PNX METALS LIMITED ABN 67 127 446 271
ANNUAL REPORT 2017
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 3, 170 Frome St
Adelaide SA 5000
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
Cover photo: Mt Bonnie
2
PNX METALS LIMITED | ANNUAL REPORT 2017
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
10
24
27
30
34
38
39
43
69
INDEPENDENT AUDIT REPORT TO MEMBERS
70
ADDITIONAL SHAREHOLDER INFORMATION
74
Drilling at Hayes Creek
3
PNX METALS LIMITED | ANNUAL REPORT 2017
CHAIRMAN’S LETTER
Dear Fellow Shareholders,
On behalf of the Board of Directors, it is my pleasure to present
the 2017 Annual Report for PNX Metals Limited (PNX or the
Company).
PNX made significant progress during the year on its objective
to be a sustainable, profitable gold and base metals producer by
completing a Preliminary Feasibility Study (PFS) on its flagship
zinc-gold-silver Hayes Creek Project (Hayes Creek or Project) in
the Pine Creek region of the Northern Territory (NT).
The PFS confirms Hayes Creek to be a high value, relatively
low risk and technically strong development opportunity for the
Company. It forecasts the Project could generate an NPV10% of
$133 million, based on net smelter revenue from the sale of zinc
and precious metals concentrates of $628 million over a 6.5 year
mine life. With a low $58 million of initial capital expenditure, the
Project is forecast to have a 73% internal rate of return and pay-
back period of just 15 months.
Current funds are sufficient to provide opportunistic, continued
exploration designed to extend the life of the Project and/or
discover additional prospects.
The Project is located in a favourable mining jurisdiction
where the development scenario considers and uses existing
infrastructure that includes rail, road, high voltage power lines
and water, further enhancing Project fundamentals and lowering
development risks.
Key priorities for the Company in 2018 include the advancement
of the environmental, metallurgical, and engineering aspects of
the Project in support of a Definitive Feasibility Study (DFS). The
DFS is anticipated to take approximately 12 months to complete
and is expected to provide increased confidence in all aspects
of the Project. It will also investigate opportunities to improve
overall Project economics to increase the prospect of favourable
development finance terms.
With the completion of the PFS, PNX has a demonstrably
valuable Project as a baseline, and we look forward to
discovering additional economic zinc and base metal resources
in the Hayes Creek area. Regional exploration success could be
a game-changer for both the Project and the Company.
As detailed in the Annual Report, a number of high quality gold
and base metals targets have been generated and early results
are encouraging. PNX holds a 51% interest in these areas and is
working toward increasing its interest in them to 90% under the
farm-in agreement with Newmarket Gold NT Holdings Pty Ltd.
The Board and management are confident that the continued
work and completion of studies on the Hayes Creek Project
in 2018 will build confidence in what is a robust development
opportunity with the potential to deliver strong returns for PNX
shareholders.
The Company continues to receive strong support from its
shareholders. In 2017, in support of its activities in the NT,
PNX successfully completed a number of fund raisings to new,
sophisticated and institutional investors as well as to existing
shareholders.
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 project at Hayes Creek 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 move forward in 2018.
Yours sincerely,
Graham Ascough
Chairman
19 September 2017
4
PNX METALS LIMITED | ANNUAL REPORT 2017 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,
primarily in the Northern
Territory (NT).
The main activities of
the Company during the
2017 financial year were
the advancement of its
Hayes Creek zinc-gold-
silver project through to the
completion of a positive
Pre-Feasibility Study (PFS),
as well as conducting mineral
exploration in the Pine Creek
region of the NT.
Darwin
Hayes Creek Project
Burnside Project
Moline Project
Chessman Project
HAYES CREEK PROJECT
The Hayes Creek Project (Project) is
located 170km by road south of Darwin
(Figure 1). It comprises 14 wholly-
owned mineral leases including the
zinc-gold-silver deposits at Iron Blow
and Mt Bonnie which were acquired in
2014 from Newmarket Gold NT Holdings
Pty Ltd, a subsidiary of Canadian-listed
Kirkland Lake Gold Ltd (Newmarket).
As announced on 12 July 2017,
PNX has completed a PFS over the
Project, confirming it to be a high value,
relatively low risk and technically strong
development opportunity for the Company.
The Project is located in a favourable
mining jurisdiction where the development
proposition considers and utilises existing
infrastructure that includes rail, road, high
voltage power lines and water, further
enhancing Project fundamentals and
lowering development risks.
Further detail regarding the PFS and
this exciting Project can be found in
the Exploration Report commencing at
page 10.
Given the positive outcomes of the PFS,
the PNX Board has resolved to proceed
with a Definitive Feasibility Study (DFS),
and baseline studies relating to long
lead-time items and the environmental
approvals process are underway. The
DFS is anticipated to take approximately
12 months to complete and is expected
to provide increased confidence in all
aspects of the Project. It will investigate
opportunities to further improve overall
Project economics, increasing the
prospect of favourable development
finance terms.
In September 2017, the Company
received $2.6 million from a share
placement ($1.8 million after costs)
and additional forward sale of silver
($0.8 million), and initiated a Share
Purchase Plan to raise a further
$0.6 million. Funds raised from these
initiatives will be utilised to advance the
DFS, as well as for continued zinc and
precious metals exploration in the NT
designed to increase mineral resources
and therefore extend the Project life.
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
Pine Creek
Moline Project
WESTERN AUSTRALIA
NORTHERN
TERRITORY
SOUTH AUSTRALIA
QUEENSLAND
Hayes Creek
NEW SOUTH WALES
Adelaide
VICTORIA
0
50
100
kilometres
Chessman Project
PNX/NMKT JV Exploration Licences
PNX/NMKT JV Mining Leases
Katherine
TASMANIA
Highway
Main road
Figure 1 PNX NT project locations
NT 01
5
PNX METALS LIMITED | ANNUAL REPORT 2017 OVERVIEW
Mt Bonnie deposit aerial view (2011) looking east showing low grade stockpile in the
foreground, historic open-pit centre, and water storage dam at the back
Massive sulphide core from Iron Blow
6
NT REGIONAL EXPLORATION
AND FARM-IN AGREEMENT
The Burnside, Moline and Chessman
Projects consist of 19 Exploration
Licences and four Mineral Leases
covering approximately 1,700km2 in the
Pine Creek region of the NT (refer Figure 1)
and are 51% owned by PNX. Under a
farm-in agreement with Newmarket,
PNX is progressing toward earning a
90% interest (excluding uranium) in the
tenements.1 Approximately $1 million
remains to be spent by 15 December
2018 in order to complete the 90%
second stage of the farm-in.
PNX’s regional exploration strategy is
to delineate additional high-value gold
and/or base metals deposits which can
be treated through the proposed Hayes
Creek processing plant, or through
existing free-gold milling infrastructure
in the region. The Burnside, Moline
and Chessman Projects contain
exciting opportunities for greenfield and
brownfield discoveries with undeveloped
mineralisation and promising new
conceptual targets.
The Exploration Report, in the section
headed “Exploration Projects” (page 17),
contains details of the regional exploration
activities undertaken by PNX during
the year and subsequent to year end,
including the excellent results achieved,
the prospects for further discoveries and
PNX’s plans for the remainder of the 2018
financial year.
1 Newmarket can re-acquire 90% of any 2012
JORC compliant gold and silver deposit by
paying PNX three times its accumulated
expenditure related to that deposit
PNX METALS LIMITED | ANNUAL REPORT 2017 SOUTH AUSTRALIA
EXPLORATION
No on-ground exploration activities
were undertaken during the year on the
Company’s four Yorke Peninsula and
eight Burra region exploration licences.
The tenements remain in good standing.
Subsequent to year end, PNX granted
an option to Ausmex Mining Group
Limited (Ausmex) which if exercised
will result in the commencement of a
farm-in and joint venture agreement
whereby Ausmex can earn up to 90%
over two stages (60% and 90%) in PNX’s
exploration licences in and around the
Burra area of South Australia. Each stage
requires Ausmex to spend a minimum
of $300,000 on diamond drilling or other
agreed exploration activities. Ausmex
has until July 2018 at the latest to
exercise the option.
LEIGH CREEK DISPOSAL
During the year, the Company completed
the sale of its wholly owned subsidiary
Leigh Creek Copper Mine Pty Ltd (LCCM)
to Resilience Mining Australia Limited
(RMA, formerly Hillsgold Resources Pty
Ltd). RMA exercised the option to acquire
LCCM it had held since April 2015 on
31 October 2016, and the transaction
was completed on 21 November 2016.
LCCM holds three mining leases in the
Leigh Creek area including Mountain of
Light. The sale included two exploration
licences held by the Company in the
vicinity of Leigh Creek.
There was no up-front cash consideration;
however, RMA assumes all rehabilitation
obligations and is required to pay the
Company $100,000 if and when 3,000
tonnes of copper are produced from future
operations at the three mining leases.
OUTLOOK
PNX’s aim is to establish an economic
mining project at Hayes Creek and
to make new mineral discoveries in
the Pine Creek region of the Northern
Territory. In 2017-18, key priorities
include completing significant portions
of the Hayes Creek DFS, including
advancement of the environmental,
metallurgical, and engineering aspects
of the Project. The Company will
also continue near-mine and regional
exploration targeting zinc and precious
metals mineralisation that could
supplement the established mineral
resources at Hayes Creek or be
developed as stand-alone projects.
7
PNX METALS LIMITED | ANNUAL REPORT 2017 OVERVIEW
KEY FINANCIAL RESULTS
($000’s, except as indicated)
Interest income
R&D tax refund
Corporate/administrative costs
Impairment – SA exploration assets
Loss on Avalon investment
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
Investment in Avalon – at fair value
Exploration assets
Borrowings2
Net assets
Number of shares on issue3
Number of performance rights on issue4
Number of unlisted options on issue
Share price (ASX: PNX)
1
excluding investment in Avalon Minerals Ltd
2 Refer discussion below ‘September 2017 Transactions’ regarding agreement to convert the loan to shares
923,975,537 as of the date of this report
8,320,000 as of the date of this report
3
4
8
30 June 2017
30 June 2016
51
405
1,407
1,500
64
100
18
246
1,056
-
128
100
2,705
0.4 cents
1,111
0.2 cents
(866)
4,108
-
1,430
1,414
193
6,899
1,200
5,551
(1,093)
1,725
1,600
1,644
1,720
258
4,688
1,200
3,877
741,055,537
507,783,980
11,410,000
65,450,000
1.0 cents
-
-
1.8 cents
PNX METALS LIMITED | ANNUAL REPORT 2017 PNX reported an overall loss for the
year after tax of $2.7 million (2016:
$1.1 million), which included a
$1.5 million impairment charge related
to the Company’s South Australian
exploration and evaluation assets. The
loss for the year was net of a $0.4 million
income tax benefit from the Company’s
research and development claims.
The pre-tax loss from continuing
operations, excluding the impairment
charge noted above, was $1.6 million
compared to $1.1 million in the prior
year. The greater loss was due primarily
to an increase in non-cash equity-
based compensation from shares and
performance rights issued during the
year, as well as higher professional fees
related to company promotion and
corporate advisory services. Corporate
and administration costs, which include
head office wages, directors’ fees,
insurance, regulatory, occupancy and
communication, have otherwise not
changed significantly.
Excluding R&D receipts, operating cash
outflows for the year were $1.3 million and
reflect the pre-tax loss from continuing
operations after excluding non-cash
impairment charges and equity-based
payments. Of the $4.1 million total equity
funds raised net of costs, $3.4 million was
spent on exploration, notably $2.6 million
of Hayes Creek PFS costs including a
significant resource drilling program at Iron
Blow and Mt Bonnie.
65,450,000 unquoted options exercisable
at 5.0 cents each and expiring on 31 May
2019 were issued in March 2017 to
participants in a placement that was
completed in December 2016.
up to $15,000 of shares in PNX at the
same price as the share placement,
being 1.05 cents per share. The SPP
is capped at $0.6 million and closes on
25 September 2017.
At 30 June 2017, the Group had cash
holdings of $1.4 million and net working
capital of $1.2 million excluding the
investment in Avalon Minerals Ltd (now
Sunstone Metals Ltd). As at the date of
this report, and following the transactions
described below, cash holdings were
approximately $3.0 million, with up to
a further $0.6 million to be received on
completion of the Share Purchase Plan.
SEPTEMBER 2017
TRANSACTIONS
In September 2017, PNX received
$0.8 million from the forward sale of an
additional 112,000oz of silver from the
Hayes Creek Project, to be delivered if
and when production commences. This
occurred following the exercise of the
option held by each party to the Silver
Streaming & Royalty Agreements to
acquire additional silver.
Also in September 2017, the Company
completed a placement of 179.8 million
shares to sophisticated and institutional
investors at 1.05 cents per share,
for a total of $1.8 million after costs.
The Company also launched a Share
Purchase Plan (SPP), offering eligible
shareholders the opportunity to acquire
In conjunction with the share placement
and SPP, the Company reached
agreement with Marilei International
Limited and Sochrastem SA as follows:
• $1.2 million loan held by Marilei will
be converted into 80,000,000 PNX
shares (1.5 cents per share);
• $0.3 million convertible notes held
by Marilei will be converted into
12,000,000 shares (2.5 cents per
share); and
• $0.3 million convertible notes held
by Sochrastem will be converted into
12,000,000 shares.
The average price at which the loan and
convertible notes are to convert is 1.73
cents per share, representing a premium
of 65% to the placement and SPP issue
price. Formal documentation to amend
and terminate the loan and convertible
note agreements is being prepared.
The proposed issue of shares to Marilei
and Sochrastem is subject to PNX
shareholder approval at the Annual
General Meeting in October 2017 as well
as any regulatory approvals that may be
required, including the Foreign Investment
Review Board.
Drilling at Iron Blow
9
PNX METALS LIMITED | ANNUAL REPORT 2017 EXPLORATION REPORT
STRATEGY
The Company’s exploration
strategy is focussed firmly
in the Northern Territory in
developing the Hayes Creek
zinc-gold-silver Project and
exploring for new gold and
base metal ore deposits that
are complementary to the
Project. A pipeline of exciting
greenfield and brownfield
prospects have primed the
Company for growth.
