revised requirement
Application date of standard
Application date for Group
1 Jan 2018
1 Jul 2018
AASB 16: Leases
This Standard sets out the principles for the
recognition, measurement, presentation and disclosure
of leases. The objective is to ensure that lessees and
lessors provide relevant information in a manner that
faithfully represents those transactions. This information
gives a basis for users of financial statements to assess
the effect that leases have on the financial position,
financial performance and cash flows of an entity.
The entity is yet to undertake a detailed assessment of
the impact of AASB 16. However, the Company does
not recognise any operating leases other than the lease
of the office which is on a short term of three months
and as such would not be required to recognise as a
finance lease. Therefore the Company does not believe
the standard will have a material impact.
New or revised requirement
Application date of standard
Application date for Group
1 Jan 2019
1 Jul 2019
(a) Basis of measurement
Historical Cost Convention
These consolidated financial statements have been
prepared under the historical cost convention,
except where stated.
Critical Accounting Estimates
The preparation of financial statements requires
the use of certain critical accounting estimates.
It also requires management to exercise its
judgement in the process of applying the Group’s
accounting policies. The areas involving a higher
degree of judgement or complexity, or areas
where assumptions and estimates are significant
to the financial statements, are disclosed where
appropriate.
(b) Going Concern
These consolidated financial statements have
been prepared on the going concern basis, which
contemplates continuity of normal business
activities and the realisation of assets and the
settlement of liabilities in the ordinary course of
business.
The Group incurred an operating loss after
income tax for the year ended 30 June 2017 of
$5,240,475 (2016: $6,105,944) and experienced
net cash outflows from operating and investing
activities of $4,367,282 (2016: $1,662,179). As
at 30 June 2017 the Group had cash and cash
equivalents of $3,560,365 (2016: $2,075,224).
The Group has the ability to defer or reduce its
operating expenditure and commitments, or to
dispose of assets. However, based on its current
projected work program it is anticipated that it
will be necessary for the Group to raise additional
equity capital during the next twelve months.
The Group has successfully raised equity capital
in the past, most recently in May 2017 when
Musgrave completed a significantly oversubscribed
placement to institutional investors and existing
professional and sophisticated shareholders
raising $3,000,000 (before costs).
The Directors are of the opinion that the Cue
Project is still very prospective and that the
ongoing gold potential of this project will enable
the Group to secure fresh capital as and when
required. The Directors have reviewed the
Group’s financial position and are of the opinion
31
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11
Notes to the Consolidated Financial Statements
that the going concern basis of accounting is
appropriate having regard to the matters outlined
above.
If the Group is unable to continue as a going
concern, it may be required to realise its assets
and/or settle its liabilities other than in the
ordinary course of business and at amounts
different from those stated in the financial report.
(c) Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate
the assets and liabilities of the Company’s
subsidiary at 30 June 2017 and the results of its
subsidiary for the year then ended. The Company
and its subsidiary together are referred to in this
financial report as the Group or the consolidated
entity.
Subsidiaries are all entities (including structured
entities) over which the Group has control. The
Group controls an entity when the Group is
exposed to, or has rights to, variable returns from
its investment with the entity and has the ability
to affect those returns through its power to
direct the activities of the entity.
The acquisition method of accounting is used to
account for business combinations by the Group.
Subsidiaries are fully consolidated from the date
on which control is transferred to the Group.
They are de-consolidated from the date that
control ceases.
Intercompany transactions, balances and
unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are
also eliminated unless the transaction provides
evidence of an impairment of the transferred
asset. Accounting policies of subsidiaries have
been changed where necessary to ensure
consistency with the policies adopted by the
Group.
Non-controlling interests in the results and
equity of subsidiaries are shown separately in the
consolidated statement of profit or loss and other
comprehensive income, consolidated statement of
financial position and the consolidated statement
of changes in equity respectively.
Joint arrangements
Under AASB 11: Joint Arrangements investments
in joint arrangements are classified as either joint
operations or joint ventures. The classification
32
depends on the contractual rights and obligations
of each investor, rather than the legal structure of
the joint arrangement.
A joint operation is a joint arrangement
whereby the parties that have joint control
of the arrangement have rights to the assets,
and obligations for the liabilities, relating to
the arrangement. Those parties are called joint
operators. A joint venture is a joint arrangement
whereby the parties that have joint control of
the arrangement have rights to the net assets of
the arrangement. Those parties are called joint
venturers.
(d) Critical accounting judgements and key
sources of estimation uncertainty
The application of accounting policies requires
the use of judgements, estimates and assumptions
about carrying values of assets and liabilities that
are not readily apparent from other sources. The
estimates and associated assumptions are based
on historical experience and other factors that
are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions are
recognised in the period in which the estimate
is revised if it affects only that period, or in the
period of the revision and future periods if the
revision affects both current and future periods.
Share-based payment transactions
The Group measures the cost of equity-settled
transactions with employees by reference to
the fair value of the equity instruments at the
date at which they are granted. The fair value is
determined using a Black-Scholes option pricing
model.
Exploration and evaluation costs carried forward
The recoverability of the carrying amount of
exploration and evaluation costs carried forward
has been reviewed by the Directors. In conducting
the review, if any impairment indicators are
identified, the recoverable amount is then
assessed by reference to the higher of “fair value
less costs to sell” and, if applicable, “value in use”.
In determining value in use, future cash flows are
based on estimates of ore reserves and mineral
resources for which there is a high degree of
confidence of economic extraction, production
and sales levels, future commodity prices, future
AnnualReport mUSGRAVE mINERALAS LTD
capital and production costs and future exchange
rates.
Variations to any of these estimates, and timing
thereof, could result in significant changes to the
expected future cash flows which in turn could
result in significant changes to the impairment
test results, which in turn could impact future
financial results. The recoverability of the carrying
amount of deferred exploration and evaluation
expenditure is dependent on the successful
development and commercial exploitation, or
alternatively the sale, of the respective areas of
interest.
(e) Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision maker. The chief
operating decision maker, who is responsible for
allocating resources and assessing performance of
the operating segments, has been identified as the
Board of Directors of Musgrave Minerals Limited.
(f) Functional and presentation of currency
The consolidated financial statements are
presented in Australian dollars, which is the
Group’s functional and presentational currency.
Foreign currency transactions are translated
into the functional currency using the exchange
rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from
the settlement of such transactions and from
the translation at year end exchange rates of
monetary assets and liabilities denominated in
foreign currencies are recognised in profit or
loss, except when they are deferred in equity
as qualifying cash flow hedges and qualifying net
investment hedges or are attributable to part of
the net investment in a foreign operation.
Foreign exchange gains and losses that relate to
borrowings are presented in the statement of
profit or loss and other comprehensive income,
within finance costs. All other foreign exchange
gains and losses are presented in the statement of
profit or loss and other comprehensive income
on a net basis within other income or other
expenses.
