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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
Ground Floor, 5 Ord Street
West Perth, WA 6005
Telephone:
+61 (8) 9324 1061
Facsimile:
+61 (8) 9324 1014
Email: info@musgraveminerals.com.au
Web: www.musgraveminerals.com.au
AUDITOR
Grant Thornton Audit Pty Ltd
Chartered Accountants
Level 43, Central Park
152-158 St Georges Terrace
Perth, WA 6000
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
Telephone:
+61 (8) 9323 2000
Facsimile:
+61 (8) 9323 2033
SECURITIES EXCHANGE LISTING
The Company is listed on the Australian Securities Exchange Ltd (“ASX”)
Home Exchange: Perth, Western Australia
ASX Code: MGV
Musgrave Minerals Ltd (“Musgrave”
or “the Company”) (ASX: MGV) is an
Australian resources company focused
on gold exploration and near-term
development at the Cue Project in
the Murchison Province of Western
Australia.
A description of the Company’s
operations and principal activities is
included in the Review of Operations
and the Directors’ Report.
CONTENTS
CORPORATE DIRECTORY
CHAIRMAN’S LETTER
REVIEW OF OPERATIONS
TENEMENT SCHEDULE
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
ADDITIONAL INFORMATION
Cover photo:
Drilling at Lake Austin North
IFC
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PAGE 1
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 CHAIRMAN’S LETTER
On behalf of the Board of Directors, it is my pleasure
to present the 2018 Annual Report for Musgrave
Minerals Limited (“Musgrave” or “Company”).
2018 was a successful year for Musgrave, we
expanded our resource base, identified new
discovery opportunities and advanced on a potential
pathway to development that could provide strong
financial returns for Shareholders. Our focus
continues to be on the Cue Project (“Cue”) which
is located in the well-endowed, gold producing
Murchison region of Western Australia.
Significantly, the Company continues to expand
its existing gold resources and identify new zones
of gold mineralisation at Cue. In July 2017, the
Company announced an update to the Mineral
Resources for Lena and Break of Day and together
with the other resources identified on the project, Cue
is now estimated to host 440k oz of gold. Extensional
drilling after the release of the new resource
continued to intersect high grade mineralisation at
Break of Day, including 30m @ 11.3g/t gold and 11m
@ 54g/t gold. The mineralisation encountered by
these and other drill holes at Lena and Break of Day
have not been included in the resource models to
date and the deposits remain open at depth. Regional
drilling also identified new mineralised positions at a
number of targets including Louise, Joshua and Lake
Austin North which is shaping up to potentially be
a significant new gold discovery. Given the ongoing
drilling success at Cue, the current resource figure of
gold is expected to grow.
In August 2017, the Company was pleased to
increase its interest in Cue by exercising its pre-
emptive right to acquire Silver Lake Resources
Limited’s remaining interest in the Project on
equivalent terms to those proposed by Westgold
Resources Ltd (“Westgold”). As a result, Musgrave
now holds 100% of the core tenure that hosts all the
gold and copper Mineral Resources on the Project.
As stated above, Cue is located in the gold producing
Murchison region of Western Australia, a region
that is host to four operating gold plants including
Westgold’s Tuckabianna plant. In May 2018, Westgold
invested $3.36M in Musgrave at a premium to the
market price at the time, to become a substantial
shareholder in the Company.
At the end of the financial year Musgrave and
Westgold agreed to a non-binding Term Sheet
that provides the scope on which a formal Mine
PAGE 2
Management and Profit Sharing Agreement can be
negotiated. The proposed Mine Management and
Profit Sharing arrangement would provide a near
term development pathway, potentially generating
significant cashflow for the Company. It will be
restricted to existing resources at Cue and Musgrave
will retain a 100% interest in the exploration tenure
and all new discoveries. This potential low-risk, low-
cost development pathway will enable Musgrave
to focus on its exploration strengths and accelerate
our drilling programs across a range of high priority
targets including Lake Austin North.
The Company will continue to advance its internal
optimisation and development studies during the
negotiations on the formal Mine Management
and Profit Sharing Agreement. These studies will
provide baseline parameters and assist in forecasting
production goals and potential cashflow under the
proposed arrangement.
Our exploration team continues to identify high
priority targets and exploration drilling is ongoing
at Cue with the aim of making further high-grade
gold discoveries that could support a stand-alone
operation or alternatively be mined in partnership
with an existing local producer.
Prior to the Westgold investment described above,
Musgrave had successfully completed a capital
raising in October 2017 to raise $3.6M through a
Placement and Share Purchase Plan (SPP). The
Placement attracted several new investors to the
Company and the SPP offered eligible shareholders
the opportunity to acquire further shares in the
Company on the same terms as the 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 also 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.
Graham Ascough
Chairman
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 REVIEW OF OPERATIONS
Musgrave Minerals Ltd (“Musgrave” or “the
Company”) (ASX:MGV) is an Australian resources
company focused on gold and base metals
exploration and development at the Cue Project
in the Murchison Province of Western Australia.
Musgrave had outstanding success during the year
from extensional drilling at Break of Day and more
recent success at the A Zone target at Lake Austin
North.
Following the discovery of high grade gold at Break
of Day and significantly upgrading the gold resource
in July 2017, the Company completed more than
25,000 metres of resource and exploration drilling
within the Cue tenements during the period.
The total Indicated and Inferred JORC Mineral
Resources on the project now stand at 4.83 Mt @
2.84g/t Au for 441,000 ounces of gold (see ASX
announcement 24 October 2017, “Annual Report
2017”), with the majority of those resources
contained within the Break of Day and Lena deposits.
Corporate
Musgrave also has tenement applications in the
Musgrave Geological Province of South Australia and
has recently farmed out the Corunna Project in the
southern Gawler Craton region of South Australia to
Petratherm Ltd (Figure 1).
2018 Annual Report
Review of Operations
Figure 1
Figure 1: Musgrave Minerals’ Project Location Map
Musgrave Minerals’ Project Location Map
Corporate
During the year, Musgrave spent $3.8 million on exploration activities.
During the year, Musgrave spent $3.8 million on
exploration activities.
The Break of Day and Lena Mineral Resource
On 18 July 2017, Musgrave announced that it had elected to exercise its pre-emptive right to acquire
estimates are being used as the basis for in-house
Silver Lake’s remaining interest in the Cue Project on equivalent terms to those proposed by
On 18 July 2017, Musgrave announced that it had
Westgold Resources Limited (“Westgold”). The sale of the interest was completed on 4 August 2017
near term development studies. Musgrave’s intent
elected to exercise its pre-emptive right to acquire
for a cash consideration of $1.5 million.
is to develop a low-cost operation from the current
Silver Lake’s remaining interest in the Cue Project
Musgrave now holds 100% of the core tenure on the Cue Project (Figure 2) including the tenure
resource base that is capable of delivering strong
hosting all of the gold and copper Mineral Resources (see ASX announcement 4 August 2017,
on equivalent terms to those proposed by Westgold
financial returns for its shareholders. This may
“Musgrave Secures 100% of Key Cue Tenure”). Musgrave has also increased its landholding at Cue
Resources Limited (“Westgold”). The sale of the
enable the Company to largely self-fund exploration
through the application for new exploration licences and now holds over 300km2 of tenure in the
interest was completed on 4 August 2017 for a cash
region.
at Lake Austin North and other high priority targets at
consideration of $1.5 million.
Cue that suggest the presence of large gold systems.
Specifically, Musgrave is looking for systems of a
size that have the potential to deliver a significant
resource increase, and may in the future, define a
stand-alone operation or alternatively be mined in
partnership with an existing producer.
On 11 October 2017, the Company completed a placement to sophisticated and professional
investors of 46,000,000 ordinary shares at an issue price of 6.2 cents per share raising $2,852,000
Musgrave now holds 100% of the core tenure on the
before costs. In October 2017 the Company also announced a Share Purchase Plan (“SPP”). The SPP
Cue Project (Figure 2) including the tenure hosting
was strongly supported by Shareholders and the Company issued 12,338,675 new shares at an issue
price of 6.2 cents per share raising an additional $765,000 before costs. On 28 May 2018, the
all of the gold and copper Mineral Resources (see
Company completed a placement to Westgold Resources Limited (Westgold) of 48,000,000 ordinary
ASX announcement 4 August 2017, “Musgrave
shares at an issue price of 7.0 cents per share raising $3,360,000. The placement to Westgold was at
Secures 100% of Key Cue Tenure”). Musgrave has
a premium of 15.4% to the 15-day VWAP at the time of investment and represents a holding of
also increased its landholding at Cue through the
14.7% (undiluted) in the Comapny (see ASX announcement dated 28 may 2018, “Westgold Invests
$3.36M in Musgrave Minerals”).
application for new exploration licences and now
holds over 300km2 of tenure in the region.