Following the September
2017 capital raising initiatives
noted previously in the
Overview, PNX is well funded
to undertake a significant
zinc and base metals
exploration program on its
Northern Territory Projects,
and proceed with the DFS at
Hayes Creek.
Iron Blow
Underground Mine
Develop
Develop
Mt Bonnie
Open Pit
1.1Moz AuEq
450,000 tpa
Zn-Ag-Au-Pb-Cu
$133M NPV
Hayes Creek
Processing Hub
Applying Modern
Techniques in
mineralised areas to
find new Resources
Discover
Define
Mt Ellison
Cu mine
Greenfields Exploration
Brownfields Exploration
Hayes Creek flotation testwork
10
PNX METALS LIMITED | ANNUAL REPORT 2017 DEVELOPMENT PROJECTS
HAYES CREEK PROJECT
Summary
The Hayes Creek zinc-gold-silver
Project is 100% owned by PNX and
is the principal asset which underpins
the Company’s strategy to becoming a
base and precious metals producer. The
Project comprises 14 granted mineral
leases containing the high grade Iron Blow
and Mt Bonnie base and precious metal
deposits and is located approximately
170km south of Darwin (Figure 1).
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).
Progress during 2016/2017
The key achievement during 2017
was the completion of a Pre-Feasibility
Study (PFS), the results of which were
announced to the ASX on 12 July
2017. The PFS confirmed the Project
to be a high value, relatively low risk
and technically strong development
opportunity for the Company. The PFS
forecasts the project to return an NPV10%
Figure 1 Hayes Creek Project
Figure 2 Iron Blow (left) and Mt Bonnie historical pits
11
PNX METALS LIMITED | ANNUAL REPORT 2017 EXPLORATION REPORT
DEVELOPMENT PROJECTS
The PFS financial model was developed
based on a steady state 450,000tpa
mining and processing schedule from
open pit mining operations at Mt Bonnie
and subsequent underground mining
at Iron Blow, over a 6.5 year life of
mine (LoM). Plant and infrastructure
construction and pre-strip at Mt Bonnie
will occur concurrently followed by plant
commissioning.
A summary of the project returns,
key assumptions, mineral resources,
and annual productions volumes
contemplated in the PFS are shown in the
Tables 1-6 below.
As shown in Table 1, the Project is
expected to generate an average LoM
pre-tax net cashflow of approximately
$41 million per year and $266 million in
total, which will be available to re-pay the
initial plant and mine infrastructure capital
costs of $58 million. On a per tonne of
ore basis (Table 2), the Project is forecast
to yield $90/t of pre-tax cashflow, based
on net smelter revenue of $211/t less
operating costs and royalties. Net smelter
revenue over the LoM by commodity is
shown in Figure 3.
Table 1 PFS: Summary of estimated project financial returns
Estimated project returns
Total net smelter revenue (Zn, Au, Ag, Pb + Cu)
Zinc net revenue
Silver net revenue
Gold net revenue
Lead + copper net revenue
Pre-tax net cash flow (over LoM)
Annual average pre-tax net cash flow
Pre-tax net cash flow per tonne of ore over LoM
Up-front plant capital/mine development
Peak cash draw (prior to first revenue)
Pre-tax net present value (NPV), 10%
Internal rate of return (IRR)
Payback period
PFS financial model
$628 million
$271 million, 43%
$187 million, 30%
$117 million, 19%
$53 million, 8%
$266 million
$41 million
$90 per tonne
$58 million
$66 million
$133 million
73%
15 months
of $133 million over a 6.5 year mine life,
with a pay-back period on initial capital
expenditure of just 15 months.
A major infill and extensional drilling
program was completed during the
year at both Iron Blow and Mt Bonnie,
comprising 57 holes and 7128 metres.
Mineral resources for both deposits
were subsequently updated under the
JORC (2012) guidelines and in total are
now estimated to contain 177kt of zinc,
238koz gold, 16Moz silver, 37kt lead, and
10kt of copper, of which 85% is Indicated
and 15% Inferred (refer to the Mineral
Resources and Ore Reserves tables on
pages 27 and 28 for further detail). Long
sections of each deposit are shown in
Figures 5 and 6 (page 15).
Under the PFS, the Mt Bonnie open-pit
will contribute 1.02 million tonnes of ore
production over approximately 2 years,
declining early in year three when the
Iron Blow underground mine ramps up
and contributes 1.96 million tonnes of
ore for a further 4.5 years of steady-state
production. Figures 7 and 8 (page 16)
show the conceptual open pit and
underground mine designs.
A metallurgical testwork program was
carried out to identify and assess the
lowest risk, most viable, and most
economic processing route. This was
determined to be sequential flotation,
with the targeted aims of maximising
recoveries whilst producing a clean
zinc concentrate containing greater
than 50% zinc, and a precious metal
concentrate containing greater than
2,000 ppm silver, whilst minimising
deleterious and penalty elements.
The proposed plant is planned to be
constructed at the historic Fountain Head
mining area located approximately 12km
to the north of Iron Blow and Mt Bonnie.
Processing will consist of crushing,
grinding, and flotation to generate two
product streams, a zinc concentrate and
a precious metals concentrate, as well as
tails. All concentrates would be trucked
to the main port of Darwin for shipment to
international markets.
12
PNX METALS LIMITED | ANNUAL REPORT 2017 Table 2 PFS: Margin and costs per tonne of ore processed over LoM
`
Per tonne of ore processed over LoM
Net smelter revenue
Open-pit mining per tonne of ore Mt Bonnie
Underground mining per tonne of ore Iron Blow
Total mining
Processing
General and administration
Royalties
Underground capital equipment
LoM margin
$39.75
$72.72
$211.11
$13.58
$47.88
$61.46
$39.75
$4.49
$13.32
$2.52
$89.57
Table 3: Summary of forward consensus metals prices and USD exchange rate used
Zinc (t)
US$2,570
Gold (oz)
US$1,289
Silver (oz)
US$19.40
Lead (t)
US$2,129
Copper (t)
US$6,366
AUD/USD
US$0.73
Table 4: Total project Mineral Resources by JORC classification as at 3 May 2017
Mineral Resources
Mt Bonnie + Iron Blow
Total Indicated (84.7%)
Total Inferred (15.3%)
Total Indicated + Inferred Mineral Resources
Total Contained Metal (t)
Tonnage (kt)
Zn (%)
Pb (%)
Cu (%)
Ag (g/t)
Au (g/t)
3,455
622
4,077
4.88
1.39
4.35
1.01
0.37
0.91
0.27
0.1
0.25
137
52
124
1.88
1.46
1.81
177,200
37,000
10,050
16.2Moz
237.7koz
Table 5: Mineral Resources used to generate production targets
Plant Feed (kt)
Zn (%)
Pb (%)
Cu (%)
Ag (g/t)
Au (g/t)
Waste (kt)
Material (kt)
Resource
Mt Bonnie Indicated
Mt Bonnie Inferred
Mt Bonnie Waste
Iron Blow Indicated
Iron Blow Inferred
Iron Blow Waste
Category
%
97%
3%
99%
1%
TOTAL
98%
2,974
987
29
-
1,938
20
-
4.43
1.29
-
4.50
4.31
-
4.45
1.34
1.15
-
0.79
0.20
-
0.97
0.26
0.09
-
0.25
0.10
-
0.25
152.5
97.4
-
120.9
24.2
-
130.5
1.69
1.94
-
1.81
0.53
-
1.76
-
-
8,144
-
-
334
8,478
987
29
8,144
1,938
20
334
11,452
Table 6: Production: Average annual and LoM production of metals in concentrate
Metals produced in concentrates
Average recovery of metals
to concentrate over LoM
Average annual production of
metals in concentrate over LoM
Total metals production in
concentrate over LoM
Zinc (t)
Gold (oz)
Silver (oz)
Lead/copper (t)
89.9%
56.6%
74.4%
58.8%
18,300
14,700
1,427,000
3,300
118,900
95,400
9,278,000
21,400
13
PNX METALS LIMITED | ANNUAL REPORT 2017 EXPLORATION REPORT
DEVELOPMENT PROJECTS
6.8%
29.3%
44.6%
Zinc
Gold
Silver
Lead/copper
19.4%
Figure 3 Net smelter revenue percentages by commodity
'
)
s
0
0
0
$
(
'
V
P
N
NPV Sensitivity Analysis
FX
Zinc Price
Silver Price
Gold Price
Capex
Opex
Zinc Recoveries
Gold Recoveries
Silver Recoveries
280,000
240,000
200,000
160,000
120,000
80,000
40,000
The Project’s returns are most sensitive
to movements in the commodity price
and exchange rate assumptions as
well as variations in metal recoveries
(Figure 4). While exposure to commodity
price and exchange rate movement are
risks, they also provide potential upside
to the Project should metals prices rise
or the Australian dollar weaken against
the US dollar by more than assumed in
the consensus forecasts. Consideration
will be given to implementing initiatives
to manage these risks (for example
through hedging arrangements) during
the completion of the Definitive Feasibility
Study and through discussions with
Project financiers.
Refer to PNX’s ASX release of 12 July
2017 for further detail including the PFS
Executive Summary document, which
includes the scope of the PFS and
relevant cautionary statements.
-25%
-15%
-5%
5%
15%
25%
Variation from Base Case Assumptions
Figure 4 NPV sensitivity analysis
Project snapshot
1.
INFRASTRUCTURE:
Located in existing infrastructure corridor only 170km from Darwin
with rail, gas, power and other mining operations nearby
2. HIGH-GRADE:
Mining inventory contains high-grade zinc-gold-silver sulphide ore amenable to flotation
3. STRONG ECONOMICS:
Fast payback of less than 15 months driven by the initial
2 years of low-cost open-pit mining at Mt Bonnie
4. LOW CAPITAL HURDLE:
Estimated start-up capex of $58 million provides a relatively low capital hurdle for Project financing
5. HIGH MARGIN:
Expected low unit operating costs and high net smelter returns results in high margins
6. COMMODITY MIX/HEDGE:
Project revenues split evenly between zinc, silver and gold providing a
natural hedge against individual commodity price fluctuations
7. RISK MANAGABLE:
Low up-front capital, short payback period, low throughput rates and
near-surface deposits result in an IRR of greater than 70%
8. COMMODITY PRICE OUTLOOK:
Attractive mix of commodities with strong outlook and price upside potential
9. EXPLORATION POTENTIAL:
Strong exploration potential with VMS deposits typically occurring in clusters;
multiple exploration targets in prospective near-mine lithology
14
PNX METALS LIMITED | ANNUAL REPORT 2017
100 RL
0 RL
Base of oxidation
Low grade mineralisation
High grade massive
sulfide mineralisation
Au_equiv
in‐situ
(Grade g/t x
thickness m)
>100
50‐100
10‐50
5‐10
< 5
Figure 5 Mt Bonnie orthogonal long section showing grade x thickness, looking towards
122o in a plane dipping approximately 40o
South
8504300 N
8504400 N
8504500 N
8504600 N
1
5
0
R
L
1
0
0
R
L
5
0
R
L
0
R
L
-
5
0
R
L
-
1
0
0
R
L
-
1
5
0
R
L
-
2
0
0
R
L
-
2
5
0
R
L
IBRC050
6
IBRC048
NL
6
IBRC053
5
IBRC052
IBDH022
IBRC026
NL
75
IBRC049
NL
IBRC057
149
S20
45
21
IBRC058
NL
IBRC046
7
IBRC054
13
IBRC047
19
IBDH017
IBRC056
5
IBRC036D
11
IBDH018
IBDH043
3
4
11
IBDH040
31
IBDH004
IBDH045
60
81
S16
S17
31
IBDH021
IBDH042
45
IBDH001
36
IBDDH2
IBRC030D
65
59
IBRC029D
63
IBRC035D
40
IBDH002
61
IBRC032D
99
IBDDH6
NL
IBRC031D
IBDH019
NL
IBDH044B
6
S11
10
IBDH009
9
3
IBDH038D
159
IBDH006
244
IBDH039
78
IBDH059
IBDH005
136
286
IBDH041
S12W3
228
S9
109
IBDH023
136
IBDH007
280
IBDH015 IBDH060
57
126
IBDH051
NL
IBDH024
NL
IBDH008
12
IBDH010
11
S12
218
IBDH011
NL
S10
9
54
64
IBRC055D
IBDH003
154
IBDH016
NL
S19
NL
S14
1
S13
NL
S15
NL
IBDH020
21
NL
S18
NL
8504700 N
North
AuEq g x m
>250
100‐250
50‐100
1‐50
Iron Blow
Western Lode
Long Section
Looking 280o (west)
Rotated 20o in plane of lode
Some holeIDs abbreviated
Figure 6 Iron Blow long section of the western lode
Next steps – Definitive
Feasibility Study (DFS)
Given the positive outcomes of the
PFS, the PNX Board has resolved to
proceed with a DFS. In September 2017,
PNX raised $2.6 million (via a share
placement and additional forward sale
of Hayes Creek silver) and commenced
a Share Purchase Plan to raise another
$0.6 million. Some of these funds will
be used to progress the DFS; however,
further funding will be required to
complete it.
DFS activities that are currently underway:
• Studies related to the Environmental
Impact Statement (EIS)
• Notice of Intent (NOI) and
Environment Protection and
Biodiversity Conservation Act 1999
(EPBC Act) submission
• Drill program planning for the Mt
Bonnie and Iron Blow deposits for
mine planning, hydrology, and waste
characterisation purposes
• Finalisation of access to the Fountain
Head mineral leases
The DFS is expected to provide
increased confidence in all aspects of the
Project and will investigate opportunities
to further improve overall Project
economics, increasing the prospect of
favourable development finance terms.
