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Seabridge GoldEASTERN GOLDFIELDS LIMITED
AND ITS CONTROLLED ENTITIES
(IN ADMINISTRATION AND SUBJECT TO DEED OF
COMPANY ARRANGEMENT)
ABN 69 100 038 266
ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2018
CORPORATE DIRECTORY AND CONTENTS
Director
Peter Mansell (Non-executive Director)
Administrators
Martin Jones and Andrew Smith
Ferrier Hodgson
Level 28, 108 St Georges Terrace
Perth WA 6000
Registered & Principal Office Address
Level 2, 220 St Georges Terrace
Perth WA 6000
Telephone: +61 8 6241 1866
Email: admin@easterngoldfields.com.au
Website: www.easterngoldfields.com.au
Share Registry
Computershare Investor Services Pty Ltd
Level 11, 172 St George’s Terrace
Perth WA 6000
Telephone: 1300 850 505
Facsimile: +61 8 9323 2033
Auditors
Ernst & Young
11 Mounts Bay Road
Perth WA 6000
Securities Exchange Listing
Listed on the Australian Securities Exchange under the
trading code EGS
1 DIRECTOR’S REPORT
The Director of Eastern Goldfields Limited (In Administration and subject to Deed of Company Arrangement) (“Eastern Goldfields”
or “Company”) presents his report on the results and state of affairs of the Group, being the Company and its controlled entities
for the financial year ended 30 June 2018.
DIRECTORS
The names of the Directors of Eastern Goldfields in office during the course of the financial year and up to the date of this report
are as follows. Directors were in office for the entire period unless otherwise stated:
Peter Mansell
Craig Readhead
Campbell Baird
Michael Fotios
Alan Still
Non-executive Director (appointed 22 June 2018)
Non-executive Director (appointed 27 March 2013 / resigned 22 February 2019)
Non-executive Director (appointed 15 May 2018 / resigned 22 February 2019)
Executive Director (appointed 17 September 2012 / resigned 28 August 2018)
Non-executive Director (appointed 31 March 2015 / resigned 28 August 2018)
INFORMATION ON DIRECTORS & COMPANY SECRETARY
Director
Qualifications, experience and special responsibilities
Peter Mansell
BCom, LLB, H. Dip. Tax, FAICD
Mr Mansell has extensive experience in the mining, corporate and energy sectors, both as an
advisor and independent Non-executive director of listed and unlisted companies. Mr Mansell
practised law for a number of years as a partner in corporate and resources law firms in South
Africa and Australia.
Energy Resources Australia Ltd
Other current ASX directorships:
Former ASX directorships in the last three years:
Tap Oil Ltd
Craig Readhead
BJuris, LLB
Mr Readhead is a lawyer with over 33 years’ experience specialising in the mining and resources
sector, including the implementation of large scale mining projects both in Australia and overseas.
Other current ASX directorships:
Beadell Resources Ltd
Redbank Copper Ltd
Western Areas Ltd
Former ASX directorships in the last three years:
General Mining Corporation Ltd
Campbell Baird
BEng, MAusIMM, AICD
Mr Baird has been involved in the mining industry for over 25 years. He has extensive
international experience developing projects in Finland, and leading multiple feasibility studies
across a range of commodities.
Nil
Other current ASX directorships:
Former ASX directorships in the last three years:
Artemis Resources Ltd
Indiana Resources Ltd
2 DIRECTOR’S REPORT
Michael Fotios
BSc (Hons), MAusIMM
Mr Fotios is a geologist with over 25 years’ extensive experience in exploration throughout
Australia for gold, base metals, tantalum, tin and nickel and taking projects from exploration to
feasibility.
Other current ASX directorships:
Horseshoe Metals Ltd
Redbank Copper Ltd
Former ASX directorships in the last three years:
Galaxy Resources Ltd
General Mining Corporation Ltd
Oklo Resources Ltd
Scorpion Minerals Ltd
Alan Still
AMIM
Mr Still is a metallurgist with over 14 years’ experience in steelmaking and a further 42 years’
mining experience in a variety of commodities including a detailed knowledge of a number of
African based rare metals projects.
Other current ASX directorships:
Horseshoe Metals Ltd
Former ASX directorships in the last three years:
General Mining Corporation Ltd
Scorpion Minerals Ltd
Company Secretary
Brendon Morton
(Resigned 21
November 2018)
CA, GIA
Mr Morton has significant experience in senior finance and company secretarial roles. He is a
Chartered Accountant and Chartered Company Secretary.
OPERATING AND FINANCIAL REVIEW
This review provides an overview of the Company’s operations, financial position, business strategies and prospects.
The review also provides contextual information, including the impact of key events that have occurred during the year and
material business risks faced by the business to allow shareholders to make an informed assessment of the results and
prospects of the Group.
1.
Operating Review
Core Business
Eastern Goldfields, via its subsidiaries, is the 100% owner of the Davyhurst Gold Project located 120 kilometres northwest of
Kalgoorlie, and the Mt Ida Gold Project located 200 kilometres northwest of Kalgoorlie. Processing infrastructure includes a
1.2Mtpa processing plant, two camps (Davyhurst Central and Mt Ida), mains power and operating bore fields.
The Group also holds a substantial tenement position that surrounds the existing infrastructure.
3 DIRECTOR’S REPORT
Principal Activities and Significant Changes in those Activities
The principal activity of the Group during the financial year was mineral exploration and evaluation, both open pit and underground
gold mining combined with processing activities at the Davyhurst Project. Care and maintenance of its historically producing gold
mine at the Mt Ida Gold Project remained ongoing.
The Davyhurst Project includes both open cut and underground mining operations, combined with a number of development
targets. Mining operations have commenced on open pit resources at Siberia (as identified within the above tenement interest
area diagram) and underground resources within the Davyhurst area. The Davyhurst area hosts some of the largest deposits
within the entire portfolio and has considerable potential for the discovery of new gold deposits, in addition to the extension of
existing resources.
Significant achievements for the financial year included:
First gold poured;
Underground mine at the Golden Eagle established and producing ore;
4 DIRECTOR’S REPORT
Continued drilling success at Callion;
Eastern Goldfields completes placement to raise $30.6 million;
Further $2,804,260 raised through entitlement issue;
Ore milled for the financial year of 340,000 tonnes at 1.4g/t for 15,232 ounces;
Resource definition drilling conducted over:
Callion deposit;
o
Riverina deposit;
o
Waihi deposit;
o
Golden Eagle deposit;
o
Exploration works conducted over:
o
o
o
o
Lady Irene and Yundaga deposits;
Bombay prospect;
Golden Wonder prospect;
Mystery prospect.
PROCESSING
The Davyhurst gold processing plant treated a total of 340,000 tonnes at 1.4g/t for 15,232 gold ounces.
The plant was negatively impacted by significant operational
downtime during the year, the causes of which included
extreme weather events, power failures, mechanical failures
and supply chain issues.
to improve plant availability, a third party
In an attempt
the processing plant maintenance
independent review of
status and processes was completed. The review identified a
number of business improvement projects that will be
undertaken during the coming financial year.
Improvements were seen in the plant performance during the fourth (June) quarter, with record through-put and gold production.
Processing statistics
Siberia Open Pit Mine
The Siberia mining centre is located 37 kilometres southeast of the Davyhurst Mill and has a current, recently upgraded Mineral
Resource estimate of 5.7Mt @ 3.1g/t Au for 577,000 ounces. The two main deposits, namely Sand King and Missouri, achieved
a mine-ready state as announced to ASX on 15 December 2016 and 3 January 2017 respectively. The project has a combined
open pit mining Reserve for the Missouri and Sand King deposits of 2,025,000t @ 2.3g/t Au for 150,000 ounces, as announced
to ASX on 14 February 2017. The Missouri and Sand King deposits have a combined mineral resource of 4,884,000 @ 3.2g/t Au
for 498,000 ounces.
Open pit mining operations continued during the year. Activities conducted or completed included:
Site establishment and civil works relating to mining operations at Siberia;
Internal haul roads and ROM pad construction/upgrades were completed;
Construction of the Siberia bypass haul road linking mining operations directly to the Ora Banda – Davyhurst road was
completed, significantly reducing ore haulage times and distances;
Stockpiling of low grade ore at Siberia;
Commencement of surface haulage operations;
Initial RC grade control drilling programme;
Mining of near surface laterite mineralisation east of the Sand King open pit mine;
Mining of bulk waste in the southern Sand King cut back.
5 DIRECTOR’S REPORT
Campaigned open pit mining operations were continued for the majority of the year, although temporary suspension of operations
occurred during the second (December) and third (March) quarters. Mining operations focused on ore extraction from within the
Sand King low grade stockpile, the newly identified near surface laterite mineralisation and the Stage 1 cut back of the southern
high wall in the Sand King open pit.
Total material movement for each is as follows:
Stage 1 Cut back
Low grade stockpile
Near surface laterites
Total
218,480
140,191
119,080
477,751
bcm
bcm
bcm
bcm
Ore production for the year totalled 128,248 tonnes at 1.16g/t for 4,792 ounces, comprising near surface laterites and low grade
tonnes extracted from the low-grade stockpile.
Open pit mining within the southern cut back of the Sand King pit progressed well, reaching approximately 15 metres below the
surface, with the current pit floor at the 400 level. The first significant in-pit grade control event was conducted from the 402.5 level
targeting the upper sections of the southern shoot array. A total of 85 holes were drilled form 2,200 metres during the year.
Additional grade control drilling was conducted over the near surface laterite ores situated east of the pit. This area has been
targeted as a source of ore earlier in the year, all of which sat outside of the larger open pit Reserve model. A total of 154 grade
control holes for 2,312 metres was completed on the near surface laterites.
On the low-grade stockpile, 199 holes for 3,851 metres were drilled to establish a 15 metre by 7.5 metre drill spacing. Mining
commenced on the low-grade stockpile in June with a successful grade reconciliation of the high-grade material between the drill,
stockpile and mill belt cuts.
The key characteristics of the proposed combined Missouri and Sand King mining project are tabled below.
Siberia Key Mining Characteristics
Waste Tonnes Moved
Ore Tonnes Processed
Stripping Ratio
Average Head Grade
Total Metal Production
7.7
2,025
10.3
2.3
Units
M bcm
tonnes ('000)
O:W
(g/t)
150.0
Oz ('000)
Golden Eagle Underground Mine
The Golden Eagle underground gold mine is located approximately 2.5 kilometres south of the Davyhurst Mill and 120
kilometres northwest of Kalgoorlie.
Development of
the Golden Eagle decline commenced with portal access works, vent portal establishment and decline
development being undertaken. Ore development was completed on the first three levels of the mine, namely the 395, 375 and
355 levels, and well established on the fourth (335). Production drilling and stoping was completed on the 395 level and continued
Feldspar Lode) maintaining
on the 375 and 355 levels. Each level delivered solid results, with the main ore lode (Quartz
consistency in grade and geometry.
‐
A total of 684 capital development metres was completed for the period with a further 307 metres of advance achieved in ore
development. Ore production for the period totalled 44,599 tonnes at 2.74g/t for 3,929 ounces.
An underground reverse circulation and diamond drilling programme targeting the Golden Eagle Central Shoot was completed
during the year. A total of 23 holes were drilled for 2,838 metres, including 17 underground RC holes for 1,984 metres and a
further six diamond holes for 854 metres. The programme successfully defined the down plunge continuation to the central shoot.
An update to the mineral resource estimate for Golden Eagle was underway at year end.
A short surface exploration diamond drilling programme was completed targeting the potential South Shoot approximately 100
vertical metres below the Central Shoot. Two holes were drilled for 707 metres. Both holes successfully intersected the targeted
6 structured. Although encouraging, further drilling is required to determine the potential of the South Shoot.
DIRECTOR’S REPORT
RESOURCE DEVELOPMENT
Resource development activities for the year primarily focussed on the Riverina, Callion and Waihi projects.
Riverina Project Area
The Riverina Project area is located approximately 48 kilometres north of the Davyhurst Mill and has a current Mineral Resource
estimate of 2.6Mt @ 2.5g/t Au for 207,000 ounces. It is one of several high priority drilling targets within the Company’s Davyhurst
Project and is seen as the next open pit mining focus following on from Siberia.
Resource definition drilling activities progressed during the year with the completion of 29 holes for a total of 4,200 metres,
comprising three RC holes for 275 metres and a further 26 holes for 3,925 metres. This drilling was designed to infill and upgrade
the existing Resource to JORC 2012 compliance. The Company is pursuing numerous opportunities to expand and extend the
known Resource into areas currently constrained by a lack of drilling coverage.
Drilling highlights returned during the year included:
11.2 m @ 22.4 g/t Au East lode system
9.0 m @ 5.45 g/t Au East lode system
1.0m @ 56.4 g/t Au East lode system
1.0m @ 41.2 g/t Au East lode system
26.0 m @ 1.30 g/t Au East lode system
19.0 m @ 2.41 g/t Au East lode system
20.0 m @ 1.37 g/t Au East lode system
27.0 m @ 1.00 g/t Au East lode system
20.0 m @ 1.00 g/t Au East lode system
18.0 m @ 1.94 g/t Au East lode system
18.0 m @ 1.47 g/t Au East lode system
4.0 m @ 7.54 g/t Au Main Lode
Refer to the Company’s ASX announcements dated 26 October 2017 and 17 April 2018 for further information.
The identification of consistent broad zones of gold mineralisation present the Company with an exciting opportunity to significantly
increase the tonnage potential of the Riverina Deposit.
Approximately 7,000 metres of RC drilling remains to complete the resource definition drilling programme. This drilling will continue
to evaluate the shallow near surface low stripping ratio gold mineralisation (East Lode System), before shifting to the higher-grade
underground mining potential (Main Lode).
Callion Project Area
The Callion Deposit is located 14 kilometres southwest of the Davyhurst processing plant and has a current Mineral Resource
estimate of 169Kt @ 2.6g/t Au for 14,000 ounces. The Company has an exploration target of 350
14g/t and considers
this a high priority resource definition target.
450Kt @ 10
‐
‐
Drilling at Callion has confirmed the presence of several high-grade areas within the historical underground mine, returning 6.0 m
@ 5.64 g/t Au (CNRC108) and 5.0 m @ 3.50 g/t Au (CNRC107). These are supported by other previously announced results
from within the historical mine area which include 2.0 m @ 17.25 g/t Au, 5.0 m @ 6.68 g/t Au and 4.0 m @ 3.22 g/t Au (refer
ASX announcement dated 31 August 2017). These results represent a critical step toward bringing this part of the Callion Mineral
Resource in line with JORC 2012 standard.
In the northern part of the deposit drilling was successful in intercepting near surface (open pitable) mineralisation, with 4.0 m @
4.54 g/t Au, 4.0 m @ 2.27 g/t, 2.0 m @ 1.73 g/t and 2.0 m @ 2.18 g/t all located within 20 metres from the base of the existing
pit and only 50 metres from surface.
Work relating to a resource estimation upgrade for the Callion deposit commenced during the year.
7 Waihi Complex
DIRECTOR’S REPORT
The Waihi Complex is located approximately three kilometres from the Davyhurst Mill and has been identified as an area
containing significant potential to provide high grade underground feed. The Waihi Complex consists of the historical Waihi and
Golden Pole Deposits, and extends south to include the Dexy, Lady Eileen and Lady Eileen South deposits. Both the Waihi and
Golden Pole deposits were initially mined from early 1890 to 1900 as high-grade underground mines to a maximum depth of 180
metres, targeting steeply dipping, north plunging shoots, producing approximately 95,500 ounces at an average grade of 27g/t
Au. In the late 1990s approximately 740,000 tonnes @ 2.40g/t Au was extracted via open pit methods at the Waihi Deposit, to a
maximum depth of 90 metres for an additional 56,000 ounces. The current mineral resource stands at 914,000 tonnes at 2.4g/t
Au for 71,000 ounces.
The Company has recovered all of the available historical mining records for the Golden Pole underground mine. The survey
plans and stoping records have been utilised in the reconstruction of the historical mine in three-dimensional space. This model
has been integral in providing direction to the current exploration effort.
A surface diamond drilling programme comprising nine diamond holes 2,290 metres was completed during the year. An updated
JORC 2012 Mineral Resource estimate for Waihi will be scheduled once the final results are returned from this drilling programme.
Mt Ida Project Area
The Mt Ida Project is located 126 kilometres north of the Company’s Davyhurst operations. Historical production of 547,000t @
17.2g/t Au for 302,000 ounces was derived through underground mining. The current Mineral Resource estimate stands at
318,000 tonnes at 13.8g/t Au for 141,000 ounces.
Project work continued on the Mt Ida trend, focussing on data validation and the development of geological models, as a precursor
to drilling planning and resource updates.
Siberia
in-situ mineralisation beneath the laterite
Additional drilling programmes were completed at Sand King, targeting potential
mineralisation at Sand King and at the Palmerston prospect, testing structural targets emanating to the north from the Sand King
open pit. In total, 19 RC holes were completed for 1,687 metres.
EXPLORATION
The exploration team continues to acquire, validate and examine base datasets for the region, including mapping, geophysical
and geochemical data. Priority RC and diamond drill programmes were planned for the Peachtree
Young Australia, Siberia
Consols and the Timber Flats areas, the latter containing the poorly drilled tested but historically rich Golden Wonder and Little
‐
‐
Wonder workings, interpreted to lie proximal to the Zuleika Shear, north of the Lights of Israel Complex.
During the year the exploration team continued to progress the regional strategy, outlined below:
Prioritise some 200+ prospects for drilling;
Prioritise early diamond drilling of prospects to identify mineralisation controls;
Acquire and compile detailed geophysical data;
Compile regional 1:25000 solid geology mapping;
Ongoing 1:5000 and 1:10000 geological project mapping for compilation;
Ongoing historic drilling and geochemical sampling data acquisition and validation;
Ongoing review of regolith and historical sampling efficacy;
Ongoing auger geochemistry acquisition;
Systematic pXRF and spectral data acquisition from all available archival material;
Establish regional end-of-hole (‘EOH’),
geochemistry;
Establish regional fresh rock spectral dataset for alteration analysis;
Complete structural and genetic model.
top-of-fresh-rock (‘TOFR’), and base of
transported cover multi
element
‐
8 During the year exploration continued to progress its regional strategy, and undertook diamond and RC drilling at a number of
prospects, including:
DIRECTOR’S REPORT
Lady Irene and Yunndaga deposits (Menzies EGS/IRC Joint Venture);
Bombay prospect at Mt Ida;
Golden Wonder prospect, east of Giles;
Mystery prospect, west of Lady Gladys.
The Company completed two diamond tail (‘RCD’) holes and one Reverse Circulation (‘RC’) hole at the Lady Irene prospect, nine
kilometres northwest of Menzies, three diamond tail holes at the historic Yunndaga Mine, 6.5 kilometres south of Menzies, and
two diamond tail holes at its Bombay prospect, 6.5 kilometres northwest of the Timoni Complex at its Mt Ida project as reported
to ASX in its Regional Exploration update on 14 June 2018. It has since completed two diamond holes at the Golden Wonder
prospect, 17.5 kilometres north-norwest of the Davyhurst mill, and one RC and one diamond tail hole at the Mystery prospect, 27
kilometres northwest of the Davyhurst Mill. Further planned drilling is currently in abeyance.
Samples from RC drilling have been submitted for assay, along with composite samples from precollars to the diamond tails. The
Company’s geologists are currently orienting, logging and processing core from these prospects ahead of sample selection for
analysis.
2.
Operating Financial Results
The Company’s financial performance and result is attributable to its ongoing exploration, evaluation, development and corporate
administration costs. The result includes $26.5 million in impairment charges against the mine properties asset.
The Group’s net loss after tax for the year was $85,922,000 (2017: $18,103,000).
Financial Position
At 30 June 2018 total Group assets were $46,032,000 (2017: $66,911,000) and net liabilities were $35,977,000 (2017: net assets
of $11,115,000).
Liquidity and Capital Resources
The table below sets out summary information about the Group’s earnings and movements in shareholder wealth for the five
years to 30 June 2018:
Performance Measures
FY 2018
FY 2017
FY 2016
FY 2015
FY 2014
$
$
$
$
$
Net assets/(liabilities)
(35,977,000)
11,115,000
4,164,000
(40,897,000)
(33,270,000)
Current assets
Cash
3,544,000
8,030,000
16,669,000
5,000
44,000
15,401,000
261,000
52,000
988,000
216,000
Contributed equity
287,168,000
251,282,000
228,343,000
168,040,000
167,965,000
Accumulated losses
(336,255,000)
(250,333,000)
(232,231,000)
(214,229,000)
(206,528,000)
Net loss before tax
(85,922,000)
(18,103,000)
(18,011,000)
(7,702,000)
(6,469,00)
Share price at start of year
Share price at end of year
Loss per share
0.37
0.11
(0.14)
0.43
0.37
(0.03)
0.15
0.43
(0.08)
0.15
0.15
(0.08)
0.15
0.15
(0.07)
9 DIRECTOR’S REPORT
3.
Key Developments
Significant Changes in the State of Affairs
1.
On 31 January 2018, the Company announced that it:
had signed a subscription agreement with Hawke’s Point Holdings I Ltd (‘Hawke’s Point’) for a subscription of $17.5
million as part of a wide placement to raise approximately $30.6 million (‘Capital Raising’);
had completed the first tranche of the Capital Raising to raise $13.1 million by issuing 65,350,000 fully paid ordinary
shares to institutional investors at an issue price of $0.20 per share (with one free attaching option for each ordinary
share acquired); and
proposes to raise a further $7.2 million by way of a non-renounceable rights issue to existing shareholders (‘Rights
Issue’);
The Company announced that it had completed the second tranche of the Capital Raising on 5 February 2018 by raising
$17.5 million by issuing 87,500,000 fully paid ordinary shares to Hawke’s Point Holdings L.P. at an issue price of $0.20
per share (with one free attaching option for each ordinary share acquired);
On 21 February 2018 the Company closed its non-renounceable rights issue. The Company subsequently announced it
had issued 14,021,303 fully paid ordinary shares at $0.20 per share (with one free attaching option for each ordinary share
acquired) in connection with the Right Issue, raising $2,804,260 before costs;
On 15 May 2018, the Group appointed Mr Campbell Baird as Non-executive Director of the Company;
On 22 June 2018, the Group appointed Mr Peter Mansell as Non-executive Director of the Company.
2.
3.
4.
5.
SIGNIFICANT EVENTS AFTER REPORTING DATE
The following events have occurred since the end of the financial year and up to the date of this financial report:
1.
2.
3.
4.
5.
6.