3
On 11 October 2017, the Company completed
a placement to sophisticated and professional
investors of 46,000,000 ordinary shares at an issue
price of 6.2 cents per share raising $2,852,000 before
costs. In October 2017 the Company also announced
a Share Purchase Plan (“SPP”). The SPP was strongly
supported by Shareholders and the Company issued
12,338,675 new shares at an issue price of 6.2 cents
per share raising an additional $765,000 before
costs. On 28 May 2018, the Company completed
a placement to Westgold of 48,000,000 ordinary
shares at an issue price of 7.0 cents per share raising
PAGE 3
Lake Austin
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
REVIEW OF OPERATIONS
$3,360,000. The placement to Westgold was at a
premium of 15.4% to the 15-day VWAP at the time
of investment and represents a holding of 14.7%
(undiluted) in the Company (see ASX announcement
dated 28 may 2018, “Westgold Invests $3.36M in
Musgrave Minerals”).
During the year the Company continued to refine
its exploration portfolio, applying for additional
tenements in the Cue region and divesting the
Corunna Project in South Australia through a Joint
Venture with Petratherm Ltd (“Petratherm”). Under
the terms of the JV, Petratherm can earn up to 75%
through staged expenditure of $1 million over 2.5
years.
After the sale of its Fraser Range tenements in
February 2017, Musgrave holds 10 million shares and
10 million unlisted options in Legend Mining Limited,
currently valued at approximately $360,000.
Chief Geologist Glenn Martin logging RC chips at
Lake Austin North
The Company successfully secured a co-funded
government industry drilling grant of $150,000 for
the Cue Project to drill test gold and copper targets in
2018-19.
PAGE 4
Events since the end of the financial year
On 3 July 2018 Musgrave executed a non-binding
Term Sheet with Westgold that provides a near-
term development pathway for the existing gold
resources at its Cue Project. The Term Sheet outlines
the scope of a Mine Management and Profit Sharing
arrangement whereby Musgrave will receive 50%
of profits from operations that will be financed,
managed and operated by Westgold, an established
and highly experienced Australian gold producer
(see ASX announcement 3 July 2018, “Musgrave to
Progress Opportunity to Develop Cue Gold Resources
with Westgold”). The arrangement will be restricted
to the existing JORC-compliant gold resources on
the Cue Project. Musgrave will retain 100% of the
exploration interests and upside outside of the
defined resources.
Exploration Activities
Musgrave had outstanding drilling success during
the year with extensional drilling at Break of Day
returning high grade intercepts including 11m @
54.0g/t Au from 217m (17MORC084), outside the
current resource boundary (see ASX announcement
5 September 2017, “Musgrave Hits 11m @ 54.0g/t
Au at Break of Day”). The Company also had drilling
success at a number of new and existing prospects
including Louise, Numbers, Joshua and Lake Austin
North. The Company drilled over 25,000 metres
during the year.
At the new Lake Austin North target, aircore drilling
outlined significant regolith (weathered rock) gold
mineralisation and subsequent RC drilling has
returned an impressive intersection of 42m @ 3.2g/t
Au from 108m, including 24m @ 5.1g/t Au from
114m down hole (see ASX announcement 31 August
2018, “First RC drill hole hits 42m @ 3.2g/t Au at Lake
Austin North, Cue”).
“This is an excellent drill result and
demonstrates the potential for the A Zone
target at Lake Austin North to host thick,
high-grade gold mineralisation.”
A significant exploration program is planned for
the coming year with the objective of potentially
defining a maiden resource at Lake Austin North and
continuing to progress development studies at Break
of Day and Lena to define a clear path to first gold
production for the Company.
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 REVIEW OF OPERATIONS
Drilling RC hole 18MORC039 – A Zone target, Lake Austin North
Murchison
Cue Project - Key tenure now held 100% by Musgrave
In July 2017 Musgrave completed Stage 2 of the
Cue Project Farm-In and Joint Venture Agreement
with Silver Lake Resources Ltd. Under the 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 completed the
acquisition of Silver Lake’s interest in the Cue
Joint Venture after exercising its pre-emptive right
following an offer from Westgold.
Musgrave now holds 100% of the core tenure on the
Cue Project (Figure 2) including the tenure hosting
the gold and copper Mineral Resources (see ASX
announcement 4 August 2017, “Musgrave Secures
100% of Key Cue Tenure”).
The Project is in close proximity to existing road
infrastructure and within trucking distance of four
operating gold plants (Figure 3).
Near Term Gold Development Opportunity
Musgrave is pursuing the opportunity to develop
the Break of Day and Lena gold deposits and has
commenced development studies to assess the
optimal development scenario for the Project.
Subsequent to the end of the financial year Musgrave
executed a non-binding Term Sheet with Westgold
that provides the scope on which a formal Mine
Management and Profit Sharing Agreement can
be negotiated to secure a near-term development
pathway for the existing gold resources at its Cue
Project. The arrangement will be restricted to the
existing JORC-compliant gold resources at Cue
(Lena, Break of Day, Jasper Queen, Gilt Edge and
Rapier South deposits), and a 100m buffer. Musgrave
will retain 100% of the exploration interests and
upside outside of the defined resources and buffer
zone.
The key benefits of the proposed arrangement
include:
•
•
•
•
•
Provides an option to potentially fast track
development.
Reduces Musgrave’s development and capital
risk exposure by working with an experienced
and well-funded gold mining company.
Westgold has a dedicated technical team
with experience in planning, permitting and
optimisation in both toll-treatment and mine
development of gold deposits in WA.
Reduces the Comapany’s capital requirements
going forward thereby reducing the prospect of
shareholder dilution.
The potential arrangement would enable
Musgrave to focus on its areas of expertise,
being exploration and discovery.
The opportunity to generate near term cash has
the potential to provide funding for Musgrave
to progress its future exploration and drilling
programs to make further discoveries and
continue to grow the resource base.
PAGE 5
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 REVIEW OF OPERATIONS
2018 Annual Report
Review of Operations
2018 Annual Report
Review of Operations
Musgrave now holds 100% of the core tenure on the Cue Project (Figure 2) including the tenure
hosting the gold and copper Mineral Resources (see ASX announcement 4 August 2017, “Musgrave
Secures 100% of Key Cue Tenure”).
The Project is in close proximity to existing road infrastructure and within trucking distance of four
operating gold plants (Figure 3).
Lake Austin
Figure 3: Cue Project location and local gold processing
Figure 3
infrastructure (Gold plants not owned or operated by
Cue Project location and local gold processing
Musgrave)
infrastructure (Gold plants not owned or operated
by Musgrave)
Metallurgy – Excellent Gold Recoveries at Lena
Metallurgy – Excellent Gold Recoveries at Lena
Musgrave completed metallurgical test work on
unweathered (fresh) mineralised RC samples from
the Lena gold deposit. The results returned a gold
recovery which supports the metallurgical recoveries
previously recorded. The test work returned in
Musgrave completed metallurgical test work on unweathered (fresh) mineralised RC samples from
excess of 97% recoverable gold using conventional
the Lena gold deposit. The results returned a positive gold recovery which supports the
gravity and cyanide leach processing with high
metallurgical recoveries previously recorded. The test work returned in excess of 97% recoverable
(>73%) gravity recovery. These recoveries suggest
gold using conventional gravity and cyanide leach processing with high(>73%) gravity recovery.
high compatibility with existing processing plants in
These recoveries suggest high compatibility with existing processing plants in the region.
the region.
Near Term Gold Development Opportunity
Musgrave is pursuing the opportunity to develop the Break of Day and Lena gold deposits and has
commenced development studies to assess the optimal development scenario for the Project.
Break of Day and Lena Drilling
Break of Day and Lena Drilling
Figure 2: Cue prospect locations and tenure
Figure 2
Cue prospect locations and tenure
The Company will continue to advance its internal
optimisation and development studies during the
negotiations on the formal agreement with Westgold.
These studies will provide baseline parameters and
assist in forecasting production goals and potential
cash flow under the proposed Mine Management
and Profit Sharing Agreement.
Subsequent to the end of the financial year Musgrave executed a non-binding Term Sheet with
Westgold that provides the scope on which a formal Mine Management and Profit Sharing
Agreement can be negotiated to secure a near-term development pathway for the existing gold
resources at its Cue Project. The arrangement will be restricted to the existing JORC-compliant gold
resources (Lena, Break of Day, Jasper Queen, Gilt Edge and Rapier South deposits), and a 100m
buffer, at Cue. Musgrave will retain 100% of the exploration interests and upside outside of the
defined resources and buffer zone.
“Pursuing development opportunities
with Westgold reduces the technical
and capital risk for Musgrave and
secures a near-term processing option.”
The key benefits of the proposed arrangement include:
Provides an option to potentially fast track development.
PAGE 6
6
Following Musgrave’s resource upgrade announced
in July 2017, Break of Day now comprises 868,000
tonnes @ 7.15g/t Au for 199,000oz Au and Lena
hosts 2,682,000 tonnes @ 1.77g/t Au for 152,000oz
Au (see ASX announcement 14 July 2017, “Resource
Estimate Exceeds 350koz Gold”) (Figure 4).
