PNX METALS LIMITED ABN 67 127 446 271
ANNUAL REPORT 2016
Share Registry
Computershare
Level 5, 115 Grenfell Street
Adelaide SA 5000
Telephone (within Australia): 1300 305 232
Telephone (outside Australia): +61 (3) 9415 4657
Auditors
Grant Thornton
Level 1, 67 Greenhill Road
Wayville SA 5034
Lawyers
Piper Alderman
Level 16
70 Franklin Street
Adelaide SA 5000
ASX
The Company’s fully paid ordinary shares are
quoted on the ASX under the code PNX.
CORPORATE DIRECTORY
Australian Business Number
67 127 446 271
Country of Incorporation
Australia
Board of Directors
Graham Ascough Non-executive Chairman
Paul Dowd
Peter Watson
David Hillier
James Fox
Non-executive Director
Non-executive Director
Non-executive Director
Managing Director & CEO
Company Secretary
Tim Moran
Principal Administrative Office
Level 1, 135 Fullarton Rd
Rose Park SA 5067
Telephone: +61 (8) 8364 3188
Facsimile: +61 (8) 8364 4288
Registered Office
Level 1, 135 Fullarton Rd
Rose Park SA 5067
Telephone: +61 (8) 8364 3188
Facsimile: +61 (8) 8364 4288
Contact:
info@pnxmetals.com.au
Website: www.pnxmetals.com.au
2
PNX METALS LIMITED | ANNUAL REPORT 2016
CONTENTS
CHAIRMAN’S LETTER
OVERVIEW
EXPLORATION REPORT
TENEMENTS
MINERAL RESOURCES AND ORE RESERVES
DIRECTORS’ REPORT
REMUNERATION REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CORPORATE GOVERNANCE STATEMENT
FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
4
5
11
22
26
28
34
38
39
43
70
INDEPENDENT AUDIT REPORT TO MEMBERS
71
ADDITIONAL SHAREHOLDER INFORMATION
74
3
PNX METALS LIMITED | ANNUAL REPORT 2016
CHAIRMAN’S LETTER
Dear Fellow Shareholders,
On behalf of the Board of Directors, it is my pleasure to present
the 2016 Annual Report for PNX Metals Limited (‘PNX’ or
‘Company’).
At last year’s AGM shareholders approved a name change to
PNX Metals Limited from Phoenix Copper Limited. The new
name is a better reflection of the Company’s recent and future
activities, with zinc, silver and gold being the predominant metals
of interest at our wholly owned Hayes Creek Project in the
Northern Territory.
The year under review has been exciting and progressive for
PNX. During the year the Company achieved excellent drilling
results at the Hayes Creek project, completed a new Mineral
Resource Estimate for the Mt Bonnie Deposit and released an
initial Scoping Study which found that mining and processing
ore derived from both open-pit and underground operations at
Hayes Creek could generate strong financial returns for PNX and
its shareholders.
The excellent results delivered to date demonstrate that we
are making considerable progress on our objective to develop
a profitable mining operation at our Hayes Creek gold-silver-
zinc project.
A Pre-Feasibility Study is now underway – it is fully funded and
due for completion by May 2017. The PFS aims to build on the
strong results of the scoping study, improving on the certainty of
the mining inventory and associated operating and development
costs, and reducing the technical risk of the Project before a
development decision is made.
In support of the PFS, drilling at the Iron Blow and Mt Bonnie
deposits is ongoing with the objective to define additional near-
surface mineralisation to complement the already significant
Mineral Resources outlined at both deposits. The drilling will
also provide infill data to increase the confidence in the Mineral
Resource estimates and will provide samples for metallurgical
optimisation test work to underpin the technical aspects of the
PFS. The company has also commenced Environmental Impact
Assessment studies in support of permitting and a decision to
mine. The development strategy includes the use of existing
infrastructure including rail, road, high voltage power lines and
water, designed to boost economics and reduce project risk.
The board and management remain confident that the continued
work and completion of studies on the Hayes Creek project in
2017 will deliver a robust development opportunity.
June 2016 under novel metal streaming and royalty agreements
with two investors (details of the agreements are provided in the
attached report). The forward sale, at this early stage, of a small
amount of the total silver that we believe may be produced from
the Hayes Creek Project is an important step and allows PNX
to continue to execute on its development strategy providing
funds to complete the technical components of the PFS without
diluting shareholders.
In the near term our priority will continue to be the advancement
of Hayes Creek towards development; however we are pursuing
gold and base metals exploration programs in the Pine Creek
region with the aim of diversifying our opportunities. As detailed
in the annual report, a number of high quality gold and base
metals targets have been generated at our Burnside, Moline and
Chessman projects and these will gradually be tested for further
resource potential and future development options.
Although no activities of significance occurred during the year
at the Company’s Burra or Yorke Peninsula projects in South
Australia, the tenure remains in good standing and the Company
is assessing the future of these projects. At Leigh Creek,
Resilience Mining Australia Limited (‘RMA’, previously Hillsgold
Resources Pty Ltd) continues to hold an option to acquire
the Company’s 100% owned subsidiary Leigh Creek Copper
Mine Pty Ltd that holds three mining leases including Mountain
of Light, which has been on care and maintenance since
January 2012.
In closing, I would like to take this opportunity to express
my thanks to my fellow directors, management and staff for
their dedication and work during the past 12 months. We are
committed to progressing the Company and advancing our
flagship Hayes Creek project towards development for the
benefit of all shareholders.
I also take this opportunity to thank all shareholders for your
continued support of PNX and I look forward to providing further
updates as our activities advance in 2017.
Yours sincerely,
The Company continues to receive strong support from
its shareholders, and in 2016 PNX completed a number of
successful fundraisings to new, professional investors as well as
to existing shareholders. The Company also raised $1.6 million in
Graham Ascough
Chairman
7 October 2016
4
PNX METALS LIMITED | ANNUAL REPORT 2016 OVERVIEW
GENERAL
PNX Metals Limited (‘PNX’ or the
‘Company’) is an ASX listed minerals
exploration company, with a vision of being
a successful explorer and sustainable and
profitable gold and base metals producer.
PNX has a significant base and precious
metals tenement portfolio in the Northern
Territory and South Australia.
The principal activity of the Company
during the 2016 financial year was mineral
exploration in the Northern Territory (NT)
and advancement of its Hayes Creek
gold-silver-zinc project in the NT through
to a completed scoping study and the
start of a Pre-Feasibility Study.
HAYES CREEK PROJECT
The Hayes Creek Project (‘Project’) is
located in a favourable mining jurisdiction
in the Pine Creek region of Northern
Territory, 180km by road south of Darwin
(Figure 1). It comprises 14 wholly-owned
mineral leases including the base and
precious metals deposits at Iron Blow
and Mt Bonnie which were acquired in
2014 from Newmarket Gold NT Holdings
Pty Ltd, a subsidiary of Newmarket Gold
Inc. (‘Newmarket Gold’).
The Hayes Creek Project contains total
Inferred and Indicated mineral resources
(JORC Code 2012) of 257koz gold,
16.3Moz silver, 178kt zinc, 41kt lead
and 11.5kt copper1. During the year
the Company completed a scoping
study on the Project which found that
mining and processing ore derived
from both open-pit and underground
operations would generate strong
financial returns for PNX, including a
fast payback period with modest capital
expenditure. The Company is aiming to
develop an operation with a mine life of
greater than 7 years, producing payable
metals of 14koz gold, 1.3Moz silver, and
14kt zinc in concentrate annually. The
development strategy includes the use
of existing infrastructure including rail,
road, high voltage power lines and water,
designed to boost economics and reduce
project risk.
Darwin
Hayes Creek Project
Burnside Project
Moline Project
Chessman Project
NORTHERN
TERRITORY
QUEENSLAND
WESTERN AUSTRALIA
SOUTH AUSTRALIA
Yorke Peninsula Project
Leigh Creek Project
NEW SOUTH WALES
Burra Project
Adelaide
VICTORIA
TASMANIA
PNX project locations
Key achievements during the year,
which are discussed in more detail in the
Exploration Report, that provided valuable
input to the scoping study included:
• Completion of a 1,560m RC and
diamond drill program at Mt Bonnie
in October 2015 with better
intersections including:
• The drilling and assay results from
Mt Bonnie were a key component
of an initial JORC 2012 resource
estimate at that deposit that was
finalised in February 2016:
»
1.3 million tonnes @ 4.2% Zn,
1.3g/t Au, 133g/t Ag, 1.3% Pb,
and 0.3% Cu3
»
»
8.78m @ 7.16% Zn, 1.04g/t
Au, 215g/t Ag, 0.34% Cu and
1.62% Pb from 55m in MBDH033
42.25m @ 2.96% Zn, 0.59g/t
Au, 35g/t Ag and 0.33% Pb from
25.75m in MBDH034, including
3.1m @ 10.77% Zn, 3.34g/t Au,
133g/t Au, 0.39% Cu and
1.21% Pb from 63.9m2
1 Refer ASX release 31 March 2016 and
Table 2 on page 26
2 Refer ASX release 17 December 2015
3 Refer ASX release 1 February 2016 and
Table 2 on page 26
5
PNX METALS LIMITED | ANNUAL REPORT 2016 OVERVIEW
• R&D metallurgical test-work – detailed
analysis was completed on Iron
Blow massive sulphides, including
grind variability, reagent optimisation,
concentrate regrind and cleaning
flotation. Metallurgical investigations
have identified a practical and
low cost flow sheet to maximise
recoveries of the most valuable
minerals in the resources, being zinc,
gold and silver.
A Pre-Feasibility Study (‘PFS’) at Hayes
Creek has now commenced, which is
fully funded and due for completion by
May 2017. The PFS aims to improve
the certainty of the mining inventory and
associated operating and development
costs, and reduce the technical risk of the
Project before a development decision.
PFS and Research and Development
(R&D) metallurgical optimisation work
includes the continuation of research
and development activities associated
with identifying and understanding the
geological and mineralogical structure
and processing characteristics of the
polymetallic ores at Hayes Creek.
A R A F U R A S E A
DARWIN
N O R T H E R N
T E R R I T O R Y
Burnside Project
Hayes Creek Project
Hayes Creek
Pine Creek
Moline Project
0
50
100
kilometres
Chessman Project
PNX/NMKT JV Exploration Licences
PNX/NMKT JV Mining Leases
Katherine
Highway
Main road
NT 01
Figure 1 NT project locations
Pit wall, Mt Bonnie
6
PNX METALS LIMITED | ANNUAL REPORT 2016 CAPITAL RAISING
SILVER STREAMING AGREEMENTS
During the first half of the financial year
the Company raised $1.5 million via
the placement of 115 million shares at
1.3 cents per share to sophisticated
investors and, with shareholder approval,
company directors. A further $0.25 million
was raised in April 2016 from the
placement of 26.3 million shares at
0.95 cents each to sophisticated investors.
Subsequent to 30 June 2016, the
Company raised $1.5 million via the
placement of 79 million shares at 1.9 cents
each to sophisticated and institutional
investors, and received a commitment for
a further share placement of $0.25 million,
if approved by shareholders at the
Company’s 2016 annual general meeting.
The Company raised $1.6 million
in June 2016 under identical metal
streaming and royalty agreements with
two investors. $800,000 was received
from each investor for the forward sale of
112,000 troy ounces of silver ($7.14/oz).
The silver is to be delivered at a rate of
14,000 oz per quarter (56,000 oz per
year) for 2 years once commissioning
and ramp up of the Hayes Creek Project
is complete.
At the end of the two year silver delivery
period, each investor receives a 0.24%
Net Smelter Return (NSR) royalty. The
NSR royalty applies in respect of gold
and silver produced from the Hayes
Creek Project, and will be paid for
REGIONAL EXPLORATION AND
FARM-IN AGREEMENT
The Burnside, Moline and Chessman
project areas are also in the Pine Creek
region of the Northern Territory and
form part of PNX’s farm-in agreement
with Newmarket Gold where PNX is
earning up to 90%, in two stages,
of 19 Exploration Licenses and four
Mineral Leases covering approximately
1,700 square kilometres (Figure 1).
Total expenditure at 30 June 2016 for the
purpose of the first stage of the farm-in
was approximately $1.5 million. A further
$0.5 million is required, and will, be spent
by mid-December 2016 to achieve the
51% stage one farm-in. PNX can then
elect to increase its interest to 90% with
expenditure of an additional $2 million
over a further 2 year period.
The Burnside, Moline and Chessman
Projects contain exciting opportunities for
brownfield discoveries with undeveloped
mineralisation and promising new
conceptual targets. Regional exploration
activities during the year were aimed
at identifying new gold and base metal
targets in the vicinity of the Hayes Creek
project. Geological mapping, rock chip
sampling and geochemical soil data
were collected to complement the
already significant datasets inherited from
Newmarket Gold.
A number of targets will be drill-tested
in 2016-17, and a pipeline of new
prospects is being generated through
geological mapping and surface
geochemical analysis.
The Company will also conduct diamond
drilling in the coming months at two
greenfield targets, Barossa (Burnside
Project) and Tractor Corner (Chessman
Project). In June 2016, PNX was
successful in obtaining grant funding from
the Northern Territory Geological Survey’s
Geophysics and Drilling Collaborations of
approximately $85,000 to co-fund these
diamond drilling programs.
Portable XRF soil and rock chip sampling
7
PNX METALS LIMITED | ANNUAL REPORT 2016 (other than the assumption of the
rehabilitation obligations at Mountain
of Light) and a contingent payment to
the Company of $100,000 if and when
3,000 tonnes of copper are produced
from future operations at the three
mining leases.
Avalon Investment
The Company continues to hold
12.9 million shares in Avalon Minerals
Limited, representing an equity holding
of approximately 2.5% of that company.
The investment was funded primarily
by a $1.2 million unsecured loan, which
is to be repaid via the remittance of
proceeds from the sale of Avalon shares.
Any shortfall may be paid by the issue
of shares in the Company. If the shares
in Avalon are not disposed of by the
November 2019 maturity date, the loan
is repayable in cash. The maturity date
of the loan was extended three years
to November 2019 during the year by
agreement with the lender.
The Company is continuing to evaluate
strategic options regarding its holding in
Avalon. Avalon is continuing to progress
its flagship Viscaria copper project in
northern Sweden toward feasibility and
a production decision, and advance its
newly acquired lithium and gold assets in
Finland and Sweden.
OUTLOOK
PNX’s aim is to be a sustainable,
profitable gold and base metals producer
and successful explorer in the Pine
Creek region of the NT by establishing an
economic mining project at Hayes Creek
and through new mineral discoveries in
the region.
In 2016-17, the Group will continue
mineral exploration and development of
the Hayes Creek Project. Key priorities
include completion of a PFS at Hayes
Creek, including conducting significant
extensional and infill resource drilling, as
well as continued regional exploration
targeting gold and base metals
mineralisation at the Burnside, Moline and
Chessman projects.
The Group aims to conclude a
divestment of its Leigh Creek assets
by the end of calendar 2016, and will
continue to evaluate opportunities to
undertake exploration programs on its
South Australian assets.
OVERVIEW
a 5 year period from the end of the
silver delivery period. PNX can buy
back the NSR royalty from an Investor
prior to production commencing for
$0.27 million.
Each investor has an option, to be
exercised within 3 months of completion
of the pre-feasibility study over the Hayes
Creek project, to purchase an additional
56,000 oz of silver for $0.4 million. This
silver is to be delivered over a further
one year period. In this scenario the
NSR increases to 0.36% and buy-back
amount increases to $0.4 million.
If production at the Hayes Creek Project
has not commenced within 5 years and
PNX or an investor elects to terminate
the agreement, the forward payment
made by that investor ($0.8 million,
or $1.2 million, if the option has been
exercised) converts to PNX shares
based on a 30 day VWAP. If any required
approval to issue the shares is not
received, the applicable forward payment
is to be repaid in cash via a series of
quarterly installment payments plus
interest. The NSR royalty will still apply
in these circumstances for 5 years from
when production commences on any of
the mineral leases making up the Hayes
Creek project.
OTHER CORPORATE MATTERS
Leigh Creek
Resilience Mining Australia Limited
(‘RMA’, previously Hillsgold Resources
Pty Ltd) continues to hold an option to
acquire the Company’s 100% owned
subsidiary Leigh Creek Copper Mine
Pty Ltd (‘LCCM’). LCCM holds three
mining leases in the Leigh Creek area
including Mountain of Light, which has
been on care and maintenance since
January 2012.
RMA has yet to exercise the option,
which now expires 31 October 2016
following an agreed 2 week extension.
Should RMA exercise the option, it will
acquire LCCM, and two exploration
licences in the Leigh Creek area, from the
Company for nil up-front consideration
Iron Blow drill core
8
PNX METALS LIMITED | ANNUAL REPORT 2016 FINANCIAL SUMMARY
($000’s, except as indicated)
Interest and other income
Research & development tax refund
Impairment – Leigh Creek
Impairment – exploration assets
Loss on Avalon investment
Corporate/administrative costs
Interest charges
Comprehensive Loss after tax
Comprehensive Loss per share
Net operating cashflows
Funds raised – equity (net of costs)
Funds raised – silver streaming
Cash on hand
Net working capital1
Assets held for sale – Leigh Creek
Investment in Avalon – at fair value
Capitalised exploration expenditure
Borrowings
Net assets
30 June 2016
30 June 2015
18
246
-
-
128
1,056
100
69
-
150
1,718
773
1,026
100
1,111
0.2 cents
3,875
1.4 cents
(1,093)
1,738
1,600
1,644
1,720
-
258
4,688
1,200
3,877
(1,195)
2,901
-
869
657
-
387
3,294
1,200
3,182
Number of shares on issue2
Number of performance rights on issue
Number of unlisted options on issue
507,783,980
-
-
357,256,457
1,500,000
1,250,000
Inferred and Indicated resources – Hayes Creek^:
Gold (contained oz)
Silver (contained oz)
Zinc (contained tonnes)
Lead (contained tonnes )
Copper (contained tonnes)
Indicated resources – South Australia
Copper (contained tonnes)
– 0.9% at 0.4% cut-off grade
Share price (ASX: PNX)
256,631
16,286,146
178,483
40,657
11,515
19,600
0.018
203,000
10,700,000
125,000
23,000
7,000
19,600
0.020
^
1
2
3.9Mt at 2.05g/t Au, 130g/t Ag, 4.59% Zn, 1.05% Pb, 0.3% Cu – refer Exploration Report for details
Excluding Investment in Avalon
588,691,875 as of the date of this report
9
PNX METALS LIMITED | ANNUAL REPORT 2016 OVERVIEW
REVIEW OF OPERATIONS
Overall, PNX and its controlled entities
(‘Group’) reported a comprehensive net
loss for the year of $1.1 million (2015:
$3.9 million), and the net result from
continuing operations was a loss after
income tax of $0.9 million (2015: $4.1
million). The prior year result included
impairment charges on the Group’s South
Australian exploration and evaluation
assets of $1.7 million and $1.2 million on
the investment in Avalon. The loss from
the Group’s discontinued operations
at Leigh Creek was $0.1 million (2015:
$0.2 million). The 2016 result included
a tax benefit of $0.2 million from the
Group’s 2015 research and development
claim, which was received in July 2016.
Overall, the loss from continuing
operations in 2016 of $0.9 million was
similar to the $1.2 million loss from 2015
after excluding the prior year impairment
charges, and very similar on a pre-tax
basis ($1.1 million loss in 2016 compared
to $1.2 million in the prior year). The
Group’s corporate costs, which include
head office wages, directors’ fees,
professional fees, insurance, regulatory,
occupancy and communications costs
have not changed significantly.
During the year the Company raised
$1.7m from placements to sophisticated
investors and, with shareholder approval,
Company directors, and also raised
$1.6 million from the forward sale of
224,000 oz of silver from the Hayes
Creek Project under silver streaming
agreements executed with two investors.
Net operating cash outflows for the year
of $1.1 million reflect the pre-tax loss from
continuing operations. Exploration cash
outflows of $1.5 million related almost
entirely to the Group’s projects in the
Northern Territory.
At 30 June 2016, the Group had cash
holdings of $1.6 million and net working
capital of $1.7 million excluding the
investment in Avalon. As noted earlier,
subsequent to year-end the Group raised
$1.5m from placements to sophisticated
and institutional investors.
PNX Directors and Exploration Manager Andy Bennett, Mt Bonnie
10
PNX METALS LIMITED | ANNUAL REPORT 2016 EXPLORATION REPORT
OVERVIEW
PNX’s interests in the Northern Territory comprise four
project areas covering approximately 1,700km2 of tenure
prospective for both gold and base metals within the
Pine Creek Orogen (Figure 1). All projects are easily
accessible being located just off the Stuart Highway
180km south of Darwin.
The Hayes Creek gold-silver-zinc project is 100% owned
by PNX and is the principal asset which underpins the
Company’s strategy to become a base and precious
metals producer. The project comprises 14 granted
mineral leases containing the Iron Blow and Mt Bonnie
base and precious metal deposits as well as three granted
mineral leases with historical gold production in the
Golden Dyke Dome area.
Figure 1 NT Project locations
The Burnside, Moline and Chessman
Projects include 19 exploration licences
and four mineral leases in which the
Company is earning up to a 90%
interest from Newmarket Gold and one
exploration licence (part of the Burnside
project) which is 100% owned by
PNX. These projects contain exciting
opportunities for brownfield discoveries
with undeveloped mineralisation and
promising new conceptual targets.
The key focus of the Company during
2016 was the advancement of its Hayes
Creek Project through to a completed
Scoping Study and the start of a
Pre-Feasibility Study. Mineral exploration
in regional areas was aimed at identifying
new gold and base metal targets in the
vicinity of the Hayes Creek project.
In South Australia the Company holds
15 exploration licences and three mining
leases covering an area of approximately
3,500km2. Exploration activity during
the year was minimal at the Company’s
main South Australian projects at Burra
and on the Yorke Peninsula as resources
were directed toward the Company’s
NT projects.
SUMMARY OF PHYSICAL
ACTIVITIES
During the reporting year, field activities
consisted of reverse-circulation (RC)
drilling (455.4m), diamond drilling
(1,339.5m), as well as surface
geochemical activities and mapping
(4,644 pXRF measurements, 1,079 soil
samples and 215 rock chip samples).
This was the first full season of field
activity following PNX’s entry into the NT.
The work has advanced the geological
and technical understanding of the
development potential of the Hayes Creek
Project and has highlighted the potential
mineral wealth of the Burnside Project.
11
PNX METALS LIMITED | ANNUAL REPORT 2016 EXPLORATION REPORT
HAYES CREEK PROJECT – NORTHERN TERRITORY
The Hayes Creek Project
(Project) is underpinned
by total estimated Inferred
and Indicated mineral
resources (JORC Code
2012) containing 257koz
gold, 16.3Moz silver, 178kt
zinc, 41kt lead and 11.5kt
copper (750koz AuEq) (refer
Mineral Resources and Ore
Reserves tables on page 26
for further detail).
The Project is located in a favourable
mining jurisdiction in the Northern
Territory where the development
scenario considers and utilises existing
infrastructure that includes rail, road, high
voltage power lines, water and historical
mining areas, further enhancing project
fundamentals and lowering development
risks (Figure 3).
The Iron Blow and Mt Bonnie deposits
were first discovered in the late 1800s
with limited open pit and underground
mining occurring in the early 1900s.
During the mid-1980s most of the
oxidised ore was mined by shallow open
pits for gold and silver with the remaining
primary sulphide ore now the focus for
PNX. Figure 2 shows recent photos of the
historical pits.
12
Figure 2 Iron Blow (top) and Mt Bonnie historical pits
PNX METALS LIMITED | ANNUAL REPORT 2016 SCOPING STUDY
Completed March 2016
PNX completed a Scoping Study in
March 2016 that identified a robust
economic base case and the potential
for the Project to be economically viable.
