Annual Report
2019
Contents
Corporate Directory ............................................................................................................................................................ ii
Chairman’s Message ......................................................................................................................................................... iii
Review of Operations ........................................................................................................................................................ v
Corporate Governance ................................................................................................................................................... xv
New Century in the Community .......................................................................................................................... xvi
Mineral Resource Statement ................................................................................................................................xxiv
Directors’ Report ................................................................................................................................................................... 4
Auditor’s Independence Declaration ................................................................................................................ 22
Consolidated Statement of Profit or Loss and Other Comprehensive Income .............. 23
Consolidated Statement of Financial Position .......................................................................................... 24
Consolidated Statement of Changes in Equity ........................................................................................ 25
Consolidated Statement of Cashflows ............................................................................................................ 27
Notes to the Financial Statements ..................................................................................................................... 28
Directors’ Declaration .................................................................................................................................................... 72
Independent Auditor’s Report ............................................................................................................................... 73
ASX Additional Information...................................................................................................................................... 78
i
Corporate Directory
Directors
Registered and business address
Robert McDonald (Chairman)
Level 4, 360 Collins Street
Patrick Walta (Managing Director)
Melbourne, Victoria 3000
Nick Cernotta (Non-Executive Director)
Australia
Evan Cranston (Non-Executive Director)
Telephone: +61 3 9070 3300
Bryn Hardcastle (Non-Executive Director)
Email: info@newcenturyresources.com
Peter Watson (Non-Executive Director)
Website: www.newcenturyresources.com
Company secretary
Oonagh Malone
Auditors
Deloitte Touche Tohmatsu
550 Bourke Street
Melbourne, Victoria 3000
Securities exchange
Share registry
Australian Securities Exchange (ASX)
Automic Registry Services
Code:
NCZ
Home office: Perth
126 Phillip Street
Sydney, New South Wales 2000
Telephone: +61 2 9698 5414
Country of incorporation and domicile
Solicitors
Australia
Bellanhouse
Level 19, Alluvion
58 Mounts Bay Road
Perth, Western Australia 6000
ii
Chairman’s Message
Dear Shareholders,
I am pleased to present my first message as the new independent Chairman of New
Century Resources.
Our Century operations are starting to deliver strong and consistent zinc recoveries
and continued record metal production rates, delivering on our strategy to become
Australia’s premier sustainable mining company.
I would like to acknowledge our partner, MMG Ltd, and its trust in us to profitably
recover valuable metals from its previous workings while also delivering a solution
for rehabilitation of the Century mine, which for some 16 years prior to its closure 3
years ago was one of the world’s major zinc mines.
Of course it is people that make things happen. We have assembled an outstanding
team, dedicated to making your company special. I commend the entire team on
the focussed efforts during the ramp up process and for the quarter-on-quarter
growth achieved and establishing New Century as a top 20 zinc producer.
In addition to the operational milestones achieved at Century with commissioning
of the plant, pipeline and port facility, major highlights for the Company this year
have included:
•
16 shipments of Century concentrate completed to date to 7 different smelters
on 3 different continents;
• A strengthened Board and Management team for the next phase of the
Company’s growth;
• Acknowledgement from the Queensland Government of our contribution to the
development of the State’s North West region through a landmark royalty
deferral which allows us to defer State royalties for 3 years while the Company is
in the development phase;
• Successful capital raising of $43.4 million by way of a placement to sophisticated
and professional investors, together with a shareholder share placement plan
and investment from Board and management.
The Century Mine has a long history of engaging with the Gulf Communities and
Traditional Owners of the region, and New Century Resources has continued this
practice through transparent engagement and innovative delivery of community
development initiatives. I am particularly pleased to report to shareholders on the
outcomes of our Training and Development Program, delivered in accordance with
our Native Title Obligations In a first for the Century Mine after almost 20-years of
operation, the program has now been designed and is being delivered by
community members, for community members. The outcomes delivered to date
have been outstanding and address community-identified sustainable social
development goals such as improving literacy outcomes for school children on
Mornington Island, and creating employment pathways in the defence sector for
young adults in Doomadgee.
iii
Safety also remains a paramount focus of our business. New Century’s safety motto,
“Safety Starts With You”, which was created with ground up contribution from the
entire team, demonstrates the strong commitment of each individual team member
to continually improving the Company’s safety record.
Shareholders will be acutely aware of the progressive reduction of our share price
throughout the year. It is cold comfort to report that the same is true of other zinc
producers on the back of a reduction in spot zinc prices and a significant increase in
concentrate treatment charges, both of which have negatively impacted on the
performance of the industry. Our relative performance throughout the year was also
exacerbated by a slower than planned ramp-up.
However, as completion of the ramp up to a 12mtpa operation at Century occurs
during the coming financial year, a continued reduction in operating costs will occur.
This continues to put the Company in a good position to weather the current dour
zinc price environment. Longer term, based on the consensus view of mineral
economists and analysts about commodity markets and treatment charges we
expect our increased production to be complemented with significantly increased
earnings streams from operations.
We look forward to the future with confidence.
Robert McDonald
iv
Review of Operations
Over the course of FY19 New Century Resources made a successful transition from
aspiring mine developer to significant zinc producer in its own right, restarting
operations just 18 months from acquisition of the Century assets.
The Company is now an established top 20 zinc producer based on current monthly
production rates and continues to progress its ramp up strategy to become a top 10
zinc producer.
The Directors of New Century are pleased to present a summary of operations to
Shareholders.
Ramp Up Progress to Date
Since the start of operations in August 2018, operations at Century have continued
to ramp up, with consistent increases in quarterly zinc production. The ramp up of
operations is scheduled to continue throughout FY20.
Ramp up Highlights
Highlights to date from the operational ramp up include:
• Consistent increase in quarterly metal production, with the Company achieving
mid-range September 2019 production guidance of 26,171t zinc metal and on
track to achieve current December 2019 quarter guidance on 27,000t to 33,000t
zinc metal
• Quarterly zinc production rates have increased on average 30% over the first 12
months of concentrate production ramp up
• Consistent reduction in quarterly C1 costs, with the Company achieving mid-
range September 2019 quarter C1 cost guidance of US$1.00/lb payable metal
(including treatment charges) and on track to achieve current December 2019
quarter guidance of US$0.87/lb to US$0.98/lb.
• Quarterly C1 costs have decreased on average 15% over the first 12 months of
concentrate production ramp up
• Metallurgical performance has increased since zinc recovery to a monthly
average of 52% in September 2019
• Over 160,000t of zinc concentrate shipments (China, Europe & Australia) since
the commencement of operations
• Average impurity penalties and treatment charges continue to be maintained in
line with standard market pricing and remain competitive with other miners
• Hydraulic mining continues to ramp up, with a third mining cannon installed in
Q4 FY19, and the operations now delivering an ~8Mtpa mining rate
• Continued strong reconciliation of mining grade to the ore reserve model, with
the ore grade mined during the June 2019 quarter averaging 2.92% Zn
• Approximately 6% of the tailings Ore Reserve mined to the end of FY19
v
Mining & Production Performance
The figures below provided a detailed review of the operational performance data
from the Century operations to date.
Figure 1: Century’s quarterly metal production performance and annualised mining rate
Q2 FY20 guidance based on scheduled ramp up process
Figure 2: Century’s quarterly C1 cost trend (including TCs) against the zinc price
C1 Costs defined as direct cash operating cost, net of any by-product credits. Direct cash operating costs include all mining and
processing costs, mine site overheads and realisation costs (including transport costs, treatment and refining costs and smelter
recovery deductions) through to refined metal. Payable metal basis. Q2 FY20 guidance based on scheduled ramp up process.
Consensus Economics data used for zinc price projection (av. of 28 investment banks).
vi
Figure 3: Average monthly recovery and daily zinc metal production ramp up at Century
Figure 4: Daily recovery (with a 7 day moving average line) & annualised mining rate performance
since the start of operations at Century
vii
Figure 5: Overview of hydraulic mining progress at the Century
Concentrate Product Quality & Treatment Charges
Century operations have continued to improve overall product quality as part of the
ramp up process, with various circuit upgrades allowing operations to now regularly
achieve average zinc grades of 49 – 50% zinc. Century concentrate has to date also
achieved relatively low impurity penalty rates.
Spot treatment charges remain near 10 year highs and currently represent >30% of
the New Century’s C1 costs (see Figure 2). Treatment charges received for Century
concentrate remain in line with standard market pricing and are also competitive
with other global zinc miners.
Figure 6: 10 year spot zinc treatment charges
viii
In-situ Expansion Study Completed
The Company released the In-situ Expansion Study in the last quarter of 2019, which
investigated the incorporation of Century’s in-situ Mineral Resources into the current
tailings only mine plan.
Figure 7: Overview of existing Reserves & Resources at the Century Zinc Mine
Summary technical and financial projections and overall project highlights are set
out below. The Company confirms that all material assumptions underpinning the
production targets and forecast financial information derived from those production
targets in the Expansion Study announcement continue to apply and have not
materially changed.
While the Study has highlighted robust potential of the existing Mineral Resources
at Century, the Company remains fully committed to the ramp up of its tailings
operations during the course of FY20.
Development of in-situ resources remains contingent on completion of a Bankable
Feasibility Study (BFS) and Board consideration of a decision to mine. The BFS is
targeted for completion in Q4 FY20.
The Company does not anticipate any material capital costs associated with the
development of in-situ operations being incurred during FY20.
In-situ Resource Expansion Study Highlights
• Strong production potential (10Mtpa tailings + 2Mtpa in-situ model):
Zinc production LOM average of 233ktpa zinc-in-concentrate including ramp
up period (total production 1,630kt) from both tailings and in-situ deposits
Lead production LOM average of 29ktpa lead-in-concentrate including ramp
up period (total production 159kt) from in-situ deposits
Total silver production of up to 18.9Moz in zinc and lead concentrates
ix
• Excellent overall in-situ project economics (in addition to tailings operations):
A$422M in additional after tax free cashflow
A$268M in additional overall Century operations NPV (after tax)
Combined operations have the potential to generate over A$1,500M in after-
tax free cash flow based on updated analyst consensus zinc pricing and TC
projections
• Strong estimated EBITDA profile from combined tailings and in-situ operations:
600
500
400
300
200
100
M
$
A
,
A
D
T
B
E
I
0
Financial Year
2020
2021
12Mtpa Tailings
2022
2023
10Mtpa Tailings + SB-EFB
2024
2025
2026
10Mtpa Tailings + SB-EFB + SK
Figure 8: Average life-of-mine C1 cost projections for development of tailings and in-situ
resources based on parameters used in the In-situ Expansion Study
• Attractive overall operating costs (average life-of-mine C1 cost projections):
Case 1: Current tailings only operations (ramping up to 12Mtpa) LOM C1 costs
of US$0.56/lb Zn including ramp up
Case 2: Combined tailings (10Mtpa) and South Block & East Fault Block
operations (2Mtpa) LOM average C1 costs of US$0.55/lb Zn including ramp up,
with in-situ mining and processing costs offset by lead & silver credits
Case 3: Combined tailings (10Mtpa) and all in-situ deposit operations (2Mtpa)
LOM average C1 costs of US$0.50/lb including ramp up, with in-situ mining
and processing costs offset by lead & silver credits
n
Z
e
l
b
a
y
a
p
b
l
/
$
D
S
U
,
t
s
o
C
1
C
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
Financial Year
2020
2021
2022
2023
2024
2025
2026
12Mtpa Tailings
10Mtpa Tailings + SB/EFB
10Mtpa Tailings + SB/EFB + SK
Figure 9: Estimated EBITDA projections for tailings only and combined tails/in-situ operations
based on parameters used in the In-situ Expansion Study
x
•
Improved capital expenditure profile:
Case 1: Current tailings only operations (ramping up to 12Mtpa): A$40M capex,
to be incurred over FY20
Case 2: Capex estimate for South Block / East Fault Block deposits estimated
at A$55M (in addition to Case 1 capital), spread over ~2 years from decision to
mine
Case 3: Capital estimate for development of all in-situ deposits estimated at
A$97M (in addition to Case 1 capital)
• Mine life extension:
Development of Century in-situ operations in addition to existing tailings
operations to provide an increase in mine life, now totalling 7 years to mid-
2026
Silver King extension potential, with the ore body remaining open along a
structurally controlled strike with multiple drilling hits outside of the existing
resource
Watson’s Lode resource potential, with the mineralisation at this target to be
assessed for further drilling and resource definition
xi
Table 1: Expansion Study Technical Summary (see table notes below)
Approximate Technical Parameters – Life-of-Mine
Units
12 Mtpa Tailings
10Mtpa Tailings +
South Block / East
Fault Block
10Mtpa Tailings +
South Block / East
Fault Block + Silver
King
Mine Life (from 01 July 2019)
Estimated Start Date
Mining1
Tailings - Ore Mined
Tailings - Waste Mined
In-situ - Ore Mined
In-situ - Waste Mined
Open Pit Strip Ratio6
Processing
Tailings - Av. Zinc Grade2
Tailings - Av. Lead Grade2
Tailings - Av. Silver Grade2
In-situ - Av. Zinc Grade2
In-situ - Av. Lead Grade2
In-situ - Av. Silver Grade2
Tailings - Zinc Recovery3
Tailings - Lead Recovery3
Tailings - Silver Recovery3
In-situ - Zinc Recovery3
In-situ - Lead Recovery3
In-situ - Silver Recovery3
Production1
Zinc Metal Recovered
Lead Metal Recovered
-
-
Mt
Mt
Mt
Mt
-
%
%
g/t
%
%
g/t
%
%
%
%
%
%
kt
kt
Silver Metal Recovered
kOz
Zinc Concentrate Grade4
Silver in Zn Conc. Grade4
Lead Concentrate Grade5
Silver in Pb Conc. Grade5
Zinc Concentrate Production
Lead Concentrate Production
%
g/t
%
g/t
kt
kt
7 years (through to mid-2026)
In Operation
1H CY2021
72.3
0
-
-
-
3.0%
0.6%
12
-
-
-
62%
-
43%
-
-
-
1,293
-
11,876
49%
140
-
-
2,639
-
72.3
0
7.7
62.2
8.1
3.0%
0.6%
12
4.8%
1.2%
39
62%
-
43%
75%
68%
65%
1,563
63
17,488
50%
160
68%
350
3,126
93
72.3
0
9.3
62.8
8.1
3.0%
0.6%
12
5.0%
4.3%
54
62%
-
43%
76%
71%
69%
1,630
159
18,909
50%
160
69%
510
3,261
230
Table 1 Notes:
1. For further details on projected annual production figures for all products see the In-situ Expansion Study
Announcement
2. Average metal grades based on life of mine material reporting to the processing plant
3. Average recoveries based on steady state operations exclusive of ramp up
4. Zinc concentrate from all deposits to be combined (in-situ and tailings initially processed via separate existing
zinc rougher circuits, followed by combined feed for the zinc scavenger and zinc cleaner circuits)
5. Lead concentrate from all in-situ deposits to be combined and processed through the existing individual lead
rougher/scavenger and cleaning circuits), In-situ Expansion Study Announcement
6. Strip ratio for South Block / East Fault Block open pits only
xii
Table 2: Expansion Study Financial Summary (see table notes below)
Financial Parameters (approximate)
Metal Prices & Exchange Rate1
Zinc
Lead
Silver
AUD/USD
US$2,650/t (US$1.20/lb)
US$2,165/t (US$0.98/lb)
US$19/oz
$0.707
Units
12 Mtpa Tailings2
10Mtpa Tailings +
South Block / East
Fault Block
10Mtpa Tailings +
South Block / East
Fault Block + Silver
King
Project Cash Flows
Net Smelter Revenue
C1 Operating Costs (payable Zn)4
C1 Operating Cost Differential5
EBITDA
Capital Expenditure3
Sustaining Capital &
Rehabilitation6
Valuation
Free Cashflow (after tax)
NPV8
IRR (incremental on 12Mtpa
tailings)
A$M
USD/lb
Zn
USD/lb
Zn
A$M
A$M
A$M
A$M
A$M
%
3,504
0.56
-
1,704
40
1,128
879
-
4,432
0.55
-0.01
2,102
95
127
1,365
1,024
46%
4,949
0.50
-0.05
2,404
137
1,549
1,146
80%
Table 2 Notes:
1. Commodity pricing assumption represents average over life of mine based on Consensus Economics forecasts,
June 2019.
2. Tailings economics based on the Restart Feasibility Study (Nov 2017), up to date actual operating cost data, with
revised commodity, exchange rate and treatment charge assumptions as well as considering current depletion
of the Ore Reserve and existing tailings ramp up progress.
3. Capital Expenditure represents further capital requirements for tailings ramp-up and all capital requirements
including appropriate contingency allowances for in-situ development
4. C1 is defined as direct cash operating costs produced, net of by-product credits, divided by the amount of
payable zinc produced. Direct cash operating costs include all mining, processing, transport, treatment costs
and smelter recovery deductions through to refined metal.
5. Calculated reduction (negative value) or increase (positive value) in LOM average operating costs due to
incremental cost increase of respective in-situ operation Case
6. Net rehabilitation is expected to remain the same as increased disturbance for East Fault Block and Silver King
are offset by savings through integrated mining and rehabilitation of the waste rock dumps.
7. USD:AUD of 0.73 used for FY20 and then 0.70 for every subsequent year.
xiii
Exploration Developments
The Company completed an Induced Polarisation (IP) survey over a section of the
Mining Lease considered prospective for further Century style mineralisation, with
results forming the basis for drill planning of identified targets.
In the June 2019 quarter, three drill holes were completed for a total of 1,600m,
targeting a dislocated portion of the Century orebody hypothesized to have spalled
into the adjacent crater structure following a meteorite impact ~470 million years
ago.
Termite
Range Fault
Nikkis
Fault
Orebody
structure
prior to
mining
operations
Interpreted
formation of
original orebody
Potential
displaced portion
of the original
orebody
Figures 10 & 11: Reconstruction of the original Big Zinc orebody (left) & orebody final form prior to
mining operations (right), including a conceptual target slumping location of the missing section
(denoted by a yellow star)
Figures 12 & 13: Reconnaissance drill hole locations with crater floor contours (left) and
topographic map (right)
The programme was successful in confirming the conceptual model, and better
defining the crater architecture. The presence of Century footwall sequence slump
blocks in the target area, and identification of distinct crater features vastly improved
the understanding of the mechanisms and vectors of mass movement on the crater
margin.
Detailed modelling and interpretation of the results over the next quarter is
anticipated to generate further targets with potential for dislocated Century blocks.
xiv
Non-Core Assets
Kodiak Coal Project (NCZ 70%)
The Kodiak Coal Project is currently on care and maintenance.
The Company continues to consider options with regard to the future of the Kodiak
Coking Coal Project in Alabama, USA, including assessing options in relation to joint
venture opportunities or a disposal of the asset.
Lawn Hill & Riversleigh Pastoral Holding Company (NCZ 49%)
The Lawn Hill & Riversleigh Pastoral Holding Company is an active cattle operation
located adjected to the Company’s mining leases.
The Company continues to assess options in relation to disposal of the asset.
Corporate Governance
New Century’s Corporate Governance Statement for FY2019 is available on the
Company’s website www.newcenturyresources.com
xv
New Century in the Community
As part of the Company’s acquisition of the Century Mine, the Company inherited a
long history of community relationships and social development activities which
have been built upon under the stewardship of New Century.
Of particular note has been the reinvigoration of the Gulf Communities Agreement
(GCA), a Native Title Agreement executed in 1997 which facilitates benefits to the
Traditional Owners of the lands impacted by Century’s operations. The Company has
engaged actively with the communities of the lower gulf to implement this
agreement and the associated initiatives in a manner designed by the impacted
communities to support the sustainable development of those communities.
Figure 14: Members of the Century Environment Committee with New Century’s Port Manager,
Greg O’Shea, prior to an inspection of the Karumba Port operations.
xvi
Active Community Engagement
New Century engages with our stakeholder communities via a number of formal and
informal mechanisms. Throughout the year, the Company facilitated or participated
in the following formal engagements with stakeholders in the lower gulf
communities:
Forum
Aboriginal
Development
Benefits Trust
(ADBT)
Century
Environment
Committee
(CEC)
Century
Employment
and Training
Committee
(CETC)
Century
Liaison and
Advisory
Committee
(CLAC)
Number
of
Meetings
6
4
4
2
Purpose
New Century Role
The ADBT is an independent Trust,
established to administer funds
from the Century Mine primarily for
Indigenous business development,
and Indigenous ownership /
investment in business.
The CEC is established for the
sharing of information regarding
operational and environmental
management information with
representatives of Traditional Owner
Groups, and receiving and
responding to feedback from those
groups.
The CETC is established to advise
Century on the development and
implementation of the Century
Employment and Training Plan with
a view to maximising benefits to
Local Aboriginal People and
Corporations.
The Company appoints
one director to the board
of the ADBT Trustee.
The Company appoints
two members to the
CEC and provides
secretariat services to the
committee.