Completion of the DFS by late 2018,
along with continued progression of
environmental and mining approvals,
would allow Project construction to
commence in late 2018 or early 2019,
subject to Project funding. This would
allow mining and production activities to
commence in late 2019 as contemplated
in the PFS.
15
PNX METALS LIMITED | ANNUAL REPORT 2017
EXPLORATION REPORT
DEVELOPMENT PROJECTS
Figure 7 Mt Bonnie open pit design
Mt Bonnie freshwater dam
16
Figure 8 Long section of Iron Blow underground mine, green = stopes, light blue = decline,
blue = vent raise, grey = ore drives
PNX METALS LIMITED | ANNUAL REPORT 2017 EXPLORATION PROJECTS
The Pine Creek Orogen is
one of the most prospective
mineral provinces in
Australia and is host to
PNX’s Burnside, Moline
and Chessman Projects.
These projects consist of
19 Exploration Licences
and four Mineral Leases
covering approximately
1,700km2 that are subject
to PNX’s farm-in agreement
with Newmarket.
During the year, PNX completed the
first stage of the farm-in and now holds
a 51% interest (excluding uranium) in
these tenements. PNX is continuing with
the second stage of the farm-in and is
required to spend another approximate
$1 million by 15 December 2018 to
increase its interest in the tenements
to 90%.
Exciting opportunities are being
investigated by PNX’s exploration team
on the Burnside, Moline and Chessman
Projects (Figure 9).
Numerous Au & Base
Metal exploration
prospects in well
mineralised setting
4.1 Mt @ 8.5 g/t AuEq1
(1.11 Moz AuEq1)
Historical mining
centre with historical
reserves and highly
prospective
exploration tenure
Under-explored tenure
surrounding Maud Ck
~1 Moz Au deposit
Figure 9 PNX NT project areas and prospects
17
PNX METALS LIMITED | ANNUAL REPORT 2017 EXPLORATION REPORT
Cookies
Corner
GOODALL
330,000oz Au
BURNSIDE
PROJECT
Barossa
Mt Ellison
& Deloraine
Bartons
Santorini
Tramways
BROCKS CREEK
510,000oz Au
COSMO/
HOWLEY
>2Moz Au
Lady J West
Golden Dyke
Dome Group
WOOLWONGA
450,000oz Au
Snakebite
IRON BLOW &
MT BONNIE
1.1Moz AuEq
Margaret
Yellowtrack
Howley 1vD magneti image
Figure 10 Burnside tenure (yellow), leases excluded (grey), base metals targets (blue)
EXPLORATION PROJECTS
BURNSIDE PROJECT
Summary
The Burnside Project is located along
the Stuart Highway, only 150km south
of Darwin. There are numerous mineral
deposits and mineral occurrences within
the area that attest to the mineral wealth
of the tenure, including Cosmo-Howley,
Woolwonga, Brocks Creek group,
and Goodall, with around 2Moz gold
produced historically. The base metals
potential is evidenced by the Iron Blow
and Mt Bonnie zinc-gold-silver deposits
and the historic Mt Ellison copper mine.
PNX believes there is a significant
opportunity to exploit the sulphide-hosted
gold and base metal mineralisation
which has historically been left behind as
miners focussed on the easily won oxide
ore, which complements the strategy
to develop the Hayes Creek Project
(Figure 10).
Progress during 2016/2017
During the year, PNX completed a
government assisted drilling program
at the Barossa target. Two diamond
holes were drilled to test the source
of VTEM conductive targets. Sulphide
zones were intersected, but with no
significant mineralisation.
The field team were successful in
identifying a number of new geochemical
targets through systematic soil sampling
and mapping. One of these is the
Deloraine target (Figure 11), which is a
1.6km long zinc-lead anomaly associated
with a fold hinge in the Koolpin
Formation, and close to Mt Ellison. It is
open to the north-west, has coincident
conductive bodies interpreted in VTEM
data, and it has never been drilled.
18
PNX METALS LIMITED | ANNUAL REPORT 2017 Example 2: Mt Ellison Area Cu-Pb-Zn
•
Strong 1km long Cu anomaly
>500ppm along strike from
Mt Ellison mine and,
• New PNX discovery of 1.6km
Pb‐Zn anomaly >250ppm Zn
associated with fold hinge in
Koolpin Fm at Deloraine
• ~20km north of Hayes Creek
• Next step is geophysical
targeting using IP to pinpoint
drilling targets
• 500m RC drilling pending
geophysics results
Open to the NW
Additional Geochem
required
Conductive
trend
New Deloraine
Pb‐Zn Target
1.6km strike
with VTEM
Never drilled
Figure 11 Deloraine target near Mt Ellison
VTEM image dBdt Z38
Planned work 2017/2018
In line with the Company’s strategy,
to discover additional base metal
mineralisation PNX will follow a process
of ground geophysical testing (IP, EM
or gravity) of geochemical targets
followed by drilling of prioritised
targets. A SkyTEM survey was recently
completed over prospective parts of the
Mt Bonnie Formation, host to the Iron
Blow and Mt Bonnie deposits, targeting
further base metal mineralisation
in areas never screened using
electromagnetic techniques.
Gold targets, such as Cookies Corner
and Snakebite, are drill-ready, with
drilling approvals for Cookies Corner
secured. Previous work by WMC and
Northern Gold in this area returned
rock chips with up to 28.7g/t gold and
shallow drilling intersections, including
9m @ 2.48g/t gold (drill hole CC03
from 42m only 4km from the Goodall
mine. At Snakebite, an outcropping
mineralised vein shedding gold nuggets
has never been drilled and continues
under cover of a floodplain. Similar gold
targets exist in the Golden Dyke Dome
under and along strike from numerous
oxide pits.
Mt Ellison
Extension
1km strike at
>500ppm Cu
Never drilled
12
19
PNX METALS LIMITED | ANNUAL REPORT 2017 EXPLORATION REPORT
EXPLORATION PROJECTS
MOLINE PROJECT
Summary
The Moline Project, which lies on granted
mineral leases approximately 65km to
the east of the Hayes Creek Project,
comprises five key gold-zinc prospects:
Moline, School, Tumbling Dice, Swan,
and Hercules. The Evelyn base metal
deposit also occurs within the tenure.
Importantly, mining activities at Moline
were curtailed suddenly in 1992 after
a tank failure in the processing plant,
leaving unmined mineralisation at the
bottom of some pits. A host of untested
gold and base metal targets also occurs
on the surrounding exploration licence
(Figure 12).
Progress during 2016/2017
Two phases of drilling were completed
at the Moline project area (Figure 13)
during the year, for a total of 28 holes
and 3106 metres targeting unmined
mineralisation below the oxide pits.
Excellent results were achieved at the
School prospect, including the best
known grades of gold mineralisation
recorded to date. Mineralisation at
School is open in all directions, providing
significant scope for further exploration
success. Drilling at the Moline, Tumbling
Dice and Swan prospects has also
returned some significant gold drill
intercepts, with a strong association with
zinc. This is particularly encouraging due
to the similarities with the Hayes Creek
Project. Importantly, very little of the
mineralisation discovered to date has
been closed off at depth.
20
Highlights have included:
• 7m @ 11.9g/t Au from 115m in MORC002 at School (Figure 14);
• 3m @ 7.6g/t Au from 138m in MORC015 at School (Figure 14);
• 30m @ 2.29g/t Au. 0.70% Zn from 78m in MORC010 at Tumbling Dice;
• 9m @ 2.57g/t Au from 92m in MORC007 at Moline; and
• 2m @ 5.94g/t Au, 95.5g/t Ag, 2.53% Zn, 0.9% Pb, and 0.26% Cu from 45m in
MORC026 at Swan.
Evelyn:
~100Kt @ 6% Pb,
7% Zn,275 g/t Ag
Strong soil Zn-Pb
anomalies never
drilled
Kakadu Highway
Moline Mining Centre
Approx 135,000oz
produced – mostly oxide
Approx 50,000oz reserves
(historical)
Strong soil As
anomalies never
drilled
Anticlinal axes
Gold anomalies
> 100 ppb Au
Figure 12 Moline Project
Moline_RTP_Neshade image
PNX METALS LIMITED | ANNUAL REPORT 2017 Planned work 2017/2018
The drilling done to date in conjunction with
existing datasets have provided sufficient
information to allow modelling to take place in
order to assess the resource potential, and to
assist with identifying new areas to target with
further drilling.
Geochemical assessment of regional targets is
underway and is starting to generate new gold
and base metal targets. These will be screened
using ground geophysics to pinpoint the highest
priority drilling targets.
MORC002
MORC012
MORC017
MORC016
MORC015
MORC001
MORC014 MORC013
MORC011
MORC007
MORC005
MORC028
MORC004
MORC003
MORC022
MORC021
MORC020
MORC019 MORC018
MORC026
MORC007
MORC008
MORC009
MORC027
MORC010
MORC025
MORC024
MORC023
Figure 13 Moline Project Area and drill collar locations
SW
150RL
100RL
50RL
0RL
1
9
2
4
0
0
E
1
9
2
4
5
0
E
M
O
R
C
M
O
R
C
0
0
0
1
9
2
5
0
0
E
M
M
R
R
M
M
M
R
R
R
C
C
C
C
C
6
4
4
6
4
8
5
7
8
7
3
3
6
1
2
4
8
5
M
R
C
4
6
1
Approx pit
1
9
2
5
5
M
0
E
R
C
4
5
2
M
M
M
M
R
R
R
R
C
C
C
C
4
4
4
4
1
8
3
6
5
3
4
2
1
9
2
6
0
0
E
11m @ 1.1 g/t
3m @ 7.6 g/t
145
7m @ 11.9 g/t
NE
150RL
100RL
50RL
School Prospect
Section 14825N
Looking NW
E
0
0
4
2
9
1
50m
E
0
5
4
2
9
1
E
0
0
5
2
9
1
180
E
0
5
5
2
9
1
0RL
Conceptual target –
stacked lenses
repeating at depth
E
0
0
6
2
9
1
Figure 14 School Prospect
section
21
PNX METALS LIMITED | ANNUAL REPORT 2017
EXPLORATION REPORT
EXPLORATION PROJECTS
Chessman – ML30293 and EL25054
CHESSMAN PROJECT
Summary
The Chessman Project is located
approximately 20km due east of
Katherine (Figure 15) at the southern
margin of the Pine Creek Orogen. Easy
access is via the Stuart Highway and
then along roads that were established
in 2000 for ore haulage to and from the
Maud Creek mining area. The Chessman
Project surrounds the ~1Moz Maud
Creek gold deposit which is being
contemplated for development by
Kirkland Lake Gold Ltd.
Progress 2016/2017
PNX was awarded NT Government
co-funding for drilling at the Tractor
Corner prospect, which involved a new
exploration concept for SEDEX-style
mineralisation within Cambrian sediments
overlying the Pine Creek basement.
Strong base metal anomalism (lead-zinc-
silver-molybdenum) at the base of the
Tindall Limestone in the vicinity of Tractor
Corner associated with VTEM conductive
targets was believed to provide evidence
to test this concept. Two diamond holes
were drilled for 581 metres, but no
significant results were obtained and the
geophysical signatures were attributable
to conductive graphitic shales in
the basement.
Planned work 2017/2018
A number of prospects have been
identified for further follow up. An oxide
copper breccia containing over 5%
copper outcrops at the end of a major
10km long multi-element geochemical
anomaly to the southeast of Maud Creek,
and at Chessman, two mineralised
structures have been identified in the
existing soils and magnetic datasets.
22
Main structures of
interest
Not drilled
Chessman 150m
strike >1 g/t in
drilling
Red Queen
Not drilled
Figure 15 Chessman gold prospects
ENVIRONMENT
Mine Management Plans (MMPs) were
submitted and approved for all of PNX’s
project areas in the NT and environmental
bonds are in place. Progressive rehabilitation
of disturbed areas has occurred in
accordance with licence conditions, and will
continue to occur in the future.
SOCIAL & COMMUNITY
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 recently participated in
the Mining the Territory Conference in
August 2017.
OCCUPATIONAL HEALTH
& SAFETY
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. Field
staff engage in regular training to
develop skills for supervising and
conducting exploration activities in
remote environments.
PNX METALS LIMITED | ANNUAL REPORT 2017 Drilling at Hayes Creek Iron Blow
23
PNX METALS LIMITED | ANNUAL REPORT 2017 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%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
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%
24
PNX METALS LIMITED | ANNUAL REPORT 2017 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
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
Brocks Creek
PNX Metals Limited 51%, Newmarket 49%
Jenkins
PNX Metals Limited 51%, Newmarket 49%
Cosmo North
Hayes Creek
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
Margaret River
PNX Metals Limited 51%, Newmarket 49%
Yam Creek
PNX Metals Limited 51%, Newmarket 49%
McCallum Creek
PNX Metals Limited 51%, Newmarket 49%
Yam Creek
PNX Metals Limited 51%, Newmarket 49%
Brocks Creek South
PNX Metals Limited 51%, Newmarket 49%
Mt Masson
PNX Metals Limited 51%, Newmarket 49%
Margaret Diggings
PNX Metals Limited 51%, Newmarket 49%
Burnside
Mt Bonnie
Maud
Maud
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
Chessman
PNX Metals Limited 51%, Newmarket 49%
Moline
Moline
Moline
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
Mt Evelyn
PNX Metals Limited 51%, Newmarket 49%
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
*
PNX has elected to proceed with the farm-in (under an agreement with Newmarket Gold NT Holdings Pty Ltd) toward earning a 90% interest in all tenements.