The level of capital investment scoped
provides for modest mining and ore
throughput rates and demonstrates, at
the metal prices used, a potentially fast
Project payback period. This is likely to
be attractive to stakeholders and/or other
financiers, as is the inherent commodity
mix of gold, silver and zinc. The Study
confirms the Project to be profitable
across the commodity cycle and capable
of producing zinc concentrate and gold-
silver doré from both open-pit (Figure 5)
and underground operations (Figure 4).
PNX is aiming to develop an operation
with a greater than 7 year mine life,
producing 14koz of gold, 1.3Moz of silver
and 14kt of zinc annually.
PRELIMINARY FEASIBILITY STUDY
Underway, due for
completion May 2017
On completion of the Scoping Study PNX
commenced a fully funded Preliminary
Feasibility Study (PFS) with the aim of
improving the certainty of the mining
inventory and associated operating
and development costs, and reducing
the technical risk of the Project before
a development decision. Specific
components and objectives of the
PFS include:
• Drilling:
» Upgrade the confidence in
the mineral resources to the
‘Indicated’ category for both the
Iron Blow and Mt Bonnie deposits
»
Test for extensions to the
mineralisation beyond current
geological models
• Define additional gold resources at
Iron Blow to enhance Project value
• Ongoing approvals, environmental
impact studies, and stakeholder
engagement toward a decision to
mine
Figure 3 Hayes Creek Project location
• Selection of optimum Project
configuration: process plant,
infrastructure, engineering studies,
tails treatment, waste dumps, route
to market
•
Increase confidence in capital and
operating cost estimates
• Metallurgical optimisation: improve
recoveries, reduce impurities, and
investigate additional revenue streams
In September 2016, a 7,500 metre infill
and extensional RC and diamond drilling
program commenced at Mt Bonnie and
Iron Blow with assay results expected in
October 2016.1
1 Refer ASX release 6 October 2016 for first
assay results
Drill rig at Mt Bonnie
13
PNX METALS LIMITED | ANNUAL REPORT 2016 EXPLORATION REPORT
MT BONNIE DRILL PROGRAMS
October 2015 & September 2016
A 1,560m RC and diamond drill program
was completed at the Mt Bonnie deposit in
October 2015, with results incorporated into
an initial Mineral Resource Estimate (reported
in accordance with JORC 2012). Better
intersections included:
• 8.78m @ 7.16% Zn, 1.04g/t Au, 215g/t
Ag, 0.34% Cu and 1.62% Pb from 55m in
MBDH033
• 42.25m @ 2.96% Zn, 0.59g/t Au, 35g/t Ag
and 0.33% Pb from 25.75m in MBDH034,
including;
»
3.1m @ 10.77% Zn, 3.34g/t Au, 133g/t
Au, 0.39% Cu and 1.21% Pb from 63.9m
High-grade, multi-element mineralisation
was drilled over a substantial area (Figure 6).
Importantly, drilling to the south of the historical
open pit identified a new thick zone of
mineralisation where potential exists to link with a
gossan outcropping approximately 150m to the
south of the existing pit, providing near-surface
extensional upside. A gossan is the weathered
product of sulphide mineralisation.
The results show excellent continuity and
consistency of mineralisation, and indicate
a simple tabular north-west dipping zone of
massive sulphides. A halo of brecciated and
carbonate altered rocks containing primarily gold-
rich mineralisation was intersected directly below
the massive sulphide zone, and a zone of silver-
rich supergene mineralisation occurs in a flat-lying
zone near surface. The lateral and vertical extents
of this gold and silver mineralisation is currently
undefined, and was not included in the mineral
resource estimate. As it is outside of the massive
sulphide envelope it was likely not identified by
ground and downhole EM surveys and therefore
provides considerable potential upside.
As noted earlier, in September 2016, an infill
and extensional RC program was completed at
Mt Bonnie for 27 holes and 1,826m (Figure 6).
Mineralisation was intercepted in all holes drilled
and is consistent with the geological model.
Assay results are expected in October 20161 with
an updated mineral resource due by the end of
2016 which will be a key component of the PFS.
Figure 4 Isometric view of the conceptual Iron Blow underground
mine design looking south west
Blue: fresh air intake/egress; Red: exhaust air; Green stopes:
longitudinal retreat stopes; Red stopes: transverse stopes; Brown:
blind uphole/crown stopes; Light blue: decline
1 Refer ASX release 6 October 2016 for first assay results
Figure 5 Conceptual Whittle pit shell (white) for Mt Bonnie looking
south, blue zone represents the orebody
14
PNX METALS LIMITED | ANNUAL REPORT 2016 MT BONNIE RESOURCE ESTIMATE
February 2016
In February 2016, based on information
derived from historical data and the
October 2015 drill program, an initial
Mineral Resource Estimate was
completed for the Mt Bonnie deposit
(reported in accordance with JORC
Code, 2012) containing:
• 1.3 million tonnes @ 4.2% Zn,
1.3g/t Au, 133g/t Ag, 1.3% Pb,
and 0.3% Cu
Refer to the Mineral Resources and
Ore Reserves tables on page 26 and
the Company’s ASX release dated
2 February 2016 for further detail.
This resource estimate, along with the
significant resource existing at Iron Blow,
was a key input to the Scoping Study.
RESEARCH & DEVELOPMENT
PROGRAM – METALLURGY
In January 2016, PNX published results
of interim metallurgical test work on
representative material from Mt Bonnie
to determine the performance relative
to previously tested Iron Blow ore. The
conditions for flotation tests were based
on the optimal conditions established
previously for the Iron Blow composite
sample and resulted in an improvement
in recoveries of zinc, silver, and in
particular gold.
The results were excellent for a first
pass, and are expected to improve with
possible further grinding optimisation
and recycling. Various reagent (zinc
depressant) parameters will be trialled
to adjust the zinc deportment in the
bulk rougher. Further work is also
progressing to better understand the
gold deportment in flotation, and silver
concentrate leaching.
A detailed metallurgical test work
program to further optimise the innovative
processing route being developed for the
Hayes Creek PFS is currently in progress
and expected to be completed by the
end of 2016.
Figure 6 Mt Bonnie drilled holes September 2016 (red) and 2015 drill holes (blue) and
Scoping Study pit outline
Drill rig at Mt Bonnie
15
PNX METALS LIMITED | ANNUAL REPORT 2016 EXPLORATION REPORT
MINERAL LEASE ACQUISITION
In July 2016, PNX completed the
acquisition of three highly prospective
Mineral Leases containing a number
of gold prospects adjacent to the
Hayes Creek project (Figure 7). The
acquisition is aimed at increasing the
already established significant mineral
resource base at Hayes Creek through
the delineation of additional economic
gold mineralisation.
Consideration for the purchase was
1 million PNX shares, which have been
issued to the vendor Newmarket Gold.
PNX has also granted Newmarket Gold
a 2% Net Smelter Return royalty over
any gold and silver production from
the leases.
The three mineral leases acquired
MLN 794, MLN 795, and ML 30936 are
located less than 3km to the west of the
Hayes Creek project.
Figure 7 Mineral leases acquired
(blue) in proximity to Hayes Creek,
Mt Bonnie and Iron Blow (red)
16
PNX METALS LIMITED | ANNUAL REPORT 2016 REGIONAL EXPLORATION – NORTHERN TERRITORY
BURNSIDE, MOLINE &
CHESSMAN PROJECTS
PNX is currently earning up to a 90%
interest from Newmarket Gold in
19 Exploration Licenses and 4 Mineral
Leases covering approximately 1,700km2
(Figure 8) through total expenditure of
$4 million over 4 years in two stages.
During the year, PNX applied for a new
tenement (EL31099) in the Burnside
project area, which was granted on
4 August 2016. This tenement is located
along the highly endowed Howley
anticline adjacent to Burnside area and
complements that project.
At 30 June 2016, total expenditure for the
purpose of the first stage of the farm-in
was approximately $1.5 million. A further
$0.5 million is required, and will be spent
by December 2016 to achieve the 51%
stage one earn-in.
Regional exploration activities during
the year were aimed at identifying and
testing new gold and base metal targets
in the vicinity of the Hayes Creek project.
Geological mapping, rock chip sampling
and geochemical soil data were collected
to complement the already significant
datasets inherited from Newmarket Gold.
GOVERNMENT GRANT AWARDED
During the year, PNX was awarded grant
funding totalling approximately $85,000
to co-fund diamond drilling of two
new prospects within its Burnside and
Chessman projects.
The grants, awarded through the
Northern Territory Geological Survey’s
Geophysics and Drilling Collaborations
funding program, comprise up to
$34,100 for the Barossa zinc-silver-gold
VMS prospect and up to $51,590 for the
Tractor Corner lead-zinc prospect.
The Geophysics and Drilling Collaborations
program forms part of the Northern
Territory Government’s CORE (Creating
Opportunities for Resource Exploration)
initiative and provides co-funding for
exploration drilling and geophysical work
in greenfield areas. PNX was one of nine
successful applicants for the 2015-2016
round of co-funding for drilling.
BURNSIDE EXPLORATION
Exploration during the 2015/2016 dry
seasons has been aimed at identifying
new gold and base metal targets
to complement (by increasing the
prospective project life of) the Hayes
Creek project. PNX is progressing
a number of early-stage exploration
prospects by collecting geological
mapping, rock chip sampling and
geochemical soil data to prioritise further
exploration programs including drilling.
The prospect areas shown in Figure 8
all provide excellent opportunities for
economic mineralisation in one of
the most highly endowed geological
domains in Australia. Significant nearby
gold deposits include Cosmo-Howley
(>2Moz), Woolwonga (450,000oz),
Brocks Creek (500,000oz) and Goodall
(330,000oz) and PNX’s own Iron Blow/Mt
Bonnie (~750,000oz AuEq*). Several key
prospects that were progressed during the
year are discussed in further detail below.
*
Refer Table 2 on page 26.
DARWIN
N O R T H E R N
T E R R I T O R Y
Burnside Project
Hayes Creek Project
Hayes Creek
Pine Creek
Moline Project
0
50
100
Katherine
kilometres
NT 03
Chessman Project
Figure 8 PNX Burnside tenure (shaded blue), showing exploration targets
17
PNX METALS LIMITED | ANNUAL REPORT 2016 EXPLORATION REPORT
MAZE (AU)
Mapping and sampling at the Maze
prospect, less than 1km to the east of
Mt Bonnie (Figure 9) has identified a 2km
NNW/SSE trending mineralised structure
containing three zones of gold-arsenic
anomalism in surface soil sampling. Gold
and arsenic anomalism occurs together in
several places along the contact of Zamu
Dolerite within the Koolpin Formation
and concentrated within the fold hinges
of a prominent NNW trending anticlinal
structure. The geology is interpreted to be
directly analogous with the Cosmo-Howley
gold deposit, being situated within an
anticlinal fold hinge at the dolerite contact.
MT ELLISON (CU) & DELORAINE
(PB-ZN-AG)
The historical Mt Ellison mine is located
on EL25748, approximately 20km to
the north of the Hayes Creek project.
During the period 1891-1911, Mount
Ellison produced approximately 3,300t
of copper-bismuth ore averaging
approximately 20% Cu and 0.1% Bi.
Along strike from the old workings
(Figure 10), a conductive body has
been identified and modelled from 2011
VTEM survey data. It is not known yet to
what extent this may have been tested
by historical work, but it is considered
unlikely that the primary zone received
much attention during small-scale mining
activities more than 100 years ago.
Elevated copper in soils has been defined
along a 1.4km strike to the north of the
mine trend (Figures 10 and 11) which
may represent a northerly extension to
the mined lode. There is good potential to
discover both lateral and depth extensions
to the Mt Ellison mineralisation.
During 2015 and 2016, PNX delineated
a new strong Pb and Zn anomaly
(Deloraine) by soil sampling to the
northwest of Mt Ellison (Figure 10). This
anomaly occurs in the fold hinge of a
northwest trending anticlinal axis, extends
to over 2.8km in length, and is open
along strike. The anomaly is located in
the aureole of Burnside Granite and in
a favourable setting for localisation of
metal-bearing hydrothermal fluids.
18
Figure 9 Maze prospect geochemical anomalies shown
with Newmarket Gold Cosmo mine cross-section
PNX METALS LIMITED | ANNUAL REPORT 2016 LANGLEYS AND SHADY CAMP
PROSPECTS
An 8-hole RC drilling program was
completed in September 2016 for 602
metres at the Langleys and Shady Camp
prospect, one of many gold targets
within the Golden Dyke Dome and
approximately 3km from the Hayes Creek
Project. The program targeted extensions
to known gold mineralisation. The best
intercept drilled was:
• 2m @ 5.10 g/t Au from 72m in
LAR006
Four of the holes drilled contained narrow
zones of gold mineralisation and assay
results received were in general of a lower
grade and narrower width than historically
drilled. As such the gold mineralisation
intercepted is unlikely to be economic
and based on current knowledge and
geological interpretation of the results,
the mineralising system appears to be
pinching out. Whilst the mineralisation
system remains open and there is
potential for it to swell in thickness at
depth, Langleys is now considered a
lower priority target.
19
Figure 10 Mt Ellison-Deloraine area Zn and Cu geochemistry on late-time VTEM image
Figure 11 Mt Ellison area – historically mined copper lode at surface
PNX METALS LIMITED | ANNUAL REPORT 2016 EXPLORATION REPORT
BAROSSA VMS PROSPECT
(Government co-funded drill program)
Barossa is a cluster of volcanogenic
massive sulphide (VMS) style zinc-silver-
gold targets in an area which has never
been drilled and has seen only limited
exploration. Nine strong late-time airborne
electromagnetic (VTEM) anomalies
consistent with that of VMS camps have
been identified using the nearby Iron Blow
and Mt Bonnie VMS deposits as known
analogies (Figure 12).
The VTEM anomalies at Barossa are of
a strength and geometry consistent with
concentrations of massive sulphides. The
host stratigraphy and structural setting
are also identical to those observed at the
Iron Blow and Mt Bonnie deposits.
Two holes are proposed to test the
highest-priority electromagnetic
responses among the nine VTEM
anomalies, being BLT021 and BLT018
(Figure 12). Drilling is due to commence
in October 2016.
MOLINE EXPLORATION
The Moline Project (Figure 13) is centred
on the historic Moline goldfields at the
northern end of a belt of gold, tin and
base metal mineralisation which extends
from the vicinity of the abandoned Evelyn
Zn-Pb-Ag mine southerly for some
60 kilometres to the vicinity of the former
Mount Todd gold mine. Between 1989
and 1992, approximately 110,000 ounces
of gold were recovered from production
of 1.6Mt at a grade of 2.14g/t, mainly
from oxidised ore to a maximum depth of
65m below surface.
PNX has identified numerous untested
VTEM anomalies in the project area and
in 2016 began systematically undertaking
surface geochemistry and field inspection
to prioritise drilling targets. PNX also
considers that there is significant potential
for high grade shoots to continue at
depth under the oxide pits. There is
therefore both considerable greenfield and
brownfield potential latent in the Moline
leases, all of which are easily accessible
off the Arnhem Highway. Furthermore,
the elevated Zn nature of mineralisation
in the Moline pits has good synergy with
the contemplated development at Hayes
Creek. PNX is bringing a multi-commodity
focus to this tenure.
20
Figure 12 Barossa VTEM targets and Iron Blow deposit on VTEM time channel 42
(same scale).
Figure 13 Moline Project area.
PNX METALS LIMITED | ANNUAL REPORT 2016 CHESSMAN EXPLORATION
(adjacent to Katherine, NT)
TRACTOR CORNER SEDEX
PROSPECT
(Government co-funded drill program)
Tractor Corner is a sedimentary exhalative
(SEDEX) style zinc-lead target situated on
the margin of the Cambrian Daly Basin
and the Proterozoic Pine Creek Orogen
(Figure 14), a favourable setting for such
deposits. Drilling is due to commence in
late October 2016.
SEDEX deposits represent attractive
exploration targets due to their size
potential and the fact that they are
responsible for more than 50% of the
world’s zinc and lead reserves. Australian
examples include Mt Isa, Century and
McArthur River mines.
ENVIRONMENT
The Company’s exploration activities
have been carried out in accordance
with the Northern Territory government’s
regulatory laws. PNX is committed to
reducing its environmental footprint,
implementing ‘best practices’ for
assessment, management, mitigation and
rehabilitation for all exploration activities.
The Company reviews its environmental
policies and procedures regularly and
liaises with the appropriate government
departments to ensure compliance.
There were no reportable environmental
incidents during the year.
Mine Management Plans (MMPs)
were submitted and approved for the
Hayes Creek and Burnside projects
and environmental bonds are in place.
Rehabilitation will commence in areas
disturbed by drilling activity prior to the
onset of the wet season in late 2016.
Figure14 Tractor Corner drilling targets.
SOCIAL AND
COMMUNITY
OCCUPATIONAL HEALTH
AND SAFETY
PNX recognises and responds to the
growing expectation from community,
regulators and industry leaders for
more open community engagement
and stakeholder consultation. The
Company’s policy and practice of
‘information, consultation and active
participation’ forms an integral part of the
exploration process.
The Company participated in the Mining
the Territory Conference in September
2015 and September 2016.
PNX is committed to the health and
safety of its employees, contractors and
visitors. No reportable incidents occurred
during the year.
The Company reviews its Health and
Safety policies and procedures on a
regular basis to ensure it maintains
a high standard. All field staff have
been engaged in appropriate ongoing
training and skills for supervising and
implementing the required exploration
activities in remote environments.
PNX METALS LIMITED | AN N UAL REP ORT 2016
21
TENEMENTS
NORTHERN TERRITORY
PNX TENEMENTS
Tenement
ML30512
ML30589
MLN1033
MLN1039
MLN214
MLN341
MLN342
MLN343
MLN346
MLN349
MLN405
MLN459
MLN811
MLN816
MLN794
MLN795
Name
Mt Bonnie
Mt Bonnie
Mt Bonnie
Mt Bonnie
Iron Blow
Iron Blow
Mt Bonnie
Iron Blow
Mt Bonnie
Iron Blow
Mt Bonnie
Mt Bonnie
Mt Bonnie
Mt Bonnie
Fishers-1
Fishers-2
ML30936
Good Shepherd
Holder
Area (hectare)
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%1
PNX Metals Ltd 100%1
PNX Metals Ltd 100%1
6.4
31.6
4.8
1.2
6.3
14.9
13.7
14.9
16.0
15.0
12.0
15.0
8.1
8.1
8.1
8.1
106
290.2
60.2km2
EL31099
Bridge Creek
PNX Metals Ltd 100%2
1 Completion of acquisition of mineral leases occurred in July 2016
2
Tenement granted August 2016
Hand-drawn longitudinal section of the Iron Blow mine, circa 1906
22
PNX METALS LIMITED | ANNUAL REPORT 2016 FARM-IN TENEMENTS
Tenement
Name
Holder
Area (sq km)
Burnside Project*
EL10012
EL10347
EL23431
EL23536
EL23540
EL23541
EL24018
EL24051
EL24058
EL24351
EL24405
EL24409
EL24715
EL25295
EL25748
EL9608
Chessman Project*
EL25054
EL28902
ML30293
Moline Project*
EL28616
ML24173
MLN1059
MLN41
Mt Ringwood
Golden Dyke
Thunderball
Newmarket Gold NT Holdings Pty Ltd 100%
Newmarket Gold NT Holdings Pty Ltd 100%
Newmarket Gold NT Holdings Pty Ltd 100%
Brocks Creek
Newmarket Gold NT Holdings Pty Ltd 100%
Jenkins
Newmarket Gold NT Holdings Pty Ltd 100%
Cosmo North
Hayes Creek
Newmarket Gold NT Holdings Pty Ltd 100%
Newmarket Gold NT Holdings Pty Ltd 100%
Margaret River
Newmarket Gold NT Holdings Pty Ltd 100%
Yam Creek
Newmarket Gold NT Holdings Pty Ltd 100%
McCallum Creek
Newmarket Gold NT Holdings Pty Ltd 100%
Yam Creek
Newmarket Gold NT Holdings Pty Ltd 100%
Brocks Creek South
Newmarket Gold NT Holdings Pty Ltd 100%
Mt Masson
Newmarket Gold NT Holdings Pty Ltd 100%
Margaret Diggings
Newmarket Gold NT Holdings Pty Ltd 100%
Burnside
Mt Bonnie
Maud
Maud
Newmarket Gold NT Holdings Pty Ltd 100%
Newmarket Gold NT Holdings Pty Ltd 100%
Newmarket Gold NT Holdings Pty Ltd 100%
Newmarket Gold NT Holdings Pty Ltd 100%
Chessman
Newmarket Gold NT Holdings Pty Ltd 100%
Moline
Moline
Moline
Newmarket Gold NT Holdings Pty Ltd 100%
Newmarket Gold NT Holdings Pty Ltd 100%
Newmarket Gold NT Holdings Pty Ltd 100%
Mt Evelyn
Newmarket Gold NT Holdings Pty Ltd 100%
*
PNX is earning up to 90% in these tenements in two stages. PNX’s interest at the date of this report is zero
14.9
10.0
13.4
70.4
16.7
3.3
23.4
86.9
3.3
30.1
4.1
22.1
56.8
10.0
643.1
10.0
64.0
288.2
1.1
262.5
31.3
4.2
0.1
1669.9
23
PNX METALS LIMITED | ANNUAL REPORT 2016 TENEMENTS
SOUTH AUSTRALIA
Exploration Licences
Name
Holder
Area (sq. km)
Adelaide Geosyncline
EL5382
EL4807
EL4970
EL5411
EL4809
EL5473
EL5169
EL4886
EL5557
Yorke Peninsula
ELA281/12
EL5491
EL4983
EL5196
Leigh Creek
EL5264
EL5300
Burra Central
Burra West
Burra North
Mongolata
Princess Royal
Bagot Well
Tarnma
Spalding
Washpool
Minlaton
Koolywurtie
Weaver Hill
Coonarie
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
Wellington Exploration Pty Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
Nantawarrinna
Mt Elkington
PNX Metals Ltd 100%
PNX Metals Ltd 100%
84
69
300
60
314
71
128
157
135
1,318
547
255
104
254
1,160
317
618
935
3,413
Holder
LCCM 100%
LCCM 100%
LCCM 100%
Area (hectare)
250
200
122
TOTAL ELs - South Australia
Mineral Leases
Name
ML5467
ML5741
ML5498
Mountain of Light
Mount Coffin
Lorna Doone
24
PNX METALS LIMITED | ANNUAL REPORT 2016 Mt Bonnie freshwater dam
25
PNX METALS LIMITED | ANNUAL REPORT 2016 MINERAL RESOURCES AND ORE RESERVES
As at 30 September 2016
NORTHERN TERRITORY
HAYES CREEK – IRON BLOW
Table 1: Hayes Creek Project Mineral Resources
Deposit
Domain
Cut-off
Category
Ktonnes
Iron Blow
Mt Bonnie
> -90m RL
0.7g/t AuEq
Inferred
2,200
< -90m RL
3.0g/t AuEq
>1% Zn
>1% Zn
>0.5g/t Au
>50g/t Ag
Inferred
Indicated
Inferred
Inferred
Inferred
400
456
644
78
107
Zn
(%)
4.9
4.1
5.63
4.38
0.16
0.26
Pb
(%)
1.0
0.4
1.26
1.52
1.87
0.06
Cu
(%)
0.3
0.4
0.32
0.25
0.26
0.04
TOTAL
INDICATED & INFERRED 3,885
4.59
1.05
0.30
Ag
(g/t)
140
71
151
131
121
70
130
Au
(g/t)
2.4
2.7
1.15
1.47
1.88
0.04
ZnEq*
(%)
AuEq*
(g/t)
11.8
10.0
9.14
8.16
5.36
1.60
6.7
5.6
5.46
4.87
3.20
0.96
2.05
10.29
5.91
Table 2: Hayes Creek Project total contained metal estimate based on total mineral resources
Contained metal
Iron Blow
Mt Bonnie
TOTAL
Zn
(t)
124,200
54,283
178,483
Au
(oz)
204,482
52,149
256,631
Ag
(oz)
10,815,677
5,470,469
16,286,146
Pb
(t)
23,600
17,057
40,657
Cu
(t)
8,200
3,315
11,515
ZnEq
(t)
304,504
102,803
407,307
AuEq
(oz)
550,450
197,382
747,832
Notes relating to Tables 1 and 2
Due to effects of rounding, totals may not represent the sum of all components.