Non-monetary items that are measured at fair
value in a foreign currency are translated using
the exchange rates at the date when the fair value
was determined. Translation differences on assets
and liabilities carried at fair value are reported as
part of the fair value gain or loss.
(g) Revenue recognition
Revenue is measured at fair value of the
consideration received or receivable. Amounts
disclosed as revenue are net of returns, trade
allowances, rebates and amounts collected
on behalf of third parties. Interest income is
recognised as it accrues.
(h) Income tax
The income tax expense or benefit for the period
is the tax payable on the current period’s taxable
income based on the applicable income tax rate
for each jurisdiction, adjusted by changes in
deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on
the basis of the tax laws enacted or substantively
enacted at the end of the reporting period.
Management periodically evaluates positions
taken in tax returns with respect to situations
in which applicable tax regulation is subject to
interpretation. It establishes provisions where
appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred income tax is provided in full, using the
liability method, on temporary differences arising
between the tax bases of assets and liabilities
and their carrying amounts in the consolidated
financial statements. However, deferred tax
liabilities are not recognised if they arise from the
initial recognition of goodwill. Deferred income
tax is also not accounted for if it arises from initial
recognition of an asset or liability in a transaction
other than a business combination that at the
time of the transaction affects neither accounting
nor taxable profit or loss. Deferred income tax is
determined using tax rates (and laws) that have
been enacted or substantially enacted by the
end of the reporting period and are expected to
apply when the related deferred income tax asset
is realised or the deferred income tax liability is
settled.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only
if it is probable that future taxable amounts will
be available to utilise those temporary differences
and losses.
33
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11
Notes to the Consolidated Financial Statements
Deferred tax assets and liabilities are offset
when there is a legally enforceable right to offset
current tax assets and liabilities and when the
deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are
offset where the entity has a legally enforceable
right to offset and intends either to settle on a
net basis, or to realise the asset and settle the
liability simultaneously.
Musgrave Minerals Limited and its wholly-owned
Australian controlled entity have implemented the
tax consolidation legislation. As a consequence,
these entities are taxed as a single entity
and the deferred tax assets and liabilities of
these entities are set off in the consolidated
financial statements. Current and deferred tax
is recognised in profit or loss, except to the
extent that it relates to items recognised in other
comprehensive income or directly in equity.
In this case, the tax is also recognised in other
comprehensive income or directly in equity,
respectively.
Amounts receivable from the Australian Tax Office
in respect to the research and development tax
concession claims are recognised as an income
tax benefit in the year in which the claim is lodged
with the Australian Tax Office. Any research and
development tax offset due to the Company will
be recognised under the tax expense or income
in the Consolidated Statement of Profit or Loss
and Other Comprehensive Income when the
amount to be received is known.
(i) Leases
Leases of property, plant and equipment where
the Group, as lessee, has substantially all the risks
and rewards of ownership are classified as finance
leases. Finance leases are capitalised at the lease’s
inception at the fair value of the leased property
or, if lower, the present value of the minimum
lease payments. The corresponding rental
obligations, net of finance charges, are included in
other short-term and long-term payables.
Each lease payment is allocated between the
liability and finance cost. The finance cost is
charged to the profit or loss over the lease
period so as to produce a constant periodic
rate of interest on the remaining balance of
the liability for each period. The property, plant
and equipment acquired under finance leases is
depreciated over the asset’s useful life or over the
34
shorter of the asset’s useful life and the lease term
if there is no reasonable certainty that the Group
will obtain ownership at the end of the lease
term.
Leases in which a significant portion of the risks
and rewards of ownership are not transferred to
the Group as lessee are classified as operating
leases. Payments made under operating leases (net
of any incentives received from the lessor) are
charged to profit or loss on a straight-line basis
over the period of the lease.
(j)
Impairment of assets
Intangible assets that have an indefinite useful life
are not subject to amortisation and are tested
annually for impairment or more frequently if
events or changes in circumstances indicate that
they might be impaired. Other assets 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
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are
separately identifiable cash inflows which are
largely independent of the cash inflows from
other assets or groups of assets (cash-generating
units). Non-financial assets other than goodwill
that suffered an impairment are reviewed for
possible reversal of the impairment at the end of
each reporting period.
(k) Cash and cash equivalents
Cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, and
other short-term, highly liquid investments with
maturities of three months or less.
(l) Trade and other receivables
Trade receivables are recognised initially at fair
value and subsequently measured at amortised
cost using the effective interest method, less
provision for impairment. Trade receivables are
due for settlement within 30 days. They are
presented as current assets unless collection is
not expected for more than 12 months after the
reporting date.
Collectability of trade receivables is reviewed
on an ongoing basis. Debts which are known
AnnualReport mUSGRAVE mINERALAS LTD
to be uncollectible are written off by reducing
the carrying amount directly. A provision for
doubtful receivables is established when there
is objective evidence that the Group will not be
able to collect all amounts due according to the
original terms of the receivables. The amount
of the provision is the difference between the
asset’s carrying amount and the present value of
estimated future cash flows, discounted at the
original effective interest rate.
Cash flows relating to short-term receivables
are not discounted if the effect of discounting
is immaterial. The amount of the provision is
recognised in the profit or loss.
(m) Exploration and evaluation expenditure
Exploration and evaluation expenditure, including
the costs of acquiring licences and permits, are
capitalised as exploration and evaluation assets
on an area of interest basis. Costs incurred before
the Group has obtained the legal rights to explore
an area are recognised in the statement of profit
or loss and other comprehensive income.
Exploration and evaluation assets are only
recognised if the rights to the area of interest are
current and either:
(i)
(ii)
the expenditures are expected to be
recouped through successful development
and exploitation or from sale of the area of
interest; or
activities in the area of interest have not at
the reporting date reached a stage which
permits a reasonable assessment of the
existence or otherwise of economically
recoverable reserves, and active and
significant operations in, or in relation to, the
area of interest are continuing.
Exploration and evaluation assets are assessed for
impairment if sufficient data exists to determine
technical feasibility and commercial viability, and
facts and circumstances suggest that the carrying
amount exceeds the recoverable amount. For the
purposes of impairment testing, exploration and
evaluation assets are allocated to cash-generating
units to which the exploration activity relates. The
cash generating unit shall not be larger than the
area of interest.
Once the technical feasibility and commercial
viability of the extraction of minerals in an area
of interest are demonstrable, exploration and
evaluation assets attributable to that area of
interest are first tested for impairment and then
reclassified to mineral property and development
assets within property, plant and equipment.
When an area of interest is abandoned or the
Directors decide that it is not commercial, any
accumulated costs in respect of that area are
written off in the financial period the decision is
made.
The Cue Project Farm-in and Joint Venture with
Silver Lake is deemed to be a Joint Operation
under AASB 11: Joint Arrangements and the
Group accounts for its share of the joint venture
assets, liabilities, income and expenses.