On 8 August 2018 the Group entered into a repayment plan with the ATO in relation to a debt of $421,689. The final
payment of $321,689 required under the plan was made on 31 August 2018;
On 13 August 2018 the Group announced a settlement had been agreed with GR Engineering Services Ltd (‘GR’) involving
the payment of cash to GR and the issue of shares to the total value of $8.25 million inclusive of GST, payable in three
tranches. On 4 November 2018 the Group reached agreement with GR that the final instalment would be paid on or before
30 November 2018. The payment was not made and, as a result, the settlement was cancelled/withdrawn;
On 16 August 2018 a Deed of Settlement was executed between the Group and Eureka Mine Constructions Pty Ltd, which
required payment to Eureka of $150,000 by 20 September 2018. This payment was not made;
On 28 August 2018 Hawke’s Point completed the acquisition of the outstanding debt owed by the Group to Investec,
pursuant to the Investec Debt Facility, as well as the assignment of the Syndicated Facility Agreement (and associated
security documents), from Investec;
On 3 September 2018 all mining and processing activities were suspended to mitigate spending, whilst a proposed
recapitalisation plan was developed;
On 27 September 2018 the Group raised an additional $8.75 million from the issue of convertible notes to each of Hawke’s
Point, Donald Smith Value Fund LP, National Nominees Ltd (as nominee for Perennial Value Microcap Opportunities Fund)
and Wyllie Group Pty Ltd;
10 DIRECTOR’S REPORT
7.
8.
9.
On 28 September 2018 the Group announced a $75 million recapitalisation plan. This plan included a restructured board
and leadership team, and a $5 million entitlements issue to existing shareholders. The $75 million recapitalisation plan
included:
a.
b.
c.
d.
$8.75 million interim funding via the issue of secured convertible loan notes;
$36.8 million placement to sophisticated, professional and institutional investors;
Up to $17.5 million of in-kind services to be performed by Adaman Resources Pty Ltd; and
Conversion of the Syndicated Facility of $9.6 million and certain trade creditors of $2.5 million;
On 27 November 2018 the Group announced that the $75 million recapitalisation plan would no longer proceed;
On 29 November 2018 the Group resolved to appoint Martin Jones and Andrew Smith of Ferrier Hodgson as Joint and
Several Administrators of the Group;
10.
On 18 January 2019 the Administrators received a Deed of Company Arrangement (‘DOCA’) proposal from Hawke’s Point.
The proposed DOCA included the following key features:
Key Elements
DOCA Proposal
Purpose
Ensure that creditors of the Companies receive a better return than in liquidation.
Facilitate a capital raising for the Companies of not less than $22 million, expected to comprise
a rights issue, issue of convertible notes and placement of shares.
Minimise holding costs and reducing the further administrators’ fees that may be incurred.
Ensure that, at the conclusion of the DOCA process, the Group is sufficiently funded to pursue
a resource development and mine planning programme.
Creditors Trust
Contributions
Capital raising
A creditors’ trust will be established for the purposes of the DOCA, named ‘Eastern Goldfields
Creditors’ Trust.’
The funds available for distribution to creditors of the Companies out of the Creditors’ Trust will be
an amount of up to $7.3 million out of proceeds of the Capital Raising.
Not less than $22 million shall be raised to:
satisfy the obligations of the Companies under the DOCA; and
provide the Companies with adequate working capital to advance its business post administration.
It is intended that this amount shall be raised via any or all of the following (each carried out by
EGS):
a one-for-one rights issue priced at one cent per share, which will be underwritten as to at least
25% (inclusive of its entitlement amount) by Hawke’s Point or such lesser percentage as required
to ensure it is fully underwritten (Rights Issue);
an offering of:
o secured convertible notes (‘New Convertible Notes’), to be converted at one cent per share;
and
o ordinary shares (‘Placement Shares’) to be issued via a placement. Capital Raising
participants subscribing for Placement Shares, if any, shall escrow their subscription funds
contemporaneous with the funding of the New Convertible Notes; and
such other equity and/or debt capital raising as the directors of EGS, the Deed Administrators
and Hawke’s Point agree, having regard to the objects of the DOCA.
Finalisation of the Capital Raising will be subject to the Deed Administrators and the directors of EGS
being satisfied that the events subsequent to completion of the DOCA will occur, including the passing
of certain shareholder approvals forEGS.
11 DIRECTOR’S REPORT
Key Elements
DOCA Proposal
Position of
Creditors
Creditors’ claims are to be dealt with in the following categories of creditor:
1) Employee entitlements;
2) Debts due to government and statutory authorities;
3) Supporting Creditors;
4) PPSR Secured Creditors;
5) Non-Supporting Creditors – Pool A;
6) Non-Supporting Creditors – Pool B.
To the extent that there are any arrears or other amounts due and payable to employees with respect
to wages and other employee entitlements, the debts due to employees will be paid in full. To the
extent that any government or statutory authority or regulator is a creditor, and the non-payment of
the debt to that authority or regulator puts at risk any of the assets of the Companies, such debts will
be paid in full.
Supporting Creditors and PPSR Secured Creditors will not participate as creditors/beneficiaries
under the Creditors’ Trust. Supporting Creditors are defined as the creditors specified at 1 to 8 below
with whom the Companies seek to have an ongoing commercial relationship and to whom offers of
securities can be made without disclosure under Chapter 6D of the Act and who agree to accept:
a cash payment out of the Capital Raising equal to 22c/$ of 60% of each Supporting Creditor’s
agreed claim amount; and
to convert the remaining 40% of their respective agreed claims to equity in EGS fully paid
ordinary shares at the rate of one cent per share,
in full satisfaction of the respective debts owed to them by the Companies.
(a) Aggreko Generator Rentals Pty Ltd – to the extent of $674,795.70;
(b) GR Engineering Services Ltd – to the extent of $11,554,660.81;
(c) Pit N Portal Mining Services Pty Ltd – to the extent of $14,482,318.50;
(d) Ralmana Pty Ltd t/as R J Vincent & Co – to the extent of $3,461,378.19;
(e) Squire Patton Boggs (AU) – to the extent of $1,930,300.29;
(f) Gilbert & Tobin – to the extent of $1,190,932.45;
(g) Seismic Drilling Pty Ltd – to the extent of $854,060.36; and
(h) Junile Nominees Pty Ltd t/as Red Dirt Personnel Group – to the extent of $679,152.
(together the Supporting Creditors).
Supporting Creditors will be paid out of the Capital Raising proceeds and by the Deed Administrators
at conclusion of the DOCA.
PPSR secured creditors will be serviced in the ordinary way and will not participate under the
Creditor’s Trust.
Dividends and
order of
distribution
Other unsecured creditors will be split into Pool A and Pool B, subject to whether the claimed debt
is greater or less than $50,000. Pool A creditors are those that are owed less than $50,000. They
will be paid up to 100 cents in the dollar. Pool B creditors are those that are owed greater than
$50,000. They will be paid $50,000 plus a pro-rata share of the funds available in the Creditors trust,
which is estimated at $3.9 million.
12 Key Elements
DOCA Proposal
DIRECTOR’S REPORT
Secured Creditor
Hawke’s Point will agree to:
take up its entitlements under the Rights Issue in full and underwrite the Rights Issue to the extent
of at least 25% (inclusive of its entitlement) or such lesser percentage as required to ensure the
Rights Issue is fully underwritten;
subscribe to at least 25% of the New Convertible Notes or such lesser percentage as required
to ensure that the offering of New Convertible Notes is fully subscribed; and
subsequent to the Rights Issue closing, convert its secured debt (being both its loan facility and
its holding of the convertible notes issued 28 September 2018 (‘Existing Convertible Notes’) into
equity at the rate of one cent per share, subject to the approval of the shareholders of EGS at
the shareholders meeting to be held after completion of the DOCA, with such conversion to occur
simultaneously with the conversion of the New Convertible Notes and the issue of the Placement
Shares.
Wyllie Group Pty Ltd, National Nominees Ltd (as nominee for Perennial Value Microcap
Opportunities Fund) and Donald Smith Value Fund LP (the Other Secured Creditors), who agree to
convert the secured debt under their existing convertible notes into equity at the rate of one cent per
share, subject to the approval of the EGS shareholders at the shareholders meeting to be held after
completion of the DOCA, with such conversion to occur simultaneously with the conversion of the
new convertible notes and the issue of the Placement Shares.
Termination
In the event that completion does not occur by 30 April 2019 or such other date as agreed between
Hawke’s Point and the Deed Administrators, the Deed Administrators may:
Cause the Companies to be placed into liquidation; and/or
Convene a meeting of creditors to vary or terminate the DOCA.
Key Conditions
and Subsequent
Events
The DOCA will complete on the date which is two business days after satisfaction of thelast of the
following Conditions Precedent:
(a) That the creditors of the Companies approve the DOCA;
(b) The creation of the Creditors’ Trust;
(c) The entry into any requisite new contracts or amendments to existing contracts, in each case to
be negotiated in good faith, between Supporting Creditors (or any of their respective associated
entities) and the Companies (or an associated entity) in respect of their ongoing commercial
relationship on terms reasonably acceptable to both parties;
(d) The appointment of the interim managing director; and
(e) The receipt by the Companies of no less than:
a. $22 million from the Capital Raising (other than the funds that are to be received in respect
of the issue of Placement Shares, which shall be held in escrow pending shareholder
approval); and
b. $19 million (of that sum of $22 million) to be raised from the New Convertible Notes and Rights
Issue;
(f) The Conditions Precedent:
a. at (a) above can be waived by Hawke’s Point (ie: if entry into the DOCA is not approved by
all of the Companies);
b. at (e)(b) can be waived by agreement between Hawke’s Point and the Administrators if they
are satisfied that sufficient funds are available to the Companies to enable completion to
occur;
c. are otherwise for the benefit of Hawke’s Point and the Administrators and may only be waived
by mutual agreement between Hawke’s Point and the Administrators in writing;
a.
b.
c.
(g) Upon completion occurring:
the DOCA will terminate;
the control of the Companies will return to the New Directors;
the sum of $7.3 million out of the Capital Raising will be paid to the Trustee of the Creditors’
Trust;
the sums due to Supporting Creditors will be paid out of the Capital Raising by the Deed
Administrators; and
d.
13 Key Elements
DOCA Proposal
DIRECTOR’S REPORT
e.
the claims of all creditors except for the PPSR Secured Creditors against the Companies will
be released, and creditors other than Supporting Creditors will only be entitled to participate
as beneficiaries under the Creditors’ Trust;
(h) Events subsequent to completion:
a. The shareholders of EGS will approve (to the extent required):
(1) the conversion of debt to equity by the Supporting Creditors;
(2) the conversion of the Proponent’s Secured Debt and the secured debt of the Other
Secured Creditors;
(3) the conversion of the New Convertible Notes;
(4) the issuance of the Placement Shares;
(5) the effectuation of the Directors LEIP (if necessary);
b. The Notice of Meeting seeking the shareholder approvals above will include an independent
expert’s report stating whether, in the expert’s opinion, the conversion of Hawke’s Point’s
Secured Debt to equity is fair and reasonable to shareholders;
c. The Companies will change their name to a new name to be agreed by the directors to whom
control is being returned at completion;
11.
12.
On 1 February 2019, at the second meeting of creditors of the Group, it was resolved that the DOCA proposal received on
18 January 2019 from Hawkes Point I Limited, be executed;
Settlement deeds have been executed in relation to critical tenements subject to plaints. It is intended plaint applications
on non-critical tenements will be defended by the Group.
Apart from the above, no other matters have arisen since the end of the financial year that impact or are likely to impact the results
of the Group in subsequent financial periods.
DIVIDENDS
No amounts were paid or declared by way of dividend since the end of the previous financial year. The Director does not
recommend the payment of a dividend in respect of the current financial year.
Director’s Interests in the shares and options of Eastern Goldfields
As at the date of this report, the direct and indirect interests of the Director and his related parties in the Company’s shares and
options were:
Director
Fully paid shares
Unlisted options
Peter Mansell
-
-
14 DIRECTOR’S REPORT
SHARES UNDER OPTION
Unissued ordinary shares of the Company under option at the date of this report are as follows:
Date options granted
Number of unissued ordinary
shares under option
Exercise price of
options
Expiry date of the
options
Various (i)
Various (i)
31 January 2018
31 January 2018
2 February 2018
2 February 2018
Various (ii)
Various (ii)
9,700,000
12,325,000
32,675,000
32,675,000
7,642,500
1,000,000
57,822,944
57,822,944
$0.189
$0.189
$0.25
$0.275
$0.26
$0.465
$0.25
$0.275
8 March 2020
8 March 2020 (subject
to vesting conditions)
31 January 2023
31 January 2023
2 February 2021
2 February 2021
2 February 2023
2 February 2023
(i)
(ii)
Consists of options provided to employees, directors and as consideration for tenements acquired. The issue dates of
these options were 30 December 2015, 4 April 2016 and 3 May 2016;
Consists of options issued to Hawke’s Point, as participants under the rights issue (including pursuant to underwriting
arrangements). The issue dates of these options were 9 February 2018, 27 February 2018 and 14 March 2018.
The following ordinary shares of the Company were issued during or since the end of the financial year as a result of the exercise
of an option:
Date issued
Number of ordinary shares issued
Amount paid per share
14 July 2017
14 July 2017
6 April 2018
6 April 2018
21 May 2018
21 May 2018
25 September 2018
25 September 2018
324,030
250,000
12,950,000
2,135,851
250
250
5
7
Nil (i)
$0.168
$0.168
Nil (i)
$0.275
$0.25
$0.275
$0.25
(i)
Exercised utilising the cashless exercise facility outlined within the Employee Share Option Plan.
MEETINGS OF DIRECTORS
The number of meetings of the Board of Directors held during the year and the number of meetings attended by each Director
was as follows:
Number held whilst in office
Number attended
Michael Fotios
Craig Readhead
Alan Still
Campbell Baird
Peter Mansell
3
3
3
3
1
3
3
2
3
1
15 REMUNERATION REPORT (AUDITED)
DIRECTOR’S REPORT
This Remuneration Report outlines the Director and executive remuneration arrangements of the Group in accordance with the
requirements of the Corporations Act 2001 and its Regulations. This report forms part of the Director’s Report and has been
audited in accordance with Section 300A of the Corporations Act 2001.
For the purposes of this report, Key Management Personnel are defined as those persons having authority and responsibility for
planning, directing and controlling the major activities of the Group, directly or indirectly, including any Director (whether executive
or otherwise) of the parent company. Unless otherwise indicated, all Key Management Personnel held their position throughout
the financial year and up to the date of this report.
Directors
Peter Mansell
Craig Readhead
Campbell Baird
Michael Fotios
Alan Still
Non-executive Director (appointed 22 June 2018)
Non-executive Director (appointed 27 March 2013 / resigned 22 February 2019)
Non-executive Director (appointed 15 May 2018 / resigned 22 February 2019)
Executive Director (appointed 17 September 2012 / resigned 28 August 2018)
Non-executive Director (appointed 31 March 2015 / resigned 28 August 2018)
Principles used to determine the nature and amount of remuneration
Directors and executives’ remuneration
Overall remuneration policies are determined by the Board of Directors and are adapted to reflect competitive market and business
conditions. Within this framework, the board considers remuneration policies and practices generally, and determines specific
remuneration packages and other terms of employment for executive Directors and senior management. Executives may be
provided with longer-term incentives through participation in option schemes, which serve to align the interests of the executives
with those of shareholders. Executive remuneration and other terms of employment are reviewed annually by the Board and are
not linked to the performance of the Company.
Non-executive Directors’ remuneration
The Company’s Policy is to remunerate Non-executive Directors (‘NEDs’) at market rates (for comparable companies) for time
commitment and responsibilities. Fees for Non-executive Directors are not linked to the performance of the Company, however
to align Directors’ interests with those of shareholders, Directors are encouraged to hold shares in the Company. The amount of
aggregate remuneration sought to be approved by shareholders and the fee structure is reviewed annually against fees paid to
NEDs of comparable companies.
Payments to Non-executive Directors reflect the demands that are made on, and the responsibilities of the NEDs. Non-executive
Directors’ fees and payments are reviewed annually by the Board. The Company’s constitution and the ASX listing rules specify
that the NED fee pool shall be determined from time to time at a general meeting of shareholders.
In accordance with current corporate governance practices, the structure for the remuneration of Non-executive Directors and
senior executives is separate and distinct. Shareholders approve the maximum aggregate remuneration for Non-executive
Directors, with the current approved limit being $500,000. The Board determines the actual payments to Directors.
Share-based payments
2018
During the 30 June 2018 financial year, no options were issued to Directors or Key Management Personnel under the Company’s
Employee Option Plan.
2017
During the 30 June 2017 financial year, no options were issued to Directors or Key Management Personnel under the Company’s
Employee Option Plan.
Remuneration Strategy
The Company has yet to adopt any remuneration strategy and will review this strategy at the appropriate time.
16 Details of remuneration
DIRECTOR’S REPORT
The following table discloses details of the nature and amount of each element of the emoluments of each Director of Eastern
Goldfields and each of the officers receiving the highest emoluments for the year ended 30 June 2018.
30 June 2018
Primary (Short-term)
Name
Executives & Directors
Michael Fotios (Executive)1
Alan Still2
Craig Readhead3
Campbell Baird4
Peter Mansell
Total
Restated
30 June 2017
Name
Executives & Directors
Michael Fotios (Executive)1
Alan Still2
Craig Readhead3
Salary &
Directors’
fees
$
65,000
43,434
43,434
8,585
1,644
162,097
Salary &
Directors’
fees
$
60,000
40,000
40,000
Non-
monetary
benefits
$
Other fees5
$
356,250
-
160,600
-
-
516,850
Primary (Short-term)
Non-
monetary
benefits
$
Other fees5
$
241,500
-
153,000
Total
140,000
394,500
Post-
employment
Superannuation
Total
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
421,250
43,434
204,034
8,585
1,644
678,947
Post-
employment
Superannuation
Total
$
$
-
-
-
-
301,500
40,000
193,000
534,500
1
2
3
4
5
6
Michael Fotios resigned on 28 August 2018
Alan Still resigned on 28 August 2018
Craig Readhead resigned on 22 February 2019
Campbell Baird resigned on 22 February 2019
Other fees represent consulting fees paid to the Directors for services provided to the Group
2017 remuneration table above has been restated to include the other fees paid to Directors to be consistent with the current year disclosures. These amounts
were previously disclosed in the related party disclosures which have been updated to exclude the consulting fees included in the above table.
There were no proportions of any elements of Key Management Personnel remuneration that related to the Company’s
performance.
Option holdings of Key Management Personnel (consolidated)
30 June 2018
Balance at
1 July 2017
On the
exercise of
options
Directors
Michael Fotios
Alan Still
Craig Readhead
Campbell Baird
Peter Mansell
Total
7,500,000
3,600,000
-
-
-
11,100,000
-
(1,800,000)
-
-
-
(1,800,000)
Options
issued
during the
year (a)
23,500,000
-
-
-
-
23,500,000
Balance at
30 June 2018
Award date
Vesting date
31,000,000
1,800,000
-
-
-
32,800,000
1/02/2018
-
-
-
-
1/02/2018
-
-
-
-
(a) Free attaching options issued as part of the entitlement issue and share placement undertaken by the group during the year.
17 DIRECTOR’S REPORT
There were no options granted to Key Management Personnel during the years ended 30 June 2018 and 30 June 2017 as
part of their remuneration package. There were also no options issued to Key Management Personnel that lapsed during the
years ended 30 June 2018 and 30 June 2017. All options on issue have fully vested and are exercisable.
Shareholdings of Key Management Personnel (consolidated)
30 June 2018
Directors
Michael Fotios1
Alan Still
Craig Readhead2
Campbell Baird
Peter Mansell
Total
Balance at
1 July 2017
On the
exercise of options Net change other1
Balance at
30 June 2018
194,068,723
-
9,775,134
-
-
203,843,857
-
1,800,000
-
-
-
1,800,000
38,227,661
-
750,000
-
-
38,977,661
232,296,384
1,800,000
10,525,134
-
-
244,621,518
1.Shares acquired as part the Company’s share placement and entitlement issue
30 June 2017
Directors
Michael Fotios1
Alan Still
Craig Readhead2
Total
Balance at
1 July 2016
184,261,060
-
1,653,332
185,914,392
On the
exercise of
options
Net change other
Balance at
30 June 2017
-
-
3,600,000
3,600,000
9,807,663
-
4,521,802
14,329,465
194,068,723
-
9,775,134
203,843,857
1 Includes shareholdings by Michael Fotios and entities he controlled (Michael Fotios Family A/C, Investmet Limited, Delta Resource Management Pty Ltd,
Whitestone Minerals Limited)
2 Includes shareholdings and on market share purchases by Craig Readhead and entities he controlled (Hengolo Pty Ltd as trustee for CL Readhead Family Trust).
There were no alterations to the terms and conditions of options granted as remuneration since their grant date. There were no
forfeitures during the year.
Loans to Key Management Personnel
There were no loans to Key Management Personnel during the financial year (2017: Nil).
Other transactions with Directors
The following transactions occurred during the year between the Group and Directors or their director-related entities. These
amounts are not included in the Remuneration table in the preceding pages:
Delta Resources Management Pty Ltd, a company in which Michael Fotios is a substantial shareholder and director, provided
technical and administrative support to the Company to the value of $980,000 inclusive of GST (30 June 2017: $330,500). A
total of $1,048,000 remains due and payable as at 30 June 2018 (30 June 2017: $93,000);
Whitestone Minerals Pty Ltd, a company which is 100% owned by Investmet Ltd, a company in which Michael Fotios is a
substantial shareholder and director, provided consulting services to the Company to the value of $2,704,000 inclusive of
GST (30 June 2017: $12,021,000). $168,400 remains due and payable as at 30 June 2018 (30 June 2017: $2,671,000).
$2,200,000 worth of services received were settled by way of shares issued as approved at a general meeting of shareholders
held on 4 January 2018;
18 DIRECTOR’S REPORT
Horseshoe Metals Limited, a company in which Michael Fotios is a substantial shareholder and director, received no
consulting and administrative support from the Company (30 June 2017: $75,000). A total of $75,000 remains due and
receivable by the Group as at 30 June 2018 (30 June 2017: $75,000). A loan of $36,000 is receivable (30 June 2017: Nil),
however has been fully provided for. Interest has not been charged on the outstanding amounts;
Scorpion Minerals Limited (formerly Pegasus Metals Limited), a company in which Michael Fotios is a substantial shareholder,
received no consulting and administrative support from the Company (30 June 2017: $25,000). $4,000 remains due and
receivable by the Group as at 30 June 2018 (2017: $25,000) which have been fully provided for in the financial statements.
Interest has not been charged on the outstanding amount;
Redbank Copper Limited, a company in which Michael Fotios is a substantial shareholder and director, received no consulting
and administrative support from the Company (30 June 2017: $35,000). $35,000 remains due and receivable by the Group
as at 30 June 2018 (30 June 2017: $35,000) and has been fully provided for (30 June 2017: $102,000). Interest has not been
charged on the outstanding amount;
Crixus Pty Limited, a company in which Michael Fotios is a substantial shareholder and director, converted 5,000,000 options
valued at $840,000 (30 June 2017: Nil) which remains due and receivable by the Group as at 30 June 2018. A provision for
doubtful debts has been included in these financial statements for the outstanding balance of $840,000;
Apollo Corporation (WA) Pty Ltd, a related party company to Michael Fotios, converted 2,500,000 options valued at $420,000
(30 June 2017: Nil) which remains due and receivable by the Group as at 30 June 2018. A provision for doubtful debts has
been included in these financial statements for the outstanding balance of $420,000;
Allan Still converted 1,800,000 options valued at $302,400 (30 June 2017: Nil) which remains due and receivable by the
Group as at 30 June 2018. A provision for doubtful debts has been included in these financial statements for the outstanding
balance of $302,400;
During the year the Group drew down on a loan with Investmet Limited (‘Investmet’), a company in which Michael Fotios is a
substantial shareholder and director. The interest rate applicable to the loan was 4.5% to 30 January 2018 and 19% thereafter.