Mt Bonnie – zinc domains are reported above a cut-of grade of 1% zinc, gold domains are reported above a cut-off grade of 0.5 g/t gold and silver domains are
reported above a cut-off grade of 50 g/t silver.
Iron Blow – a variable gold-equivalent cut-off grade was used corresponding to an RL at which mineralisation could be extracted with open cut versus
underground methods.
In order to assess the potential value of the total suite of minerals of economic interest in the mineral inventory, formulae were developed to calculate metal
equivalency for the gold and zinc (see below). Metal price assumptions were updated during the Mt Bonnie estimation to reflect average consensus forecasts for
the period 2017 through 2021, (consensus forward price forecasts compiled from a group of domestic and international mining analysts and financial institutions).
Metallurgical recovery information for Iron Blow was assigned prior to any diagnostic testwork by PNX and was based on what was considered reasonable in
similar operations. Metallurgical recovery information for Mt Bonnie was sourced from test work completed on diamond drill core from the Iron Blow deposit, and
historical test work on the Mt Bonnie deposit. Mt Bonnie and Iron Blow have similar mineralogical characteristics and are a similar style of deposit; hence the
assumption that metallurgical characteristics are similar between the two deposits is considered reasonable by the Competent Persons.
Price assumptions
Deposit
Zn price
($USD/t)
Pb price
($USD/t)
Cu price
($USD/t)
Ag price
($USD/troy oz)
Au price
($USD/troy oz)
Deposit
Recovery assumptions
Iron Blow
Mt Bonnie
2350
2400
2250
2000
7000
6200
20
18
1300
1250
Iron Blow
Mt Bonnie
The formulae below were applied to the estimated constituents to derive the metal equivalent values:
Zn
(%)
70
80
Pb
(%)
70
60
Cu
(%)
70
60
Ag
(%)
90
75
Au
(%)
90
55
Gold Equivalent (field = “AuEq”) (g/t) = (Au grade (g/t) * (Au price per ounce/31.10348) * Au recovery) + (Ag grade (g/t) * (Ag price per ounce/31.10348) * Ag
recovery) + (Cu grade (%) * (Cu price per tonne/100) * Cu recovery) + (Pb grade (%) * (Pb price per tonne/100) * Pb recovery) + (Zn grade (%) * (Zn price per
tonne/100) * Zn recovery) / (Au price per ounce/31.10348)
Zinc Equivalent (field = “ZnEq”) (%) = (Au grade (g/t) * (Au price per ounce/31.10348) * Au recovery) + (Ag grade (g/t) * (Ag price per ounce/31.10348) * Ag
recovery) + (Cu grade (%) * (Cu price per tonne/100) * Cu recovery) + (Pb grade (%) * (Pb price per tonne/100) * Pb recovery) + (Zn grade (%) * (Zn price per
tonne/100) * Zn recovery) / (Zn price per tonne/100)
Iron Blow Resource - See ASX release 3 November 2014, ‘High Grade Mineral Resource Estimate for Iron Blow Deposit’, where further details are provided. All
material assumptions and technical parameters underpinning the resource estimate announced on 3 November 2014 continue to apply and have not materially
changed. Results of drilling by PNX since October 2014 have not been included in the estimate but if they were, they would not likely result in a material change to
the October 2014 resource estimate.
Mt Bonnie Resource - See ASX release 1 February 2016, ‘Mt Bonnie Resource Estimate Boosts Hayes Creek Project, NT’ where further details are provided.
All material assumptions and technical parameters underpinning the resource estimate announced on 1 February 2016 continue to apply and have not
materially changed.
26
PNX METALS LIMITED | ANNUAL REPORT 2016
SOUTH AUSTRALIA
Table 3: Resources at Mountain of Light, Lorna Doone and Princess Royal
Indicated Resources
Cut-off grade
Tonnage
Grade % copper
Tonnes copper contained
ML5467 – MOUNTAIN OF LIGHT
Paltridge North
Rosmann East
ML5498 – LORNA DOONE
Lorna Doone
Lynda
EL4809 – PRINCESS ROYAL
Princess Royal
TOTALS
Indicated
Inferred
>0.3%
>0.4%
>0.5%
>0.3%
>0.4%
>0.5%
>0.3%
>0.4%
>0.5%
>0.3%
>0.4%
>0.5%
>0.3%
>0.4%
>0.5%
>0.3%
>0.4%
>0.5%
>0.3%
>0.4%
>0.5%
890,000
710,000
570,000
128,000
100,000
77,000
840,000
620,000
460,000
1,000,000
750,000
580,000
286,757
216,586
184,995
2,858,000
2,180,000
1,687,000
286,757
216,586
184,995
0.83%
0.96%
1.10%
0.78%
0.88%
1.00%
0.75%
0.90%
1.00%
0.72%
0.84%
0.96%
0.81%
0.96%
1.10%
0.77%
0.90%
1.02%
0.81%
0.96%
1.10%
7,400
6,800
6,200
1,000
900
800
6,300
5,600
4,600
7,200
6,300
5,600
2,325
2,083
2,034
21,900
19,600
17,200
2,325
2,083
2,034
The information pertaining to the Mountain of Light, Lorna Doone and Princess Royal Indicated and Inferred Mineral Resources was
prepared and first disclosed by PNX 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.
There has been no change in the reported mineral resources for Iron Blow – Northern Territory and South Australia from the prior year.
The Mt Bonnie mineral resource data is new for 2016 as noted earlier in this report.
PNX utilises suitably qualified independent consultants to compile all new mineral resources estimates. These resources estimates,
and the underlying assumptions and interpretations, are reviewed by PNX management, in particular the Company’s Exploration
Manager Andy Bennett (a Competent Person), for reasonableness prior to being finalised.
COMPETENT PERSON’S STATEMENT
The information in this report that relates to Exploration Results is based on information compiled by Mr Andrew Bennett, a Competent
Person who is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Bennett has sufficient experience relevant
to the style of mineralisation and the type of deposits under consideration and to the activity being undertaken 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 Bennett is a full time employee of PNX Metals Limited and consents to the inclusion in this report of the matters based on his information
in the form and context in which it appears.
27
PNX METALS LIMITED | ANNUAL REPORT 2016
DIRECTORS’ REPORT
The Directors of PNX Metals Limited (‘PNX’ or ‘Company’) present their report for the financial year ended 30 June 2016.
As approved by shareholders at the Company’s November 2015 Annual General Meeting and effective December 2015, the
Company’s name was changed from Phoenix Copper Limited to PNX Metals Limited.
DIRECTORS
The names and details of directors in office during and since the end of the financial year are as follows.
GRAHAM ASCOUGH
Non-executive Chairman
Appointed 7 December 2012
PAUL J DOWD
Non-executive Director
Appointed 27 September 2007
PETER WATSON
Non-executive Director
Appointed 7 September 2007
Graham Ascough (BSc, PGeo, MAusIMM) is
a senior resources executive with more than
25 years of industry experience evaluating
mineral projects and resources in Australia
and overseas.
Mr Ascough, a geophysicist by training, has
had broad industry involvement playing a
leading role in setting the strategic direction
for companies, completing financing and
in implementing successful exploration
programmes. Mr Ascough was the Managing
Director of Mithril Resources Ltd from
October 2006 until June 2012. Prior to
joining Mithril in 2006, he was the Australian
Manager of Nickel and PGM Exploration
at a major Canadian resources house,
Falconbridge Limited, which was acquired by
Xstrata Plc in 2006. He was also a Councillor
of the South Australian Chamber of Mines
and Energy and Chair of its Exploration
Committee from 2006–2012 and has strong
ties to the South Australian resources
industry. He is a member of the Australian
Institute of Mining and Metallurgy and is a
Professional Geoscientist of Ontario, Canada.
In the 3 years immediately prior to 30 June
2016, Graham Ascough held the following
directorships of other listed companies for the
following periods:
• Non-executive Chairman, Avalon Minerals
Limited since 30 November 2013
Paul Dowd has over 50 years’
experience in the mining industry in
Australia and many overseas countries.
In April 2012 he retired as Managing
Director of PNX, a position he assumed
in September 2008, but remains on
the Board as a non-executive director.
Mr Dowd’s experience includes
executive management roles including
Vice President of Newmont Mining
Corporation’s Australian and New
Zealand Operations and Managing
Director of Newmont Australia Limited,
and as a senior public servant – head
of the resources and petroleum
department in the Kennett Government
of Victoria. In 2015, he retired as
Chairman of the SA Mineral Resources
& Heavy Engineering Skills Centre
but remains on the Board. He is a
non-executive director of Oz Minerals
Limited and Energy Resources of
Australia Limited (ERA). Mr Dowd is
also a board member of the Sustainable
Minerals Institute (University of
Queensland) and Chairman of the
Mineral Resources Sector Advisory
Council of the CSIRO.
In the 3 years immediately prior to
30 June 2016, Paul Dowd held the
following directorships of other listed
companies for the following periods:
• Non-executive Chairman, Mithril
• Non-executive director, Oz Minerals
Resources Limited since 9 October 2006
Limited since 23 July 2009
• Non-executive director, Energy
Resources of Australia Limited since
26 October 2015
• Non-executive Chairman, Musgrave
Minerals Limited since 26 May 2010
• Non-executive Chairman, Aguia
Resources Limited from 19 October 2010
to 15 November 2013
• Non-executive Director, Reproductive
Health Science Limited from 31 July 2013
to 2 April 2014
28
Peter Watson, a founder of PNX,
studied Law at Melbourne University
and graduated with honours. He has
practiced law for over 45 years,
specialising in commercial, corporate,
resources and trade practices law. He is
admitted to practice in South Australia,
New South Wales, Victoria and Western
Australia as well as the High Court of
Australia. For over 20 years, Mr Watson
was a partner in the national law firm
now known as Norton Rose Fulbright.
During that time he established, and
for 4 years managed, its Perth office.
He also managed its Melbourne office
for 2 years. In 1996 Mr Watson joined
Andersen Legal as its first Melbourne
partner and in 1999 was recruited by
Normandy Mining Limited as its group
legal counsel and a group executive.
Following the takeover of Normandy
by Newmont Mining Corporation, he
returned to private legal practice and
founded the boutique law firm Watsons
Lawyers in Adelaide which on 1 July
2016 merged with Piper Alderman.
Mr Watson is a member of the board
of trustees of the Bethlehem Griffiths
Research Foundation (a medical
research charitable foundation), non-
executive director of Felton Grimwade
and Bosisto’s Pty Ltd (a manufacturer
and supplier of eucalyptus products and
over-the-counter therapeutic products).
In the 3 years immediately prior to
30 June 2016, Peter Watson held the
following directorships of other listed
companies for the following periods:
• Non-executive director, Lawson
Gold Limited from 5 August 2010
to 2 July 2013
PNX METALS LIMITED | ANNUAL REPORT 2016 DAVID HILLIER
Non-executive Director
Appointed 17 September 2010
David Hillier is a Chartered Accountant
and has more than 40 years’ experience
in commercial aspects of the resources
industry. He has served as Chairman
and as a director of a number of public
companies in the mining and exploration
field, including Lawson Gold Limited and
Buka Gold Limited. Throughout 2008
he was Chief Financial Officer and an
executive director of AIM listed Minerals
Securities Limited, based in London.
Between 1989 and 2002, Mr Hillier held
a range of senior executive positions in
the Normandy Mining Limited Group of
companies and was Chief Financial Officer
of Normandy for six of these years.
In the 3 years immediately prior to 30
June 2016, David Hillier held the following
directorships of other listed companies
for the following periods:
• Non-executive Chairman, Lawson
Gold Limited from 5 August 2010 to
2 July 2013
JAMES FOX
Managing Director & Chief Executive Officer
(MD & CEO)
Appointed 26 November 2014
James Fox has been CEO of the Company
since May 2012. He has 20 years’
experience in the mining industry. Prior
to joining PNX, he was responsible for
the development and operation of the
Nickel Laterite Heap Leach project at
the Murrin Murrin operations in Western
Australia. Mr Fox has held various senior
processing positions including Process
Manager at the Nifty Copper Operation
in Western Australia. He has worked in
the UK, Cyprus, Uganda and Australia in
gold, lead, zinc, copper, nickel and cobalt
mining and processing operations.
COMPANY SECRETARY
DIVIDENDS AND DISTRIBUTIONS
Tim Moran
Tim Moran is a Chartered Accountant
with 20 years’ experience in accounting
and finance and over 10 years’
experience in the mining and energy
industries. Prior to commencing with
PNX, Mr Moran was the Chief Financial
Officer and Company Secretary of a
Canadian listed oil and gas company in
Calgary, Canada, and before that spent
12 years with global accounting and
professional advisory firm KPMG.
INTERESTS IN SHARES AND
PERFORMANCE RIGHTS OF THE
COMPANY
As at the date of this report, the interests
of the Directors in the shares and
performance rights of PNX are as follows:
Graham Ascough,
Non-executive Chairman
Graham Ascough has an indirect interest
in 2,363,010 shares.
Paul Dowd,
Non-executive Director
Paul Dowd has a direct interest in
500,000 shares, and an indirect interest
in 5,668,077 shares.
Peter Watson,
Non-executive Director
Peter Watson has a direct interest
in 1,767,231 shares and an indirect
interest in 7,000,000 shares. Related
parties of Mr Watson hold a further
1,350,000 shares.
David Hillier,
Non-executive Director
David Hillier has an indirect interest in
2,000,000 shares.
James Fox,
Managing Director & CEO
A related party of Mr Fox holds
3,825,000 shares.
No dividends or distributions were paid
to members during the financial year and
none were recommended or declared
for payment.
PRINCIPAL ACTIVITIES
The principal activity of the Company and
its wholly owned subsidiaries (‘Group’)
during the financial year was mineral
exploration and advancement of its Hayes
Creek gold-silver-zinc project through to a
completed scoping study and the start of
a Pre-Feasibility Study (‘PFS’).
Hayes Creek Project
The Hayes Creek Project (‘Project’) is
located in a favourable mining jurisdiction
in the Pine Creek region of Northern
Territory, approximately 180km south
of Darwin. It comprises 14 wholly-
owned mineral leases including the
base and precious metals deposits at
Iron Blow and Mt Bonnie which were
acquired, as prospects, in 2014 from
Newmarket Gold NT Holdings Pty Ltd,
a subsidiary of Newmarket Gold Inc.
(‘Newmarket Gold’)1.
The Hayes Creek Project contains total
Inferred and Indicated mineral resources
(JORC Code 2012) of 257koz gold,
16.3Moz silver, 178kt zinc, 41kt lead
and 11.5kt copper2. During the year the
Company completed a scoping study
on the Project which found that mining
and processing ore derived from both
open-pit and underground operations
would generate strong financial returns for
PNX, including a fast payback period with
modest capital expenditure. The Company
is aiming to develop an operation with a
mine life of greater than 7 years, producing
payable metals of 14koz gold, 1.3Moz
1 Refer ASX release 18 August 2014 for
further detail
2
Refer ASX release 31 March 2016 for
further detail
29
PNX METALS LIMITED | ANNUAL REPORT 2016 DIRECTORS’ REPORT
silver, and 14kt zinc in concentrate
annually. The development strategy
includes the use of existing infrastructure
including rail, road, high voltage power
lines and water, designed to boost
economics and reduce project risk.
A PFS is underway, fully funded and
due for completion by mid-2017.
The PFS aims to improve the certainty
of the mining inventory and associated
operating and development costs, and
reduce the technical risk of the Project
before a development decision. Specific
components and objectives of the
PFS include:
• Drilling:
» Upgrade the confidence in
the mineral resources to the
‘Indicated’ category for both the
Iron Blow and Mt Bonnie deposits
»
Test for extensions to the
mineralisation beyond current
geological models
» Define additional gold resources
at Iron Blow to enhance Project
value
• Ongoing approvals, environmental
baseline studies, stakeholder
engagement toward a decision to
mine
• Selection of optimum Project
configuration – process plant,
infrastructure, engineering studies,
tails treatment, waste dumps, route
to market
•
Increase confidence in capital and
operating cost estimate
• Metallurgical optimisation:
»
»
increase recoveries of payable
metals to final products
decrease potential penalty and/or
deleterious elements
30
»
»
investigate benefits of producing
bullion – doré (a scoping study
assumption) vs precious metals
concentrate
investigate potential revenue
from lead/copper concentrates
(assumed nil in scoping study)
PFS drilling commenced in
September 2016 at Hayes Creek,
comprising a 7,500 metre infill and
extensional reverse-circulation (‘RC’) and
diamond drilling program.
PFS and Research and Development
(R&D) metallurgical optimisation work
includes the continuation of research
and development activities associated
with identifying and understanding the
geological and mineralogical structure
and processing characteristics of the
polymetallic ores at Hayes Creek.
Regional exploration and
farm-in agreement
The Burnside, Moline and Chessman
project areas are also in the Pine Creek
region of the Northern Territory and form
part of PNX’s farm-in agreement with
Newmarket Gold where PNX is earning up
to 90%, in two stages, of 19 Exploration
Licenses and four Mineral Leases covering
approximately 1,700 square kilometres.3
Total expenditure at 30 June 2016 for the
purpose of the first stage of the farm-in
was approximately $1.5 million. A further
$0.5 million is required to be spent by
mid-December 2016 to achieve the
51% stage one earn-in. PNX can then
elect to increase its interest to 90% with
expenditure of an additional $2 million
over a further 2 year period.
Regional exploration activities during the
year were aimed at identifying new gold
and base metal targets in the vicinity
of the Hayes Creek project. Geological
mapping, rock chip sampling and
geochemical soil data were collected
to complement the already significant
datasets inherited from Newmarket Gold.
3
Refer ASX release 18 August 2014 for further
detail
Gold and base metals exploration will be
the key regional focus for the latter half
of 2016 and into 2017, with four clear
areas of focus for short to medium term
development potential emerging:
• Golden Dyke Dome – near
mine growth potential, primary
mineralisation beneath historic open
pits
• Cosmo-Howley anticline – large zone
of interest, numerous existing gold
deposits, limited deeper drilling
• Moline – historical mining centre
with reserves reportedly remaining
unmined and untested depth
potential of numerous high grade ore
shoots
• Mt Ellison – multi-commodity
zone (Au, Cu, Pb, Zn), historic
copper-bismuth mining, no modern
exploration
A 7-hole RC drilling program commenced
subsequent to year-end at Langleys
prospect (Burnside area), one of many
gold targets within the Golden Dyke
Dome and approximately 3km from the
proposed developments at Hayes Creek.
The program is targeting extensions
to known gold mineralisation, with
assay results expected by the end of
September. PNX acquired a further
three minerals leases during the year
(completed subsequent to year-end)
to consolidate a dominant position in
this prospective but under-explored
geological region.
The Company will also conduct diamond
drilling in the coming months at two
greenfield targets, Barossa (Burnside
Project) and Tractor Corner (Chessman
Project). In June 2016, PNX was
successful in obtaining grant funding from
the Northern Territory Geological Survey’s
Geophysics and Drilling Collaborations
funding program of approximately
$85,000 to co-fund these diamond
drilling programs.
PNX METALS LIMITED | ANNUAL REPORT 2016 Avalon investment
The Company continues to hold
12.9 million shares in Avalon Minerals
Limited, representing approximately
2.5% of ordinary shares on issue of that
company. The investment was funded
primarily by a $1.2 million unsecured loan,
which is to be repaid via the remittance of
proceeds from the sale of Avalon shares.
Any shortfall may be paid by the issue
of shares in the Company. If the shares
in Avalon are not disposed of by the
November 2019 maturity date, the loan
is repayable in cash. The maturity date
of the loan was extended three years
to November 2019 during the year by
agreement with the lender.
The Company is continuing to evaluate
strategic options regarding its holding in
Avalon. Avalon is continuing to progress
its flagship Viscaria copper project in
northern Sweden toward feasibility and
a production decision, and advance its
newly acquired lithium and gold assets in
Finland and Sweden.
Capital raising
During the first half of the financial year
the Company raised $1.5 million via
the placement of 115 million shares at
1.3 cents per share to sophisticated
investors and company directors.
A further $0.25 million was raised
in April 2016 from the placement of
26.3 million shares at 0.95 cents per
share to sophisticated investors.
Subsequent to 30 June 2016, the
Company raised $1.5 million via the
placement of 79 million shares at
1.9 cents each to sophisticated and
institutional investors, and received
a commitment for a further share
placement of $0.25 million, if approved
by shareholders at the Company’s annual
general meeting.
Other funding – silver
streaming agreements
The Company raised $1.6 million
in June 2016 under identical metal
streaming and royalty agreements with
two investors. $800,000 was received
from each investor for the forward sale of
112,000 troy ounces of silver ($7.14/oz).
The silver is to be delivered at a rate of
14,000 oz per quarter (56,000 oz per
year) for 2 years once commissioning and
ramp up of the Hayes Creek Project is
complete.
At the end of the two year silver delivery
period, each investor receives a 0.24%
Net Smelter Return (NSR) royalty.
The NSR royalty applies in respect of
gold and silver produced from the Hayes
Creek Project, and will be paid for a
5 year period from the end of the silver
delivery period. PNX can buy back the
NSR royalty from an Investor prior to
production commencing for $0.27 million.
Each investor has an option, to be
exercised within 3 months of completion
of the pre-feasibility study over the Hayes
Creek project, to purchase an additional
56,000 oz of silver for $0.4 million. This
silver is to be delivered over a further
one year period. In this scenario the
NSR increases to 0.36% and buy-back
amount increases to $0.4 million.
If production at the Hayes Creek Project
has not commenced within 5 years and
PNX or an investor elects to terminate
the agreement, the forward payment
made by that investor ($0.8 million,
or $1.2 million, if the option has been
exercised) converts to PNX shares based
on a 30 day VWAP. The NSR royalty
will also apply in these circumstances
for 5 years from when production
commences on any of the mineral leases
making up the Hayes Creek project.
Leigh Creek
Resilience Mining Australia Limited
(‘RMA’, previously Hillsgold Resources
Pty Ltd) continues to hold an option to
acquire the Company’s 100% owned
subsidiary Leigh Creek Copper Mine
Pty Ltd (‘LCCM’). LCCM holds three
mining leases in the Leigh Creek area
including Mountain of Light, which has
been on care and maintenance since
January 2012.
RMA has yet to exercise the option,
which expires in mid-October 2016.
Should RMA exercise the option, it will
acquire LCCM, and two exploration
licences in the Leigh Creek area, from the
Company for nil up-front consideration
(other than the assumption of the
rehabilitation obligations at Mountain
of Light) and a contingent payment to
the Company of $100,000 if and when
3,000 tonnes of copper are produced
from future operations at the three
mining leases.
31
PNX METALS LIMITED | ANNUAL REPORT 2016 DIRECTORS’ REPORT
REVIEW OF OPERATIONS
The Group reported a comprehensive
net loss for the year of $1.1 million (2015:
$3.9 million), and the net result from
continuing operations was a loss after
income tax of $0.9 million (2015: $4.1
million). The prior year result included
impairment charges on the Group’s South
Australian exploration and evaluation
assets of $1.7 million and $1.2 million on
the investment in Avalon. The loss from
the Group’s discontinued operations at
Leigh Creek was $0.1 million (2015: $0.2
million). The 2016 result included a tax
benefit of $0.2 million from the Group’s
2015 research and development claim,
which was received in July 2016.