25
PNX METALS LIMITED | ANNUAL REPORT 2017 TENEMENTS
SOUTH AUSTRALIA
Tenement
Name
Holder
Area (sq km)
Adelaide Geosyncline
EL5382
EL4807
EL4970
EL5411
EL4809
EL5473
EL4886
EL5557
Yorke Peninsula
ELA281/12
EL5491
EL4983
EL5196
Burra Central
Burra West
Burra North
Mongolata
Princess Royal
Bagot Well
Spalding
Washpool
Minlaton
Koolywurtie
Weaver Hill
Coonarie
TOTAL EXPLORATION LICENCES – SOUTH AUSTRALIA
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%
84
69
300
60
314
71
157
135
1,190
547
255
104
254
1,160
2,350
26
PNX METALS LIMITED | ANNUAL REPORT 2017 MINERAL RESOURCES AND ORE RESERVES
As at 30 September 2017
NORTHERN TERRITORY
HAYES CREEK MINERAL RESOURCES
Table 1: Iron Blow Mineral Resources by JORC Classification as at 3 May 2017
JORC
Classification
Indicated
Total Indicated
Inferred
Lode
East Lode
West Lode
East Lode
West Lode
FW Gold
HW Gold
Interlode Gold
Interlode Base Metal
Total Inferred
AuEq Cut-off
(g/t)
Tonnage
(kt)
Zn
(%)
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
800
1,280
2,080
20
20
210
40
40
120
450
7.64
4.14
5.49
0.48
0.76
0.25
0.06
0.21
3.52
1.11
Pb
(%)
1.83
0.33
0.91
0.34
0.96
0.07
0.09
0.03
0.32
0.18
Cu
(%)
0.30
0.31
0.30
0.16
0.13
0.03
0.01
0.07
0.14
0.07
Ag
(g/t)
275
60
143
132
109
16
6
8
35
27
Au
(g/t)
2.90
1.73
2.19
6.01
1.02
2.03
1.68
1.66
0.69
1.71
ZnEq
(%)
AuEq
(g/t)
20.64
15.53
8.84
6.66
13.39
10.08
13.65
5.90
3.48
2.57
2.79
5.87
4.38
9.43
4.44
2.62
1.94
2.10
4.42
3.30
8.87
Total Indicated + Inferred Mineral Resource
2,530
4.71
0.78
0.26
122
2.10
11.79
Total Contained Metal (t)
119,200
19,700
6,650
9.9Moz 170.9koz 298,000t 721.5koz
Table 2: Mt Bonnie Mineral Resources by JORC Classification as at 8 February 2017
JORC
Classification
Indicated
Indicated
Total Indicated
Inferred
Inferred
Inferred
Total Inferred
Domain
Cut-off grade
Oxide/Transitional
0.5g/t Au
Fresh
1% Zn
Oxide/Transitional
0.5g/t Au
Fresh
Ag Zone
1% Zn
50g/t Ag
Tonnage
(kt)
195
1,180
1,375
32
118
21
171
Zn
(%)
0.94
4.46
3.96
0.43
2.91
0.17
2.11
Pb
(%)
2.43
0.94
1.15
1.33
0.90
0.03
0.87
Cu
(%)
0.18
0.23
0.23
0.29
0.15
0.04
0.16
Total Indicated + Inferred Mineral Resource
1,545
3.76
1.12
0.22
Ag
(g/t)
171
121
128
74
135
87
118
127
Au
(g/t)
3.80
1.02
1.41
2.28
0.54
0.04
0.80
1.34
ZnEq
(%)
11.50
9.60
9.87
6.37
7.61
2.36
6.73
9.53
AuEq
(g/t)
9.44
7.88
8.11
5.23
6.25
1.94
5.53
7.82
Total Contained Metal (t)
58,000
17,300
3,400
6.3Moz
66.8koz 147,000t 388.5koz
Table 3: Total Hayes Creek Mineral Resources (Iron Blow + Mt Bonnie) by JORC Classification at 3 May 2017
JORC
Classification
Total Indicated (84.7%)
Total Inferred (15.3%)
Total Indicated + Inferred Mineral Resource
Tonnage
(kt)
3,455
622
4,077
Zn
(%)
4.88
1.39
4.35
Pb
(%)
1.01
0.37
0.91
Cu
(%)
0.27
0.10
0.25
Ag
(g/t)
137
52
124
Au
(g/t)
1.88
1.46
1.81
ZnEq
(%)
11.99
5.03
10.93
AuEq
(g/t)
9.29
3.91
8.47
Total Contained Metal (t)
177,200
37,000
10,050 16.2Moz 237.7koz 445,000t 1,110koz
27
PNX METALS LIMITED | ANNUAL REPORT 2017
MINERAL RESOURCES AND ORE RESERVES
As at 30 September 2017
Table 4: Commodity price and metal recovery assumptions
Metals
Zinc
Lead
Copper
Silver
Gold
Unit
USD / t
USD / t
USD / t
USD / troy ounce
USD / troy ounce
*
consensus prices at the time of the resources estimates.
Price*
2,450
2,100
6,200
20.50
1,350
Recovery Mt Bonnie
Recovery Iron Blow
80%
60%
60%
70%
55%
80%
60%
60%
80%
60%
Notes relating to Resource Tables
• Due to effects of rounding, the total may not represent the sum of all components. No material changes in the estimates of the
Mineral Resources at Mt Bonnie and Iron Blow have occurred since they were originally reported.
• Metallurgical recoveries and metal prices (Table 4) have been applied in calculating zinc equivalent (ZnEq) and gold equivalent
(AuEq) grades.
•
Iron Blow – A mineralisation envelope was interpreted for each of the two main lodes, the East Lode (Zn-Au-Ag-Pb) and West
Lode (Zn-Au), and four subsidiary lodes with a 1g/t AuEq cut-off used to interpret and report these lodes.
• Mt Bonnie – Zinc domains are reported above a cut-of grade of 1% zinc, gold domains are reported above a cut-off grade of
0.5g/t gold and silver domains are reported above a cut-off grade of 50g/t silver.
In order to assess the potential value of the total suite of minerals of economic interest, formulae were developed to calculate metal
equivalency for the gold and zinc (see below). Metal prices as set out in Table 4 were derived from average consensus forecasts at
the time of the Resource Estimates.
Metallurgical recovery information was sourced from test work completed at the Mt Bonnie and Iron Blow deposits, including
historical test work. In PNX’s opinion all the metals used in the equivalence calculation have a reasonable potential to be recovered
and sold. PNX has chosen to report both the ZnEq and AuEq grades as although individually zinc is the dominant metal by value, the
precious metals are the dominant group by value and are planned to be recovered and sold separately to the zinc.
The formulae below were applied to the estimated constituents to derive the metal equivalent values:
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 * Au recovery)
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 * Zn recovery)
28
PNX METALS LIMITED | ANNUAL REPORT 2017 SOUTH AUSTRALIA
EL5918 – PRINCESS ROYAL
Table 5: Inferred Mineral Resource at Princess Royal
Princess Royal
Cut-off Grade
>0.3%
>0.4%
>0.5%
Tonnage
286,757
216,586
184,995
Grade % Copper
Tonnes Copper Contained
0.81%
0.96%
1.10%
2,325
2,083
2,034
The information pertaining to the Princess Royal Inferred Mineral Resource 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.
The reported mineral resources for Iron Blow ad Mt Bonnie were updated in February 2017 and May 2017 and there have been no
material changes in the estimated resources, underlying assumptions or technical parameters since then.
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.
29
PNX METALS LIMITED | ANNUAL REPORT 2017 DIRECTORS’ REPORT
The Directors of PNX Metals Limited (‘PNX’ or ‘Company’) present their report for the
financial year ended 30 June 2017.
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
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. 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.
In 2017, Mr Dowd retired as a non-
executive director of Oz Minerals Limited
after 8 years of service. He is a non-
executive director of Energy Resources of
Australia Limited (ERA), 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 2017, Paul
Dowd held the following directorships of
other listed companies for the following
periods:
• Non-executive director, Oz Minerals
Limited - from 23 July 2009 to
24 May 2017
• Non-executive director, Energy
Resources of Australia Limited - since
26 October 2015
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 director
of BGRF Company Ltd, the trustee
of the Bethlehem Griffiths Research
Foundation (a medical research charitable
foundation), non-executive director of
Felton Grimwade & Bosisto’s Pty Ltd (a
manufacturer and supplier of eucalyptus
products and over-the-counter
therapeutic products) and a trustee of a
perpetual charitable trust. In the 3 years
immediately prior to 30 June 2017, Peter
Watson held no other directorships of
other listed companies.
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 2017, Graham Ascough held the
following directorships of other listed
companies for the following periods:
• Non-executive Chairman,
Avalon Minerals Limited (now
Sunstone Metals Limited) – since
30 November 2013
• Non-executive Chairman, Mithril
Resources Limited – since
9 October 2006
• Non-executive Chairman, Musgrave
Minerals Limited – since 26 May 2010
30
PNX METALS LIMITED | ANNUAL REPORT 2017 DIVIDENDS AND DISTRIBUTIONS
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 the
advancement of its zinc-gold-silver Hayes
Creek Project through to the completion
of a Pre-Feasibility Study (‘PFS’), as
well as conducting mineral exploration
in the Pine Creek area of the Northern
Territory (‘NT’).
Refer to the Overview and Exploration
Report sections of this Annual Report
for detail on the Hayes Creek Project
PFS as well as regional exploration
activities conducted during the year
in the NT. There were no activities of
significance on the Company’s South
Australian exploration tenements during
the year; however, subsequent to year
end an ‘Option to Farm-In’ agreement
was signed with Ausmex Mining Group
Limited – refer to ‘Subsequent Events’
below for details.
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 2017, David Hillier held no other
directorships of other listed companies.
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.
In the 3 years immediately prior to
30 June 2017, James Fox held no other
directorships of other listed companies.
COMPANY SECRETARY
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
1,354,165 Shares.
David Hillier,
Non-executive Director
David Hillier has an indirect interest in
2,000,000 Shares.
James Fox,
Managing Director & CEO
James Fox holds 4,450,000 Performance
Rights, and a related party of Mr Fox
holds 5,625,000 Shares.
31
PNX METALS LIMITED | ANNUAL REPORT 2017 DIRECTORS’ REPORT
REVIEW OF OPERATIONS
The Group reported an overall loss
for the year after tax of $2.7 million
(2016: $1.1 million), which included a
$1.5 million impairment charge related to
the Group’s South Australian exploration
and evaluation assets. The loss for the
year was net of a $0.4 million income tax
benefit from the Company’s research and
development claims.
The pre-tax loss from continuing
operations, excluding the impairment
charge noted above, was $1.6 million
compared to $1.1 million in the prior
year. The greater loss was due primarily
to an increase in non-cash equity-
based compensation (up $0.1 million)
from shares and performance rights
issued during the year, as well as higher
professional fees (also up $0.1 million,
noting that $0.05 million of these costs
were settled by issuing shares) related
to company promotion and corporate
advisory services. An impairment charge
on the Group’s investment in Avalon
Minerals Limited (now Sunstone Metals
Limited) of $0.06 million was also taken
in 2017, adjusting the carrying value of
PNX’s 12.9 million shares in line with
Avalon’s closing share price on the ASX
at 30 June 2017.
The Group’s other corporate costs,
which include head office wages,
directors’ fees, insurance, regulatory,
occupancy and communication have not
changed significantly.
Net operating cash outflows of
$1.3 million for the year reflect the
pre-tax loss from continuing operations
after excluding non-cash impairment
charges and equity-based payments.
Exploration cash outflows of $3.4 million
consisted of $2.6 million Hayes Creek
PFS costs including resource drilling at
Iron Blow and Mt Bonnie, and NT regional
exploration $0.8 million.
In the first half of the 2017 financial year
(September and December 2016), the
Company raised a total of $4.4 million
before costs via share placements to
sophisticated and institutional investors.
65,450,000 unquoted options exercisable
32
at 5.0 cents each and expiring on 31 May
2019 were issued in March 2017 to
participants in the December placement.
At 30 June 2017, the Group had cash
holdings of $1.4 million and net working
capital of $1.2 million excluding the
investment in Avalon. As discussed below
under ‘Subsequent Events’, in September
2017 the Company received $2.6 million
from a share placement ($1.8 million
after costs) and additional forward sale of
silver ($0.8 million), and initiated a Share
Purchase Plan to raise a further $0.6 million.
LEIGH CREEK DISPOSAL
During the year, the Company completed
the sale of its wholly owned subsidiary
Leigh Creek Copper Mine Pty Ltd
(‘LCCM’) to Resilience Mining Australia
Limited (‘RMA’, formerly Hillsgold
Resources Pty Ltd). RMA exercised
the option to acquire LCCM it had held
since April 2015 on 31 October 2016,
and the transaction was completed on
21 November 2016.
LCCM holds three mining leases in the
Leigh Creek area including Mountain of
Light. The sale included two exploration
licences held by the Company in the
vicinity of Leigh Creek.
There was no up-front cash
consideration; however, RMA assumes
all rehabilitation obligations and is
required to pay the Company $100,000
if and when 3,000 tonnes of copper are
produced from future operations at the
three mining leases.
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
In September 2017, PNX received
$0.8 million from the forward sale of an
additional 112,000oz of silver from the
Hayes Creek Project, to be delivered if
and when production commences. This
occurred following the exercise of the
option held by each party to the Silver
Streaming & Royalty Agreements to
acquire additional silver.
Also in September 2017, the Company
completed a placement of 179.8 million
shares to sophisticated and institutional
investors at 1.05 cents per share, for
a total of $1.8 million after costs. The
Company also launched a Share Purchase
Plan (‘SPP’), offering eligible shareholders
the opportunity to acquire up to $15,000
of shares in PNX at the same price as the
share placement, being 1.05 cents per
share. The SPP is capped at $0.6 million
and closes on 25 September 2017.
In conjunction with the share placement
and SPP, the Company reached
agreement with Marilei International
Limited and Sochrastem SA as follows:
• $1.2 million loan held by Marilei will
be converted into 80,000,000 PNX
shares (1.5 cents per share);
• $0.3 million convertible notes held
by Marilei will be converted into
12,000,000 shares (2.5 cents per
share); and
• $0.3 million convertible notes held
by Sochrastem will be converted into
12,000,000 shares.
The average price at which the loan
and convertible notes are to convert
is 1.73 cents per share, representing
a premium of 65% to the placement &
SPP issue price. Formal documentation
to amend and terminate the loan and
convertible note agreements is now
being prepared.