The Company appoints
two members to the
CETC and provides
secretariat services to the
committee.
The CLAC is established to discuss
the working of the GCA and provide
a forum for discussion and
exchange of information between
parties.
The Company appoints
two members to the
CLAC and provides
secretariat services to the
committee.
Amongst these formal engagements, New Century maintains regular informal and
semi-formal contact with other community stakeholder groups including the Burke
and Carpentaria Shire Councils,
landowners, State and Federal
local
Parliamentarians, the Queensland Government, and other interested stakeholders
from the lower Gulf of Carpentaria.
xvii
Figure 15: Members of the Century Environment Committee prior to an inspection of the mining
operations at Lawn Hill.
Aboriginal Development Benefits Trust
The Aboriginal Development Benefits Trust (ADBT) was established in 1997 following
the execution of the Gulf Communities Agreement and continues to operate today.
The purpose of the Trust is to administer annual funding contributions from the
Century Mine with a view to enhancing Aboriginal business development and
ownership within the Gulf Communities affected by the Century Mine’s activities.
New Century has been represented on the Board of the Trustee of the ADBT since
taking over stewardship of the Century Mine in 2017.
During that time, the ADBT has continued to receive annual funding contributions
from Century in line with the obligations outlined in the Gulf Communities
Agreement.
xviii
The Board of the ADBT has been able to apply that funding in thoughtful and
constructive ways that have already built upon the aim of enhancing Aboriginal
business development and ownership in the Gulf Communities. Key activities have
included:
• Acquisition of the Daintree Discovery Centre, a profit-generating tourism
endeavour that directs surplus funds back to the ADBT for the benefit of Local
Aboriginal People;
• Purchase of the Burketown Pub, a landmark enterprise in the Gulf Communities,
under Aboriginal ownership for the first time in its history;
• Establishment of the Ancient Journeys shopfront gallery in Cairns, which is
already exposing Indigenous art and handcrafts to the significant tourism market
in Cairns, with all profits going back to the artists from the Gulf Communities;
• The ADBT has also provided a number of sporting and community sponsorships
which contribute to the social development of young people throughout the Gulf
Communities.
New Century will continue its active participation with the ADBT and we remain
encouraged by the excellent governance and administrative standards set by the
ADBT Board which will ensure continuing positive outcomes for the Gulf
Communities.
Photo 3: Through funding from New Century, the ADBT has established an art gallery and
shopfront in Cairns, brining art and business development opportunities from the Gulf
Communities to the Cairns tourism market.
xix
Photo 4: New Century’s Head of Corporate Affairs and Social Responsibility, Shane Goodwin
represents the company on the Board of the ADBT
Training and Development Initiatives
One of the most significant elements of the Gulf Communities Agreement are the
provisions for training and development of Local Aboriginal People. These provisions
were developed at a time when the Century Mine was expected to employ
significantly higher numbers than today’s economic rehabilitation activities do, so
New Century has had to engage actively with communities to develop innovative
ways to fulfil of obligations under the changed circumstances of economic
rehabilitation.
Following community engagement and feedback regarding the delivery of training
and development initiatives for local Aboriginal People, New Century engaged the
Waanyi-Downer Joint Venture to deliver community-led training and development
programs that were designed to enhance sustainable development of the Local
Aboriginal Communities impacted by the Century Mine’s operations.
The Waanyi-Downer Joint venture is a 50:50 joint venture established between the
Waanyi Registered Native Title Body Corporate (which represents the Native Title
interests of the Waanyi People whose Traditional lands are impacted by the Century
Mine) and the well-established international mining-services firm, Downer.
Through processes of genuine community-led engagement and design, key Training
and Development initiatives have already been delivered in communities that have
provided for sustainable development outcomes in those communities.
xx
Mornington Island Literacy Initiative
Through engagement with the Principal of the Mornington Island State School, New
Century has provided funding for the employment of two local Indigenous teachers’
aides at the school. The purpose of the initiative is to Increased literacy among
students of all ages, which should lead to increased engagement at school, resulting
in increased attendance in the short term, and increased employability prospects in
the long term.
Photo 5: New Century funded the appointment of a full-time teachers’ aide position at
Mornington Island State School, an appointment which has resulted in a marked improvement
in student literacy and participation at the school.
xxi
Cowboys House Mentorship Initiative
Cowboys House is a boarding facility located in Townsville that ensures Aboriginal
and Torres Strait Islander children from remote communities across North
Queensland get access to a full secondary curriculum.
New Century has funded the employment of former NRL player, Antonio Winterstein
in a mentoring role for the students boarding at the house. Aside from Antonio’s day
to day role around the house and in Townsville, the position description also includes
allowances to travel to community as the need arises (e.g. school holidays) to
facilitate and run activities for the local children.
The initiative is designed to lead to increased engagement for students when they
travel home for school holidays via community activity days, which will aid in
increased retention of students at their respective schools. The mentor has also
succeeded in securing a number of school-based traineeships for students from the
Gulf Communities including:
• Cert III in LV Mechanical Technology;
• 2 x Cert III in Carpentry; and
• 2 x Cert II in Civil Construction.
Photo 6: Cowboys House Mentor, Antonio Winterstein with students from Mornington Island
during a visit focussed on establishing connectivity between students, their families and their
school-lives while boarding in Townsville.
xxii
Kapani Warrior Program – Doomadgee
New Century funded the rollout of the Kapani Warrior Program in Doomadgee. The
program works to restructure the thinking of Aboriginal people to see ‘the warrior’ as
a provider and protector, rather than an aggressor. The ‘warrior’ protects themselves,
their family and their community. The program has strong links to the Australian
Defence Force.
Participants undertake a variety of exercises as part of the program, including:
• Bush skills / camp orientation activities
• Personal development and problem solving;
• Leadership and confidence training;
• Group and individual team building and counselling sessions;
• Local Lore and Custom frameworks; and
• Specialist / custom skill activities: bush mechanics / driving skills / handyman
skills.
To date, 11 of the 30 participants in this program have completed applications for the
51st. One entered the Army Indigenous Development program in April. An additional
six were accepted into the 51st during the Army’s May intake, with the remaining four
listed for the recruit course.
Photo 7: Young people from Doomadgee participated in exercises with the Kapani Warriors,
leading to a high uptake into employment with the Australian Defence Forces.
xxiii
Mineral Resources and Ore Reserves Statement
The following information is provided in accordance with Listing Rule 5.21 and as at 30 June
2019.
Mineral Resource Estimation Governance Statement
independent external consultants and
New Century Resources Ltd ensures that the Mineral Resource estimates are subject to
appropriate levels of governance and internal controls. The Mineral Resources have been
generated by
internal employees who are
experienced in best practices in modelling and estimation methods. Where applicable, the
consultants have also undertaken review of the quality and suitability of the underlying
information used to generate the resource estimations. The Mineral Resource estimates
follow standard industry methodology using geological interpretation and assay results from
samples won through drilling.
New Century Resources reports its Mineral Resources in accordance with the “Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (the JORC
Code) (2004 Edition). Competent Persons named by the Company qualify as Competent
Persons as defined in the JORC Code.
The tables below set out the Mineral Resources and Reserves for 2018 and 2019 for the
Century Zinc Project in Queensland. The Company advises that the material decrease in 2019
arises from Mining Depletion at the Century Tailings Deposit.
Century Mine Resources and Reserves 2019 (rounding errors apply)
Mineral
Resources
Tonnes
(Mt)
Zn (%) Pb (%)
Ag
(g/t)
43
42
Zn (t)
Pb (t)
Ag (Oz)
322,000
90,000
8,550,000
63,000
7,300
872,000
1.5
1.1
12.5
120
186,000
337,500
10,500,000
4.6
65
571,000
434,800
19,922,000
6.1
5.3
0.6
9.8
2.7
9.4
6.9
6.1
Tonnes
(Mt)
ZnEq
(%)
Zn (%)
Ag
(g/t)
Zn (t)
Pb (t)
Ag (Oz)
71.6
3.1
3.0
12
2,132,000
-
28,340,000
South Block
(Indicated)
East Fault Block
(Indicated)
Silver King
(Inferred)
TOTAL
Ore Reserves
Century Tails
(Proved)
Century Mine Resources and Reserves 2018 (rounding errors apply)
Mineral
Resources
Tonnes
(Mt)
Zn (%) Pb (%)
Ag
(g/t)
Zn (t)
Pb (t)
Ag (Oz)
South Block
(Indicated)
Silver King
(Inferred)
East Fault Block
(Inferred)
TOTAL
Ore Reserves
Century Tails
(Proved)
6.1
5.3
1.5
43
322,000
90,000
8,550,000
2.7
6.9
12.5
120
186,000
337,500
10,500,000
0.5
9.3
11.6
6.1
1.1
4.7
Tonnes
(Mt)
ZnEq
(%)
Zn (%)
48
66
Ag
(g/t)
60,000
5,500
800,000
568,000
433,000
19,850,000
Zn (t)
Pb (t)
Ag (Oz)
77.3
3.1
3.0
12
2,287,662
-
29,734,819
xxiv
The table below sets out Mineral Resources for 2017 and 2018 for the Kodiak Coking Coal
Project in Alabama, USA. There was no change between the two periods.
Kodiak Project Resources as at 30 June 2019 and at 30 June 2019 (rounding errors apply)
Coal Seam
Measured
Resource
Indicated
Resource
Inferred
Resource
Total Resource
Coke Seam, Gurnee Property
Atkins Seam, Gurnee Property
TOTAL
34.0Mt
37.6Mt
71.6Mt
3.2Mt
1.6Mt
4.8Mt
2.0Mt
-
2.0Mt
39.2Mt
39.2Mt
78.4Mt
Zinc Equivalent Calculation
ZnEq was calculated for each block of the Century Tailings Deposit from the estimated block
grades. The ZnEq calculation takes into account, recoveries, payability (including transport
and refining charges) and metal prices in generating a zinc equivalent value for each block
grade for Ag and Zn. ZnEq = Zn%+ + Ag troy oz/t*0.002573. Metal prices used in the calculation
are: Zn US$3,000/t, and Ag US$17.50/troy oz.
Competent Persons’ Statements
The information in this announcement that relates to Mineral Resources on the Silver King
Deposit and the East Fault Block Deposit was first reported by the Company in its prospectus
released to ASX on 20 June 2017, and the South Block Deposit was first reported by the
Company to ASX on 15 January 2018. The Company confirms that it is not aware of any new
information or data that materially affects the information included in the original market
announcements, and in the case of estimates of Mineral Resources, that all material
assumptions and technical parameters underpinning that estimates in the relevant market
announcements 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.
The information in this announcement that relates to the Ore Reserve at the Century Tailings
Deposit was first reported by the Company in its ASX announcement titled "New Century
Reports Outstanding Feasibility Results that Confirm a Highly Profitable, Large Scale
Production and Low Cost Operation for the Century Mine Restart" dated 28 November 2017.
The Company confirms that it is not aware of any new information or data that materially
affects the information included in the original market announcement, and in the case of
estimates of Mineral Resources or 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.
The information in this report relating to Exploration Results and to JORC Compliant (Coal)
Resources and Reserves for the Coke and Atkins Seams on the Gurnee Property at the Kodiak
Coking Coal Project, Alabama, USA has been reviewed and is based on information compiled
by Mr Alan Stagg of Stagg Resource Consultants Inc. Mr Stagg is a Registered Member of the
Society of Mining, Metallurgy, and Exploration, Inc. (SME), registration number 3063550RM,
and has sufficient experience which is relevant to the style of mineralisation and type of
deposit under consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2004 Edition of the “Australian Code for Reporting of
Mineral Resources and Ore Reserves”. Mr Stagg consents to the inclusion in the report on the
matters on this information in the form and context in which it appears. The information in
this report was first disclosed under the JORC Code 2004 on 8 October 2012, 12 October 2012,
27 November 2012, 19 March 2013, 6 August 2013 and 14 November 2013. It has not been
updated since to comply with the JORC 2012 on the basis that the information has not
materially changed since first being reported.
xxv
Financial Statements
FY2019
1
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
DIRECTORS' REPORT
The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter
as the 'Group' or the ‘Consolidated Entity’) consisting of New Century Resources Limited (referred to hereafter as ‘New
Century Resources Limited’ or the 'Company') and the entities it controlled for the financial year ended 30 June 2019.
Directors
The names of Directors who held office during or since the end of the financial year and until the date of this report are
set out below. Directors were in office for the entire period unless otherwise stated.
Robert McDonald (Chairman)
Patrick Walta (Managing Director)
Nick Cernotta
Evan Cranston
Tom Eadie
Bryn Hardcastle
Tolga Kumova
Peter Watson
Information on current directors
appointed 17 July 2019
appointed 28 March 2019
resigned 28 March 2019
resigned 17 July 2019
Other current
listed entity
directorships
Cobalt Blue
Holdings
Limited
Former listed
entity
directorships
in last three
years
Sedgman
Limited (to 14
April 2016)
New Century
special
responsibilities
Chairman of
New Century
Limited Board
Member of
Remuneration &
Nomination
Committee
Director
Experience and expertise
Robert
McDonald
Chairman
Appointed 17
July 2019
B.Comm
MBA
(Honours)
Member of the
AusIMM
Robert McDonald has more than 40 years of
broad experience in the international mining
sector. His early career within the Rio Tinto
Group involved various operational business
development, deal making and strategic
planning roles for Hamersley Iron, RTZ
Services and Rio Tinto Minera SA.
This experience was followed by 20 years of
investment banking, initially with BA
Australia, then as director and principal of
Resource Finance Corporation, and
subsequently as a Managing Director of N.M.
Rothschild & Sons. In these roles he was
responsible for a wide range of advisory
services including company formation,
mergers and acquisitions, business
origination, strategic advice on value
creation/recognition, risk management,
fairness opinions, debt and equity capital
raisings and corporate restructurings.
Over the most recent decade Mr McDonald
has continued as a trusted investment
banking advisor to a selected group of major
international mining and investment
companies. He has also maintained an active
involvement in publicly listed and private
mining and mining service companies
through various board roles including as non-
executive director and chairman.
4
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Director
Experience and expertise
Other current
listed entity
directorships
New Century
special
responsibilities
Managing
Director
Former listed
entity
directorships
in last three
years
Matador
Mining Limited
(to 3 July
2018)
Primary Gold
Limited (to 31
May 2017)
Patrick Walta is a qualified metallurgist,
mineral economist and board executive with
experience across both technical and
commercial roles within the mining and water
treatment industries.
None
Mr Walta's experience within the mining
industry includes public and private company
management, mineral processing, mergers
and acquisitions, initial public offerings,
project management, feasibility studies,
exploration activities, competitive intelligence
and strategic planning. Mr Walta also has a
broad level of resource industry experience
through Rio Tinto, Citic Pacific Mining, Cradle
Resources, Carbine Resources, Primary Gold
and Clean TeQ.
Nick Cernotta is a mining engineer who has
held senior operational and executive roles in
Australia and overseas over a 30 plus year
period. Mr Cernotta has considerable
experience in the management and operation
of large resource projects, having served as
Director of Operations at Fortescue Metals
Group, Chief Operating Officer
(Underground, International and Engineering)
at MacMahon Holdings Limited and as
Director of Operations for Barrick (Australia
Pacific) Pty Ltd, a subsidiary of Barrick Gold
Corporation.
Mr Cernotta’s particular operational expertise
is in managing safety, culture, production and
cost efficiency, and organisational
effectiveness.
Evan Cranston is an experienced mining
executive with a background in corporate and
mining law. He is the principal of corporate
advisory and administration firm Konkera
Corporate and has extensive experience in
the areas of equity capital markets, corporate
finance, structuring, asset acquisition,
corporate governance and external
stakeholder relations.
5
ServTech
Global
Holdings Ltd
(to 22
November
2017)
Northern Star
Resources
Limited
Panoramic
Resources
Limited
Pilbara
Minerals
Limited
African Gold
Resources
Limited
Boss
Resources
Limited
Carbine
Resources
Limited
Primary Gold
Limited (to 29
November
2017)
Clancy
Exploration
Ltd (to 1
December
2017)
Chair of
Remuneration &
Nomination
Committee
Member of Audit
& Risk
Committee
Member of
Environmental,
Social &
Governance
Committee
Member of Audit
& Risk
Committee
Patrick Walta
Managing
Director
Appointed 13
July 2017
Degrees in
Chemical
Engineering
and Science
MBA
Masters of
Science
(Mineral
Economics)
Diploma of
Project
Management
Nick Cernotta
Non-Executive
Director
Appointed 28
March 2019
B.Eng
(Mining)
Evan
Cranston
Non-Executive
Director
Appointed 10
October 2012
B.Comm, LLB
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Former listed
entity
directorships
in last three
years
Flamingo Ai
Limited
(formerly
Cre8tek
Limited) (to 27
August 2018)
ServTech
Global
Holdings Ltd
(to 22
November
2017)
Vysarn
Limited
(formerly
MHM Metals
Limited)
(to 27 October
2017)
Resource
Generation
Limited (to 30
November
2018)
Sedgman
Limited (to 7
October 2016)
New Century
special
responsibilities
Chair of
Environmental,
Social &
Governance
Committee
Member of
Remuneration &
Nomination
Committee
Chair of Audit &
Risk Committee
Member of
Environmental,
Social &
Governance
Committee
Other current
listed entity
directorships
Caprice
Resources
Limited
Director
Experience and expertise
Bryn
Hardcastle
Non-Executive
Director
Appointed 8
December
2011
LLB
Bryn Hardcastle is Managing Partner of
Perth-based law firm, Bellanhouse,
specialising in corporate, commercial and
securities law. He advises on equity capital
markets, takeovers & schemes and corporate
acquisitions, reconstructions and disposals
predominantly in the energy and resources
sector. Mr Hardcastle has previously worked
in London, Melbourne and Dubai at Freehills
and Allen & Overy and is a former partner of
Perth boutique law firm, Hardy Bowen
Lawyers.
Strandline
Resources
Limited
Peter Watson
Non-Executive
Director
Appointed 22
January 2018
B.Eng
(ChemEng)
(Hons)
Dip Acc & Fin
Mgmt
FIEAust
GAICD
Peter Watson is a chemical engineer with
over 30 years’ experience in the resources
sector, both in Australia and overseas. He
has held technical and executive roles with a
number of companies throughout his career,
culminating in his appointment as the
Managing Director & Chief Executive Officer
of Sedgman Limited, a market leading
engineering and mining services firm. Initially
joining Sedgman as Chief Operating Officer
Metals Division in 2010, Mr Watson
successfully led and supported the
development and execution of Engineering,
Procurement and Construction as well as
Operations Contracts in excess of $2 billion
as he progressed through roles as Executive
General Manager (2011 – 2012) and Global
Executive Director (2012 – 2014), before
being made Managing Director & Chief
Executive Officer (2014 – 2016).
During this time at Sedgman, Mr Watson
provided leadership and guidance across a
suite of over ten large scale mine operations
contracts and over 30 EPC contracts across
a broad spectrum of commodities.
6
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
None
None
None
Syrah
Resources
Limited (to 5
October 2016)
Former
Directors
(Ernest) Tom
Eadie
Non-Executive
Director
Appointed on
13 July 2017
and resigned
on 28 March
2019
Tolga
Kumova
Non-Executive
Director
Appointed on
13 July 2017
and resigned
on 17 July
2019
Tom Eadie is a well-credentialed mineral
industry leader and explorer with broad
experience in both the big end and small end
of town. He was the founding Chairman of
Syrah Resources, Copper Strike and
Discovery Nickel as well as a founding
Director of Royalco Resources. At Syrah, he
was at the helm during acquisition, discovery
and early feasibility work of the huge Balama
graphite deposit in Mozambique which
started production in late 2017.
Strandline
Resources
Limited
Alderan
Resources
Limited
Hill End Gold
Limited
Tolga Kumova has 15 years' experience in
stockbroking, corporate finance and
corporate restructuring, and has specialised
in initial public offerings and capital
requirements of mining focused companies.
He has raised in excess of $500 million for
mining ventures, varying from inception stage
through to construction and development.
African Gold
Resources
Limited
European
Cobalt Ltd
Mr Kumova was a founding shareholder of
Syrah Resources in 2010 and served as an
Executive Director from May 2013 to October
2016, and as Managing Director from
October 2014 to October 2016. During his
tenure at Syrah Resources, Mr Kumova led
the business from resource stage through to
full funding through to development, gaining
experience negotiating offtake agreements
with numerous globally recognised
counterparties.
Oonagh Malone, Company Secretary
Oonagh Malone is a principal of a corporate advisory firm which provides company secretarial and administrative
services. She has over 10 years’ experience in administrative support roles for listed companies and is a member of the
Governance Institute of Australia and Australian Institute of Company Directors. Ms Malone is a non-executive director
of Hawkstone Mining Limited and Carbine Resources Limited. She is currently company secretary to ASX listed
companies Bunji Corporation Limited, Carbine Resources Limited, Caprice Resources Limited, European Cobalt Ltd,
Hawkstone Mining Limited and Sagon Resources Limited.