After the resource update Musgrave continued
to drill at Break of Day to improve the geological
8
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
Following Musgrave’s resource upgrade announced in July 2017, Break of Day now comprises
868,000 tonnes @ 7.15g/t Au for 199,000oz Au and Lena hosts 2,682,000 tonnes @ 1.77g/t Au for
152,000oz Au (see ASX announcement 14 July 2017, “Resource Estimate Exceeds 350koz Gold”)
(Figure 4).
REVIEW OF OPERATIONS
2018 Annual Report
Review of Operations
understanding and confirm grade continuity. A
combination of RC and diamond drilling was utilised
and returned significant intercepts within the
confines of the existing resource, including:
13m @ 8.8g/t Au from 102m down hole
•
(17MORC093)
11m @ 13.6g/t Au from 115m down hole
(17MORC108)
30m @ 11.3g/t Au from 120m down hole
(17MORC127)
16m @ 7.2g/t Au from 95m down hole
(17MODD002)
•
•
•
(see ASX announcements 20 September 2017, 27
November 2017, 8 December 2017 and 16 February
2018).
Extensional drilling was also undertaken at Break of
Day with numerous high-grade gold intersections
identified outside the current resource boundary
(Figure 5) including:
•
2018 Annual Report
Review of Operations
11m @ 54.0g/t Au from 217m down hole
(17MORC084)
9m @ 4.8g/t Au from 206m down hole
(17MORC105)
4m @ 9.3g/t Au from 288m down hole
(17MORC120)
(see ASX announcements 5 September 2017, 10
November 2017 and 8 December 2017).
Extensional drilling was also undertaken at Break of Day with numerous high-grade gold
intersections identified outside the current resource boundary (Figure 5) including:
•
11m @ 54.0g/t Au from 217m down hole (17MORC084)
9m @ 4.8g/t Au from 206m down hole (17MORC105)
4m @ 9.3g/t Au from 288m down hole (17MORC120)
Figure 4 (above)
Figure 4: Surface plan of Break of Day and Lena gold lodes on Landsat image
Surface plan of Break of Day gold lodes on
Landsat image
•
(see ASX announcements 5 September 2017, 10 November 2017 and 8 December 2017)
After the resource update Musgrave continued to drill at Break of Day to improve the geological
understanding and confirm grade continuity. A combination of RC and diamond drilling was utilised
and returned significant intercepts within the confines of the existing resource, including:
13m @ 8.8g/t Au from 102m down hole (17MORC093)
11m @ 13.6g/t Au from 115m down hole (17MORC108)
30m @ 11.3g/t Au from 120m down hole (17MORC127)
16m @ 7.2g/t Au from 95m down hole (17MODD002)
(see ASX announcements 20 September 2017, 27 November 2017, 8 December 2017 and 16
February 2018)
9
Figure 5 (left)
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)
Figure 5: 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
PAGE 7
ADD Photo (GP at Break of Day.jpg)
Caption: “Senior Geologist Glen Pickens at Break of Day, Cue”
10
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
2018 Annual Report
Review of Operations
Regional Exploration
Musgrave completed a large regional aircore/RC drilling program, which comprised 151 drill holes
for 13,325m, testing 10 new high priority regional targets. The targets were defined through the
integration of new detailed regional gravity survey data with existing aeromagnetic data, historical
broad spaced aircore drilling and surface geochemistry. The 10 high priority targets (Figure 6) lie
along a 20km long prospective corridor that hosts the Break of Day and Lena gold resources.
Musgrave received excellent high-grade gold drilling results at the Lake Austin North and Joshua
REVIEW OF OPERATIONS
targets and the Numbers Prospect.
The A Zone is situated on a highly prospective
sheared tonalite-mafic contact in a similar geological
setting to that seen at the Granny Smith gold
deposit in the Eastern Yilgarn of Western Australia.
The Granny Smith-Goanna-Windich string of gold
deposits contained combined 2001 resources of 43Mt
@ 1.65g/t Au for 2.3Moz of contained gold1.
The mineralisation in the A Zone is adjacent to the
contact of a tonalite intrusive and mafic stratigraphy.
Many of the drill holes terminated in mineralisation
and deeper drilling has commenced to further test
the system.
The A Zone mineralisation is defined by anomalous
gold (>0.1g/t Au) in aircore drilling over a width
of 100-300m and covers more than 700m in strike
length and is open in all directions (Figure 7). The
gold is forming a dispersed regolith (weathered
rock) halo. Geological interpretation of the recent
detailed gravity data indicates that the prospective
Figure 6: Location plan showing all drill holes completed to date in the current
drill program and location of the Lake Austin North target
Figure 6
Location plan showing drill holes completed to
date in the current drill program and location of
the Lake Austin North target
Lake Austin North Target
Regional Exploration
targets.
Aircore drilling at the Lake Austin North gold target has returned thick intervals of significant gold
mineralisation in weathered Archean regolith over three wide zones (A Zone, B Zone and C Zone,
Figure 7) with significant strike potential. The three zones represent three separate basement gold
Musgrave completed a large regional aircore/
RC drilling program, which comprised 151 drill
holes for 13,325m, testing 10 new high priority
regional targets. The targets were defined through
the integration of new detailed regional gravity
survey data with existing aeromagnetic data,
historical broad spaced aircore drilling and surface
geochemistry. The 10 high priority targets (Figure 6)
lie along a 20km long prospective corridor that hosts
the Break of Day and Lena gold resources.
Musgrave received excellent high-grade gold drilling
results at the Lake Austin North and Joshua targets
and the Numbers Prospect.
Lake Austin North Target
Aircore drilling at the Lake Austin North gold target
has returned thick intervals of significant gold
mineralisation in weathered Archean regolith over
three wide zones (A Zone, B Zone and C Zone, Figure
7) with significant strike potential. The three zones
represent three separate basement gold targets.
PAGE 8
11
Exploration Geologist Frasah White recording drill
hole geology on site at Lake Austin, Cue
1 Salier, B.P.: The Timing and Source of Gold-Bearing Fluids in
Laverton Greenstone Belt, Yilgarn Craton, with Emphasis on the
Wallaby Gold Deposit. Honours Thesis, University of Western
Australia 2003.
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
2018 Annual Report
Review of Operations
Subsequent to the end of the year Musgrave commenced a 7,500m, ~30 hole, RC drill program to
test the fresh (unweathered) rock below the A Zone aircore target. On 31 August 2018, Musgrave
announced the results from the first RC hole (18MORC039) drilled into the A Zone target at Lake
Austin North (Figure 7 and 8). This first hole intercepted an exceptional result of:
42m @ 3.2g/t Au from 108m, including
24m @ 5.1g/t Au from 114m which included
6m @ 12.6g/t Au from 126m down hole
REVIEW OF OPERATIONS
(see ASX announcement
31 August 2018, “First RC
drill hole hits 42m @
3.2g/t Au at Lake Austin
North, Cue”).
RC drilling is continuing
and a diamond drill rig is
currently being sourced to
continue to test this
exciting new discovery.
Figure 7
Location plan showing drill holes completed to
date and the new planned RC holes at Lake Austin
North, the tonalite instrusive and regolith contours
of gold in hole represented as grams of gold x
metre thickness of intercept
Figure 7: Location plan showing drill holes completed to date
and new planned RC holes at Lake Austin North, the
PAGE 9
tonalite intrusive and regolith gold contours of gold in
hole represented as grams of gold x metre thickness of
intercept
13
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
REVIEW OF OPERATIONS
tonalite-mafic contact could extend for a further 2km
along strike into areas of no basement drilling, thus
increasing the potential for additional discoveries.
Significant aircore intercepts from the A Zone
include:
•
13m @ 3.95g/t Au from 120m (18MOAC075) to
EOH including,
2m @ 10.46g/t Au from 131m to EOH
31m @ 1.78g/t Au from 124m (18MOAC077) to
EOH,
26m @ 1.11g/t Au from 120m (18MOAC106) to
EOH
•
•
•
(see ASX releases dated 27 July 2018 and 8 August
2018).
Subsequent to the end of the year Musgrave
commenced a 7,500m, ~30 hole, RC drill program
to test the fresh (unweathered) rock below the A
Zone aircore target. On 31 August 2018, Musgrave
announced the results from the first RC hole
(18MORC039) drilled into the A Zone target at
Lake Austin North (Figure 7 and 8). This first hole
intercepted an exceptional result of:
42m @ 3.2g/t Au from 108m, including
•
24m @ 5.1g/t Au from 114m which included
•
6m @ 12.6g/t Au from 126m down hole
•
(see ASX announcement 31 August 2018, “First RC
drill hole hits 42m @ 3.2g/t Au at Lake Austin North,
Cue”).
Lake drilling support vehicle at Lake Austin North
target
RC drilling is continuing and a diamond drill rig
is currently being sourced to continue to test this
exciting new discovery.