The proposed issue of shares to Marilei
and Sochrastem is subject to PNX
shareholder approval at the Annual
General Meeting in October 2017 as well
as any regulatory approvals that may be
required, including the Foreign Investment
Review Board.
Also subsequent to year-end:
• The Company entered into an
agreement with Ausmex Mining Group
Limited (‘Ausmex’) whereby PNX
granted Ausmex an option to farm-in
PNX METALS LIMITED | ANNUAL REPORT 2017 to the Company’s tenement holdings
in the Burra area of South Australia
in return for Ausmex conducting
$50,000 of geophysical survey work
over the area. Should Ausmex exercise
its option, it can earn up to a 90%
interest in the eight exploration licences
held by PNX in the Burra region. The
proposed farm-in has two stages (60%
and 90%), each requiring Ausmex
to spend a minimum of $300,000
on diamond drilling or other agreed
exploratory work;
• 3,090,000 shares were issued to
PNX staff following the vesting of an
equivalent number of performance
rights at 30 June 2017; and
• Under an engagement letter executed
with Hartleys Limited, a component
of the fee arrangements require the
issue of 20,000,000 unquoted options
to Hartleys’ wholly owned subsidiary
Zenix Nominees Pty Ltd, with the
following key terms:
• 10,000,000 options will vest upon the
completion of a capital raise, managed
by Hartleys, of $2 million or more
• 10,000,000 options will vest upon
the completion, in aggregate, of a
capital raise managed by Hartleys of
$6 million or more
• Exercise price is 140% of the issue
price of the capital raising under which
the first 10,000,000 Options vest
• Expiry Date – 3 years after the date of
issue;
The issue of these options is subject to
shareholder approval at the 2017 AGM.
It is expected that 10,000,000 Options
will vest once the SPP is completed and
the exercise price for all Options will be
established as 1.47 cents, being 140% of
the September 2017 share placement and
SPP issue price of 1.05 cents per share.
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 minerals explorer by
establishing an economic mining project
at Hayes Creek and to make new mineral
discoveries in the Pine Creek region of the
Northern Territory.
In 2017-18, the Group will proceed with a
Definitive Feasibility Study (DFS) over the
Hayes Creek Project as well as continue
mineral exploration in the NT. Key priorities
for the DFS include advancement of
the environmental, metallurgical, and
engineering aspects of the project. The
Company will also continue near-mine
and regional exploration targeting gold
and base metals mineralisation that could
supplement the established mineral
resources at Hayes Creek or be developed
as stand-alone projects. PNX holds a
51% interest in the Burnside, Moline and
Chessman projects in the Pine Creek
region and is working toward increasing its
interest in these projects to 90% under the
farm-in agreement with Newmarket Gold
NT Holdings Pty Ltd.
ENVIRONMENT REGULATION
AND PERFORMANCE
The Group continues to meet all
environmental obligations across
its tenements.
OPTIONS AND PERFORMANCE
RIGHTS
During the year, 11,410,000 Performance
Rights were issued under the Company’s
Performance Rights Plan, of which
3,090,000 vested on 30 June 2017 and
the related shares were issued in August
2017. At the date of this report, 8,320,000
Performance Rights are on issue.
Following receipt of shareholder
approval, in March 2017 the Company
issued 65,450,000 unlisted options
to participants in the December 2016
share placement that raised $2.6 million.
The options have an exercise price of
5.0 cents and expire on 31 May 2019.
As noted previously under Subsequent
Events, the Company has agreed, subject
to shareholder approval, to issue a
subsidiary of Hartleys Limited 20,000,000
unquoted options under the terms of a
service agreement.
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
Eight Board meetings were held during
the financial year. Graham Ascough,
Paul Dowd, Peter Watson, David Hillier,
and James Fox attended all eight.
Two Audit Committee meetings were held
during the financial year. Audit Committee
members David Hillier, Graham Ascough
and Peter Watson attended each meeting,
as did James Fox and Paul Dowd
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 2017 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 or Performance Rights,
the date mentioned is the date on which
those Shares or Performance Rights
were agreed to be issued (whether
conditionally or otherwise) or, if later, the
date on which key terms of the Shares
or Performance Rights (e.g. performance
conditions) 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.
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 have a policy
regarding trading in derivatives that
would 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.
The Company has established an
Employee Performance Rights Plan
(Plan), where 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.
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
special exertions, in accordance with the
Company’s Constitution. There are no
schemes for retirement benefits other than
government mandated superannuation.
34
PNX METALS LIMITED | ANNUAL REPORT 2017 As noted in the remuneration table on
page 36, certain non-executive directors
elected to forego part of their fees for one
quarter of the year to assist the Company
to minimise corporate costs.
Summary details of remuneration for
non-executive Directors are given in
the tables on page 36. 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 $275,000
(effective 1 January 2017, previous
salary was $250,000) plus mandated
superannuation contributions as well as
20 days annual leave and 10 days sick
leave per annum.
At 30 June 2017 and as of the date of
this report, Mr Fox held no Shares in the
Company. At the date of this report, a
related party of Mr Fox holds 5,625,000
Shares in the Company (4,825,000 at
30 June 2017).
During the year, the Board resolved to
issue 1,000,000 Shares to James Fox
or his nominee and grant him 1,250,000
Performance Rights, with both awards
approved by shareholders at the
Company’s 2016 AGM. The share
issuance was considered by the Directors
to be an appropriate bonus for Mr Fox’s
performance as the Company’s Managing
Director & CEO, and in particular for
his leadership regarding the Hayes
Creek Project.
• 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;
The 1,250,000 Performance Rights
granted 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.
These Performance Rights have not yet
vested.
In February 2017, a further 4,000,000
Performance Rights were issued to
Mr Fox, in conjunction with an issuance
of Performance Rights to all staff. The
Performance Rights have conditions
related to key Company objectives,
including development of the Hayes
Creek project, exploration discoveries
and Company share price performance.
Performance conditions are required to
be achieved within specified time periods
(extending to 31 December 2019) in order
for the rights to vest.
At 30 June 2017, 800,000 of these
Performance Rights vested and the
related 800,000 shares were issued in
August 2017. At 30 June 2017 Mr Fox
held 5,250,000 Performance Rights and
as at the date of this report, he holds
4,450,000.
James Fox’s employment with the
Company may be terminated on
3 months written notice or on summary
notice if he:
•
•
•
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
2 consecutive months;
• 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.
CHIEF FINANCIAL OFFICER
& COMPANY SECRETARY
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. During the 2017 financial
year, Mr Moran’s fees were $162,225
inclusive of superannuation.
In February 2017, Mr Moran was granted
1,200,000 Performance Rights, with
similar performance conditions to those
noted above for James Fox. At 30 June
2017, 300,000 of these Performance
Rights vested and the related 300,000
shares were issued in August 2017. At 30
June 2017, Mr Moran held no Shares and
1,200,000 Performance Rights and as at
the date of this report, he holds 300,000
Shares and 900,000 Performance Rights.
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.
In February 2017, Mr Bennett was
granted 3,000,000 Performance Rights
under the Plan, with similar performance
conditions to those noted previously for
James Fox. At 30 June 2017, 750,000
of these Performance Rights vested
and the related 750,000 shares were
issued in August 2017. At 30 June
2017, Mr Bennett held no Shares and
35
PNX METALS LIMITED | ANNUAL REPORT 2017 DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED
3,000,000 Performance Rights
and as at the date of this report,
he holds 750,000 Shares and
2,250,000 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.
36
REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
Directors’ and Key Management Personnel remuneration (all amounts are paid or payable) for the
year ended 30 June 2017:
Short term
employment benefits
Post-employment
Equity
Salary & fees
Superannuation
Shares and
performance
rights
Total
% of total
remuneration
consisting of equity
Directors
Graham Ascough
Paul Dowd1
Peter Watson1
David Hillier
James Fox
$75,000
$18,265
$34,247
$40,000
-
$19,235
$3,253
-
$262,500
$24,938
-
-
-
-
$46,4472,3
$75,000
$37,500
$37,500
$40,000
$333,885
Chief Financial Officer & Company Secretary
Tim Moran
$148,151
$14,074
$9,3703
$171,595
Other Key Management Personnel
Andy Bennett
TOTALS
$195,000
$773,163
$18,525
$80,025
$23,7733
$237,298
$79,590
$932,778
0%
0%
0%
0%
14%
5%
10%
1 Mr Dowd and Mr Watson waived 25% of their fees for one quarter of the financial year (total $2,500 waived each).
2
Includes $21,000 representing the value of 1,000,000 shares issued in November 2016, the remainder is the
value of Performance Rights issued to Mr Fox of $25,447 attributable to the 2017 financial year (vested and
unvested).
3 Total value of Performance Rights that had vested at 30 June 2017: James Fox $18,571; Tim Moran $7,347;
Andy Bennett $18,367.
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
Shares and
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
$209,905
($9,162)
$805,813
0%
0%
0%
0%
0%
0%
0%
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.
Other than the amounts disclosed in the column for equity, all other remuneration amounts are fixed.
PNX METALS LIMITED | ANNUAL REPORT 2017 EQUITY HOLDINGS OF DIRECTORS AND KEY MANAGEMENT
PERSONNEL
i) Fully paid ordinary shares issued by PNX Metals Limited:
Balance 01/07/16
Net Changes
Balance 30/06/17
Directors
Graham Ascough
Paul Dowd
Peter Watson1
David Hillier
James Fox2
Key Management Personnel
Tim Moran
Andy Bennett
2,363,010
6,168,077
8,767,231
1,430,000
-
-
-
-
-
-
570,000
-
-
-
2,363,010
6,168,077
8,767,231
2,000,000
-
-
-
1 Additional shares held by related parties: 1,354,165 (2016: 1,354,165)
2 Shares held by related party at 30 June 2017: 4,825,000 (2016: 3,825,000)
ii) Performance rights issued by PNX Metals Limited:
2015
Balance 1/07/16
Granted
Vested
Lapsed
Balance 30/06/17
James Fox
Tim Moran
Andy Bennett
-
-
-
5,250,000 800,000
1,200,000 300,000
3,000,000 750,000
Vested
Unvested
-
-
-
800,000
4,450,000
300,000
900,000
750,000
2,250,000
OTHER RELATED PARTY TRANSACTIONS
During the financial year the Group engaged Piper Alderman, an entity in which a
Director (Peter Watson) is a senior consultant, to advise on legal matters. The amount
paid in the financial year for these services inclusive of GST was $24,518. In the prior
year, $46,833 was paid to Watsons Lawyers for legal services, an entity in which
Mr Watson was a partner.
END OF REMUNERATION REPORT
Signed on 19th September 2017 in accordance with a resolution of the Board made
pursuant to section 298(2) of the Corporations Act 2001.
G R A H A M A S C O U G H
C H A I R M A N
37
PNX METALS LIMITED | ANNUAL REPORT 2017
AUDITORS INDEPENDENCE DECLARATION
Grant Thornton House
Level 3
170 Frome Street
Adelaide, SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T 61 8 8372 6666
F 61 8 8372 6677
E info.sa@au.gt.com
W www.grantthornton.com.au
Grant Thornton House
Level 3
170 Frome Street
Adelaide, SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
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 2017, I declare that, to the best of
my knowledge and belief, there have been:
T 61 8 8372 6666
F 61 8 8372 6677
E info.sa@au.gt.com
W www.grantthornton.com.au
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
Auditor’s Independence Declaration
b
To the Directors of PNX Metals Limited
no contraventions of any applicable code of professional conduct in relation to the audit.
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 2017, I declare that, to the best of
my knowledge and belief, there have been:
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
J L Humphrey
Partner – Audit & Assurance
Adelaide, 19 September 2017
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
J L Humphrey
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
Partner – Audit & Assurance
Adelaide, 19 September 2017
‘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.
38
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.
PNX METALS LIMITED | ANNUAL REPORT 2017
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 19 September 2017 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 2017 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
periodically reviewed 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. In December 2016 the
Board conducted a formal evaluation of
the performance of the Board. No major
deficiencies in Board or individual director
performance were noted, although some
improvement areas were identified and
have been actioned.
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 and informally reviewed from
time to time.
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
Company outlining their responsibilities,
remuneration arrangements, and other
terms of their employment.
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 2017 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
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 senior
consultant at the Company’s legal advisor
Piper Alderman; however, as Mr 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;
• evaluating the adequacy and
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.
Two Audit Committee meetings were held
during the year and each was attended
by David Hillier, Peter Watson and
Graham Ascough as well as by James
Fox and Paul Dowd on an invitation basis.
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 2017 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.
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 its
key 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 environmental
consultants were utilised during the
Hayes Creek Pre-Feasibility Study and
these advisors are continuing to provide
services for the Definitive Feasibility Study
at Hayes Creek which has commenced.
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.