7
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Directors’ meetings
During the financial year ended 30 June 2019, there were ten meetings of the Board of Directors. Attendances by each
Director during the period were as follows:
Director
Robert McDonald
Patrick Walta
Nick Cernotta
Evan Cranston
Tom Eadie
Bryn Hardcastle
Tolga Kumova
Peter Watson
Number
attended
Number eligible
to attend
-
9
2
10
8
10
10
9
-
10
2
10
8
10
10
10
The Directors made and approved three circular resolutions during the financial year ended 30 June 2019.
Principal activities
The principal activities of the Group for the financial year were the review and development of mineral exploration
projects.
Dividends
No dividend has been declared or paid by the Group during the financial year and the Directors do not at present
recommend a dividend (30 June 2018: Nil).
Operating results
The consolidated loss of the Group amounted to $21,502,018 (2018: Loss of $123,310,765) after providing for income
tax.
Review of operations and significant changes in the state of affairs
During the year, the Group continued with the development of the Century Mine. Full details are set out in the Review
of Operations section as well as the Company’s website.
In February 2019, the Group secured a new financing facility with Varde Partners Inc (‘Varde’). This comprises a secured
facility of US$42,900,000 which has been drawn down and an unsecured facility of US$28,600,000 which was subject
to conditions precedent before draw down. Prior to the end of September 2019, Varde advised that the availability of
this unsecured facility has expired. Discussion in relation to a US$28,600,000 facility are continuing with Varde. In
February 2019, the Group repaid the National Australia Bank facility of $40,000,000 which had been obtained earlier in
October 2018. Further details are set out in Note 14 to the Financial Statements. Subsequent to year end, the Company
raised $42,500,000 (before transaction costs) via a placement to institutional and sophisticated investors which was
completed over two tranches. Tranche one completed in August 2019 and tranche two was approved by shareholders
at an extraordinary general meeting of the Company and completed in September 2019.
Nick Cernotta joined the New Century Resources Limited Board as a Non-Executive Director in March 2019. Mark
Chamberlain joined the Group as the Chief Financial Officer in June 2019. Robert McDonald joined the Group as the
Chairman of the Company in July 2019. Tom Eadie and Tolga Kumova stepped down from the New Century Resources
Limited Board in March 2019 and July 2019 respectively.
During the year, the Company changed its external auditor from Bentleys Audit & Corporate (WA) Pty Ltd to Deloitte
Touche Tohmatsu.
8
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Previously, a strategic decision was made by the Group to suspend work on the Kodiak Coking Coal Project, which is
located in Alabama, USA. During the year the Group continued to maintain the Kodiak Coking Coal Project in care and
maintenance mode, including environmental studies and monitoring. The Group is considering its options with regards
to the future of the Kodiak Coking Coal Project.
Matters subsequent to the end of the financial year
Subsequent to year end, the Company raised $42,500,000 (before transaction costs) via a placement to institutional
and sophisticated investors which was completed over two tranches. Tranche one completed in August 2019 and
tranche two was approved by shareholders at an extraordinary general meeting of the Company and completed in
September 2019.
In February 2019, the Group secured a new financing facility with Varde Partners Inc. This comprises a secured facility
of US$42,900,000 which has been drawn down and an unsecured facility of US$28,600,000 which was subject to
conditions precedent before draw down. Prior to the end of September 2019, Varde advised that the availability of this
unsecured facility has expired. Discussion in relation to a US$28,600,000 facility are continuing with Varde.
Robert McDonald was appointed as the Chairman of New Century Resources Limited on 17 July 2019. Tolga Kumova
resigned as a Director of New Century Resources Limited on 17 July 2019. Further details are set out above in the
Directors’ Report.
There have been no other events that have occurred subsequent to the reporting date which have significantly affected
or may significantly affect the Group’s operations or results in future years.
Future developments, prospects and business strategies
Disclosure of further information regarding likely developments in the operations of the Group in future financial periods
and the expected results of those operations are set out in the Company’s ASX announcements which are located at
the Company’s website.
9
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Share options
At the date of this report, the Group had the following options over ordinary shares on issue:
Type of
options
Unquoted options issued under the ESOP
Unquoted options issued to Directors
Unquoted options issued to Directors
Unquoted options issued to Directors
Unquoted options issued to Directors
Unquoted options issued to Directors
Unquoted options issued to Directors
Unquoted options issued to Vendors
Unquoted options issued under the ESOP
Unquoted consideration options
Unquoted consideration options
Unquoted consideration options
Unquoted consideration options
Unquoted options issued under the ESOP
Unquoted options issued to Director
Unquoted options issued to Director
Unquoted options issued under the ESOP
Unquoted options issued to Director
Unquoted options issued to Director
Total
Directors’ interests
Number of
options
Exercise
price
Expiry
date
5,140,000
6,000,000
6,000,000
7,500,000
7,500,000
7,500,000
7,500,000
30,000,000
500,000
22,000,000
6,000,000
3,500,000
3,500,000
500,000
1,000,000
1,000,000
250,000
1,000,000
1,000,000
117,390,000
$0.25
$0.25
$0.50
$0.25
$0.50
$0.75
$1.00
$0.25
$1.60
$0.25
$0.50
$0.75
$1.00
$0.25
$1.20
$1.50
$0.95
$0.56
$0.70
13/07/2020
13/07/2020
13/07/2020
13/07/2021
13/07/2021
13/07/2021
13/07/2021
13/07/2022
02/10/2020
27/02/2021
27/02/2021
27/02/2021
27/02/2021
27/02/2021
28/03/2022
28/03/2022
06/06/2022
18/09/2022
18/09/2022
The relevant interest of each Director in the share capital of the Group shown in the Register of Directors’ shareholdings
as at the date of this report is:
Directors
Ordinary shares fully paid
Options
Direct
Indirect
Total
Direct
Indirect
Total
Robert McDonald
-
303,031
303,031
-
2,000,000
2,000,000
Patrick Walta
Nick Cernotta
Evan Cranston
Bryn Hardcastle
Peter Watson
Total
32,088,455
-
32,088,455
15,750,000
-
15,750,000
-
-
87,080
87,080
31,645,455
31,645,455
180,000
1,078,789
1,258,789
-
138,775
138,775
-
-
-
-
2,000,000
2,000,000
8,750,000
8,750,000
4,000,000
4,000,000
-
-
32,268,455
33,253,130
65,521,585
15,750,000
16,750,000
32,500,000
10
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
REMUNERATION REPORT
The Remuneration Report, which has been audited, outlines the Director and executive remuneration arrangements for
the Group and the Company, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Remuneration Governance
The Board recognises that the success of the business depends on the quality and engagement of its people. To ensure
the Company continues to succeed and grow, it must attract, motivate and retain skilled Directors, Executives and
employees. The Board’s aim is to ensure that people and performance are a priority.
Role of the Remuneration & Nomination Committee
The Remuneration & Nomination Committee is responsible for the oversight of the remuneration system and policies.
The Board, upon recommendation of the Remuneration & Nomination Committee, determines the remuneration of
Executive Directors.
The Remuneration & Nomination Committee reviews and approves the remuneration of the executive management
team. The objective of the Remuneration & Nomination Committee is to ensure that the remuneration system and
policies attract and retain employees, Executives and Directors who will create sustained value for shareholders.
Remuneration Philosophy
The remuneration policy of the Company has been designed to be simple and transparent, to promote the interests of
the Company over the medium and long term, and encourage a ‘pay for performance’ culture.
The following guiding principles direct our remuneration approach. The remuneration structure aims to:
- Attract, retain and motivate the right calibre of people for the business;
- Provide strong linkage between incentive rewards and creation of value for shareholders;
- Reward the achievement of financial and strategic objectives; and
- Comply with applicable legal requirements and appropriate standards of governance.
Remuneration Positioning
In order to reflect a ‘pay for performance’ culture, the Total Fixed Remuneration (“TFR”) package is positioned at the
median of the market for a fully proficient and experienced performer, whilst the Total Remuneration package (fixed and
variable pay), reflects a median to upper quartile pay position when superior levels of performance have been met.
External Advice and Benchmarking
The Remuneration & Nomination Committee engaged BDO Remuneration and Reward (“BDO”) to provide market data
relating to the remuneration packages of the Group’s senior executives to assist the Committee in assessing the
positioning and competitiveness of current remuneration packages.
BDO were engaged by the Remuneration & Nomination Committee Chair, and reported to the Committee and the Board.
Further, BDO has processes and procedures in place to minimise potential opportunities for undue influence from senior
executives.
The Board is satisfied that the interaction between BDO and Senior Executives is minimal, principally relating to provision
of relevant Group information for consideration by the respective consultants. The Board is therefore satisfied that the
advice received from BDO is free from undue influence from the Senior Executives to whom the remuneration
recommendations apply.
The information provided by BDO was provided to the Board as inputs into decision making only. The Committee and
the Board considered the information, along with other factors, in making its ultimate remuneration decisions. Total fees
paid to BDO for services during the year ended 30 June 2019 were $15,675.
11
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
The KMP of the Group are listed below:
Name
Current
Position
Period of KMP during the year
Robert McDonald
Chairman
None, appointed on 17 July 2019
Patrick Walta
Nick Cernotta
Evan Cranston
Bryn Hardcastle
Peter Watson
Managing Director
All of financial year 2019
Director
Director
Director
Director
From 28 March 2019
All of financial year 2019
All of financial year 2019
All of financial year 2019
Mark Chamberlain
Chief Financial Officer
From 7 June 2019
Barry Harris
Former
Tom Eadie
Tolga Kumova
Chief Operating Officer
All of financial year 2019
Director
Director
Until 28 March 2019
All of financial year 2019, resigned on 17 July 2019
Executive and KMP Remuneration Framework
KMP have authority and responsibility for planning, directing and controlling activities of the Group, directly or indirectly,
including directors of the Company and other key executives. KMP comprises the Directors of the Company and the
senior executives for the Group that are named above in this report.
Executive and KMP remuneration is comprised of fixed and at risk components, the purpose of which is to align executive
reward with shareholder outcomes, executive performance and the retention of key talent. TFR and at risk remuneration
is benchmarked annually by the Board. The table below provides an overview of the different remuneration components
within the Company framework.
Component
Vehicle
Purpose
Total Fixed Remuneration Base salary, superannuation and non-
cash benefits.
Incentive Plan (IP)
Cash and equity based pay for delivering
the plan and growth agenda for the
Company which must translate into longer
terms value for shareholders. It reflects
‘pay for outcome based shareholder
results’.
Total Fixed Remuneration
Pay for meeting role requirements with
reference to experience and skills, size
and complexity of role and proficiency.
Cash and equity based pay for creating
value for shareholders over the ‘mid to
long term’ shareholder returns.
TFR is reviewed annually. Any adjustments to the TFR for the KMPs must be approved by the Board after
recommendation by the Remuneration & Nomination Committee. The Executive Directors determine the TFR of other
senior executives within specified guidelines approved by the Board, subject to final approval by the Remuneration &
Nomination Committee.
The Group seeks to position fixed remuneration around the 50th market percentile of salaries for comparable companies
within the mining industry with which the Group competes for talent and equity investment, utilising datasets and specific
advice provided by independent remuneration consultants. To reflect the ‘pay for performance’ culture, the Total
Remuneration package (fixed and variable pay), reflects a median to upper quartile pay position when superior levels
of performance have been met.
12
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Performance Based Remuneration
As the Company was not in ‘commercial production’, and in order to limit its cash outgoings, the Board determined to
minimise any short-term cash-based incentives. Whilst certain milestones were in place, the Company viewed that many
of the activities undertaken in this financial year were more representative of ‘every day’ roles and adopted a cautious
approach to any payments being made and therefore, no cash incentive payments were made to any executive in 2019.
However, the Board is cognisant that the executive team could earn incentive based pay in the market and sought to
provide equity instruments to those KMPs in order to offset the payment of incentives in cash. This was provided to the
KMP who joined the Company in 2019 being Mark Chamberlain.
Purpose of Equity Plan in 2019
The Company issues options to Executives in accordance with the Company’s Employee Share Option Plan or in
accordance with shareholder approval in the case of Directors. Vesting conditions including length of service can be
applied to these options. The Company views the exercise price being set at a premium to the share price at the time of
issue as basis to align Executives and Directors with shareholder based performance metrics.
Other than the criteria noted above, there are no performance requirements on the incentive options granted as given the
speculative nature of the Company’s activities and the small management team responsible for its running, it is considered
that the performance of the Directors and KMP is closely related to the performance and value of the Company and
therefore appropriate for performance measurement purposes at this stage of the Company’s development.
The Equity Plan for 2019 was structured as a combination of a short and mid to long term incentive plan as it contains a
short and a mid to long term component:
- Short term in that the instrument vests within 12 months; and
- Mid to long term in that the the hurdle rate will likely take more than 12 months to achieve (based on the historical
performance of the shares).
It is noted that the aforementioned options do not reflect the standard definition of a short and/or mid to long term incentive
plan but rather is a combined plan which aims at encouraging an ownership mentality which in addition to have a retentive
benefit, also aligns management interests with that of shareholders at this stage of the Company’s development.
Planned Amendments to Incentive Plans for 2020
Given the ongoing developing nature of the Company the Board has decided to appoint a firm of remuneration advisors
to review the Company’s remuneration and incentive plans for senior executives and KMPs. The review is being
undertaken to ensure appropriateness of performance conditions (over the short and long term), vesting scales, targets
and gates to the circumstances that are anticipated to prevail over the measurement period and the expectations of
shareholders and to also take into account the strategic objectives of the Company going forward.
Further, the Company is seeking shareholder approval for the establishment of two new employee incentive schemes
under which the Board may offer to eligible person the opportunity to subscribe for such number of equity securities in
the Company as the Board may decide and on the terms set out in the rules of the relevant plan. Both of these plans
provide eligible employees the opportunity to participate in the future growth of the Company.
The General Employee Share Plan will allow for the eligible persons to subscribe for shares that may be subject to income
tax exemptions or deferral, while the Employee Share Incentive Plan is a broader plan under which the Board may offer
eligible persons to subscribe for shares and/or equity securities.
Non-Executive Director Remuneration
The Board's policy is for fees to Non-Executive Directors to be competitive to market for comparable companies for time,
commitment and responsibilities. Given the current size, nature and risks of the Company, Incentive Options have been
used to attract and retain Non-Executive Directors. The Board determines payments to the Non-Executive Directors and
reviews their remuneration annually, based on market practice, duties and accountability and company specific
requirements which include a competent and seasoned Board.
Principally, fees for Non-Executive Directors are not linked to the performance of the Group, however, to align Directors'
interests with shareholder interests, the Directors are encouraged to hold shares and/or options in the Company and Non-
13
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Executive Directors may in limited circumstances receive incentive options in order to secure their initial or ongoing
services.
The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be
determined from time to time by a general meeting.
It is noted that the options issued to Nick Cernotta during the financial year and to Robert McDonald subsequent to the
year end are subject to a price hurdle and, as such, could be viewed as a performance-based option. The purpose of
issuing these options at the time was to:
- Attract the right calibre of individual to ensure that the Company has a seasoned and respected Board;
- Ensure that the Non-Executive Director is committed to the Company’s long term aspirations by virtue of
accepting such options; and
- Preserve cash holdings in the most effective way possible.
Planned Amendments for 2020
Notwithstanding the aforementioned, and based on preliminary discussions with a firm of remuneration advisors, the
remuneration structure for Non-Executive Directors will be reviewed to represent the following structure:
- Annual board fees;
- Committee fees; and
- Equity based fees (in lieu of fixed fees).
Additional information for consideration of shareholder wealth
This table summarises the earnings of the Group and other factors that are considered to affect shareholder wealth for
the five years to 30 June 2019. Comparative basic losses per share differ from those in previous financial reports
because they have been updated to reflect the January 2016 rights issue for the year ended 30 June 2016 and the
March 2016 placements, in accordance with Australian Accounting Standards.
2019
2018
2017
2016
2015
Loss after income tax attributable to
shareholders - $
(21,502,018)
(119,021,291)
(3,785,112)
(3,722,417)
(6,530,288)
Share price at financial year end - $
0.485
1.31
0.195
0.195
0.16
Movement in share price for the
year - $
Total dividends declared - cents
Returns of capital - cents
(0.825)
1.115
-
-
-
-
-
-
-
0.035
(0.22)
-
-
-
-
Basic loss per share - cents
(4.26)
(32.32)
(2.02)
(2.27)
(4.20)
14
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Service agreements
A summary of service agreements with Executives and Key Management Personnel effective during the financial year
is set out below. These details are in addition to the share options issued as share based payment compensation.
Base salary or fee
per annum for 2019
including any
superannuation(i)
(Non-performance
based)
$240,000
$180,000
Role
Managing
Director
Executive
Chairman
Termination
conditions
6 month notice
period
6 month notice
period
Chief Financial
Officer
$383,250
6 month notice
period
Chief Operating
Officer
$350,000
3 month notice
period
Term of
agreement
To 28
February
2020
To 20 July
2020
No
specified
term
No
specified
term
To 20 July
2020
Executive
director
$50,000
3 month notice
period
KMP
Patrick Walta
Evan Cranston(ii)
Mark Chamberlain
Barry Harris
Tolga Kumova
(resigned during the
year)
Proportion of
elements of
remuneration
related to
performance
%
-
-
-
50
95
(i)
(ii)
Base salary quoted is the position as at 30 June 2019; salaries are reviewed at least annually.
During the period, Mr Cranston transitioned to a Non-Executive Director role and the service agreement ceased.
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 compensation, relevant to the
office of director.
15
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Compensation of Key Management Personnel
Short-term
benefits
cash salary
and fees
$
Post
employment
benefits
superannuation
$
Termination
benefit
$
Share
based
payments
$
Proportion of
remuneration
performance
related
%
Total
$
2019
Directors
Patrick Walta
Nick Cernotta
Evan Cranston
Bryn Hardcastle
Peter Watson
Tom Eadie
Tolga Kumova
Other KMPs
Mark Chamberlain
Barry Harris
240,000
12,903
180,000
53,135
50,000
37,500
54,750
628,288
19,445
416,190
435,635
Total
1,063,923
2018
Directors
Patrick Walta
Evan Cranston
Tom Eadie
Bryn Hardcastle
Tolga Kumova
Peter Watson
Other KMPs
John Carr
Barry Harris
Oonagh Malone
Total
220,000
172,032
47,372
53,134
47,706
22,372
562,616
180,000
167,597
35,694
383,291
945,907
-
1,226
-
-
4,750
3,562
-
9,538
1,847
20,532
22,379
31,917
-
-
4,500
-
-
2,125
6,625
-
14,250
-
14,250
20,875
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
450,900
-
-
-
-
-
240,000
465,029
180,000
53,135
54,750
41,062
54,750
450,900 1,088,726
3,247
-
24,539
436,722
3,247
461,261
454,147 1,549,987
-
-
240,700
192,560
220,000
172,032
292,572
245,694
1,428,525 1,476,231
24,497
-
1,861,785 2,431,026
-
180,450
144,420
180,000
362,297
180,114
324,870
722,411
2,186,655 3,153,437
-
-
-
-
-
-
-
-
-
-
-
-
-
-
82
78
97
-
77
-
50
80
45
69
Movements in annual leave and current long service leave provisions for KMP have been recognised as short-term
cash benefits.
Nick Cernotta became a KMP from 28 March 2019.
Mark Chamberlain became a KMP from 7 June 2019.
John Carr and Oonagh Malone were KMP during the prior financial year.
16
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Other transactions with Key Management Personnel
A number of KMP, or their related parties, hold positions in other entities that may result in them having control or
significant influence over the financial or operating policies of those entities. Where the Group transacts with the KMP
and their related parties, the terms and conditions of these transactions are no more favourable than those available, or
which might reasonably be expected to be available, on similar transactions to non-KMP related entities on an arm’s
length basis.
Share based payment compensations
No shares were issued to KMPs of the Group as part of their remuneration.
Details of options over ordinary shares in the Company provided as remuneration to KMPs are set out below. When
exercised, each option is convertible into one ordinary share of New Century Resources Limited. These options were
granted with nil additional consideration. No options issued to current or previous KMPs expired or lapsed during the
financial year.
Grant
date
Number
granted
Exercise
price
$
Value
per
option
$
Value of
options
granted
$
Value of
options
recognised
$
Issue
date
Expiry
date
28/03/2019
1,000,000
1.20
0.2493
249,300
249,300 28/03/2019 28/03/2022
28/03/2019
1,000,000
1.50
0.2016
201,600
201,600 28/03/2019 28/03/2022
06/06/2019
250,000
0.95
0.2008
50,200
3,247 06/06/2019 06/06/2022
2,250,000
501,100
454,147
KMP
Nick
Cernotta
Nick
Cernotta
Mark
Chamberlain
Total
The vesting date for the options granted to Nick Cernotta is 28 March 2019 and the vesting date for options granted to
Mark Chamberlain is 11 June 2020.