Overall, the loss from continuing
operations in 2016 of $0.9 million was
similar to the $1.2 million loss from 2015
after excluding the prior year impairment
charges, and very similar on a pre-tax
basis ($1.1 million loss in 2016 compared
to $1.2 million in the prior year). The
Group’s corporate costs, which include
head office wages, directors’ fees,
professional fees, insurance, regulatory,
occupancy and communications costs
have not changed significantly.
Net operating cash outflows for the year
of $1.1 million reflect the pre-tax loss from
continuing operations. Exploration cash
outflows of $1.5 million related almost
entirely to the Group’s projects in the
Northern Territory.
At 30 June 2016, the Group had cash
holdings of $1.6 million and net working
capital of $1.7 million excluding the
investment in Avalon. As noted earlier,
subsequent to year-end the Group raised
$1.5m from placements to sophisticated
and institutional investors.
EXPLORATION
Regional exploration (NT)
As noted earlier, exploration activities
during the year were focused at Hayes
Creek, with the successful completion
of a scoping study and commencement
of a PFS. These have been discussed
earlier under ‘Principal Activities’.
Other significant achievements that
provided valuable input to the scoping
study included:
• Completion of a 1,560m RC and
diamond drill program at Mt Bonnie in
October 2015 with better intersections
including:
»
»
8.78m @ 7.16% Zn, 1.04g/t Au,
215g/t Ag, 0.34% Cu and 1.62%
Pb from 55m in MBDH033
42.25m @ 2.96% Zn, 0.59g/t
Au, 35g/t Ag and 0.33% Pb from
25.75m in MBDH034, including
3.1m @ 10.77% Zn, 3.34g/t Au,
133g/t Au, 0.39% Cu and 1.21%
Pb from 63.9m
• The drilling and assay results from
Mt Bonnie were a key component of
an initial JORC 2012 resource estimate
at that deposit that was finalised in
February 2016:
»
1.3 million tonnes @ 4.2% Zn,
1.3 g/t Au, 133 g/t Ag, 1.3% Pb,
and 0.3% Cu4
• R&D metallurgical test-work was
completed during the year where
detailed analysis was completed on
Iron Blow massive sulphides, including
grind variability, reagent optimisation,
concentrate regrind and cleaning
flotation. Metallurgical investigations
have identified a practical and low cost
flow sheet to maximise recoveries of the
most valuable minerals in the resources,
being zinc, gold and silver.
Exploration during the year was aimed
at identifying new gold and base metal
targets in the vicinity of the Hayes Creek
project. The Burnside, Moline and
Chessman Projects contain exciting
opportunities for brownfield discoveries
with undeveloped mineralisation and
promising new conceptual targets.
A number of targets will be drill-tested
in 2016-17, and a pipeline of new
prospects is being generated through
geological mapping and surface
geochemical analysis.
South Australian Projects
No activities of significance occurred
during the year at the Company’s Burra
or Yorke Peninsula projects.
SIGNIFICANT CHANGES IN STATE
OF AFFAIRS
There were no significant changes in the
state of affairs of the Group during or
since the end of the year.
SIGNIFICANT EVENTS
SUBSEQUENT TO THE END OF
THE FINANCIAL YEAR
Subsequent to year end the Company
raised $1.5 million via the placement of
79 million shares to sophisticated and
institutional investors at an issue price
of 1.9 cents per share. The Company
also received a commitment for a further
placement of $0.25 million, if approved
by shareholders at the Company’s
2016 AGM.
Also subsequent to year-end, the Board
resolved to issue 1,000,000 Shares
to Company MD & CEO James Fox
and grant him 1,250,000 Performance
Rights, with both awards subject to
shareholder approval at the Company’s
2016 AGM. The proposed share
issuance is considered by the Directors
to be an appropriate bonus for Mr Fox’s
performance over the past year as the
Company’s Managing Director & CEO,
and in particular for his leadership in
advancing the Hayes Creek Project into a
Pre-Feasibility Study.
4
Refer ASX release 1 February 2016
32
PNX METALS LIMITED | ANNUAL REPORT 2016 The 1,250,000 Performance Rights to
be offered to Mr Fox have the following
performance conditions:
• The Company’s share price
performance for the year ended 30
June 2017 must exceed that of at
least 50% of ten companies identified
by the Directors as the Company’s
peers; and
• The Company’s closing price on
the ASX is 6.0 cents or more for 15
consecutive trading days prior to 30
June 2018.
There has not otherwise been any matter
or circumstance that has occurred
subsequent to the end of the financial
year that has significantly affected, or may
significantly affect, the operations of the
Group, the results of those operations, or
the state of affairs of the Group in future
financial years.
LIKELY DEVELOPMENTS
PNX’s aim is to be a sustainable,
profitable gold and base metals producer
and successful explorer in the Pine
Creek region of the NT by establishing an
economic mining project at Hayes Creek
and to make new mineral discoveries in
the region.
In 2016-17, the Group will continue
mineral exploration and development of
the Hayes Creek Project. Key priorities
include completion of a PFS at Hayes
Creek, including conducting significant
extensional and infill resource drilling.
The Company will also continue regional
exploration targeting gold and base
metals mineralisation at the Burnside,
Moline and Chessman projects and
expects to earn a 51% interest in these
projects by December 2016 under the
farm-in agreement with Newmarket.
The Group aims to conclude a divestment
of its Leigh Creek assets by 31 December
2016, and will continue to evaluate
opportunities to undertake exploration
programs its South Australian assets.
ENVIRONMENT REGULATION AND
PERFORMANCE
The Group continues to meet all
environmental obligations across its
tenements.
OPTIONS AND PERFORMANCE
RIGHTS
During the year, all Performance Rights
on issue lapsed as the performance
conditions were not met.
As at the date of this report, the Group
has no Performance Rights and no share
options on issue.
INDEMNIFICATION AND
INSURANCE OF DIRECTORS AND
OFFICERS
The Company entered into a Deed of
Access, Insurance and Indemnity with
Peter Watson and Paul Dowd on 12
November 2007, David Hillier on 22
September 2010, Graham Ascough on
11 December 2012, and James Fox on
26 November 2014. Under the terms
of these Deeds, the Company has
undertaken, subject to restrictions in the
Corporations Act 2001, to:
•
indemnify each Director in certain
circumstances;
• advance money to a Director for
the payment of legal costs incurred
by a Director in defending legal
proceedings before the outcome of
those proceedings is known (subject
to an obligation by the Director to
repay money advanced if the costs
become costs in respect of which
the Director is not entitled to be
indemnified under the Deed);
• maintain Directors’ and Officers’
insurance cover (if available) in favour
of each Director whilst they remain a
director of the Company and for a run
out period after ceasing to be such a
director; and
• provide each Director with access to
Board papers and other documents
provided or available to the Director
as an officer of the Company.
Throughout and since the end of
the financial year, the Company has
had in place and paid premiums for
insurance policies, with a limit of liability
of $10 million, indemnifying Directors
and Officers of the Company against
certain liabilities incurred in the conduct
of business or in the discharge of
their duties as Directors or Officers.
The contracts of insurance contain
confidentiality provisions that preclude
disclosure of the premium paid.
DIRECTORS’ ATTENDANCE AT
MEETINGS
Nine Board meetings were held during
the financial year. Graham Ascough,
Peter Watson, David Hillier, and James
Fox attended all nine, and Paul Dowd
attended eight meetings.
Three Audit Committee meetings were
held during the financial year. Audit
Committee members David Hillier,
Graham Ascough and Peter Watson
attended all three. James Fox attended
all three meetings by invitation, and Paul
Dowd attended one meeting by invitation.
AUDITOR’S INDEPENDENCE
DECLARATION
The auditor’s independence declaration is
included on page 38.
NON-AUDIT SERVICES
During the year, no services other than
the external audit were provided by the
Company’s auditor Grant Thornton.
33
PNX METALS LIMITED | ANNUAL REPORT 2016 DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED
This Report outlines the remuneration
arrangements in place for the
Directors, Company Secretary and key
management personnel of the Group.
Where this report refers to the ‘Grant
Date’ of Shares, Options or Performance
Rights, the date mentioned is the date
on which those Shares, Options or
Performance Rights were agreed to
be issued (whether conditionally or
otherwise) or, if later, the date on which
key terms of the Shares, Options or
Performance Rights (e.g. subscription or
exercise price) were determined.
DIRECTORS AND KEY
MANAGEMENT PERSONNEL
DETAILS
The following persons acted as Directors
of the Company during and since the end
of the financial year:
• Graham Ascough
(Non-executive Chairman)
• Paul Dowd
(Non-executive Director)
• Peter Watson
(Non-executive Director)
• David Hillier
(Non-executive Director)
• James Fox
(Managing Director & CEO)
The following persons were key
management personnel of the Company
and Group during and since the end of
the financial year:
• Tim Moran
(Company Secretary & Chief Financial
Officer)
• Andy Bennett
(Exploration Manager)
RELATIONSHIP BETWEEN
REMUNERATION POLICY AND
GROUP PERFORMANCE
There is no direct link between the
Group’s financial performance and
the setting of remuneration except
as discussed below in relation to
Performance Rights.
34
REMUNERATION PHILOSOPHY
The performance of the Group depends
on the quality of its Directors and
management and therefore the Group
must attract, motivate and retain
appropriately qualified industry personnel.
The Group embodies the following
principles in its remuneration framework:
• provide competitive rewards to attract
and retain high calibre executives,
directors and employees;
•
link executive rewards to Group
financial performance and shareholder
value by the granting of Performance
Rights with performance-based
vesting conditions; and
• ensure total remuneration is
competitive by market standards.
The Group does not currently have a
policy on trading in derivatives that limit
exposure to losses resulting from share
price decreases applicable to Directors
and employees who receive part of
their remuneration in securities of the
Company. The Board is not aware of
any member of the Company’s directors
or key management personnel ever
conducting such activity.
REMUNERATION POLICY
The Group does not have a separately
established remuneration committee.
The full Board acts as the Group’s
remuneration committee. The Board
is responsible for determining and
reviewing remuneration arrangements for
non-executive Directors, the Managing
Director & CEO, the Company Secretary
and other senior management. The
Board assesses the appropriateness of
the nature and amount of remuneration
of such persons on a periodic basis with
reference to relevant employment market
conditions with the overall objective of
ensuring maximum stakeholder benefit
from the retention of a high quality Board
and executive team. External advice on
remuneration matters is sought when the
Board deems it necessary.
The remuneration of non-executive
Directors and senior management is
not dependent on the satisfaction of
performance conditions, except in relation
to Performance Rights as described below.
In 2010, the Company replaced its
Employee Share Option Plan with an
Employee Performance Rights Plan.
In accordance with the Performance
Rights Plan the Directors can, at their
discretion, grant Performance Rights
to eligible participants. Upon a grant of
Performance Rights, the Board may set
vesting conditions, determined at the
Board’s discretion, which if not satisfied
will result in the lapse of the Performance
Rights granted to the particular employee.
Each Performance Right granted
converts into one ordinary share in PNX
on vesting. No amounts are paid or
payable by the recipient on receipt of
the Performance Right, nor at vesting.
Performance Rights have no entitlement
to dividends or voting rights.
The Performance Rights Plan offers
employees the possibility of reward without
monetary cost and is less dilutive than
the previous Employee Share Option Plan
due to the lesser number of Performance
Rights that need to be issued to achieve a
similar level of reward or incentive.
NON-EXECUTIVE DIRECTOR
REMUNERATION
The Board seeks to set remuneration of
non-executive Directors at a level which
provides the Company with the ability
to attract and retain Directors of the
highest calibre, whilst incurring a cost
which is appropriate at this stage of the
Company’s development.
As non-executive Chairman, Graham
Ascough is entitled to receive $75,000 per
annum inclusive of superannuation and
non-executive directors are each entitled
to receive $40,000 per annum inclusive of
superannuation. Non-executive Directors
are entitled to be paid reasonable
travelling, accommodation and other
expenses incurred as a consequence of
their attendance at meetings of Directors
and otherwise in the execution of their
duties as Directors. Non-executive
Directors are also entitled to additional
remuneration for extra services or
PNX METALS LIMITED | ANNUAL REPORT 2016 special exertions, in accordance with the
Company’s Constitution. There are no
schemes for retirement benefits other than
government mandated superannuation.
James Fox’s employment with the
Company may be terminated on
3 months written notice or on summary
notice if he:
As noted in the remuneration table on
page 36, certain non-executive directors
elected to forego part of their fees
during the year to assist the Company to
minimise corporate costs.
Summary details of remuneration for
non-executive Directors are given in the
table on pages 36 and 37. Remuneration
is not dependent on the satisfaction of
performance conditions. The maximum
aggregate remuneration of non-executive
Directors, other than for extra services
or special exertions, is presently set at
$500,000 per annum.
MANAGING DIRECTOR &
CHIEF EXECUTIVE OFFICER
REMUNERATION
The Group aims to reward the Managing
Director & Chief Executive Officer (MD &
CEO) with a level and mix of remuneration
commensurate with his position and
responsibilities within the Group to:
• align the interests of the MD & CEO
with those of shareholders;
•
through Performance Rights, link
reward with the strategic goals and
performance of the Group; and
• ensure total remuneration is
competitive by market standards.
James Fox has been Chief Executive
Officer of PNX since 1 May 2012 and
assumed the title Managing Director &
CEO on 26 November 2014 with his
appointment to the Board. Mr Fox is
entitled to an annual salary of $250,000
plus mandated superannuation
contributions as well as 20 days annual
leave and 10 days sick leave per annum.
At 30 June 2016 and as of the date of
this report, Mr Fox held no Shares in the
Company. A related party of Mr Fox holds
3,825,000 Shares in the Company. During
the year 825,000 Performance Rights
held by Mr Fox lapsed as the performance
conditions were not met. Mr Fox no
longer holds any Performance Rights.
•
•
•
is charged with any criminal offence
or is guilty of any other conduct
which, in the reasonable opinion
of the Board, is prejudicial to the
interests of the Group;
is negligent in the performance of his
duties;
is incapacitated from performing his
duties as Chief Executive Officer by
illness or injury for a period of two
consecutive months;
• materially breaches any term of his
contract of employment and this is
not remedied within 14 days of notice
of the breach to him by the Company;
• materially contravenes any share
dealing code relating to shares;
•
•
is the subject of, or causes the
Company or Group to be the subject
of, a material penalty or serious
reprimand imposed by any regulatory
authority; or
independently acts in a manner
contravening the directives and
expressed wishes of the Board.
COMPANY SECRETARY &
CHIEF FINANCIAL OFFICER
REMUNERATION
Tim Moran has been Chief Financial
Officer and Company Secretary since
January 2012. In June 2013, Mr Moran
ceased as an employee of the Company
and from July 2013 has provided CFO
and Company Secretary services on
a contract basis, and is therefore not
entitled to any employee benefits. During
the 2016 financial year, Mr Moran’s fees
were $152,700.
EXPLORATION MANAGER
REMUNERATION
Andy Bennett commenced as
Exploration Manger on 1 January 2015.
Mr Bennett is entitled to an annual
salary of $195,000 plus mandated
superannuation contributions, as well as
20 days annual leave and 10 days sick
leave each year.
During the year 675,000 Performance
Rights held by Mr Bennett lapsed as
the performance conditions were not
met. Mr Bennett no longer holds any
Performance Rights.
Andy Bennett’s employment with the
Company may be terminated on 4 weeks
written notice or on summary notice if he:
• commits any act of misconduct or
acts in a way which in the reasonable
opinion of the Company may injure
or be likely to injure the business or
reputation of the Company or other
employees of the Company;
•
is convicted of any criminal offence or
is guilty of any other conduct which,
in the opinion of the Company, may
bring the Company into disrepute or
affect his ability to perform his duties;
• commits a serious, persistent or
material breach of the terms and
conditions of his employment
contract;
•
•
refuses to carry out a lawful and
reasonable instruction by the
Company;
is negligent in the performance of his
duties;
• becomes of unsound mind or a
person whose person or estate is
liable to be dealt with in any way
under laws relating to mental health;
• becomes incapacitated by illness
or injury which prevents him from
performing his duties as Exploration
Manager for a period of 3 consecutive
months or any periods aggregating
3 months in any 12 month period of
employment; or
•
is the subject of, or causes the
Company or Group to be the subject
of, a material penalty or serious
reprimand imposed by any regulatory
authority.
35
PNX METALS LIMITED | ANNUAL REPORT 2016 DIRECTORS’ REPORT
REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
Directors’, Company Secretary and key management personnel remuneration (all amounts are paid or payable) for the year ended
30 June 2016:
Short term
employment benefits
Post-Employment
Equity
Salary & Fees
Superannuation
Performance Rights
Total
% of total remuneration
consisting of equity
Directors
Graham Ascough
Paul Dowd1
Peter Watson1
David Hillier
James Fox
$75,000
-
$27,397
$40,000
$250,000
-
$30,000
$2,603
-
$23,750
-
-
-
-
($5,542)2
$75,000
$30,000
$30,000
$40,000
$268,208
Company Secretary & Chief Financial Officer
Tim Moran
$152,700
-
-
$152,700
Other key management personnel
Andy Bennett
TOTALS
$195,000
$740,097
$18,525
$74,878
($3,620)2
($9,162)
$209,905
$805,813
1 Mr Dowd and Mr Watson waived 25% of their fees for each quarter of the financial year (total $10,000 waived each)
2 Reflects the reversal of previously recorded equity-based compensation related to Performance Rights that ultimately did not vest
0%
0%
0%
0%
0%
0%
0%
Directors’, Company Secretary and key management personnel remuneration (all amounts are paid or payable) for the year ended 30
June 2015:
Short term
employment benefits
Post-Employment
Equity
Salary & Fees
Superannuation
Performance Rights
Total
% of total remuneration
consisting of equity
Directors
Graham Ascough
Paul Dowd1
Peter Watson1
David Hillier
James Fox
$75,000
$13,699
$27,397
$40,000
$250,000
-
$16,301
$2,603
-
$23,750
-
-
-
-
$7,177
$75,000
$30,000
$30,000
$40,000
$280,927
0%
0%
0%
0%
2.5%
Company Secretary & Chief Financial Officer
Tim Moran
$173,940
-
-
$173,940
Other key management personnel
Andy Bennett2
Nicole Galloway
Warland3
TOTALS
$97,500
$100,367
$9,263
$8,478
$3,620
-
$110,383
$108,845
$777,903
$60,395
$10,797
$849,095
1 Mr Dowd and Mr Watson waived 25% of their fees for each quarter of the financial year (total $10,000 waived each).
2
From 1 January 2015.
3 Until 20 November 2014.
Other than the amounts disclosed in the columns for equity, all other remuneration amounts are fixed.
36
PNX METALS LIMITED | ANNUAL REPORT 2016 EQUITY HOLDINGS OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
i) Fully paid ordinary shares issued by PNX Metals Limited:
Directors
Graham Ascough
Paul Dowd
Peter Watson1
David Hillier2
James Fox3
Key management personnel
Tim Moran
Andy Bennett
Balance 01/07/15
Net Changes
Balance 30/06/16
439,933
3,095,000
7,998,000
510,000
1,923,077
3,073,077
769,231
920,000
2,363,010
6,168,077
8,767,231
1,430,000
-
-
-
-
-
-
-
-
-
1 Additional shares held by related parties: 1,350,000 (2015: 1,350,000)
2 Subsequent to year-end, an entity related to Mr Hillier acquired 570,000 shares on-market
3 Shares held by related party: 3,825,000 (2015: 3,325,000)
ii) Performance rights issued by PNX Metals Limited:
2015
James Fox
Andy Bennett
Balance 01/07/15
Granted
Vested
Lapsed
Balance 30/06/16
825,000
675,000
-
-
-
-
825,000
675,000
-
-
OTHER RELATED PARTY TRANSACTIONS
During the financial year the Group engaged Watsons Lawyers, an entity in which a Director (Peter Watson) was a partner, to advise
on legal matters. The amount paid in the financial year for these services inclusive of GST was $46,833 (2015: $134,788). $2,200
was owed at year end (2015: nil).
END OF REMUNERATION REPORT
Signed on 20th September 2016 in accordance with a resolution of the Board made pursuant to
section 298(2) of the Corporations Act 2001.
Graham Ascough
C H A I R M A N
37
PNX METALS LIMITED | ANNUAL REPORT 2016
AUDITORS INDEPENDENCE DECLARATION
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TO THE DIRECTORS OF PNX METALS LIMITED
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF PNX METALS LIMITED
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of PNX Metals Limited for the year ended 30 June 2016, I declare that, to
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
the best of my knowledge and belief, there have been:
auditor for the audit of PNX Metals Limited for the year ended 30 June 2016, I declare that, to
AUDITOR’S INDEPENDENCE DECLARATION
the best of my knowledge and belief, there have been:
TO THE DIRECTORS OF PNX METALS LIMITED
no contraventions of the auditor independence requirements of the Corporations Act 2001
a
in relation to the audit; and
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
no contraventions of the auditor independence requirements of the Corporations Act 2001
a
auditor for the audit of PNX Metals Limited for the year ended 30 June 2016, I declare that, to
in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
b
the best of my knowledge and belief, there have been:
no contraventions of any applicable code of professional conduct in relation to the audit.
b
no contraventions of the auditor independence requirements of the Corporations Act 2001
a
in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
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38
PNX METALS LIMITED | ANNUAL REPORT 2016
CORPORATE GOVERNANCE STATEMENT
The Board has adopted a Corporate
Governance Charter (Charter), which
includes a code of conduct, an audit
committee charter, a shareholder
communication policy, a continuous
disclosure policy and a securities dealing
policy. The Charter is available on the
Company’s website. The Company’s
corporate governance principles and
policies and this corporate governance
statement are structured with reference to
the ASX Corporate Governance Principles
and Recommendations, 3rd Edition
(Principles and Recommendations). This
Corporate Governance statement is
current as of 7 October 2016 and has
been approved by the Board.
FUNCTIONS AND OPERATION
OF THE BOARD
The Board is responsible for the
corporate governance of the Company.
The Board’s primary responsibility is to
shareholders but it also has regard for the
interests of other stakeholders and the
broader community.
The Board is comprised of an independent
Chairman, independent non-executive
directors, and the Managing Director and
Chief Executive Officer (MD & CEO). The
most important responsibilities of the
Board include:
• Providing oversight and strategic
direction to the Company, including
reviewing and approving business
and project development plans
and monitoring the achievement
of the Company’s strategic goals
and objectives;
•
Identifying and managing material
business and legal risks, including
sources of capital, regulatory, safety
and environmental. This process
includes ensuring an effective Risk
Management system is in place to
monitor material risks and review
the effectiveness of the Company’s
internal controls to manage
these risks;
• Appointing, removing and monitoring
the performance of the Chairman, MD
& CEO, senior executives, consultants
and the Company Secretary;
• Approving the remuneration of
Directors, senior executives and
consultants;
• Evaluating the Board’s performance
and recommending the appointment
and removal of Directors;
• Reporting to and communicating with
shareholders;
• Reviewing, approving and monitoring
the progress of budgets, financial
plans, acquisitions, divestments and
major capital expenditure;
• Monitoring the financial performance
of the Company and approving all
external financial reporting including
the annual and half-year reports; and
•
Improving and protecting the
reputation of the Company.
The Board has delegated the day-to-
day management of the Company to its
senior executives, and in particular the
MD & CEO. Only the tasks of Director
remuneration, MD & CEO appointment,
removal and remuneration, Director
appointment and removal, and Board
performance evaluation are expressly
reserved to the Board. The appointment
of the Company Secretary is also
finalised by the Board, and the Company
Secretary is accountable directly to the
Board on matters to do with the proper
functioning of the Board.