(n) Property, plant and equipment
Property, plant and equipment is stated at
historical cost less accumulated depreciation.
Historical cost includes expenditure that is
directly attributable to the acquisition of the
items.
Where parts of an item of property, plant and
equipment have different useful lives, they are
accounted for as separate items of property, plant
and equipment.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that
future economic benefits associated with the item
will flow to the Group and the cost of the item
can be measured reliably. The carrying amount
of any component accounted for as a separate
asset is derecognised when replaced. All other
repairs and maintenance are charged to profit or
loss during the reporting period in which they are
incurred.
Depreciation is calculated using the diminishing
value and prime cost methods to allocate their
cost, net of their residual values, over their
estimated useful lives, or in the case of certain
leased plant and equipment, the shorter lease
term as follows:
• Motor vehicles
8 years
• Office and computer equipment 1 – 10 years
• Furniture, fittings and equipment 1 – 10 years
35
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11
Notes to the Consolidated Financial Statements
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at the end
of each reporting period.
An asset’s carrying amount is written down
immediately to its recoverable amount if the
asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by
comparing proceeds with the carrying amount.
These are included in profit or loss.
(o) Trade and other payables
These amounts represent liabilities for goods and
services provided to the Group prior to the end
of the financial year and which are unpaid. The
amounts are unsecured and are usually paid within
30 days of recognition. Trade and other payables
are presented as current liabilities unless payment
is not due within 12 months from the reporting
date.
(p) Employee benefits
Short–term Obligations
Liabilities for wages and salaries, including non-
monetary benefits, annual leave and accumulating
sick leave expected to be settled within 12
months after the end of the period in which
the employees render the related service, are
recognised in respect of employees’ services up to
the end of the reporting period and are measured
at the amounts expected to be paid when the
liabilities are settled. The liability for annual leave
and accumulating sick leave is recognised in the
provision for employee benefits. Liabilities for
non-accumulating sick leave are recognised when
the leave is taken and measured at the rates paid
or payable. All other short-term employee benefit
obligations are presented as payables.
The obligations are presented as current liabilities
in the statement of financial position if the entity
does not have an unconditional right to defer
settlement for at least twelve months after the
reporting date, regardless of when the actual
settlement is expected to occur.
Other Long-term Obligations
The liability for long service leave and annual
leave which is not expected to be settled within
12 months after the end of the period in which
the employees render the related service, is
recognised in the provision for employee benefits
and measured as the present value of expected
36
future payments to be made in respect of services
provided by employees up to the end of the
reporting period using the projected unit credit
method. Consideration is given to expected future
wage and salary levels, experience of employee
departures and periods of service. Expected
future payments are discounted using market
yields at the end of the reporting period on high
quality corporate bonds with terms to maturity
and currency that match, as closely as possible,
the estimated future cash outflows.
Share-Based Payments
The Group provides benefits to employees of
the Company in the form of share options. The
fair value of options granted is recognised as an
employee benefits expense with a corresponding
increase in equity. The fair value is measured at
grant date and spread over the period during
which the employees become unconditionally
entitled to the options. The fair value of the
options granted is measured using a Black-Scholes
option pricing model, taking into account the
terms and conditions upon which the options
were granted.
The cost of equity-settled transactions is
recognised, together with a corresponding
increase in equity, on a straight line basis over
the vesting period. The amount recognised as an
expense is adjusted to reflect the actual number
that vest.
The dilutive effect, if any, of outstanding options
is reflected as additional share dilution in the
computation of earnings per share.
Termination Benefits
Termination benefits are payable when
employment is terminated before the normal
retirement date, or when an employee accepts
voluntary redundancy in exchange for these
benefits. The Group recognises termination
benefits when it is demonstrably committed to
either terminating the employment of current
employees according to a detailed formal plan
without possibility of withdrawal or providing
termination benefits as a result of an offer made
to encourage voluntary redundancy. Benefits
falling due more than 12 months after the end of
the reporting period are discounted to present
value. No termination benefits, other than accrued
benefits and entitlements, were paid during the
period.
AnnualReport mUSGRAVE mINERALAS LTD
(q) Equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
(r) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing
the profit attributable to owners of the Group,
excluding any costs of servicing equity other than
ordinary shares by the weighted average number
of ordinary shares outstanding during the financial
year, adjusted for bonus elements in ordinary
shares issued during the year and excluding
treasury shares.
Diluted earnings per share
Diluted earnings per share adjusts 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 additional
ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential
ordinary shares.
(s) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net
of the amount of associated GST, unless the GST
incurred is not recoverable from the taxation
authority. In this case it is recognised as part of
the cost of acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive
of the amount of GST receivable or payable.
The net amount of GST recoverable from, or
payable to, the taxation authority is included with
other receivables or payables in the statement of
financial position.
Cash flows are presented on a gross basis.
The GST components of cash flows arising
from investing or financing activities which are
recoverable from, or payable to the taxation
authority, are presented as operating cash flows.
(t) Financial assets
Financial assets are classified as either financial
assets at fair value through profit or loss, loans
and receivables, held-to-maturity investments,
or available-for-sale investments, as appropriate.
When financial assets are recognised initially,
they are measured at fair value, plus, in the case
of investments not at fair value through profit or
loss, directly attributable transaction costs. The
Group determines the classification of its financial
assets after initial recognition and, when allowed
and appropriate, re-evaluates this designation at
each financial year-end. All regular way purchases
and sales of financial assets are recognised on the
trade date i.e. the date that the Group commits
to purchase the asset. Regular way purchases or
sales are purchases or sales of financial assets
under contracts that require delivery of the
assets within the period established generally by
regulation or convention in the marketplace.
Financial assets at fair value through profit or loss
(FVTPL)
Financial assets at FVTPL include financial assets
that are either classified as held for trading or
that meet certain conditions and are designated
at FVTPL upon initial recognition. All derivative
financial instruments fall into this category, except
for those designated and effective as hedging
instruments, for which the hedge accounting
requirements apply.
Assets in this category are measured at fair value
with gains or losses recognised in profit or loss.
The fair values of financial assets in this category
are determined by reference to active market
transactions or using a valuation technique where
no active market exists.
Available-for-Sale (AFS) financial assets
AFS financial assets are non-derivative financial
assets that are either designated to this category
or do not qualify for inclusion in any of the other
categories of financial assets. The Group’s AFS
financial assets include listed securities.
AFS financial assets are measured at fair value.
Gains and losses are recognised in other
comprehensive income and reported within the
AFS reserve within equity, except for impairment
losses and foreign exchange differences on
monetary assets, which are recognised in profit
or loss. When the asset is disposed of or is
determined to be impaired the cumulative gain or
loss recognised in other comprehensive income
is reclassified from the equity reserve to profit or
loss and presented as a reclassification adjustment
within other comprehensive income.