A total of $14,315,000 was drawn down on the loan, interest of $955,000 was incurred and repayments of $4,678,000 were
made during the year (refer to Note 15 for further details). At 30 June 2018 the outstanding loan balance is $10,592,000 (30
June 2017: $Nil). Investmet also provided consulting services to the Group to the value of $372,000 inclusive of GST (30
June 2017: $17,000). $17,000 remains due and payable by the Company as at 30 June 2018 (30 June 2017: $15,000).
Interest is not charged on the consulting services;
During the year, the Group drew down on a loan with the Michael Fotios Family Trust. The interest rate applicable to the loan
was 4.5% up to 30 January 2018 and 19% thereafter. A total of $828,000 was drawn down on the loan, interest of $77,000
was incurred and repayments of $56,000 were made during the year (refer to Note 15 for further details). At 30 June 2018
the outstanding loan balance was $849,000.
Terms and conditions of transactions with Director-related entities:
Outstanding balances at 30 June 2018 are unsecured and settlement occurs in cash unless agreed otherwise. There have been
no guarantees provided or received for any related party receivables or payables. An impairment assessment is undertaken each
financial year through examining the financial position of the related party and the market in which the related party operates.
19 Service agreements
DIRECTOR’S REPORT
The terms of employment for executive Directors and specified executives were formalised in service agreements during the year
ended 30 June 2018. The principal terms of the executive service agreements existing at reporting date are set out below:
Michael Fotios
The Group and Michael Fotios entered into an executive services agreement on 20 October 2016 for his role as Executive
Chairman which commenced on 14 September 2012. The principal terms of this agreement are as follows:
(a) a base fee of $60,000 per annum for acting as Executive Chairman; and
(b) Termination is upon written resignation being presented to the Group or if Mr Fotios is not re-elected by shareholders as and
when required by the Corporations Act and the ASX listing rules.
The terms of employment for executive Directors and specified executives were updated in service agreements on 13 August
2018. The principal terms of the executive service agreements existing at reporting date are set out below:
(a) a base fee of $100,000 per annum for acting as Executive Chairman; and
(b) a base fee of $66,667 per annum for acting as Non-executive Director.
The updated service agreements were to be effective retrospectively from 15 May 2018.
Company performance
The table below shows the performance of the Group as measured by its earnings per share and share price. In the past five
years the Group has incurred losses and no dividends have been paid. Any improvement to earnings is viewed as a long-term
position that is not yet fully determinable.
30 June
2018
30 June
2017
30 June
2016
30 June
2015
30 June
2014
Loss per share
Share price at end of year
(0.14)
0.11
(0.03)
0.37
(0.08)
0.43
(0.08)
0.15
(0.07)
0.15
End of REMUNERATION REPORT (AUDITED)
ENVIRONMENTAL REGULATIONS
The Group is subject to significant environmental regulation in respect to its mineral exploration activities. These obligations are
regulated under relevant government authorities within Australia. The Group is a party to exploration and mine development
licences. Generally, these licences specify the environmental regulations applicable to exploration and mining operations in the
respective jurisdictions. The Group aims to ensure that it complies with the identified regulatory requirements in each jurisdiction
in which it operates.
Compliance with environmental obligations is monitored by the Directors. No environmental breaches have been notified to the
Group by any government agency during the year ended 30 June 2018.
WARDENS COURT PROCEEDINGS
The Company (and its wholly owned subsidiaries) is a party to various proceedings in the Wardens Court pursuant to which third
parties are seeking to challenge its title to various mining tenements by way of forfeiture and other proceedings. The Director is
confident that the Company (and its wholly owned subsidiaries) will be successful in defending these proceedings. There were no
proceedings against any subsidiary that could bring into doubt whether the Company controlled any of its subsidiaries within the
Group.
PROCEEDINGS ON BEHALF OF THE COMPANY
Other than as referred to above, no person has applied for leave of court or to bring proceedings on behalf of the Company or
intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company,
for all or any part of those proceedings.
20 NON-AUDIT SERVICES
DIRECTOR’S REPORT
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company are important. The Directors consider the general standard of independence for
auditors imposed by the Corporations Act 2001 before any engagements are agreed.
During the year, no non-audit services were provided by Ernst & Young as the external auditors (2017: $Nil). Further details of
remuneration of the auditors are set out at Note 19.
AUDITOR INDEPENDENCE
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included
immediately following the Director’s Report and forms part of this Director’s Report.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified sum). No payment has been
made to indemnify Ernst & Young during or since the financial year end.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has entered into indemnity agreements with each of the Directors and officers of the Company. Under the
agreements, the Company will indemnify those officers against certain claims or for any expenses or costs which may arise as a
result of work performed in their respective capacities as officers of the Company or any related entities.
The Company has taken out an insurance policy insuring Directors and Officers of the Company against any liability arising from
a claim bought by a third party against the Company or its Directors or Officers, and against liabilities for costs and expenses
incurred by them in defending any legal proceedings arising out of their conduct while acting in their capacity as a Director or
Officer of the Company, other than conduct involving a wilful breach of duty in relation to the Company.
During the year, the Company paid premiums in respect of the above insurance policy. The contract prohibits the disclosure of
the nature of the liabilities and/or the amount of the premium.
ROUNDING OF AMOUNTS
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in the
Director’s Report and in the financial report have been rounded to the nearest one thousand dollars, or in certain cases, to the
nearest dollar (where indicated).
Signed in accordance with clauses 2.4(a)(1) and 2.4(f) of the Deed of Company Arrangement.
Peter Mansell
Non-executive Director
Perth, Western Australia
1 April 2019
21 ANNUAL RESOURCE AND RESERVES STATEMENT
In accordance with ASX Listing Rule 5.21, the Company reviews and reports its Mineral Resources and Ore Reserves at least
annually. The date of reporting is 30 June each year, to coincide with the Company’s end of financial year balance date. If there
are any material changes to its Mineral Resources or Ore Reserves over the course of the year, the Company is required to
promptly report these changes.
As at 30 June 2018, the Company has the following reported Mineral Resources and Ore Reserves:
Total Mineral Resources are estimated of 21.0 Mt @ 2.6 g/t Au for 1.78 Moz of contained gold.
Total Ore Reserves are estimated of 2.0 Mt @ 2.3 g/t Au for 150 Koz of contained gold.
Mineral Resources as at 30 June 2018
The Company’s total Measured, Indicated and Inferred Mineral Resources as at 30 June 2018 are 21.0 million tonnes (Mt) @ 2.6
grams per tonne of gold (g/t Au) containing 1.78 million ounces of gold (Moz).
As no active ore mining occurred within any project area listed below, no resource depletion has occurred for the review period.
PROJECT
GOLDEN EAGLE
LIGHTS OF ISRAEL
UNDERGROUND
MAKAI SHOOT
WAIHI
Central Davyhurst Subtotal
LADY GLADYS
RIVERINA AREA
FOREHAND
SILVER TONGUE
SUNRAYSIA
Riverina-Mulline Subtotal
SAND KING
MISSOURI
PALMERSTON / CAMPERDOWN
BEWICK MOREING
BLACK RABBIT
THIEL WELL
Siberia Subtotal
CALLION
Callion Subtotal
FEDERAL FLAG
SALMON GUMS
WALHALLA
WALHALLA NORTH
MT BANJO
MACEDON
Walhalla Subtotal
Mineral Resource Table
MEASURED
INDICATED
INFERRED
TOTAL MATERIAL
('000t)
(g/t Au)
('000t)
(g/t Au)
('000t)
(g/t Au)
('000t)
(g/t Au)
('000oz.)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
32
0
0
0
0
0
32
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
2.0
0.0
0.0
0.0
0.0
0.0
2.0
345
74
1,985
805
3,209
1,858
941
386
155
175
3,515
1,773
2,022
118
0
0
0
3,913
86
86
112
199
448
94
109
0
962
2.5
4.3
2.0
2.4
2.2
1.9
2.4
1.7
2.7
2.1
2.1
3.3
3.0
2.3
0.0
0.0
0.0
3.1
2.8
2.8
1.8
2.8
1.8
2.4
2.3
0.0
2.1
311
180
153
109
753
190
1,644
436
19
318
2,607
680
409
174
50
434
18
1,765
83
83
238
108
216
13
126
186
887
2.6
4.2
1.7
2.4
2.6
2.4
2.5
1.9
1.3
2.0
2.3
3.7
2.6
2.4
2.3
3.5
6.0
3.2
2.3
2.3
2.5
2.9
1.4
3.0
1.4
1.8
2.0
656
254
2,138
914
3,962
2,048
2,585
822
174
493
6,122
2,453
2,431
292
50
434
18
5,678
169
169
382
307
664
107
235
186
1,881
2.5
4.2
2.0
2.4
2.3
1.9
2.5
1.8
2.5
2.0
2.2
3.4
2.9
2.4
2.3
3.5
6.0
3.1
2.6
2.6
2.3
2.8
1.7
2.5
1.8
1.8
2.1
54
35
136
71
296
128
205
48
14
32
427
272
227
22
4
49
3
577
14
14
28
28
36
9
14
11
126
22 ANNUAL RESOURCE AND RESERVES STATEMENT
Mineral Resource Table (Continued)
IGUANA
LIZARD
Lady Ida Subtotal
Davyhurst Total
BALDOCK
BALDOCK STH
METEOR
WHINNEN
Mount Ida Total
Combined Total
0
106
106
138
0
0
0
0
0
138
0.0
4.0
4.0
3.5
0.0
0.0
0.0
0.0
0.0
3.5
690
75
765
12,450
136
0
0
0
136
2.1
3.7
2.3
2.5
18.6
0.0
0.0
0.0
18.6
2,032
13
2,045
8,140
0
0
143
39
182
2.0
2.8
2.0
2.4
0.0
0.0
9.3
13.3
10.2
2,722
194
2,916
20,728
136
0
143
39
318
2.0
3.8
2.1
2.5
18.6
0.0
9.3
13.3
13.8
177
24
201
1,641
81
0
43
17
141
12,586
2.7
8,322
2.6
21,046
2.6
1,782
1.
2.
3.
All Resources listed above with the exception of the Missouri and Sand King Resources were prepared and first disclosed under the JORC
Code 2004 (refer to ASX release “Swan Gold Prospectus”, 13/2/2013). It has not been updated since to comply with JORC Code 2012
on the basis that the information has not materially changed since it was last reported.
The Missouri, Sand King Mineral Resources has been updated and complies with all relevant aspects of the JORC code 2012, and initially
released to the market on 15 December 2016 (Missouri), 3 January 2017 (Sand King).
The numbers in the above table are rounded.
Ore Reserves at 30 June 2018
The Company’s total Proved and Probable Gold Ore Reserve as at 30 June 2018 are 2.0 million tonnes (Mt) @ 2.3 grams per
tonne of gold (g/t Au) containing 150,000 ounces of gold (Koz). The maiden Ore Reserves for Missouri and Sand King were
announced to ASX on 15 December 2016 and 14 February 2017 respectively and there was previously no publicly reported
estimate of Gold Ore Reserves as at 30 June 2016. As no active ore mining has occurred in this project area hence no resource
depletion has occurred for the year.
Ore Reserve Table
Reserve
Proven
Probable
Total
('000t)
(g/t Au)
('000t)
(g/t Au)
('000t)
(g/t Au)
('000oz.)
Missouri – Dec 2016
Sand King – Feb 217
Combined Total
-
-
-
-
-
-
1,205
820
2,025
2.2
2.5
2.3
1,205
820
2,025
2.2
2.5
2.3
85
65
150
Governance Arrangements and Internal Controls
the Mineral Resources and Ore Reserves quoted are subject
Eastern Goldfields has ensured that
to good governance
arrangements and internal controls. The Mineral Resources and Ore Reserves reported have been generated by internal
Company geologists, who are experienced in best practice in modelling and estimation methods. The competent person has also
undertaken reviews of the quality and suitability of the underlying information used to generate the resource estimation. In addition,
Eastern Goldfields’ management carry out regular reviews and audits of internal processes and external contractors that have
been engaged by the Company.
Competent Person Statement
The information in this report that relates to Exploration Results and the Sand King and Missouri Mineral Resources is based on
information compiled under the supervision of Mr Michael Thomson, a former employee of Eastern Goldfields Limited, who is
Member of the Australian Institute of Mining and Metallurgy. Mr Thomson 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 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves’. The Company confirms that the form and context in which the Competent Person’s findings are presented have not
23 ANNUAL RESOURCE AND RESERVES STATEMENT
been modified from the original announcement and, in the case of estimates of Mineral Resources, all material assumptions and
technical parameters underpinning the estimates in the initial announcement continue to apply and have not materially changed.
The information in this report that relates to Mineral Resources (with the exception of the Sand King and Missouri Mineral
Resources) is based on information compiled under the supervision of Mr Michael Thomson, a former employee of Eastern
Goldfields Limited, who is Member of the Australian Institute of Mining and Metallurgy. Mr Thomson 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 and 2012 Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves’. 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. The Company confirms that the form and context
in which the Competent Person’s findings are presented have not been modified from the original announcement and, in the case
of estimates of Mineral Resources, all material assumptions and technical parameters underpinning the estimates in the initial
announcement continue to apply and have not materially changed. This information was prepared and first disclosed under the
JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not
materially changed since it was last reported.
The information in this report that relates to Ore Reserves is based on information compiled by Mr Craig Mann, who is an
independent mining engineering consultant and a full-time employee of Entech Pty Ltd and has sufficient relevant experience to
advise Eastern Goldfields Limited on matters relating to mine design, mine scheduling, mining methodology and mining costs. Mr
Mann is satisfied that the information provided in this statement has been determined to a PFS level of accuracy, based on the
data provided by Eastern Goldfields Limited. 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. The Company confirms that the form and context
in which the Competent Person’s findings are presented have not been modified from the original announcement and, in the case
of estimates of Ore Reserves, all material assumptions and technical parameters underpinning the estimates in the initial
announcement continue to apply and have not materially changed.
This Annual Resources and Reserves Statement has been compiled under the supervision of Mr Andrew Czerw, a permanent
employee of Eastern Goldfields Limited, who is Member of the Australian Institute of Mining and Metallurgy. Mr Czerw 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 2012 Edition of the ‘Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves’. Mr Czerw consents to the inclusion in the report of the matters
based on his information in the form and context in which it appears. Mr Czerw also consents to the Annual Resources and
Reserves Statement as a whole.
24 AUDITOR’S INDEPENDENCE DECLARATION
25 CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
NOTES
30 June 2018
$’000
30 June 2017
$’000
Revenue – Gold sales
Cost of sales
Gross Loss
Other (expense)/income
General and administration
Other operating expenses
Operating loss
Finance income
Finance costs
Loss before income tax expense
Income tax (expense) benefit
Loss for the year
Other comprehensive income
items that may be reclassified to profit and loss
Changes in fair value of available-for-sale assets
Income tax relating to this item
Cash flow hedges
Other comprehensive income, net of income tax
16,152
(33,310)
(17,158)
(33)
(54,079)
(12,379)
(83,649)
2
(2,743)
(86,390)
468
(85,922)
1,666
(468)
(271)
927
4
5
5
5
6
18
18
18
-
-
-
-
(6,316)
(11,010)
(17,326)
5
(777)
(18,103)
-
(18,103)
(3)
-
271
268
Total comprehensive loss for the year
(84,995)
(17,835)
Total comprehensive loss attributable to:
Equity holders of the Parent
(84,995)
(17,835)
Basic and diluted loss per share
29
(0.14)
(0.03)
The above statement should be read in conjunction with the accompanying notes.
26 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018
NOTES
30 June 2018
$’000
30 June 2017
$’000
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Mine properties
Capitalised exploration expenditure
Available-for-sale financial assets
Derivative financial instruments
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Provisions
Derivative financial instruments
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET (LIABILITIES)/ASSETS
SHAREHOLDERS’ (DEFICIT)/EQUITY
Contributed equity
Accumulated losses
Reserves
TOTAL SHAREHOLDERS’ (DEFICIT)/EQUITY
7
8
9
8
10
11
12
13
14
15
16
13
16
17
18
5
1,481
2,058
3,544
64
38,460
-
3,845
119
42,488
46,032
40,627
21,543
1,303
293
63,766
18,243
18,243
82,009
(35,977)
287,168
(336,255)
13,110
(35,977)
44
7,986
-
8,030
64
55,703
585
2,199
330
58,881
66,911
28,618
15,060
206
-
43,384
11,912
11,912
55,796
11,115
251,282
(250,333)
10,166
11,115
The above statement should be read in conjunction with the accompanying notes.
27 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018
Consolidated
NOTES
$’000
$’000
$’000
$’000
$’000
$’000
Contributed
equity
Accumulated
losses
Share-based
payments reserve
Cash flow hedge
reserve
Available-for-sale
reserve
Total equity /
(shareholders’
deficit)
228,343
(232,230)
8,029
At 1 July 2016
Loss for the year
Other comprehensive income, net of
income tax
Total comprehensive loss
Issue of ordinary shares (net of costs)
Share-based payments
At 30 June 2017
Loss for the year
Other comprehensive income, net of
income tax
Total comprehensive loss
-
-
-
22,939
-
(18,103)
-
(18,103)
-
-
251,282
(250,333)
-
-
-
(85,922)
-
(85,922)
-
-
-
-
-
-
1,846
9,875
-
-
-
2,017
11,892
-
-
271
271
-
-
271
-
(271)
(271)
-
-
-
23
-
(3)
(3)
-
-
20
-
1,198
1,198
-
-
4,165
(18,103)
268
(17,835)
22,939
1,846
11,114
(85,922)
927
(84,995)
35,886
2,017
1,218
(35,977)
Issue of ordinary shares (net of costs)
Share-based payments
17
18
35,886
-
At 30 June 2018
287,168
(336,255)
The above statement should be read in conjunction with the accompanying notes.
28 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018
30 June 2018
30 June 2017
NOTES
$’000
$’000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs paid
16,152
(40,413)
2
(746)
Net cash flows used in operating activities
28
(25,005)
Cash flows from investing activities
Payments for capitalised exploration expenses
Payments for mine properties
Payments for available-for-sale asset acquisition
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from share issue
Payments for costs of raising capital
Proceeds from loan advances
Repayment of loans
Net cash flows from financing activities
Net decrease in cash and cash equivalents held
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
7
(53)
(10,887)
(73)
(11,013)
29,939
(1,387)
14,974
(7,547)
35,979
(39)
44
5
The above statement should be read in conjunction with the accompanying notes.
-
(18,159)
5
(499)
(18,653)
-
(27,754)
(1,500)
(29,254)
17,534
(456)
17,627
(2,155)
32,550
(15,357)
15,401
44
29 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
CORPORATE INFORMATION
The consolidated financial report of Eastern Goldfields Limited (‘the parent’) and its Subsidiaries (In Administration and Subject
to Deed of Company Arrangement) (collectively referred to as “the Group”) for the year ended 30 June 2018 was authorised for
issue in accordance with clauses 2.4(a)(1) and 2.4(f) of the Deed of Company Arrangement, on the date of signing of the Director’s
Report. Eastern Goldfields Limited is a for-profit company limited by shares that is incorporated and domiciled in Australia.
Eastern Goldfields, via its subsidiaries, is the 100% owner of the Davyhurst Gold Project located 120 kilometres northwest of
Kalgoorlie, and the Mt Ida Gold Project located 200 kilometres northwest of Kalgoorlie. Processing infrastructure includes a
1.2Mtpa processing plant, two camps (Davyhurst Central and Mt Ida), mains power and operating bore fields.
The principal activity of the Group during the financial year was mineral exploration and evaluation, both open pit and underground
gold mining combined with processing activities at the Davyhurst Gold Project. Care and maintenance of its historically producing
gold mine at the Mt Ida Gold Project remained ongoing.
2.
BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of preparation
The consolidated financial report is a general-purpose financial report which has been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’). The financial report has been prepared on a historical cost basis, except for certain financial
assets and liabilities which are measured on a fair value basis. The consolidated financial report is presented in Australian dollars,
which is the parent’s and Group’s functional and presentation currency.
Compliance with Australian Accounting Standards ensures that the consolidated financial statements and notes comply with
International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’).
The accounting policies adopted are consistent with those of the previous financial year and corresponding reporting period except
for the adoption of the new standards and amendments which became mandatory for the first time this reporting period
commencing 1 July 2017. The adoption of these standards and amendments did not result in a material adjustment to the amounts
or disclosures in the current or prior year. The Group has not early adopted any other standard, interpretation or amendment that
has been issued but is not yet effective.
(b)
Going concern
As at 30 June 2018, the Group’s current liabilities exceeded its current assets by $60,222,000, and equity deficiency totalled
$35,977,000. The Group recorded a consolidated loss after tax of $85,922,000 for the year to 30 June 2018 (30 June 2017:
consolidated loss after income tax of $17,835,000).
As outlined in the Director’s Report, the Directors of the Group appointed Voluntary Administrators on 29 November 2018.
Following their appointment, the Administrators received a Deed of Company Arrangement (‘DOCA’) proposal from Hawkes Point
I Limited (refer Note 31) which was put to creditors and approved on 1 February 2019. The DOCA was subsequently executed by
the Group on 12 February 2019.
The ability of the Group to continue as a going concern is primarily dependent upon:
The Group undertaking a capital raising to raise an amount of not less than $22 million, as contemplated by the DOCA;
All terms and conditions of the DOCA being satisfied, including obtaining necessary regulatory and shareholder approvals,
including from ASIC and ASX; and
The Group’s Davyhurst operations remaining on care and maintenance for 18 months from the date of the capital raising.
At the date of these financial statements, the Group has:
Executed the DOCA whereby if the terms and conditions are satisfied all the Group’s secured creditors will be issued
shares to convert the entire value of their claim to equity; all supporting creditors will receive 22 cents in the dollar for 60%
of each supporting creditor’s claim, with 40% of their respective claims being converted into equity at a conversion price of
30 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
one cent per share and all remaining creditors to be paid out of a separately established trust to be funded up to an amount
of $7.3 million from the capital raising;
Signed a mandate letter with Hartleys Limited in relation to the capital raising referred to above, to raise a minimum of $22
million; and
As part of the DOCA, Hawke’s Point I Limited will underwrite 25% of the capital raising.
The Director believes that at the date of signing the financial report, and with the Group’s Davyhurst facility remaining on care and
maintenance, there are reasonable grounds to believe that having regard to the matters set out above, the Group will be able to
continue as a going concern.
However, should any of the matters detailed above not be successfully concluded, the Group may be unable to meet its debts as
and when they fall due and realise its assets and settle its liabilities in the ordinary course of business at the amounts stated in
the financial report.