The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from issue
date to vesting date, and the amount is included in the remuneration tables above. Fair values 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, the risk-free interest rate for the term of the option and the liquidity of the share
market. Further details are set out in Note 23 to the Financial Statements.
17
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Details of all options held by KMP, at the date of this report, are shown below.
Issue
date
Number
granted
Value of options
granted
$
Vesting
date
Expiry
date
Vested
%
KMP
Directors
Patrick Walta
Patrick Walta
Patrick Walta
Patrick Walta
Patrick Walta
Nick Cernotta
Nick Cernotta
Evan Cranston
Evan Cranston
Evan Cranston
Evan Cranston
13/07/2017
27/02/2018
27/02/2018
27/02/2018
27/02/2018
28/03/2019
28/03/2019
27/02/2018
27/02/2018
27/02/2018
27/02/2018
Bryn Hardcastle
13/07/2017
Bryn Hardcastle
13/07/2017
Robert McDonald
18/09/2019
Robert McDonald
18/09/2019
Other KMPs
Mark Chamberlain
06/06/2019
Barry Harris
13/07/2017
7,000,000
5,500,000
1,500,000
875,000
875,000
1,000,000
1,000,000
5,500,000
1,500,000
875,000
875,000
2,000,000
2,000,000
1,000,000
576,730
13/07/2017
13/07/2022
6,501,000
27/02/2018
27/02/2021
1,545,000
27/02/2018
27/02/2021
799,750
27/02/2018
27/02/2021
718,375
27/02/2018
27/02/2021
249,300
28/03/2019
28/03/2022
201,600
28/03/2019
28/03/2022
6,501,000
27/02/2018
27/02/2021
1,545,000
27/02/2018
27/02/2021
799,750
27/02/2018
27/02/2021
718,375
27/02/2018
27/02/2021
119,660
13/07/2017
13/07/2020
72,900
13/07/2017
13/07/2020
126,700
18/09/2019
18/09/2019
1,000,000
32,500,000
109,200
20,584,300
18/09/2019
18/09/2019
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
250,000
3,000,000
3,250,000
50,200
11/06/2020
06/06/2022
180,450
13/07/2017
13/07/2020
-
100
230,650
Total
35,750,000
20,814,990
18
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Option holdings of Key Management Personnel
The number of options over ordinary shares of New Century Resources Limited held by each KMP of the Group during
the financial year is as follows:
Balance at
beginning of
year or
appointment
Granted as
remuneration
during the
year
Options
exercised
during
the year
Other
changes
during
the year
Balance at
end of year
Vested
during the
year
Vested and
exercisable
KMP
Current
Directors
Patrick Walta
15,750,000
-
Nick Cernotta
2,000,000
2,000,000
Evan Cranston
8,750,000
Bryn Hardcastle
4,000,000
Peter Watson
-
-
-
30,500,000
2,000,000
Other KMPs
Mark Chamberlain
250,000
250,000
Barry Harris
3,000,000
-
3,250,000
250,000
Former
Tom Eadie
5,000,000
Tolga Kumova
30,000,000
35,000,000
-
-
-
Total
68,750,000
2,250,000
-
-
-
-
-
-
-
-
-
-
-
-
-
- 15,750,000
- 15,750,000
-
-
-
-
2,000,000 2,000,000
2,000,000
8,750,000
4,000,000
-
-
-
-
8,750,000
4,000,000
-
- 30,500,000 2,000,000 30,500,000
-
-
-
250,000
3,000,000
3,250,000
-
-
-
-
3,000,000
3,000,000
-
5,000,000
-
5,000,000
- 30,000,000
- 30,000,000
- 35,000,000
- 35,000,000
- 68,750,000 2,000,000 68,500,000
19
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Shareholdings of Key Management Personnel
The number of shares in New Century Resources Limited held by each KMP of the Group and their related parties
during the financial year is as follows:
Balance at
beginning of
year or
appointment
Granted as
remuneration
during the year
Issued on
exercise of
options during
the year
Other changes
during the year
Balance at end
of year or
resignation
KMP
Current
Directors
Patrick Walta
Nick Cernotta
Evan Cranston
Bryn Hardcastle
Peter Watson
Other KMPs
Mark Chamberlain
Barry Harris
Former
Tom Eadie
Tolga Kumova
Total
32,000,000
-
31,500,000
1,113,334
39,370
64,652,704
-
1,235,000
1,235,000
2,000,000
17,916,666
19,916,666
85,804,370
End of audited remuneration report
-
-
-
-
-
-
-
-
-
-
-
-
-
43,000
41,625
100,000
100,000
53,950
338,575
-
-
-
-
-
-
338,575
32,043,000
41,625
31,600,000
1,213,334
93,320
64,991,279
-
1,235,000
1,235,000
2,000,000
17,916,666
19,916,666
86,142,945
-
-
-
-
-
-
-
-
-
-
-
-
-
20
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Indemnifying officers or auditor
The Company has paid premiums to insure all Directors and Officers against liabilities for costs and expenses incurred
by them in defending any legal proceedings arising out of their conduct while acting in their capacity of director of the
Company, other than conduct involving a wilful breach of duty in relation to the Company.
Disclosure of the nature and the amount of the premium is prohibited by the confidentiality clause of the insurance
contract.
No indemnities have been given or agreed to be given or insurance premiums paid or agreed to be paid, during or since
the financial year ended 30 June 2019, to any person who is or has been an auditor of the Company.
Auditor
Deloitte Touche Tohmatsu has been appointed as auditor of the Group in accordance with section 327 of Corporations
Act 2001.
Non-audit services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are
outlined in Note 26 to the Financial Statements. The directors are of the opinion that the services as disclosed in Note
26 to the Financial Statements do not compromise the external auditor’s independence.
Proceedings on behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings
to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those
proceedings.
The Group was not a party to any such proceedings during the financial year.
Environmental regulations
The Group is required to carry out its activities in accordance with the Mining Laws and regulations in the areas in which
it undertakes its exploration and development activities. The Group is not aware of any matter which requires disclosure
with respect to any significant environmental regulation in respect of its operating activities.
Auditor’s independence declaration
The lead auditor’s independence declaration for the financial year ended 30 June 2019 has been received and can be
found on the following page.
Made and signed in accordance with a resolution of the Directors.
Robert McDonald
Chairman
30 September 2019
21
Deloitte Touche Tohmatsu
ABN 74 490 121 060
550 Bourke Street
Melbourne VIC 3000
Australia
Tel: +61 3 9671 7000
www.deloitte.com.au
The Board of Directors
New Century Resources Limited
Level 4
360 Collins Street
Melbourne, VIC, 3000
30 September 2019
Dear Board Members
New Century Resources Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of New Century Resources Limited.
As lead audit partner for the audit of the financial statements of New Century Resources Limited
for the year ended 30 June 2019, I declare that to the best of my knowledge and belief, there
have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Suzana Vlahovic
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
22
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2019
Other income
Depreciation and amortisation expense
Exploration and evaluation expenditure
Employee benefits – share based payments
Employee benefits – other
Professional expenses
Foreign exchange losses
Increase in rehabilitation provision
Finance income
Finance costs
Loss on acquisition classified as exploration expenditure
Impairment loss
Other expenses
Loss before income tax expense
Income tax expense
Loss for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange (loss)/gain on translation of foreign controlled entities,
net of tax
Other comprehensive (loss)/ income for the year
Note
2019
$
2018
$
4
11
4
4
4
16
4
4
31
30
4
5
837,527
1,854,976
(261,604)
(1,901,570)
(454,147)
(2,317,374)
(3,561,154)
(1,045,910)
-
374,297
(9,817,294)
-
-
(3,354,789)
(25,701)
(12,041,913)
(3,224,270)
(1,980,801)
(1,527,631)
(1,868)
(21,763,731)
7,366,665
(2,622,646)
(70,092,066)
(18,153,406)
(1,098,373)
(21,502,018)
(123,310,765)
-
-
(21,502,018)
(123,310,765)
(49,239)
(49,239)
673,009
673,009
Total comprehensive loss for the year
(21,551,257)
(122,637,756)
Loss for the year attributable to:
Members of the parent entity
Non-controlling interests
Total comprehensive loss for the year attributable to:
Members of the parent entity
Non-controlling interests
(21,502,018)
-
(119,021,291)
(4,289,474)
(21,502,018)
(123,310,765)
(21,551,257)
-
(118,348,282)
(4,289,474)
(21,551,257)
(122,637,756)
Loss per share
Cents
Cents
Basic and diluted loss per share
24
(4.26)
(32.32)
The accompanying notes form part of these financial statements.
23
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
Note
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Financial assets
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Deferred exploration, evaluation and development
expenditure – Kodiak Project
Other financial assets
Total non-current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Employee provisions
Borrowings
Financial liability at fair value through profit or loss
Total current liabilities
Non-current liabilities
Mine restoration provisions
Borrowings
Financial liability at fair value through profit or loss
Total non-current liabilities
TOTAL LIABILITIES
NET LIABILITIES
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of these financial statements.
24
6
7
8
9
10
11
12
9
13
16
14
15
16
14
15
17
18
2019
$
2018
$
34,282,769
8,668,896
7,903,782
5,750,000
7,945,067
46,249,135
2,881,331
-
17,250,000
1,327,400
64,550,514
67,707,866
233,133,258
60,412,157
-
-
13,166,698
3,167,752
246,299,956
63,579,909
310,850,470
131,287,775
77,879,468
1,269,054
14,076,069
1,233,331
23,013,820
678,548
-
-
94,457,922
23,692,368
200,828,797
40,024,281
5,903,918
117,297,685
-
-
246,756,996
117,297,685
341,214,918
140,990,053
(30,364,448)
(9,702,278)
312,052,963
4,096,678
(346,514,089)
311,618,023
4,145,917
(325,466,218)
(30,364,448)
(9,702,278)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Ordinary shares
$
Accumulated
losses
$
Foreign
currency
translation
reserve
$
Share based
payments
reserve
$
Non-controlling
interest
$
2019
Balance at 1 July 2018
Comprehensive income
Loss for the year
Other comprehensive income for the year
Exchange differences on translation of
controlled entities
Total comprehensive loss for the year
Transactions with owners, in their
capacity as owners, and other transfers
Issue of shares
Share based payment – Note 23
Costs arising from issues
311,618,023
(325,466,218)
4,145,917
-
-
-
(21,502,018)
-
-
(21,502,018)
(49,239)
(49,239)
440,000
-
(5,060)
-
454,147
-
-
-
-
Balance at 30 June 2019
312,052,963
(346,514,089)
4,096,678
The accompanying notes form part of these financial statements.
25
Total
$
(9,702,278)
(21,502,018)
(49,239)
(21,551,257)
440,000
454,147
(5,060)
(30,364,448)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Ordinary shares
$
Accumulated
losses
$
Foreign
currency
translation
reserve
$
Share based
payments
reserve
$
Non-controlling
interest
$
Total
$
32,259,433
(36,312,507)
3,472,908
3,196,536
-
2,616,370
(119,021,291)
-
-
(119,021,291)
673,009
673,009
-
-
-
(4,289,474)
(123,310,765)
-
673,009
(4,289,474)
(122,637,756)
2018
Balance at 1 July 2017
Comprehensive income
Loss for the year
Other comprehensive income for the year
Exchange differences on translation of
controlled entities
Total comprehensive loss for the year
Transactions with owners, in their
capacity as owners, and other transfers
Transfer of opening option reserve to
accumulated losses
Transfer of equity component of
convertible notes to accumulated losses
Issue of shares
Share based payment
Issue of options for acquisition
-
-
-
-
(404,548)
114,505,108
-
-
Shares to be issued from prior year
(5,089,834)
Acquisition of non-controlling interest
175,140,000
(179,429,474)
Costs arising from issues
(4,792,136)
-
Balance at 30 June 2018
311,618,023
(325,466,218)
4,145,917
3,196,536
404,548
-
3,224,270
2,471,700
-
-
-
-
-
-
-
-
-
(3,196,536)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,289,474
-
-
-
-
114,505,108
3,224,270
2,471,700
(5,089,834)
-
(4,792,136)
(9,702,278)
With effect from 1 July 2018, a change in presentation was adopted to recognise adjustments for share-based payment transactions in the accumulated losses
section of equity, rather than in the share based payments reserve. Accordingly, the balance in the share based reserve was transferred to accumulated losses, a
component of equity.
The accompanying notes form part of these financial statements.
26
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
CONSOLIDATED STATEMENT OF CASHFLOWS
For the year ended 30 June 2019
Note
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Financing expenses paid
Payments for exploration and evaluation expenditure
Other income
2019
$
2018
$
(5,894,155)
374,297
(595,504)
(1,901,570)
-
(7,446,561)
569,188
(1,950,203)
(12,041,913)
345,128
Net cash (outflow) from operating activities
25
(8,016,932)
(20,524,361)
CASH FLOWS FROM INVESTING ACTIVITIES
Receipts during development phase classified as investing
activity
Payments for property, plant and equipment
Payments for borrowing costs capitalised
Payments for security guarantees
Payments for mining lease interests
Refund of bonds
Cash acquired on acquisition of subsidiaries
Proceeds on disposal of property, plant and equipment
146,918,916
(209,404,649)
(4,525,914)
(9,998,946)
-
-
-
729,204
-
(36,505,249)
(2,586,715)
(1,818,091)
(263,124)
33,105
4,732,628
1,555,817
Net cash (outflow) from investing activities
(76,281,389)
(34,851,629)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Varde borrowings
Proceeds from NAB borrowings
Repayment of NAB borrowings
Proceeds from share issues
Payments for share issue costs
Proceeds from MMG funding support
60,397,015
11,438,424
(11,438,424)
440,000
(5,060)
11,500,000
-
-
-
95,062,493
(4,792,136)
5,750,000
Net cash inflow from financing activities
72,331,955
96,020,357
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Exchange difference on cash and cash equivalents
(11,966,366)
46,249,135
-
40,644,367
5,606,108
(1,340)
Cash and cash equivalents at the end of the financial year
6
34,282,769
46,249,135
The accompanying notes form part of these financial statements.
27
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
NOTES TO THE FINANCIAL STATEMENTS
The consolidated financial statements and notes represent those of New Century Resources Limited (the ”Company”)
and its controlled entities (the “Group”). The separate financial statements of the parent entity have not been presented
within this financial report as permitted by the Corporations Act 2001.
The financial statements for the Group were authorised for issue in accordance with a resolution by the Board of
Directors on 30 September 2019.
Note 1: Summary of significant accounting policies
Basis of preparation
The financial statements are general purpose financial statements that have been prepared in accordance with
Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the
Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001. The Group is a for-profit entity for
financial reporting purposes under Australian Accounting Standards.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial
statements containing relevant and reliable information about transactions, events and conditions. Compliance with
Australian Accounting Standards ensures that the financial statements and notes also comply with International
Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in the preparation of these
financial statements are presented below and have been consistently applied unless stated otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on
historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial
assets and financial liabilities.
(a) Going concern
This report has been prepared on the going concern basis which assumes the continuity of normal business activity and
the realisation of assets and the settlement of liabilities in the normal course of business.
The primary activity of the Group during the year has been the continuation of the development and commissioning of
the Century Project. Given the Century Project is currently in development and commissioning phase, no revenue is
being recognised in the consolidated statement of profit or loss and other comprehensive income. The Group incurred
a net loss of $21,502,018 (2018: $123,310,765) during the year.
As at 30 June 2019, the Group had a net current assets deficiency of $29,907,408 (30 June 2018: net current assets of
$44,015,498) and net assets deficiency of $30,364,448 (30 June 2018: $9,702,278).
The Directors of the Company note the following considerations relevant to the Group’s ability to continue as a going
concern:
• as at 30 June 2019, total available cash and cash equivalents of $34,282,769 are held by the Group.
• equity raising subsequent to year end in September 2019 as set out in Note 33 to the Financial Statements.
•
cash flow forecasts show that the Group will generate sufficient cash flows to meet all commitments and working
capital requirements for the 12 month period from the date of signing this financial report.
As a result, the Directors are of the view that the Group will be able to meet its debts as and when they fall due and
accordingly the Directors have prepared the consolidated financial statements on a going concern basis.
28
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
(b) Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (New Century
Resources Limited) and all of the subsidiaries (including any structured entities). Subsidiaries are entities the parent
controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided
in Note 20.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from
the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that
control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between Group
entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments
made where necessary to ensure uniformity of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling
interests”. The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries
and are entitled to a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-
controlling interests’ proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling
interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling
interests are shown separately within the equity section of the statement of financial position and statement of profit or
loss and other comprehensive income.
(c) Income tax
The income tax expense benefit for the financial year comprises current income tax expense (income) and deferred tax
expense (income). Current income tax expense charged to profit or loss is the tax payable on taxable income. Current
tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant
taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability
balances during the financial year as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to
items that are recognised outside profit or loss.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability,
where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset
is realised or the liability is settled and their measurement also reflects the manner in which management expects to
recover or settle the carrying amount of the related asset or liability. With respect to non-depreciable items of property,
plant and equipment measured at fair value and items of investment property measured at fair value, the related deferred
tax liability or deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered entirely
through sale.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur.
Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred
tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity
or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the
respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities
are expected to be recovered or settled.
29
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
(d) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in Australian dollars,
which is the parent entity’s functional currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of
the transaction. Foreign currency monetary items are translated at the financial year-end exchange rate. Non-monetary
items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary
items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred
in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive
income to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the
exchange difference is recognised in profit or loss.
Group companies
The financial results and position of foreign operations, whose functional currency is different from the Group’s
presentation currency, are translated as follows:
assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars
are recognised in other comprehensive income and included in the foreign currency translation reserve in the statement
of financial position. These differences are recognised in profit or loss in the period in which the operation is disposed
of.
(e) Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits held at call with financial institutions which are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(f) Property, plant and equipment
Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any
accumulated depreciation and impairment losses.
Property, plant and equipment are measured on the cost basis and therefore carried at cost less accumulated
depreciation and any accumulated impairment. In the event the carrying amount of property, plant and equipment is
greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated
recoverable amount and impairment losses are recognised in profit or loss. A formal assessment of recoverable amount
is made when impairment indicators are present (refer to Note 1(i) for details of impairment).
The carrying amount of property, plant and equipment is reviewed annually by directors to ensure it is not in excess of
the recoverable amount from these assets.
The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs and
an appropriate proportion of fixed and variable overheads. Any proceeds during the development phase is offset against
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
30
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
can be measured reliably. All other costs including repairs and maintenance are recognised as expenses in the
statement of profit or loss and other comprehensive income during the financial period in which they are incurred.
Depreciation
Depreciation of assets commences when the assets are ready for their intended use. Capital Work in Progress, which
relates mainly to Century Mine, is not depreciated. Depreciation on this will commence when the Century Mine starts
commercial production, which will be on the units of production basis over the life of the mine. All other assets are
depreciated on a straight-line basis.
Mining Plant and Equipment relates mainly to the Kodiak Mine. This mine was fully impaired in previous financial year
and is currently under care and maintenance and therefore no depreciation applies.
Items of property, plant and equipment initially recognised are derecognised upon disposal or when no future economic
benefits are expected from their continued use. Any gain or loss arising on the disposal of an asset are determined as
the difference between the net disposal proceeds and the carrying amount of the asset and are recognised as other
income or other expenses in the statement of profit or loss and other comprehensive income.
(g) Exploration and evaluation expenditure
Exploration and evaluation expenditure is recognised in the statement of profit or loss as incurred, unless the expenditure
is expected to be recouped through successful development and exploitation of the area of interest, or alternatively by
its sale, in which case it is recognised as an asset on an area of interest basis.
When exploration and evaluation assets are capitalised they are classified as tangible (as part of property, plant and
equipment) or intangible according to the nature of the assets. As the assets are not yet ready for use they are not
depreciated.
Exploration and evaluation assets are assessed for impairment if:
•
sufficient data exists to determine technical feasibility and commercial viability; or
• other facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
For the purposes of the impairment testing, exploration and evaluation assets are allocated to cash-generating units to
which the exploration activity relates. The cash generating units (CGU) are not larger than the area of interest.
Once the technical feasibility and commercial viability of the extraction of mineral reserves 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 relevant categories within property, plant and equipment.
(h) Goods and Services Tax (GST) and other indirect taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense
item as applicable; and
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising
from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as
operating cash flows included in receipts from customers or payments to suppliers.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
31
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
(i) Impairment of assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired.
The assessment will include the consideration of external and internal sources of information including dividends
received from subsidiaries, associates or jointly controlled entities. If such an indication exists, an impairment test is
carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value
less costs to sell and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying amount over its
recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in
accordance with another Standard (e.g. in accordance with the revaluation model in AASB 116). Any impairment loss
of a revalued asset is treated as a revaluation decrease in accordance with that other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
(j) Share based payments
Equity-settled share-based payments are measured at fair value at the date of grant. Fair value is measured by use of
a Black-Scholes model. The expected life used in the model is adjusted, based on management’s best estimate, for the
effects of non-transferability, exercise restrictions, and behavioural considerations.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Company’s estimate of shares that will eventually vest.