37
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11
Notes to the Consolidated Financial Statements
3. REVENUE AND ExPENSES
(a) Revenue from operating activities
Interest revenue
Other
Total revenue from operating activities
(b) Employee benefits expense
Wages, salaries, directors fees and other remuneration expenses
Superannuation contributions
Transfer to/(from) annual leave provision
Transfer to/(from) long service leave provision
Share-based payments expense
Transfer to capitalised tenements
Total employee benefits expense
(c) Funds misappropriated
Consolidated
2017
$
66,273
59,352
125,625
976,487
84,586
(6,020)
15,367
255,379
(818,552)
507,247
2016
$
73,972
2,520
76,492
795,276
72,118
(853)
12,974
14,798
(616,355)
277,958
Recovery was made during the 2016 financial year of $100,000 in respect of the funds misappropriation as disclosed in
the Company’s announcement released to the ASX on 12 February 2015.
(d) Other expenses
Secretarial, professional and consultancy costs
Occupancy costs
Share register maintenance
Insurance costs
Promotion, advertising and sponsorship
Audit fees
Employer related on-costs
Other expenses
Total other expenses
4.
SEGMENT INFORMATION
128,816
48,000
51,634
28,103
15,899
31,365
19,083
4,526
99,369
48,070
12,966
20,391
13,903
26,464
14,649
66,948
327,426
302,760
The Group operates in one geographical segment, being Australia and in one operating category, being mineral exploration.
Therefore, information reported to the chief operating decision maker (the Board of Musgrave Minerals Limited) for the
purposes of resource allocation and performance assessment is focused on mineral exploration within Australia. The Board
has considered the requirements of AASB 8: Operating Segments and the internal reports that are reviewed by the chief
operation decision maker in allocating resources and have concluded at this time that there are no separately identifiable
segments.
38
AnnualReport mUSGRAVE mINERALAS LTD
5.
INCOME TAx
Statement of Profit or Loss and Other Comprehensive Income
Current Income Tax
- Current income tax benefit at a rate of 27.5% (2016:28.5%)
- R&D tax concession
Deferred Income Tax
- Relating to original and reversal of temporary differences
- Deferred tax liability offset by deferred tax asset losses
- Temporary difference not recognised in the current period
Income tax expense / (benefit) reported in the Consolidated Statement of Profit
or Loss and Other Comprehensive Income
A reconciliation of income tax expense / (benefit) applicable to accounting
profit / (loss) before income tax at the statutory income tax rate to income tax
expense / (benefit) at the Company’s effective income tax is as follows:
Consolidated
2017
$
2016
$
–
–
(236,366)
(513,162)
(411,364)
1,177,104
(765,740)
(1,211,107)
759,866
451,241
(236,366)
(513,162)
Accounting loss from continuing operations before income tax
(5,476,841)
(6,619,106)
At the statutory income tax rate of 27.5% (2016: 28.5%)
(1,506,131)
(1,886,445)
Add
- Immediate write off of capital expenditure
- Expenditures not allowable for income tax purposes
- Other deductible items
- Tax losses not recognised due to not meeting recognition criteria
Deferred income tax
Recognised on the statement of financial position
Deferred income tax at the end of the reporting period
Relates to the following: (2017: 27.5%, 2016: 28.5%)
Deferred income tax liabilities
- Capitalised expenditure deductible for tax purposes
- Trade and other receivables
Deferred income tax assets
Trade and other payables
Employee benefits
Change in market value of derivative
Capital raising costs
Tax losses available to offset DTL
Net deferred tax asset / (liability)
(1,083,945)
1,522,984
(110,012)
(1,177,104)
(518,990)
1,813,433
(170,275)
(762,277)
1,381,059
3,023
1,384,082
(8,743)
(24,539)
(1,100)
(81,189)
1,715,770
3,587
1,719,357
(7,695)
(22,767)
–
(2,274)
(1,268,511)
(1,686,621)
–
–
In 2017, the Government enacted a change in the income tax rate for small business entities from 28.5% to 27.5%.
Musgrave Minerals Limited satisfies the criteria to be a small business entity.
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AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11 Notes to the Consolidated Financial Statements
5.
INCOME TAx CONTINUED
The Company and its 100% owned controlled entity have formed a tax consolidated group. The head entity of the
tax consolidated group is Musgrave Minerals Limited. The tax consolidated group has potential revenue tax losses of
$20,269,956 (2016: $16,664,803) and capital losses of $81,054.
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have
not been recognised in respect of these items because it is not probable that future taxable profit will be available against
which the Group can utilise benefits.
The utilisation of tax losses is dependent on the Group satisfying the continuity of ownership test or the same business test
at the time the tax losses are applied against taxable income.
The Company participated in the Federal Government’s 2014/15 Exploration Development Incentive (“EDI”) Scheme for
eligible exploration activities. As a result the Company has foregone 2015 income tax losses to the extent of $349,968 in
exchange for the EDI credits of $104,990 for the eligible shareholders.
6. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term deposits
Consolidated
2017
$
410,365
3,150,000
3,560,365
2016
$
125,224
1,950,000
2,075,224
The weighted average interest rate for the year was 2.28% (2016: 2.55%).
The Group’s exposure to interest rate risk is set out in note 23. The maximum exposure to credit risk at the end of the
reporting period is the carrying amount of each class of cash and cash equivalents mentioned above.
7. TRADE AND OTHER RECEIVABLES
Current
Research and development tax concession
GST receivable
Other
236,366
126,334
73,095
435,795
–
31,512
12,000
43,512
The amounts held in trade and other receivables do not contain impaired assets and are not past due. Based on the credit
history of these trade and other receivables, it is expected that these amounts will be received when due. The Group’s
financial risk management objectives and policies are set out in note 23.
Due to the short term nature of these receivables their carrying value is assumed to approximate their fair value.
8. OTHER CURRENT ASSETS
Accrued interest
10,307
10,307
12,588
12,588
40
AnnualReport mUSGRAVE mINERALAS LTD
9.