The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts
nor to the amounts and classification of liabilities that might be necessary should the Group not be able to continue as a going
concern.
(c)
New Accounting Standards and Interpretations issued but not yet effective or early adopted
The following Accounting Standards and Interpretations have been issued by the AASB but are not yet effective for the year ended
30 June 2018. The Group has not yet early adopted any other standard, interpretation or amendment that has been issued but is
not yet effective.
Mandatory
Application date
/ Date of
Adoption by
Group
years
Financial
commencing on
or after 1 January
2018.
Expected date of
adoption by the
Group:
July
2018.
1
Title of
Standard
9
AASB
Financial
Instruments
Nature of Change
Impact
9
addresses
the
AASB
classification, measurement and
derecognition of
financial assets
and financial liabilities, introduces
new rules for hedge accounting
and a new impairment model for
financial assets.
The Group has reviewed its financial assets and
liabilities and is expecting the following impact from
the adoption of the new standard on 1 July 2018:
are
instruments, which
currently
Equity
classified as available-for-sale financial assets,
are measured at fair value, with movements in
fair value being recognised in an Available-for-
sale Reserve. Under AASB 9, these assets will
continue to be measured at fair value, however
the Group will make an irrevocable election to
recognise all
fair value movements through
OCI. Accordingly, the Group does not expect
the new standard to have a significant impact
on the classification and measurement of its
equity instrument financial assets;
The requirements applicable to financial
liabilities carried at fair value through profit or
loss are not expected to have a material impact
on the operating results of the Group due to
minimal holdings of such liabilities. The
derecognition rules have been transferred from
AASB 139 Financial Instruments: Recognition
and Measurement and have not been
changed;
The hedging requirements under
the new
standard are not expected to have a material
impact on the operating results of the Group
due to minimal hedging arrangements in place;
31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Title of
Standard
Nature of Change
Impact
Mandatory
Application date
/ Date of
Adoption by
Group
lease
receivables,
requires the
The new impairment model
recognition of impairment provisions based on
expected credit losses (‘ECL’) rather than only
incurred credit losses as is the case under
It applies to financial assets
AASB 139.
classified at amortised cost, debt instruments
measured at FVOCI, contract assets under
AASB 15 Revenue from Contracts with
loan
Customers,
commitments and certain financial guarantee
contracts. The new standard also introduces
expanded
and
changes in presentation. These are expected
to change the nature and extent of the Group’s
disclosures about
instruments
particularly in the year of the adoption of the
new standard. However, due to the nature of
the Group’s receivables at 30 June 2018, the
new standard is not considered to have a
material
of
on
impairment provisions under the ECL model.
requirements
its financial
recognition
disclosure
impact
the
AASB
15
Revenue from
Contracts with
Customers
The AASB has issued a new
standard for
the recognition of
revenue. This will replace AASB
118 which covers revenue arising
from the sale of goods and the
rendering of services and AASB
111 which covers construction
contracts. The new standard is
based on the principle that revenue
is recognised when control of a
good or service transfers to a
customer. The standard permits
either a full
retrospective or a
modified retrospective approach
for the adoption.
Financial
years
commencing on
or after 1 January
2018.
Expected date of
adoption by the
Group:
July
2018.
1
The Group plans
to use the full
retrospective
approach to apply
the new standard.
During the current year, the Group completed its
assessment of the impact of the new AASB 15 on
its consolidated financial statements.
Under AASB 15, revenue from the sale of gold
bullion is recognised when control is transferred to
Perth Mint. This occurs when Perth Mint accepts the
product which is on the out-turn of the gold and the
Group has agreed to sell the gold to Perth Mint. All
performance obligations are also satisfied at this
there are no
time. With these arrangements,
advance payments received from Perth Mint. A
transaction price is determined at outturn by virtue
of a deal confirmation received from Perth Mint and
there are no further adjustments to this price. For
the Group’s principal revenue stream, the nature
and timing of satisfaction of
the performance
obligations, and, hence, the amount and timing of
revenue recognised under AASB 15, is the same as
that under AASB 118.
As a result of
the above, no impacts on the
consolidated statement of profit or loss and other
comprehensive income, the consolidated statement
of
financial position, consolidated statement of
cashflows or earnings per share (‘EPS’) are
expected.
AASB
Leases
16
AASB 16 was issued in January
2016.
in almost all
leases being recognised on the
It will result
Although the Group has yet to commence its impact
assessment, during the year ended 30 June 2019,
focus on reviewing contracts, aggregating
it will
Financial
years
commencing on
or after 1 January
32 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Title of
Standard
Nature of Change
Impact
balance sheet, as the distinction
between operating and finance
leases is removed. Under the new
standard, an asset (the right to use
the leased item) and a financial
liability
are
pay
recognised. The exceptions are
short-term and low-value leases.
rentals
to
data to support the evaluation of the accounting
impacts and identifying where key policy decisions
are required. At the date of this report all major
contracts have been terminated. Hence, the impact
is not expected to be material.
no
share-based
payment
has
The Group
transactions with net settlement
features for
withholding tax obligations and had not made any
modifications to the terms and conditions of
its
transactions. Therefore,
share-based payment
these amendments do not have a material impact
on the Group’s consolidated financial statements.
AASB 2016-5
Amendments
to Australian
Accounting
–
Standards
Classification
and
Measurement
Share-
of
based
Payment
Transactions
Payments,
transaction with
This Standard amends AASB 2
Share-based
that
addresses three main areas: the
effects of vesting conditions on the
measurement of a cash settled
share-based payment transaction;
the classification of a share-based
payment
net
settlement features for withholding
tax obligations; and accounting
where a modification to the terms
and conditions of a share-based
transaction changes its
payment
classification from cash settled to
equity
adoption,
entities are required to apply the
restating
amendments without
prior periods, but
retrospective
application is permitted if elected
for all three amendments and other
criteria are met.
settled. On
3
AASB
Business
Combinations
The amendments clarify that, when
an entity obtains control of a
business that is a joint operation, it
applies
the requirements for a business
combination achieved in stages,
including remeasuring previously
These amendments are currently not applicable to
the Group but may apply in future transactions.
Mandatory
Application date
/ Date of
Adoption by
Group
this
At
2019.
stage, the Group
does not intend to
the
adopt
before
standard
its effective date.
The
Group
intends to apply
the
modified
retrospective
transition
approach and will
not
restate
comparative
amounts for
the
year prior to first
adoption.
Expected date of
adoption by the
Group:
July
2019.
1
years
Financial
commencing on
or after 1 January
2018.
Expected date of
adoption by the
Group:
July
2018.
1
Financial
years
commencing on
or after 1 January
2019.
Expected date of
adoption by the
33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Title of
Standard
Nature of Change
Impact
Mandatory
Application date
/ Date of
Adoption by
Group
Group:
2019
July
1
111
AASB
Joint
Arrangements
AASB
112
Income Taxes
held interests in the assets and
liabilities of the joint operation at
fair value. In doing so, the acquirer
remeasures its entire previously
held interest in the joint operation
A party that participates in, but
does not have joint control of, a
joint operation might obtain joint
the joint operation in
control of
which the activity of
the joint
operation constitutes a business
as defined in AASB 3.
The amendments clarify that the
previously held interests in that
joint operation are not remeasured.
tax
distributions
consequences
The amendments clarify that the
income
of
dividends are linked more directly
to past transactions or events that
generated distributable profits than
to
owners.
Therefore, an entity recognises the
of
income
dividends in profit or loss, other
comprehensive income or equity
according to where the entity
originally recognised those past
transactions or events.
consequences
tax
to
123
AASB
Borrowing
Costs
IFRIC
Interpretation
23
Uncertainty
over
Income
Tax treatment
The amendments clarify that an
entity treats as part of general
borrowings
borrowing
any
originally made to develop a
qualifying asset when substantially
the activities necessary to
all of
prepare that asset for its intended
use or sale are complete.
The Interpretation addresses the
accounting for income taxes when
tax treatments involve uncertainty
that affects the application of
AASB 112 and does not apply to
taxes or levies outside the scope of
AASB 112, nor does it specifically
include requirements relating to
interest and penalties associated
with uncertain tax treatments.
These amendments are currently not applicable to
the Group but may apply in future transactions.
These amendments are currently not applicable to
the Group but may apply in future transactions.
These amendments are currently not applicable to
the Group but may apply in future transactions.
tax
applying
environment,
Although the Group does not operate in a complex
multinational
the
Interpretation may affect its consolidated financial
statements in future periods. In addition, the Group
may need to establish processes and procedures to
obtain information that is necessary to apply the
Interpretation on a timely basis.
Financial
years
commencing on
or after 1 January
2019.
Expected date of
adoption by the
Group:
July
2019
1
Financial
years
commencing on
or after 1 January
2019.
Expected date of
adoption by the
July
Group:
2019
1
Financial
years
commencing on
or after 1 January
2019.
Expected date of
adoption by the
Group:
July
2019
1
Financial
years
commencing on
or after 1 January
2019.
Expected date of
adoption by the
July
Group:
2019
1
34 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Title of
Standard
Nature of Change
Impact
Mandatory
Application date
/ Date of
Adoption by
Group
Interpretation
The
addresses the following:
specifically
Whether an entity considers
treatments
tax
uncertain
separately;
The assumptions an entity
makes about the examination
of tax treatments by taxation
authorities;
How an entity determines
taxable profit (tax loss),
tax
bases, unused tax losses,
unused tax credits and tax
rates;
How an
entity
in
changes
circumstances;
considers
and
facts
An entity has to determine whether
to consider each uncertain tax
treatment separately or together
with one or more other uncertain
tax treatments. The approach that
better predicts the resolution of the
uncertainty should be followed.
(d)
Principles of consolidation
The consolidated financial statements comprise the financial statements of Eastern Goldfields Limited and its subsidiaries (as
outlined in Note 25) as at 30 June 2018.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to
direct the relevant activities of the entity. Specifically, the Group controls an entity if, and only if, the Group has all of the following:
Power over the entity (ie: existing rights that give it the current ability to direct the relevant activities of the entity);
Exposure, or rights, to variable returns from its involvement with the entity; and
The ability to use its power over the entity to affect its returns.
The relevant activities are those which significantly affect the subsidiary’s returns. The ability to approve the operating and capital
budget of a subsidiary and the ability to appoint key management personnel are decisions that demonstrate that the Group has
the existing rights to direct the relevant activities of a subsidiary.
The Group re-assesses whether or not it controls an entity if facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary
and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or
disposed of during the year are included in the statement of profit or loss and other comprehensive income from the date the
Group gains control until the date the Group ceases to control the subsidiary. Where the Group’s interest is less than 100 per
cent, the interest attributable to outside shareholders is reflected in non-controlling interests (‘NCIs’).
Profit or loss and each component of other comprehensive income (‘OCI’) are attributed to the equity holders of the parent of the
Group and to the NCIs, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments
35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group
loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non- controlling interest and other
components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair
value.
Investments in subsidiaries held by Eastern Goldfields Limited are accounted for at cost in the separate financial statements of
the parent entity less any impairment charges. Dividends received from subsidiaries are recorded as a component of other
revenues in the separate income statement of the parent entity, and do not impact the recorded cost of the investment. Upon
receipt of dividend payments from subsidiaries, the parent will assess whether any indicators of impairment of the carrying value
of the investment in the subsidiary exist. Where such indicators exist, to the extent that the carrying value of the investment
exceeds its recoverable amount, an impairment loss is recognised.
(e)
Revenue recognition
Sales
Revenue from the sale of gold bullion is recognised when the risks and rewards of ownership have passed to the buyer (Perth
Mint). There are no revenue amounts recognised on a provisional basis, as all revenue is recognised on the basis of final pricing,
which is determined at outturn by Perth Mint.
The point at which risk and rewards passes to Perth Mint which is on the out-turn of the gold when the Group agrees to sell the
gold to Perth Mint. That is, once the gold has been refined and the Group and Perth Mint have agreed to sale.
(f)
Mine properties (plant & equipment, construction in progress, mine development)
All assets acquired, including property, plant and equipment are initially recorded at their cost of acquisition being the fair value
of the consideration provided plus incidental costs directly attributable to the acquisition. Upon completion of the construction
phase, all assets are transferred to Mine Properties at cost.
Plant and equipment located on a mine site (and carried forward mine development costs) is carried at cost less accumulated
depreciation and any accumulated impairment losses. All such assets are depreciated over the estimated remaining economic
life of the mine, using a units-of-production (‘UOP’) basis. The UOP rate calculation for depreciation/amortisation of plant &
equipment located on the mine site (and carried forward mine development costs) takes into account expenditures incurred to
date, together with future development expenditure, as well as economically recoverable reserves (comprising proven and
probable reserves).
All other plant and equipment is carried at cost less accumulated depreciation and impairment losses. These items are depreciated
on a straight-line basis over the assets estimated useful life which is three to eight years. Depreciation commences from the time
the asset is held ready for use. All repairs and maintenance costs are recognised in profit or loss as incurred. The present value
of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the
recognition criteria for a provision are met. Refer to significant accounting judgments, estimates and assumptions (at Note 3) and
provisions for further information about the recognised decommissioning provision.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is including the statement of profit or loss when
the asset is derecognised.
Asset residual values, useful lives and methods of depreciation/amortisation are reviewed at each reporting period and adjusted
prospectively, if deemed appropriate.
36 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(g)
Financial Instruments
Financial Assets
Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity or
available-for-sale financial assets. When financial assets are recognised initially, they are measured at fair value, plus, in the case
of investments not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification
of its financial assets at initial recognition.
Financial assets are recognised when the entity becomes a party to the contractual provisions of the instrument. This is equivalent
to the date that the entity commits itself to either the purchase or sale of the asset (ie: trade date accounting is adopted). Financial
assets are derecognised when the rights to receive cashflows from the financial assets have expired or have been transferred
and the Group has transferred substantially all the risks and rewards of ownership.
Loans, receivables and security deposits
Loans, receivables and security deposits are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are
recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation
process.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets, principally equity securities that are either designated as
available-for-sale or not classified as any other category. Available-for-sale financial assets are subsequently measured at fair
value. Unrealised gains and losses arising from changes in fair value are recognised in the available-for-sale reserve in equity.
The cumulative gain or loss is held in equity until the financial asset is de-recognised or impaired, at which time the cumulative
gain or loss held in equity is reclassified from equity to profit or loss.
Non-listed investments for which fair value cannot be reliably measured, are carried at cost and tested for impairment.
Financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings, payables or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly
attributable transaction costs.
Financial liabilities include trade payables, other creditors, loans from third parties and loans or other amounts due to director-
related entities.
On initial recognition non-derivative financial
subsequently measured at amortised cost.
liabilities are recognised at
fair value less any transaction costs and then
Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting date, in which case, they are classified as non-current.
A financial liability is derecognised when the associated obligation is discharged, cancelled or it expires.
Derivative financial instruments
The Group holds derivative financial instruments to mitigate its risk exposures from commodity price movements. Derivatives are
initially recognised at fair value on the date the derivative contract is entered into and are subsequently measured to their fair
value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated
as a hedging item, and if so, the nature of the item being hedged. Derivatives that are not designated in a qualifying hedge
relationship are subsequently measured at fair value through profit or loss. Derivatives designated as hedging instruments are
accounted for as described below.
37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(g)
Financial instruments (Continued)
Hedge accounting
Certain derivatives are designated as hedging instruments and are further classified as either fair value hedges or cash flow
hedges.
At the inception of each hedging transaction, the Group documents the relationship between the hedging instruments and hedged
items, its risk management objective and its strategy for undertaking the hedge transaction. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions
have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.
Cash flow hedges
Cashflow hedges are used to cover the Group’s exposure to variability in cashflows that is attributable to particular risks associated
with a recognised asset of liability or a firm commitment which could affect the profit or loss. To qualify as a cash flow hedge the
underlying transactions generating the cash flows must be highly probable.
The effective portion of the gain or loss on the hedging instrument is recognised in OCI and accumulated in equity in the cash
flow hedging reserve (net of tax). This gain or loss is released to profit or loss in the same periods when the forecast transactions
occur, thereby offsetting any exchange fluctuations that would have been recognised in the absence of the hedge. The ineffective
portion of the gain or loss is recognised in profit or loss.
If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the hedge becomes
ineffective and is no longer a designated hedge, the amounts previously recognised in equity remain in equity unit the forecast
transaction occurs.
Impairment
Financial assets are tested for impairment at each financial year end to establish whether there is any objective evidence for
impairment as a result of one or more events (‘loss events’) having occurred and which have an impact on the estimated future
cash flows of the financial assets.
For loans and receivables carried at amortised cost, impairment losses are measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred)
discounted at the financial asset’s original effective interest rate.
Individual receivables that are known to be uncollectible are written off to profit or loss by reducing the carrying amount of the
asset directly. For other receivables, estimated impairment losses are recognised in a separate provision for impairment.
The Group applies the following criteria as objective evidence that a loss event has occurred:
significant financial difficulties of the debtor;
payments more than 30 days overdue and failure by the debtor to adequately respond to a follow-up request for payment;
payments more than 90 days overdue;
it is probable the debtor will enter bankruptcy or other financial reorganisation; or
the Group, for reasons relating to the debtor’s financial difficulty, granting to the debtor a concession the entity would not
otherwise consider.
When it is concluded that it is probable the Group will not recover the net carrying amount (gross carrying amount less impairment
provisions) of an impaired receivable, the allowance amount attributable to the asset is written off directly against the gross
carrying amount of the asset.
An available-for-sale financial asset is considered impaired if there has been a significant or prolonged decline in its fair value
below its original cost. If an available-for-sale financial asset is impaired, the cumulative loss is reclassified from equity to profit or
loss as a reclassification adjustment. For impaired equity investments, subsequent increases in the fair value of the investment
are not reversed through profit or loss. For impaired debt investments, subsequent increases in the fair value of the investment
are treated as a reversal of the impairment loss and recognised in profit or loss if the subsequent fair value increase can be
objectively related to the previous impairment event.
38 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(h)
Exploration and evaluation expenditure
The Group applies the area-of-interest method when accounting for exploration and evaluation costs. Once the legal right to
explore has been acquired, exploration and evaluation expenditure is charged to profit or loss as incurred unless the Group
concludes that a future economic benefit is more likely than not to be realised. Exploration and evaluation costs include the
acquisition of rights to explore, studies, exploratory drilling, sampling and associated activities and an allocation of depreciation
and amortisation of assets used in exploration and evaluation activities. General and administrative costs are included in the
measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of
interest.
Capitalised exploration and evaluation costs related to areas of interest are carried forward to the extent that the rights to tenure
of the areas of interest are current and the Group controls the area of interest in which the expenditure has been incurred, and
a)
b)
such costs are expected to be recouped through successful development and exploitation of the area of interest, or
alternatively by its sale, or
exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in, or in relation to, the area of interest are continuing.
Impairment
The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment whenever facts and
circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. These include:
a)
b)
c)
d)
the period for which the entity has the right to explore in the specific area has expired during the period or will expire in the
near future, and is not expected to be renewed;
substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted
nor planned;
exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable
quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; or
sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of
the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.
If impairment indicators exist, the Group determines the recoverable amount of the capitalised exploration and evaluation
expenditure. An impairment loss exists when the carrying amount exceeds the recoverable amount. In this instance, the capitalised
exploration and evaluation expenditure is written down to its recoverable amount. Any impairment losses are recognised in profit
or loss.
Any impairment loss in relation to capitalised exploration and evaluation expenditure, recognised in accordance with AASB 6, is
reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If this is the case, the carrying amount of the asset is increased to its recoverable amount.
However, such reversals do not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset in prior years.
(i)
Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is an indication that an asset (or CGU) may be impaired. If any
indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s or CGU’s recoverable
amount. The recoverable amount is the higher of an asset’s or CGU’s FVLCD and its VIU. The recoverable amount is determined
for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets
or groups of assets, in which case, the asset is tested as part of a larger CGU to which it belongs. If the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset/CGU is considered impaired and is written down to its recoverable
amount. Management has assessed its CGU as being the Davyhurst Project, which is the lowest level for which cash inflows are
largely independent of those of other assets.
In calculating VIU, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset/ CGU. In determining FVLCD, recent
market transactions (where available) are taken into account. If no such transactions can be identified, an appropriate valuation
model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies, or
other available fair value indicators.
39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Impairment losses of continuing operations, including impairment of inventories, are recognised in the statement of profit or loss
and other comprehensive income in those expense categories consistent with the function of the impaired asset.
For assets/CGUs, an assessment is made at each reporting date to determine whether there is an indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the
asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the
assumptions used to determine the asset’s/CGU’s recoverable amount since the last impairment loss was recognised. The
reversal is limited so that the carrying amount of the asset/CGU does not exceed either its recoverable amount, or the carrying
amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset/CGU in prior
years. Such a reversal is recognised in the consolidated statement of profit or loss and other comprehensive income as other
income.
(j)
Joint operations
The Group has an interest in a joint arrangement that is a joint operation. A joint arrangement is a contractual arrangement
whereby two or more parties undertake an economic activity that is subject to joint control. Joint control is the contractual agreed
sharing of control of the arrangement which exists only when decisions about the relevant activities (being those that significantly
affect the returns of the arrangement) require unanimous consent of the parties sharing control. To the extent the joint arrangement
provides the Group with rights to the individual assets and obligations arising from the joint arrangement, the arrangement is
classified as a joint operation and as such the Group recognises its:
assets, including its share of any assets held jointly;
liabilities, including its share of any liabilities held jointly;
revenue from the sale of its share of the output arising from the joint operation;
share of revenue from the sale of the output by the joint operation; and
expenses, including its share of any expenses incurred jointly.
All such amounts are measured in accordance with the terms of the arrangement which are in proportion to the Group’s interest
in each asset, liability, income and expense item of the joint operation.
(k)
Trade and other receivables
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by
reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence
that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in
payments are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the
difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original
effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
(l)
Inventories
Inventories include consumable stores, ore stockpiles, gold in circuit and finished goods (dore). Gold bullion, gold in circuit and
ore stockpiles are physically measured or estimated and valued at the lower of cost and net realisable value. Cost represents the
weighted average cost and includes direct purchase costs and an appropriate portion of fixed and variable production overhead
expenditure, including depreciation and amortisation, incurred in converting materials into finished goods.
Net realisable value represents estimated selling price in the ordinary course of business less any further costs expected to be
incurred to completion and disposal.
Consumable stores are valued at the lower of cost and net realisable value. Any provision for obsolescence is determined by
reference to specific items of stock. A regular review is undertaken to determine the extent of any provision for obsolescence.
40 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(m)
Income tax
Current tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from, or paid to, the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted at the reporting date in the countries where the Group operates and generates taxable income.
Current income tax relating to items recognised directly in other comprehensive income or equity is recognised in other
comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns
with respect to situations where applicable tax regulations are subject to interpretation and establishes provisions where
appropriate.