42
PNX METALS LIMITED | ANNUAL REPORT 2017 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2017
Interest 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 – continuing operations
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 (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
28
28
Year ended
30/06/17
$
50,605
(306,551)
(413,512)
(190,000)
(86,964)
(66,294)
(31,522)
(102,775)
(11,607)
(30,882)
(111,687)
(98,173)
(7,605)
(1,500,000)
(64,460)
(100,000)
(3,071,427)
404,958
(2,666,469)
(38,535)
(2,705,004)
-
(2,705,004)
(0.4)
(0.4)
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)
(1,111,381)
(0.2)
(0.2)
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 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2017
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments and deposits
Other financial assets
Total current assets
NON-CURRENT ASSETS
Other receivables
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
30/06/17
$
1,430,630
293,179
133,832
193,380
2,051,021
50,000
6,899,372
38,015
6,987,387
9,038,408
541,669
95,095
636,764
50,950
1,200,000
1,600,000
2,850,950
3,487,714
30/06/16
$
1,643,632
260,880
77,913
257,840
2,240,265
-
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
5,550,694
3,877,001
32,665,302
600,000
90,687
(27,805,295)
5,550,694
28,377,292
600,000
-
(25,100,291)
3,877,001
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
44
PNX METALS LIMITED | ANNUAL REPORT 2017 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2017
Issued capital
Other equity
Reserves
$
$
$
Accumulated
losses
$
Total
$
26,562,067
600,000
347,193
(24,326,941)
3,182,319
Balance at 30 June 2015
Total loss for the year
Other comprehensive income
Total comprehensive loss for the year
Shares issued
Share issue costs
Shares issued for interest on convertible notes
Fair value of equity settled payments
Reclassification on expiry of options
-
-
-
1,863,250
(18,025)
(30,000)
-
-
-
-
-
-
-
-
-
-
Balance at 30 June 2016
28,377,292
600,000
Total comprehensive loss for the year
Shares issued
Share issue costs
Shares issued for interest on convertible notes
Fair value of equity settled payments
-
4,586,250
(268,240)
(30,000)
-
-
-
-
-
-
(128,920)
(982,461)
-
(982,461)
(128,920)
(128,920)
(982,461)
(1,111,381)
-
-
-
(9,162)
(209,111)
-
-
-
-
-
90,687
-
-
-
-
209,111
1,863,250
(18,025)
(30,000)
(9,162)
-
(25,100,291)
3,877,001
(2,705,004)
(2,705,004)
-
-
-
-
4,586,250
(268,240)
(30,000)
90,687
Balance at 30 June 2017
32,665,302
600,000
90,687
(27,805,295)
5,550,694
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
45
PNX METALS LIMITED | ANNUAL REPORT 2017 CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2017
Cash flows relating to operating activities
Receipt of Research and Development tax refunds
Payments to suppliers and employees
Net operating cash flows
Cash flows relating to investing activities
Interest received
Loan advanced – refer Note 6
Payments for exploration activities
Payments for 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
Depreciation and amortisation
Equity-settled marketing services
Impairment charges – exploration and evaluation assets
Impairment charges – investment (other financial asset)
(Increase)/decrease in receivables - operating
(Increase)/decrease in other current assets - operating
Increase/(decrease) in payables - operating
Increase/(decrease) in employee provisions
Inflows/(outflows)
Inflows/(outflows)
Year ended
30/06/17
$
400,863
(1,267,271)
(866,408)
51,897
(50,000)
(3,435,597)
(20,654)
(3,454,354)
-
4,354,000
(246,240)
4,107,760
(213,002)
1,643,632
1,430,630
(2,705,004)
(50,605)
111,687
90,000
7,605
50,250
1,500,000
64,460
(10,585)
3,530
20,444
51,810
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
Net operating cash flows
(866,408)
(1,093,243)
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
46
PNX METALS LIMITED | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
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.
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 2017.
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 2016 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 ending 30 June 2018:
AASB 2016-1 Amendments to Australian
Accounting Standards – Recognition of
Deferred Tax Assets for Unrealised Losses
AASB 2016-1 amends AASB 112 Income Taxes to clarify how
to account for deferred tax assets related to debt instruments
measured at fair value, particularly where changes in the
market interest rate decrease the fair value of a debt instrument
below cost.
AASB 2016-2 Amendments to Australian
Accounting Standards – Disclosure
Initiative: Amendments to AASB 107
AASB 2016-2 amends AASB 107 Statement of Cash Flows
to require entities to provide disclosures that enable users of
financial statements to evaluate changes in liabilities arising from
financing activities, including both changes arising from cash
flows and non-cash changes.
When these standards are first adopted for the year ending
30 June 2018, 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 2016-5 Amendments to Australian Accounting
Standards – Classification and Measurement
of Share-based Payment Transactions
This Standard amends AASB 2 Share-based Payment to
address:
a) The accounting for the effects of vesting and non-vesting
conditions on the measurement of cash-settled share-based
payments;
b) The classification of share-based payment transactions with
a net settlement feature for withholding tax obligations; and
c) The accounting for a modification to the terms and
conditions of a share-based payment that changes the
classification of the transaction from cash-settled to equity-
settled.
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 ending 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.
47
PNX METALS LIMITED | ANNUAL REPORT 2017
»
»
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 ending 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
»
»
»
»
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 2017, the Group made a
total comprehensive loss of $2,705,004 (2016: total
comprehensive loss of $1,111,381) and recorded a net cash
outflow from operating and investing activities of $4,320,762
(2016: net cash outflow of $2,550,458). At 30 June 2017,
the Group had cash of $1,430,630 (2016: $1,643,632), net
current assets excluding the investment in Avalon Minerals
Ltd of $1,200,877 (2016: $1,721,593) and net assets of
$5,550,694 (2016: $3,877,001).
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
feasibility studies, mineral exploration and administrative
activities to continue over at least the next 12 months.
Subsequent to year-end, the Company raised $1.8 million
after costs via the placement of 179.8 million shares at 1.05
cents per share to sophisticated and institutional investors,
and commenced a Share Purchase Plan to raise a further
$0.6 million. Also subsequent to year-end, the Company
received $0.8 million from the additional forward sale of silver
from the Hayes Creek Project to the parties to the Silver
Streaming & Royalty agreements. Notwithstanding these fund
raising initiatives, additional capital will be required in 2018 to
complete the Definitive Feasibility Study on the Hayes Creek
Project and allow mineral exploration and administrative
activities to continue at planned levels.
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.
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:
requires new and different disclosures about leases
¬ has power over the investee;
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. The
Group has very few operating leases currently in place.
¬ 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.
48
PNX METALS LIMITED | ANNUAL REPORT 2017 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.
Deferred Revenue
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.
49
PNX METALS LIMITED | ANNUAL REPORT 2017
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.
Impairment of financial assets
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
Exploration and evaluation expenditure 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:
›
or
›
the exploration and evaluation expenditure is
expected to be recouped through successful
development of the mineral exploration project, or
alternatively, by its sale;
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.
Exploration and evaluation assets 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 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 (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
50
PNX METALS LIMITED | ANNUAL REPORT 2017
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)
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.
o) Site restoration and environmental rehabilitation
Provision for the costs of 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.
51
PNX METALS LIMITED | ANNUAL REPORT 2017 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
entity 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).
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.
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. Refundable tax offsets received
or receivable under the Australian government’s Research
& Development Tax Incentive program are classified as an
income tax benefit (current or deferred) in the Statement of
Profit or Loss.
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
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.
52
PNX METALS LIMITED | ANNUAL REPORT 2017
s) Goods and service tax
Impairment
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 circumstances,
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.
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 fair
value of exploration assets is inherently difficult to estimate,
particularly in the absence of comparable transactions and
where a purchase offer has not been made, and relies on
management judgement.
During the year an impairment loss of $1,500,000 was
recognised in relation to Exploration and Evaluation Assets
and an impairment charge of $64,460 was also recorded
in relation to Other Financial Assets. Details of these
impairment loss calculations are provided in Notes 11 and
10 respectively.
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
regarding equity-based payments made during the year.
53
PNX METALS LIMITED | ANNUAL REPORT 2017
4 LOSS FROM CONTINUING OPERATIONS
a) Interest income
Interest on bank deposits
Interest on loan receivable
b) Depreciation
Depreciation of plant and equipment
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 27.5% (2016: 30%)
Equity-based remuneration – performance rights
Current year tax losses and movements in
temporary differences not recognised
Recognition of estimated research and development
tax refund related to the 2016-17 tax year
Recognition of actual research and development
tax refund related to the previous tax year
Year ended
30/06/17
$
49,105
1,500
50,605
Year ended
30/06/16
$
17,733
-
17,733
7,605
3,351
66,294
63,919
1,500,000
-
Year ended
30/06/17
$
(250,000)
(154,958)
(404,958)
(3,109,962)
(855,240)
24,938
692,801
(830,302)
(154,958)
Year ended
30/06/16
$
-
(245,905)
(245,905)
(1,228,366)
(368,510)
(2,749)
371,259
-
(245,905)
Tax expense (benefit)
(404,958)
(245,905)
The tax rate used in the above reconciliation is the corporate tax rate of 27.5% payable by Australian small business entities
on taxable profits under Australian tax law. The corporate tax rate applicable to small business entities (those entities with
less than $10 million of revenue) was amended in May 2017 from 30% applicable in the 2016 financial year to 27.5%.
b) Recognised tax assets and liabilities
Deferred tax assets and (liabilities) are attributable to the following:
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)
*
prior year: part of assets held for sale
54
(2,033,098)
(11,404)
-
35,998
43,814
-
75,344
(1,889,346)
1,889,346
-
(1,372,829)
(11,241)
(123,075)
13,717
28,271
168,075
25,015
(1,272,067)
1,272,067
-
PNX METALS LIMITED | ANNUAL REPORT 2017 A net deferred tax liability will only arise if the Company generates taxable income in the future (for example via a profitable mining
operation). Deferred tax balances shown above have been calculated utilising a 30% tax rate, the corporate tax rate applicable for
entities that are not small business entities, as that is the rate expected to apply if and when the net deferred tax liability is settled
in the future via utilisation of carried forward tax losses. The potential benefit of unrecognised tax losses (shown below) has similarly
been calculated utilising a 30% tax rate.
c) Unrecognised tax losses:
A deferred tax asset has not been recognised in respect of the following:
Tax Losses – operating (tax effected)
Tax Losses – capital (tax effected)
30/06/17
$
8,004,469
115,307
30/06/16
$
7,284,639
115,307
Of the total operating tax losses of approximately $33 million in the Group at 30 June 2017, $26.7 million are unrecognised as shown
above as a $8.0 million potential tax benefit. 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 DISPOSAL OF SUBSIDIARY
In the first half of the year, the Company completed the sale of its wholly owned subsidiary Leigh Creek Copper Mine Pty Ltd (‘LCCM’) to
Resilience Mining Australia Limited (‘RMA’, formerly Hillsgold Resources Pty Ltd). RMA exercised the option to acquire LCCM it had held
since April 2015 on 31 October 2016, and the transaction was completed on 21 November 2016.
LCCM holds three mining leases in the Leigh Creek area including Mountain of Light. The sale included two exploration licences held by
the Company in the vicinity of Leigh Creek.
There was no up-front cash consideration; however, RMA assumes all rehabilitation obligations and is required to pay the Company
$100,000 if and when 3,000 tonnes of copper are produced from future operations at the three mining leases. No gain or loss was
recorded on the sale as the disposal group had been carried in the consolidated financial statements at a net nil value and the fair value of
the contingent consideration has been assessed as nil.
To assist RMA with its costs of transitioning to ownership of LCCM, the Company provided RMA with a loan of $50,000, which was
drawn on 16 December 2016. The loan is secured by specified plant and equipment at Mountain of Light and bears interest at 6% per
annum, payable semi-annually. The loan is to be re-paid at the earliest of the following:
»
»
»
»
31 October 2018;
The date that is 6 months after first production from any of the three mining leases held by LCCM;
Following an equity capital raise by RMA in excess of $1.5 million (cumulative from 31 October 2016); or
The date RMA sells or transfers any of the acquired tenements.
The loan has been classified as a non-current other receivable in the Statement of Financial Position.
The loss incurred on discontinued operations at Leigh Creek up to 21 November 2016 has been shown in the Statement of Profit or Loss
as a separate line, and is detailed below:
Mine site maintenance
Loss – discontinued operations
21/11/2016
$
38,535
38,535
30/06/16
$
90,060
90,060
Loss per share (cents) basic and diluted
0.01
0.02
Cash outflows
38,535
90,060
55
PNX METALS LIMITED | ANNUAL REPORT 2017 Detail of the assets and liabilities of the disposal group at the point of sale and the net nil gain or loss on sale is shown below:
Assets
Environmental deposit
Plant & equipment - cost
Plant & equipment – accumulated depreciation
Mineral rights
Total Assets
Liabilities
Rehabilitation
Net assets
Fair Value of Consideration
Net Gain or Loss on Sale
7 CASH AND CASH EQUIVALENTS
Cash at bank
Term deposits
21/11/2016
$
150,000
3,634,902
(3,634,902)
410,250
560,250
(560,250)
-
-
-
30/06/17
$
780,630
650,000
1,430,630
30/06/16
$
150,000
3,634,902
(3,634,902)
410,250
560,250
(560,250)
-
30/06/16
$
493,632
1,150,000
1,643,632
At year end, term deposits were invested for 90 days earning 2.5% annual interest, with all amounts set to mature in less than 90 days.
8 TRADE AND OTHER RECEIVABLES
Interest
Research & Development Tax Incentive
Goods & Services Tax
Other
30/06/17
$
1,519
250,000
41,544
116
293,179
30/06/16
$
1,918
245,905
12,046
1,011
260,880
The Research & Development claim for the 2016-17 year has not yet been lodged, and the estimated receivable of $250,000 is based on
a preliminary estimate of qualifying expenditure.
9 PREPAYMENTS AND DEPOSITS
Prepayments
Environmental Deposits – Northern Territory
Deposit – office bond
30/06/17
$
16,988
84,084
32,760
133,832
30/06/16
$
19,018
26,135
32,760
77,913
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 2018 and earning 2.7% interest.
56
PNX METALS LIMITED | ANNUAL REPORT 2017 10 OTHER FINANCIAL ASSETS
Investment in Avalon Minerals Ltd
30/06/17
$
193,380
30/06/16
$
257,840
The Company continues to hold 12,892,013 shares in ASX listed Avalon Minerals Limited (Avalon), which was renamed Sunstone Metals
Limited in September 2017.
At each reporting date, the carrying value of the investment in Avalon is revalued to fair value, based on the market value of Avalon’s
shares at that time. At 30 June 2017, an impairment charge of $64,460 was recorded to reduce the carrying value of the investment
in Avalon to fair value, based on the market value of Avalon’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 carrying value per share of the investment.
In the prior year, the investment was revalued down $128,920 through Other Comprehensive Income/Loss (OCI), reducing the fair value
movements reserve in Equity to zero.
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
30/06/17
$
4,688,184
3,798,152
(86,964)
(1,500,000)
6,899,372
30/06/16
$
3,293,812
1,495,682
(101,310)
-
4,688,184
Virtually all expenditure during the year related to Hayes Creek Project (100% owned) mineral resource drilling and Pre-Feasibility Study
costs as well as mineral exploration activity on the Group’s Northern Territory tenements (51% owned progressing toward 90% under a
farm-in agreement).