Appointment
The Directors may appoint any person
as a Director to fill a casual vacancy or
as an addition to the existing Directors.
Unless the Director is an Executive
Director and the ASX Listing Rules do
not require that Director to be subject
to retirement, a Director so appointed
will hold office until the end of the next
annual general meeting of the Company,
at which time the Director may be re-
elected but he or she will not be taken
into account in determining the number
of Directors who must retire by rotation
at the meeting. A detailed description
of the background, qualifications and
experience of a Director nominated for
appointment or re-election, as well as his
or her financial interest in the Company,
is provided to the Company’s security
holders via the Notice of Meeting prior
to the relevant annual general meeting at
which the appointment or re-election will
be voted on.
The Board does not have a separate
Nominations Committee as the Board
considers it is not necessary or practical
for the Company given its current small
size and low level of complexity. The
full Board is responsible for the duties
and responsibilities typically delegated
to a nomination committee. The Board
undertakes background checks and
evaluates the qualifications, skills and
experience of any Directors before
making an appointment. The Company
has an informal induction process for
new Directors that includes meetings with
other Directors and senior executives, as
well as the provision to a new Director
of relevant governance (including the
Code of Conduct), financial and project
related information.
Each Director has entered into a services
agreement with the Company that sets
out the terms of his or her appointment
including fees and responsibilities
and matters of independence. Each
Director has also entered into a Deed
of Access, Insurance and Indemnity
with the Company. Directors have the
right, in connection with their duties and
responsibilities, to seek independent
professional advice at the Company’s
expense where prior written or email
approval has been obtained from the
Chairman. Such approval will not be
unreasonably withheld.
39
PNX METALS LIMITED | ANNUAL REPORT 2016 CORPORATE GOVERNANCE STATEMENT
STRUCTURE OF THE BOARD:
SKILLS, QUALIFICATION,
EXPERIENCE & DIVERSITY
The names, term of office, skills,
experience and expertise of the Directors
in office are set out at the beginning of
the Directors’ Report. As part of the
Director appointment process, the Board
considers the necessary balance of skills
and knowledge of the Board as a whole
to ensure the Board is able to discharge
its duties effectively.
The Board looks to maintain an
appropriate balance of geological,
minerals processing, capital project
management, financial, legal and funding
skills and experience that is relevant for a
minerals exploration company.
The Board does not keep a formal ‘skills
matrix’ of current Directors; however,
the Board considers that collectively the
Directors have the appropriate range
of skills and experience to guide and
direct the Company toward achieving its
business objectives.
The Board recognises the benefits of
diversity in terms of both the composition
of the Board and senior executives of
the Company. However, the Board does
not have specific objectives in relation to
the gender, age, cultural background or
ethnicity of its Board or senior executives.
Board members and senior executives
are appointed or employed based on their
skills and experience and candidates are
not discriminated against based on age,
gender or background.
The Board currently has no female
representation. Of the Company’s
four permanent employees and one
contractor, three are male and two
are female.
PERFORMANCE EVALUATION
AND REMUNERATION
The performance of the Board, Audit
Committee and individual Directors
is informally reviewed on an ongoing
basis by self-assessing whether or not
the Company is achieving its strategic
objectives, and by assessing the
Company’s exploration success, project
development, financial performance and
movement in its market capitalisation.
A policy has recently been drafted
which outlines a more formal process to
evaluate the performance of the Board.
This policy will be finalised by the end of
calendar 2016 and a formal evaluation will
take place thereafter.
A performance appraisal process
exists regarding the Company’s senior
executives, whereby the performance
of executives is formally reviewed once
per year against previously set goals
relating to both Company and individual
performance. The performance of the MD
& CEO is monitored by the Board. A formal
performance review of the MD & CEO has
not occurred since his appointment to the
Board on 26 November 2014, although an
informal review has occurred.
The performance of the Company’s Chief
Financial Officer/Company Secretary
and Exploration Manager is monitored
by the MD & CEO. A formal evaluation
of the Exploration Manager has not
occurred since his appointment on
1 January 2015. The Chief Financial
Officer/Company Secretary works on a
contract basis.
The Board considers that a separate
remuneration committee is not necessary
for the Company given its current size
and complexity. The full Board acts as the
Company’s remuneration committee. All
senior executives of the Company have
entered into written agreements with the
Retirement and removal
A person, other than a Director retiring
by rotation or because he or she is a
Director appointed by the other Directors
and is seeking re-election, is not eligible
for election as a Director at a general
meeting unless:
•
•
the person is proposed as a
candidate by at least 50 Members
or Members holding between them
at least 5% of the votes that may
be cast at a general meeting of the
Company; and
the proposing Members leave a
notice at the Company’s registered
office not less than 35 business days
before the relevant general meeting
which nominates the candidate for
the office of Director and includes the
signed consent of the candidate.
The retirement by rotation of Directors is
governed by the Company’s Constitution,
the Corporations Act 2001 and the
ASX Listing Rules. Clause 2.5 of the
Company’s Constitution specifies that
one-third of the Directors (excluding any
executive Directors) must retire from
office at the end of each annual general
meeting. A retiring Director remains in
office until the end of the meeting and will
be eligible for re-election at the meeting.
The Directors to retire by rotation at
an annual general meeting are those
Directors who have been longest in office
since their last election.
According to the Company’s Constitution,
the Company may, subject to the
Corporations Act, pass a resolution in a
general meeting to:
remove any Director before the end of
the Director’s term of office; and
if the outgoing Director is a non-
executive Director, elect another
person to replace the Director.
•
•
40
PNX METALS LIMITED | ANNUAL REPORT 2016 Company outlining their responsibilities,
remuneration arrangements, and other
terms of their employment.
Remuneration arrangements for non-
executive Directors are structured
separately from those of the MD & CEO
and senior executives. Non-executive
directors are entitled to fixed fees for
services, whereas the MD & CEO and
senior executives can earn equity-based
remuneration (performance rights) at
the Board’s discretion, in addition to
fixed salary arrangements. Details of the
Company’s remuneration policies and
levels are provided in the Remuneration
Report in the Directors’ Report.
The Company’s Constitution states that,
subject to the Corporations Act 2001,
the Company may provide a retirement
benefit to persons retiring from the Board
or from employment with the Company.
COMMUNICATION
Communication with the Company’s
shareholders occurs through ASX
announcements, updates to the
Company’s website, in person at the
Annual General Meeting and other
general meetings (when held), through its
share registry, and through other means
as appropriate including the channels
of investor relations consultants. The
Company, via its share registrar, provides
an option to shareholders to receive
Company communications by electronic
means.
The Board is mindful of its obligations
under the Continuous Disclosure rules
set by the ASX, and also of its disclosure
requirements under the Corporations Act
2001. The Board has delegated the day-
to-day management of public disclosure
to its MD & CEO and Company Secretary.
All price sensitive information is disclosed
to the ASX before being disclosed to any
party outside the Company.
AUDIT COMMITTEE
• evaluating the adequacy and
The Audit Committee consists of three
Non-executive directors David Hiller, Peter
Watson and Graham Ascough and is
chaired by David Hillier. All three members
are considered to be independent. Peter
Watson is a consultant at the Company’s
legal advisor Piper Alderman and prior to
1 July 2016 Mr Watson was the principal
at Watsons Lawyers, the Company’s
previous legal advisors. However, as Peter
Watson is not actively engaged in the day-
to-day management of the Company’s key
business activity (mineral exploration and
project development), he is considered
by the Board to be independent. The
qualifications of the Audit Committee
members are set out at the beginning of
the Directors’ Report.
All members of the Board are encouraged
to attend Audit Committee Meetings.
The Audit Committee’s responsibilities
are set out in the Company’s Corporate
Governance Charter and include:
• establishing a framework for
identifying and managing the
Company’s key business risks;
•
reviewing, at least twice annually
including once with the Company
external auditors, the Company’s
risk management systems, controls
and procedures, ensuring these
controls are regularly tested for
effectiveness, and that recommended
improvements are implemented;
•
recommending the appointment,
liaising with, and reviewing the
performance of the external auditors;
• evaluating the independence of the
external auditor, including considering
the auditor’s policy on rotating the
external audit engagement partner;
•
reviewing the Company’s annual
reports and half year reports and
ensuring that the financial reports
comply with accounting standards
and the law;
effectiveness of the Company’s
accounting policies through ongoing
communication with management
and the Company’s external auditors;
and
•
investigating any matters raised by
the external auditors.
The Audit Committee discharges
its responsibilities by making
recommendations to the Board. The
Audit Committee does not have any
executive powers to commit the Board
or management to implement its
recommendations.
Three Audit Committee meetings were
held during the year. David Hillier attended
each of the Audit Committee meetings
and Peter Watson and Graham Ascough
each attended two of the three meetings.
The Company’s auditor Grant Thornton
was appointed at the 2014 Annual
General Meeting in accordance with
section 327B of the Corporations Act
2001. Any subsequent appointment or
rotation of external auditors will occur in
accordance with the Corporations Act
2001. The auditor is available at each
annual general meeting of the Company
to answer questions related to the audit
from shareholders.
RISK MANAGEMENT
Whilst the Board is ultimately responsible
for identifying and managing areas of
significant business risk, it has delegated
the management of this function to
the Audit Committee as noted above.
The Audit Committee is responsible for
maintaining effective Risk Management
systems, identifying and managing
key Company risks, establishing and
maintaining effective controls, ensuring
compliance with risk management
policies and reporting of any non-
compliance occurrences. The Company
has created a Corporate Risk Register
which lists and rates these risks in terms
of likelihood and consequence, and
also documents the controls in place to
manage these risks.
41
PNX METALS LIMITED | ANNUAL REPORT 2016 CORPORATE GOVERNANCE STATEMENT
The key areas of risk that have been
identified are as follows:
• Financial
• Statutory/regulatory
• Legal
• Personnel and safety
• Asset management and protection
• Tenement management
•
Information Technology and Security
• Community
• Environmental
The Company has no material exposure
at present to economic, social, or
sustainability risks. The Company is
exposed to environmental risks as a
mineral exploration company with one
project at Hayes Creek progressing
toward development. Environmental
matters are identified and addressed
by management and communicated to
the Board as part of normal business
activities. External consultants are
utilised where considered appropriate;
for example, as part of the Hayes Creek
Project Pre-Feasibility Study which
commenced in 2016.
All risks facing the Company are
managed on an ongoing basis and are
reviewed at least annually by the Board
and Audit Committee.
Management ensures that the Risk
Register is kept up-to-date on an ‘as
needs’ basis so as to reflect changes in
the Company’s business activities and
risks, the law and current best practice
within the mining industry. A thorough
review of the Corporate Risk Register is
undertaken by the management and the
Audit Committee each year to identify any
further risks, evaluate existing controls
and, if necessary, develop and implement
further strategies and action plans for
minimising and controlling the risks.
The Audit Committee, in conjunction with
management, has developed specific
cost-effective strategies, controls and
action plans for minimising and treating
the risks. The current control measures
and improvement actions for minimising
and managing each risk are noted in
detail on the Company’s Corporate Risk
Register and followed by employees and
contractors.
The Board requires management
to report to it at least annually in a
comprehensive manner, and by exception
at each Board meeting, on compliance
with the Company’s Risk Management
policies and whether the Company’s
material business risks are being
managed effectively. While the Company
does not have an Internal Audit function,
the comprehensive risk review process
is seen by the Board as an effective and
appropriate substitute for the Internal
Audit function.
The Board has received assurance
from the MD & CEO and Chief Financial
Officer that the declaration provided in
accordance with section 295A of the
Corporations Act 2001 is founded on
a sound system of risk management
and internal control and that the system
is operating effectively in all material
respects in relation to financial reporting
risks.
ONGOING MONITORING
AND IMPROVEMENT
The Corporate Governance policies of the
Company are reviewed on an ongoing
basis by the Directors to ensure they
meet the standards set by the Board, as
well as those required by ASX, ASIC and
other stakeholders.
42
PNX METALS LIMITED | ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2016
Other income
Employee benefits
Professional fees
Directors’ fees
Exploration – tenement maintenance
Occupancy
Insurance
Share registry and regulatory
Communication
Audit fees
Equity-based remuneration
Other expenses
Depreciation
Impairment - Exploration and evaluation assets
Impairment – financial assets
Interest charges
Loss before income tax
Income tax benefit
Loss for the year – continuing operations
Loss from discontinued operations, net of tax
Total loss for the year
Other comprehensive loss:
Change in fair value of investment – reclassified
to impairment loss (tax: nil)
Change in fair value of investment – may be reclassified
subsequently to profit or loss (tax: nil)
Total comprehensive loss for the year,
attributable to equity holders of the parent
Loss per share – continuing operations
Basic and diluted (cents per share)
Loss per share - total
Basic and diluted (cents per share)
Note
4(a)
11
4(c)
23
21
4(b)
4(d), 11
10
14
5
6
10,19
10,19
28
28
Year ended
30/06/16
$
17,733
(217,826)
(298,462)
(175,000)
(101,310)
(63,919)
(34,649)
(61,219)
(11,183)
(28,340)
9,162
(69,942)
(3,351)
-
-
(100,000)
(1,138,306)
245,905
(892,401)
(90,060)
(982,461)
-
(128,920)
Year ended
30/06/15
$
68,520
(265,286)
(337,855)
(175,000)
(53,207)
(66,954)
(41,865)
(51,127)
(5,289)
(33,385)
(10,797)
(49,462)
(32,370)
(1,717,891)
(1,229,448)
(100,000)
(4,101,416)
-
(4,101,416)
(229,883)
(4,331,299)
327,007
128,920
(1,111,381)
(3,875,372)
(0.2)
(0.2)
(1.3)
(1.4)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
43
PNX METALS LIMITED | ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2016
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments/deposits
Other financial assets
Assets held for sale
Total current assets
NON-CURRENT ASSETS
Exploration and evaluation expenditure
Plant and equipment
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Provisions
Loan
Deferred Revenue
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Other contributed equity
Reserves
Accumulated losses
Total equity
Note
7
8
9
10
6
11
12
13
15
15
14
16
17
18
19
20
30/06/16
$
1,643,632
260,880
77,913
257,840
-
30/06/15
$
868,865
14,607
54,927
386,761
-
2,240,265
1,325,160
4,688,184
37,470
4,725,654
6,965,919
194,683
66,149
260,832
28,086
1,200,000
1,600,000
2,828,086
3,088,918
3,293,812
54,154
3,347,966
4,673,126
235,269
45,606
280,875
9,932
1,200,000
-
1,209,932
1,490,807
3,877,001
3,182,319
28,377,292
600,000
-
(25,100,291)
3,877,001
26,562,067
600,000
347,193
(24,326,941)
3,182,319
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
44
PNX METALS LIMITED | ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2016
Balance at 30 June 2014
Total loss for the year
Other comprehensive income
Total comprehensive Loss for the year
Shares issued
Share issue costs
Interest on convertible notes
Fair value of equity settled payments
Transfer from reserve on vesting
of performance rights
Balance at 30 June 2015
Total loss for the year
Other comprehensive loss
Total comprehensive loss for the year
Shares issued
Share issue costs
Interest on convertible notes
Fair value of equity settled payments
Reclassification on expiry of options
Issued capital
$
Other Equity
$
Reserves
$
Accumulated
losses
$
Total
$
23,557,745
600,000
(91,555)
(19,995,642)
4,070,548
-
-
-
3,142,847
(108,525)
(30,000)
-
-
-
-
-
-
-
-
-
-
-
(4,331,299)
(4,331,299)
455,927
-
455,927
455,927
(4,331,299)
(3,875,372)
-
-
-
10,797
(27,976)
-
-
-
-
-
3,142,847
(108,525)
(30,000)
10,797
(27,976)
26,562,067
600,000
347,193
(24,326,941)
3,182,319
-
-
-
1,863,250
(18,025)
(30,000)
-
-
-
-
-
-
-
-
-
(128,920)
(982,461)
-
(982,461)
(128,920)
(128,920)
(982,461)
(1,111,381)
-
-
-
(9,162)
(209,111)
-
-
-
-
209,111
1,863,250
(18,025)
(30,000)
(9,162)
-
Balance at 30 June 2016
28,377,292
600,000
-
(25,100,291)
3,877,001
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
45
PNX METALS LIMITED | ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2016
Cash flows relating to operating activities
Receipts from customers
Payments to suppliers and employees
Net operating cash flows
Cash flows relating to investing activities
Interest received
Payments for exploration activities
Payments for plant and equipment
Proceeds from sale of plant and equipment
Net investing cash flows
Cash flows relating to financing activities
Proceeds from metal streaming transactions
Proceeds from share issues
Payments for capital raising costs
Net financing cash flows
Net increase/(decrease) in cash
Cash at beginning of financial year
Cash at end of financial year
Loss for the year
Interest income
Equity-based remuneration
Interest expense – equity settled
Cash-settled interest on convertible notes – accounted for in equity
Depreciation and amortisation
Other income from asset disposals
Impairment charges – exploration and evaluation assets
Impairment charges – investment (other financial asset)
Impairment charges – discontinued operations
(Increase)/decrease in operating receivables
(Increase)/decrease in other current assets
Increase/(decrease) in operating payables
Increase/(decrease) in employee provisions
Net operating cash flows
Inflows/(outflows)
Inflows/(outflows)
Year ended
30/06/16
$
-
(1,093,243)
(1,093,243)
19,127
(1,476,342)
-
-
(1,457,215)
1,600,000
1,738,250
(13,025)
3,325,225
774,767
868,865
1,643,632
(982,461)
(17,733)
(9,162)
90,000
-
3,351
-
-
-
-
(246,798)
1,216
29,647
38,697
Year ended
30/06/15
$
-
(1,194,653)
(1,194,653)
36,507
(1,288,747)
(47,551)
14,300
(1,285,491)
-
3,009,871
(108,525)
2,901,346
421,202
447,663
868,865
(4,331,299)
(38,638)
10,797
90,000
(15,000)
32,370
(14,300)
1,717,891
1,229,448
150,000
14,349
4,323
(44,743)
149
(1,093,243)
(1,194,653)
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
46
PNX METALS LIMITED | ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2016
1 GENERAL INFORMATION AND
BASIS OF PREPARATION
PNX Metals Limited (“Company”) is a for-profit Australian
publicly listed company, incorporated and operating in Australia.
Its registered office and principal place of business is Level 1,
135 Fullarton Road, Rose Park, South Australia 5067. Effective
December 2015, the Company’s name was changed from
Phoenix Copper Limited to PNX Metals Limited.
The consolidated financial statements of PNX Metals
Limited comprises the Company and its controlled entities
(“Group”) and is a general purpose financial report prepared
in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards
Board and the Corporations Act 2001.
The consolidated financial statements also comply with
International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The consolidated financial statements have been prepared on
the basis of historical cost, which is based on the fair values of
the consideration given in exchange for assets. All amounts are
presented in Australian dollars, unless otherwise noted.
The financial statements were authorised for issue by the
Directors on 19th September 2016.
2 NEW AND REVISED ACCOUNTING STANDARDS
None of the standards and amendments to standards that are
mandatory for the first time for the financial year beginning 1
July 2015 had any material effect on any amounts recognised
or disclosed in the current or prior period and are not likely to
affect future periods.
At the date of authorisation of these financial statements,
certain new standards, amendments and interpretations
to existing standards have been published but are not
yet effective, and have not been adopted early by the
Group. Management anticipates that all of the relevant
pronouncements will be adopted in the Group’s accounting
policies for the first period beginning after the effective date of
the pronouncement. Information on several issued but not yet
effective standards that may be relevant to the Group’s financial
statements in future periods is provided below.
Year ended 30 June 2017: AASB 2014-3 Amendments
to Australian Accounting Standards – Accounting
for Acquisitions of Interests in Joint Operations
The amendments to AASB 11 Joint Arrangements state that an
acquirer of an interest in a joint operation in which the activity of
the joint operation constitutes a ‘business’, as defined in AASB
3 Business Combinations, should:
»
apply all of the principles on business combinations
accounting in AASB 3 and other Australian Accounting
Standards except principles that conflict with the
guidance of AASB 11. This requirement also applies to
the acquisition of additional interests in an existing joint
operation that results in the acquirer retaining joint control
of the joint operation (note that this requirement applies to
the additional interest only, i.e. the existing interest is not
re-measured) and to the formation of a joint operation when
an existing business is contributed to the joint operation by
one of the parties that participate in the joint operation; and
provide disclosures for business combinations as required
by AASB 3 and other Australian Accounting Standards.
When these amendments are first adopted for the year ending
30 June 2017, it is not expected that there will be a material
impact on the transactions and balances recognised in the
financial statements or on the notes to the financial statements.
Year ended 30 June 2017: AASB 2015-2 Amendments
to Australian Accounting Standards – Disclosure
Initiative: Amendments to AASB 101
This standard makes amendments to AASB 101 Presentation
of Financial Statements. The amendments:
»
»
»
»
clarify the materiality requirements in AASB 101, including
an emphasis on the potentially detrimental effect of
obscuring useful information with immaterial information
clarify that AASB 101’s specified line items in the statement
of profit or loss and other comprehensive income and the
statement of financial position can be disaggregated
add requirements for how an entity should present
subtotals in the statement of profit and loss and other
comprehensive income and the statement of financial
position
clarify that entities have flexibility as to the order in
which they present the notes, but also emphasise that
understandability and comparability should be considered
by an entity when deciding that order
»
remove potentially unhelpful guidance in AASB 101 for
identifying a significant accounting policy
When these amendments are first adopted for the year ending
30 June 2017, it is not expected that there will be a material
impact on the transactions and balances recognised in the
financial statements or on the notes to the financial statements.
47
PNX METALS LIMITED | ANNUAL REPORT 2016
Year ended 30 June 2019: AASB 9:
Financial Instruments
This standard introduces new requirements for the classification
and measurement of financial assets and liabilities. These
requirements improve and simplify the approach for classification
and measurement of financial assets compared with the
requirements of AASB 139. The main changes are:
»
»
»
»
Financial assets that are debt instruments will be classified
based on (1) the objective of the entity’s business model for
managing the financial assets; and (2) the characteristics of
the contractual cash flows.
Introduces a ‘fair value through other comprehensive
income’ measurement category for particular simple debt
instruments.
Allows an irrevocable election on initial recognition to present
gains and losses on investments in equity instruments
that are not held for trading in other comprehensive
income (instead of in profit or loss). Dividends in respect of
these investments that are a return on investment can be
recognised in profit or loss and there is no impairment or
recycling on disposal of the instrument.
Financial assets can be designated and measured at fair
value through profit or loss at initial recognition if doing
so eliminates or significantly reduces a measurement or
recognition inconsistency that would arise from measuring
assets or liabilities, or recognising the gains and losses on
them, on different bases.
» Where the fair value option is used for financial liabilities
the change in fair value is to be accounted by presenting
changes in credit risk in other comprehensive income (OCI)
and the remaining change in the statement of profit or loss.
When this standard is first adopted for the year ending 30 June
2019, it is not expected that there will be a material impact
on the transactions and balances recognised in the financial
statements.
Year ended 30 June 2019: AASB 15 Revenue
from Contracts with Customers
This standard replaces AASB 118 Revenue, AASB
111 Construction Contracts and some revenue-related
Interpretations. The new standard:
»
»
»
establishes a new revenue recognition model
changes the basis for deciding whether revenue is to be
recognised over time or at a point in time
provides new and more detailed guidance on specific topics
(e.g. multiple element arrangements, variable pricing, rights
of return, warranties and licensing)
»
expands and improves disclosures about revenue
When this standard is first adopted for the year ending 30 June
2019, it is not expected that there will be a material impact
on the transactions and balances recognised in the financial
statements.