Deferred tax
Deferred income tax is provided using the balance sheet full liability method on all temporary differences between the tax bases
of assets and liabilities and their carrying amounts for financial reporting purposes at reporting date.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction
that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable
profit or loss; or
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any
unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised,
except:
Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse
in the foreseeable future and taxable profit will be available, against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting date and are recognised to the extent that is has become probable that
future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised,
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the
reporting period.
Deferred tax relating to items recognised in other comprehensive income or equity, is recognised in other comprehensive income
and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against
current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
(n)
Contributed equity
Ordinary share capital is recognised at the fair value of the consideration received and is classified as equity. The 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.
41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(o)
Earnings per share
Basic earnings per share is determined by dividing net operating results after income tax attributable to members of the parent
entity, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after-
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to potential ordinary shares.
(p)
Goods and services tax
Revenues, expenses and assets are recognised net of goods and services tax (GST), except where the amount of GST incurred is
not recoverable. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense
item.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from or payable to the
tax authority is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement
of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are
recoverable from or payable to the tax authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
(q)
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is
probable that the Group will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of
money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.
Employee benefits – Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits and other benefits expected to be settled wholly within 12 months
of the reporting date are recognised in current liabilities in respect of employees’ services up to the reporting date and are measured
at the amounts expected to be paid when the liabilities are settled.
Employee benefits – Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date is recognised
in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. Long-term employee benefits are
measured as the present value of expected future payments to be made in respect of services provided by employees up to the
reporting date using the projected unit credit method. Consideration is given to the expected future wage and salary levels, experience
of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date
on high-quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash
outflows.
Rehabilitation costs
Mine rehabilitation costs will be incurred by the Group either while operating, or at the end of the operating life of, the Group’s facilities
and mine properties. The Group assesses its mine rehabilitation provision at each reporting date. The Group recognises a
rehabilitation provision where it has a legal and constructive obligation as a result of past events, and it is probable that an outflow of
resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. The nature of
these restoration activities includes: dismantling and removing structures; rehabilitating mines and tailings dams; dismantling
operating facilities; closing plant and waste sites; and restoring, reclaiming and revegetating affected areas.
The obligation generally arises when the asset is installed, or the ground/environment is disturbed at the mining operation’s
location. When the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying
amount of the related mining assets to the extent that it was incurred as a result of the development/construction of the mine.
42 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Additional disturbances that arise due to further development/construction at the mine are recognised as additions or charges to
the corresponding assets and rehabilitation liability when they occur.
Changes in the estimated timing of rehabilitation or changes to the estimated future costs are dealt with prospectively by
recognising an adjustment to the rehabilitation liability and a corresponding adjustment to the asset to which it relates, if the initial
estimate was originally recognised as part of an asset measured in accordance with AASB 116.
Rehabilitation provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting
is used, the increase in the provision due to the passage of time is recognised as a financing cost. The estimated costs of
rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other circumstances.
Onerous lease contracts
A provision for onerous leases is recognised when the expected benefits (expected lease inflows) to be derived by the Group from
a lease are exceeded by the unavoidable costs of meeting the obligations under existing lease contracts. The provision is
measured as the present value of the of the lower of the expected cost of terminating the lease and the expected net cost of
continuing the lease. Prior to the establishment of a provision for onerous leases, the Group recognises any impairment loss that
has occurred on assets associated with the lease.
(r)
Leases
Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement
so as to reflect the risks and benefits incidental to ownership. A distinction is made between financial leases, which effectively
transfer from the lessor to the lessee, substantially all the risks and benefits incidental to the ownership of the leased asset, and
operating leases, under which the lessor effectively retains such risks and benefits.
Assets acquired under a finance lease arrangement are capitalised. A lease asset and lease liability are established at the fair
value of the leased assets, or if lower, the present value of future minimum lease payments. Leased assets are depreciated over
the shorter of the lease term or the asset’s useful life.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.
The Group is not a lessor in any transactions, it is only a lessee.
(s)
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank, net of any outstanding bank overdrafts.
(t)
Rounding of amounts
The Group has applied the relief available under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 and accordingly, the amounts in the consolidated financial statements and in the director’s report have been rounded
to the nearest thousand dollars, or in certain cases, to the nearest dollar (where indicated).
(u)
Comparative figures
Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.
(v)
Borrowing costs
Borrowing costs can include interest expense calculated using the effective interest method and finance charges in respect of
finance arrangements. Borrowing costs are expensed as incurred except for borrowing costs incurred as part of the cost of
construction of a qualifying asset which are capitalised until the asset is ready for its intended use or sale.
(w)
Share-based payments
Goods or services received or acquired in a share-based payment transaction are recognised as an increase in equity if the goods
or services were received in an equity-settled share-based payment transaction or as a liability if the goods and services were
acquired in a cash settled share-based payment transaction.
43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For equity-settled share-based transactions, goods or services received are measured directly at the fair value of the goods or
services received provided this can be estimated reliably. If a reliable estimate cannot be made the value of the goods or services is
determined indirectly by reference to the fair value of the equity instrument granted using a Black-Scholes option pricing model that
takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with
non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment.
No account is taken of any other vesting conditions.
The cost of equity settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period.
The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number
of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is
the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
Market conditions are taken into account in determining fair value. Therefore, any awards subject to market conditions are considered
to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.
If equity settled awards are modified, as a minimum an expense is recognised as if the modification had not been made. An additional
expense is recognised over the remaining vesting period for any modification that increases the fair value of the share-based
compensation benefit at the date of the modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any
remaining expense of the award is recognised over the remaining vesting period, unless the award is forfeited.
For awards with non-market vesting conditions that are forfeited the accumulated vesting expense is reversed at the date of forfeiture.
If equity settled awards are cancelled, it is treated as if the award had vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated
as if they were a modification.
(x)
Fair value measurement
The Group measures certain assets and liabilities at fair value at each reporting date. Also, from time to time, the fair values of non-
financial assets and liabilities are required to be determined, e.g., when the entity acquires a business, or where an entity measures
the recoverable amount of an asset or CGU at fair value less costs of disposal.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset
or transfer the liability takes place either:
In the principal market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most
advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset
or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by
using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and
best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure
fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities
for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as
follows:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either
directly or indirectly. For derivative hedging instruments, the inputs used are forward gold prices.
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable
44 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
market data.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers
have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to
the fair value measurement as a whole) at the end of each reporting period.
(y)
Current versus non-current classification
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset
is current when it is:
Expected to be realised or intended to be sold or consumed in normal operating cycle;
Held primarily for the purpose of trading;
Expected to be realised within 12 months after the reporting period; or
Cash or cash equivalent, unless restricted from being exchanged or used, to settle a liability for at least 12 months after the
reporting period.
All other assets are classified as non-current.
A liability is current when:
It is expected to be settled in the normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within 12 months after the reporting period; or
There is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
3.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures at
the date of the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on
management’s experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment
to the carrying amount of assets or liabilities affected in future periods.
In particular, the Group has identified a number of areas where significant judgements, estimates and assumptions are required,
as described below:
Significant Judgements
Production start date
The Group assesses the stage of each mine under development/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 start
date are determined based on the unique nature of each mine development/ construction project, such as the complexity of the
project and its location. The Group considers various relevant criteria to assess when the production phase is considered to have
commenced. At this point, all related amounts are reclassified from ‘Mines under construction’ to ‘Property, plant and equipment’.
Some of the criteria used to identify the production start date include, but are not limited to:
Level of capital expenditure incurred compared with the original construction cost estimate;
Completion of a reasonable period of testing of the mine plant and equipment;
Ability to produce metal in saleable form (within specifications); and
Ability to sustain ongoing production of metal.
45 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
When a mine development project moves into the production phase, the capitalisation of certain mine development costs ceases,
and 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, underground mine development or mineable reserve development. It is also
at this point that depreciation/amortisation commences.
During the year ended 30 June 2018, the Group considered the Davyhurst mine had met the abovementioned criteria to support
the commencement of ‘commercial production’.
Deferred tax assets
Deferred tax assets, including those arising from unutilised tax losses, require the Group to assess the likelihood that it will
generate sufficient taxable earnings in future periods, in order to utilise recognised deferred tax assets. Assumptions about the
generation of future taxable profits depend on management’s estimates of future cash flows. These estimates of future taxable
income are based on forecast cash flows from operations (which are impacted by production and sales volumes, commodity
reserves, operating costs, closure and rehabilitation costs, capital expenditure and other capital management
prices,
transactions). To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group
to realise the net deferred tax assets could be impacted. At 30 June 2018, deferred tax assets have not been recognised because
it is not probable that future taxable profit will be available against which the Group can utilise the benefits thereof.
Significant Estimates and Assumptions
Exploration and evaluation costs carried forward
The future recoverability of capitalised exploration and evaluation expenditure is dependent on several factors, including whether
the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation
asset through sale. Factors which could impact the future recoverability include the level of proved, probable and inferred mineral
resources, future technological changes which could impact the cost of mining, future legal changes (including changes to
environmental restoration obligations) and changes to commodity prices. To the extent that capitalised exploration and evaluation
expenditure is determined not to be recoverable in the future, this will reduce profits and net assets in the period in which this
determination is made. At 30 June 2018, the capitalised exploration and evaluation expenditure was written down to nil, as it was
assessed that it was unlikely future economic benefits would be realised for the areas of interest that the expenditure relates to.
Net realisable value of inventories
Gold dore, gold in circuit and ore stockpiles are physically measured or estimated and valued at the lower of cost or net realisable
value. Net realisable value tests are performed at each reporting date and represent the estimated future sales price of the product
the entity expects to realise when the product is processed and sold, less estimated costs to complete production and bring the
product to sale.
Consumable stores are valued at the lower of cost or net realisable value. Any provision for obsolescence is determined by
reference to specific items of stock. A regular review is undertaken to determine the extent of any provision for obsolescence.
At 30 June 2018, the Group recognised a provision against consumable stores of $549,000 for consumable store items identified
as obsolete.
Provision for rehabilitation
Decommissioning and restoration costs are a normal consequence of mining and much of this expenditure is incurred at the end
of a mine’s life. In determining an appropriate level of provision, consideration is given to the expected future costs to be incurred,
the timing of these expected future costs (largely dependent on the life of the mine) and the estimated future level of inflation. The
ultimate cost of decommissioning and restoration is uncertain, and costs can vary in response to many factors including changes
to the relevant legal requirements, the emergence of new restoration techniques or experience at other mine sites. The expected
timing of expenditure can also change, currently proposed to be 2025 (2017: 2024), for example in response to changes in
reserves or to production rates. Changes to any of the estimates could result in significant changes to the level of provisioning
required, which would in turn impact future financial results. At 30 June 2018, the provision of $15.6 million represents
management’s best estimate of the rehabilitation costs required and represents a $3.24 million increase over the 30 June 2017
provision. Refer to Note 16 for further details.
Ore reserve and mineral resource estimates
Ore reserves and mineral resource estimates are estimates of the amount of ore that can be economically and legally extracted
from the Group’s mining properties. Such reserves and mineral resource estimates and changes to these may impact the Group’s
reported financial position and results, in the following way:
46 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The carrying value of exploration and evaluation assets, mine properties and plant and equipment, may be affected due to
changes in estimated future cash flows;
Depreciation and amortisation charges in the statement of profit or loss and other comprehensive income may change
where such charges are determined using the units of production method, or where the useful life of the related assets
change;
The recognition and carrying value of deferred income tax assets may change due to changes in the judgements regarding
the existence of such assets and in estimates of the likely recovery of such assets.
The Group estimates its ore reserves and mineral resources based on information compiled by appropriately qualified persons
relating to the geological and technical data on the size, depth, shape and grade of the ore body and suitable production techniques
and recovery rates. Such an analysis requires complex geological judgements to interpret the data. The estimation of recoverable
reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements and
production costs, along with geological assumptions and judgements made in estimating the size and grade of the ore body.
The Group estimates and reports ore reserves and mineral resources in line with the principles contained in the ‘Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (December 2012 Edition).
As the economic assumptions used may change and as additional geological
operations, estimates of ore reserves and mineral resources may change.
information is produced during the Group’s
Impairment of mine properties
Assets, including plant and equipment, are reviewed for impairment if there is any indication that the carrying amount may not be
recoverable. Where a review for impairment is conducted, the recoverable amount is assessed by reference to the higher of ‘value
in use’ (being the net present value of expected future cash flows of the relevant cash generating unit) and ‘air value less costs to
sell’. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Assessments of the recoverable amounts require the use of estimates and
assumptions such as reserves, mine lives, discount rates, exchange rates, commodity prices, grade of ore mined, recovery
percentage, operating performance, costs and capital estimates.
After consideration of potential indicators of impairment, the Group concluded that there were indicators of impairment present in
relation to the Group’s cash generating unit (‘CGU’) at 30 June 2018. In accordance with the Accounting Standards, the
recoverable amount of the CGU was determined to be its fair value of $39.66 million less costs of disposal of $1.2 million. As a
result, an amount of $26.46 million was recognised as an impairment loss in the consolidated statement of profit or loss and other
comprehensive income for the year ended 30 June 2018. Refer to Note 10 for further details.
Fair value measurements
For financial reporting purposes, ‘fair value’ is the price that would be received to sell an asset, or paid to transfer a liability, in an
orderly transaction between market participants (under current market conditions) at the measurement date, regardless of whether
that price is directly observable or estimated using another valuation technique.
When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be measured
based on quoted prices in active markets, they are measured using valuation techniques including the discounted cash flow
(‘DCF’) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a
degree of judgement is required in establishing fair values.
Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these
factors could affect the reported fair value of financial instruments. At 30 June 2018, the fair value of the Group’s derivative
financial instruments (financial liability) based on observable inputs, other than quoted prices, was $293,000 (30 June 2017:
financial asset $271,000).
When the fair values of non-financial assets/CGUs need to be determined, ie: for the purposes of calculating FVLCD or VIU for
impairment testing purposes, they are measured using valuation techniques including a DCF model. Further information about
the significant judgements, estimates and assumptions impacting impairment testing is contained in Note 10.
Share-based Payments
The Group measures the cost of equity settled share-based payments at fair value at the grant date using the Black-Scholes
model taking into account the exercise price, the term of the option, the impact of dilution, the share price at grant date, the
expected volatility of the underlying share, the expected dividend yield and risk-free interest rate for the term of the option.
47 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
During the year, the Group recognised share-based payments expenses of $1.09 million (30 June 2017: $1.19 million) in the
consolidated statement of profit or loss and other comprehensive income. Refer to Note 30 for details of the key estimates and
assumptions used.
Onerous contracts
The Group has identified it has an onerous contract in relation to a property subject to a non-cancellable lease agreement that
was vacated by the group during the year. The Group has estimated the economic benefits that it is likely to receive from sub-
leasing the property over the remaining lease term based on an annual rate of between $80/sqm to $90/sqm. As the estimated
economic benefits from subleasing the property are less than the obligations under the lease arrangement an onerous lease
provision of $3.6 million was recognised in the consolidated statement of financial position at 30 June 2018 with a corresponding
expense being recognised in the consolidated statement of profit or loss and other comprehensive income. Refer to Note 16.
The calculation of the onerous lease provision is most sensitive to estimated sublease annual rental rates, when the property is
subleased, and any lease incentives included in the subleased.
Annual Subleasing Rates – If the annual rate to sub-lease the property decreased to $80/sqm, the onerous lease provision would
increase by $212,000. If the annual rate to sub-lease the property increased to $90/sqm, the onerous lease provision would
decrease by $212,000.
Sublease dates and incentives – If the property was sub-let in December 2019 with a 12 month rent free period, the onerous lease
provision would increase by $267,000.
4.
OTHER (EXPENSE)/INCOME
Loss on sale of investment
(33)
-
30 June 2018
$’000
30 June 2017
$’000
5.
OPERATING PROFIT(LOSS)
Loss from continuing operations before income tax has been
determined after the following specific expenses:
Depreciation and amortisation
Impairment of mine properties
Exploration and evaluation expensed
Exploration and evaluation written off
Realised hedging loss
Operating lease expenses
Onerous lease provision
Share-based payments
Employee benefits expense
Directors’ fees
Consulting fees
Mining costs
Processing costs
Site contractors and consultants
NRV write-down
Finance costs expensed:
-
-
-
Accretion of rehabilitation provision
Interest bearing loans and borrowings
Other parties
30 June 2018
$’000
30 June 2017
$’000
4,912
26,460
4,154
637
602
1,144
3,602
1,088
10,438
109
1,130
12,784
15,614
5,602
549
441
2,301
-
310
-
9,261
-
-
167
-
1,194
1,157
136
2,629
-
-
-
-
403
-
374
48 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6.
INCOME TAX
Components of tax expense:
(a)
Current tax benefit
Deferred tax
Under/(over) provision in prior years
(b)
Deferred income tax related to items recognised directly
to equity
Gain on Available-for-sale investment
Prima facie income tax expense
(c)
The prima facie tax payable on loss before income tax is reconciled
to the income tax expense as follows:
Prima facie income tax expense on loss before income tax at 30%
(2017: 30%).
Tax effect of:
-
-
expenses not deductible in determining taxable profit/loss
items which are non-assessable in determining taxable
profit/loss
losses and other deferred tax balances not recognised during
the period
-
Income tax benefit attributable to loss
(468)
-
-
(468)
468
-
-
-
-
-
(25,917)
(5,430)
1,477
-
23,972
(468)
559
(64)
4,935
-
Deferred tax assets are recognised for the carry-forward of unused tax losses to the extent that it is probable that taxable profits
will be available in the future against which unused tax losses can be utilised. The deductible carry-forward tax losses do not
expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not
probable that future taxable profit will be available against which the Group can utilise the benefits therefrom.
Given the current status of the Group’s operating activities and the nature of its future plans, it is uncertain as to the extent to
which the carried forward unused tax losses will continue to be available to it in future periods. At the date of this report, the Group
has yet to complete its assessment of the availability or otherwise of its carry forward unused tax losses.
(d)
Tax consolidation
Eastern Goldfields Limited and its wholly owned Australian resident subsidiary have formed a tax consolidated Group with effect
from 1 July 2002. Eastern Goldfields is the head entity of the tax consolidated Group.
(i)
Members of the tax consolidated Group and the tax sharing agreement
Members of the Group have entered into a tax sharing agreement that provides for the allocation of income tax liabilities between
the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial
statements in respect of this agreement on the basis that the possibility of default is remote.
(ii)
Tax effect accounting by members of the tax consolidated Group
The head entity and the controlled entities in the tax consolidated Group continue to account for their own current and deferred
tax amounts. The Group has applied the Group allocation approach in determining the appropriate amount of current taxes and
deferred taxes to allocate to members of the tax consolidated Group. The current and deferred tax amounts are measured in a
systematic manner that is consistent with the broad principles in AASB 112 Income Taxes.
49 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30 June 2018
$’000
30 June 2017
$’000
7.
CASH AND CASH EQUIVALENTS
Cash at bank and on hand
For the purposes of the consolidated statement of cashflow, cash and cash equivalents comprise:
Cash at bank and on hand
5
5
5
5
44
44
44
44
TRADE AND OTHER RECEIVABLES
8.
CURRENT
Trade receivables
GST Receivables
Security deposits (ii)
Related party receivables (iii)
Other receivables
less provision for doubtful debts
Prepayments (i)
NON-CURRENT
Security deposits (iv)
30 June 2018
$’000
30 June 2017
$’000
-
1,156
250
1,217
1,801
(3,268)
1,156
325
1,481
3
6,612
400
232
432
(208)
7,471
515
7,986
64
64
(i)
(ii)
(iii)
(iv)
Prepayments consist of expenses paid in advance.
Security deposits relate to amounts paid to secure the services of contractors. These amounts are not available to finance
the Group’s day-to-day operations and have therefore been excluded from cash and cash equivalents in the Group’s
consolidated statement of cashflows.
These receivables relate to outstanding amounts for shares issued to related parties during the year and advances
provided to related parties for the recharges of certain costs incurred by the Group on behalf of the related party. There
are no interest charges on these amounts.
Security deposits consist of bank guarantees held for the Group’s credit card arrangements. Amounts cannot be released
until such time as any outstanding amounts for these items have been met. These amounts are not available to finance
the Group’s day-to-day operations and have therefore been excluded from cash and cash equivalents in the Group’s
consolidated statement of cashflows.
The carrying amount of trade and other receivables, which is the gross receivable less provisions for doubtful debts,
approximates their fair value. No collateral is held by the Group in relation to any amounts included above.
Impairment of receivables
During the year ended 30 June 2018, the Group recognised expenses of $3,060,000 in relation to provisions for doubtful debts
for related party receivables, other receivables and security deposits that have been fully provided for. The prior year provisions
for doubtful debts relate to other receivables.
50 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
TRADE AND OTHER RECEIVABLES (Continued)
Reconciliation of provision for doubtful debts
Carrying amount at beginning of year
Arising during the year
Carrying amount at the end of year
30 June 2018
$’000
30 June 2017
$’000
208
3,060
3,268
-
208
208
Past due but not impaired
Receivables with balances that are past due but not impaired amount to nil (30 June 2017: Nil).
9
INVENTORIES
CURRENT
Consumables (net of provision for obsolescence)
Ore stockpiles
Gold in circuit at NRV
Finished goods – dore at NRV
Total inventories - lower of cost or NRV
10.
MINE PROPERTIES
Plant and equipment
Gross carrying amount – at cost
Accumulated depreciation and impairment
Construction in progress
Gross carrying amount – at cost
Mine development
Gross carrying value at cost
Accumulated depreciation and impairment
Total mine properties
Gross carrying value at cost
Accumulated depreciation and impairment
Refer to Note 15 for encumbrances against these assets
30 June 2018
$’000
30 June 2017
$’000
-
9
1,561
488
2,058
-
-
-
-
-
30 June 2018
$’000
30 June 2017
$’000
49,315
(35,585)
13,730
14,628
(11,455)
3,173
-
35,197
42,777
(18,047)
24,730
92,092
(53,632)
38,460
17,333
-
17,333
67,158
(11,455)
55,703
51 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30 June 2018
$’000
30 June 2017
$’000
10.
MINE PROPERTIES (Continued)
Reconciliations
Reconciliations of the carrying amounts of mine properties at the beginning and
end of the current financial year
Plant and Equipment
Carrying amount at beginning of year
Additions
Transfers in from construction in progress
Depreciation
Impairment expense
Carrying amount at the end of year
Construction in Progress
Carrying amount at beginning of year
Additions
Transfers
Carrying amount at the end of year
Mine Development
Carrying amount at beginning of year
Additions (i)
Transfers in from construction in progress
Depreciation
Impairment
Carrying amount at the end of year
3,173
197
34,477
(4,274)
(19,843)
13,730
35,197
101
(35,298)
-
17,333
13,744
908
(638)
(6,617)
24,730
3,000
483
-
(310)
-
3,173
607
34,590
-
35,197
-
17,333
-
-
-
17,333
(i) A total of $3.24 million is included above for reassessment of rehabilitation provisions during the year. This amount was
attributed directly to mine properties as the Group at the time of reassessment, was not in production. Refer to Note 16 for further
details.