FINANCIAL ASSETS
a) Derivative financial instruments
Current
Opening balance
Acquisition
Change in fair value
Closing balance
b) Available for sale financial assets
Non-Current
Opening balance
Acquisition
Change in fair value
Closing balance
10. PROPERTY, PLANT AND EQUIPMENT
Plant and equipment
- At cost
- Acquisitions
- Disposals
- Accumulated depreciation
Total plant and equipment
Motor vehicles
- At cost
- Accumulated depreciation
Total motor vehicles
Total property, plant and equipment
Consolidated
2017
$
2016
$
–
41,000
(4,000)
37,000
–
123,211
16,789
140,000
224,344
–
–
(217,094)
7,250
166,545
(124,985)
41,560
48,810
–
–
–
–
–
–
–
–
243,076
2,468
(21,200)
(213,478)
10,866
166,545
(113,971)
52,574
63,440
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Notes to the Consolidated Financial Statements
10. PROPERTY, PLANT AND EQUIPMENT CONTINUED
Movement in carrying amounts
Movements in the carrying amounts for each class of property, plant and equipment between the beginning and the end of
the year:
2017
Consolidated:
Balance at the beginning of the year
Depreciation expense
Carrying amount at the end of the year
2016
Consolidated:
Balance at the beginning of the year
Acquisitions
Depreciation expense
Disposals
Carrying amount at the end of the year
11. ExPLORATION AND EVALUATION
Opening balance
Exploration expenditure incurred during the year
Impairment expense
Tenements sold
Closing balance
Plant and
equipment
$
10,866
(3,616)
7,250
29,533
2,468
(8,873)
(12,262)
10,866
Motor
Vehicles
$
52,574
(11,014)
41,560
66,655
-
(14,081)
-
52,574
Total
$
63,440
(14,630)
48,810
96,188
2,468
(22,954)
(12,262)
63,440
Consolidated
2017
$
2016
$
6,020,245
3,941,619
(4,749,163)
(190,670)
10,391,152
1,821,019
(6,191,926)
–
5,022,031
6,020,245
The recoverability of the carrying amount of deferred exploration and evaluation expenditure is dependent on the
successful development and commercial exploitation, or alternatively the sale, of the respective areas of interest. As a result,
an impairment of $4,749,163 (2016: $6,191,926) has been booked.
12. SUBSIDIARIES
Details of the Company’s subsidiary are as follows:
Subsidiary
Musgrave Exploration Pty Ltd
Principal Activity
Country of
Incorporation
Exploration
Australia
Proportion of
Ownership
2017
100%
2016
100%
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AnnualReport mUSGRAVE mINERALAS LTD
13. TRADE AND OTHER PAYABLES
Trade creditors
Other payables
Consolidated
2017
$
282,605
106,767
389,372
2016
$
176,082
67,454
243,536
Trade creditors are non-interest bearing and are normally settled on 30 day terms. The Group’s financial risk management
objectives and policies are set out in note 23. Due to the short term nature of these payables their carrying value is
assumed to approximate their fair value.
14. PROVISIONS
Short-term
Annual leave
Long service leave - current
Long-term
Long service leave
15. CONTRIBUTED EQUITY
a)
Share capital
Ordinary shares fully paid
b)
Movements in ordinary shares on issue
Balance at 1 July 2015
41,505
37,488
78,993
10,238
10,238
47,525
–
47,525
32,359
32,359
32,646,322
26,793,899
Consolidated
Number
$
121,000,000
26,718,899
Issue of shares to Silver Lake Resources Limited
4,032,258
75,000
Balance at 30 June 2016
Placement - 6 July 2016
Exercise of Employee Options - 20 July 2016
Share Purchase Plan - 11 August 2016
Placement - 16 August 2016
Placement – 19 May 2017
Share issue costs
Balance at 30 June 2017
125,032,258
26,793,899
12,711,864
200,000
33,627,084
8,474,576
40,000,000
–
750,000
9,000
1,983,998
500,000
3,000,000
(390,575)
220,045,782
32,646,322
Ordinary shares have the right to receive dividends as declared, and in the event of winding up the Company, to
participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up
on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the
Company.
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15. CONTRIBUTED EQUITY CONTINUED
c)
Movements in options on issue
Balance at beginning of the financial year
Options granted
Options exercised
Options expired / lapsed
Consolidated
2017
Number
2016
Number
2,200,000
3,750,000
(200,000)
(375,000)
15,975,000
1,725,000
–
(15,500,000)
Balance at end of the financial year
5,375,000
2,200,000
16. RESERVES
Share option reserve
Opening balance
Issue of employee options under the Employee Share Option Plan
Exercise of employee options
Expiry of options
Issue of director options
Balance at the end of the financial year
Consolidated
2017
$
2016
$
64,503
–
(3,870)
(12,518)
255,379
303,494
2,858,705
14,798
–
(2,809,000)
–
64,503
The options reserve is used to recognise the fair value of options issued to employees and contractors.
Assets held for sale reserve
Opening balance
Available for sale financial assets (change in fair value)
Balance at the end of the financial year
17. ACCUMULATED LOSSES
Balance at the beginning of the financial year
Net loss attributable to members
Transfer from share option reserve
Balance at the end of the financial year
–
16,789
16,789
–
–
–
(18,966,813)
(15,669,869)
(5,240,475)
16,388
(6,105,944)
2,809,000
(24,190,900)
(18,966,813)
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AnnualReport mUSGRAVE mINERALAS LTD
18. EARNINGS PER SHARE
- basic loss per share
- diluted loss per share
The following reflects the income and share data used in the calculations of basic
and diluted loss per share:
2017
cents
2.92
2.92
2016
cents
4.95
4.95
$
$
Profits / (losses) used in calculating basic and diluted earnings per share
(5,240,475)
(6,105,944)
Weighted average number of ordinary shares used in calculating basic and diluted
loss per share
179,467,936
123,302,574
2017
Number
2016
Number
19. AUDITOR’S REMUNERATION
Audit services
Grant Thornton Audit Pty Ltd
- Audit and review of the financial reports
Total remuneration
20. CONTINGENT ASSETS AND LIABILITIES
The Group had contingent liabilities in respect of :
Future royalty payments
Consolidated
2017
$
2016
$
30,750
30,750
30,600
30,600
On 4 August 2017 Musgrave completed a Sale and Purchase Agreement to acquire Silver Lake’s remaining interest in the Cue
Project Farm-in and Joint Venture on equivalent terms to those proposed by Westgold Resources Limited after exercising its
pre-emptive right.
Musgrave now holds a 100% interest in the key tenure at Cue including the Break of Day and Lena deposits and other
prospects. Some of the Cue tenements are subject to third party royalty payments on future gold production including the
mining licence hosting the Break of Day and Lena gold deposits.
The Group had contingent assets in respect of :
Future royalty payments
In January 2014 the Group entered in to a Mining Farm-in and Joint Venture Agreement (“Agreement”) with Menninnie
Metals Pty Ltd. In August 2015 the parties agreed to terminate the Agreement (“Termination Agreement”). As part of the
Termination Agreement the Group retains a 1% Net Smelter Return Royalty on all ores, concentrates or other primary,
intermediate or final product of any minerals produced from two of the tenements.
There are no other material contingent assets or liabilities as at 30 June 2017.
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Notes to the Consolidated Financial Statements
21. EVENTS OCCURRING AFTER THE REPORTING PERIOD
In June 2017 Silver Lake announced that it had agreed to sell its Murchison assets (which includes its 40% interest in the Cue
Project with the Company) to a wholly owned subsidiary of Westgold Resources Limited (“Westgold”) (ASX: WGX) for
total consideration of approximately $10 million. On 18 July 2017, the Company announced that it had elected to exercise
its pre-emptive right to acquire Silver Lake’s remaining interest in the Cue Project on equivalent terms to those proposed by
Westgold. The purchase of the interest was completed on 4 August 2017 for cash consideration of $1.5 million.