(k) Trade and other payables
These amounts represent liabilities for goods, services and deferred proceeds provided to the Company prior to the end
of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
(l) Contributed 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.
(m) Employee benefits
A provision is made for the Group’s liability for employee benefits arising from services rendered by employees to
balance date. Short-term employee benefits are expensed as the related service is provided. A liability is recognised for
the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result
of past service provided by the employee and the obligation can be estimated reliably. Employee benefits that are
expected to be settled wholly within one year have been measured at the amounts expected to be paid when the liability
is settled plus related on costs. Employee benefits not expected to be wholly settled within one year have been measured
at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability,
consideration is given to employee wages increases and the probability that the employee may satisfy vesting
requirements. Those cash flows are discounted using market yields on high quality corporate bonds with terms to
maturity that match the expected timing of cash flows.
Equity-settled compensation
Share-based payments to employees are measured at the fair value of the instruments on grant dates and amortised
over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services
received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services
cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding
amount is recorded to accumulated losses. The number of shares and options expected to vest is reviewed and adjusted
at the end of each reporting period such that the amount recognised for services received as consideration for the equity
instruments granted is based on the number of equity instruments that eventually vest. The Group measures fair value
for share based payments using the Black-Scholes model with the assumptions detailed in Note 23 to the Financial
Statements.
32
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
(n) Financial instruments
Recognition
The Group recognises financial assets and financial liabilities on the date that they are originated. All other financial
assets are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the
instrument.
Classification and subsequent measurement
Financial instruments are initially measured at fair value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets or financial liabilities (other than financial assets and liabilities at fair value through profit or
loss) are added to or deducted from the fair value of the financial assets or liabilities. Transaction costs directly
attributable to the acquisition of financial assets or liabilities at fair value through profit or loss are recognised immediately
in profit or loss. All recognised financial instruments are subsequently measured at fair value or amortised cost using
the effective interest method.
Amortised cost
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial
recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation
of the difference between that initial amount and the maturity amount calculated using the effective interest method.
The effective interest method
The effective interest method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and
other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the contractual term) of
the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future
net cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of an income or
expense item in profit or loss.
Fair value
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending
on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly
(i.e. unforced) transaction between independent, knowledgeable and willing market participants at the measurement
date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to
determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific
asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one
or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable
market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (ie the
market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the
most advantageous market available to the entity at the end of the reporting period (ie the market that maximises the
receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account
transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the
asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best
use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share - based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective
note to the financial statements.
33
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Valuation techniques
In the absence of an active market for an identical asset or liability, the Group selects and uses one or more valuation
techniques to measure the fair value of the asset or liability. The Group selects a valuation technique that is appropriate
in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and
relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation
techniques selected by the Group are consistent with one or more of the following valuation approaches:
–
–
–
Market approach: valuation techniques that use prices and other relevant information generated by market
transactions for identical or similar assets or liabilities.
Income approach: valuation techniques that convert estimated future cash flows or income and expenses into
a single discounted present value.
Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service
capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing
the asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority
to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs
that are developed using market data (such as publicly available information on actual transactions) and reflect the
assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable,
whereas inputs for which market data is not available and therefore are developed using the best information available
about such assumptions are considered unobservable.
Fair value hierarchy
AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value
measurements into one of three possible levels based on the lowest level that an input that is significant to the
measurement can be categorised into as follows:
Level 1
Level 2
Level 3
Measurements based on quoted
prices (unadjusted) in active markets
for identical assets or liabilities that
the entity can access at the
measurement date.
Measurements based on inputs other
than quoted prices included in Level
1 that are observable for the asset or
liability, either directly or indirectly.
Measurements based on
unobservable inputs for the asset or
liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all
significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more
significant inputs are not based on observable market data, the asset or liability is included in Level 3.
The Group would change the categorisation within the fair value hierarchy only in the following circumstances:
(i)
if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or
(ii)
if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa.
When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy
(ie transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances
occurred.
The Group has no assets or liabilities measured at fair value, except for financial liabilities at fair value through profit or
loss. While assets acquired and liabilities assumed in business combinations have been measured at their acquisition
date fair values, in accordance with paragraph 18 of AASB 3, these initial measurements have formed the costs of the
assets acquired and liabilities assumed for the purpose of other accounting standards.
34
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are measured
at amortised cost or at FVTOCI, lease receivables, trade receivables and contract assets, as well as on financial
guarantee contracts. The amount of expected credit losses (ECL) is updated at each reporting date to reflect changes
in credit risk since initial recognition of the respective financial instrument. The Group always recognises lifetime ECL
for trade receivables, contract assets and lease receivables. The expected credit losses on these financial assets are
estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are
specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast
direction of conditions at the reporting date, including time value of money where appropriate. For all other financial
instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial
recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition,
the Group measures the loss allowance for that financial instrument at an amount equal to 12‑month ECL. Lifetime ECL
represents the expected credit losses that will result from all possible default events over the expected life of a financial
instrument. In contrast, 12‑month ECL represents the portion of lifetime ECL that is expected to result from default
events on a financial instrument that are possible within 12 months after the reporting date.
Financial liabilities
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at fair value
through profit or loss. A financial liability is designated as at fair value through profit or loss upon initial recognition if it
forms part of a contract containing one or more embedded derivatives, and AASB 9 permits the entire combined contract
to be designated as at fair value.
Derecognition
Financial assets are derecognised when the contractual rights to receipt of cash flows expire or the asset is transferred
to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits
associated with the asset. Financial liabilities are derecognised when the related obligations are discharged, cancelled
or have expired. The difference between the carrying amount of the financial liability extinguished or transferred to
another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is
recognised in profit or loss.
(o) Parent entity financial information
The financial information for the parent entity, New Century Resources Limited, disclosed in Note 19 has been prepared
on the same basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries
Investments in subsidiaries are accounted for at the lower of cost and recoverable amount in the financial statements of
New Century Resources Limited.
Tax consolidation legislation
New Century Resources Limited and its wholly-owned Australian controlled entities have implemented the tax
consolidation legislation. The Group is now treated as a consolidated tax entity.
The head entity, New Century Resources Limited, and the controlled entities in the tax consolidated group account for
their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated
group continues to be a standalone taxpayer in its own right.
In addition to its own current and deferred tax amounts, New Century Resources Limited also recognises the current
tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed
from the controlled entity in the tax consolidated group.
New Century Resources Limited will be responsible for any current tax payable, current tax receivable and deferred tax
assets relating to unused tax losses or unused tax credits of the wholly owned subsidiary, which are transferred to New
Century Resources Limited under tax consolidation legislation.
The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments.
35
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Assets or liabilities arising with the tax consolidated entity are recognised as current amounts receivable from or payable
to other entity in the Group.
Any difference between the amounts assumed and amounts receivable or payable are recognised as a contribution to
(or distribution from) wholly-owned tax consolidated entity.
(p) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the
legal ownership are transferred to entities in the consolidated group, are classified as finance leases.
Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts equal to the fair value
of the leased property or the present value of the minimum lease payments, including any guaranteed residual values.
Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of the lease term or estimated useful lives.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are
recognised as expenses on a straight line basis over the lease term. Lease incentives under operating leases are
recognised as a liability and amortised on a straight-line basis over the lease term.
(q) New and amended accounting policies adopted by the Group
The accounting policies applied by the Group in the consolidated financial statements are consistent with those applied
by the Group in the previous financial year, except for the adoption of new standards and interpretations effective as of
1 July 2018.
•
AASB 9: Financial Instruments and associated Amending Standards
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement. The Group has applied the AASB 9
changes prospectively from the date of initial application. AASB 9 includes a single approach for the classification and
measurement of financial assets, based on cash flow characteristics and the business model used for the management
of the financial instruments. The standard introduces changes to three key areas:
• New requirements for the classification and measurement of financial instruments. There were no material
changes to the classification and measurement of the Group’s financial instruments.
• A new impairment model based on expected credit losses for recognising provisions, which has replaced the
incurred loss model used in AASB 139. The expected credit loss model requires the Group to account for
expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in
credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred
before credit losses are recognised. Given the Century Mine has not been commissioned, credit risk has no
material impact on the Group.
• Simplified hedge accounting through closer alignment with an entity’s risk management methodology, to align
the accounting treatment with the risk management objective and strategy of the business. There are no hedge
accounting transactions for the Group and therefore this change has had no impact on the Group.
The adoption of AASB 9 has not had a material impact on the Group’s financial statements.
•
AASB 15: Revenue from Contracts with Customers and associated Amending Standards
AASB 15 Revenue from Contracts with Customers supersedes AASB 118 Revenue and related Interpretations.
AASB 15 applies to all revenue arising from contracts with customers unless those contracts are in the scope of other
standards. The new standard establishes a five-step model to account for revenue arising from contracts with customers.
Under AASB 15 the revenue recognition model changed from one based on the transfer of risk and reward of ownership
to the transfer of control of ownership. Under AASB 15, revenue is recognised at an amount that reflects the
consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The Group adopted AASB 15 from 1 July 2018 and elected to apply the modified retrospective method of adoption. This
transition method requires the cumulative effect of initially applying AASB 15 as an adjustment to the opening balance
36
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
of accumulated losses from the date of initial application. In accordance with the modified retrospective method,
comparative figures are not restated and continue to be presented under AASB 118.
Given the Century Mine has not been commissioned, the adoption of the new standard did not have any financial impact
on the Group during the financial year.
(r) New accounting standards for application in future periods
Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group,
together with an assessment of the potential impact of such pronouncements on the Group when adopted in future
periods, are discussed below:
•
AASB 16 Leases (applicable from 1 July 2019 for the Group)
AASB 16 Leases supersedes the existing accounting standard, AASB 117 Leases. It has an effective date for the Group
of 1 July 2019. The Group will adopt the new standard on the required effective date.
AASB 16 introduces a single lessee accounting model, requiring the recognition of assets and liabilities for all leases
with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a
right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligations
to make lease payments.
The Group is party to contracts for leases of property, plant and equipment; including but not limited to office premises
and contractor-provided equipment. Adoption of the new lease standard will result in lower operating costs and higher
finance and depreciation costs as the accounting profile of the lease payments changes under the new model. The
statement of financial position will also be impacted, with an increase to both non-current assets (right-of-use assets)
and liabilities (lease liabilities). Cash flows from operating activities will increase as affected lease payments will be now
be classified as financing cashflows. Conversely, cash flows from financing activities will decrease for the same reason.
The Group has progressed its implementation of the new lease standard. During the year it conducted ongoing reviews
of its lease population for the application of AASB 16 and developed systems to manage lease data capture and
reporting. Implementation of the project will continue into the first half of the 2020 financial year.
The Group will use the modified retrospective method of adoption on transition. It expects to utilise the practical
expedient available under the standard for short-term leases, low value leases and leases expiring within 12 months of
transition date. The Group will use a single discount rate to a portfolio of leases with reasonably similar characteristics.
Based on the analysis performed to date, the Group expects the impact of AASB 16 on the date of adoption (1 July
2019) will result in the recognition of additional right of use assets and lease liabilities of approximately $45,000,000.
The cumulative effect on accumulated losses will be immaterial.
• Other mandatory Accounting Standards and Interpretations
Other mandatory Accounting Standards and Interpretations issued and available for early adoption but not applied by
the Group or not available for early adoption which will become mandatory in subsequent years have not been included
above as they are not expected to have a material impact on the consolidated financial statements.
(s) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it
is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the
reporting period.
(t) Inventories
Inventories are made up of spare parts and consumables. They are valued at the lower of cost and net realisable value.
37
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
(u) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All
other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other
costs that the Group incurs in connection with the borrowing of funds.
(v) Derivatives
Derivatives financial instruments are initially recognised at fair value on the date a derivative contract is entered into and
are subsequently remeasured to their fair value at each reporting date. Changes in the fair value of any derivative
instrument are recognised in the income statement. Fair values for derivative instruments are determined using valuation
techniques, using assumptions based on market conditions existing at the reporting date. Derivatives embedded in non-
derivative contracts are recognised separately unless they are closely related to the host contract, in which case they
are accounted together with the host contract.
(w) Dividends
The Company recognises a liability to pay a dividend when the distribution is authorised and the distribution is no longer
at the discretion of the Company. As per the corporate laws of Australia, a distribution is authorised when it is approved
by the shareholders. A corresponding amount is recognised directly in equity.
(x) Mine rehabilitation, restoration and dismantling obligations
Provisions relating to mine rehabilitation, restoration and dismantling obligations are recognised at the commencement
of the mining project and/or construction of the assets where a legal or constructive obligation exists at that time.
Provisions are made for the estimated cost of rehabilitation, decommissioning and restoration relating to areas disturbed
during mining and exploration operations up to the reporting date but not yet rehabilitated.
Provision has been made in full for all the disturbed areas at the reporting date based on current estimates of costs to
rehabilitate such areas, discounted to their present value based on expected future cash flows. The estimated costs
include the current cost of rehabilitation necessary to meet legislative requirements. Changes in estimates are dealt with
on a prospective basis as they arise.
These costs are based on judgements and assumptions regarding removal dates, technologies and industry practice.
The capitalised cost of this asset is recognised in property, plant and equipment and is amortised over the life of the
mine.
A corresponding asset is included in mine property and development assets, only to the extent that it is probable that
future economic benefits associated with the restoration expenditure will flow to the Group.
Changes in the liability relating to mine rehabilitation, restoration and dismantling obligations are added to or deducted
from the related asset (where it is probable that future economic benefits will flow to the Group). Over time the liability
is increased for the present value based on the risk adjusted pre-tax discount rate appropriate to the risk inherent in the
liability. The unwinding of the discount is recorded as an accretion charge within finance costs.
The costs of the restoration are brought to account in the statement of comprehensive income through depreciation of
the associated assets over the economic life of the mine which these costs are associated.
The provisions referred to above do not include any amounts related to remediation costs associated with unforeseen
circumstances.
(y) Reclassification
Some amounts in the comparative year have been reclassified to conform to the current year disclosure.
38
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 2. Critical accounting judgements, estimates and assumptions
Estimates and judgements are continually evaluated and are based on experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates may differ from
the actual results. The critical estimates and judgements that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year are discussed below.
Going concern
For the reasons detailed in Note 1(a), the financial report is prepared on a going concern basis.
Mine rehabilitation, restoration and dismantling obligations
Provision is made for the anticipated costs of future restoration and rehabilitation of mining areas from which natural
resources have been extracted in accordance with the accounting policy. These provisions which include future cost
estimates associated with reclamation, plant closures, waste site closures, monitoring, demolition of equipment,
decontamination, water purification and permanent storage of historical residues, are discounted to their present value.
At each reporting date the rehabilitation liability is remeasured in line with changes in discount rates, and timing or
amounts of the costs to be incurred. Rehabilitation, restoration and dismantling provisions are adjusted for changes in
estimates. Adjustments to the estimated amount and timing of future rehabilitation and restoration cash flows are a
normal occurrence in light of the significant judgements and estimates involved.
Uncertainty exists as to the amount of rehabilitation obligations which will be incurred due to the impact of changes in
environmental legislation, and many other factors, including future developments, changes in technology, price
increases and changes in interest rates.
The calculation of these provision estimates requires assumptions such as application of environmental legislation, plant
closure dates, available technologies, engineering cost estimates and discount rates. A change in any of the
assumptions used may have a material impact on the carrying value of mine rehabilitation, restoration and dismantling
provisions. The provision at reporting date represents management’s best estimate of the present value of the future
rehabilitation costs required.
Recoverability of assets
The recoverable amount of each cash-generating unit (CGU) is determined as the higher of the asset’s fair value less
costs to sell and its value in use. The recoverable amount assessments require the use of estimates and assumptions
including discount rates, exchange rates, commodity prices, future capital requirements and future operating
performance, as well as the value that a market participant would place on any resources which have yet to be proven
as reserves associated with the CGU.
A change in any of the critical assumptions listed will alter the value as initially determined and may therefore impact
the carrying value of assets in the future.
39
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Status of asset commissioning
The Group assesses the stage of the mine under construction to determine when a mine moves into the production
phase, this being when the mine is substantially complete and ready for its intended use. The criteria used to assess
the status of commissioning are based on the unique characteristics of each project. Some of the criteria used to identify
the status of commissioning include, but are not limited to completion of a reasonable period of testing of the mine plant
and equipment, the ability to produce metal in saleable form (within specifications) and the ability to sustain ongoing
production of metal.
When a mine development/construction project moves into the production phase, the capitalisation of certain mine
development/construction costs ceases. At this point all related amounts are reclassified from capital work in progress
to relevant categories within Property, Plant and Equipment and depreciation/amortisation commences.
Subsequent costs are either regarded as forming part of the cost of inventory or expensed, except for costs that qualify
for capitalisation relating to mining asset additions or improvements.
Development expenditure is capitalised, provided commercial viability conditions continue to be satisfied. Proceeds from
the sale of the product extracted during the development phase are netted against development expenditure. Upon
completion of development and commencement of production capitalised development costs are further transferred as
required, to the appropriate plant and equipment asset category and depreciated using the unit of production method
(UOP) basis.
Income tax and deferred tax assets and liabilities
The Group is subject to income taxes of Australia and jurisdictions where it has foreign operations. Significant judgement
is required in determining the group provision for income taxes. There are many transactions and calculations
undertaken during the ordinary course of business for which the ultimate tax determination is uncertain for which
provisions are based on estimated amounts. Where the final tax outcome of these matters is different from the amounts
that were initially recorded, such differences will impact the current and deferred tax provision in the period in which the
determination is made.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable profits will be available to utilise those temporary differences and losses, and the tax losses continue to
be available having regard to the nature and timing of their origination and compliance with the relevant tax legislation
associated with their recoupment.
Assumptions about the generation of future taxable profits depend on estimates of future cash flows. These estimates
are based on future production and sales volumes, operating costs, restoration costs, capital expenditure and other
capital transactions. Judgements are also required about the application of income tax legislation. These judgements
and assumptions are subject to risk and uncertainty, which may impact the amount of deferred tax assets and liabilities
recognised and the amount of other tax losses and temporary differences not yet recognised.
40
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 3. Operating segments
Description of segments
The Group has determined the operating segments based on the reports reviewed by the Board of Directors in order to
make strategic decisions. The Board considers how resources are allocated and performance is assessed and has
identified two reportable segments being Australia (which constitutes the Century Mine) and United States of America
(which constitutes the Kodiak Project).
Basis of accounting for purposes of reporting by operating segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors, being the chief operating decision maker with
respect to operating segments, are determined in accordance with accounting policies that are consistent to those
adopted in the annual financial statements of the Group.
Intersegment transactions
Segment assets and liabilities are presented net of any intersegment borrowings.
41
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Segment information
Australia
2019
$
United
States of
America
2019
$
Total
2019
$
Australia
2018
$
United
States of
America
2018
$
Total
2018
$
(19,917,902)
(1,584,116)
(21,502,018)
(104,550,872)
(18,759,893)
(123,310,765)
245,471,586
828,370
246,299,956
62,801,036
778,873
63,579,909
310,006,568
843,902
310,850,470
130,328,026
959,749
131,287,775
Segment result
Loss after income
tax
Assets
Segment non-
current assets
Segment total
assets
Liabilities
Segment liabilities
(339,679,855)
(1,535,063)
(341,214,918) (139,124,401)
(1,865,652)
(140,990,053)
Other
Depreciation and
amortisation
expense
Exploration and
evaluation
expenditure
Employee benefits –
other
Professional
expenses
(261,604)
-
(261,604)
(19,125)
(6,576)
(25,701)
(695,618)
(1,205,952)
(1,901,570)
(11,451,665)
(590,248)
(12,041,913)
(2,317,374)
-
(2,317,374)
(1,980,801)
-
(1,980,801)
(3,182,555)
(378,599)
(3,561,154)
(1,523,413)
(4,218)
(1,527,631)
Finance income
367,838
6,459
374,297
7,366,665
-
7,366,665
Finance costs
(9,817,274)
Impairment loss
-
-
-
(9,817,294)
(2,622,505)
(141)
(2,622,646)
-
-
(18,153,406)
(18,153,406)
Other expenses
(3,348,764)
(6,025)
(3,354,789)
(1,093,068)
(5,305)
(1,098,373)
42
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 4. Loss before income tax
Other income
Gain on sale of property, plant and equipment
Other income
Total
Loss before income tax includes the following expenses
Exploration and evaluation expenditure
Kodiak Project costs
Century Project costs
2019
$
2018
$
729,204
108,323
1,410,837
444,139
837,527
1,854,976
(1,205,952)
(695,618)
(590,248)
(11,451,665)
(1,901,570)
(12,041,913)
Exploration and evaluation costs for the Century Project have been expensed until the technical and commercial
viability of the project was finalised. All eligible expenditure during the construction phase has been capitalised as
Property, Plant and Equipment.