(ii). Refer to Note 15 for details on asset encumbrances.
Impairment testing
In accordance with its accounting policies and processes, each asset or CGU is evaluated annually at 30 June, to determine
whether there are any indications of impairment or whether there are any circumstances justifying the reversal of previously
recognised impairment losses. Factors, such as changes in assumptions in future commodity prices, exchange rates,
production rates and input costs, are monitored to assess for indications of impairment or reversal of previously recognised
impairments. If any such indications of impairment or impairment reversals exist, a formal estimate of the recoverable amount
is performed. In assessing whether an impairment is required, the carrying value of the asset or CGU is compared with its
recoverable amount, which is the higher of fair value less cost to dispose (‘FVLCD’) and value-in-use (‘VIU’).
The operating performance of the Group during the year to 30 June 2018, was considered to be an indicator of impairment.
Accordingly, the Group has determined the recoverable value of its CGU. Given the current status of the Group’s operations,
the calculation of the recoverable value on a VIU basis is not considered appropriate. Accordingly, the recoverable value of the
Group’s CGU is on the basis of FVLCD. The fair value has been determined based on the highest and best use. The highest
best and use was determined on the basis that a market participant would acquire the entire Davyhurst CGU rather than the
individual assets within the CGU. The fair values were determined by external valuers.
52 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10.
MINE PROPERTIES (Continued)
Cash generating units
CGUs represent a grouping of assets at the lowest level for which there are separately identifiable cash inflows that are largely
independent of the cash inflows from other assets or groups of assets. This results in the Group evaluating its CGUs as
individual mining operations. As the Group has one mining operation, being the Davyhurst Project, this is considered to be the
only CGU, which is consistent with the Group’s presentation of its operating segments. There has been no change in the
determination of the Group’s CGUs since the previous financial year.
In determining the fair value of the Davyhurst CGU separate valuation were performed for plant and equipment and mine property
assets.
Plant and Equipment
Valuation Methodology
The FVLCD was determined using a combination of the following valuation methods:
Depreciated Replacement Cost – involves the determination of the costs of new plant and equipment and the establishment
of reasonable estimates of applicable depreciation;
Comparable Transactions – involves reviewing recent transactions for the sale of plant & equipment on an appropriate
basis.
The valuation is on the basis that the plant and equipment would remain in its current location for continued use, representing
the highest and best use of the asset.
Recoverable Values
The recoverable value of the plant & equipment of $13.73 million, was determined based on its estimated fair value of $14.16
million less estimated costs of disposal of $0.43 million as at 30 June 2018.
The key assumption in determining recoverable value under the Depreciated Replacement Cost method, which was the primary
method used for determining the fair value, is the age of the plant and equipment. Items of plant and equipment were categorised
into two broad categories based on the age of the items, being: Category 1 items, which were items between 23 and 33 years old
had an estimated remaining useful life of three to four years; and Category 2 items, which were items that were replaced or
refurbished in 2016 and 2017 were considered to have remaining useful live based on 90% of their original estimated useful life.
Mine Development
Valuation Methodology
The fair value of mine development assets was determined based on comparable market transactions. Comparable transactions
included recent transactions of mineral asset that were comparable in location and commodity to the Group’s Davyhurst project
and were considered to be arm’s length transactions. Based on the consideration paid and the types of tenements/resources
acquired in the comparable transactions a range of values were determined for the group’s resources, tenements and exploration
prospects.
Recoverable Values
Due to the operational history of the Davyhurst project, the lower end of the range was considered most appropriate in determining
the recoverable value of $24.73 million which includes estimated disposal costs of $0.77 million.
The fair value of the Group’s resources make up more than 80% of the recoverable value. The fair value was determined by
multiplying the Group’s resource by resource multiples from comparable transactions. The resource multiples from comparable
transactions ranged from A$8/oz to A$12/oz for Inferred Resources, and A$12/oz to A$36/oz for Indicated Resources. The value
assigned to the Group’s resource was dependent on when the resource was initially determined with lower value resource
multiples being applied against resources that were not reported under the JORC 2012 code. In future reporting periods, should
there be a change in the resource multiple, based on new comparable transactions, or a revision to the Davyhurst resources this
will impact in the fair value.
53 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10.
MINE PROPERTIES (Continued)
For the Group’s mining, prospecting and exploration tenements fair values were determined based on the size of these tenements
and the consideration price paid in comparable transactions for similar types of tenements.
FAIR VALUE HIERARCHY
The fair value estimates are considered to be Level 3 fair value measurements (as defined by accounting standards – refer
Note 2(x)) as they are derived from valuation techniques that include inputs that are not based on observable market data. The
Group considers the inputs and the valuation approach to be consistent with the approach taken by market participants.
SUMMARY OF IMPAIRMENTS
The following impairment losses were recognised during the period:
Mine Development
Plant & Equipment
11.
CAPITALISED EXPLORATION EXPENDITURE
Exploration and evaluation assets
Carrying amount at beginning of year
Expenditure incurred during the year
Capitalised exploration written off
Carrying amount end of year
30 June 2018
$’000
30 June 2017
$’000
6,617
19,843
26,460
-
-
-
30 June 2018
$’000
30 June 2017
$’000
585
52
(637)
-
454
131
-
585
During the year, $4,154,000 of exploration costs incurred were immediately expensed to ‘Other Operating Expenses’ in the
consolidated statement of profit or loss and other comprehensive income. This amount related to works carried out on the
Davyhurst project. In accordance with the Group’s accounting policy for exploration and evaluation, costs are expensed to the
consolidated statement of profit or loss and other comprehensive income as incurred unless the Directors conclude that a future
economic benefit is more likely than not to be realised.
As at the reporting date, in light of the Group’s revised operating strategy, it was assessed that future economic benefits would
not be realised in relation to this expenditure and the expenditure was written off.
12.
AVAILABLE-FOR-SALE FINANCIAL ASSETS
NON-CURRENT
At fair value (Note 24(a)):
Shares in Orion Gold NL
Shares in Intermin Resources Limited
Total available-for-sale financial assets at fair value
30 June 2018
$’000
30 June 2017
$’000
1,697
2,148
3,845
1,061
1,138
2,199
54 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12.
AVAILABLE-FOR-SALE FINANCIAL ASSETS (Continued)
Reconciliation of fair values at the beginning at the end of the current
and previous financial year:
Opening fair value
Additions
Disposals
Revaluation increments(decrements)
Closing fair value
13.
DERIVATIVE FINANCIAL INSTRUMENTS
NON-CURRENT ASSETS
At fair value (Note 24(a)):
Listed options in Intermin Resources Limited
Cashflow hedging instruments
NON-CURRENT LIABILITIES
At fair value:
Forward gold contract derivatives
14.
TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Accruals
Other Payables
30 June 2018
$’000
30 June 2017
$’000
2,199
24
(44)
1,666
3,845
533
1,669
-
(3)
2,199
30 June 2018
$’000
30 June 2017
$’000
119
-
119
293
293
59
271
330
-
-
30 June 2018
$’000
30 June 2017
$’000
36,324
2,860
1,443
40,627
24,447
1,304
2,867
28,618
Trade payables and accruals are non-interest bearing and are ordinarily settled within 30 to 90 day terms. The carrying amount
of trade payables approximate their fair values.
Included within trade and other payables are balances to related parties totalling $1,233,400 (2017: $1,918,000).
55 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30 June 2018
$’000
30 June 2017
$’000
15.
LOANS AND BORROWINGS
CURRENT
Secured – interest bearing
Revolving Loan Facility – Investec (a)
Reconciliation:
Opening balance
Interest charged
Interest paid
Repayments – cashflows
Drawdowns
Closing balance
CURRENT
Unsecured – interest bearing
Investmet (b)
Michael Fotios Family Trust (b)
Reconciliation:
Opening balance
Interest Charged
Advances
Repayments – cashflows
Repayments – other1
Closing balance
10,102
10,102
10,592
849
11,441
Investmet
$’000
-
955
14,315
(2,178)
(2,500)
10,592
MFFT
$’000
-
77
828
(56)
-
849
15,060
15,060
Investec
$’000
15,060
959
(434)
(5,535)
52
10,102
-
-
-
Total
$’000
-
1,032
15,143
(2,234)
(2,500)
11,441
1.
This represents shares issued in lieu of repayment of the outstanding loan balance.
Terms and conditions for loans and borrowings:
Investec Australia Limited
(a)
As announced on the ASX by the Company on 14 December 2016, Investec Australia Limited (‘Investec’) agreed to provide
debt facilities totalling $25 million under a Syndicated Facilities Agreement. These consisted of:
(i)
(ii)
(iii)
Revolving Loan Facility of $15 million (‘RLF’);
Equity Linked Facility of $10 million (‘ELF’); and
Gold Hedging Facility of 40,000 ounces, half of which the Company is required to undertake and the other half at their
own discretion.
The RLF was subject to the following conditions precedent:
56 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15.
LOANS AND BORROWINGS (Continued)
(i)
(ii)
(iii)
(iv)
(v)
Completion of legal documentation;
Confirmation of a committed $10 million standby facility by Investmet Limited (a company controlled by Michael Fotios);
Satisfactory review of various technical matters in respect of the Davyhurst Gold Project;
Issue of two equal tranches of call options to Investec. The options were exercisable at a 25% premium to the Volume
Weighted Average Price (‘VWAP’) of the Company 11 days prior to the commitment letter date for the first tranche and the
date that the aggregate amount drawn under the RLF exceeds $5 million for the second tranche. Each tranche of call
options is to be of a sufficient number to repay up to $2.5 million of the RLF;
Other conditions precedent for facilities typical of those being provided.
The Group has provided security for the RLF as follows:
(i)
(ii)
(iii)
General security agreements over all of their current and future assets;
Specific security agreements over the ordinary shares in the capital of each of the guarantors;
Other security of the Company as required by Investec, acting reasonably in the context of financing transactions of this
nature.
As outlined in the Syndicated Facility Agreement, interest payable on the RLF and ELF is determined as follows:
RLF – 4% margin plus BBR
ELF – 1.5% margin plus BBR
At 30 June 2018, the Group had fully drawn its available facilities under the RLF of $10 million ($5 million having been repaid
during February 2018, in accordance with the terms of the RLF). The facility maturity date was 1 February 2019 with $5 million
required to be repaid by 1 August 2018 with any remaining principal and accrued interest repaid by 1 February 2019. At 30 June
2018, the Group had $10 million undrawn in relation to the ELF.
During the year, conditions outlined in the syndicated facility agreement were breached whereby Investec could require the
outstanding facility balance to be repaid immediately.
On 28 August 2018 Hawke’s Point Holdings I Ltd (‘Hawke’s Point’) completed the acquisition of the outstanding debt owed by the
Group to Investec, pursuant to the Investec Debt Facility, as well as the assignment of the Syndicated Facility Agreement (and
associated security documents), from Investec. Refer to Note 31 for further information.
Investmet Limited, Michael Fotios Family Trust
(b)
The terms of the Investmet standby and Michael Fotios Family Trust loan facilities are:
(i)
(ii)
(iii)
Principal amount not to exceed $15 million;
Maturity date of 6 months after the Investec RLF is closed out;
Interest is charged at 19% whilst the facility is unsecured; 10% whilst the facility is secured but ranking second in priority
and distribution to the Syndicated Facilities Agreement or 3% above BBR whilst the facility is secured and first ranking in
priority and distribution. As at 30 June 2018 the Investmet standby and Michael Fotios Family Trusts facilities were
unsecured with an interest rate of 19% being charged on outstanding balances.
PROVISIONS
16.
CURRENT
Employee Benefits
Onerous Lease
Total
NON-CURRENT
Provision for rehabilitation
Onerous lease
30 June 2018
$’000
30 June 2017
$’000
349
954
1,303
15,595
2,648
18,243
206
-
206
11,912
-
11,912
57 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16.
PROVISIONS (Continued)
Provision for rehabilitation
(a)
Carrying amount at beginning of year
Movement as a result of re-assessment of provision
Accretion
Carrying amount at the end of year
30 June 2018
30 June 2017
$’000
$’000
11,912
3,242
441
15,595
9,380
2,129
403
11,912
The Group makes full provision for the future cost of rehabilitating mine sites and related production facilities on a discounted
basis on the development of mines or installation of those facilities.
The rehabilitation provision represents the present value of rehabilitation costs relating to mine sites. These provisions for 2018,
have been based on estimates provided by an external consultant, who was commissioned by the Group in June 2018. Key
inclusions and pertinent matters underpinning the provision are:
The provision covered the four Project Areas, being Carnegie, Siberia, Mt Ida and Heron;
Project Areas (apart from the Davyhurst Project site) have undergone limited scale exploration activities and have been
on care and maintenance;
Costing estimates at 30 June 2018 for the four Project Areas, included actual mining contractor and equipment rates and
average industry contracting rates;
The provision incorporates costs for the demolition and cartage of fixed infrastructure to the nearest nominated waste
disposal area;
No allowance has been made for decommissioning of assets not owned by the Group but are located on Group owned
leases;
The rehabilitation costs being incurred over an eight-year period;
A 15% contingency has been included in the provision calculation; and
An allowance has been made within the Contingency, for post-closure maintenance and reworking of environmental
rehabilitation.
Assumptions, which are based on the current economic environment, have been made which the Company believes are a
reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to take into account any
material changes to the assumptions. However, actual rehabilitation costs will ultimately depend upon future market prices for
necessary decommissioning works required which will reflect market conditions at the relevant time.
During the financial year ended 30 June 2018, management undertook a detailed review of the Group’s future rehabilitation
obligations in relation to the mine. This re-assessment resulted in a $3.24 million increase in provisions (2017 increase: $2.13
million). This amount was capitalised to mine property assets during the year.
(b)
Provision for onerous lease
Carrying amount at beginning of year
Arising during the year
Carrying amount at the end of year
30 June 2018
$’000
30 June 2017
$’000
-
3,602
3,602
-
-
-
The onerous lease provision represents the unavoidable costs discounted to present value for an onerous property lease
arrangement. The unavoidable costs represent the minimum lease payment over the remaining lease term of eight years less any
estimated benefits expected to be received from being able to sublease the property.
58 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17.
CONTRIBUTED EQUITY
30 June
2018
No.
30 June
2018
$’000
30 June
2017
No.
30 June
2017
$’000
Issued and Paid up capital
761,784,738
287,168
559,778,054
251,282
The fully paid ordinary shares have no par value.
(a)
Movements in share capital
Balance at 1 July 2016
28/12/2016 Shares issued upon exercise of options
26/04/2017 Shares issued at $0.35 per share – Tranche 1 of
placement shares
26/04/2017 Shares issued at $0.168 per share – Exercise of options
26/04/2017 Shares issued at $0.15 per share – Relating to March
2016 capital raising
30/05/2017 Shares issued at $0.35 per share – Tranche 1 of
placement shares
30/05/2017 Shares issued at $0.35 per share – Conversion of debt
7/06/2017 Shares issued at $0.35 per share – Tranche 2 of
placement shares
7/06/2017 Shares issued – Conversion of ESOP Options to shares
using cashless exercise facility
30/06/2017 Shares issued at $0.168 per share – Exercise of options
30/06/2017 Shares issued – Conversion of Michael Fotios debt as
approved at EGM on 29 May 17
Cost of Capital Raising
No.
489,597,819
3,600,000
34,985,205
750,000
100,000
8,571,429
5,000,000
3,956,935
416,666
1,200,000
11,600,000
-
$'000
228,343
643
12,245
126
15
3,000
1,750
1,385
-
202
4,060
(487)
Balance at 30 June 2017
559,778,054
251,282
14/07/2017 Shares at issue price of $0.35 per share – portion of
tranche 2 placements
14/07/2017 Shares at an issue price of $0.168 per share – exercise
of 650,000 options utilising the cashless exercise facility
14/07/2017 Shares issue at $0.168 – exercise of options
02/11/2017 Shares issued pursuant to Stirling Settlement Deed as
announced 30 December 2015
01/02/2018 Shares issued at issue price of $0.20 per share
01/02/2018 Shares issue at a deemed issue price of $0.20 per share
02/02/2018 Shares issued to Hawkes Point under tranche 2 of
placement at issue price of $0.20 per share
28/02/2018 Shares issued at issue price of $0.20 per share – non-
15/03/2018
renounceable rights issue
Issue of shares at issue price of $0.20 per share
pursuant to underwriting agreement entered in relation to
the Company's non-renounceable rights issue.
06/04/2018 Shares issued on conversion of 12,950,000 options at
06/04/2018
exercise price of $0.168 expiring 8 March 2018
2,135,851 shares issued on conversion of 6,975,000
options exercisable at $0.168 expiring 8 March 2018
using cashless exercise facility
21/05/2018 Shares issued at $0.20 per share, pursuant to shortfall
offer in relation to non-renounceable rights issue
21/05/2018 Shares issued on conversion of 250 options at
conversion price of $0.25 expiring 2 February 2023
21/05/2018 Shares issued on conversion of 250 options at
conversion price of $0.275 expiring 2 February 2023
Cost of Capital Raising
Balance at 30 June 2018
100,000
324,030
250,000
4,500,000
65,350,000
750,000
87,500,000
14,021,303
11,000,000
12,950,000
2,135,851
3,125,000
250
250
35
-
42
-
13,070
150
17,500
2,804
2,200
2,176
-
625
-
-
-
761,784,738
(2,716)
287,168
59 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17.
CONTRIBUTED EQUITY (Continued)
Non-cash equity transactions during the year comprised:
(i)
(ii)
(iii)
(iv)
Shares issued to settle related party loans in the amount of $2,500,000 (2017: Nil);
Shares for which payment has not been received at 30 June 2018 in the amount of $2,591,000 (2017: Nil);
Shares issued to settle supplier invoices and salaries in the amount of $3,172,000 (2017: $5,810,000); and
Shares issued for services provided as part of capital raising for the amount of $400,000 (2017: Nil).
(b)
Rights of each type of share
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares
held. At shareholders meetings each ordinary share gives entitlement to one vote when a poll is called.
(c)
Share Options
Options over ordinary shares:
Employee share scheme
The Group continued to offer employee participation in short-term and long-term incentive schemes as part of the remuneration
packages for the employees of the Group. Refer to Note 30 for further information.
(d)
Capital Management
When managing capital, management's objective is to ensure the Group continues to maintain optimal returns to shareholders
and benefits for other stakeholders, whilst also trying to safeguard the Group’s ability to continue as a going concern.
In order to achieve this overall objective, the Group’s capital management, amongst other things, aims to ensure that it meets its
obligations attached to its interest-bearing loans and borrowings that form part of its capital structure, as well as its obligations to
its trade creditors. Subsequent to 30 June 2018, the Group entered into repayment arrangements with certain trade creditors and
restructured its existing interest-bearing loans and borrowings. While a number of the repayment plans with trade creditors have
been adhered to, a number have not. Following an unsuccessful attempt to recapitalise the Group during September 2018, the
Group entered Voluntary Administration on 29 November 2018. Subsequently, a Deed of Company Arrangement was approved
at a meeting of creditors on 1 February 2019. Refer to Note 31 for further information.
(e)
Dividends paid or proposed
No dividends were paid or proposed during the current or previous financial year. No dividends have been proposed subsequent
to the end of the current financial year.
RESERVES
18.
Available-for-sale financial asset reserve
Cash flow hedge reserve
Share-based payment reserve
Notes
30 June 2018
$’000
30 June 2017
$’000
(a)
(b)
(c)
1,218
-
11,892
13,110
20
271
9,875
10,166
Available-for-sale financial asset reserve
(a)
(i) Nature and purpose of reserve
This reserve is used to record unrealised movements in fair values of financial assets classified as available-for-sale and not
distributable.
(ii) Movements in reserve
Balance at beginning of year
Change in fair value of available-for-sale financial assets, net of tax
Balance at end of year
20
1,198
1,218
23
(3)
20
60 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes
30 June 2018
$’000
30 June 2017
$’000
18.
RESERVES (Continued)
(b)
Cash flow hedge reserve
(i) Nature and purpose of reserve
This reserve is used to record gains or losses on derivatives that are designed and qualify as cash flow hedges and that are
recognised in other comprehensive income. Amounts are reclassified to profit and loss when the associated hedged
transaction affects profit or loss.
(ii) Movements in reserve
Balance at beginning of year
Charge for the year due to ineffective hedge
Reclassification to profit and loss net of tax
Balance at end of year
271
-
(271)
-
-
271
271
As the hedge no longer meets the criteria for hedge accounting the gain has been reclassified to profit and loss.
Share-based payments reserve
(c)
(i) Nature and purpose of reserve
This reserve is used to record the fair value of shares or options issued to employees and directors as part of their
remuneration. The balance is transferred to share capital when options are granted, and balance is transferred to retained
earnings when options lapse.
(ii) Movements in reserve
Balance at beginning of year
Share-based payments expense
Options issued in lieu of payment for share raising costs
9,875
1,088
929
8,029
1,846
-
Balance at end of year
11,892
9,875
19.
REMUNERATION OF AUDITORS
Amounts paid or due and payable to:
Ernst & Young
-
Auditing and reviewing the financial reports
No non-assurance services (2017: Nil) were provided during the
financial year.
20.
COMPENSATION OF KEY MANAGEMENT PERSONNEL
-
-
-
Short-term employee benefits
Post-employment
Share-based payments (refer note 30)
30 June 2018
$’000
30 June 2017
$’000
248
248
171
171
30 June 2018
$’000
30 June 2017
$’000
644
-
-
644
557
-
-
557
61 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
21.
EXPENDITURE COMMITMENTS
Under the terms of mineral tenement licences held by the Group, minimum annual expenditure obligations of $4,447,237 (2017:
$5,284,798) may be required to be expended during the forthcoming financial year in order for the tenements to maintain a status
of good standing. This expenditure may be incurred by the Group and may be subject to variation from time to time in accordance
with Department of Industry and Resources regulations.
Any additional expenditure commitments to those amounts detailed above, will be addressed as part of the implementation of
Deed of Company Arrangement. Refer to Note 31 for further information.
22.
SEGMENT INFORMATION
For the year ended 30 June 2018, the Group’s focus has been on the exploration and evaluation of its interests in mineral tenement
licences associated with the Davyhurst Gold Project.
The Group operates in Australia.
Group performance is evaluated based on the financial position and operating profit or loss and is measured on a consistent basis
with the information contained in the consolidated financial statements. As such, no additional information is provided to that
already contained in the consolidated financial statements.
Major Customer
During the year ended 30 June 2018, all of the Group’s revenue of $16,152,000 was derived from sales to one customer, being
Perth Mint. For the year ended 30 June 2017, the Group generated no revenue.
23.
RELATED PARTY TRANSACTIONS
(a)
A list of Controlled entities can be found at Note 25 of this financial report.
(b)
Directors who held office for any time during the period are disclosed in the Director’s Report.
(c)
Terms and conditions of transactions with related parties:
Outstanding balances at the year-end are unsecured and settlement occurs in cash unless agreed otherwise. There have
been no guarantees provided or received for any related party receivables or payables.