Year ended 30 June 2020: AASB 16 Leases
This standard replaces AASB 117 Leases and some lease-
related Interpretations. The new standard:
»
»
»
»
requires all leases to be accounted for ‘on-balance sheet’ by
lessees, other than short-term and low value asset leases
provides new guidance on the application of the definition of
lease and on sale and lease back accounting
largely retains the existing lessor accounting requirements in
AASB 117
requires new and different disclosures about leases
When this standard is first adopted for the year ending 30 June
2020, it is not expected that there will be a material impact
on the transactions and balances recognised in the financial
statements or on the notes to the financial statements.
3 SIGNIFICANT ACCOUNTING POLICIES
In the application of the Group’s accounting policies, which are
described below, management is required to make judgements,
estimates and assumptions. Key areas of judgement and
estimation uncertainty are discussed in Note 3(u).
The following significant accounting policies have been adopted
in the preparation of the financial report:
a) Going concern basis
The financial report has been prepared on the going concern
basis which contemplates the continuity of normal business
activities and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
For the year ended 30 June 2016, the Group made
a comprehensive loss of $1,111,381 (2015: loss of
$3,875,372) and recorded a net cash outflow from
operating and investing activities of $2,550,458 (2015: net
cash outflow of $2,480,144). At 30 June 2016, the Group
had cash of $1,643,632 (2015: $868,865), net current
assets excluding the investment in Avalon Minerals Ltd of
$1,721,593 (2015: $657,524) and net assets of $3,877,001
(2015: $3,182,319).
The Directors believe that it is appropriate to prepare the
financial statements on the going concern basis, as the
Group plans to raise sufficient capital in the future to allow
planned exploration and administrative activities to continue
over at least the next 12 months. Subsequent to year-
end, the Company raised $1.5 million via the placement
of 79 million shares at $0.019 each to sophisticated and
institutional investors, and received a commitment for a
further share placement of $0.25 million to be approved
by shareholders at the Company’s 2016 annual general
meeting.
If sufficient additional capital is not raised, the going
concern basis of accounting may not be appropriate, and
the Group may have to realise its assets and extinguish its
liabilities other than in the ordinary course of business and
at amounts different from those stated in the financial report.
No allowance for such circumstances has been made in the
financial report.
48
PNX METALS LIMITED | ANNUAL REPORT 2016
b) Principles of consolidation
The consolidated financial statements comprise the financial
statements of the Company and entities controlled by the
Company (its subsidiaries). Control is achieved when the
Company:
¬ has power over the investee;
¬ is exposed, or has rights, to variable returns from its
involvement with the investee; and
¬ has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control
listed above.
The results of subsidiaries acquired or disposed of are
included in the Statement of Profit or Loss and Other
Comprehensive Income from the effective date of acquisition
and up to the effective date of disposal.
Profit or loss and each component of other comprehensive
income are attributed to the owners of the Company and to
the non-controlling interests. Total comprehensive income
of subsidiaries is attributed to the owners of the Company
and to the non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies
into line with those used by other members of the Group.
All intra-group transactions, balances, income and
expenses, and cash flows are eliminated in full on
consolidation.
c) Business combinations
Acquisitions of subsidiaries and businesses are accounted
for using the acquisition method. The consideration
transferred in a business combination is measured at fair
value which is calculated as the sum of the acquisition-date
fair values of assets transferred by the Group, payables
to the vendors, and any equity instruments issued by
the Group in exchange for control of the acquired entity.
Acquisition-related costs are recognised in profit or loss as
incurred.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value,
except that:
¬ Deferred tax assets or liabilities and liabilities or
assets related to employee benefit arrangements are
recognised and measured in accordance with AASB
112 Income taxes and AASB 119 Employee Benefits
respectively;
¬ Liabilities or equity instruments related to share-
based payment arrangements of the acquired entity,
or share-based payment arrangements of the Group
that are entered into to replace share-based payment
arrangements of the acquired entity, are measured in
accordance with AASB 2 Share-based Payment at the
acquisition date; and
¬ Assets (or disposals groups) classified as held for sale
in accordance with AASB 5 Non-current Assets Held
for Sale and Discontinued Operations are measured in
accordance with that Standard.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts
for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the subsequent
measurement period, or, if applicable, additional assets
or liabilities are recognised, to reflect new information
obtained about facts and circumstances that existed as of
the acquisition date that, if known, would have affected the
amounts recognised as of that date.
d) Discontinued operations & assets held for sale
Non-current assets or disposal groups are classified as held
for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing
use and a sale is considered highly probable. They are
measured at the lower of their carrying amount and fair value
less costs to sell. An impairment loss is recognised for any
initial or subsequent write-down of the asset or disposal
group to fair value less costs to sell. Non-current assets
that are part of a disposal group are not depreciated or
amortised while they are classified as held for sale.
Assets of the disposal group held for sale are presented
separately from other assets in the Statement of Financial
Position.
A discontinued operation is a component of the entity
that has been disposed of or is classified as held for sale
and that represents a separate major line of business or
geographical area of operation. The results of discontinued
operations are presented separately in the Statement of
Profit or Loss and Other Comprehensive Income.
e) Revenue
Revenue is measured at the fair value of consideration
received or receivable.
Sale of goods
Revenue from the sale of goods is recognised when all of
the following conditions are satisfied:
¬ the Group has transferred to the buyer the significant
risks and rewards of ownership of the goods;
¬ the Group retains neither continuing managerial
involvement to the degree usually associated with
ownership nor effective control over the goods sold;
¬ the amount of revenue can be measured reliably;
¬ it is probable that the economic benefits associated with
the transaction will flow to the Group; and
¬ the costs incurred or to be incurred in respect of the
transaction can be measured reliably.
Royalties based on revenue from the sale of goods are
accrued as payables in the same period as the related
revenue is recognised.
49
PNX METALS LIMITED | ANNUAL REPORT 2016
Deferred Revenue
Impairment of financial assets
Cash received from the forward sale of metal from future
mining projects is accounted for as a long-term liability
until such time as the metal is delivered. Deferred revenue
amounts are recognised as revenue from the sale of goods
in the period that the related metal is delivered.
Interest
Interest income is accrued on a time basis, with reference
to the principal balance and at the effective interest rate
applicable, which is that rate that exactly discounts
estimated future cash receipts through the expected life of
the financial asset to the asset’s net carrying amount.
f) Government grants
Government grants that are received or receivable as direct
compensation for mineral exploration expenditure already
incurred are recognised as a reduction in the accumulated
cost of the relevant exploration and evaluation asset.
g) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash
held at financial institutions and bank deposits with a
maturity of less than 3 months.
h) Financial assets
Financial assets are classified into the following specified
categories: financial assets ‘at fair value through profit or
loss’, ‘held to maturity investments’, ‘loans and receivables’,
and ‘available for sale financial assets’. The classification
depends on the nature and purpose of the financial asset
and is determined at the time of initial recognition.
Other financial assets – available for sale
Other financial assets are those that are not held for trading
and have no fixed maturity date. These assets are initially
measured at fair value and any subsequent changes
in fair value prior to disposal are recognised in other
comprehensive income. Upon disposal, the cumulative
balance in the reserve in equity is reclassified to the income
statement.
Loans and receivables
Trade receivables and other receivables that have fixed or
determinable payments that are not quoted in an active
market are classified as ‘Trade and other receivables’. Trade
and other receivables are measured at amortised cost using
the effective interest method less impairment.
Interest is recognised by applying the effective interest rate.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial asset and of allocating interest
income over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset,
or, where appropriate, a shorter period, to the net carrying
amount on initial recognition of the financial asset.
Financial assets are assessed for indicators of impairment
at the end of each reporting period. Financial assets are
impaired where there is objective evidence that, as a
result of one or more events that occurred after the initial
recognition of the asset, the estimated future cash flows
have been impacted.
For available for sale (AFS) financial assets carried at fair
value, the amount of any impairment is recorded in profit
and loss, including any cumulative loss carried in other
comprehensive income with the latter recorded as a
reclassification adjustment. Any further decline in the fair
value of the AFS asset is recorded as an impairment loss.
Subsequent increases in the carrying value of the AFS asset
are not reversed back through profit and loss, but rather are
recorded in other comprehensive income.
For financial assets carried at amortised cost, the amount of
the impairment 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.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets except trade
receivables where the carrying amount is reduced through
the use of an allowance account. When a trade receivable
is determined to be uncollectible, it is written off against the
allowance account. Changes in the carrying amount of the
allowance account are recognised in profit or loss.
If, in a subsequent period, the amount of an impairment loss
decreases and the decrease can be related objectively to an
event occurring after the impairment was first recognised,
the previously recognised impairment loss is reversed
through profit or loss to the extent the carrying amount of
the asset at the date of impairment is reversed does not
exceed what the amortised cost would have been had the
impairment not been recognised.
i) Exploration and evaluation expenditure and
mineral rights
Exploration and evaluation expenditure and mineral rights in
relation to each separate area of interest are recognised as
an asset in the year in which they are incurred or acquired
and where the following conditions are satisfied:
i.
the rights to tenure of the area of interest are current;
and
ii. at least one of the following conditions is also met:
›
›
the exploration and evaluation expenditure is
expected to be recouped through successful
development of the mineral exploration project, 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 of economically recoverable reserves,
and active and significant operations in, or in relation
to, the area of interest are continuing.
50
PNX METALS LIMITED | ANNUAL REPORT 2016
Exploration and evaluation assets and mineral rights are
initially measured at cost and include the acquisition cost
of rights to explore, studies, exploration drilling, trenching
and sampling and associated activities. General and
administrative costs are only included in the measurement of
exploration and evaluation assets where they relate directly
to operational activities in a particular area of interest.
Exploration and evaluation assets and mineral rights are
assessed for impairment when facts and circumstances (as
defined in AASB 6 Exploration for and Evaluation of Mineral
Resources) suggest that the asset’s carrying amount may
exceed its recoverable amount. The recoverable amount
of exploration and evaluation assets and mineral rights
(or the cash-generating unit to which they have been
allocated, being no larger than the relevant area of interest),
is determined in accordance with AASB 136 Impairment of
Assets, being the higher of fair value less costs to sell and
value in use. If the recoverable amount as determined is less
than the carrying amount, an impairment loss is recognised.
Where an impairment loss subsequently reverses, the
carrying amount of the asset is increased to the revised
estimate of its recoverable amount, but only to the extent
that the increased carrying amount does not exceed the
carrying amount had no impairment loss been recognised
for the asset in previous years.
Where a decision is made to proceed with development
in respect of a particular area of interest, the relevant
exploration and evaluation asset is tested for impairment,
reclassified to development properties, and then amortised
over the life of the reserves associated with the area of
interest once mining operations have commenced.
j) Plant and equipment
Plant and equipment is stated at cost less accumulated
depreciation and accumulated impairment. Cost includes
expenditure that is directly attributable to the acquisition
of the item. In the event that settlement of all or part of the
purchase consideration is deferred, cost is determined
by discounting the amounts payable in the future to their
present value as at the date of acquisition.
Depreciation is provided on plant and equipment.
Depreciation is calculated on a straight line basis so as to
write off the cost of each asset over its expected useful life
to its estimated residual value. The estimated useful lives,
residual values and depreciation method are reviewed at the
end of each annual reporting period.
Estimated useful lives of 3-5 years are used in the
calculation of depreciation for plant and equipment.
k) Impairment of assets (other than financial
assets, exploration and evaluation assets and
mineral rights)
At each reporting date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the
asset belongs.
Recoverable amount is the higher of fair value less
costs to sell and value in use. In assessing value in use,
estimated future cash flows are discounted to their present
value using pre-tax discount rate that reflects current
market assessments of the time value of money and the
risks specific to the asset which have not already been
incorporated into the future cash flows estimates.
If the recoverable amount of an asset or cash-generating
unit is estimated to be less than its carrying amount, the
carrying amount of the asset or cash-generating unit is
reduced to its recoverable amount. An impairment loss is
recognised in profit or loss.
Where an impairment loss subsequently reverses, the
carrying amount of the asset or cash-generating unit is
increased to the revised estimate of its recoverable amount,
but only to the extent that the increased carrying amount
does not exceed the carrying amount had no impairment
loss been recognised in prior periods. A reversal of an
impairment loss is recognised in profit or loss.
l) Trade and other payables
Liabilities for goods and services provided to the Group are
recognised initially at their fair value and subsequently at
amortised cost using the effective interest method. Trade
and other payables are unsecured.
m) Debt and equity instruments
Debt and equity instruments are classified as either
liabilities or as equity in accordance with the substance of
the contractual arrangement. An equity instrument is any
contract that evidences a residual interest in the assets of
an entity after deducting all of its liabilities. Contracts settled
via the delivery of a fixed number of equity instruments in
the Company in exchange for cash or other assets are
accounted for as equity instruments. Equity instruments
issued by the Group are recorded at the proceeds received,
net of direct issue costs.
n) Employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave and long service
leave when it is probable that settlement will be required and
amounts are capable of being measured reliably.
Liabilities recognised in respect of employee benefits
expected to be settled within 12 months are measured at
their nominal values using the remuneration rate expected to
apply at the time of settlement.
Liabilities recognised in respect of employee benefits
which are not expected to be settled within 12 months are
measured as the present value of the estimated future cash
outflows to be made by the Group in respect of services
provided by employees up to reporting date. The present
value is calculated using a discount rate that references
market yields on high quality corporate bonds that have
maturity dates that approximate the timing of the estimated
future cash flows.
Contributions to accumulated benefit superannuation plans
are expensed when incurred.
51
PNX METALS LIMITED | ANNUAL REPORT 2016
o) Site restoration and rehabilitation provision
Deferred tax
Provision for the costs of mine and environmental restoration
and rehabilitation are recognised when the Group has
a present obligation (legal or constructive) to perform
restoration activities, 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.
Restoration and rehabilitation provisions are measured as
the present value of estimated future cash flows to perform
the rehabilitation activities, discounted at pre-tax rate that
reflects market assessments of the time value of money and
risks specific to the rehabilitation obligation.
p) Share-based payments
Equity-settled share-based payments made to employees
and directors are measured at fair value at the grant date,
which is the date on which the equity instruments were
agreed to be issued (whether conditionally or otherwise) or,
if later, the date on which key terms (e.g. subscription or
exercise price) were determined. Fair value is determined
using the Black-Scholes model or another binomial model,
depending on the type of equity instrument issued.
The fair value of the equity instruments at grant date is
expensed on a straight-line basis over the vesting period,
based on the Group’s estimate of the number of equity
instruments that will eventually vest, with a corresponding
increase to the equity settled benefits reserve in
shareholders’ equity.
Equity-settled share-based payment transactions with
other parties are measured at the fair value of the goods
and services received, except where the fair value cannot
be estimated reliably, in which case the transactions are
measured at the fair value of the equity instruments granted,
measured at the date the Group obtains the goods or the
counterparty renders the service.
q) Leases
Operating lease payments made by the Group are
recognised as an expense on a straight-line basis over
the lease term, except where another systematic basis is
more representative of the time pattern in which economic
benefits from the leased asset are consumed. Contingent
rentals arising under operating leases are recognised as an
expense in the period in which they are incurred.
r)
Income tax
Income tax expense represents the sum of tax currently
payable and deferred tax.
Current tax
Current tax is calculated with reference to the amount of
income tax payable or recoverable in respect of the taxable
profit or tax loss for the financial year. It is calculated
using tax rates and tax laws that have been enacted or
substantively enacted at the reporting date. Current tax for
current and prior periods is recognised as a liability (or asset)
to the extent that it is unpaid (or refundable).
Deferred tax is accounted for in respect of temporary
differences arising from differences between the carrying
amount of assets and liabilities for accounting purposes and
the corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all
taxable temporary differences. Deferred tax assets are
recognised to the extent that it is probable that sufficient
taxable amounts will be available against which deductible
temporary differences or unused tax losses and tax offsets
can be utilised.
However, deferred tax assets and liabilities are not
recognised if the temporary differences giving rise to them
arise from the initial recognition of assets and liabilities (other
than as a result of a business combination) which affects
neither taxable income nor accounting profit.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period(s) when the
assets or liabilities giving rise to them are realised or settled,
based on tax rates (and tax laws) that have been enacted or
substantively enacted by reporting date. The measurement
of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which
the Group expects, at the reporting date, to recover or settle
the carrying amount of the related assets and liabilities.
Deferred tax assets and liabilities are offset when they
relate to income taxes levied by the same taxation authority
and the Group intends to settle its current tax assets and
liabilities on a net basis.
Current and deferred tax recognition
Current and deferred tax is recognised as an expense
or income in the Statement of Profit or Loss and Other
Comprehensive Income, except when it relates to items
credited or debited directly to equity (in which case the
deferred tax is also recognised directly in equity), or where it
arises from the initial accounting for a business combination.
Tax consolidation
The Company and its wholly-owned Australian resident
entities are part of a tax-consolidated group under Australian
taxation law. The members of the tax consolidated group are
disclosed in Note 29. PNX Metals Limited is the head entity
in the tax-consolidated group. Tax expense/income, deferred
tax liabilities and deferred tax assets arising from temporary
differences of the members of the tax-consolidated group
are recognised in the separate financial statements of the
members of the tax-consolidated group using the ‘separate
taxpayer within group’ approach. Current tax liabilities
and assets and deferred tax assets arising from unused
tax losses and tax credits of the members of the tax-
consolidated group are recognised by the Company (as the
head entity in the tax-consolidated group).
52
PNX METALS LIMITED | ANNUAL REPORT 2016
Under a tax funding arrangement between the entities
in the tax-consolidated group, amounts transferred from
entities within the tax consolidated group and recognised
by the Company (‘tax contribution amounts’) are recorded
in intercompany accounts in accordance with the
arrangement.
Where the tax contribution amount recognised by a member
of the tax-consolidated group for a particular period is
different to the aggregate of the current tax liability or asset
and any deferred tax asset arising from unused tax losses
and tax credits in respect of that period, the difference is
recognised as a contribution from (or distribution to) the
group member.
s) Goods and service tax
Revenues, expenses, assets and liabilities are recognised
net of the amount of goods and services tax (GST), except:
i. where the amount of GST incurred is not recoverable
from the taxation authority, in which case it is recognised
as part of the cost of acquisition of an asset or as part of
an item of expense; or
ii.
for receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables.
Cash flows are included in the cash flow statement on a
gross basis. The GST component of cash flows arising from
investing and financing activities which is recoverable from,
or payable to, the taxation authority is classified as operating
cash flows.
t) Earnings per share
Basic earnings per share is calculated by dividing the profit
or loss attributable to owners of the Company (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 tax effect of interest and other financing costs
associated with dilutive potential ordinary shares; and
¬ the weighted average number of additional ordinary
shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
u) Critical accounting judgements and key sources of
estimation uncertainty
In the application of the Group’s accounting policies,
management is required to make judgements, estimates
and assumptions about the carrying values of assets,
liabilities and equity. These estimates and assumptions are
based on historical experience and various other factors
that are believed to be reasonable under the circumstance,
the results of which form the basis for making judgements.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if
the revision affects only the current period, or in the period
of the revision and future periods if the revision affects both
current and future periods.
The following are the critical judgements that management
has made in the process of applying the Group’s accounting
policies and that have the most significant effect on the
amounts recognised in the financial statements.
Impairment
Determining whether assets are impaired requires an
estimation of the value in use or fair value of the assets or
cash-generating units to which assets are allocated. The
value in use calculation requires the entity to estimate the
future cash flows expected to arise from the asset or cash-
generating unit and apply a suitable discount rate in order to
calculate present value.
In the prior year, an impairment loss of $1,717,891 was
recognised in relation to Exploration and Evaluation Assets
and a prior year impairment charge of $150,000 was also
recorded in relation to Assets Held for Sale. Details of the
prior year impairment loss calculations are provided in Notes
11 and 6 respectively.
Restoration and rehabilitation provision
The site restoration and rehabilitation provision require
estimates of future cash flows to meet the costs of
rehabilitation activities and the application of a discount rate
in order to determine the present value of those cash flows.
Refer to Note 6 Assets Held for Sale (loss from discontinued
operations) for further detail on the basis for the restoration
and rehabilitation provision.
Equity-based payments
The determination of the fair value at grant date of options
and performance rights utilises a financial asset pricing
model with a number of assumptions, the most critical of
which is an estimate of the Company’s future share price
volatility. Refer to Note 21 for detail on assumptions made
regarding equity-based payments made during the year.
53
PNX METALS LIMITED | ANNUAL REPORT 2016
4 LOSS FROM CONTINUING OPERATIONS
a) Other income
Interest on bank deposits
Asset sales
Exploration personnel & equipment hire
Other
a) Depreciation
Year ended
30/06/16
$
17,733
-
-
-
17,733
Year ended
30/06/15
$
38,638
14,300
5,460
10,122
68,520
Depreciation of plant and equipment
3,351
32,370
c) Occupancy
Operating lease rental expenses
d) Impairment
Exploration and evaluation assets
5
INCOME TAX
a) Income tax recognised in profit or loss
Current tax expense/(benefit)
Deferred tax expense/(benefit)
Total tax expense/(benefit)
The prima facie income tax benefit on the loss before income tax reconciles
to the tax expense/(benefit) in the financial statements as follows:
Total loss for the year before tax
Income tax benefit calculated at 30%
Equity-based remuneration
Current year tax losses and movements in
temporary differences not recognised
Recognition of research and development tax
refund related to the previous tax year
Tax expense (benefit)
63,919
66,954
-
1,717,891
Year ended
30/06/16
$
-
(245,905)
(245,905)
(1,228,366)
(368,510)
(2,749)
371,259
(245,905)
(245,905)
Year ended
30/06/15
$
-
-
-
4,331,299
(1,299,390)
3,239
1,296,151
-
-
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits
under Australian tax law. There has been no change in the corporate tax rate when compared with the previous reporting period.
b) Recognised tax assets and liabilities
Deferred tax assets and (liabilities) are attributable to the following:
Other financial assets
Exploration and evaluation expenditure
Plant and equipment
Mineral rights*
Trade and other payables
Employee benefits
Restoration and rehabilitation provision*
Share issue costs
Net deferred tax liabilities
Tax losses recognised
Net deferred tax assets / (liabilities)
*
part of Assets Held for Sale in the Statement of Financial Position
54
-
(1,372,829)
(11,241)
(123,075)
13,717
28,271
168,075
25,015
(1,272,068)
1,272,068
-
330,158
(956,944)
(16,246)
(69,037)
12,741
16,661
168,075
49,867
(464,725)
464,725
-
PNX METALS LIMITED | ANNUAL REPORT 2016
c) Unrecognised tax losses
A deferred tax asset has not been recognised in respect of the following:
Tax losses – operating, at 30% potential benefit
Tax losses – capital, at 30% potential benefit
30/06/16
$
7,284,639
115,307
30/06/15
$
7,406,862
115,307
Of the total operating tax losses in the Group at 30 June 2016 of approximately $28.5 million, $25.5 million are unrecognised as
shown above ($7.3 million tax effected at 30%). A deferred tax asset has not been recognised in respect of these losses because it is
not considered probable at this time that future taxable profit will be available against which to utilise the losses.
6 ASSETS HELD FOR SALE
Assets held for sale
30/06/16
$
-
30/06/15
$
-
In 2014, the Company formally commenced a sale process for its three mining leases near Leigh Creek, and associated assets and
liabilities. The preferred manner of sale is through a 100% disposition of the Company’s subsidiary Leigh Creek Copper Mine Pty Ltd
(‘LCCM’).
Mining and production operations at Leigh Creek have been on care and maintenance since January 2012, during which time the
Company conducted studies into alternative copper leaching methods before formally putting the assets for sale.