Employee benefit expenses
Wages and salaries including director fees
Other employment expenses
Professional expenses
Legal fees
Other professional expenses
Finance income
Interest received
Interest reversed on convertible notes
Discount unwind relating to MMG support fee
Finance costs
Unwind of discount relating to mine restoration provisions – Note 16
Borrowing costs
(2,317,374)
-
(1,954,457)
(26,344)
(2,317,374)
(1,980,801)
(1,659,214)
(1,901,940)
(1,232,963)
(294,668)
(3,561,154)
(1,527,631)
374,297
-
-
569,188
4,292,334
2,505,143
374,297
7,366,665
(9,221,790)
(595,504)
-
(2,622,646)
(9,817,294)
(2,622,646)
43
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Other expenses
Century Project acquisition costs
Share registry expenses
Rent expenses
Travel expenses
Administrative expenses
Note 5. Income tax benefit
2019
$
2018
$
-
(13,156)
(311,598)
(150,129)
(2,879,906)
(149,600)
(63,440)
(155,649)
(230,558)
(499,126)
(3,354,789)
(1,098,373)
Numerical reconciliation of income tax benefit to prima facie tax payable
Loss from operations before income tax expense
Tax at the Australian tax rate of 30% (2018: 30%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable
income:
Tax effect of different tax rate of overseas subsidiaries
Share based payments
Interest on convertible notes
Write off of receivable
Loss on acquisition classified as exploration expenditure
Accretion in rehabilitation provision
Impairment loss
Income tax benefits not recognised
Other
Income tax benefit
21,502,018
123,310,765
(6,450,605)
(36,993,230)
39,517
136,244
-
-
-
-
-
6,248,432
26,412
(60,649)
967,281
(1,287,700)
2,677,170
21,027,620
6,529,119
5,446,022
1,688,469
5,898
-
-
Unrecognised deferred tax assets – tax losses
Gross tax losses Australia and USA
102,890,501
33,050,743
Tax benefit not recognised Australia
Tax benefit not recognised USA
Total tax benefit not recognised
Unrecognised temporary differences
Total timing differences not recognised
23,990,891
6,802,175
3,509,597
8,540,835
30,793,066
12,050,432
75,642,349
96,868,764
44
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
The above temporary differences and tax losses have not been brought to account as they do not meet the
recognition criteria as per the Group’s accounting policy. The benefit of these deferred tax assets will only be obtained
if:
(1) the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from
the deductions for the temporary differences to be realised;
(2) the Group continues to comply with the conditions for deductibility imposed by tax legislation; and
(3) no changes in tax legislation adversely affect the entity in realising the benefit from the deductions for the
temporary differences.
No franking credits are available (30 June 2018: Nil).
Note 6. Cash and cash equivalents
Cash on hand
Cash at bank
Cash on deposit
2019
$
2018
$
15
34,282,754
-
15
16,749,120
29,500,000
34,282,769
46,249,135
The effective interest rate on cash on deposit is disclosed in note 29.
Amount of cash and cash equivalents held as USD was US$4,844,886 (2018: US$82,574) at balance date.
Note 7. Trade and other receivables
GST receivable
Other receivables
1,344,308
7,324,588
2,539,424
341,907
8,668,896
2,881,331
Other receivables comprise mainly outstanding invoice amounts of shipment during the development phase. The
credit loss is not significant on the other receivables
Note 8. Inventories
Consumables and spare parts – at cost
7,903,782
-
Consumables inventory were acquired during the year.
45
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 9. Financial assets
Current
2019
$
2018
$
MMG funding support payment receivable
5,750,000
17,250,000
MMG agreed to pay a series of funding support payments for a total of $34,500,000 to support rehabilitation of the
Century Project. The balance at 30 June 2019 represents the remaining payment which has been valued at the amount
receivable. Subsequent to financial year end, the final payment of $5,750,000 was received in July 2019.
Non-current
Deposits held as security guarantees
13,166,698
3,167,752
Term deposits held as security guarantees are for the benefit of other parties in guarantee of liabilities. They are interest
bearing with the interest rate dependent on the term of the deposits. They are valued at the face value of the term
deposits.
Note 10. Other current assets
Prepayments
Other
Total
7,945,067
-
840,405
486,995
7,945,067
1,327,400
46
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 11. Property, plant and equipment
At 30 June 2019
At cost
Accumulated depreciation
Movements in carrying value
Year ended 30 June 2019
Balance 1 July 2018
Additions
Disposals
Exchange differences
Depreciation expense for the year
Proceeds from sale in development phase
Balance at 30 June 2019
At 30 June 2018
At cost
Accumulated depreciation
Movements in carrying value
Year ended 30 June 2018
Balance 1 July 2017
Acquisition of subsidiaries
Additions
Disposals
Exchange differences
Depreciation expense for the year
Impairment loss – refer Note 30
Balance at 30 June 2018
Land and
buildings
$
Mining plant
and equipment
$
Capital work
in progress
$
Total
$
2,171,694
-
15,050,038
(14,580,907)
230,492,433
-
247,714,165
(14,580,907)
2,171,694
469,131
230,492,433
233,133,258
2,171,694
-
-
-
-
-
2,171,694
2,171,694
-
2,171,694
454,368
1,800,000
-
(82,674)
-
-
-
2,171,694
384,073
346,662
-
-
(261,604)
-
57,856,390
287,850,870
-
-
-
(115,214,827)
60,412,157
288,197,532
-
-
(261,604)
(115,214,827)
469,131
230,492,433
233,133,258
14,848,356
(14,464,283)
57,856,390
-
74,876,440
(14,464,283)
384,073
57,856,390
60,412,157
13,376,737
-
970,291
-
430,930
(25,701)
(14,368,184)
-
-
57,856,390
-
-
-
-
13,831,105
1,800,000
58,826,681
(82,674)
430,930
(25,701)
(14,368,184)
384,073
57,856,390
60,412,157
The depreciation expense relates mainly to the property, plant and equipment at the Group corporate office.
Any proceeds during development phase has been offset against the property, plant and equipment in accordance
with the Group’s accounting policy. Proceeds against which shipment had not been made by 30 June 2019 has been
treated as deferred proceeds as described in Note 13 to the financial statements.
Borrowing costs capitalised during the year was $4,525,914 (30 June 2018: $2,586,715).
47
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 12. Deferred exploration and development expenditure – Kodiak Project
Opening balance
Additions during the year
Exchange differences
Impairment loss
Total
2019
$
-
-
-
-
-
2018
$
3,287,297
347,051
150,874
(3,785,222)
-
The deferred exploration and development expenditure relates to the Kodiak Project. The ultimate recoupment of the
deferred exploration and development expenditure is dependent upon the successful development and commercial
exploration or alternatively the sale of respective areas of interest. An impairment loss was recognised in the previous
financial year – refer to Note 30 to the Financial Statements.
Note 13. Trade and other payables
Current unsecured liabilities
Trade payables
Amounts payable to director related party
Other payables and accrued expenses
Deferred proceeds
Total
29,773,346
441,721
15,960,312
31,704,089
20,738,060
137,303
2,138,457
-
77,879,468
23,013,820
At reporting date, it was not yet certain when commissioning will take place and therefore proceeds against which
shipment had not been made by 30 June 2019 has been treated as deferred proceeds. Refer to Note 11 to the Financial
Statements.
48
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 14. Borrowings
Secured - current
Borrowings
Secured – non-current
Borrowings
Total borrowings at 30 June
2019
$
2018
$
14,076,069
40,024,281
54,100,350
-
-
-
On 18 February 2019, the Group secured a new financing facility with Varde. This comprises a secured Senior facility
of US$42,900,000 (A$61,237,599 at 30 June 2019 exchange rate) which has been drawn down and an unsecured
Junior facility of US$28,600,000 (A$40,825,066 at 30 June 2019 exchange rate) which was subject to conditions
precedent before draw down. Prior to the end of September 2019, Varde advised that the availability of this unsecured
facility has expired. Discussion in relation to a US$28,600,000 facility are continuing with Varde. The borrowings attract
interest at 8 percent per annum and are repayable by scheduled payments over a period of 12 to 30 months after the
utilisation date. The Varde facility also includes payments based on silver production which is capped at US$5,000,000
(A$7,137,249 at 30 June 2019 exchange rate). This has been recognised as a financial liability at fair through profit or
loss as disclosed Note 15 to the Financial Statements.
On 31 October 2018, the Group obtained a financing facility from the National Australia Bank of $20,000,000 which
constituted cash advances of $11,438,424 and $8,561,576 utilised as bank guarantees. On 22 February 2019, the
Group settled the National Australia Bank facility.
Note 15. Financial liability at fair value through profit or loss
Current
Non-current
Balance at 30 June
1,233,331
5,903,918
7,137,249
-
-
-
The financial liability at fair value through profit or loss represent the fair value of payments to be made under the Varde
Senior loan facility which is dependent on forecast silver production. The payment is capped at US$5,000,000 which
equates to A$7,137,249 at the 30 June 2019 exchange rate.
49
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 16. Provisions
(a) Provision for employee entitlements - current
Balance at 1 July
Movement for the year
Balance at 30 June
(b) Provision for mine site restoration – non-current
Balance at 1 July
Provision for mine site restoration on acquisition of subsidiaries
Increase in provision
Impact of change in discount rate
Interest unwind
Exchange differences
Balance at 30 June
2019
$
2018
$
678,548
590,506
1,269,054
-
678,548
678,548
117,297,685
-
-
74,266,969
9,221,790
42,353
739,531
94,764,306
21,763,731
-
-
30,117
200,828,797
117,297,685
The Group has provisions for mine site restoration associated with the Century Mine in Queensland and the Kodiak
Project in Alabama. Movements in balances for the separate areas are as follows:
Century Mine
Balance at 1 July
Provision for mine site restoration on acquisition of subsidiaries
Increase in provision
Impact of change in discount rate
Interest unwind
Balance at 30 June
Kodiak Project
Balance at 1 July
Exchange differences
Balance at 30 June
116,528,037
-
-
74,266,969
9,221,790
-
94,764,306
21,763,731
-
-
200,016,796
116,528,037
769,648
42,353
812,001
739,531
30,117
769,648
The impact of change in discount rate of $74,266,969 relates to a change in estimate of the discount rate as at 30 June
2019, with the corresponding amount recognised in Property plant and equipment in accordance with the Group’s
accounting policy.
The provision for the mine site restoration on acquisition of subsidiaries of $94,764,306 in the prior year was measured
at its fair value. The increase in provision of $21,763,731 in the prior year includes interest unwind for the prior year.
All rehabilitation will be carried out at the end of life of the Group’s mining operations.
The provision for mine site restoration constitutes a critical accounting judgement – refer to Note 2 to the Financial
Statements.
50
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 17. Issued capital
2019
$
2018
$
505,732,048 (2018: 503,972,048) fully paid ordinary shares
312,052,963 311,618,023
Holders of ordinary shares have the right to receive dividends as declared and in the event of winding up the parent
entity, to participate in the proceeds from the sale of all surplus assets in proportion to the number of shares held and
the amount paid up.
At shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder
has one vote on a show of hands.
Issue of ordinary shares and other equity instruments during the year
Opening balance
503,972,048
311,618,023
189,852,519
32,259,433
2019
Number of
shares
2018
Number of
shares
$
$
Funds received to 30 June 2017 for shares issued in
July 2017
Shares issued 13 July 2017 @ $0.15 from public offer
Shares issued 13 July 2017 at $0.20 on conversion of
convertible notes
Shares issued 13 November 2017 at $1.20 under
sophisticated investor placement
Shares issued 13 November 2017 at $0.25 on
conversion of share options
Shares issued 13 November 2017 at agreed value of
$0.15 in payment for services
Shares issued 14 November 2017 at $1.20 under
cleansing prospectus
Shares issued 27 February 2018 at market value of
$1.39 for non-controlling interest acquisition
Shares issued 12 April 2018 at $0.25 on conversion of
share options
Shares issued 8 May 2018 at $1.15 under
sophisticated investor placement
Transfer of equity component of convertible notes to
accumulated losses on conversion of notes
Shares issued 21 February 2019 at $0.25 on
conversion of share options
Shares issued 22 May 2019 at $0.25 on conversion of
share options
Costs arising from issue of shares
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,260,000
315,000
500,000
125,000
-
(5,060)
-
(5,089,834)
34,333,333
5,150,000
71,538,898
14,307,780
44,058,703
52,870,444
1,100,000
275,000
300,000
45,000
10
12
126,000,000
175,140,000
500,000
125,000
36,288,585
41,731,872
-
-
-
-
(404,548)
-
-
(4,792,136)
505,732,048
312,052,963
503,972,048
311,618,023
51
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Options over ordinary shares
As at 30 June 2019, there were 115,390,000 (2018: 114,900,000) unquoted options over ordinary shares in the
Company. The fair value of unquoted options granted for nil cash consideration during the financial year ended 30 June
2019 was $501,100 (2018: $43,952,470). 1,760,000 (2018: 1,600,000) unquoted employee options with an exercise
price of $0.25 (2018: $0.25) each were converted during the financial year as disclosed above.
As at 30 June 2019, there were no (2018: nil) quoted options over ordinary shares in the Company.
Each option entitled the holder to subscribe for one share upon exercise of each option. Further details of the total
options on issue by the Company are disclosed in Note 23.
Capital management
The Company’s debt and capital includes ordinary share capital, and financial liabilities, supported by financial assets.
There are no externally imposed capital requirements.
The Board effectively manages the Company’s capital by assessing the Company’s financial risks and adjusting its
capital structure in response to changes in these risks and in the market. These responses include the management of
debt levels and share issues. The Board frequently review budgets and budget variance analyses that include cash flow
projections and working capital projections, to ensure prudent management of capital budgeting requirements. There
has been no change in the strategy adopted by the Board to control the capital of the Group since the prior year.
Note 18. Reserves
Historically, the Group has recognised accounting adjustments for share-based payment transactions in a Share Based
Payments reserve. From 1 January 2018, a change in presentation was adopted to recognise adjustments in the
accumulated losses section of equity, rather than in the Share Based Payments reserve. Accordingly, the balance in
the Share Based Payments reserve was transferred to accumulated losses, a component of equity on 1 July 2017.
52
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 19. Parent entity
The following information has been extracted from the books and records of the parent entity and has been prepared in
accordance with Accounting Standards.
Statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Statement of profit or loss and comprehensive income
Total loss
Total comprehensive loss
2019
$
2018
$
1,225,141
40,422,137
46,111,855
262,719
41,647,278
46,374,574
1,176,041
-
1,176,041
304,249
-
304,249
40,471,237
46,070,325
312,406,511
-
(271,935,274)
311,971,571
-
(265,901,246)
40,471,237
46,070,325
(6,488,175)
(281,286,577)
(6,488,175)
(281,286,577)
The non-current assets of the Company mainly represent its receivable from its subsidiary, Century Mining Limited. The
receivable is unsecured with no fixed repayment terms. This receivable was deemed recoverable at 30 June 2019 based
on the expected positive cash flows of Century Mining Limited.
Guarantees
There are no guarantees entered into by the parent entity in the financial years ended 30 June 2019 and 30 June 2018
in relation to the debt of a subsidiary.
Contingent liabilities and Commitments
Refer to Note 27 for Contingent liabilities and Note 28 for Commitments.
53
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 20. Controlled entities
Information about principal subsidiaries
Set out below are the Group’s subsidiaries at 30 June 2019. The subsidiaries listed below have share capital consisting
solely of ordinary shares, which are held directly by the Group, and the proportions of ownership interests held equals
the voting rights held by the Group. Each subsidiary’s country of incorporation or registration is also its principal place
of business.
Name of Subsidiary
Principal place
of business
Ownership interest held by
the Group
Proportion of non-controlling
interests
Attila Resources US Pty Ltd
Australia
Attila Resources Holding US
Ltd
United States of
America
Attila Resources US LLC
Kodiak Mining Company LLC
United States of
America
United States of
America
Century Bull Pty Ltd
Century Mining Rehabilitation
Pty Ltd (CMRP)
Australia
Australia
Century Mining Limited (CML)
Australia
PCML SPC Pty Ltd (PCML)
Australia
SPC1 Pty Ltd
SPC2 Pty Ltd
Investment Co Pty Ltd
Australia
Australia
Australia
2019
100%
2018
100%
100%*
100%*
2019
2018
-
-
-
-
70%*
70%*
30%*
30%*
70%*
100%
100%
100%*
100%*
100%*
100%*
100%*
70%*
100%
100%
100%*
100%*
100%*
100%*
100%*
30%*
30%*
-
-
-
-
-
-
-
-
-
-
-
-
-
-
*Indirect Holdings. The 30 percent non-controlling interest in Attila Resources US LLC and Kodiak Mining Company LLC (Kodiak) has nil value since
acquisition.
Since acquisition on 13 July 2017, the Group now also own:
• 49 percent interest in Lawn Hill & Riversleigh Pastoral Holding Company Pty Ltd through a 49 percent shareholding
and 1 special share held by PCML. Pursuant to the Gulf Communities Agreement (GCA), CML and the Gulf
Aboriginal Development Company (GADC) established PCML as a special purpose vehicle to hold shares in Lawn
Hill and Riversleigh Pastoral Holding Company Pty Ltd (Pastoral Company), which holds leases for the adjacent
Lawn Hill and Riversleigh cattle stations. The GADC incorporated Waanyi SPC Pty Ltd to hold the other 51 percent
of shares in the Pastoral Company. No assets or liabilities of PCML or Pastoral Company are recognised as assets,
liabilities or equity interests by the Group.
• 1 Class C share in ABDT Pty Ltd, the trustee of the Aboriginal Development Benefits Trust (ADBT), which is a
charitable trust established pursuant to the GCA for the delivery of economic benefits to the Native Title Groups
and other Aboriginal peoples living in communities across the Lower Gulf Region.
54
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Summarised financial information of subsidiaries with material non-controlling interests
Set out below is the summarised financial information for each subsidiary that has non-controlling interests that are
material to the Group.
Summarised financial position before intra-group eliminations
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets/(liabilities)
2019
$
15,161
828,370
2018
$
179,837
778,873
(29,280,105)
(26,129,695)
(812,001)
(769,648)
(29,248,575)
(25,940,633)
Carrying amount of non-controlling interests
-
-
The non-current assets and non-current liabilities of Kodiak include a secured deposit of $828,370 (30 June 2018:
$778,873) that is security against a non-current reclamation liability of $722,919 (30 June 2018: $769,648). The nature
of this non-current reclamation liability restricts the Group’s ability to access the secured deposit for the purpose of
meeting other liabilities of the Group.
The current liabilities of Kodiak also include intra-group loan balances totaling $27,990,534 (30 June 2018:
$25,033,960). These intra-group loan balances are unsecured and at call, so consequently considered current.
Although the functional currency of Kodiak is United States dollars and the presentation currency of the Group is
Australian dollars, there are no foreign currency translation reserve movements recognised in other comprehensive
income of Kodiak as foreign currency translation reserve movements only arise on consolidation.
Summarised financial performance before intra-group eliminations
Revenue
Loss before income tax
Income tax expense
Post-tax loss
Other comprehensive income
Total comprehensive income
Profit/(loss) attributable to non-controlling interests
Distributions paid to non-controlling interests
Summarised cash flow information before intra-group eliminations
Net cash from/(used in) operating activities
Net cash from/(used in) investing activities
Net cash from/(used in) financing activities
2019
$
-
2018
$
-
(1,580,693)
(18,750,370)
-
(1,580,693)
-
(18,750,370)
-
-
(1,580,693)
(18,750,370)
-
-
2019
$
(856,725)
(520,400)
1,387,926
-
-
2018
$
(866,230)
(10,828)
901,678
Cash and cash equivalents at end of year
10,801
80,274
Kodiak’s net cash from financing activities for both 2019 and 2018 solely comprised movements in intra-group loan
account balances.
55
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 21. Significant related party transactions and balances
The Group’s main related entities are KMPs and Kingslane Pty Ltd (and its associated entities). KMPs are any people
having authority and responsibility for planning, controlling and directing the activities of the entity, directly or indirectly,
including any director (whether executive or otherwise). For further disclosures relating to KMPs see Note 22.
Kingslane Pty Ltd and associated entities (Kingslane) is a substantial shareholder in the Company and held 36,757,534
(2018: 42,177,536) ordinary shares in the Company at 30 June 2019. Entities controlled by Kingslane also hold a 10
percent (2018: 10 percent) non-controlling interest in the Kodiak Project and Kodiak Mining Company LLC through a
non-controlling shareholding in 70 percent owned Attila Resources US LLC.
In the previous financial year, Patrick Walta, Evan Cranston and a former KMP John Carr received ordinary shares and
share options pursuant to the Century Mining Rehabilitation Project, details of which are disclosed in Note 31.