There have been no other events subsequent to reporting date which are sufficiently material to warrant disclosure.
22. COMMITMENTS
In order to maintain an interest in the exploration tenements in which the Group is involved, the Group is committed
to meet the conditions under which the tenements were granted. The timing and amount of exploration expenditure
commitments and obligations of the Group are subject to the minimum expenditure commitments required as per the
Mining Act 1978 (Western Australia) and the Mining Act 1971 (South Australia), and may vary significantly from the forecast
based upon the results of the work performed which will determine the prospectivity of the relevant area of interest.
Currently, the minimum expenditure commitments for the granted tenements is $970,900 (2016: $1,208,020) per annum.
Commitments in relation to the lease of office premises are payable as follows:
Consolidated
2017
$
12,000
–
–
2016
$
12,000
–
–
12,000
12,000
Within 1 year
Later than one year but not later than five years
Later than five years
23. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Financial Risk Management
Overview
The Group has exposure to the following risks from their use of financial instruments:
•
•
•
•
Interest rate risk
Credit risk
Liquidity risk
Commodity risk
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and
processes for measuring and managing risk, and the management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits
and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group’s activities.
The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and
procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
The Group’s principal financial instruments are cash, short-term deposits, receivables and payables.
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23. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will
fluctuate due to changes in market interest rates. Interest rate risk arises from fluctuations in interest bearing financial assets
and liabilities that the Group uses.
Interest bearing assets comprise cash and cash equivalents which are considered to be short-term liquid assets. It is
the Group’s policy to settle trade payables within the credit terms allowed and therefore not incur interest on overdue
balances.
The following table set out the carrying amount, by maturity, of the financial instruments that are exposed to interest rate
risk:
Fixed interest rate maturing in
Floating
interest
rate
1 Year or
Less
Over 1 to
5 years
More than
5 years
Total
Non
interest
bearing
$
$
$
$
$
$
Consolidated – 2017
Financial assets
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
410,065
3,150,000
–
–
–
–
410,065
3,150,000
Weighted average interest rate
1.17%
2.48%
Financial liabilities
Trade and other payables
Weighted average interest rate
Consolidated – 2016
Financial assets
Cash and cash equivalents
Trade and other receivables
–
–
–
–
–
–
124,924
1,950,000
–
–
124,924
1,950,000
Weighted average interest rate
1.98%
2.79%
Financial liabilities
Trade and other payables
Weighted average interest rate
–
–
–
–
–
–
Fair value sensitivity analysis for fixed rate instruments
–
–
–
-
–
–
–
–
–
–
–
–
–
–
–
–
–
–
-
–
–
–
–
–
–
–
–
–
–
–
300
3,560,365
435,795
140,000
435,795
140,000
576,095
4,136,160
–
–
389,372
389,372
389,372
389,372
–
–
300
2,075,224
43,512
43,512
43,812
2,118,736
–
–
243,536
243,536
243,536
243,536
–
–
The Group does not account for any fixed rate financial assets or liabilities at fair value through profit or loss. Therefore, a
change in interest rates at the reporting date would not affect profit or loss.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased / (decreased) equity and profit or
loss by the amounts shown below:
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Notes to the Consolidated Financial Statements
23. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
Consolidated - 2017
Carrying
value at
period end
Profit or loss Equity
100 bp
increase
100 bp
decrease
100 bp
increase
100 bp
decrease
$
$
$
$
$
Financial assets
Cash and cash equivalents
3,560,365
Cash flow sensitivity (net)
Consolidated - 2016
Financial assets
Carrying
value at
period end
29,045
29,045
(29,045)
(29,045)
29,045
29,045
(29,045)
(29,045)
Profit or loss Equity
100 bp
increase
100 bp
decrease
100 bp
increase
100 bp
decrease
$
$
$
$
$
Cash and cash equivalents
2,075,224
29,059
(29,059)
29,059
(29,059)
Cash flow sensitivity (net)
29,059
(29,059)
29,059
(29,059)
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers and investment securities. The
Group trades only with recognised, creditworthy third parties. It is the Group policy that all customers who wish to trade
on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing
basis with the result that the Group’s exposure to bad debts is not significant. The maximum exposure to credit risk is the
carrying value of the receivable, net of any provision for doubtful debts.
With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents,
the Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying
amount of these instruments. This risk is minimised by reviewing term deposit accounts from time to time with approved
banks of a sufficient credit rating which is AA and above.
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum
exposure to credit risk at the reporting date was:
Consolidated
2017
$
3,560,365
435,795
3,996,160
2016
$
2,075,224
43,512
2,118,736
Cash and cash equivalents
Trade & other receivables
Foreign currency risk
The Group’s exposure to foreign currency risk is minimal at this stage of its operations.
Commodity price risk
The Group’s exposure to commodity price risk is minimal at this stage of its operations.
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AnnualReport mUSGRAVE mINERALAS LTD
23. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Group’s reputation.
The Group’s objective is to maintain a balance between continuity of funding and flexibility. The following are the contractual
maturities of financial liabilities:
Consolidated - 2017
Trade and other payables
Receivables
Consolidated - 2016
Trade and other payables
Receivables
Carrying
amount
$
389,372
389,372
435,795
435,795
243,536
243,536
43,512
43,512
Contractual
cash flows
$
–
–
–
–
–
–
–
–
6 months
or less
$
389,372
389,372
435,795
435,795
243,536
243,536
43,512
43,512
Fair value of financial assets and liabilities
The fair value of cash and cash equivalents and non-interest bearing financial assets and financial liabilities of the Group is
equal to their carrying value.
Fair value measurement of financial instruments
Financial assets and financial liabilities measured at fair value in the Consolidated Statement of Financial Position are grouped
into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the
measurement, as follows:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly
Level 3: unobservable inputs for the asset or liability
The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value on a
recurring basis at 30 June 2017 and 30 June 2016:
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Notes to the Consolidated Financial Statements
23. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
30 June 2017
Available for sale financial assets
Total as at 30 June 2017
30 June 2016
Available for sale financial assets
Total as at 30 June 2016
Capital risk management
Level 1
$
140,000
140,000
–
–
Level 2
Level 3
$
–
–
–
–
$
–
–
–
–
Total
$
140,000
140,000
–
–
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order
to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital. The management of the Group’s capital is performed by the Board.
The capital structure of the Group consists of net debt (trade payables and provisions detailed in notes 13 & 14 offset by
cash and bank balances) and equity of the Group (comprising contributed equity and reserves, offset by accumulated losses
detailed in notes 15, 16 & 17).
The Group is not subject to any externally imposed capital requirements. None of the Group’s entities are subject to
externally imposed capital requirements.