In April 2015, the Company executed an Option and Sale Agreement with Hillsgold Resources Pty Ltd, now Resilience Mining Australia
Limited (RMA), regarding LCCM. Under the Agreement, RMA has the option to acquire LCCM as well as two exploration licences held
by the Company near LCCM’s mining leases, in return for preparing and submitting to the State government updated environmental
plans (PEPRs) for the three mining leases, and also preparing certain feasibility studies on the leases, within 9 months of the date of the
Agreement. These obligations were fulfilled by RMA in January 2016.
RMA has yet to exercise the option, which expires in mid-October 2016.
Should RMA exercise the option, it will acquire LCCM, and the two exploration licences mentioned, from the Company for nil up-front
consideration (other than the assumption of the rehabilitation obligations at Mountain of Light) and a contingent payment to the Company
of $100,000 if and when 3,000 tonnes of copper are produced from future operations at the three mining leases.
As a formal sale process is ongoing, the disposal group has been classified as a single current asset in the Statement of Financial
Position, and the loss incurred on these discontinued operations has been shown in the Statement of Comprehensive Income as a
separate line.
Detail of the loss from discontinued operations:
Mine site maintenance
Impairment
Loss – discontinued operations
30/06/16
$
90,060
-
90,060
30/06/15
$
79,883
150,000
229,883
Loss per share (cents) basic and diluted
0.02
0.10
Cash outflows
Prior year impairment
90,060
79,883
Given the continuing lack of interest in small-scale mining projects both within the industry and in the wider investment community, the fair
value of the Leigh Creek net asset disposal group was re-assessed during the previous financial year. It was determined that based on
estimated net disposal proceeds from an arm’s length transaction of nil (ie disposal of assets and liabilities for a net nil sum), the fair value
was zero and as such an impairment charge of $150,000 was recorded.
That figure continues to be management’s best estimate at 30 June 2016 of the overall recoverable amount, and is consistent with what
would be received from RMA, should they exercise the option to acquire LCCM.
55
PNX METALS LIMITED | ANNUAL REPORT 2016
Detail of the assets and liabilities of the disposal group at 30 June 2016:
Assets
Environmental deposit1
Plant & equipment – cost
Plant & equipment – accumulated depreciation
Mineral rights2
Total assets
Liabilities
Rehabilitation3
Net asset carrying value
30/06/16
$
30/06/15
$
150,000
3,634,902
(3,634,902)
410,250
560,250
(560,250)
-
150,000
3,634,902
(3,634,902)
410,250
560,250
(560,250)
-
1
The environmental deposit is held by the South Australian government as a condition of the mining leases held by the Group. The deposit will be
returned to the Group upon satisfactory rehabilitation of its mining leases. Interest on the deposit does not accrue to the Group.
2 Mineral rights are amortised as the resource is mined. No mining has occurred since 2011.
3
The provision for site restoration and rehabilitation is based on the estimated future costs of dismantling plant and equipment and performing site
rehabilitation at the Group’s Mountain of Light copper mine, discounted at a risk-adjusted risk-free rate.
7 CASH AND CASH EQUIVALENTS
Cash at bank
Term deposits
At year end, term deposits were invested for 90 days earning 2.9% annual interest.
8 TRADE AND OTHER RECEIVABLES
Interest
Research & Development Tax Incentive
Goods & Services Tax
Other
9 PREPAYMENTS AND DEPOSITS
Prepayments
Environmental deposits – Northern Territory
Deposit – office bond
30/06/16
$
493,632
1,150,000
1,643,632
30/06/16
$
1,918
245,905
12,046
1,011
260,880
30/06/16
$
19,018
26,135
32,760
77,913
30/06/15
$
218,865
650,000
868,865
30/06/15
$
3,312
-
11,179
116
14,607
30/06/15
$
22,167
-
32,760
54,927
Environmental deposits are required to be lodged with the Department of Mines and Energy in the Northern Territory prior to the
commencement of exploration activities on mineral leases and exploration licences.
The office bond is invested in a 365 day term deposit maturing February 2017 and earning 2.9% interest.
56
PNX METALS LIMITED | ANNUAL REPORT 2016 10 OTHER FINANCIAL ASSETS
Investment in Avalon Minerals Ltd
30/06/16
$
257,840
30/06/15
$
386,761
The Company continues to hold 12,892,013 shares in ASX listed Avalon Minerals Limited (Avalon).
At each reporting period, the carrying value of the investment in Avalon is revalued to fair value, based on the market value of Avalon
Minerals Limited’s shares at that time. At the half year, the investment was revalued down $128,920 through Other Comprehensive
Income/Loss (OCI), reducing the fair value movements reserve in Equity to zero.
At 30 June 2016, the investment fair value had not materially changed from that at the half year.
Prior year impairment
In the prior year, an impairment charge of $1,229,448 was recorded to reduce the carrying value of the investment in Avalon to fair value,
based on the market value of Avalon Minerals Limited’s shares at that time. The impairment was recorded in profit or loss in accordance
with AASB 139 Financial Instruments: Recognition and Measurement, due to the significant and prolonged decline in Avalon’s share price
in comparison to the Company’s average cost of the investment. The impairment charge included a reclassification of $327,007 from OCI
representing the decline in the value of the Avalon investment initially recorded in OCI as a loss in the 2014 financial year.
In accordance with the requirements of AASB 13 Fair Value Measurement, and consistent with prior periods, the fair value of the
investment in Avalon is determined with reference to its quoted market price (a ‘Level 1’ measurement standard per AASB 13) on the
ASX.
11 EXPLORATION AND EVALUATION EXPENDITURE
Costs brought forward
Expenditure incurred during the year
Recognised as an expense (tenements previously impaired)
Impairment charges
30/06/16
$
3,293,812
1,495,682
(101,310)
-
4,688,184
30/06/15
$
3,633,957
1,430,953
(53,207)
(1,717,891)
3,293,812
Virtually all expenditure during the year related to exploration activity and project development on the Group’s Northern Territory projects.
In August 2014, the Company executed an agreement with Crocodile Gold Australia Pty Ltd, now Newmarket Gold NT Holdings Pty Ltd
(Newmarket Gold), a subsidiary of Canadian-listed Newmarket Gold Inc., for the acquisition of 14 mineral leases in the Northern Territory,
and a farm-in arrangement whereby the Company can earn up to 90% in 21 (now 19) exploration licences and four mineral leases, also in
the Northern Territory.
Consideration for the purchase of the mineral leases was $1 plus a 2% royalty on the market value of any future production of gold and
silver from the leases (all other metals are excluded from the royalty). Payment of $500,000, either in cash or shares at the Company’s
election, is due if a bankable feasibility study is completed on any of the acquired or farm-in tenements.
Newmarket Gold retains a 30% claw-back right over the acquired tenements by paying PNX three times the Company’s accumulated
expenditure on the tenements, and can also re-acquire 90% of any gold or silver deposits with a JORC compliant resource on the farm-in
tenements by paying PNX three times the Company’s accumulated expenditure on the deposit(s).
The acquired mineral leases include the Iron Blow and Mt Bonnie base metals and gold deposits contained within the
Hayes Creek project.
The farm-in tenements include the Burnside, Moline and Chessman base metals and gold exploration projects. Under the terms of the
farm-in, PNX can earn a 51% interest in the farm-in tenements with expenditure of $2 million over 2 years (to 15 December 2016) , and
can then elect to increase its interest to 90% with expenditure of an additional $2 million over a further 2 year period. $500,000 of the
expenditure requirements for each 2 year period may be spent on the acquired mineral leases. As at 30 June 2016, total expenditure for
the purposes of the farm-in was approximately $1.5 million.
Prior year impairment
At 30 June 2015, an impairment charge of $1,717,891 was recognised in relation to the Group’s Burra Central and Yorke Peninsula
exploration tenements in South Australia. The fair value less costs to sell of these projects was assessed as $2 million, based on their
estimated value in an arms-length sale transaction in market conditions at that time.
The fair value of the Company’s South Australian tenements continues to be assessed at $2 million on the same basis, given market
conditions are largely similar to that of one year ago and there have been no events otherwise impacting on the assessed fair value.
57
PNX METALS LIMITED | ANNUAL REPORT 2016
12 PLANT AND EQUIPMENT
Cost
Balance at 30 June 2014
Additions
Disposals
Balance at 30 June 2015
Additions
Disposals
Balance at 30 June 2016
Accumulated depreciation
Balance at 30 June 2014
Depreciation expense
Disposals
Balance at 30 June 2015
Depreciation expense
Depreciation capitalised to exploration assets
Disposals
Balance at 30 June 2016
Net book value – plant and equipment
Balance at 30 June 2015
Balance at 30 June 2016
The useful lives applied in the determination of depreciation for all items of plant and equipment is 3-5 years.
13 TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Other payables
Average credit period on trade payables is 30 days.
30/06/16
$
87,525
82,072
25,086
194,683
$
489,216
47,551
(96,532)
440,235
-
-
440,235
450,243
32,370
(96,532)
386,081
(3,351)
(13,333)
-
402,765
54,154
37,470
30/06/15
$
134,083
78,319
22,867
235,269
58
PNX METALS LIMITED | ANNUAL REPORT 2016 14 LOAN
Loan
30/06/16
$
1,200,000
30/06/15
$
1,200,000
The key terms of the Company’s $1.2 million loan are as follows:
»
Loan funding must be used to acquire shares in Avalon Minerals Limited
» Maturity date of 6 November 2019 (extended from 6 November 2016 in May 2016)
» Unsecured
»
»
7.5% annual interest rate, payable in cash or ordinary shares of the Company, at the option of the Company
Principal is to be repaid via the remittance of net proceeds from the sale of any of the shares in Avalon acquired using the loan
proceeds, up to the $1.2m loan principal. If the cash proceeds available to the Company through the sale of Avalon shares are
insufficient to repay the loan principal amount by the maturity date, any shortfall may be repaid via the issue of shares in the Company.
If the shares in Avalon have not been disposed of by the maturity date, the loan is repayable in cash.
Interest charges of $100,000 (2015: $100,000) were incurred on the loan during the year, of which $10,000 (2015: $10,000) consisted of
withholding tax remitted to the Australian Taxation Office. Interest payable on a 6-monthly basis was settled on both occasions by issuing
shares; refer to Note 17(b) for further detail.
15 PROVISIONS
Current
Employee benefits
Non-current
Employee benefits
16 DEFERRED REVENUE
Metal streaming receipts
30/06/16
$
66,149
28,086
30/06/16
$
1,600,000
30/06/15
$
45,606
9,932
30/06/15
$
-
On 7 June 2016, the Company entered into identical metal streaming and royalty agreements with two investors. The key terms of the
agreements are as follows:
»
»
»
»
»
$800,000 received from each investor for the forward sale of 112,000 troy ounces of silver ($7.14/oz)
Silver to be delivered at a rate of 14,000 oz per quarter (56,000 oz per year) for 2 years once commissioning and ramp up of the
Hayes Creek Project is complete
At the end of the two year silver delivery period, each investor receives a 0.24% Net Smelter Return (NSR) royalty. The NSR royalty
applies in respect of gold and silver produced from the Hayes Creek Project, and will be paid for a 5 year period from the end of the
silver delivery period. PNX can buy back the NSR royalty from an investor prior to production commencing for $0.27 million.
Each investor has an option, to be exercised within 3 months of completion of the pre-feasibility study over the Hayes Creek Project,
to purchase an additional 56,000 oz of silver for $0.4 million. This silver is to be delivered over a further one year period. In this
scenario the NSR increases to 0.36% and buy-back amount increases to $0.4 million
If production at the Hayes Creek Project has not commenced within 5 years and PNX or an investor elects to terminate the
agreement, the forward payment made by that investor ($0.8 million, or $1.2 million, if the option has been exercised) converts to
PNX shares based on a 30 day VWAP. The NSR royalty will also apply in these circumstances for 5 years from when production
commences on any of the mineral leases making up the Hayes Creek project
»
If shareholder approval and/or Foreign Investment Review Board approval is required but not received in relation to the conversion to
shares then the applicable forward payment is to be repaid in cash
The $1.6 million of cash received has been accounted for as deferred revenue, classified in the Statement of Financial Position as a long-
term liability. Revenue will be recognised as the silver is delivered in the future.
Approximately $28,000 in legal fees were incurred in finalising the agreements, which have been recorded in profit and loss.
59
PNX METALS LIMITED | ANNUAL REPORT 2016 17 ISSUED CAPITAL
30/06/16
$
30/06/15
$
507,783,980 fully paid ordinary shares (2015: 357,256,457)
28,377,292
26,562,067
Movement in ordinary shares for the year:
No.
30/06/16
$
No.
30/06/15
$
Ref Balance at beginning of year
357,256,457
26,562,067
210,052,258
23,557,745
a
b
c
c
d
e
f
g
Shares issued to settle interest
on convertible notes
2,382,318
30,000
872,094
15,000
Shares issued to settle interest on loan
7,029,817
90,000
4,152,926
90,000
Shares issued at 1.3 cents
Shares issued at 0.95 cents
Shares issued on vesting of performance
rights, and transfer from equity settled
benefits reserve to share capital
Shares issued at 1.3 cents
Shares issued at 2.3 cents, rights Issue
Interest on convertible notes –
reduction in share capital
Share issue costs
114,865,388
1,493,250
26,250,000
250,000
-
-
-
-
-
-
-
-
(30,000)
(18,025)
-
-
-
-
750,000
27,976
24,300,000
315,900
117,129,179
2,693,971
-
-
(30,000)
(108,525)
Balance at end of year
507,783,980
28,377,292
357,256,457
26,562,067
Fully paid shares carry one vote per share and a right to dividends.
a) Shares were issued in November 2015 and May 2016 at the Company’s preceding 30 day volume-weighted average share price
(VWAP) of 1.2 and 1.3 cents respectively to settle a total of $30,000 of interest payable on convertible notes.
In the prior year, shares were issued in May 2015 at the Company’s preceding 30 day VWAP of 1.7 cents to settle $15,000 of interest
payable on convertible notes.
b) Shares were issued in November 2015 and May 2016 at the Company’s 30 day VWAP of 1.4 cents and 1.2 cents respectively
(2015: 2.9 cents and 1.7 cents) to settle a total of $90,000 of interest payable on the Company’s $1.2 million loan.
c) During the year shares were issued to sophisticated investors and company directors at 1.3 cents (September and November 2015,
114,865,388 shares) raising $1.49 million before costs and to sophisticated investors at 0.95 cents (April 2016, 26,250,000 shares),
raising $250,000.
d) Prior year: 375,000 ordinary shares were issued to a related party of the Company’s Chief Executive Officer in August 2014 following
the vesting of an equivalent number of performance rights that were originally issued in September 2013. A further 375,000 ordinary
shares were issued to a related party of the Company’s CEO in November 2014 following the vesting of an equivalent number of
performance rights that were issued in September 2014.
e) Prior year: 24,300,000 ordinary shares were issued to sophisticated and professional investors in August 2014 at 1.3 cents raising
$315,900 before costs.
f) Prior year: 117,129,179 shares were issued in October and November at 2.3 cents raising $2.69 million before costs under a one-
for-two non-renounceable pro-rata Rights Issue, including 6,260,693 shares placed with sophisticated investors within 90 days of the
closing of the offer.
g)
Interest paid by issuing shares on convertible notes has been accounted for as a reduction in share capital, consistent with the
treatment of the convertible notes as an equity item (refer Note 18 for further detail).
60
PNX METALS LIMITED | ANNUAL REPORT 2016 18 OTHER CONTRIBUTED EQUITY
Convertible notes – equity settled
30/06/16
$
600,000
30/06/15
$
600,000
The Group has on issue 600,000 unsecured convertible notes at a price of $1 per note. The key terms of the notes are as follows:
» Convertible at the option of either the Company or the note holders, for 20 ordinary fully paid shares per note
»
»
»
Interest accrues at 5% per annum, payable in cash or ordinary shares (based on the Company’s 30 day VWAP preceding the end of
each interest period) semi-annually at the option of the Company
Any unconverted notes automatically convert into ordinary shares, at the rate of 20 ordinary shares per note, on the maturity date of
22 May 2019 (extended from 22 May 2016 in May 2016)
Redeemable in cash at the option of the Company at the end of each calendar quarter during the 18 month period after issuance
(subject to an interest premium of 2.5% for early redemption)
As the notes will be settled by way of the issue of a fixed number of shares in the Company (unless the Company elects to settle in cash
as noted above), the notes have been accounted for as a separate component of shareholders’ equity.
Semi-annual interest payable of $15,000 was settled in November 2015 and in May 2016 by issuing shares as outlined in Note 17(a).
19 RESERVES
Equity-settled benefits reserve
Fair value movements reserve
30/06/16
$
-
-
-
30/06/15
$
218,273
128,920
347,193
The equity-settled benefits reserve arises on the vesting of performance rights and share options granted to employees, consultants and
executives under the Employee Performance Rights Plan and (previous) Employee Share Option Plan. It also reflects the fair value at grant
date of options issued in conjunction with ordinary shares for capital raising purposes.
Amounts are transferred out of the reserve and into issued capital when the rights are converted into shares or options are exercised, or
to accumulated losses when rights or options lapse. Further information on share based payments is disclosed in Note 21.
The decrease in the equity settled benefits reserve for the year consists of:
»
»
$209,111 reclassified to accumulated losses on the expiry of options (refer Note 21)
$9,162 recorded in profit and loss as an expense recovery upon the lapsing of performance rights that did not vest as the
performance conditions were not met (Note 21)
The fair value movements reserve relates to the Company’s investment in Avalon Minerals Ltd. During the year the reserve decreased
$128,920 reflecting the downward movement in the market value of the investment in Avalon since 30 June 2015, as outlined in Note 10.
20 ACCUMULATED LOSSES
Balance at beginning of year
Loss for the year
Transfer from equity settled benefits reserve regarding
options that expired unexercised
30/06/16
$
24,326,941
982,461
(209,111)
30/06/15
$
19,995,642
4,331,299
-
Balance at end of year
25,100,291
24,326,941
61
PNX METALS LIMITED | ANNUAL REPORT 2016 21 SHARE OPTIONS AND PERFORMANCE RIGHTS
In 2010, the Group replaced the Employee Share Option Plan with the PNX Metals Limited Employee Performance Rights Plan (PRP).
Under the PRP, the Directors may issue performance rights to Company executives, employees and consultants. Performance rights
are granted for no monetary consideration and entitle the holder to be issued one fully paid ordinary share per performance right upon
vesting.
September 2014 rights
In September 2014, 1,200,000 Performance Rights were issued to the Company’s CEO, with performance conditions covering the period
to 30 June 2016:
»
»
»
achievement of a capital raise in excess of $2 million by 30 December 2014 (375,000 Rights);
a discovery defined by two drill holes spaced a minimum of 75 metres apart with ore-grade mineralisation by 30 June 2016 (375,000
Rights); and
at the Hayes Creek project, double the contained metal of the existing foreign resource estimate at Iron Blow through the definition of
additional resources within a 10km radius of the existing deposit by 30 June 2016 (450,000 Rights).
The achievement of each of the performance conditions was subject to Board approval. The Board also had discretion to amend the
allocation of Performance Rights to each condition by up to 50%; however, the total number of Performance Rights that could vest was
fixed at 1,200,000.
375,000 shares were issued in November 2014 as the performance condition of a minimum $2 million capital raise prior to 30 December
2014 was met on 7 November 2014, following the issue of shares under a non-renounceable rights issue.
The remaining 825,000 rights lapsed on 30 June 2016 as the performance conditions were not met.
January 2015 rights
In January 2015, 750,000 performance rights were issued to the Company’s Exploration Manager with the following performance
conditions:
» Completion of a scoping study on the Hayes Creek project including defining an initial resource estimate at Mount Bonnie of greater
than 1 million tonnes by 31 December 2015 (187,500 Rights);
»
»
»
Increase in the market capitalisation of the Company to >$20 million, measured on a 20 day VWAP basis, by 30 June 2015 (75,000
Rights);
A discovery, defined by two drill holes spaced a minimum of 75 metres apart with ore-grade mineralisation, at a new prospect by 30
June 2016 (225,000 Rights); and
At the Hayes Creek project, double the contained metal of the current JORC 2012 resource estimate at Iron Blow through the
definition of additional resources within a 10km radius by 30 June 2016 (262,500 Rights).
The achievement of each of the performance conditions was subject to Board approval. The Board also had discretion to amend the
allocation of Performance Rights to each condition by up to 50%; however, the total number of Performance Rights that could vest was
fixed at 750,000.
At 30 June 2015, it was determined that the performance conditions relating to 75,000 rights (second bullet point above) were not met
and therefore the rights lapsed at that time.
The remaining 675,000 rights lapsed on 30 June 2016 as the performance conditions were not met.
During the year, share-based payment expense of negative $9,162 (2015: 10,797) was recorded in relation to the Performance Rights
described above, effectively reversing the majority of the expense recorded in the previous year related to those Rights that ultimately did
not vest.
Options
At the discretion of the Directors, and subject to shareholder approval, Options to acquire shares can and have been issued, for example
as part of corporate and asset acquisitions or as part of a capital raising process.
The following table reconciles outstanding Options from the beginning to the end of the financial year:
Options
Balance at beginning of the year
Options granted
Options exercised or lapsed
Balance at end of the year
30/06/16
Number of options
30/06/16
Weighted average
exercise price
$
30/06/15
Number of options
30/06/15
Weighted average
exercise price
$
1,250,000
-
(1,250,000)
0.27
-
(0.27)
1,250,000
-
-
-
-
1,250,000
0.27
-
-
0.27
62
PNX METALS LIMITED | ANNUAL REPORT 2016
22 KEY MANAGEMENT PERSONNEL DISCLOSURE
The key management personnel of the Group during the year were:
» Graham Ascough (Non-executive Chairman)
»
»
Paul Dowd (Non-executive Director)
Peter Watson (Non-executive Director)
» David Hillier (Non-executive Director)
»
»
»
James Fox (Managing Director & Chief Executive Officer)
Tim Moran (Chief Financial Officer and Company Secretary)
Andy Bennett (Exploration Manager)
The aggregate compensation of Key Management Personnel of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Year ended
30/06/16
$
740,097
74,878
(9,162)
805,813
Details of key management personnel compensation are disclosed within the Remuneration Report in the Directors’ Report.
23 REMUNERATION OF AUDITOR
Paid or payable for the following services:
Audit and review of the financial reports
Tax return preparation and advice
30/06/16
$
28,340
-
28,340
Year ended
30/06/15
$
777,903
60,395
10,797
849,095
30/06/15
$
33,385
6,825
40,210
Audit fees in the prior year include $27,000 paid and payable to Grant Thornton, appointed as the Company’s auditor at the
2014 Annual General Meeting. Remaining audit fees in 2015 and fees for the preparation of the tax return and other advice were paid
to the previous auditor.
24 RELATED PARTY DISCLOSURES
a) Subsidiaries
Details of the percentage of ordinary shares held in subsidiaries are disclosed in Note 29.
b) Other related party transactions
During the year the Company engaged Watsons Lawyers (now part of Piper Alderman), an entity in which a Director (Peter Watson)
was a partner, to advise on legal matters. The amount paid in the financial year for these services inclusive of GST was $46,833
(2015: $134,788). $2,200 inclusive of GST was owed at year end (2015: nil).
63
PNX METALS LIMITED | ANNUAL REPORT 2016 25 COMMITMENTS FOR EXPENDITURE AND CONTINGENT LIABILITIES
a) Expenditure commitments
The Group has certain obligations to perform exploration work and expend minimum amounts of money on mineral exploration
tenements in South Australia in order to retain the full tenement lease. There are no minimum expenditure requirements on the
Company’s mineral leases in the Northern Territory.
These obligations vary from time to time, subject to statutory approval. The terms of current and future joint ventures, the grant or
relinquishment of licences and changes to licence areas at renewal or expiry will alter the expenditure commitments of the Company.