At 30 June 2017, an impairment charge of $1,500,000 was recognised in relation to the Group’s Burra and Yorke Peninsula exploration
tenements in South Australia. The fair value less costs to sell of these projects was assessed as $0.5 million, based on their estimated
value in an arms-length sale transaction in current market conditions. The carrying value prior to the impairment charge was $2 million and
hence a $1.5 million impairment charge was recorded.
57
PNX METALS LIMITED | ANNUAL REPORT 2017 12 PLANT AND EQUIPMENT
Cost
Balance at 30 June 2015
Additions
Disposals
Balance at 30 June 2016
Additions
Disposals
Balance at 30 June 2017
Accumulated Depreciation
Balance at 30 June 2015
Depreciation Expense
Depreciation capitalised to exploration assets
Disposals
Balance at 30 June 2016
Depreciation Expense
Depreciation capitalised to exploration assets
Disposals
Balance at 30 June 2017
Net book value – Plant and Equipment
Balance at 30 June 2016
Balance at 30 June 2017
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.
30/06/17
$
363,455
153,942
24,272
541,669
$
440,235
-
-
440,235
20,654
-
460,889
386,081
3,351
13,333
-
402,765
7,605
12,504
-
422,874
37,470
38,015
30/06/16
$
87,525
82,072
25,086
194,683
58
PNX METALS LIMITED | ANNUAL REPORT 2017 14 LOAN
Loan
30/06/17
$
1,200,000
30/06/16
$
1,200,000
The key terms of the Company’s $1.2 million unsecured loan are as follows:
» Maturity date of 6 November 2019
»
»
7.5% annual interest rate, payable semi-annually 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 Minerals Limited (now
Sunstone Metals Limited) 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 (2016: $100,000) were incurred on the loan during the year, of which $10,000 (2016: $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.
Subsequent to year-end, the Company agreed with the lender to convert the loan into 80,000,000 PNX shares, subject to shareholder
and any regulatory approvals required. Refer to Note 31 Subsequent Events for further detail.
15 PROVISIONS
Current
Employee benefits
Non-current
Employee benefits
16 DEFERRED REVENUE
Silver streaming receipts
30/06/17
$
95,095
50,950
30/06/16
$
66,149
28,086
30/06/17
$
1,600,000
30/06/16
$
1,600,000
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), to be delivered over a 2 year
period 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 over gold and silver
produced from the Hayes Creek Project, and will be paid for a 5 year period. PNX can buy back the NSR royalty from an investor prior
to production commencing for $0.27 million.
Each investor has an option (‘Quantity 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.
Subsequent to year-end, each investor exercised the Quantity Option and PNX received payment of $0.4 million from each party.
PNX is now required to deliver a total of 168,000 troy ounces of silver over a 3 year period to each investor. The NSR royalty held by
each investor has now increased to 0.36% and the royalty buy-back amount has increased to $0.4 million.
If production at the Hayes Creek Project has not commenced by 7 June 2021 and PNX or an investor elects to terminate the
agreement, the forward payment made by that investor (now $1.2 million) 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
Cash received from the forward sale of silver 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.
59
PNX METALS LIMITED | ANNUAL REPORT 2017 17 ISSUED CAPITAL
30/06/17
$
30/06/16
$
741,055,537 fully paid ordinary shares (2016: 507,783,980)
32,665,302
28,377,292
Movement in ordinary shares for the year:
No.
30/06/17
$
No.
30/06/16
$
Ref Balance at beginning of year
507,783,980
28,377,292
357,256,457
26,562,067
a)
b)
c)
d)
e)
f)
g)
h)
h)
i)
Shares issued to settle interest on convertible notes
Shares issued to settle interest on loan
Shares issued to acquire tenements
Shares issued as remuneration
Shares issued at 1.9 cents
Shares issued at 2.0 cents
Shares issued for services
Shares issued at 1.3 cents
Shares issued at 0.95 cents
Interest on convertible notes –
reduction in share capital
Share issue costs
1,551,938
4,153,830
1,000,000
1,000,000
93,065,789
130,900,000
1,600,000
-
-
-
-
30,000
90,000
19,000
21,000
1,768,250
2,618,000
40,000
-
-
(30,000)
(268,240)
2,382,318
7,029,817
30,000
90,000
-
-
-
-
-
-
-
-
-
-
114,865,388
1,493,250
26,250,000
-
-
250,000
(30,000)
(18,025)
Balance at end of year
741,055,537
32,665,302
507,783,980
28,377,292
Fully paid shares carry one vote per share and a right to dividends.
a) Shares were issued in November 2016 and May 2017 at the Company’s preceding 30 day volume-weighted average share price
(VWAP) of 2.3 and 1.7 cents respectively (2016: 1.2 cents and 1.3 cents) to settle a total of $30,000 of interest payable on convertible
notes.
b) Shares were issued in November 2016 and May 2017 at the Company’s 30 day VWAP of 2.7 cents and 1.8 cents respectively
(2016: 1.4 cents and 1.2 cents) to settle a total of $90,000 of interest payable on the Company’s $1.2 million loan.
c) Shares were issued in July 2016 to Newmarket Gold NT Holdings Pty Ltd as consideration for the acquisition by the Company of
3 tenements near the Hayes Creek Project in the Northern Territory.
d) Shares were issued in November 2016 to a nominee of the Company’s Managing Director as a performance bonus.
e) Shares were issued as a placement to sophisticated and institutional investors, including 750,000 shares to settle fees associated
with the placement, in September 2016 and (following shareholder approval) in November 2016 at 1.9 cents per share raising
$1.75 million before costs.
f) Shares were issued as a placement to sophisticated and institutional investors, including 900,000 shares to settle fees associated
with the placement, in December 2016 at 2.0 cents per share raising $2.6 million before costs. A total of 65,450,000 attaching
unquoted options (one-for-two basis) were issued in March 2017 to participants in the placement – refer Note 21 for details.
g) Shares were issued in return for investor relations services, at an agreed value of 2.5 cents per share. At 30 June 2017, 800,000 of
these shares were still subject to a voluntary escrow period expiring 15 September 2017.
h) Prior 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.
i)
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 2017 18 OTHER CONTRIBUTED EQUITY
Convertible notes – equity settled
30/06/17
$
600,000
30/06/16
$
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 semi-annually in cash or ordinary shares (based on the Company’s 30 day VWAP
preceding the end of each interest period) 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
Semi-annual interest payable of $15,000 was settled in November 2016 and in May 2017 by issuing shares as outlined in Note 17(a).
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.
Subsequent to year-end, the Company agreed with the noteholders to convert the notes into 24,000,000 PNX shares (40 shares per
note), subject to shareholder and any regulatory approvals required. Refer to Note 31 Subsequent Events for further detail.
19 RESERVES
Equity-settled benefits reserve
30/06/17
$
90,687
30/06/16
$
-
The equity-settled benefits reserve arises on the vesting of performance rights granted to employees, consultants and executives under
the PNX Metals Limited Employee Performance Rights Plan (Plan).
Amounts are transferred out of the reserve and into issued capital when the rights are converted into shares, or to accumulated losses
when rights lapse. Further information on share based payments is disclosed in Note 21.
The increase in the equity settled benefits reserve for the year reflects that portion of the value of performance rights granted during the
year that is applicable to the 2017 financial year, and the $90,687 forms part of total equity-based compensation in the Statement of Profit
or Loss (along with the $21,000 detailed in Note 17(d)).
20 ACCUMULATED LOSSES
Balance at beginning of year
Loss for the year
Transfer from equity settled benefits reserve regarding
options that expired unexercised
30/06/17
$
25,100,291
2,705,004
-
30/06/16
$
24,326,941
982,461
(209,111)
Balance at end of year
27,805,295
25,100,291
61
PNX METALS LIMITED | ANNUAL REPORT 2017 21 SHARE OPTIONS AND PERFORMANCE RIGHTS
PNX Metals Limited has established an Employee Performance Rights Plan (Plan). Under the Plan, 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.
There were no Performance Rights on issue at the beginning of the year. During the year, a total of 11,410,000 Performance Rights were
issued to PNX personnel under the Plan, as described below.
November 2016
Following receipt of shareholder approval at the November 2016 Annual General Meeting, 1,250,000 Performance Rights were issued to
the Company’s Managing Director & CEO James Fox, with 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.
These Performance Rights have not yet vested.
February 2017
In February 2017, a total of 10,160,000 Performance Rights were issued to PNX personnel under the Plan, including 4,000,000
Performance Rights to James Fox following receipt of shareholder approval. The Performance Rights have conditions related to key
Company objectives, including development of the Hayes Creek project, exploration discoveries and Company share price performance.
Performance conditions are required to be achieved within specified time periods (extending to 31 December 2019) in order for the rights
to vest.
At 30 June 2017, 3,090,000 of these Performance Rights vested and the related 3,090,000 shares were issued in August 2017.
In total, at 30 June 2017 11,410,000 Performance Rights were on issue, of which 3,090,000 had vested as noted above.
Share-based payment expense recorded during the year was $90,687 (2016: negative $9,162) in relation to the Performance Rights
described above, which reflects the value of performance rights granted during the year that is applicable to the 2017 financial year. The
value at grant date of Performance Rights reflects the current market value of the Company’s publicly traded shares, and the expense
recognised at each reporting date reflects the number of Performance Rights estimated to ultimately vest.
Options
At the discretion of the Directors, and subject to shareholder approval, options to acquire shares can be issued, for example as part of
corporate and asset acquisitions or as part of a capital raising process.
Following receipt of shareholder approval, in March 2017 the Company issued 65,450,000 unlisted options to participants in the
December 2016 share placement that raised $2.6 million. The options have an exercise price of 5.0 cents and expire on 31 May 2019.
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
30/06/17
Number
of options
30/06/17
Weighted average
exercise price
$
30/06/16
Number
of options
30/06/16
Weighted average
exercise price
$
-
65,450,000
-
65,450,000
-
0.05
-
0.05
1,250,000
-
(1,250,000)
-
0.27
-
(0.27)
-
62
PNX METALS LIMITED | ANNUAL REPORT 2017
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
30/06/17
$
773,163
80,025
79,590
932,778
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
The Company’s auditor is Grant Thornton Audit Pty Ltd.
24 RELATED PARTY DISCLOSURES
a) Subsidiaries
30/06/17
$
30/06/16
$
30,882
28,340
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 Piper Alderman, an entity in which a Director (Peter Watson) is a senior consultant, to advise
on legal matters. The amount paid in the financial year for these services inclusive of GST was $24,518. In the prior year, $46,833
was paid for legal services to Watsons Lawyers, and entity in which Mr Watson was a partner. $1,997 inclusive of GST was owed to
Piper Alderman at 30 June 2017, which was paid subsequent to year end.
63
PNX METALS LIMITED | ANNUAL REPORT 2017 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 2017 in respect of minimum expenditure requirements not provided for in the financial
statements are approximately:
Minimum exploration expenditure on SA tenements
30/06/17
$
1,000,000
30/06/16
$
900,000
The Group’s office lease in Rose Park, South Australia, with annual lease payments of $66,900 exclusive of GST, extends to
August 2018 with a one-year renewal right.
b) Reilly Tenement Acquisition Agreement
Under 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 5874, 4970, and 5910 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 5918).
¬ 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).
d) Native Title
A native title claim application was lodged several years ago 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. There were no developments of
significance in this claim application over the 2017 financial year.
e) Newmarket Gold NT Holdings Pty Ltd
Newmarket 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 comprising the Hayes Creek Project. A payment of $500,000, either in cash or shares at the Company’s election,
is also due to Newmarket if a bankable feasibility study is completed over the Hayes Creek Project or on any of the 23 farm-in
tenements that are subject to a farm-in agreement between the two companies.
Newmarket also holds a 30% claw-back right over the Hayes Creek tenements which may be exercised 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 2017 26 FINANCIAL INSTRUMENTS & FINANCIAL RISK MANAGEMENT
Categories of financial instruments
Financial assets
Cash and cash equivalents
Deposits
Trade and other receivables
Other receivable
Other financial assets – Investment in Avalon
Financial liabilities
Trade and other payables
Loan
30/06/17
$
1,430,630
116,844
293,179
50,000
193,380
541,669
1,200,000
30/06/16
$
1,643,632
58,895
260,880
-
257,840
194,683
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 development prospects of the Hayes Creek Project are to some extent exposed to the risk of unfavourable movements in the
US/Australian dollar exchange rate and zinc, gold and silver commodity prices. The Group, however, has no direct exposure to foreign
exchange or commodity price risk at present.
The Group is exposed to movements in the share price of Avalon Minerals Ltd (now Sunstone Metals Limited), as the Company’s
investment of 12,892,013 shares is carried at fair value, and price movements are reflected through profit or loss or other comprehensive
income/loss. Each one cent change in the market value of Sunstone’s shares changes the fair value of the Company’s investment by
$128,920. Movement in the fair value of the investment, 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,
including agreement reached subsequent to year end).
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 or decrease by approximately $11,000 (2016: increase or decrease by approximately $3,000).
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 Sunstone Metals 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 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 and senior management 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.
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.
65
PNX METALS LIMITED | ANNUAL REPORT 2017 The table includes both interest and principal cash flows.
2017
Non-interest bearing
Fixed Interest bearing*
2016
Non-interest bearing
Fixed Interest bearing
Weighted average
effective interest rate
%
Less than
one month
$
-
7.5%
-
7.5
521,281
-
158,333
-
1-3 months
3-12 months
1-5 years
$
$
17,100
-
19,500
-
3,288
90,000
16,850
90,000
$
-
1,365,000
-
1,425,000
*
refer subsequent events note regarding agreement reached with the lender in September 2017 to convert the loan into shares, subject to shareholder
and any required regulatory approvals.
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, 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 silver 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 project development, 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 and development in the Northern Territory. 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
Financial information regarding these segments is presented below. The accounting policies for reportable segments are the same as the
Group’s accounting policies.