The C Zone at Lake Austin North consists of a
regolith gold mineralised halo (>0.1g/t Au) defined by
aircore drilling and extending up to 150m wide and
covering a strike extent of over 450m. The target is
open to the north and south (Figures 7) where recent
aircore drilling intersected grades up to 30m @ 0.5g/t
Au, including 4m @ 1.6g/t Au to end of hole.
2018 Annual Report
Review of Operations
The C Zone is situated partially within a highly
prospective sheared and altered granophyric dolerite
intrusion on a similar orientation to the Great Fingall
dolerite that hosts the high-grade Great Fingall gold
deposit at Cue.
Other Cue Project Targets
Drilling at the Joshua target and Numbers prospect
(Figure 6) also intersected high-grade gold during
the year. Follow-up drilling of these and other gold
targets within the project area is currently being
prioritised.
Other Projects
Musgrave currently holds tenement applications in
the central Musgrave province of South Australia and
a granted tenement in the southern Gawler Craton
region which is managed by Petratherm Ltd. No
field activity was completed by Musgrave on these
projects during the period.
Figure 8
Figure 8: Cross section 6939200mN at Lake Austin North, A Zone target with
Cross section 6939200mN at Lake Austin North,
current drilling – Note: Drill holes 18MOAC075 and 18MOAC108 are
A Zone with current drilling – Note: Drill holes
projected onto the east-west cross section (a cross-section is a
18MORC075 and 18MOAC108 are projected onto
vertical section perpendicular to the line of mineralisation)
the east-west cross section (a cross section is
a vertical section perpendicular to the line of
mineralisation)
C Zone
The C Zone target at Lake Austin North consists of a regolith gold mineralised halo (>0.1g/t Au)
defined by aircore drilling and extending up to 150m wide and covering a strike extent of over 450m.
The target is open to the north and south (Figures 7) where recent aircore drilling intersected grades
up to 30m @ 0.5g/t Au, including 4m @ 1.6g/t Au to end of hole.
PAGE 10
The C Zone target is situated partially within a highly prospective sheared and altered granophyric
dolerite intrusion on a similar orientation to the Great Fingall dolerite that hosts the high-grade
Great Fingall gold deposit at Cue.
14
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
REVIEW OF OPERATIONS
Table 1: Summary of JORC Resources and Reserves for the Cue Project
Mineral Resources
Gold Mineral Resources
30 June 2018
Indicated Resources
Inferred Resources
Total Resources
Tonnes
‘000s
Au
g/t
oz. Au
‘000s
Tonnes
‘000s
Au
g/t
oz. Au
‘000s
Tonnes
‘000s
Au
g/t
oz. Au
‘000s
Deposit
Moyagee
Break of Day
Lena
Leviticus
Numbers
Total Moyagee
Eelya
Hollandaire
Rapier South
Total Eelya
Tuckabianna
Jasper Queen
Gilt Edge
445
1,288
7.73
1.69
111
70
1,733
3.24
181
473
473
1.4
1.4
21
21
423
1,394
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
2.84
199
153
8
22
382
22
12
34
15
9
441
Total Project
2,206
2.84
202
2,623
2.84
239
4,830
Copper Mineral Resources
30 June 2018
Deposit
Hollandaire
Copper
Indicated Resources
Grade
%
Tonnes
‘000s
Tonnes
Cu
‘000s
Inferred Resources
Grade
%
Tonnes
‘000s
Tonnes
Cu
‘000s
Total Resources
Grade
%
Tonnes
‘000s
Tonnes
Cu
‘000s
1,891
2.0
38
122
1.4
2
2,013
2.0
40
Silver Mineral Resources
30 June 2018
Deposit
Hollandaire
Silver
Ore Reserves
Copper Ore Reserves
30 June 2018
Deposit
Hollandaire
Copper
Silver Ore Reserves
30 June 2018
Deposit
Hollandaire
Silver
Indicated Resources
Grade
g/t
Tonnes
‘000s
oz. Au
‘000s
Inferred Resources
Grade
g/t
Tonnes
‘000s
oz. Au
‘000s
Total Resources
Grade
g/t
Tonnes
‘000s
oz. Au
‘000s
1,925
6.3
390
728
4.7
110
2653
5.9
500
Indicated Resources
Grade
%
Tonnes
‘000s
Tonnes
Cu
‘000s
Indicated Resources
Grade
g/t
Tonnes
‘000s
oz. Au
‘000s
Inferred Resources
Grade
%
Tonnes
‘000s
Tonnes
Cu
‘000s
Total Resources
Grade
%
Tonnes
‘000s
Tonnes
Cu
‘000s
442
3.3
15
442
3.3
15
Inferred Resources
Grade
g/t
Tonnes
‘000s
oz. Au
‘000s
Total Resources
Grade
g/t
Tonnes
‘000s
oz. Au
‘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
PAGE 11
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
REVIEW OF OPERATIONS
Notes to Table 1:
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
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 effects
the information included in the original market announcement and, in the case of estimates of Minerals
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, Mineral Resources or Ore Reserves
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 the 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.
PAGE 12
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 TENEMENT SCHEDULE
Project / Tenement
Location
Status
Interest
Corunna Project
South Australia
EL5497
Cue Project
Western Australia
E20/606
E20/608
E20/616
E20/629
E20/630
E20/659
E20/698
E20/699
E20/700
E20/836
E21/129
E21/144
E21/177
E21/194
E21/200
E21/204
E58/335
E59/507
M20/225
M20/245
M20/277
M21/106
M21/107
M58/224
M58/225
P20/2219
P20/2279
P21/0757
P58/1709
P59/1710
L20/57
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
Granted
100%
100%
100%
100%
100%
100%
90%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
PAGE 13
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 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 2018.
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:
• Mr Graham Ascough, Non-Executive Chairman
• Mr Robert Waugh, Managing Director
• Ms Kelly Ross, Non-Executive Director
• Mr John Percival, Non-Executive Director
PRINCIPAL ACTIVITIES
During the year, the principal continuing activities of
the Group consisted of:
•
•
•
exploration of mineral tenements, both on a
joint venture basis and by the Group in its own
right, with the intent to progress to development
in the near to mid-term;
continuing to seek extensions of areas held and
to seek out new areas with mineral potential;
and
evaluating results received 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 2018 was
$189,475 (2017: $5,240,475).
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 $41,108
(2017: $4,749,163) were impaired during the year. The
impaired exploration and evaluation costs primarily
comprise previously capitalised costs in relation to
some non-core tenements in South Australia and
PAGE 14
Western Australia which were relinquished and two
new tenement applications in the Cue region.
As at 30 June 2018, the Group had net assets of
$16,086,195 (2017: $8,775,705) including cash and
cash equivalents of $5,230,122 (2017: $3,560,365).
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 11 October 2017, the Company completed
a placement to sophisticated and professional
investors of 46,000,000 ordinary shares at an issue
price of 6.2 cents per share raising $2,852,000 before
costs.
In October 2017 the Company also announced a
Share Purchase Plan (“SPP”). The SPP was strongly
supported by Shareholders and the Company issued
12,338,675 new shares at an issue price of 6.2 cents
per share raising an additional $765,000 before costs.
On 28 May 2018, the Company completed a
placement to Westgold Resources Limited (Westgold)
of 48,000,000 ordinary shares at an issue price of 7.0
cents per share raising $3,360,000. The placement to
Westgold was at a premium of 15.4% to the 15-day
VWAP at the time of investment and represents a
holding of 14.7% (undiluted) in Musgrave Minerals
Ltd.
A Farm-in and Joint Venture agreement with
Petratherm Limited (Petratherm) (ASX: PTR) was
executed for the Corunna Project (EL5497) in South
Australia. Petratherm can earn up to 75% through
staged expenditure of $1 million over 2.5 years.
Musgrave has increased its landholding in the Cue
region and now holds over 300km2 of tenure.
The Company successfully secured an Exploration
Incentive Scheme (“EIS”) co-funded drilling grant
of $150,000 for the Cue Project to drill test gold and
copper targets in 2018-19.
There were no other significant changes in the state
of affairs of the Group during the financial year.
EVENTS SINCE THE END OF THE FINANCIAL YEAR
On 3 July 2018 Musgrave executed a non-binding
Term Sheet with Westgold that provides a near-
term development pathway for the existing gold
resources at its Cue Project. The Term Sheet outlines
the scope of a Mine Management and Profit Sharing
arrangement whereby Musgrave will receive 50%
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 DIRECTORS’ REPORT
of profits from operations that will be financed,
managed and operated by Westgold, an established
and highly experienced Australian gold producer
(see ASX announcement 3 July 2018, “Musgrave to
Progress Opportunity to develop Cue Gold Resources
with Westgold”).