24. SHARE BASED PAYMENTS
Employee Share Option Plan
The Group has an Employee Share Option Plan (“ESOP”) for executives and employees of the Group. In accordance with
the provisions of the ESOP, as approved by shareholders at a previous Annual General Meeting, executives and employees
may be granted options at the discretion of the Directors.
Each share option converts into one ordinary share of Musgrave Minerals Limited on exercise. No amounts are paid or are
payable by the recipient on receipt of the option. The options carry neither rights of dividends nor voting rights. Options
may be exercised at any time from the date of vesting to the date of their expiry.
Options issued to Directors are subject to approval by shareholders.
The following share-based payment arrangements were in existence during the reporting period:
Option series
Number
Grant date
Expiry date
Vesting date
Exercise
price
Fair value at
grant date
175,000
500,000
300,000
200,000
250,000
75,000
700,000
400,000
2,550,000
800,000
24 Jan 2012
23 Jan 2017
6 Mar 2013
5 Mar 2018
11 Mar 2014
10 Mar 2019
16 Sep 2015
23 Jan 2017
16 Sep 2015
10 Mar 2019
16 Sep 2015
23 Mar 2018
22 Apr 2016
22 Apr 2021
4 Nov 2016
22 Apr 2021
4 Nov 2016
3 Nov 2019
4 Nov 2016
3 Nov 2021
Immediate
Immediate
Immediate
Immediate
Immediate
Immediate
Immediate
Immediate
Immediate
Immediate
$0.50
$0.50
$0.12
$ 0.250
$ 0.120
$ 0.250
$ 0.045
$ 0.045
$ 0.167
$ 0.195
$0.0714
$0.0431
$0.0522
$0.0001
$0.0046
$ 0.0010
$ 0.0194
$ 0.0923
$ 0.0659
$ 0.0628
These options expired during the financial year
200,000 of these options were exercised during the financial year
E (1)
F
H
I (1)
J
L
M (2)
N
O
P
(1)
(2)
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AnnualReport mUSGRAVE mINERALAS LTD
24. SHARE BASED PAYMENTS CONTINUED
Fair Value of Share Options Granted During the Year
The fair value of share options at grant date is determined using a Black-Scholes option pricing model that takes into
account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the
underlying share and the risk free rate for the term of the option. The fair value of share options issued during the year was
$255,379.
The model inputs for options granted during the year ended 30 June 2017 are as follows:
Inputs
Exercise Price
Grant date
Expiry date
Share price at grant date
Expected price volatility
Expected dividend yield
Risk-free interest rate
Issue N
$0.045
4 Nov 2016
22 Apr 2021
$0.11
91.0%
0%
1.84%
Issue 0
$0.167
4 Nov 2016
3 Nov 2019
$0.11
91.0%
0%
1.67%
Issue P
$0.195
4 Nov 2016
3 Nov 2021
$0.11
91.0%
0%
1.84%
Movements in share options during the year
Movement in the number of share options held by Directors and employees:
2017
2016
No. of options
Weighted
average
exercise price
$
No. of options
Weighted
average
exercise price
$
0.32
0.18
–
0.33
0.15
0.15
Outstanding at the beginning of the year
Granted and vested during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
2,200,000
3,750,000
(200,000)
(375,000)
5,375,000
5,375,000
0.15
0.16
0.045
0.25
0.15
0.15
15,975,000
1,725,000
–
(15,500,000)
2,200,000
2,200,000
The weighted average remaining contractual life of share options outstanding at the end of the year was 2.64 years (2016:
2.74 years).
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Notes to the Consolidated Financial Statements
24. SHARE BASED PAYMENTS CONTINUED
Share options outstanding at the end of the year
Share options issued and outstanding at the end of the year have the following exercise prices:
Expiry Date
23 January 2017
5 March 2018
23 March 2018
10 March 2019
22 April 2021
3 November 2019
3 November 2021
Exercise price
$
0.25
0.25
0.25
0.12
0.045
0.167
0.195
25. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operating activities
Loss for the period
Non-cash flows in profit/(loss):
-
-
-
-
-
-
-
Depreciation
Impairment expense
Field related internal charges
Share based remuneration
(Gain) / Loss on sale of assets
Change in fair value of derivative financial instruments
Research and development tax concession
Changes in assets and liabilities
-
-
-
-
Decrease/(increase) in trade and other receivables
Decrease/(increase) in other current assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in employee entitlements
Net cash used in operating activities
Non-cash investing and financing activities
There were no non-cash investing and financing activities during the year.
2017
No.
–
500,000
75,000
550,000
900,000
2,550,000
800,000
5,375,000
2016
No.
375,000
500,000
75,000
550,000
700,000
–
–
2,200,000
Consolidated
2017
$
2016
$
(5,240,475)
(6,105,944)
14,630
4,749,163
–
255,379
26,459
4,000
(236,366)
(155,917)
2,281
12,961
9,347
(558,538)
22,954
6,191,926
(66,289)
14,798
5,262
–
–
3,647
16,932
(64,714)
(16,738)
1,834
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AnnualReport mUSGRAVE mINERALAS LTD
26. RELATED PARTY DISCLOSURE
Class
Country of
incorporation
Investment at
cost
Investment at
cost
a)
Parent entity
Musgrave Minerals Limited
b)
Subsidiaries
Musgrave Exploration Pty Ltd
Ord
Ord
2017
2016
$
–
$
–
Australia
Australia
100
100
c)
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Bonus payments
Share-based payments
Detailed remuneration disclosures are provided in the Remuneration Report.
2017
$
461,495
38,880
59,211
255,379
814,965
2016
$
503,394
38,299
–
–
541,693
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Notes to the Consolidated Financial Statements
27. PARENT ENTITY DISCLOSURE
Financial Performance
Profit / (loss) for the year
Other comprehensive income
Total comprehensive profit / (loss)
Financial Position
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
2017
$
2016
$
(5,240,475)
(6,105,944)
16,789
–
(5,223,686)
(6,105,944)
4,043,467
5,210,841
9,254,308
468,365
10,238
478,603
2,131,324
6,083,685
8,215,009
291,061
32,359
323,420
8,775,705
7,891,589
32,646,322
26,793,899
320,283
64,503
(24,190,900)
(18,966,813)
8,775,705
7,891,589
No guarantees have been entered into by Musgrave Minerals Limited in relation to the debts of its subsidiary.
Musgrave Minerals Limited had no expenditure commitments as at 30 June 2017 other than the commitment in relation to
the lease of office premises as disclosed in note 22.
54
AnnualReport mUSGRAVE mINERALAS LTD
DIRectoRs’ DecLARAtIon
The Directors of Musgrave Minerals Limited declare that:
(a)
in the Directors’ opinion the financial statements and notes set out on pages 19 to 54 and the Remuneration Report in the
Directors’ Report are in accordance with the Corporations Act 2001, including :
(i)
(ii)
giving a true and fair view of the Company’s financial position as at 30 June 2017 and of its performance, for the
financial year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations), Corporations
Regulations 2001 and mandatory professional reporting requirements.