Evan Cranston is a director of Konkera Corporate. Konkera Corporate received $120,000 (2018: $120,000) during the
financial year for administrative, bookkeeping and accounting services. The company secretarial fees of $36,000
(2018: $35,694) for Oonagh Malone and Director fees of $180,000 (2018: $172,032) for Evan Cranston were also
payable to Konkera Corporate. Bryn Hardcastle is a director of Bellanhouse which provided legal services totalling
$1,181,174 (2018: $1,067,814) during the financial year ended 30 June 2019.
A number of KMP, or their related parties, hold positions in other entities that may result in them having control or
significant influence over the financial or operating policies of those entities. Where the Group transacts with the KMP
and their related parties, the terms and conditions of these transactions are no more favourable than those available, or
which might reasonably be expected to be available, on similar transactions to non-KMP related entities on an arm’s
length basis.
Note 22. Interests of KMP
Refer to the remuneration report contained in the Directors’ Report for additional details of the remuneration paid or
payable to each member of the Group’s KMP for the financial year ended 30 June 2019.
The totals of remuneration paid to KMP of the Company and the Group during the financial year are as follows:
Short-Term
Benefits
Post Employment
Benefits
Termination
Payments
Share-Based
Payments
Total KMP
Compensation
$
$
454,147
1,549,987
2,186,655
3,153,437
$
2019 Total
1,063,923
2018 Total
945,907
Other KMP Transactions
$
31,917
20,875
$
-
-
For details of other transactions with KMP, refer to Note 21 Related party transactions and balances.
56
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 23. Share based payments
Options
The following table summarises the share options outstanding as at 30 June 2019:
2019
2018
Weighted
average fair
value
$
Number of
options
114,900,000
2,250,000
(1,760,000)
-
0.424
0.223
(0.378)
-
Weighted
average
remaining
contractual
term
(Year)
Weighted
average fair
value
$
Number of
options
Weighted
average
remaining
contractual
term
(Year)
-
-
-
- 116,500,000
0.038
-
-
(1,600,000)
-
(0.424)
-
-
-
-
-
-
115,390,000
0.269
- 114,900,000
0.386
Outstanding at the
beginning of the year
Granted during the
year
Exercised during the
year
Forfeited
Outstanding at end
of the year
Details of options recognised during the year are as follows:
2019
Number of
options
Exercise
price
$
Issue
date
Expiry
date
Value of
options
$
Amount
recognised
in period
$
$1.20 3 year director options
1,000,000
1.20 28/03/2019 28/03/2022
249,300
$1.50 3 year director options
1,000,000
1.50 28/03/2019 28/03/2022
201,600
95c 3 year employee options
250,000
0.95 06/06/2019 11/06/2022
50,200
249,300
201,600
3,247
Total
2,250,000
501,100
454,147
57
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
2018
Number of
options
Exercise
price
$
Issue
date
Expiry
date
Value of
options
$
Amount
recognised
in period
$
Century Project
Consideration options
30,000,000
0.25 13/07/2017 13/07/2022
2,471,700
2,471,700
25c 3 year director options
6,000,000
0.25 13/07/2017 13/07/2020
50c 3 year director options
6,000,000
0.50 13/07/2017 13/07/2020
25c 4 year director options
7,500,000
0.25 13/07/2017 13/07/2021
50c 4 year director options
7,500,000
0.50 13/07/2017 13/07/2021
75c 4 year director options
7,500,000
0.75 13/07/2017 13/07/2021
$1 4 year director options
7,500,000
1.00 13/07/2017 13/07/2021
25c 3 year employee options
8,500,000
0.25 13/07/2017 13/07/2020
October employee options
February employee options
500,000
500,000
1.60
2/10/2017
2/10/2020
1.99 27/02/2018 27/02/2021
358,980
218,700
540,525
373,425
285,150
229,425
511,275
330,130
376,660
358,980
218,700
540,525
373,425
285,150
229,425
511,275
330,130
376,660
Tranche 1 non-controlling
interest options
Tranche 2 non-controlling
interest options
Tranche 3 non-controlling
interest options
Tranche 4 non-controlling
interest options
22,000,000
0.25 27/02/2018 27/02/2021
26,004,000
26,004,000
6,000,000
0.50 27/02/2018 27/02/2021
6,180,000
6,180,000
3,500,000
0.75 27/02/2018 27/02/2021
3,199,000
3,199,000
3,500,000
1.00 27/02/2018 27/02/2021
2,873,500
2,873,500
Total
116,500,000
43,952,470
43,952,470
Amounts recognised for director, KMP and employee options are summarised as follows:
Share based payment expense
- Directors and KMP
- Others
Total share based payment expense
Century Project consideration options recognised as loss on acquisition
Non-controlling interest options recognised in accumulated losses (Note 31)
Total
2019
$
2018
$
454,147
-
2,186,655
1,037,615
454,147
3,224,270
-
-
2,471,700
38,256,500
454,147
43,952,470
58
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
These options have been valued using the Black-Scholes model with the following additional parameters.
2019
Tranche
Number
of
options
$1.20 3 year director options
1,000,000
$1.50 3 year director options
1,000,000
Share
price
grant
date
$
0.81
0.81
95c 3 year employee options
250,000
0.65
Total
2,250,000
Term
years
Volatility
%
Interest
rate
%
Grant
date
Value
per
option
$
Value of
options
$
3
3
3
62
62
62
1.375 28/03/2019
0.24930
249,300
1.375 28/03/2019
0.20160
201,600
1.055 06/06/2019
0.20080
50,200
501,100
2018
Tranche
Number of
options
Share
price
grant
date
$
Term
years
Volatility
%
Interest
rate
%
Value
per
option
$
Grant
date
Value of
options
$
Century Project
Consideration options
30,000,000
0.15
25c 3 year director
options
50c 3 year director
options
25c 4 year director
options
50c 4 year director
options
75c 4 year director
options
$1 4 year director
options
25c 3 year employee
options
October employee
options
February employee
options
Tranche 1 non-
controlling interest
options
Tranche 2 non-
controlling interest
options
Tranche 3 non-
controlling interest
options
Tranche 4 non-
controlling interest
options
6,000,000
0.15
6,000,000
0.15
7,500,000
0.15
7,500,000
0.15
7,500,000
0.15
7,500,000
0.15
8,500,000
0.15
500,000
1.115
500,000
1.115
22,000,000
1.39
6,000,000
1.39
3,500,000
1.39
3,500,000
1.39
5
3
3
4
4
4
4
3
3
4
3
3
3
3
80
80
80
80
80
80
80
80
1.9 13/07/2017 0.08239
2,471,700
1.65 31/05/2017 0.05983
358,980
1.65 31/05/2017 0.03645
218,700
1.69 31/05/2017 0.07207
540,525
1.69 31/05/2017 0.04979
373,425
1.69 31/05/2017 0.03802
285,150
1.69 31/05/2017 0.03059
229,425
1.94 13/07/2017 0.06015
511,275
107
2.15
2/10/2017 0.66026
330,130
107
2.24
2/10/2017 0.75332
376,660
76.63
2.06 27/02/2018 1.18230 26,004,000
76.63
2.06 27/02/2018
1.03006
6,180,000
76.63
2.06 27/02/2018
0.91353
3,199,000
76.63
2.06 27/02/2018
0.82065
2,873,500
Total
116,500,000
43,952,470
59
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
The following options were issued to Directors as part of their remuneration in the previous financial year. Although
these options have been escrowed for two years from the issue date, they vested at the issue date for financial
accounting purposes.
Number
of
Options
Exercise
Price
$
Term
years
Total
value
$
2,000,000
2,000,000
7,500,000
7,500,000
7,500,000
7,500,000
2,500,000
2,500,000
1,500,000
1,500,000
42,000,000
0.25
0.50
0.25
0.50
0.75
1.00
0.25
0.50
0.25
0.50
3
3
4
4
4
4
3
3
3
3
Value
for
Director
$
192,560
119,660
72,900
540,525
373,425
285,150
229,425
1,428,525
149,575
91,125
89,745
54,675
240,700
144,420
2,006,205
2,006,205
Director
Current
Bryn Hardcastle
Former
Tolga Kumova
Ernest Thomas Eadie
Oonagh Malone
Total
Performance rights
There were no performance rights on issue or recognised in 2019 or 2018.
Note 24. Earnings per share
The following reflects the income used in the basic and diluted earnings per share computations:
2019
2018
Basic / dilutive earnings per share
Basic loss per share - cents
Weighted average number of ordinary shares outstanding during the year used in
calculation of basic earnings per share – number of ordinary shares
Net loss used in the calculation of basic earnings per share - $
(4.26)
(32.32)
504,470,788
368,312,425
(21,502,018)
(119,021,291)
Share options are not considered dilutive as the conversion of options will result in a decrease in the net loss per share.
The weighted average number of shares has no dilutive effect to the diluted earnings per share.
Due to the Group being in a loss position, it is considered anti-dilutive and therefore earnings per share are not diluted.
60
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 25. Cash-flow information
Reconciliation of cashflow from operations with loss after income tax
Loss after income tax
Non-cashflows in loss
Depreciation and amortisation
Interest unwind on rehabilitation provision
Share based payments
Loss on acquisition classified as exploration expenditure
Impairment loss
Gain on disposal of property, plant and equipment
Equity settled expenses
Reversal of interest expense on convertible notes
Other
Changes in assets and liabilities net of effects of purchase of
subsidiaries
Increase in other receivables
Increase in inventories
Increase in other assets
Increase/(decrease) in trade and other payables
Increase in employee benefits provision
Increase in provisions
2019
$
2018
$
(21,502,018)
(123,310,765)
261,604
9,221,790
454,147
-
-
-
-
-
104,494
25,701
-
3,224,270
70,092,066
18,153,406
(1,410,837)
45,000
(4,292,334)
(269,344)
(5,787,565)
(7,903,782)
(6,617,667)
23,161,559
590,506
-
(99,011)
-
(3,630,963)
(1,493,829)
678,548
21,763,731
Net cash used in operating activities
(8,016,932)
(20,524,361)
Acquisition of subsidiaries
Refer to Note 31 regarding the acquisition of the Century Project in previous financial year.
Non cash financing and investing activities
The Group did not have any non-cash financing and investing activities during the financial year ended 30 June 2019
except as disclosed in Note 17 related to the issue of ordinary shares, and as disclosed in Note 31 for the acquisition of
the Century Project for the financial year ended 30 June 2018.
61
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 26. Remuneration of auditors
Remuneration of the auditors for:
- Audit or review of the financial report
- Taxation services
- Other non-audit services
Remuneration of previous auditors for:
- Audit or review of the financial report
Note 27. Contingent liabilities
Bank guarantees
2019
$
95,000
40,000
5,000
2018
$
-
-
-
-
140,000
106,663
106,663
The Group has provided certain bank guarantees to third parties, primarily associated with the terms of mining financial
assurance, exploration licences, provision of electricity and office leases, in respect of which the relevant entity is obliged
to indemnify the bank if the guarantee is called upon. At the end of the financial year, no claims have been made under
any of these guarantees. The amount of some of these guarantees may vary from time to time depending upon the
requirements of the recipient. These guarantees are backed by deposits which amounted to $13,166,698 as at 30 June
2019 (30 June 2018: $3,167,752).
Deeds of indemnity
The Group has granted indemnities under Deeds of Indemnity with current and former Executive and Non-executive
Directors and officers. Each Deed of Indemnity indemnifies the relevant director or officer to the fullest extent permitted
by law for liabilities incurred while acting as an officer of the Group, its related bodies corporate and any associated
entity, where such an office is or was held at the request of the Company. Under these indemnities, the Company meets
the legal costs incurred by Company officers in responding to investigations by regulators and may advance funds to
meet defence costs in litigation, to the extent permitted by the Corporations Act 2001.
Other
The Company and its controlled entities are defendants from time to time in other legal proceedings or disputes, arising
from the conduct of their business. The Group does not consider that the outcome of any of these proceedings or
disputes is likely to have a material effect on the Company’s or the Group’s financial position.
Note 28. Commitments
Century Mine
As part of the acquisition of Century Project, the Group has an agreement with MMG for MMG to acquire and stand
behind a Financial Assurance Bond of $193,700,000 for the benefit of Century to meet its financial assurance obligations
with the Queensland Government for a period of ten years through to 31 December 2026.
Once commercial production has been declared for accounting purposes at the Century Project, the Group must allocate
an amount equal to 40 percent of its earnings before interest, tax, depreciation and amortisation (EBITDA), which will
go towards replacing the Financial Assurance Bond. In the event that the total balance of the Financial Assurance Bond
has not been replaced by 31 December 2026, the Group will be required to source alternative financing for the
outstanding amount. Both the Company and subsidiaries holding the Century Project have indemnified MMG against
any default on amounts owing to MMG under these agreements.
The Group has an obligation to pay MMG a fee of 1.35 percent per annum payable quarterly in advance on the face
value of the Financial Assurance Bond until the expiry of the Financial Assurance Bond agreement on 31 December
2026.
62
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Community commitment
Community commitment relate to the Group’s contractual obligations under the Gulf Communities Agreement with the
local communities. In the past, this obligation was met by MMG under various support agreements. The estimated
commitments in respect of community expenses which is not recognised as a liability as at 30 June 2019 is
approximately $28,000,000. These payments are made throughout the life of the project.
Take or pay contracts
The Group has entered into take or pay contracts for supply of electricity and gas for its Century Mine. The aggregate
future take or pay commitment as at 30 June 2019 was $75,000,000 (30 June 2018: $130,000,000).
Operating leases
Upon the adoption of AASB 16 from 1 July 2019, the Group will no longer have any operating lease commitments. Under
the existing AASB 117, at the reporting date, the Group had outstanding commitments for future minimum lease
payments (undiscounted) under non- cancellable operating leases, which fall due as follows
Up to 1 year
In the second to fifth years inclusive
More than five years
Total
2019
$
11,851,931
33,857,329
5,170,570
50,879,830
The aggregate minimum lease payments under non-cancellable operating leases at 30 June 2018 was approximately
$1,000,000.
Capital commitments
The Group did not have any significant commitments for capital expenditure contracted for at the reporting date but not
recognised as liabilities.
Note 29. Financial instruments
Financial risk management
The Group’s principal financial instruments are cash, receivables, deposits held as security guarantees, and payables.
Overview
The Group has exposure to the following financial risks from their use of financial instruments:
-
-
-
-
liquidity risk
credit risk
interest rate risk; and
foreign exchange risk
This note presents information about the Group’s exposure to each of the above risks. There was no material exposure
to price risk or market risk in respect of financial instruments in 2019 as the Group had no significant exposures to equity
markets or derivatives.
Financial risk management policies
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
Risk management policies are established by the Board of Directors 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.
63
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Financial assets
Cash and cash equivalents
Trade and other receivables (excluding GST receivable)
Current financial assets
Non-current financial assets
Total
Financial liabilities
Trade and other payables (excluding deferred proceeds) - Note 13
Borrowings
Financial liability at fair value through profit or loss
Total
2019
$
2018
$
34,282,769
7,324,588
5,750,000
13,166,698
46,249,135
341,907
17,250,000
3,167,752
60,524,055
67,008,794
46,175,379
54,100,350
7,137,249
23,013,820
-
-
107,412,978
23,013,820
Non-current other financial assets of $13,166,698 (2018: $3,167,752) consist of security deposits of $9,505,148 (2018:
$2,398,104) plus an environmental bond of $828,370 (2018: $769,648).
Liquidity risk and liquidity risk management
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to
ensure that it will have sufficient cash to meet its liabilities when they are due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group’s reputation.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of
funding through an adequate amount of credit facilities or other fund raising initiatives.
The Board frequently reviews budget variance analyses that include working capital projections to monitor working
capital requirements and optimise cash utilisation.
The following are the contractual maturities of financial liabilities:
Carrying
amount
Under 6
Months 6 – 12 Months
1 - 2 years
2 – 5
years
30 June 2019
Trade and other payables
Borrowings
Financial liability at fair
value through profit or loss
46,175,379
54,100,350
46,175,379
-
-
14,076,069
-
19,613,790
-
20,410,491
7,137,249
-
1,233,331
3,525,073
2,378,845
Total
107,412,978
46,175,379
15,309,400
23,138,863
22,789,336
30 June 2018
Trade and other payables
23,013,820
23,013,820
Total
23,013,820
23,013,820
-
-
-
-
-
-
64
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
The table details changes in Group’s liabilities arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be
classified in the Group’s consolidated cash flow statement as cash flows from financing activities.
1 July
2018
$
Financing
cash
inflows
$
Financing
cash
outflows
$
Foreign
exchange
adjustment
$
Fair
value
adjustment
$
30 June
2019
$
Varde loan
Financial liability at fair
value
NAB loan
MMG funding support
-
60,397,015
-
840,584
(7,137,249)
54,100,350
-
-
17,250,000
-
11,438,424
(11,500,000)
-
(11,438,424)
-
-
-
-
7,137,249
-
-
7,137,249
-
5,750,000
Total
17,250,000
60,335,439
(11,438,424)
840,584
-
66,987,599
Credit risk
Credit risk refers to the risk that counterparties will default on its contractual obligations resulting in financial loss to the
Group. The Group has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient
collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults.
Banks and financial institutions are chosen only if they are independently rated parties with a minimum rating of ‘A’.
The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties
having similar characteristics other than MMG.
The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents
the Group’s maximum exposure to credit risk without taking account of the value of any collateral or other security
obtained.
65
2019
Financial assets
Cash and cash equivalents
Trade and other
receivables
Current financial assets
Non-current financial
assets
Financial liabilities
Trade and other payables
Borrowings
Financial liability at fair
value through profit or loss
Net financial liabilities
2018
Financial assets
Cash and cash equivalents
Trade and other
receivables
Current financial assets
Non-current financial
assets
Financial liabilities
Trade and other payables
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Interest rate risk
Interest rate risk is managed with a mixture of fixed and floating rate debt. The Group’s exposure to interest rate risk
and the effective weighted average interest rate for each class of financial assets and financial liabilities is set out in the
following table:
Weighted
average
interest
rate
%
Fixed
interest
maturing in
1 year or
less
$
Fixed
interest
maturing in
over 1 year
$
Floating
interest
rate
$
Non-
interest
bearing
$
Total
$
0.43
26,050,221
-
-
2.15
0.06
8.07
-
-
-
-
-
-
-
-
-
-
12,337,128
-
-
-
-
8,232,548
34,282,769
7,324,588
5,750,000
7,324,588
5,750,000
829,570
13,166,698
(285,490)
(14,076,069)
-
(40,024,281
)
(45,889,889
)
-
(46,175,379
)
(54,100,350
)
-
-
(7,137,249)
(7,137,249)
26,050,221
(2,024,431)
(40,024,281
)
(30,890,432
)
(46,888,923
)
1.25
16,310,520
29,500,000
-
-
1.5
-
-
-
-
-
2,388,879
0.42
-
(968,409)
-
-
-
-
-
-
438,615
46,249,135
341,907
17,250,000
341,907
17,250,000
778,873
3,167,752
(22,045,411
)
(23,013,820
)
(3,236,016)
43,994,974
Net financial assets
16,310,520
30,920,470
In respect of the above interest rate risk exposure at the balance date, an increase or decrease in interest rates by 1
percent would have decreased the post-tax loss and increased equity by $159,986 (2018: increased in both post-tax
loss and equity by $472,310).
66
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
The following tables summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate
risk:
Carrying
Amount
$
-1%
+1%
Profit
Equity
Profit
Equity
$
$
$
$
34,282,769
7,324,588
5,750,000
13,166,698
(46,175,379)
(54,100,350)
(260,502)
-
-
(123,371)
2,855
541,004
(260,502)
-
-
(123,371)
2,855
541,004
260,502
-
-
123,371
(2,855)
(541,004)
260,502
-
-
123,371
(2,855)
(541,004)
(7,137,249)
-
-
-
-
159,986
159,986
(159,986)
(159,986)
46,249,135
341,907
17,250,000
3,167,752
(23,013,820)
(458,105)
-
-
(23,889)
9,684
(458,105)
-
-
(23,889)
9,684
(472,310)
(472,310)
458,105
-
-
23,889
(9,684)
472,310
458,105
-
-
23,889
(9,684)
472,310
2019
Cash and cash equivalents
Trade and other receivables
Current financial assets
Non-current financial assets
Trade and other payables
Borrowings
Financial liability at fair value
through profit or loss
Total increase/(decrease)
2018
Cash and cash equivalents
Trade and other receivables
Current financial assets
Non-current financial assets
Trade and other payables
Total increase/(decrease)
Foreign exchange risk
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating
due to movement in foreign exchange rates of currencies in which the Group holds financial instruments which are other
than the AUD functional currency of the Group.
With instruments being held by overseas operations, fluctuations in the US dollar may impact on the Group’s financial
results unless those exposures are appropriately hedged. The Group does not currently have any foreign currency
hedging facility in place.