The Term Sheet is non-binding and provides the
scope on which a formal Mine Management and
Profit Sharing Agreement can be negotiated. The
arrangement will be restricted to the existing JORC-
compliant gold resources, and a 100m buffer at the
Lena, Break of Day, Jasper Queen, Gilt Edge and
Rapier South deposits on Musgrave’s 100% owned
tenements at Cue. Musgrave will retain 100% of
the exploration interests and upside outside of the
defined resources.
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).
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
2018. However, reporting requirements may change
in the future.
INFORMATION ON DIRECTORS
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 28 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 Australasian Institute of
Mining and Metallurgy (“AusIMM”) 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 (formerly Avalon Minerals Ltd)
(appointed 29 November 2013)
Former directorships in last three 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
1,091,172
1,500,000
PAGE 15
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 DIRECTORS’ REPORT
Mr Robert Waugh MSc, BSc, FAusIMM, MAIG
Mrs Kelly Ross BBus, CPA, AGIA
(Managing Director),
Director since 6 March 2011
Experience and expertise
(Non-Executive Director),
Director since 26 May 2010
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 (“WMC”) 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
and BHP Billiton Exploration Ltd. 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 AusIMM and a Member of the Australian
Institute of Geoscientists.
Other current directorships
None
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 Chairperson of
the Audit Committee.
Other current directorships
None
Former directorships in last three years
Former directorships in last three years
None
Special responsibilities
Managing Director
Interests in shares and options
Ordinary shares – Musgrave Minerals
Limited
Unlisted options – Musgrave Minerals
Limited
None
Special responsibilities
Chair of the Audit Committee
Interests in shares and options
1,457,172
3,100,000
Ordinary shares – Musgrave Minerals
Limited
Unlisted options – Musgrave Minerals
Limited
181,492
1,000,000
Lake Austin Drilling
PAGE 16
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 DIRECTORS’ REPORT
Mr John Percival
(Non-Executive Director),
Director since 26 May 2010
Experience and expertise
John 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
was an Executive Director from 2000 to 2014. In
May 2014, Goldsearch changed direction and Mr
Percival resigned his executive position.
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 2018, and the numbers of
meetings attended by each Director were:
Board of
Directors
Audit
Committee
A
8
8
8
8
B
8
8
8
8
A
2
2
2
2
B
2
2
2
2
Graham Ascough
Robert Waugh
Kelly Ross
John Percival
Other current directorships
A = Number of meetings attended.
None
Former directorships in last three 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
694,559
1,000,000
COMPANY SECRETARY
Mrs Patricia (Trish) Farr, GradCertProfAcc,
GradDipACG, AGIA, ACIS, GAICD,
appointed 30 June 2015
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.
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
Mr John Percival, being the Director retiring by
rotation who, being eligible, will offer himself for re-
election at the 2018 Annual General Meeting.
REMUNERATION REPORT (AUDITED)
The Directors present the Musgrave Minerals Limited
2018 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 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
2017 Annual General Meeting
g) Details of remuneration
h) Service agreements
i)
Details of share-based compensation and
bonuses
PAGE 17
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 DIRECTORS’ REPORT
j)
Equity instruments held by key management
personnel
k)
Loans to key management personnel
l) Other transactions with key management
personnel.
a) Key management personnel covered in this
report
Non-Executive and Executive Directors (see
pages 15 to 17 for details about each director)
Name
Position
Graham Ascough Non-Executive Chairman
Robert Waugh
Managing Director
Kelly Ross
Non-Executive Director
John Percival
Non-Executive Director
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 2018.
PAGE 18
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.
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.
Drillhole sampling at Lake Austin North
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
DIRECTORS’ REPORT
d) Relationship between remuneration and the
Group’s performance
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 Non-Executive 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 Non-Executive 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 and aligns 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.
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
2017 Annual General Meeting
Proxies received for the 2017 remuneration
report at the Company’s AGM were more than
96% in favour of the report. The Company did
not receive any specific feedback at the AGM on
its remuneration practices.
Lake Austin drilling sunset
PAGE 19
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
DIRECTORS’ REPORT
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
%
2018
Directors
G Ascough
R Waugh
K Ross
J Percival
TOTALS
2017
Directors
G Ascough
R Waugh
K Ross
J Percival
TOTALS
65,000
268,716
45,000
45,000
423,716
65,000
266,055
45,000
45,000
–
–
–
–
–
–
53,211
–
–
421,055
53,211
–
–
–
–
–
–
–
–
–
–
–
25,528
4,275
4,275
32,670
65,340
21,780
21,780
97,670
359,584
71,055
71,055
34,078
141,570
599,364
–
49,460
30,330
139,973
4,275
4,275
32,973
32,973
114,460
489,569
82,248
82,248
38,880
255,379
768,525
33.4
18.2
30.7
30.7
43.2
28.6
40.1
40.1
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 $268,716 plus statutory
superannuation. Either party may terminate
the employment contract without cause by
providing six 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.
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
PAGE 20
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
DIRECTORS’ REPORT
Company are subject to shareholder approval. Options issued to Directors in the 2017 and 2018 financial
period as indicated in the table above were approved by shareholders at the 2016 and 2017 Annual General
Meetings.
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 (1)
H
J
L (1)
M
N (2)
O
P
Q
R
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
22 Apr 2021
4 Nov 2016
4 Nov 2016
3 Nov 2019
4 Nov 2016
4 Nov 2016
3 Nov 2021
29 Nov 2017
29 Nov 2017
29 Nov 2020
7 Dec 2017
29 Nov 2017
29 Nov 2020
$0.25
$0.12
$0.12
$0.25
$0.045
$0.045
$0.167
$0.195
$0.097
$0.097
$0.0431
$0.0522
$0.0046
$0.0010
$0.0194
$0.0923
$0.0659
$0.0628
$0.0436
$0.0436
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(1) These options expired during the financial year.
(2) These options were exercised during the financial year.
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.
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
2018
Directors
Opening
balance at
1 July
Granted
as remun-
eration
Options
exercised
Net
change
(other)
Balance
at 30
June
Vested
but not
exer-
cisable
Vested and
exercisable
Vested
during
the year
G Ascough
750,000
750,000
–
R Waugh
2,000,000
1,500,000
(400,000)
K Ross
J Percival
500,000
500,000
500,000
500,000
–
–
TOTAL
3,750,000
3,250,000
(400,000)
–
–
–
–
–
1,500,000
3,100,000
1,000,000
1,000,000
6,600,000
–
–
–
–
–
1,500,000
3,100,000
1,000,000
1,000,000
6,600,000
–
–
–
–
–
PAGE 21
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
DIRECTORS’ REPORT
Shareholdings
2018
Directors
G Ascough
R Waugh
K Ross
J Percival
TOTAL
Opening
balance at 1
July
849,237
815,237
100,847
554,237
2,319,558
Granted as
remuneration
Options
exercised
Net change
(other)
Balance at 30
June
–
–
–
–
–
–
400,000
–
–
400,000
241,935
241,935
80,645
140,322
704,837
1,091,172
1,457,172
181,492
694,559
3,424,395
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)
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
11 March 2014
16 September 2015
22 April 2016
4 November 2016
4 November 2016
10 March 2019
10 March 2019
22 April 2021
3 November 2019
3 November 2021
29 November 2017
29 November 2020
7 December 2017
29 November 2020
$0.12
$0.12
$0.045
$0.167
$0.195
$0.097
$0.097
TOTAL:
300,000
250,000
500,000
2,550,000
800,000
3,250,000
2,250,000
9,900,000
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 400,000 options, previously issued to Mr Waugh were exercised and 400,000 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 2018 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.