(b)
the financial statements also comply with International Financial Reporting Standards as disclosed in note 2; and
(c)
there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become
due and payable.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 by the Managing Director
and Chief Financial Officer for the financial year ended 30 June 2017.
Signed in accordance with a resolution of the Directors.
Graham Ascough
Chairman
Perth, Western Australia
8 September 2017
55
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11
InDepenDent AuDItoR’s RepoRt
Level 1
10 Kings Park Road
West Perth WA 6005
Correspondence to:
PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
to the Members of Musgrave Minerals Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Musgrave Minerals Limited (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30
June 2017, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
then ended, and notes to the consolidated 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 2017 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
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.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘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.
56
AnnualReport mUSGRAVE mINERALAS LTD
2
Material Uncertainty Related to Going Concern
We draw attention to Note 2(b) “Going Concern” in the financial statements, which indicates that
the Group incurred a net loss of $5,240,475 during the year ended 30 June 2017. As stated in
Note 2(b), these events or conditions, along with other matters as set forth in Note 2(b), 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.
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 – valuation
Note 2(m) and 11
As at 30 June 2017, the Group had $5 million of
exploration and evaluation expenditure capitalised on
the statement of financial position.
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group 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 valuation of
exploration and evaluation assets being a significant
risk.
Our procedures included, amongst others:
• Obtaining the management prepared reconciliation
of capitalised exploration and evaluation
expenditure and agreeing to the general ledger;
• Reviewing management’s area of interest
considerations against AASB 6;
• Conducting a detailed review of management’s
assessment of trigger events prepared in
accordance with AASB 6 including;
-
Tracing projects to statutory registers,
exploration licenses and third party
confirmations to determine whether a right of
tenure existed;
Enquiry of management regarding their
intentions to carry out exploration and
evaluation activity in the relevant exploration
area, including review of managements’
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;
• Assessing the accuracy of impairment recorded for
the year as it pertained to exploration interests;
and
• Reviewing the appropriateness of the related
disclosures within the financial statements.
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 2017, 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.
57
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3
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the 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:
http://www.auasb.gov.au/auditors_responsibilities/ar1.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 pages 10 to 15 of the directors’ report for
the year ended 30 June 2017.
In our opinion, the Remuneration Report of Musgrave Minerals Limited, for the year ended 30 June
2017, 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.
58
AnnualReport mUSGRAVE mINERALAS LTD
4
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
C A Becker
Partner - Audit & Assurance
Perth, 8 September 2017
59
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11
ADDItIonAL InFoRmAtIon
The following additional information not shown elsewhere in this report is required by the ASX Listing Rules and is current as at
18 September 2017.
Securities
Quotation has been granted for 220,045,782 ordinary shares of the Company on the Australian Securities Exchange.
Quoted Securities
ASx Code
MGV
Unquoted Securities
ASx Code
MGVAI
MGVAB
MGVAA
MGVAB
MGVAB
MGVAB
Number of Holders
Security Description
Total Securities
1,406
Ordinary Fully Paid
220,045,782
Number of Holders
Security Description
Total Securities
1
1
6
3
4
1
Options expiring 05/03/2018
500,000
Exercisable at $0.25
Options expiring 23/03/2018
75,000
Exercisable at $0.25
Options expiring 10/03/2019
550,000
Exercisable at $0.12
Options expiring 24/04/2021
900,000
Exercisable at $0.045
Options expiring 03/11/2019
2,550,000
Exercisable at $0.1671
Options expiring 03/11/2021
800,000
Exercisable at $0.195
One holder Mr Robert Waugh and Mrs Sara Waugh hold 2,000,000 unlisted options (equivalent to
37.2% of total unlisted options).
Voting Rights
The voting rights attached to each class of security are as follows:
• Ordinary Fully Paid shares – one vote per share held.
• Options – no voting rights are attached to unexercised options.
Distribution schedule
Spread of Holdings - Ordinary Shares (ASX Code: MGV)
1 -
1,000
1,001 -
5,000
5,001 -
10,000
10,001 -
100,000
100,001 -
99,999,999
TOTAL
Unmarketable Parcel
Holders
76
33
197
727
373
1,406
Units
5,572
129,815
1,712,664
32,304,838
185,892,893
220,045,782
Percentage
0.00
0.06
0.78
14.68
84.48
100%
There are 121 Shareholders holding less than a marketable parcel of fully paid ordinary shares (a minimum parcel $500 shares,
being 6,667 shares using a market value of $0.075).
60
AnnualReport mUSGRAVE mINERALAS LTD Buyback
No on-market share buy-back is current.
Top Holders
The names of the twenty largest shareholders (ASX Code: MGV) are listed below:
Rank
Name
Units held
% of Units
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Independence Group NL
BNP Paribas Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
Chesapeake Capital Ltd
Silver Lake (Integra) Pty Ltd
Silver Lake Resources Ltd
Equity Trustees Limited
Riggy & Boo Pty Ltd
Mr Stacey Radford
Forsyth Barr Custodians Ltd
Scintilla Strategic Investments Limited
Allise Pty Ltd
Soudure S/F Pty Ltd
Mr Jacobus Gerardus De Jong
Rishon Holdings Pty Ltd
JP Morgan Nominees Australia Limited
Ms Shan Kuang
Mr Julian Vincent Laws + Mrs Toni Lenore Laws
Jim Wilson Pty Ltd
Mrs Amity Brooke Johnson
9,027 000
6,850,470
6,579,492
6,000,000
5,516,129
4,032,258
3,916,667
3,882,790
3,583,333
3,391,150
3,000,000
2,854,237
2,600,000
2,387,238
2,004,559
1,981,775
1,899,459
1,781,000
1,700,000
1,600,000
4.10
3.11
2.99
2.73
2.51
1.83
1.78
1.76
1.63
1.54
1.36
1.30
1.18
1.08
0.91
0.90
0.86
0.81
0.77
0.73
TOTAL
74,587,557
33.88
61
AnnualReport aNNUaL rEPOrT 2017CHANGE GREY LINES BACK TO 67/49/39/11
28 Richardson Street, West Perth, WA 6005
Telephone: +61 (8) 9324 1061
Facsimile: +61 (8) 9324 1014
Email:
Web:
info@musgraveminerals.com.au
www.musgraveminerals.com.au
ABN 12 143 890 671
28 Richardson Street, West Perth, WA 6005
Telephone: +61 (8) 9324 1061
Facsimile: +61 (8) 9324 1014
Email:
Web:
info@musgraveminerals.com.au
www.musgraveminerals.com.au
ABN 12 143 890 671
AnnuAl RepoRt 2017