Total expenditure commitments at 30 June 2016 in respect of minimum expenditure requirements not provided for in the financial
statements are approximately:
Minimum exploration expenditure on SA tenements
30/06/16
$
900,000
30/06/15
$
1,000,000
The Group’s office lease in Rose Park, South Australia, with annual lease payments exclusive of GST of $66,900, extends to
August 2017.
b) Reilly Tenement Acquisition Agreement
By the Reilly Tenement Acquisition Agreement dated 19 October 2007 between the Company and Matthew Reilly, as amended by
deed dated 19 November 2007 (RTAA), the Company agreed to purchase mineral exploration licence EL 3161 (now EL 5382) from
Mr Reilly.
Contingent consideration pursuant to this agreement:
¬ the issue and allotment to Mr Reilly of 800,000 Shares and 800,000 Options upon grant of an Exploration Licence over some or
all of the area within EL 3161 (now EL5382) reserved from the operation of the Mining Act 1971 (SA), comprising the area, and
immediate surroundings, of the historic Burra Mine and the historic Burra Smelter, as gazetted in March 1988;
¬ the payment of $100,000 upon commencement of processing of any tailings, waste residues, waste rock, spoiled leach materials
and other materials located on the surface of the land the subject matter of EL 3161 or derived from that land by or on behalf of
the Company; and
¬ the payment of $200,000 upon the Company announcing an ore reserve, prepared in accordance with the JORC Code, on EL
3161 of at least 15,000 tonnes of contained copper.
c) Royalty agreements
The Company has granted the following royalties:
¬ to Mr Matthew Reilly – 6% of the aggregate net revenue in respect of all metals derived from EL 3161 (now EL 5382).
¬ to Avanti Resources Pty Ltd – 2.5% of the net smelter return on all metals derived from EL 3604, EL 3716 and EL 3686 (now ELs
4807, 4970, and 4886 respectively).
¬ to Marathon Resources Limited – 2.5% net smelter return on all metals derived from EL 3164 (now EL 5411).
¬ to Copper Range (SA) Pty Limited – 1.5% net smelter return on all metals derived from EL 3459 (now EL 4809).
¬ to Copper Range (SA) Pty Limited – 2.0% net smelter return on all metals derived from EL 3971 and EL 3451 (now ELs 5169 and
4626 respectively).
¬ to Copper Range (SA) Pty Limited – 50% of a 1.5% net smelter return on all metals derived from EL 4370 (now EL 5557).
¬ to Flinders Mines Limited – 50% of a 1.5% net smelter return on all metals derived from EL 4370 (now EL 5557).
The Company’s subsidiary Leigh Creek Copper Mine Pty Ltd has a royalty agreement with Mount Gunson Mines Pty Ltd whereby a
1% royalty is payable to Mount Gunson in respect of copper produced from operations at ML 5467, ML 5498, and ML 5741.
d) Native title
A native title claim application has been lodged with the Federal Court of Australia over land on which the majority of the Group’s
tenements in South Australia are located. The Group is unable to determine the prospects of success or otherwise of the claim
application, and to what extent an approved claim might affect the Group or its projects.
e) Newmarket Gold
As outlined in Note 11, Newmarket Gold is entitled to a 2% royalty on the market value of any future production of gold and silver
from the 14 mineral leases in the Northern Territory acquired by the Company in 2014. A payment of $500,000, either in cash or
shares at the Company’s election, is also due if a bankable feasibility study is completed on any of the acquired or farm-in tenements.
In addition, Newmarket Gold holds a 30% claw-back right over the acquired tenements by paying PNX three times the Company’s
accumulated expenditure on the tenements, and can also re-acquire 90% of any gold or silver deposits with a JORC compliant
resource on the farm-in tenements by paying PNX three times the Company’s accumulated expenditure on the deposit(s).
64
PNX METALS LIMITED | ANNUAL REPORT 2016 26 FINANCIAL INSTRUMENTS & FINANCIAL RISK MANAGEMENT
Categories of financial instruments
Financial assets
Cash and cash equivalents
Deposits
Trade and other receivables
Other financial assets – Investment in Avalon
Financial liabilities
Trade and other payables
Loan
30/06/16
$
1,643,632
58,895
260,880
257,840
194,683
1,200,000
30/06/15
$
868,865
32,760
14,607
386,761
235,269
1,200,000
The Group’s activities expose it to several financial risks which impact on the measurement of and potentially could affect the ultimate
settlement amount of its financial instruments: market risk, credit risk, and liquidity risk.
Market risk
The Group’s activities, up to 31 December 2011 when copper production ceased, were exposed to the financial risks of changes in US
dollar exchange rates and global copper prices. Since then, price and currency risk is minimal.
The Group is exposed to movements in the share price of Avalon Minerals Ltd, as the Company’s investment of 12,892,013 shares in
Avalon is carried at fair value, and price movements are reflected through other comprehensive income or loss. Each one cent change in
the market value of Avalon’s shares changes the fair value of the Company’s investment by $128,920. Movement in the fair value of the
investment in Avalon, as an indicator of its realisable value, also affects the number of shares the Company may have to issue to settle
any shortfall in the Company’s $1.2 million loan before it matures in November 2019 (refer Note 14).
The Group’s exposure to interest rate movements is limited to increases or decreases in interest earned on cash, cash equivalents, and
deposits.
If interest rates had been 50 basis points higher or lower during the financial year and all other variables were held constant, the Group’s
net loss would increase/decrease by approximately $3,000 and $3,000 respectively (2015: increase/decrease by approximately $5,000
and $5,000 respectively).
As the Group’s exposure to market risks is not significant, management of these risks is limited to monitoring movements in commodity
prices, foreign exchange rates, interest rates, and the market value of the shares of Avalon Minerals Ltd.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group
has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of
mitigating the risk of financial loss from activities.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-
rating agencies.
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s
maximum exposure to credit risk without taking account of the value of any collateral obtained.
Liquidity risk
Ultimate responsibility for managing liquidity risk rests with the Board of Directors, which has built an appropriate liquidity risk management
framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Board
manages liquidity risk by continuously monitoring forecast and actual cash flows, and raising capital as needed, primarily through new
equity issuances, in order to meet the Group’s exploration expenditure commitments and corporate and administrative costs.
65
PNX METALS LIMITED | ANNUAL REPORT 2016
Liquidity and interest risk tables
The following table details the Company’s and the Group’s remaining contractual maturity for its non-derivative financial liabilities. The
table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can
be required to pay.
The table includes both interest and principal cash flows.
Weighted
average effective
interest rate
%
Less than
one month
1-3 months
3-12 months
1-5 years
$
$
$
2016
Non-interest bearing
Fixed interest bearing
2015
Non-interest bearing
Fixed interest bearing
-
7.5
-
7.5
158,333
-
175,021
-
19,500
-
43,398
-
16,850
90,000
16,850
90,000
$
-
1,425,000
-
1,245,000
Fair value of financial instruments
The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial
statements approximate their fair values.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return
to shareholders through the optimisation of debt and equity balances. Due to the nature of the Group’s activities (primarily exploration), the
Directors believe that the most appropriate and advantageous way to fund activities is through equity issuances, and all capital raised to
date with the exception of the $1.2 million loan (which funded the acquisition of shares in Avalon Minerals Ltd) and the $1.6 million metal
streaming transactions (Note 16) has been equity based.
The Group closely monitors and forecasts its cash flow and working capital to ensure that adequate funds are available in the future to
meet exploration and administrative activities.
27 SEGMENT INFORMATION
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly
reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.
Information reported to the Group’s Chief Executive Officer for the purposes of resource allocation and assessment of performance is both
activity and project based. The principal activity is mineral exploration in the Northern Territory and in South Australia. Exploration projects
are evaluated individually, and the decision to allocate resources to individual projects in the Group’s overall portfolio is predominantly
based on available cash reserves, technical data and expectations of resource potential and future metal prices.
The Group’s reportable segments under AASB 8 are therefore as follows:
»
»
Exploration in the Northern Territory
Exploration in South Australia
» Mining and production of copper in Australia (now discontinued)
Financial information regarding these segments is presented below. The accounting policies for reportable segments are the same as the
Group’s accounting policies.
Revenue
Year ended
30/06/16
$
Revenue
Year ended
30/06/15
$
Segment loss
Year ended
30/06/16
$
Segment loss
Year ended
30/06/15
$
-
-
-
-
-
-
-
-
(101,310)
(1,771,097)
-
-
(90,060)
(229,883)
(1,036,996)
(2,330,319)
(1,228,366)
(4,331,299)
245,905
-
(982,461)
(4,331,299)
Exploration – SA
Exploration – NT
Mining – discontinued operation
Unallocated
Total loss before tax
Income tax benefit
Total loss for the year
66
PNX METALS LIMITED | ANNUAL REPORT 2016
Segment loss represents the loss earned by each segment without allocation of corporate administration costs, interest income and
income tax. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of
segment performance.
The following is an analysis of the Group’s assets and liabilities by reportable operating segment:
Assets
Exploration – SA
Exploration – NT
Mining (held for sale)
Unallocated assets
Total assets
Liabilities
Exploration – SA
Exploration – NT
Mining (held for sale)
Unallocated liabilities
Total liabilities
30/06/16
$
30/06/15
$
2,000,000
2,739,486
-
2,226,433
6,965,919
-
42,400
-
3,046,518
3,088,918
2,000,000
1,330,479
-
1,342,647
4,673,126
-
101,965
-
1,388,842
1,490,807
For the purposes of monitoring segment performance and allocating resources between segments, all assets are allocated to reportable
segments except for cash/cash equivalents, other financial assets, prepayments/deposits, and corporate office equipment.
All liabilities are allocated to reportable segments other than employee provisions, loan, deferred revenue and corporate/administrative
payables.
28 EARNINGS PER SHARE
Basic and Diluted loss per share- continuing operations
Basic and Diluted loss per share – discontinued operations
Total loss per share
The earnings and weighted average number of ordinary shares used in
the calculation of basic and diluted earnings per share are as follows:
Loss after tax – continuing operations $
Loss after tax – discontinued operations $
Weighted average number of ordinary shares
Year ended
30/06/16
Cents per share
Year ended
30/06/15
Cents per share
(0.2)
(0.0)
(0.2)
(1.3)
(0.1)
(1.4)
$
$
(892,401)
(90,060)
451,064,157
(4,101,416)
(229,883)
311,671,557
The weighted average number of ordinary shares in the calculation of diluted earnings per share is the same as for basic earnings per
share, as the inclusion of potential ordinary shares in the diluted earnings per share calculation is anti-dilutive due to the loss incurred for
the year.
67
PNX METALS LIMITED | ANNUAL REPORT 2016
29 CONTROLLED ENTITIES
Name of entity
Country of Incorporation
Ownership Interest
2016
%
Ownership Interest
2015
%
Parent entity
PNX Metals Limited
Subsidiaries
Wellington Exploration Pty Ltd
Leigh Creek Copper Mine Pty Ltd
i) Head entity in tax consolidated group
ii) Members of tax consolidated group
(i)
(ii)
(ii)
Australia
Australia
Australia
100%
100%
100%
100%
The ultimate parent entity in the wholly-owned group is PNX Metals Limited. During the financial year, PNX Metals Limited provided
accounting and administrative services at no cost to the controlled entities and advanced interest free loans. Tax losses have been
transferred to PNX Metals Limited by way of inter-company loans.
PNX Metals Limited has entered into a deed of cross guarantee with its wholly-owned subsidiaries, Leigh Creek Copper Mine Pty Ltd
and Wellington Exploration Pty Ltd, and therefore these latter entities are relieved from the requirement to prepare a financial report and
directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission. As there are
no other entities in the Group other than those party to the deed of cross guarantee, the consolidated financial statements of the entities
party to the deed of cross guarantee are the same as those of the Group.
30 PARENT ENTITY DISCLOSURES
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Other equity
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive income/loss
Total comprehensive loss
30/06/16
$
30/06/15
$
2,240,265
4,725,654
6,965,919
260,832
2,828,086
3,088,918
1,325,160
3,347,966
4,673,126
280,875
1,209,932
1,490,807
3,877,001
3,182,319
28,377,292
600,000
-
(25,100,291)
3,877,001
Year ended
30/06/16
$
(982,461)
(128,920)
(1,111,381)
26,562,067
600,000
347,193
(24,326,941)
3,182,319
Year ended
30/06/15
$
(4,331,299)
455,927
(3,875,372)
Commitments for expenditure and contingent liabilities of the parent entity
Note 25 discloses the Group’s commitments for expenditure and contingent liabilities, all of which are applicable to the parent entity also.
68
PNX METALS LIMITED | ANNUAL REPORT 2016 31 SUBSEQUENT EVENTS
In August 2016, the Group raised $1.5 million via the placement of 79 million shares at $0.019 each to sophisticated and institutional
investors. The Group also received a commitment for a further share placement of $0.25 million if approved by shareholders at the
Company’s 2016 annual general meeting.
Also subsequent to year-end, the Board resolved to issue 1,000,000 Shares to Company MD & CEO James Fox and grant him 1,250,000
Performance Rights, with both awards subject to shareholder approval at the Company’s 2016 AGM. The proposed share issuance is
considered by the Directors to be an appropriate bonus for Mr Fox’s performance over the past year as the Company’s Managing Director
& CEO, and in particular for his leadership in advancing the Hayes Creek Project into a Pre-Feasibility Study.
The 1,250,000 Performance Rights to be offered to Mr Fox have the following performance conditions:
»
»
The Company’s share price performance for the year ended 30 June 2017 must exceed that of at least 50% of 10 companies
identified by the Directors as the Company’s peers; and
The Company’s closing price on the ASX is 6.0 cents or more for 15 consecutive trading days prior to 30 June 2018.
There are no other matters or circumstances otherwise that have arisen since 30 June 2016 and have significantly affected or may
significantly affect:
»
»
»
the Group’s operations in future financial years;
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years.
69
PNX METALS LIMITED | ANNUAL REPORT 2016 DIRECTORS’ DECLARATION
In the Directors’ opinion:
a)
the consolidated financial statements and notes thereto are in accordance with the
Corporations Act 2001, including
i) complying with Accounting Standards, the Corporations Regulations 2001 and
other mandatory professional reporting requirements, and
ii) giving a true and fair view of the Group’s financial position as at 30 June 2016
and of its performance for the financial year ended on that date;
b) the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board;
c)
there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable; and
d) at the date of this declaration, there are reasonable grounds to believe that the
members of the Group will be able to meet any obligations or liabilities to which they
are, or may become, subject by virtue of the deed of cross guarantee described in
Note 29.
The Directors have been given the declarations by the Chief Executive Officer and Chief
Financial Officer required by Section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors made pursuant to Section
295(5) of the Corporations Act 2001.
Graham Ascough
Chairman
20th September 2016
70
PNX METALS LIMITED | ANNUAL REPORT 2016 INDEPENDENT AUDIT REPORT TO THE MEMBERS
of Phoenix Copper Limited
Level 1,
67 Greenhill Rd
Wayville SA 5034
Level 1,
67 Greenhill Rd
Correspondence to:
Wayville SA 5034
GPO Box 1270
Adelaide SA 5001
Correspondence to:
T 61 8 8372 6666
GPO Box 1270
F 61 8 8372 6677
Adelaide SA 5001
E info.sa@au.gt.com
T 61 8 8372 6666
W www.grantthornton.com.au
F 61 8 8372 6677
E info.sa@au.gt.com
Level 1,
W www.grantthornton.com.au
67 Greenhill Rd
Wayville SA 5034
Correspondence to:
GPO Box 1270
Adelaide SA 5001
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PNX METALS LIMITED
INDEPENDENT AUDITOR’S REPORT
T 61 8 8372 6666
TO THE MEMBERS OF PNX METALS LIMITED
F 61 8 8372 6677
Report on the financial report
E info.sa@au.gt.com
We have audited the accompanying financial report of PNX Metals Limited (the “Company”),
W www.grantthornton.com.au
Report on the financial report
which comprises the consolidated statement of financial position as at 30 June 2016, the
We have audited the accompanying financial report of PNX Metals Limited (the “Company”),
consolidated statement of profit or loss and other comprehensive income, consolidated
which comprises the consolidated statement of financial position as at 30 June 2016, the
statement of changes in equity and consolidated statement of cash flows for the year then ended,
consolidated statement of profit or loss and other comprehensive income, consolidated
notes comprising a summary of significant accounting policies and other explanatory information
INDEPENDENT AUDITOR’S REPORT
statement of changes in equity and consolidated statement of cash flows for the year then ended,
and the directors’ declaration of the consolidated entity comprising the Company and the entities
TO THE MEMBERS OF PNX METALS LIMITED
notes comprising a summary of significant accounting policies and other explanatory information
it controlled at the year’s end or from time to time during the financial year.
and the directors’ declaration of the consolidated entity comprising the Company and the entities
Report on the financial report
it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
We have audited the accompanying financial report of PNX Metals Limited (the “Company”),
The Directors of the Company are responsible for the preparation of the financial report that
which comprises the consolidated statement of financial position as at 30 June 2016, the
Directors’ responsibility for the financial report
gives a true and fair view in accordance with Australian Accounting Standards and the
consolidated statement of profit or loss and other comprehensive income, consolidated
The Directors of the Company are responsible for the preparation of the financial report that
Corporations Act 2001. The Directors’ responsibility also includes such internal control as the
statement of changes in equity and consolidated statement of cash flows for the year then ended,
gives a true and fair view in accordance with Australian Accounting Standards and the
Directors determine is necessary to enable the preparation of the financial report that gives a true
notes comprising a summary of significant accounting policies and other explanatory information
Corporations Act 2001. The Directors’ responsibility also includes such internal control as the
and fair view and is free from material misstatement, whether due to fraud or error. The
and the directors’ declaration of the consolidated entity comprising the Company and the entities
Directors determine is necessary to enable the preparation of the financial report that gives a true
Directors also state, in the notes to the financial report, in accordance with Accounting Standard
it controlled at the year’s end or from time to time during the financial year.
and fair view and is free from material misstatement, whether due to fraud or error. The
AASB 101 Presentation of Financial Statements, the financial statements comply with
Directors also state, in the notes to the financial report, in accordance with Accounting Standard
International Financial Reporting Standards.
Directors’ responsibility for the financial report
AASB 101 Presentation of Financial Statements, the financial statements comply with
The Directors of the Company are responsible for the preparation of the financial report that
International Financial Reporting Standards.
Auditor’s responsibility
gives a true and fair view in accordance with Australian Accounting Standards and the
Our responsibility is to express an opinion on the financial report based on our audit. We
Corporations Act 2001. The Directors’ responsibility also includes such internal control as the
Auditor’s responsibility
conducted our audit in accordance with Australian Auditing Standards. Those standards require
Directors determine is necessary to enable the preparation of the financial report that gives a true
Our responsibility is to express an opinion on the financial report based on our audit. We
us to comply with relevant ethical requirements relating to audit engagements and plan and
and fair view and is free from material misstatement, whether due to fraud or error. The
conducted our audit in accordance with Australian Auditing Standards. Those standards require
perform the audit to obtain reasonable assurance whether the financial report is free from
Directors also state, in the notes to the financial report, in accordance with Accounting Standard
us to comply with relevant ethical requirements relating to audit engagements and plan and
material misstatement.
AASB 101 Presentation of Financial Statements, the financial statements comply with
perform the audit to obtain reasonable assurance whether the financial report is free from
International Financial Reporting Standards.
material misstatement.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
Auditor’s responsibility
Grant Thornton Audit Pty Ltd ACN 130 913 594
Our responsibility is to express an opinion on the financial report based on our audit. We
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context
requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
conducted our audit in accordance with Australian Auditing Standards. Those standards require
entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s
acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities.
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context
us to comply with relevant ethical requirements relating to audit engagements and plan and
GTIL is not an Australian related entity to Grant Thornton Australia Limited.
requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal
entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s
perform the audit to obtain reasonable assurance whether the financial report is free from
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme
acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities.
applies.
GTIL is not an Australian related entity to Grant Thornton Australia Limited.
material misstatement.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme
applies.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context
requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal
entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s
acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities.
GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme
applies.
71
PNX METALS LIMITED | ANNUAL REPORT 2016
INDEPENDENT AUDIT REPORT TO THE MEMBERS
of Phoenix Copper Limited
2
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the
Company’s preparation of the financial report that gives a true and fair view in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the Directors, as well as evaluating the overall presentation of the financial
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
a
the financial report of PNX Metals Limited is in accordance with the Corporations Act
2001, including:
i
ii
giving a true and fair view of the consolidated entity’s financial position as at 30 June
2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001; and
b
the financial report also complies with International Financial Reporting Standards as
disclosed in the notes to the financial statements.
Material uncertainty regarding continuation as going concern
Without qualifying our opinion, we draw attention to Note 3(a) in the financial report which
indicates that the consolidated entity incurred a comprehensive loss of $1,111,381 and operations
were funded by a net cash outlay of $2,550,458 from operating and investing activities. These
conditions, along with other matters as set forth in Note 3(a), indicate the existence of a material
uncertainty which may cast significant doubt about the consolidated entity’s ability to continue as
a going concern and therefore, the consolidated entity may be unable to realise its assets and
discharge its liabilities in the normal course of business, and at the amounts stated in the financial
report.
72
PNX METALS LIMITED | ANNUAL REPORT 2016
3
Report on the remuneration report
We have audited the remuneration report included in the directors’ report for the year ended
30 June 2016. The Directors of the Company are responsible for the preparation and
presentation of the remuneration report in accordance with section 300A of the Corporations
Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our
audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of PNX Metals Limited for the year ended 30 June 2016,
complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
J L Humphrey
Partner - Audit & Assurance
Adelaide, 20 September 2016
73
PNX METALS LIMITED | ANNUAL REPORT 2016
ADDITIONAL SHAREHOLDER INFORMATION
SUBSTANTIAL SHAREHOLDERS
As at 7 October 2016, the substantial Shareholders
as disclosed in substantial holding notices given to the
Company are:
Holding
%
Asia Image Limited
80,302,204
13.64%
Marilei International Limited
54,222,048
9.21%
Sochrastem SA
48,607,762
10.22%
Potezna Gromadka Limited
30,799,159
Long Fortune Limited
Talis SA
35,075,000
37,891,032
5.23%
5.96%
6.44%
DISTRIBUTION SCHEDULES
A distribution schedule of the number of Shareholders,
by size of holding, as at 30 September 2016 is set
out below:
Size of holdings
Number of shareholders
1 – 1000
1,001 – 10,000
10,001 – 100,000
100,001 and over
Total
35
101
301
233
670
There is no current on-market buy-back.
Shareholders wishing to record a change of address
or other holder details or with queries regarding
their Shareholding should contact the Company’s
share registry, Computershare, as detailed in the
Corporate Directory at the front of this Annual
Report. Shareholders with any other query are
invited to contact the Company’s registered office as
detailed in the Corporate Directory at the front of this
Annual Report.
14,188,179
2.41
ENQUIRIES FROM SHAREHOLDERS
SHARES
The total number of shares issued as at 7 October 2016 was
588,691,875 held by 774 registered shareholders.
None of these shares are subject to escrow.
188 shareholders hold less than a marketable parcel, based on the
market price of a share as at 30 September 2016.
Each share carries one vote.
PERFORMANCE RIGHTS/OPTIONS
As at 7 October 2016, the Company had no Performance Rights or
options on issue.
TWENTY LARGEST SHAREHOLDERS
As at 7 October 2016, the twenty largest Shareholders were as shown in
the following table and held 70.6% of the Shares.
Rank
Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
MARILEI INTERNATIONAL LIMITED
SOCHRASTEM SA
ASIA IMAGE LIMITED
TALIS SA
POTEZNA GROMADKA LIMITED
LONG FORTUNE LIMITED
JP MORGAN NOMINEES
AUSTRALIA LIMITED
FORSYTH BARR CUSTODIANS LTD
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