(d)
Transactions with related parties:
The following transactions occurred during the year between the Group and Directors or their director-related entities:
Delta Resources Management Pty Ltd, a company in which Michael Fotios is a substantial shareholder and director, provided
technical and administrative support to the Company to the value of $980,000 inclusive of GST (30 June 2017: $330,500). A
total of $1,048,000 remains due and payable as at 30 June 2018 (30 June 2017: $93,000);
Whitestone Minerals Pty Ltd, a company which is 100% owned by Investmet Ltd, a company in which Michael Fotios is a
substantial shareholder and director, provided consulting services to the Company to the value of $2,704,000 inclusive of
GST (30 June 2017: $12,021,000). $168,400 remains due and payable as at 30 June 2018 (30 June 2017: $2,671,000).
$2,200,000 worth of services received were settled by way of shares issued as approved at a general meeting of shareholders
held on 4 January 2018;
Horseshoe Metals Limited, a company in which Michael Fotios is a substantial shareholder and director, received no
consulting and administrative support from the Company (30 June 2017: $75,000). A total of $75,000 remains due and
receivable by the Group as at 30 June 2018 (30 June 2017: $75,000). A loan of $36,000 is receivable (30 June 2017: Nil),
however has been fully provided for. Interest has not been charged on the outstanding amounts;
62 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. RELATED PARTY TRANSACTIONS (Continued)
Scorpion Minerals Limited (formerly Pegasus Metals Limited), a company in which Michael Fotios is a substantial shareholder,
received no consulting and administrative support from the Company (30 June 2017: $25,000). $4,000 remains due and
receivable by the Group as at 30 June 2018 (2017: $25,000) which have been fully provided for in the financial statements.
Interest has not been charged on the outstanding amount;
Redbank Copper Limited, a company in which Michael Fotios is a substantial shareholder and director, received no consulting
and administrative support from the Company (30 June 2017: $35,000). $35,000 remains due and receivable by the Group
as at 30 June 2018 (30 June 2017: $35,000) and has been fully provided for (30 June 2017: $102,000). Interest has not been
charged on the outstanding amount;
Crixus Pty Limited, a company in which Michael Fotios is a substantial shareholder and director, converted 5,000,000 options
valued at $840,000 (30 June 2017: Nil) which remains due and receivable by the Group as at 30 June 2018. A provision for
doubtful debts has been included in these financial statements for the outstanding balance of $840,000;
Apollo Corporation (WA) Pty Ltd, a related party company to Michael Fotios, converted 2,500,000 options valued at $420,000
(30 June 2017: Nil) which remains due and receivable by the Group as at 30 June 2018. A provision for doubtful debts has
been included in these financial statements for the outstanding balance of $420,000;
Allan Still converted 1,800,000 options valued at $302,400 (30 June 2017: Nil) which remains due and receivable by the
Group as at 30 June 2018. A provision for doubtful debts has been included in these financial statements for the outstanding
balance of $302,400;
During the year the Group drew down on a loan with Investmet Limited (‘Investmet’), a company in which Michael Fotios is a
substantial shareholder and director. The interest rate applicable to the loan was 4.5% to 30 January 2018 and 19% thereafter.
A total of $14,315,000 was drawn down on the loan, interest of $955,000 was incurred and repayments of $4,678,000 were
made during the year (refer to Note 15 for further details). At 30 June 2018 the outstanding loan balance is $10,592,000 (30
June 2017: $Nil). Investmet also provided consulting services to the Group to the value of $372,000 inclusive of GST (30
June 2017: $17,000). $17,000 remains due and payable by the Company as at 30 June 2018 (30 June 2017: $15,000).
Interest is not charged on the consulting services;
During the year, the Group drew down on a loan with the Michael Fotios Family Trust. The interest rate applicable to the loan
was 4.5% up to 30 January 2018 and 19% thereafter. A total of $828,000 was drawn down on the loan, interest of $77,000
was incurred and repayments of $56,000 were made during the year (refer to Note 15 for further details). At 30 June 2018
the outstanding loan balance was $849,000.
24. FINANCIAL RISK MANAGEMENT
The Group’s principal financial liabilities, other than derivatives, comprise trade payables, secured and unsecured loans and
borrowings. The main purpose of these financial instruments is to manage cash flow and assist the Group in its daily operational
requirements. The Group’s principal financial assets, other than derivatives, comprise trade and other receivables, available-for-
sale equity investments and cash that arises directly from its operations.
The Group is exposed to the following financial risks in respect to the financial instruments that it held at the end of the reporting
period:
Equity price risk;
Interest rate risk;
Credit risk;
Liquidity risk; and
Commodity price risk.
The Directors have overall responsibility for identifying and managing operational and financial risks.
63 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. FINANCIAL RISK MANAGEMENT (Continued)
(a)
Equity price risk
At reporting date, the Group owned 42,433,333 (2017: 42,433,333) listed shares in Orion Gold NL, 12,258,151 (2017: 6,250,000)
listed shares in Intermin Resources Limited and 6,250,000 (2017: 3,125,000) listed options in Intermin Resources Limited. The
Group’s listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment
securities. The Group manages the equity price risk through, where appropriate, diversification and by placing limits on individual
and total equity instruments. Reports on the equity portfolio are submitted to the Group’s senior management on a regular basis.
The Group’s Board of Directors reviews and approves all equity investment decisions.
At the reporting date, the exposure to listed equity securities at fair value was $3.96 million (2017: $2.26 million). A decrease of
10% in the price of securities on reporting date would have an impact of $396,100 (2017: $225,800) on the equity attributable to
the Group, depending on whether the decline is significant or prolonged. An increase of 10% in the value of the listed securities
would impact equity and would have an immaterial impact on profit or loss.
(b)
Commodity price risk
The Group is exposed to commodity price risk through the gold bullion it produces from its Davyhurst operations. Contracts for
the sale and physical delivery of gold are executed on a pricing basis intended to achieve a relevant index target. The pricing is
determined by the Group’s sole customer, being Perth Mint. Where pricing terms deviate from the index, derivative commodity
contracts may be used when available to return realised prices to the index. Gold future markets and economic forecasts are
constantly monitored to determine whether to implement a hedging programme.
(c)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in
market interest rates.
The effective weighted average interest rates for each class of financial asset and liability is set out below.
An increase/decrease of 1% in the interest rate applicable to the loans on the reporting date would result in an increase/decrease
in net loss of $101,000 (2017: $151,000).
30 June 2018
Financial instruments
Interest bearing
$'000
Non-interest
bearing
$'000
Total carrying
amount
$'000
Financial assets
Cash
Related party receivables
Other receivables (Note 8)
Total financial assets
30 June 2018
-
-
-
-
5
1,217
1,801
3,023
5
1,217
1,801
3,023
Financial instruments
Interest bearing
Non-interest
bearing
Total carrying
amount
$'000
$'000
$'000
Financial liabilities
Loans – variable interest
Loans – fixed interest
Trade/Other Payables
Derivatives
Total financial liabilities
10,102
11,441
-
-
21,543
-
40,627
293
40,920
10,102
11,441
40,627
293
62,463
64 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. FINANCIAL RISK MANAGEMENT (Continued)
30 June 2017
Financial instruments
Interest bearing
$'000
Non-interest
bearing
$'000
Total carrying
amount
$'000
Financial assets
Cash
Trade/Other Receivables
Derivatives
Total financial assets
-
-
-
-
44
1,374
271
1,689
44
1,374
271
1,689
Financial instruments
Interest bearing
Financial liabilities
Loans – variable interest
Trade/Other Payables
Total financial liabilities
(d)
Liquidity risk
$'000
15,060
-
15,060
Non-interest
bearing
$'000
Total carrying
amount
$'000
70
28,530
28,600
15,130
28,530
43,660
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that are
settled by delivering cash or another financial asset. The Group’s objective is to maintain a balance between continuity of funding
and flexibility through the use of loans and other available lines of credit. The Group manages liquidity risk by monitoring forecast
cash flows. The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments and interest
resulting from recognised financial assets and liabilities as of 30 June 2018. Cash flows for financial assets and liabilities without
fixed amount or timing are based on the conditions existing at 30 June 2018.
Maturity analysis
The tables below represent the undiscounted contractual settlement terms for financial instruments and managements expectation
for settlement of maturities.
Year ended 30 June
2018
< 6 months
6-12 months
1-5 years
Loans
Creditors
Derivatives
Net maturities
$'000
5,022
40,627
293
45,942
$'000
18,997
-
-
18,997
$'000
-
-
-
-
Year ended 30 June
2017
< 6 months
6-12 months
1-5 years
Loans
Creditors
Net maturities
(e)
Credit risk
$'000
-
28,530
28,530
$'000
10,950
-
10,950
$'000
5,568
-
5,568
Total
contractual
cash flows
$'000
Carrying
amount
$'000
24,019
40,627
293
64,939
21,543
40,627
293
62,463
Total
contractual
cash flows
$'000
16,518
28,530
45,048
Carrying
amount
$'000
15,060
28,530
43,590
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to
a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade and other receivables). Exposure
to credit risk associated with its financing activities arising from deposits with banks and financial institutions, foreign exchange
transactions and other financial instruments is not considered to be significant.
65 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. FINANCIAL RISK MANAGEMENT (Continued)
The Group trades only with recognised creditworthy third parties. The Group’s only customer is Perth Mint and at 30 June 2018,
the exposure to credit risk associated with this customer and trade receivables is not significant.
The maximum exposure to credit risk for trade and other receivables at the reporting date is the carrying value of each class of
financial assets disclosed in Note 8. The Group does not hold collateral as security.
(f)
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates is not significant as all its sales
are to Perth Mint and are denominated in Australian Dollars. At reporting date, the Group has no monetary assets or liabilities
denominated in currencies other than the Australian Dollar.
(g)
Fair values versus carrying values
Set out below is a comparison of the carrying amounts and fair values of financial instruments as at 30 June 2018:
Financial Assets
Cash and cash equivalents
Derivative financial instruments
Financial Assets
Total
Financial Liabilities
Loans and borrowings (i)
Trade and other payables (i)
Total
30 June 2018
Carrying Amount
$’000
30 June 2018
Fair Value
$’000
5
119
3,845
3,969
21,543
40,627
62,170
5
119
3,845
3,969
17,835
27,848
45,683
The carrying values of financial assets and financial liabilities as at 30 June 2018 which are not measured at fair value,
approximate their fair values as a result of their short maturity, except as disclosed as follows:
The fair values have been estimated using inputs that are based on the Group’s net liability position. The fair value
estimate first allocates the total assets of the Group of $46.03 million less employee benefits provisions of $1.2 million
to the secured loans and borrowings, statutory payables and unpaid employee accruals, after which any residual
amount was allocated to the remaining unsecured loans and borrowings and trade and other creditors. The fair values
were determined using level 3 inputs.
At 30 June 2017, the carrying values of financial assets and financial liabilities which are not measured at fair value, but for
which fair values should be disclosed, approximate to their fair values as a result of their short maturity.
66 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. FINANCIAL RISK MANAGEMENT (Continued)
(h)
Fair value measurements
The following table provides the fair value classification of those assets and liabilities held by the Group that are measured on a
recurring basis at fair value.
Year ended 30 June 2018
Recurring fair value measurements (Note 2(x))
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
Financial assets
Available-for-sale financial assets at fair value
Derivatives – listed options
Financial liabilities
Derivative – hedging instruments
Totals
Year ended 30 June 2017
Recurring fair value measurements
Financial assets
Available-for-sale financial assets at fair value
Derivatives – listed options
Derivatives – hedging instruments
Totals
3,845
119
-
3,964
-
-
(293)
(293)
Level 1
$’000
Level 2
$’000
Level 3
$’000
2,199
59
-
2,258
-
-
271
271
-
-
-
-
-
-
-
-
3,845
119
(293)
3,671
Total
$’000
2,199
59
271
2,529
There were no transfers between the fair value hierarchy measurement levels during the current or previous financial year.
25.
INVESTMENTS IN CONTROLLED ENTITIES
Name of controlled entities
Monarch Nickel Pty Ltd
Monarch Gold Pty Ltd (i)
Carnegie Gold Pty Ltd
Siberia Mining Corporation Pty Ltd
Eastern Goldfields Mining Services Pty Ltd
Controlled entities of Siberia Mining Corporation Pty Ltd
Mt Ida Gold Operations Pty Ltd
Ida Gold Operations Pty Ltd
Pilbara Metals Pty Ltd
Siberia Gold Operations Pty Ltd
Mt Ida Gold Pty Ltd
Country of
incorporation
Class
of shares
Equity holding
2018
2017
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
80
100
100
100
100
100
100
100
100
100
80
100
100
-
100
100
100
100
100
(i) This entity is in the process of being deregistered and has no assets or liabilities no operating results for the year (2017: Nil).
Holding Company
The ultimate holding company of the Group is Eastern Goldfields Limited (In Administration and Subject to Deed of Company
Arrangement), which is based and listed in Western Australia.
67 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26.
INTERESTS IN JOINT OPERATIONS
The Group entered into a joint arrangement with Kingsday Holdings Pty Ltd for the operation of the Mt Ida Excluded Area joint
operation. Under the agreement Eastern Goldfields retains a 70% interest in the asset and funds 100% of the joint operations
expenditure. The Group entitled to recover the contributions it has made from future gold production.
As at 30 June 2018 funding in excess of the Group’s working interest in the project amounts to $6,534,637 (2017: $6,534,637).
An applicable notional interest rate of 30% will be charged on these contributions, subject to an interest free period of 20 months
commencing when Eastern Goldfields recommences mining operations. The Group’s expenditure in respect of the joint operation
is brought to account initially as exploration and evaluation expenditure in the consolidated statement of profit or loss and other
comprehensive income.
The joint operation has no contingent liabilities or capital commitments.
27.
CONTINGENT LIABILITIES
The Company (and its wholly owned subsidiaries) is a party to various proceedings in the Wardens Court pursuant to which third
parties are seeking to challenge its title to various mining tenements by way of forfeiture and other proceedings. The Company
has legal representation in respect of these plaints. The Director does not believe the plaints have a reasonable prospect of
success and the plaints will be vigorously defended by the Group.
28.
CASH FLOW STATEMENT
(a)
Reconciliation of cash and cash equivalents
Cash balances comprise:
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash
equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts.
(b)
Reconciliation of net cash outflow from operating
activities to loss after income tax
Loss after income tax
Adjusted for non- cash items:
Depreciation of property, plant and equipment
Impairment writedown
Interest expense – capitalised against loan
Accretion of rehabilitation provision
Share-based payments
Payments to suppliers made via equity settlement
Loss on sale of investments
Loss on fair value hedge
Income tax benefit
Changes in operating assets and liabilities:
Decrease/(Increase) in receivables
Increase in inventories
Increase/(decrease) in payables (excluding capital items)
Increase of provisions
Net cash outflow from operating activities
30 June 2018
$’000
30 June 2017
$’000
5
44
(85,922)
(18,103)
4,912
27,097
1,556
441
1,088
3,172
33
293
(468)
9,096
(2,058)
12,009
3,746
(25,005)
310
-
200
403
1,194
5,810
-
-
-
(7,196)
-
(1,414)
143
(18,653)
68 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29.
EARNINGS (LOSS) PER SHARE
Loss used in the calculation of basic loss per share
Weighted average number of ordinary shares on issue used in the
calculation of basic earnings per share
Effect of dilution:
Weighted average number of ordinary shares on issue adjusted for
the effect of dilution
(85,922)
Number
(18,103)
Number
628,219,995
-
503,722,482
-
628,219,995
503,722,482
Loss per share (basic and diluted)
(0.14)
(0.03)
A total of 226,688,555 options were on issue as at 30 June 2018 (2017: 57,258,501) and have not been accounted for in the
above diluted loss per share calculations, as the Group was in a loss position for the year ended. Further disclosure of options on
issue is included within the Director’s Report for the year.
30.
SHARE-BASED PAYMENTS
Share-based payments are provided to directors, consultants and other advisors. The issue to each individual director, consultant
or advisor is controlled by the Board and the ASX Listing Rules. Terms and conditions of the payments are determined by the
Board, subject to approval where required.
Movements during the year
At 1 July
Granted during the year
Forfeited during the year
Exercised /expired during year
At 30 June
2018
Nos.
57,258,501
189,638,388
-
(20,208,334)
226,688,555
2018
WAEP ($)
0.1996
0.2567
-
0.1680
0.2608
2017
Nos.
48,200,000
15,025,167
-
(5,966,666)
57,258,501
2017
WAEP ($)
0.1785
0.3328
-
0.1647
0.1996
The fair value of options granted during the 2018 year was calculated at the date of grant using the Black-Scholes option pricing
model. The valuation model inputs used to determine the fair value at the grant dates, were as follows:
Option Series
Fair value per option
Grant date
Number of options
Expiry date
Exercise price
Price of shares on grant date
Estimated volatility
Risk-free interest rate
Dividend yield
Tranche
1
$0.0774
2/2/2018
1,000,000
2/2/2021
$0.465
$0.233
76%
2.12%
0%
Tranche
2
$0.1114
2/2/2018
7,642,500
2/2/2021
$0.26
$0.233
76%
2.12%
0%
Tranche
3
$0.0250
1/5/2018
4,000,000
1/5/2019
$0.23
$0.15
76%
1.80%
0%
Tranche
4
$0.0380
1/5/2018
4,000,000
1/5/2020
$0.271
$0.15
76%
1.80%
0%
Tranche
5
$0.0483
1/5/2018
4,000,000
1/5/2021
$0.308
$0.233
76%
1.80%
0%
Tranche
6
$0.0218
1/5/2018
1,000,000
1/5/2019
$0.25
$0.15
76%
1.80%
0%
Tranche
7
$0.0184
1/5/2018
1,000,000
1/5/2019
$0.275
$0.15
76%
1.80%
0%
A share-based payment expense of $1,088,000 was recognised in the statement of profit or loss and other comprehensive income
for the year ended 30 June 2018 and $929,000 was recognised as a share-based payment expense that was offset against share
capital.
69 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31.
SUBSEQUENT EVENTS
The following events have occurred since the end of the financial year up to the date of this financial report and are summarised
below:
1.
2.
3.
4.
5.
6.
7.
8.
On 1 July 2018, the Company appointed Brendon Morton as Company Secretary following the resignation of Shannon
Coates, effective as at 30 June 2018;
On 8 August 2018 the Group entered a repayment plan with the ATO in relation to a debt of $421,689. The final payment
under the plan of $321,689 was made on 31 August 2018;
On 13 August 2018 the Group announced a settlement had been agreed with GR Engineering Services Ltd (‘GR’) involving
the payment of cash to GR and the issue of Eastern Goldfields shares to the total value of $8.25 million (inclusive of GST),
payable in three tranches. On 4 November 2018 the Group reached agreement with GR that the final instalment would be
paid on or before 30 November 2018. This payment has not been made and as a result,
the settlement was
withdrawn/cancelled;
On 16 August 2018 a Deed of Settlement was executed between the Group and Eureka Mine Constructions Pty Ltd, which
required payment to Eureka of $150,000 by 20 September 2018. This payment was not made;
On 28 August 2018 Hawke’s Point Holdings Ltd (‘Hawke’s Point’) completed the acquisition of the outstanding debt owed
by the Group to Investec, pursuant to the Investec Debt Facility, as well as the assignment of the Syndicated Facility
Agreement (and associated security documents), from Investec;
On 3 September 2018 all mining and processing activities were suspended to mitigate spending, whilst a proposed
recapitalisation plan was developed;
On 27 September 2018 the Group raised an additional $8.75 million from the issue of convertible notes to each of Hawke’s
Point, Donald Smith Value Fund LP, National Nominees Ltd (as nominee for Perennial Value Microcap Opportunities Fund)
and Wyllie Group Pty Ltd;
On 28 September 2018 the Group announced a $75 million recapitalisation plan. This plan included a restructured board
and leadership team, and a $5 million entitlements issue to existing shareholders. The $75 million recapitalisation plan was
to comprise:
a.
b.
c.
d.
$8.75 million interim funding via the issue of secured convertible loan notes;
$36.8 million placement to sophisticated, professional and institutional investors;
Up to $17.5 million of in-kind services to be performed by Adaman Resources Pty Ltd; and
Conversion of the Syndicated Facility of $9.6 million and certain trade creditors of $2.5 million;
9.
On 27 November 2018 the Group announced that the $75 million recapitalisation plan would no longer proceed;
10.
On 29 November 2018 the Group resolved to appoint Martin Jones and Andrew Smith of Ferrier Hodgson as Joint and
Several Administrators of the Group;
70 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SUBSEQUENT EVENTS (Continued)
On 18 January 2019 the Administrators received a Deed of Company Arrangement (‘DOCA’) proposal from Hawke’s Point
Holdings I Limited (‘Hawke’s Point’). The proposed DOCA included the following key features:
31.
11.
Key Elements
Purpose
DOCA Proposal
Ensure that creditors of the Companies receive a better return than in liquidation.
Facilitate a capital raising for the Companies of not less than $22 million, expected to comprise a rights
issue, issue of convertible notes and placement of shares.
Minimise holding costs and reducing the further administrators’ fees that may be incurred.
Ensure that, at the conclusion of the DOCA process, the Group is sufficiently funded to pursue a
resource development and mine planning programme.
A creditors’ trust will be established for the purposes of the DOCA, named ‘Eastern Goldfields Creditors’ Trust.’
The funds available for distribution to creditors of the Companies out of the Creditors’ Trust will be an amount
of up to $7.3 million out of proceeds of the Capital Raising.
Creditors
Trust
Contributions
Capital raising Not less than $22 million shall be raised to:
satisfy the obligations of the Companies under the DOCA; and
provide the Companies with adequate working capital to advance its business post administration.
It is intended that this amount shall be raised via any or all of the following (each carried out by EGS):
a one-for-one rights issue priced at 1.0 cent per share, which will be underwritten as to at least 25%
(inclusive of its entitlement amount) by Hawke’s Point or such lesser percentage as required to ensure
it is fully underwritten (Rights Issue);
an offering of:
o
o
secured convertible notes (‘New Convertible Notes’), to be converted at 1.0 cent per share; and
ordinary shares (‘Placement Shares’) to be issued via a placement. Capital Raising participants
subscribing for Placement Shares, if any, shall escrow their subscription funds contemporaneous with
the funding of the New Convertible Notes; and
such other equity and/or debt capital raising as the directors of EGS, the Deed Administrators and
Hawke’s Point agree, having regard to the objects of the DOCA.
Finalisation of the Capital Raising will be subject to the Deed Administrators and the directors of EGS being
satisfied that the events subsequent to completion of the DOCA will occur, including the passing of certain
shareholder approvals forEGS.
Position of
Creditors
Creditors’ claims are to be dealt with in the following categories of creditor:
1) Employee entitlements;
2) Debts due to government and statutory authorities;
3) Supporting Creditors;
4) PPSR Secured Creditors;
5) Non-Supporting Creditors – Pool A;
6) Non-Supporting Creditors – Pool B.