PAGE 22
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
DIRECTORS’ REPORT
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 2018 no fees were paid
or were payable for non-audit services provided by the auditor of the consolidated entity (2017: $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, 19 September 2018
PAGE 23
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 AUDITOR’S INDEPENDENCE DECLARATION
Central Park, Level 43
152-158 St Georges Terrace
Perth WA 6000
Correspondence to:
PO Box 7757
Cloisters Square
Perth WA 6850
T +61 8 9480 2000
F +61 8 9480 2050
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 review of Musgrave
Minerals Limited for the year ended 30 June 2018. I declare that, to the best of my knowledge and belief, there have been:
a No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
b No contraventions of any applicable code of professional conduct in relation to the review.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
C A Becker
Partner – Audit & Assurance
Perth, 19 September 2018
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
PAGE 24
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
Revenue from operating activities
Employee benefits expense
Depreciation expense
Impairment expense
Other expenses
Change in fair value of derivate financial instruments
Loss from continuing operations before income tax
Income tax benefit
CONSOLIDATED
Notes
3(a)
3(b)
11
3(c)
9(a)
5
2018
$
81,570
(370,660)
(13,080)
(41,108)
(390,323)
418,000
(315,601)
126,126
2017
$
125,625
(507,247)
(14,630)
(4,749,163)
(327,426)
(4,000)
(5,476,841)
236,366
Loss after income tax for the period attributable to the owners
of Musgrave Minerals Limited
(189,475)
(5,240,475)
Other comprehensive income
Items that may be reclassified to profit or loss
Change in the fair value of available-for-sale financial assets
9(b)
470,000
16,789
Other comprehensive income for the period (net of tax)
470,000
16,789
Total comprehensive profit or loss for the period attributable to
the owners of Musgrave Minerals Limited
280,525
(5,223,686)
Loss per share attributable to the owners of
Musgrave Minerals Limited
Basic loss per share
Diluted loss per share
Cents per share
Cents per share
18
18
0.07
0.07
2.92
2.92
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
PAGE 25
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Derivate 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 Liabilities
Long-term provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
CONSOLIDATED
Notes
2018
$
2017
$
6
7
8
9(a)
9(b)
10
11
13
14
14
15
16
17
5,230,122
114,650
14,611
455,000
3,560,365
435,795
10,307
37,000
5,814,383
4,043,467
610,000
45,493
10,256,138
10,911,631
140,000
48,810
5,022,031
5,210,841
16,726,014
9,254,308
530,869
108,950
639,819
–
–
389,372
78,993
468,365
10,238
10,238
639,819
478,603
16,086,195
8,775,705
39,436,729
32,646,322
971,276
320,283
(24,321,810)
(24,190,900)
16,086,195
8,775,705
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
PAGE 26
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
ATTRIBUTABLE TO EQUITY HOLDERS OF THE ENTITY
Issued
Capital
$
Options
Reserve
$
Assets held
for Sale
Reserve
$
Accumulated
Losses
$
Total
Equity
$
At 1 July 2016
26,793,899
64,503
Total comprehensive loss for
the period
Other comprehensive income
Loss after income tax 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
–
–
–
6,242,998
(390,575)
–
–
–
–
–
–
–
–
(3,870)
(12,518)
255,379
–
–
(18,966,813)
7,891,589
(5,240,475)
(5,240,475)
16,789
–
16,789
16,789
(5,240,475)
(5,223,686)
–
–
–
–
–
–
–
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
At 1 July 2017
32,646,322
303,494
16,789
(24,190,900)
8,775,705
Total comprehensive loss for
the period
Other comprehensive income
Loss after income tax 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
At 30 June 2018
–
–
–
7,010,050
(219,643)
–
–
–
–
–
–
–
–
39,436,729
(36,938)
(21,627)
239,558
484,487
-
(189,475)
(189,475)
470,000
–
470,000
470,000
(189,475)
280,525
–
–
–
–
–
–
–
7,010,050
(219,643)
36,938
21,627
–
–
–
239,558
486,789
(24,321,810)
16,086,195
The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
PAGE 27
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Research and development tax rebate received
CONSOLIDATED
Notes
2018
$
2017
$
(539,570)
61,773
362,491
(627,092)
68,554
–
NET CASH FLOWS USED IN OPERATING ACTIVITIES
25
(115,306)
(558,538)
NET CASH FLOWS USED IN INVESTING ACTIVITIES
Payments for property, plant and equipment
Payments for tenements
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 the period
(9,763)
(1,500,000)
(3,480,531)
(4,990,294)
–
–
(3,808,744)
(3,808,744)
6,977,000
18,000
(219,643)
6,775,357
1,669,757
3,560,365
6,233,998
9,000
(390,575)
5,852,423
1,485,141
2,075,224
CASH AND CASH EQUIVALENTS AT END OF PERIOD
6
5,230,122
3,560,365
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
PAGE 28
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
1
CORPORATE INFORMATION
The consolidated financial report of Musgrave Minerals Limited for the year ended 30 June 2018 was
authorised for issue in accordance with a resolution of the Directors on 19 September 2018.
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 2017 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 2016-1: Amendments to Australian Accounting Standards - Recognition of Deferred Tax Assets
for Unrealised Losses;
AASB 2016-2: Amendments to Australian Accounting Standards - Disclosure Initiative: Amendments
to AASB 107; and
AASB 2017-2: Amendments to Australian Accounting Standards - Further Annual Improvements 2014-
2016 Cycle.
New accounting standards and interpretations
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.
PAGE 29
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2
STATEMENT OF COMPLIANCE CONTINUED
The key new standards which may impact the Group in future years are detailed below:
New or revised requirement
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.
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, 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.
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.
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, based on the entity’s preliminary assessment, the Standard is
expected to have an impact on the transactions and balances recognised in the
financial statements when it is first adopted for the year ending 30 June 2019.
Application
date of
standard
Application
date for
Group
1 Jan 2018
1 Jul 2018
1 Jan 2018
1 Jul 2018
1 Jan 2018
1 Jul 2018
1 Jan 2019
1 Jul 2019
PAGE 30
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2
STATEMENT OF COMPLIANCE CONTINUED
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.
c)
Principles of consolidation
Subsidiaries
The consolidated financial statements
incorporate the assets and liabilities of the
Company’s subsidiary at 30 June 2018 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 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 judgments, 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.
PAGE 31
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2
STATEMENT OF COMPLIANCE CONTINUED
f)
Functional and presentation of currency
d) Critical accounting judgements and key
sources of estimation uncertainty continued
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 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.
PAGE 32
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.
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2
STATEMENT OF COMPLIANCE CONTINUED
i)
Income Tax continued
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.
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 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.
PAGE 33
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2
STATEMENT OF COMPLIANCE CONTINUED
i)
Leases continued
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
PAGE 34
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 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:
•
•
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
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2
STATEMENT OF COMPLIANCE CONTINUED
m) Exploration and evaluation expenditure
continued
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
n) Property, plant and equipment
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
PAGE 35
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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.
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.
2
STATEMENT OF COMPLIANCE CONTINUED
p) Employee benefits continued
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
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.
PAGE 36
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2
STATEMENT OF COMPLIANCE CONTINUED
r)
Earnings per share continued
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
Financial assets at fair value through profit
or loss (“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 financial assets
Available-for-sale (“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.
PAGE 37
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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) Other expenses
CONSOLIDATED
2018
$
66,077
15,493
81,570
2017
$
66,273
59,352
125,625
CONSOLIDATED
2018
$
993,426
88,848
5,025
14,694
239,558
(970,891)
370,660
2017
$
976,487
84,586
(6,020)
15,367
255,379
(818,552)
507,247
CONSOLIDATED
2018
$
2017
$
Secretarial, professional and consultancy costs
116,685
128,816
Occupancy costs
Share register maintenance
ASX / ASIC
Promotion, advertising and sponsorship
Employer related on-costs
Other expenses
Total other expenses
48,912
15,489
38,596
73,104
25,820
71,717
48,000
51,634
32,844
15,899
19,083
31,150
390,323
327,426
4
SEGMENT INFORMATION
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.
PAGE 38
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
5
INCOME TAX
CONSOLIDATED
2018
$
2017
$
Statement of Profit or Loss and Other Comprehensive Income
Current income tax:
- Current income tax benefit at a rate of 27.5% (2017: 27.5%)
–
–
- R&D tax concession
Deferred income tax:
(126,126)
(236,366)
- 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
(1,278,715)
1,221,996
56,719
(411,364)
1,177,104
(765,740)
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:
(126,126)
(236,366)
Accounting loss from continuing operations before income tax
At the statutory income tax rate of 27.5% (2017: 27.5%)
(315,601)
(86,790)
(5,476,841)
(1,506,131)
Add:
- Immediate write-off of capital expenditure
(1,038,184)
(1,083,945)
- Expenditures not allowable for income tax purposes
- Other deductible items
125,436
(222,458)
- Tax losses not recognised due to not meeting recognition criteria
1,221,996
1,522,984
(110,012)
1,177,104
Deferred income tax
Recognised on the Statement of Financial Position,
deferred income tax at the end of the reporting
period relates to the following: (2018: 27.5%, 2017:
27.5%)
Deferred income tax liabilities:
- Capitalised expenditure deductible for tax purposes
2,433,147
1,381,059
- Trade and other receivables
- Derivative financial instruments
- Available for sale financial instruments
Deferred income tax assets:
- Trade and other payables
- Employee benefits
- Change in market value of derivative
- Capital raising costs
- Provisions
- Tax losses available to offset DTL
Net deferred tax asset/(liability)
12,691
113,850
133,867
3,023
–
–
2,693,555
1,384,082
(7,013)
(29,961)
–
(108,861)
(493)
(8,743)
(24,539)
(1,100)
(81,189)
–
(2,547,227)
(1,268,511)
–
–
PAGE 39
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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 $24,423,633 (2017: $20,269,956).
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.
6
CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term deposits
CONSOLIDATED
2018
$
353,797
4,876,325
5,230,122
2017
$
410,365
3,150,000
3,560,365
The weighted average interest rate for the year was 2.05% (2017: 2.28%).
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
CONSOLIDATED
2018
$
–
86,329
28,321
114,650
2017
$
236,366
126,334
73,095
435,795
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.