Exploration – NT
Exploration – SA1
Mining - discontinued operation
Unallocated/corporate
Total loss before tax
Income tax benefit
Total loss for the year
Revenue
Year ended
30/06/17
$
Revenue
Year ended
30/06/16
$
-
-
-
-
-
-
-
-
Segment loss
Year ended
30/06/17
$
-
(1,586,964)
(38,535)
Segment loss
Year ended
30/06/16
$
-
(101,310)
(90,060)
(1,484,463)
(1,036,996)
(3,109,962)
(1,228,366)
404,958
(2,705,004)
245,905
(982,461)
1
includes $1,500,000 impairment loss on exploration assets in SA.
Segment loss represents the loss incurred 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.
66
PNX METALS LIMITED | ANNUAL REPORT 2017
The following is an analysis of the Group’s assets and liabilities by reportable operating segment:
Assets
Exploration - NT
Exploration - SA
Unallocated assets
Total assets
Liabilities
Exploration - NT
Exploration - SA
Unallocated liabilities
Total liabilities
30/06/17
$
30/06/16
$
6,548,116
1,000,000
1,990,292
9,538,408
368,643
-
3,119,071
3,487,714
2,739,486
2,000,000
2,226,433
6,965,919
42,400
-
3,046,518
3,088,918
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, loan 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:
Year ended
30/06/17
Cents per share
Year ended
30/06/16
Cents per share
(0.4)
(0.0)
(0.4)
(0.2)
(0.0)
(0.2)
Loss after tax – continuing operations $
Loss after tax – discontinued operations $
Weighted average number of ordinary shares
(2,666,469)
(38,535)
654,172,546
(892,401)
(90,060)
451,064,157
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.
29. CONTROLLED ENTITIES
Name of entity
Country of incorporation
Parent entity
PNX Metals Limited
Subsidiaries
Wellington Exploration Pty Ltd
Leigh Creek Copper Mine Pty Ltd*
*
sold in November 2016 – refer Note 6.
(i) Head entity in tax consolidated group.
(ii) Members of tax consolidated group.
(i)
(ii)
(ii)
Australia
Australia
Australia
Ownership interest
2017
%
Ownership interest
2016
%
100%
0%
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.
67
PNX METALS LIMITED | ANNUAL REPORT 2017
30 PARENT ENTITY DISCLOSURES
The summarised Statement of Financial Position and Statement of Profit or Loss for PNX Metals Limited as parent entity in the Group
is identical to that of the Group, as the investment in subsidiary and intercompany loan receivable (parent) and related exploration and
evaluation asset (subsidiary) are both non-current assets.
Commitments for expenditure and contingent liabilities of the parent entity
Note 25 discloses the Group’s commitments for expenditure and contingent liabilities, which are also applicable to the parent entity.
31 SUBSEQUENT EVENTS
In September 2017, PNX received $0.8 million from the forward sale of an additional 112,000oz of silver from the Hayes Creek Project,
to be delivered if and when production commences. This occurred following the exercise of the option held by each party to the Silver
Streaming & Royalty Agreements to acquire additional silver.
Also in September 2017, the Company completed a placement of 179.8 million shares to sophisticated and institutional investors at
1.05 cents per share, for a total of $1.8 million after costs. The Company also launched a Share Purchase Plan (‘SPP’), offering eligible
shareholders the opportunity to acquire up to $15,000 of shares in PNX at the same price as the share placement, being 1.05 cents per
share. The SPP is capped at $0.6 million and closes on 25 September 2017.
In conjunction with the share placement and SPP, the Company reached agreement with Marilei International Limited and Sochrastem SA
as follows:
»
»
»
$1.2 million loan held by Marilei will be converted into 80,000,000 PNX shares (1.5 cents per share);
$0.3 million convertible notes held by Marilei will be converted into 12,000,000 shares (2.5 cents per share); and
$0.3 million convertible notes held by Sochrastem will be converted into 12,000,000 shares.
The average price at which the loan and convertible notes are to convert is 1.73 cents per share, representing a premium of 65% to the
placement & SPP issue price. Formal documentation to amend and terminate the loan and convertible note agreements is now being
prepared.
The proposed issue of shares to Marilei and Sochrastem is subject to PNX shareholder approval at the Annual General Meeting in
October 2017 as well as any regulatory approvals that may be required, including the Foreign Investment Review Board.
Also subsequent to year-end:
»
The Company entered into an agreement with Ausmex Mining Group Limited (‘Ausmex’) whereby PNX granted Ausmex an option
to farm-in to the Company’s tenement holdings in the Burra area of South Australia in return for Ausmex conducting $50,000 of
geophysical survey work over the area. Should Ausmex exercise its option, it can earn up to a 90% interest in the 8 exploration
licences held by PNX in the Burra region. The proposed farm-in has 2 stages (60% and 90%), each requiring Ausmex to spend a
minimum of $300,000 on diamond drilling or other agreed exploratory work;
»
3,090,000 shares were issued to PNX staff following the vesting of an equivalent number of performance rights at 30 June 2017; and
» Under an engagement letter executed with Hartleys Limited, a component of the fee arrangements require the issue of 20,000,000
unquoted options to Hartleys’ wholly owned subsidiary Zenix Nominees Pty Ltd, with the following key terms:
¬ 10,000,000 options will vest upon the completion of a capital raise, managed by Hartleys, of $2 million or more
¬ 10,000,000 options will vest upon the completion, in aggregate, of a capital raise managed by Hartleys of $6 million or more
¬ Exercise price is 140% of the issue price of the capital raising under which the first 10,000,000 Options vest
¬ Expiry Date – 3 years after the date of issue
The issue of these options is subject to shareholder approval at the 2017 AGM.
There are no other matters or circumstances that have arisen since 30 June 2017 that 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
68
PNX METALS LIMITED | ANNUAL REPORT 2017 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 2017
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.
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
19th September 2017
69
PNX METALS LIMITED | ANNUAL REPORT 2017 INDEPENDENT AUDIT REPORT TO THE MEMBERS
of PNX Metals Limited
Grant Thornton House
Level 3
170 Frome Street
Adelaide, SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
Grant Thornton House
Level 3
170 Frome Street
Adelaide, SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T 61 8 8372 6666
F 61 8 8372 6677
E info.sa@au.gt.com
W www.grantthornton.com.au
T 61 8 8372 6666
F 61 8 8372 6677
E info.sa@au.gt.com
W www.grantthornton.com.au
Grant Thornton House
Level 3
170 Frome Street
Adelaide, SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
Independent Auditor’s Report
Independent Auditor’s Report
To the Members of PNX Metals Limited
To the Members of PNX Metals Limited
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
T 61 8 8372 6666
F 61 8 8372 6677
Opinion
E info.sa@au.gt.com
Opinion
W www.grantthornton.com.au
We have audited the financial report of PNX Metals Limited (the Company) and its subsidiaries
We have audited the financial report of PNX Metals Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017,
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017,
the consolidated statement of profit or loss and other comprehensive income, consolidated
the consolidated statement of profit or loss and other comprehensive income, consolidated
Independent Auditor’s Report
statement of changes in equity and consolidated statement of cash flows for the year then ended,
statement of changes in equity and consolidated statement of cash flows for the year then ended,
and notes to the consolidated financial statements, including a summary of significant accounting
To the Members of PNX Metals Limited
and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
policies, and the directors’ declaration.
performance for the year ended on that date; and
performance for the year ended on that date; and
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Report on the Audit of the Financial Report
In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
Opinion
We have audited the financial report of PNX Metals Limited (the Company) and its subsidiaries
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017,
the consolidated statement of profit or loss and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended,
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
In our opinion, the accompanying financial report of the Group, is in accordance with the
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Corporations Act 2001, including:
Financial Report section of our report. We are independent of the Group in accordance with the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
Grant Thornton Audit Pty Ltd ACN 130 913 594
independence requirements of the Corporations Act 2001 and the ethical requirements of the
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
‘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
also fulfilled our other ethical responsibilities in accordance with the Code.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
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
basis for our opinion.
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
‘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.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
performance for the year ended on that date; and
Liability limited by a scheme approved under Professional Standards Legislation.
70
Liability limited by a scheme approved under Professional Standards Legislation.
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.
PNX METALS LIMITED | ANNUAL REPORT 2017
Material Uncertainty Related to Going Concern
We draw attention to Note 3 (a) in the financial statements, which indicates that the Group incurred
Material Uncertainty Related to Going Concern
a net loss of $2,705,004 during the year ended 30 June 2017, and cash outflows from operating
We draw attention to Note 3 (a) in the financial statements, which indicates that the Group incurred
and investing activities of $4,320,762. As stated in Note 3 (a), these events or conditions, along
a net loss of $2,705,004 during the year ended 30 June 2017, and cash outflows from operating
with other matters as set forth in Note 3 (a), indicate that a material uncertainty exists that may
and investing activities of $4,320,762. As stated in Note 3 (a), these events or conditions, along
cast doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in
with other matters as set forth in Note 3 (a), indicate that a material uncertainty exists that may
respect of this matter.
cast doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the
Key Audit Matters
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
Key audit matters are those matters that, in our professional judgement, were of most significance
do not provide a separate opinion on these matters.
in our audit of the financial report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
In addition to the matter described in the Material Uncertainty Related to Going Concern section,
do not provide a separate opinion on these matters.
we have determined the matters described below to be the key audit matters to be communicated
in our report.
In addition to the matter described in the Material Uncertainty Related to Going Concern section,
we have determined the matters described below to be the key audit matters to be communicated
in our report.
How our audit addressed the key audit matter
Key audit matter
Valuation of Exploration and Evaluation Assets
Note 11
Key audit matter
At 30 June 2017 the carrying value of Exploration
Valuation of Exploration and Evaluation Assets
and Evaluation Assets was $6,899,372.
Note 11
At 30 June 2017 the carrying value of Exploration
In accordance with AASB 6 Exploration for and
and Evaluation Assets was $6,899,372.
Evaluation of Mineral Resources, the Group is
required to assess at each reporting date if there are
In accordance with AASB 6 Exploration for and
any triggers for impairment which may suggest the
Evaluation of Mineral Resources, the Group is
carrying value is in excess of the recoverable value.
required to assess at each reporting date if there are
any triggers for impairment which may suggest the
The process undertaken by management to assess
carrying value is in excess of the recoverable value.
whether there are any impairment triggers in each
area of interest involves an element of management
The process undertaken by management to assess
judgement.
whether there are any impairment triggers in each
area of interest involves an element of management
This area is a key audit matter due to the valuation of
judgement.
exploration and evaluation assets being a significant
risk.
This area is a key audit matter due to the valuation of
exploration and evaluation assets being a significant
risk.
How our audit addressed the key audit matter
Our procedures included, amongst others:
Obtaining the management reconciliation of
Our procedures included, amongst others:
capitalised exploration and evaluation expenditure
and agreeing to the general ledger;
Obtaining the management reconciliation of
Reviewing management’s area of interest
capitalised exploration and evaluation expenditure
considerations against AASB 6;
and agreeing to the general ledger;
Assessing the accuracy of impairment recorded for
Reviewing management’s area of interest
the year as it pertained to exploration interests;
considerations against AASB 6;
Conducting a detailed review of management’s
Assessing the accuracy of impairment recorded for
assessment of trigger events prepared in
the year as it pertained to exploration interests;
accordance with AASB 6 including;
Conducting a detailed review of management’s
Tracing projects to statutory registers,
-
assessment of trigger events prepared in
exploration licenses and third party
accordance with AASB 6 including;
confirmations to determine whether a right of
Tracing projects to statutory registers,
-
tenure existed;
exploration licenses and third party
Enquiry of management regarding their
-
confirmations to determine whether a right of
intentions to carry out exploration and
tenure existed;
evaluation activity in the relevant exploration
Enquiry of management regarding their
area, including review of managements’
intentions to carry out exploration and
budgeted expenditure;
evaluation activity in the relevant exploration
- Understanding whether any data exists to
area, including review of managements’
suggest that the carrying value of these
budgeted expenditure;
exploration and evaluation assets are unlikely
- Understanding whether any data exists to
to be recovered through development or sale;
suggest that the carrying value of these
and
exploration and evaluation assets are unlikely
Reviewing the appropriateness of the related
to be recovered through development or sale;
disclosures within the financial statements.
and
-
Reviewing the appropriateness of the related
disclosures within the financial statements.
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
Information Other than the Financial Report and Auditor’s Report Thereon
include the financial report and our auditor’s report thereon.
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
Our opinion on the financial report does not cover the other information and we do not express any
include the financial report and our auditor’s report thereon.
form of assurance conclusion thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
71
PNX METALS LIMITED | ANNUAL REPORT 2017
INDEPENDENT AUDIT REPORT TO THE MEMBERS
of PNX Metals Limited
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information; we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Group or
to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
72
PNX METALS LIMITED | ANNUAL REPORT 2017
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30
June 2017.
In our opinion, the Remuneration Report of PNX Metals Ltd, for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
J L Humphrey
Partner - Audit & Assurance
Adelaide, 19 September 2017
73
PNX METALS LIMITED | ANNUAL REPORT 2017
ADDITIONAL SHAREHOLDER INFORMATION
SHARES
The total number of shares issued as at 19 September 2017 was 925,975,537 held by 1038 registered shareholders.
371 shareholders hold less than a marketable parcel, based on the market price of a share as at 19 September 2017.
Each share carries one vote.
PERFORMANCE RIGHTS/OPTIONS
As at 19 September 2017, the Company had 8,320,000 Performance Rights and 65,450,000 unquoted options (5.0 cent exercise
price expiring 31 May 2019) on issue.
TWENTY LARGEST SHAREHOLDERS
As at 19 September 2017, the twenty largest Shareholders were as shown in the following table and held 54.2% of the Shares.
Rank Name
Shares
% of shares
1.
2.
3.
4.
5.
6.
7.
8.
9.
BNP PARIBAS NOMS PTY LTD
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