To the extent that there are any arrears or other amounts due and payable to employees with respect to wages
and other employee entitlements, the debts due to employees will be paid in full. To the extent that any
government or statutory authority or regulator is a creditor, and the non-payment of the debt to that authority
or regulator puts at risk any of the assets of the Companies, such debts will be paid in full.
Supporting Creditors and PPSR Secured Creditors will not participate as creditors/beneficiaries under the
Creditors’ Trust. Supporting Creditors are defined as the creditors specified at 1 to 8 below with whom the
Companies seek to have an ongoing commercial relationship and to whom offers of securities can be made
without disclosure under Chapter 6D of the Act and who agree to accept:
a cash payment out of the Capital Raising equal to 22c/$ of 60% of each Supporting Creditor’s
agreed claim amount; and
to convert the remaining 40% of their respective agreed claims to equity in EGS fully paid ordinary
shares at the rate of 1 cent per share,
in full satisfaction of the respective debts owed to them by the Companies.
71 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Key Elements
DOCA Proposal
7) Aggreko Generator Rentals Pty Ltd – to the extent of $674,795.70;
8) GR Engineering Services Ltd – to the extent of $11,554,660.81;
9) Pit N Portal Mining Services Pty Ltd – to the extent of $14,482,318.50;
10) Ralmana Pty Ltd t/as R J Vincent & Co – to the extent of $3,461,378.19;
11) Squire Patton Boggs (AU) – to the extent of $1,930,300.29;
12) Gilbert & Tobin – to the extent of $1,190,932.45;
13) Seismic Drilling Pty Ltd – to the extent of $854,060.36; and
14) Junile Nominees Pty Ltd t/as Red Dirt Personnel Group – to the extent of $679,152. (together the
Supporting Creditors).
Supporting Creditors will be paid out of the Capital Raising proceeds and by the Deed Administrators at
conclusion of the DOCA.
PPSR secured creditors will be serviced in the ordinary way and will not participate under the Creditor’s Trust.
Dividends and
order of
distribution
Secured
Creditor
Other unsecured creditors will be split into Pool A and Pool B, subject to whether the claimed debt is greater
or less than $50,000. Pool A creditors are defined as those creditors with debts of less than $50,000. They
will be paid upto 100 cents in the dollar. Pool B creditors are defined as those creditors with debts greater than
$50,000. They will be paid $50,000 plus a pro-rata share of the funds available in the Creditors Trust which is
estimated at $3.9 million.
Hawke’s Point will agree to:
take up its entitlements under the Rights Issue in full and underwrite the Rights Issue to the extent of at
least 25% (inclusive of its entitlement) or such lesser percentage as required to ensure the Rights Issue
is fully underwritten;
subscribe to at least 25% of the New Convertible Notes or such lesser percentage as required to ensure
that the offering of New Convertible Notes is fully subscribed; and
subsequent to the Rights Issue closing, convert its secured debt (being both its loan facility and its holding
of the convertible notes issued 28 September 2018 (‘Existing Convertible Notes’) into equity at the rate of
1.0 cent per share, subject to the approval of the shareholders of EGS at the shareholders meeting to be
held after completion of the DOCA, with such conversion to occur simultaneously with the conversion of
the New Convertible Notes and the issue of the Placement Shares.
Wyllie Group Pty Ltd, National Nominees Ltd (as nominee for Perennial Value Microcap Opportunities Fund)
and Donald Smith Value Fund LP (the Other Secured Creditors), who agree to convert the secured debt under
their existing convertible notes into equity at the rate of 1.0 cent per share, subject to the approval of the EGS
shareholders at the shareholders meeting to be held after completion of the DOCA, with such conversion to
occur simultaneously with the conversion of the new convertible notes and the issue of the Placement Shares.
Termination
In the event that completion does not occur by 30 April 2019 or such other date as agreed between Hawke’s
Point and the Deed Administrators, the Deed Administrators may:
Key
Conditions
and
Subsequent
Events
Cause the Companies to be placed into liquidation; and/or
Convene a meeting of creditors to vary or terminate the DOCA.
The DOCA will complete on the date which is two business days after satisfaction of thelast of the following
Conditions Precedent:
a. That the creditors of the Companies approve the DOCA;
b. The creation of the Creditors’ Trust;
c. The entry into any requisite new contracts or amendments to existing contracts, in each case to be
negotiated in good faith, between Supporting Creditors (or any of their respective associated entities)
and the Companies (or an associated entity) in respect of their ongoing commercial relationship on
terms reasonably acceptable to both parties;
d. The appointment of the interim managing director; and
e. The receipt by the Companies of no less than:
i.
ii.
$22 million from the Capital Raising (other than the funds that are to be received in respect of the
issue of Placement Shares, which shall be held in escrow pending shareholder approval); and
$19 million (of that sum of $22 million) to be raised from the New Convertible Notes and Rights Issue;
f. The Conditions Precedent:
i.
at (a) above can be waived by Hawke’s Point (ie: if entry into the DOCA is not approved by all of
the Companies);
72 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Key Elements
DOCA Proposal
ii.
iii.
at (e)(b) can be waived by agreement between Hawke’s Point and the Administrators if they are
satisfied that sufficient funds are available to the Companies to enable completion to occur;
are otherwise for the benefit of Hawke’s Point and the Administrators and may only be waived by
mutual agreement between Hawke’s Point and the Administrators in writing;
i.
ii.
iii.
iv.
g. Upon completion occurring:
the DOCA will terminate;
the control of the Companies will return to the New Directors;
the sum of $7.3 million out of the Capital Raising will be paid to the Trustee of the Creditors’ Trust;
the sums due to Supporting Creditors will be paid out of
the Capital Raising by the Deed
Administrators; and
the claims of all creditors except for the PPSR Secured Creditors against the Companies will be
released, and creditors other than Supporting Creditors will only be entitled to participate as
beneficiaries under the Creditors’ Trust;
v.
h. Events subsequent to completion:
i.
ii.
iii.
The shareholders of EGS will approve (to the extent required):
1.
2.
the conversion of debt to equity by the Supporting Creditors;
the conversion of the Proponent’s Secured Debt and the secured debt of the Other Secured
Creditors;
the conversion of the New Convertible Notes;
the issuance of the Placement Shares;
the effectuation of the Directors LEIP (if necessary);
3.
4.
5.
include an independent
The Notice of Meeting seeking the shareholder approvals above will
expert’s report stating whether, in the expert’s opinion, the conversion of Hawke’s Point’s Secured
Debt to equity is fair and reasonable to shareholders;
The Companies will change their name to a new name to be agreed by the directors to whom control
is being returned at completion;
12.
13.
On 1 February 2019 at the concurrent second meeting of creditors of the Group, it was resolved that the Deed of Company
Arrangement (‘DOCA’) proposal received on 18 January 2019 from Hawkes Point I Limited, be executed.
Settlement deeds have been signed in relation to critical tenements subject to plaints. It is intended plaint applications on
non-critical tenements will be defended by the Group.
Apart from the above, no other matters have arisen since the end of the financial year that impact or a likely to impact the results
of the Group in subsequent financial periods.
73 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
32.
PARENT ENTITY INFORMATION
(a) Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity/(Deficit)
Contributed equity
Accumulated losses
Reserves
Total equity / (deficit)
(b) Financial performance
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
(c)
Contingent Liabilities and Commitments
30 June 2018
30 June 2017
$’000
$’000
179
2,423
2,602
35,773
2,648
38,421
287,168
(335,687)
12,700
(35,819)
(79,405)
927
(78,478)
8,003
36,515
44,518
43,870
656
44,526
251,282
(261,455)
10,166
(7)
(29,075)
268
(28,807)
Commitments and Contingent liabilities identified are as per those detailed within Notes 21 and 27 of this report (2017: $Nil).
(d)
Deed of Cross Guarantee
Eastern Goldfields Limited and the following entities are parties to a deed of cross guarantee (which was executed on 26 June
2018 and lodged with the Australian Securities and Investments Commission) under which each Company guarantees the debts
of the others:
Monarch Nickel Pty Ltd;
Carnegie Gold Pty Ltd;
Siberia Mining Corporation Pty Ltd;
Mt Ida Gold Operations Pty Ltd;
Ida Gold Operations Pty Ltd;
Pilbara Metals Pty Ltd;
Siberia Gold Operations Pty Ltd; and
Mt Ida Gold Pty Ltd.
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial statements and
directors’ report under Corporations Instrument 2016/785 issued by the Australian Securities and Investments Commission.
The above companies represent a ‘Closed Group’ for the purposes of the Corporations Instrument, and as there are no other
parties to the deed of cross guarantee that are controlled by Eastern Goldfields Limited, they also represent the ‘Extended Closed
Group’. As the Extend Closed Group includes all material subsidiaries of Eastern Goldfields Limited, there is no difference between
the consolidated statement of profit or loss and other comprehensive income and consolidated statement of financial position of
the Eastern Goldfields Limited consolidated entity and the extended closed group.
74 DIRECTOR’S DECLARATION
1.
In the opinion of the Director of Eastern Goldfields Limited and its controlled entities (Subject to Deed of Company
Arrangement):
(a)
(b)
(c)
(d)
the Group’s financial statements and notes set out on pages 30 to 74 are 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 2018 and of its performance, for
the financial year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001;
the financial report also complies with International Financial Reporting Standards as set out in Note 2;
subject to the matters disclosed in note 2(b), there are reasonable grounds to believe that the Group will be able to
pay its debts as and when they become due and payable; and
subject to the matters disclosed in note 2(b), as at the date of this declaration, there are reasonable grounds to
believe that the Company and the subsidiaries identified in Note 32, will be able to meet any obligations or liabilities
to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and
those subsidiaries.
2.
the Director has been given the declarations required by Section 295A of the Corporations Act 2001 from the Interim Chief
Executive Officer and Chief Financial Officer for the financial year ended 30 June 2018.
Signed in accordance with clauses 2.4(a)(1) and 2.4(f) of the Deed of Company Arrangement.
Peter Mansell
Non-executive Director
Perth, Western Australia
Dated this 1st day of April 2019
75 INDEPENDENT AUDITOR’S REPORT
76 INDEPENDENT AUDITOR’S REPORT
77 INDEPENDENT AUDITOR’S REPORT
78 INDEPENDENT AUDITOR’S REPORT
79 INDEPENDENT AUDITOR’S REPORT
80 TENEMENT
REGISTERED HOLDER
E16/0337
E16/0344
E16/0456
CARNEGIE GOLD PTY LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
E16/0473
CARNEGIE GOLD PTY LTD
E16/0474
CARNEGIE GOLD PTY LTD
E16/0475
CARNEGIE GOLD PTY LTD
TENEMENT SCHEDULE
REGISTERED
INTEREST
TENEMENT
REGISTERED HOLDER
100/100
M24/0665
HERON RESOURCES LIMITED
IMPRESS ENERGY PTY LTD
REGISTERED
INTEREST
90/100
10/100
100/100
M24/0683
HERON RESOURCES LIMITED
M24/0686
HERON RESOURCES LIMITED
100/100
100/100
100/100
100/100
M24/0757
M24/0772-
I
M24/0797
HERON RESOURCES LIMITED
HERON RESOURCES LIMITED
HERON RESOURCES LIMITED
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
HERON RESOURCES LIMITED
HERON RESOURCES LIMITED
SIBERIA MINING CORPORATION PTY
LTD
E16/0480
GOLDSTAR RESOURCES (WA) PTY LTD
100/100
M24/0845
E16/0482
GOLDSTAR RESOURCES (WA) PTY LTD
100/100
M24/0846
E16/0483
GOLDSTAR RESOURCES (WA) PTY LTD
100/100
M24/0847
E16/0484
GOLDSTAR RESOURCES (WA) PTY LTD
100/100
E16/0486
GOLDSTAR RESOURCES (WA) PTY LTD
100/100
M24/0848
M24/0915-
I
E16/0487
GOLDSTAR RESOURCES (WA) PTY LTD
100/100
M24/0916
E24/0203
ATRIPLEX PTY LIMITED
E29/0640
MT IDA GOLD PTY LTD
E29/0641
MT IDA GOLD PTY LTD
E29/0889
HERON RESOURCES LIMITED
E29/0895
E29/0955
MT IDA GOLD PTY LTD
SIBERIA MINING CORPORATION PTY
LTD
100/100
100/100
100/100
100/100
100/100
M24/0960
M29/0002
MT IDA GOLD PTY LTD
M29/0014
BLACK MOUNTAIN GOLD LTD
M29/0088
BLACK MOUNTAIN GOLD LTD
M29/0153
BLACK MOUNTAIN GOLD LTD
100/100
E29/0964
GOLDSTAR RESOURCES (WA) PTY LTD
100/100
M29/0165
100/100
M29/0154
BLACK MOUNTAIN GOLD LTD
MT IDA GOLD PTY LTD &
STUART LESLIE HOOPER
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
M29/0184
BLACK MOUNTAIN GOLD LTD
M29/0212
BLACK MOUNTAIN GOLD LTD
M29/0410
WAYNE CRAIG VAN BLITTERSWYK
M29/0420
BLACK MOUNTAIN GOLD LTD
M29/0422
MT IDA GOLD PTY LTD
M30/0102
CARNEGIE GOLD PTY LTD
M30/0103
CARNEGIE GOLD PTY LTD
M30/0111
CARNEGIE GOLD PTY LTD
M30/0123
CARNEGIE GOLD PTY LTD
M30/0126
CARNEGIE GOLD PTY LTD
100/100
M30/0127
CARNEGIE GOLD PTY LTD
100/100
M30/0133
CARNEGIE GOLD PTY LTD
100/100
100/100
100/100
M30/0157
CARNEGIE GOLD PTY LTD
M30/0182
CARNEGIE GOLD PTY LTD
M30/0187
CARNEGIE GOLD PTY LTD
100/100
M30/0253
CARNEGIE GOLD PTY LTD
100/100
M30/0255
CARNEGIE GOLD PTY LTD
E29/0966
BLACK MOUNTAIN GOLD LTD
E29/0984
BLACK MOUNTAIN GOLD LTD
E30/0333
CARNEGIE GOLD PTY LTD
E30/0334
CARNEGIE GOLD PTY LTD
E30/0335
CARNEGIE GOLD PTY LTD
E30/0336
CARNEGIE GOLD PTY LTD
E30/0338
E30/0449
CARNEGIE GOLD PTY LTD
DELTA RESOURCE MANAGEMENT PTY
LTD
E30/0454
CARNEGIE GOLD PTY LTD
E30/0468
L15/0224
L16/0058
L16/0062
CARNEGIE GOLD PTY LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
L16/0072
CARNEGIE GOLD PTY LTD
CARNEGIE GOLD PTY LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
L16/0073
L16/0103
L24/0085
L24/0101
L24/0115
CARNEGIE GOLD PTY LTD
SIBERIA MINING CORPORATION PTY
LTD
96/96
96/96
M30/0256
P16/2921
CARNEGIE GOLD PTY LTD
GOLDSTAR RESOURCES (WA) PTY
LTD
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
96/96
96/96
100/100
95/100
5/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
96/96
100/100
96/96
100/100
100/100
100/100
100/100
100/100
100/100
81 REGISTERED
INTEREST
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
100/100
TENEMENT
REGISTERED HOLDER
L24/0123
L24/0124
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
L24/0170
CARNEGIE GOLD PTY LTD
L24/0174
L24/0188
L24/0189
L24/0224
CARNEGIE GOLD PTY LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
TENEMENT SCHEDULE
REGISTERED
INTEREST
96/96
96/96
100/100
100/100
TENEMENT
REGISTERED HOLDER
P16/2922
GOLDSTAR RESOURCES (WA) PTY
LTD
P24/4395
HERON RESOURCES LIMITED
P24/4396
HERON RESOURCES LIMITED
P24/4400
HERON RESOURCES LIMITED
100/100
P24/4401
HERON RESOURCES LIMITED
100/100
P24/4402
HERON RESOURCES LIMITED
100/100
P24/4403
L24/0233
CARNEGIE GOLD PTY LTD
100/100
P24/4750
L29/0042
BLACK MOUNTAIN GOLD LTD
100/100
P24/4751
L29/0043
BLACK MOUNTAIN GOLD LTD
100/100
P24/4754
L29/0044
BLACK MOUNTAIN GOLD LTD
100/100
P24/5073
L29/0074
MT IDA GOLD PTY LTD
100/100
P24/5074
L29/0109
BLACK MOUNTAIN GOLD LTD
100/100
P24/5075
HERON RESOURCES LIMITED
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
L30/0035
CARNEGIE GOLD PTY LTD
L30/0037
CARNEGIE GOLD PTY LTD
L30/0066
M16/0262
M16/0263
M16/0264
CARNEGIE GOLD PTY LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
M16/0268
CARNEGIE GOLD PTY LTD
M16/0470
CARNEGIE GOLD PTY LTD
M24/0039
M24/0115
M24/0159
M24/0208
M24/0376
CHARLES ROBERT GARDNER
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
SIBERIA MINING CORPORATION PTY
LTD
M24/0634
HERON RESOURCES LIMITED
M24/0660
HERON RESOURCES LIMITED
M24/0663
HERON RESOURCES LIMITED
M24/0664
HERON RESOURCES LIMITED
96/96
100/100
100/100
P29/2153
BLACK MOUNTAIN GOLD LTD
P29/2154
BLACK MOUNTAIN GOLD LTD
P29/2155
BLACK MOUNTAIN GOLD LTD
100/100
P29/2156
BLACK MOUNTAIN GOLD LTD
100/100
100/100
P29/2251
BLACK MOUNTAIN GOLD LTD
100/100
100/100
100/100
100/100
96/96
96/96
P29/2252
BLACK MOUNTAIN GOLD LTD
P29/2253
BLACK MOUNTAIN GOLD LTD
P29/2254
BLACK MOUNTAIN GOLD LTD
P29/2328
MT IDA GOLD PTY LTD
100/100
100/100
100/100
100/100
P29/2344
BLACK MOUNTAIN GOLD LTD
100/100
100/100
P29/2345
BLACK MOUNTAIN GOLD LTD
100/100
96/96
P30/1107
CARNEGIE GOLD PTY LTD
100/100
100/100
100/100
100/100
100/100
P30/1108
CARNEGIE GOLD PTY LTD
P30/1109
CARNEGIE GOLD PTY LTD
P30/1110
CARNEGIE GOLD PTY LTD
P30/1116
CARNEGIE GOLD PTY LTD
P30/1117
CARNEGIE GOLD PTY LTD
P30/1122
CARNEGIE GOLD PTY LTD
100/100
100/100
100/100
100/100
100/100
100/100
100/100
Tenement Applications
Applications for P29/2428-2430 were made on 28 July 2017
Application for M24/973 was made on 10 August 2017
Application for M29/430 was made on 20 July 2018
Application L30/69 was made on 3 May 2018
Tenement Grants
E24/203 was granted on 8 August 2017
L30/66 was granted on 2 March 2018
82 TENEMENT SCHEDULE
Tenement Acquisitions
No third party acquisitions, JV, Farm-in arrangements, or other registrable interests were made during the year ending 30
June 2018
Annual Rents (in 2017, the DMIRS updated its policies and as a result tenements under plaint/forfeiture actions are still
obligated to pay its rents and other dues even after the tenement is relinquished)
M16/262 – M16/264, M24/208 due to a third party plaint in place, the 2015-2016, 2016-2017, 2017-2018, 2018-2019 annual
rents have yet to be paid
M24/208 due to a third party plaint in place, the 2015-2016, 2016-2017, 2018-2019 annual rents have yet to be paid
E30/335, M30/102 due to a third party plaint in place, the 2015-2016, 2017-2018 annual rents have yet to be paid
E30/468, M16/470, M30/103, M30/255, M30/256, M30/111 due to a third party plaint in place, the 2018-2019 annual rents
have yet to be paid
DMIRS issued notices of intention to forfeit the following tenements for breach of rental payment obligations recorded as at
30 June 2018 against any titles held/beneficially held by the Group: E16/337; E16/344; E29/895; E30/334; E30/449;
L24/232; and M24/665
Form 5 Reports
No DMIRS compliance issue/s recorded as at 30 June 2018 against any titles held/beneficially held by the Group
Extension of Term/Expiries/Relinquishments/Forfeitures
E16/332 was relinquished on 12 October 2017
L16/77, L29/34, L29/38, L29/40, L30/43 were relinquished on 4 August 2017
P29/2311, P29/23/2315-2318 were relinquished on 6 October 2017
P29/2324-2325 were relinquished on 31 October 2017
P29/2327 was relinquished on 3 November 2017
P30/1112-1115, P30/1119-1121 were relinquished on 3 December 2017
P30/1074 was relinquished on 5 January 2018
P29/2310, P29/2312-2314 were relinquished on 26 February 2018
E16/347 was relinquished on 11 March 2018
E29/419, E29/922, P29/2268-2269, P29/2286-2290 were relinquished on 27 March 2018
P29/2307-2308 were relinquished on 9 April 2018
P29/2319-2323, P29/2326 expired on 18 May 2018
P30/1118 expired on 15 June 2018
Extension of Term submitted on L24/85, L24/101, L24/174, L30/35 – each tenement was granted an extension of term of a
further five years
Extension of Term submitted on P24/4751, P24/4754, P29/2328, P30/1122 – each tenement was granted an extension of
term of a further four years
Extension of Term submitted on M29/184 – each tenement was granted an extension of term of a further 21 years
Extension of Term submitted on E16/337, E16/344, E29/640, E29/641, E30/333-334, E30/336, E30/338, E30/449, L24/115
– pending DMIRS assessment
Applications of Forfeiture/Plaints/DMIRS Notices of Intention to forfeit
M16/262 – M16/264 Application for forfeiture #371015 – #371017 made by Michael Allen Thompson
M24/846 – M24/848 Application for forfeiture #469309, #469308 and #469310 made by Gerard Francis Brewer and Glenn
E30/335, M16/470, M30/102 and M30/103 Application for forfeiture #460237 – #460240 made by Gerard Francis Brewer
Alan Haythornthwaite jointly
M24/208 Application for forfeiture #469423 made by Michael John Photios
M24/376 Application for forfeiture #460290 made by Glenn Alan Haythornthwaite. Case dismissed 12 July 2016
E30/336, E30/338, E30/454, E30/468, M30/253, M30/255, M30/256 Application for forfeiture #512647, #512648, #512649,
#512660, #512663, #512652, #512653 made by Nu-Fortune Gold Pty Ltd
E30/468, M30/253 Plaint #513566, #513565 made by Tasex Geological Services Pty Ltd
83 ADDITIONAL SHAREHOLDER INFORMATION
AS AT 18 MARCH 2019
The following information is provided, in accordance with Listing Rule 4.10:
CORPORATE GOVERNANCE
The Company’s corporate governance plan is available on the Company’s website at www.easterngoldfields.com.au.
SECURITY HOLDERS
SUBSTANTIAL SHAREHOLDERS
The Company has the following substantial shareholders as at 18 March 2019:
Hawke’s Point
IOOF Holdings Ltd (Perennial Value Management Ltd)
Donald Smith Value Fund
Investmet Limited1
Delta Resource Management Pty Limited1
Whitestone Mining Services Pty Ltd1
Mr Michael George Fotios
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