PAGE 40
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
8 OTHER CURRENT ASSETS
Accrued interest
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
- Accumulated depreciation
Total plant and equipment
Motor vehicles
- At cost
- Accumulated depreciation
Total motor vehicles
Total property, plant and equipment
CONSOLIDATED
2018
$
14,611
14,611
2017
$
10,307
10,307
CONSOLIDATED
2018
$
37,000
–
418,000
455,000
2017
$
–
41,000
(4,000)
37,000
CONSOLIDATED
2018
$
140,000
–
470,000
610,000
2017
$
–
123,211
16,789
140,000
CONSOLIDATED
2018
$
224,344
9,763
(221,513)
12,594
166,545
(133,646)
32,899
45,493
2017
$
224,344
–
(217,094)
7,250
166,545
(124,985)
41,560
48,810
PAGE 41
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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:
2018 – Consolidated
Balance at the beginning of the year
Acquisitions
Depreciation expense
Carrying amount at the end of the year
2017 – Consolidated
Balance at the beginning of the year
Depreciation expense
Carrying amount at the end of the year
11 EXPLORATION AND EVALUATION
Opening balance
Exploration expenditure incurred during the year
Acquisition of remaining Cue joint venture interest (i)
Impairment expense
Tenements sold
Closing balance
Plant and
equipment
$
7,250
9,763
(4,419)
12,594
10,866
(3,616)
7,250
Motor
vehicles
$
41,560
–
(8,661)
32,899
52,574
(11,014)
41,560
Total
$
48,810
9,763
(13,080)
45,493
63,440
(14,630)
48,810
CONSOLIDATED
2018
$
5,022,031
3,775,215
1,500,000
2017
$
6,020,245
3,941,619
–
(41,108)
(4,749,163)
–
10,256,138
(190,670)
5,022,031
i)
In August 2017, the Company completed the acquisition of Silver Lake Resources Limited’s remaining
interest in the Cue Project JV by exercising its pre-emptive right. The consideration for the JV interest
was $1.5 million in cash.
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 $41,108 (2017: $4,749,163) has been
booked.
12 SUBSIDIARIES
Details of the Company’s subsidiary are as follows:
Subsidiary
Principal
activity
Country of
incorporation
Proportion
of ownership
2018
2017
Musgrave Exploration Pty Ltd
Exploration
Australia
100%
100%
PAGE 42
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
13 TRADE AND OTHER PAYABLES
Trade creditors
Other payables
CONSOLIDATED
2018
$
455,422
75,447
530,869
2017
$
282,605
106,767
389,372
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
CONSOLIDATED
2018
$
46,530
62,420
108,950
–
–
2017
$
41,505
37,488
78,993
10,238
10,238
CONSOLIDATED
2018
$
2017
$
39,436,729
32,646,322
PAGE 43
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
15 CONTRIBUTED EQUITY CONTINUED
b) Movements in ordinary shares on issue
Balance at 1 July 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
Placement – 17 October 2017
Share Purchase Plan – 31 October 2016
Shares issued in lieu of services – 14 December 2017
Exercise of options – 29 December 2017
Placement – 28 May 2018
Share issue costs
Balance at 30 June 2018
CONSOLIDATED
Number
125,032,258
12,711,864
200,000
33,627,084
8,474,576
40,000,000
–
$
26,793,899
750,000
9,000
1,983,998
500,000
3,000,000
(390,575)
220,045,782
32,646,322
46,000,000
12,338,675
215,000
400,000
48,000,000
–
2,852,000
765,000
15,050
18,000
3,360,000
(219,643)
326,999,457
39,436,729
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.
c) Movements in options on issue
Balance at beginning of the financial year
Options granted
Options exercised
Options expired/lapsed
Balance at end of the financial year
CONSOLIDATED
2018
Number
5,375,000
5,500,000
(400,000)
(575,000)
9,900,000
2017
Number
2,200,000
3,750,000
(200,000)
(375,000)
5,375,000
PAGE 44
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
16 RESERVES
Share option reserve
Opening balance
Issue of director options
Issue of employee options under the Employee Share Option Plan
Exercise of employee options
Expiry of options
Balance at the end of the financial year
CONSOLIDATED
2018
$
303,494
141,570
97,988
(36,938)
(21,627)
484,487
2017
$
64,503
255,379
–
(3,870)
(12,518)
303,494
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
Total Reserves
17 ACCUMULATED LOSSES
CONSOLIDATED
2018
$
16,789
470,000
486,789
971,276
2017
$
–
16,789
16,789
320,283
CONSOLIDATED
2018
$
2017
$
Balance at the beginning of the financial year
(24,190,900)
(18,966,813)
Net loss attributable to members
Transfer from share option reserve
Balance at the end of the financial year
(189,475)
58,565
(5,240,475)
16,388
(24,321,810)
(24,190,900)
18 EARNINGS PER SHARE
Basic loss per share
Diluted loss per share
2018
Cents
0.07
0.07
2017
Cents
2.92
2.92
PAGE 45
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
18 EARNINGS PER SHARE CONTINUED
The following reflects the income and share data used in the calculations of basic and diluted loss per share:
Profits/(losses) used in calculating basic and diluted earnings per
share
2018
$
2017
$
(189,475)
(5,240,475)
2018
2017
Number
Number
Weighted average number of ordinary shares used in calculating
basic and diluted loss per share
265,146,411
179,467,936
19 AUDITOR’S REMUNERATION
CONSOLIDATED
2018
$
32,300
32,300
2017
$
30,750
30,750
Audit services
Grant Thornton Audit Pty Ltd
- Audit and review of the financial reports
Total remuneration
20 CONTINGENT ASSETS AND LIABILITIES
Contingent liabilities
The Group had contingent liabilities in respect of:
Future royalty payments
Musgrave 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.
Contingent assets
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 2018.
PAGE 46
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
21 EVENTS OCCURRING AFTER THE REPORTING PERIOD
On 3 July 2018 Musgrave executed a non-binding Term Sheet with Westgold that provides a near-term
development pathway for the existing gold resources at its Cue Project. The Term Sheet outlines the scope
of a Mine Management and Profit Sharing arrangement whereby Musgrave will receive 50% of profits
from operations that will be financed, managed and operated by Westgold, an established and highly
experienced Australian gold producer.
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 meeting 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 $901,940 (2017: $970,900) per annum.
Commitments in relation to the lease of office premises are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
CONSOLIDATED
2018
$
62,547
103,259
–
165,806
2017
$
12,000
–
–
12,000
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.
PAGE 47
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
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.
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
$
Non-
interest
bearing
$
Total
$
Consolidated – 2018
Financial assets
Cash and cash equivalents
353,497 4,876,325
Trade and other receivables
Available-for-sale financial assets
–
–
–
–
353,497 4,876,325
Weighted average interest rate
1.32%
2.36%
Financial liabilities
Trade and other payables
Weighted average interest rate
–
–
–
–
–
–
Consolidated – 2017
Financial assets
Cash and cash equivalents
410,065 3,150,000
Trade and other receivables
Available-for-sale financial assets
–
–
–
–
410,065 3,150,000
Weighted average interest rate
1.17%
2.48%
Financial liabilities
Trade and other payables
Weighted average interest rate
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
300
5,230,122
114,650
610,000
114,650
610,000
724,950
5,954,772
–
–
530,869
530,869
–
530,869
530,869
–
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
–
PAGE 48
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
Fair value sensitivity analysis for fixed rate instruments
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:
Profit or loss
Equity
Carrying
value at
period end
$
100 bp
increase
$
100 bp
decrease
$
100 bp
increase
$
100 bp
decrease
$
Consolidated – 2018
Financial assets
Cash and cash equivalents
5,230,122
Cash flow sensitivity (net)
32,186
32,186
(32,186)
(32,186)
32,186
32,186
(32,186)
(32,186)
Consolidated – 2017
Financial assets
Cash and cash equivalents
3,560,365
Cash flow sensitivity (net)
29,045
29,045
(29,045)
(29,045)
29,045
29,045
(29,045)
(29,045)
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.
PAGE 49
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
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:
Cash and cash equivalents
Trade and other receivables
Foreign currency risk
CONSOLIDATED
2018
$
5,230,122
114,650
5,344,772
2017
$
3,560,365
435,795
3,996,160
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.
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 – 2018
Trade and other payables
Receivables
Consolidated – 2017
Trade and other payables
Receivables
Carrying amount
$
Contractual cash
flows
$
6 months or less
$
530,869
530,869
114,650
114,650
389,372
389,372
435,795
435,795
–
–
–
–
–
–
–
–
530,869
530,869
114,650
114,650
389,372
389,372
435,795
435,795
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.
PAGE 50
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED
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 2018 and 30 June 2017:
30 June 2018
Available for sale financial assets
30 June 2017
Available for sale financial assets
Capital risk management
Level 1
$
610,000
610,000
140,000
140,000
Level 2
$
Level 3
$
–
–
–
–
–
–
–
–
Total
$
610,000
610,000
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 and 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 and 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.