The following table shows the foreign currency risk on the financial assets and liabilities of the Group’s operations
denominated in currencies other than the presentation currency.
2019
Net Financial Assets/(Liabilities) in $AUD
Consolidated Group
USD
(53,491,765)
Total
(53,491,765)
2018
Net Financial Assets/(Liabilities) in $AUD
Consolidated Group
USD
(106,223)
67
Total
(106,223)
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
In respect of the above USD foreign currency risk exposure in existence at the balance sheet date a sensitivity of
-10 percent lower and 10 percent higher has been applied in the US dollar against the Australia dollar. With all other
variables held constant, post tax loss and equity would have been affected as follows:
AUD $4,862,888 gain; AUD $5,493,529 loss (2018: AUD $10,622 gain; AUD $10,622 loss).
Financial risk management objectives
The Group's and parent entity's activities expose them to a variety of financial risks: market risk (including price risk and
interest rate risk), credit risk and liquidity risk. The Group's and parent entity's overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance
of the Group. The Group and parent entity use different methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest rate and other price risks and ageing analysis for
credit risk in respect of investment portfolios to determine market risk.
Risk management is carried out by the Board of Directors. These policies include identification and analysis of the risk
exposure of the Group and parent entity and appropriate procedures, controls and risk limits.
Fair value estimation
The net fair value of cash and non-interest bearing monetary assets and financial liabilities of the Group approximates
their carrying amount.
Note 30. Impairment
Pre
tax
2019
$
Tax
impact
2019
$
Post
tax
2019
$
Pre
tax
2018
$
Tax
impact
2018
$
Post
tax
2018
$
Property, plant and equipment
Deferred exploration and development
expenditure
Total impairment
-
-
-
-
-
-
-
-
-
14,368,184
3,785,222
18,153,406
-
-
-
14,368,184
3,785,222
18,153,406
No impairment is recognised in the current financial year.
In the previous financial year, the Group recognised an impairment loss of $18,153,406 for its Kodiak Project comprising
property plant and equipment impairment of $14,368,184 and deferred exploration and development impairment of
$3,785,222. This resulted in the carrying value of Kodiak Project reduced to nil as at 30 June 2018.
The Group performs an impairment assessment when facts and circumstances suggest that the carrying amount of an
exploration and evaluation asset may exceed its recoverable amount. The impairment assessment at 30 June 2018 was
triggered by the fact that the Kodiak Project is currently on care and maintenance.
Impairment is recognised when the accounting carrying amount exceeds the recoverable amount. Any variation in the
key assumptions used to determine the value would result in a change of the assessed value.
68
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 31. Acquisition of Century Project
During the year ended 30 June 2019, there were no business combination transactions. During 2017, the Company
executed a binding earn-in agreement to earn 100 percent of Century Mine Rehabilitation Project Pty Ltd (CMRP), a
wholly owned subsidiary of Century Bull Pty Ltd (Century Bull), via:
-
Initial 70 percent of CMRP (transferred up front) in consideration for:
the issue of 30,000,000 unquoted options in New Century Resources Limited with an exercise price of
$0.25 each and expiring five years from the date of issue to Century Bull or its nominees;
a 2 percent net smelter royalty from operations; and
a commitment to sole fund project expenditure of $10,000,000 for first three years.
- Following expenditure of the $10,000,000, an option to acquire the remaining 30 percent based on an agreed
New Century Resources Limited enterprise value formula, being 30 percent of the fully diluted enterprise value of
New Century Resources Limited, paid in the form of New Century Resources Limited shares which received
requisite shareholder approval.
Completion of this acquisition was finalised on 13 July 2017. Evan Cranston and Patrick Walta, both Directors of
New Century Resources Limited, were shareholders in Century Bull. John Carr, a former KMP of the Group was also a
shareholder in Century Bull.
CMRP owns 100 percent of the Century Mine and associated infrastructure in accordance with the agreements with
MMG for the acquisition of the relevant MMG Australian subsidiaries which hold the Century assets. The Century assets
include:
- All Mining Leases and the Exploration Permit Minerals associated with the Century Project;
- All site infrastructure including processing plant, mining camp and airport;
- The slurry pipeline, Karumba Port Facility and M.V. Wunma Transhipment Vessel; and
- A 49 percent interest in the Lawn Hill & Riversleigh Pastoral Holding Company.
As part of the transaction with MMG, CMRP also received:
-
-
$34,500,000 in progressive cash payments to assist with ongoing rehabilitation and care and maintenance activities
for the site;
$12,100,000 in cash, administered by an independent trust, to assist with remaining obligations contained in the
Gulf Communities Agreement and agreed community projects for the benefit of Lower Gulf communities; and
- An agreement with MMG for MMG to procure and stand behind the existing provision of bank guarantees of
$193,731,600 for the benefit of Century to meet its financial assurance obligation with the Queensland Government
for a period of ten years through to 31 December 2026, which is to be progressively replaced via profits from
operations.
On 13 July 2017, the Group issued 30,000,000 unquoted share options (Consideration Options) exercisable at
$0.25 each and expiring on 13 July 2022 in partial consideration for the Century Project. The Consideration Options
were valued at a total of $2,471,700. The acquisition has been accounted for as an acquisition of subsidiaries with
associated assets and liabilities, not as an acquisition of a business combination. It is not considered a business
combination because relevant processes were not acquired as part of the acquisition.
John Carr and Patrick Walta each received 7,000,000 of the 30,000,000 share options as purchase consideration for
the initial 70 percent interest in Century Mining Rehabilitation Project Pty Ltd. These share options had been valued at
$0.08239 per share option as shown in Note 23.
69
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Details of the purchase consideration and the net deficit acquired are as follows:
Purchase consideration paid by New Century Resources Limited
Consideration options
Total purchase consideration
The fair value of assets and liabilities recognised as a result of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables and prepayments
MMG funding support payments receivable
Property, plant and equipment
Trade and other payables
Employee provisions
Provision for rehabilitation
Net deficit acquired at fair value
13 July 2017
$
2,471,700
2,471,700
4,732,628
1,421,018
20,494,857
1,800,000
(1,035,219)
(269,344)
(94,764,306)
(67,620,366)
Loss on acquisition classified as an exploration expenditure
(70,092,066)
Non-controlling interest acquisition on 27 February 2018
On 27 February 2018, following shareholder approval on 23 February 2018, the Company acquired the remaining
30 percent interest in the Century Project in consideration for 126,000,000 shares and 35,000,000 unquoted share
options (Non-controlling Interest Consideration Options). This interest was acquired through the acquisition of Century
Bull.
The shares were valued at $1.39 each, being the fair value on 27 February 2018 based on the closing share price on
the ASX, for a total value of $175,140,000. The Non-controlling Interest Consideration Options had a total value of
$38,256,500.
The total of $175,140,000 for issue of the shares along with the $4,289,474 balance of the non-controlling interest as at
the transaction date, totalling $179,429,474 was recognised directly in accumulated losses, a component of equity in
the previous financial year.
Vendors for Century Bull and the non-controlling interest included Directors Patrick Walta and Evan Cranston, along
with John Carr, a former KMP of the Group. Evan Cranston, Patrick Walta and John Carr each received 31,500,000
ordinary shares and a total of 8,750,000 share options as part of the purchase consideration for the remaining non-
controlling interest.
70
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
Note 32. Dividends
No dividend has been declared or paid by the Group during the year and the Directors do not at present recommend a
dividend. No dividends were declared or paid in the comparative year.
Note 33. Events occurring after reporting period
Subsequent to year end, in August 2019, the Company raised $42,500,000 (before transaction costs) via a placement
to institutional and sophisticated investors which was completed over two tranches. Tranche one completed in August
2019 and tranche two was approved by shareholders at an extraordinary general meeting of the Company and
completed in September 2019.
As disclosed in Note 14 to the Financial Statements, in February 2019, the Group secured a new financing facility with
Varde Partners Inc. This comprises a secured facility of US$42,900,000 which has been drawn down and an unsecured
facility of US$28,600,000 which was subject to conditions precedent before draw down. Prior to the end of September
2019, Varde advised that the availability of this unsecured facility has expired. Discussion in relation to a US$28,600,000
facility are continuing with Varde.
Robert McDonald was appointed as the Chairman of New Century Resources Limited on 17 July 2019. Tolga Kumova
resigned as a Director of New Century Resources Limited on 17 July 2019. Further details are set out above in the
Directors Report.
There have been no other events that have occurred subsequent to the reporting date which have significantly affected
or may significantly affect the Group’s operations or results in future years.
71
New Century Resources Limited and Controlled Entities - ABN 53 142 165 080
DIRECTORS' DECLARATION
The Directors of the Company declare that:
1.
the financial statements and notes, as set out on pages 23 to 71 are in accordance with the Corporations Act
2001 and:
a.
comply with Accounting Standards, which, as stated in accounting policy Note 1 to the financial
statements, constitutes explicit and unreserved compliance with International Financial Reporting
Standards (IFRS); and
b. give a true and fair view of the financial position as at 30 June 2019 and of the performance for the year
ended on that date of the Company and Group;
2.
in the Directors’ opinion there are reasonable grounds to believe that the Company and the Group will be
able to pay its debts as and when they become due and payable.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance
with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2019.
This declaration is made in accordance with a resolution of the Board of Directors.
Robert McDonald
Chairman
30 September 2019
72
Deloitte Touche Tohmatsu
ABN 74 490 121 060
550 Bourke Street
Melbourne VIC 3000
Australia
Tel: +61 3 9671 7000
www.deloitte.com.au
Independent Auditor’s Report to the members of
New Century Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of New Century Resources Limited (the “Company”) and
its subsidiaries (the “Group”) which comprises the consolidated statement of financial position
as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash
flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
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 confirm that the independence declaration required by the Corporations Act 2001, which has
been given to directors of the Company, would be in the same terms if given to directors as at
the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
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 for 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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
73
Key Audit Matter
How the scope of our audit responded
to the Key Audit Matter
Recognition and measurement of the
mine site restoration provision
Given the nature of its operations, the Group
incurs obligations to close, restore and
rehabilitate its sites. Closure and restoration
legislative
activities are governed by
requirements.
As disclosed in note 16, at 30 June 2019 the
Group has a Mine Site Restoration Provision of
the Group’s
$200.8 million relating
requirement to rehabilitate its development
and exploration areas.
to
Due to the calculation of the provision
requiring significant judgment in estimating
the future costs, the timing as to when the
future costs will be
the
determination of an appropriate rate to
discount the future costs to their net present
value, we have considered this provision to be
a key audit matter.
incurred and
Capitalisation of the development costs
of the Century Mine
The Century Mine is in the development
phase. During the year ended 30 June 2019,
the Group capitalised costs of $287.9 million,
and recognised proceeds from sales in the
development phase of $115.2 million against
Capital Work in Progress, which increased the
carrying value of Capital Work in Progress at
30 June 2019 to $230.5 million.
for
that
criteria
As disclosed in Note 2, management has
the
the
determined
assessment of when the Century Mine
achieves commercial production, being when
the Century Mine is available for use in the
manner intended by management, includes,
but is not limited to, completion of a
reasonable period of testing of the mine plant
and equipment, the ability to produce metal
in saleable form (within specifications) and
the ability to sustain ongoing production of
metal.
Our procedures included but were not limited
to:
Obtaining an understanding of the
controls
key
management has in place to estimate
the mine site restoration provision;
processes
and
Confirming the timing of closure and
restoration estimates are consistent
with the latest estimate of the life of
mine;
in
Assessing the competence and work
in-house mine
of management’s
identifying
closure specialists
against
rehabilitation
legislative
and
assessing their timing and likely cost.
their methodology
We evaluated
against industry practice and our
understanding of the business; and
activities
requirements
Assessing
site
the accuracy of
the
calculations used to determine the
mine
restoration provision
including the discount rate applied
and
the
the appropriateness of
current and non-current classification
of the provision.
We also assessed the appropriateness of the
related disclosures included in notes 1(x), 2
and 16 to the financial report.
Our procedures included but were not limited
to:
Obtaining an understanding of and
evaluating the Group’s processes and
controls
the
capitalisation of costs to Capital Work
in Progress;
relation
to
in
Evaluating and assessing that the
capitalised costs within Capital Work
the offsetting
in Progress and
proceeds
the
in
development phase received are in
the accounting
accordance with
Group’s
and
standards
capitalisation policy;
sales
from
the
Testing additions to Capital Work in
records,
to underlying
Progress
the
of
consideration
including
appropriateness of
the amounts
capitalised;
74
Key Audit Matter
Based on management’s analysis performed,
at 30 June 2019, the Century Mine does not
meet
the metal concentrate production
tonnes, grade and recovery targets, as set by
the Board for commercial levels of production.
the
financial significance of
Given
the
amounts capitalised, and the risk of incorrect
classification of costs where costs are
capitalised that are not directly attributable to
the development of the Century Mine or
project costs are incorrectly expensed, the
capitalisation of the development costs has
been identified as a key audit matter.
How the scope of our audit responded
to the Key Audit Matter
Testing the proceeds from sales in the
development phase to underlying
contracts; and
Assessing the judgements made and
the asset commissioning criteria used
by the Group for determining whether
commercial production has been
achieved through discussion with
management and assessment of
feasibility studies and Board reports.
We also assessed the appropriateness of the
related disclosures included in notes 2 and 11
to the financial report.
Other Information
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 2019, 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 ability of the
Group to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate
the Group to cease operations, or has no realistic alternative but to do so.
75
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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether
due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial
report. We are responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of
most significance in the audit of the financial report of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.
76
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 20 of the Directors’ Report
for the year ended 30 June 2019.
In our opinion, the Remuneration Report of New Century Resources Limited, for the year ended
30 June 2019, 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.
DELOITTE TOUCHE TOHMATSU
Suzana Vlahovic
Partner
Chartered Accountants
Melbourne, 30 September 2019
77
ASX Additional Information
Shareholder Information
The following information is based on share registry information processed up to 8 October
2019.
Distribution of Fully Paid Ordinary Shares
The number of holders, by size of holding, for fully paid ordinary shares in the Company is:
Spread of Holders
Number of Holders
Number of Shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
360
824
513
1,282
352
3,331
210,025
2,471,134
4,138,455
46,469,225
584,079,594
637,368,433
There are 546 holders of unmarketable parcels comprising a total of 478,246 ordinary shares.
Twenty Largest Holders of Shares in New Century Resources Ltd
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Shareholder
Citicorp Nominees Pty Limited
CS Fourth Nominees Pty Limited
JP Morgan Nominees Australia Pty Limited
Mr Patrick Christopher Andrew Walta
Konkera Pty Ltd
Mr John Carr
HSBC Custody Nominees (Australia) Limited
Buttonwood Nominees Pty Ltd
Pacreef Investments Pty Ltd
Kingslane Pty Ltd
Kitara Investments Pty Ltd
Kingslane Pty Ltd
Kingslane Pty Ltd
CS Third Nominees Pty Limited
15 Westyle Pty Ltd
16 Warbont Nominees Pty Ltd
17
18
19
20
Mr Michael Robert Pitt
Mr Terence Bernard Moylan
Mr Rodney John Smith
Dr Stuart Lloyd Phillips & Mrs Fiona Jane Phillips
Total
Number Held
63,433,756
60,445,209
37,029,869
32,088,455
31,545,455
31,500,000
31,200,927
25,474,213
24,475,631
17,155,000
16,666,666
10,914,150
7,598,356
7,270,384
6,614,820
6,577,900
6,300,000
5,680,000
5,200,000
4,370,000
431,540,791
% of Issued
Shares
9.95
9.48
5.81
5.03
4.95
4.94
4.90
4.00
3.84
2.69
2.61
1.71
1.19
1.14
1.04
1.03
0.99
0.89
0.82
0.69
67.71
There are 637,368,433 ordinary fully paid shares currently listed and trading on the Australian
Securities Exchange. There is no current on-market buy back taking place.
78
Voting Rights - Fully Paid Ordinary Shares
Every shareholder present in person or by proxy, attorney or representative has one vote on a
show of hands, and on a poll, one vote for each fully paid share.
Unquoted Equity Securities
Quantity
12,900,000
6,000,000
7,500,000
7,500,000
7,500,000
7,500,000
30,000,000
500,000
22,000,000
6,000,000
3,500,000
3,500,000
500,000
1,000,000
1,000,000
250,000
1,000,000
1,000,000
Class
Options exercisable at $0.25 each on or before 13 July 2020
Options exercisable at $0.50 each on or before 13 July 2020
Options exercisable at $0.25 each on or before 13 July 2021
Options exercisable at $0.50 each on or before 13 July 2021
Options exercisable at $0.75 each on or before 13 July 2021
Options exercisable at $1.00 each on or before 13 July 2021
Options exercisable at $0.25 each on or before 13 July 2022
Options exercisable at $1.60 each on or before 2 October 2020
Options exercisable at $0.25 each on or before 27 February 2021
Options exercisable at $0.50 each on or before 27 February 2021
Options exercisable at $0.75 each on or before 27 February 2021
Options exercisable at $1.00 each on or before 27 February 2021
Options exercisable at $1.99 each on or before 27 February 2021
Options exercisable at $1.20 each on or before 28 March 2022
Options exercisable at $1.50 each on or before 28 March 2022
Options exercisable at $0.95 each on or before 6 June 2022
Options exercisable at $0.56 each on or before 18 September 2022
Options exercisable at $0.70 each on or before 18 September 2022
79
Holders of Unquoted Securities Holding More than 20% of Each Class
Class
Options exercisable at $0.25 each on or
before 13 July 2021
Options exercisable at $0.50 each on or
before 13 July 2021
Options exercisable at $0.75 each on or
before 13 July 2021
Options exercisable at $1.00 each on or
before 13 July 2021
Options exercisable at $0.25 each on or
before 13 July 2022
Options exercisable at $0.25 each on or
before 13 July 2022
Options exercisable at $0.25 each on or
before 13 July 2022
Options exercisable at $1.60 each on or
before 2 October 2020
Options exercisable at $0.25 each on or
before 27 February 2021
Options exercisable at $0.50 each on or
before 27 February 2021
Options exercisable at $0.75 each on or
before 27 February 2021
Options exercisable at $1.00 each on or
before 27 February 2021
Options exercisable at $1.99 each on or
before 27 February 2021
Options exercisable at $1.20 each on or
before 28 March 2022
Options exercisable at $1.50 each on or
before 28 March 2022
Options exercisable at $0.95 each on or
before 6 June 2022
Options exercisable at $0.56 each on or
before 18 September 2022
Options exercisable at $0.70 each on or
before 18 September 2022
Holder
Kitara Investments Pty Ltd
Kitara Investments Pty Ltd
Kitara Investments Pty Ltd
Kitara Investments Pty Ltd
Mr John Carr
Longreach Capital Pty Ltd
Mr Patrick Walta
Mr William Wise
Mr John Carr
Konkera Pty Ltd
Mr Patrick Christopher Andrew Walta
Mr John Carr
Konkera Pty Ltd
Mr Patrick Christopher Andrew Walta
Mr John Carr
Konkera Pty Ltd
Mr Patrick Christopher Andrew Walta
Mr John Carr
Konkera Pty Ltd
Mr Patrick Christopher Andrew Walta
Mr William Wise
Number
7,500,000
7,500,000
7,500,000
7,500,000
7,000,000
7,000,000
7,000,000
500,000
5,500,000
5,500,000
5,500,000
1,500,000
1,500,000
1,500,000
875,000
875,000
875,000
875,000
875,000
875,000
500,000
Mr Nicholas Luigi Cernotta
1,000,000
Mr Nicholas Luigi Cernotta
1,000,000
Mr Mark Chamberlain
The Minera Group Pty Ltd
The Minera Group Pty Ltd
250,000
1,000,000
1,000,000
80
Schedule of Mining Tenements
Project
Location
Status
Interest
Century Zinc Mine
Queensland, Australia
ML 90058
ML 90045
EPM 10544
EPM 26722
EPM 26772
EPM 26812
EPM 26868
EPM 26873
EPM 26874
EPM 26778
EPM 26976
Mt Isa
Mt Isa
Mt Isa
Mt Isa
Mt Isa
Mt Isa
Mt Isa
Mt Isa
Mt Isa
Mt Isa
Mt Isa
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Application
Kodiak Coking Coal Project
Alabama, USA
Coke Seam, Gurnee Property
Shelby & Bibb Counties
Atkins Seam, Gurnee Property
Shelby & Bibb Counties
Gholson Seam, Gurnee Property
Shelby & Bibb Counties
Clark Seam, Gurnee Property
Shelby & Bibb Counties
Lease
Lease
Lease
Lease
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
70%
70%
70%
70%
Company Secretary
Ms Oonagh Malone
Registered Office
Level 4
360 Collins Street
Melbourne VIC 3000
Telephone: +61 3 9070 3300
Share Registry
Automic Registry Services
126 Phillip Street
Sydney NSW 2000
Telephone: 1300 992 916
81