PAGE 51
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
24 SHARE-BASED PAYMENTS CONTINUED
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
F (1)
H
J
L (1)
M
N (2)
O
P
Q
R
500,000
6 Mar 2013
5 Mar 2018
Immediate
300,000
11 Mar 2014
10 Mar 2019
Immediate
250,000
16 Sep 2015
10 Mar 2019
Immediate
75,000
16 Sep 2015
23 Mar 2018
Immediate
500,000
22 Apr 2016
22 Apr 2021
Immediate
400,000
4 Nov 2016
22 Apr 2021
Immediate
2,550,000
4 Nov 2016
3 Nov 2019
Immediate
800,000
4 Nov 2016
3 Nov 2021
Immediate
3,250,000
29 Nov 2017
29 Nov 2020
Immediate
2,250,000
29 Nov 2017
29 Nov 2020
Immediate
$0.25
$0.12
$0.120
$0.250
$0.045
$0.045
$0.167
$0.195
$0.097
$0.097
$0.0431
$0.0522
$0.0046
$0.0010
$0.0194
$0.0923
$0.0659
$0.0628
$0.0436
$0.0436
(1) These options expired during the financial year.
(2) These options were exercised during the financial year.
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 $239,558.
The model inputs for options granted during the year ended 30 June 2018 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 Q
$0.097
29 Nov 2017
29 Nov 2020
$0.065
117.0%
0%
1.86%
Issue R
$0.097
29 Nov 2017
29 Nov 2020
$0.065
117.0%
0%
1.86%
Movements in share options during the year
Movement in the number of share options held by Directors and employees:
2018
2017
Number of
options
Weighted
average
exercise price
$
Number of
options
Weighted
average
exercise price
$
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
5,375,000
5,500,000
(400,000)
(575,000)
9,900,000
9,900,000
0.15
0.097
0.045
0.25
0.12
0.12
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
PAGE 52
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
24 SHARE-BASED PAYMENTS CONTINUED
The weighted average remaining contractual life of share options outstanding at the end of the year was
2.14 years (2017: 2.64 years).
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
5 March 2018
23 March 2018
10 March 2019
22 April 2021
3 November 2019
3 November 2021
29 November 2020
Totals
Exercise price
$
0.25
0.25
0.12
0.045
0.167
0.195
0.097
2018
Number
–
–
550,000
500,000
2,550,000
800,000
5,500,000
9,900,000
2017
Number
500,000
75,000
550,000
900,000
2,550,000
800,000
–
5,375,000
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
CONSOLIDATED
2018
$
2017
$
(189,475)
(5,240,475)
13,080
41,108
–
239,558
–
(418,000)
236,366
(30,070)
(4,304)
(23,288)
19,719
14,630
4,749,163
–
255,379
26,459
4,000
(236,366)
(155,917)
2,281
12,961
9,347
Net cash used in operating activities
(115,306)
(558,538)
Non-cash investing and financing activities
There were no non-cash investing and financing activities during the year.
PAGE 53
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
26: RELATED PARTY DISCLOSURE
a) Parent entity
Musgrave Minerals Limited
Ordinary
Australia
Class
Country of
incorporation
b) Subsidiaries
Musgrave Exploration Pty Ltd
Ordinary
Australia
Class
Country of
incorporation
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.
Investment at cost
2018
$
–
201$
$
–
Investment at cost
2018
$
100
2018
$
423,716
34,078
–
141,570
599,364
201$
$
100
2017
$
421,055
38,880
53,211
255,379
768,525
PAGE 54
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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
2018
$
2017
$
(189,475)
(5,240,475)
470,000
280,525
16,789
(5,223,686)
5,814,383
10,911,631
16,726,014
4,043,467
5,210,841
9,254,308
639,819
–
639,819
468,365
10,238
478,603
16,086,195
8,775,705
39,436,729
32,646,322
971,276
320,283
(24,321,810)
(24,190,900)
16,086,195
8,775,705
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 2018 other than the
commitment in relation to the lease of office premises as disclosed in Note 22.
PAGE 55
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
DIRECTORS’ DECLARATION
The Directors of Musgrave Minerals Limited declare that:
1)
in the Directors’ opinion, the financial statements and notes set out on pages 21 to 52 and the
Remuneration Report in the Director’s Report are in accordance with the Corporations Act 2001, including:
a) giving a true and fair view of the Company’s financial position as at 30 June 2018 and of its
performance, for the financial year ended on that date; and
b)
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations), Corporations Regulations 2001 and mandatory professional reporting requirements.
the financial statements also comply with International Financial Reporting Standards as disclosed in Note
2; and
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.
2)
3)
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 2018.
Signed in accordance with a resolution of the Directors.
Mr Graham Ascough
Chairman
Perth, Western Australia
19 September 2018
PAGE 56
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
Central Park, Level 43
152-158 St Georges Terrace
Perth WA 6000
Correspondence to:
PO Box 7757
Cloisters Square
Perth WA 6850
T +61 8 9480 2000
F +61 8 9480 2050
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 2018, 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 2018 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
PAGE 57
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
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.
Key audit matter
How our audit addressed the key audit matter
Exploration and evaluation assets – refer to Note 2(m)
and 11
At 30 June 2018, the carrying value of exploration and
evaluation assets was $10.256 million.
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 significant
judgement involved in determining the existence of
impairment triggers.
Available for Sale Financial Assets and Derivative
Financial Instruments – refer to Note 2(t) and 9
On 28 February 2017, the Group entered into a Tenement
Sale Agreement with Legend Mining in respect of the Group’s
non-core tenements in the Fraser Range area of Western
Australia.
Under the terms of the Agreement, Musgrave Minerals Limited
transferred to Legend Mining 100% of its interests in
tenements E28/2404 and E28/2405 and as consideration for
the sale received:
-
-
10,000,000 fully paid ordinary shares in Legend,
10,000,000 unlisted options exercisable at $0.04
exercisable by 30 March 2021.
Our procedures included, amongst others:
(cid:120) obtaining the management reconciliation of capitalised
exploration and evaluation expenditure and agreeing to the
general ledger;
(cid:120) reviewing management’s area of interest considerations
against AASB 6;
(cid:120) conducting a detailed review of management’s assessment
of trigger events prepared in accordance with AASB 6
including;
o
o
o
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 management’s
budgeted expenditure;
understanding whether any data exists to
suggest that the carrying value of these
exploration and evaluation assets are
unlikely to be recovered through
development or sale;
(cid:120) assessing the accuracy of impairment recorded for the year
as it pertained to exploration interests; and
(cid:120) assessing the appropriateness of the related financial
statement disclosures.
Our procedures included, amongst others:
(cid:120) agreeing the receipt of shares and options to ASX
announcements;
(cid:120) reviewing the terms and conditions of the options received;
(cid:120) reviewing the methodology and key inputs of the option
valuation calculation, as at 30 June 2018;
(cid:120) recalculating the profit/ (loss) on disposal of the tenements
in reference to the fair value of the shares and options
received;
(cid:120) testing the calculation of fair value movements on the
shares and options during the period to ensure these
movements were recognised in 'other comprehensive
income' and 'statement of profit or loss' respectively; and
(cid:120) assessing the adequacy of the Group's disclosures in
respect to available for sale financial assets and derivative
financial instruments.
PAGE 58
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
In accordance with the Australian Accounting Standards, the
consideration received at transaction date is recorded at fair
value and subsequently revalued at each reporting date.
The calculation undertaken by management to estimate at fair
value the Legend Mining options involves an element of
management judgement.
This area is a key audit matter due to the significant
judgement involved in determining the fair value of the
available for sale financial assets and derivative financial
instruments, driven by movements in financial markets.
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 2018, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
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.
PAGE 59
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 13 to 18 of the Directors’ report for the year ended 30 June
2018.
In our opinion, the Remuneration Report of Musgrave Minerals Limited, for the year ended 30 June 2018 complies with
section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
C A Becker
Partner – Audit & Assurance
Perth, 19 September 2018
PAGE 60
MUSGRAVE MINERALS LTD ANNUAL REPORT 2018
ADDITIONAL INFORMATION
The following additional information not shown elsewhere in this report is required by the ASX Listing Rules
and is current as at 17 September 2018.
Securities
Quotation has been granted for 326,999,457 ordinary shares of the Company on the Australian Securities
Exchange.
Quoted Securities
ASX Code
MGV
Unquoted Securities
ASX Code
MGVAA
MGVAB
MGVAB
MGVAB
MGVAB
Number of
Holders
1,445
Number of
Holders
6
2
4
1
Security Description
Total
Securities
Ordinary Fully Paid
326,999,457
Security Description
Options expiring 10/03/2019 exercisable at $0.12
Options expiring 24/04/2021 exercisable at $0.045
Total
Securities
550,000
500,000
Options expiring 03/11/2019 exercisable at $0.1671
2,550,000
Options expiring 03/11/2021 exercisable at $0.195
800,000
11
Options expiring 29/11/2020 exercisable at $0.195
5,500,000
One holder Mr Robert Waugh and Mrs Sara Waugh
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