PNX METALS LIMITED ABN 67 127 446 271
ANNUAL REPORT 2018
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: Massive arsenopyrite,
commonly associated with gold, from
drilling at Tally Ho, Fountain Head.
2
PNX METALS LIMITED | ANNUAL REPORT 2018
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
INDEPENDENT AUDITOR’S REPORT TO MEMBERS
ADDITIONAL SHAREHOLDER INFORMATION
4
5
9
23
26
29
34
38
39
43
66
67
70
Pegmatite, Kilfoyle Project, NT.
3
PNX METALS LIMITED | ANNUAL REPORT 2018 CHAIRMAN’S LETTER
Dear Fellow Shareholders,
On behalf of the Board of Directors, it is my pleasure to
present the 2018 Annual Report for PNX Metals Limited
(‘PNX’ or ‘Company’).
the Company. As detailed in the annual report, a number of high
quality gold and base metals targets have been generated and
initial results are very encouraging.
PNX made significant progress during the year on its objective
to be a successful explorer and sustainable and profitable gold
and base metals producer.
The Preliminary Feasibility Study (‘PFS’) completed on our
flagship zinc-gold-silver Hayes Creek Project (‘Hayes Creek’ or
‘Project’) in the Pine Creek region of the Northern Territory (‘NT’)
confirms it to be a high value, relatively low risk and technically
strong development opportunity for the Company. The Pine
Creek Region is a favourable mining jurisdiction and the Hayes
Creek development scenario considers and utilises existing
infrastructure that includes rail, road, high voltage power lines
and water, further enhancing Project fundamentals and lowering
development risks.
As part of our de-risking strategy for the Project, the preferred
site for the processing plant and tailings facility was acquired
during the year at Fountain Head, located less than 15km from
the Hayes Creek deposits. In addition to being the preferred
facilities site, it is also host to a previous high-grade mining
operation and currently, a number of high-grade gold prospects.
In our initial drilling program at Fountain Head, high-grade gold
mineralisation was intersected from three separate targets
including a very impressive 6m @ 39.5g/t Au from 54m in
FHRC085 at the Banner Prospect. At the time of writing, assays
are still awaited from several drill holes from this initial program
but there is increasing confidence that the Fountain Head area
has the potential to host a sizeable gold system.
The Definitive Feasibility Study (‘DFS’) at Hayes Creek has not
advanced as quickly as originally planned during 2018, primarily
due to funding availability and market conditions. However, the
feasibility work completed to date has demonstrated that the
Company holds a valuable Project that provides a significant
platform for growth. Regional exploration became a priority
during the year with the objective of identifying additional
economic mineralisation with the potential to complement and
enhance the Hayes Creek development, as well as identifying
new, potentially stand-alone resources. Regional exploration
success would have a very significant impact on the Project and
We expect to complete the next earn-in stage on the farm-
in area surrounding Hayes Creek in the near term taking our
interest in these areas to 90%. We already hold Moline, Fountain
Head and Hayes Creek 100% and with the new Kilfoyle joint
venture, the total area we hold or are earning into is more than
2000km2 in the region.
The Board and management are confident that continued
exploration work will be successful in growing the resource base
and that the completion of studies on the Hayes Creek project
in 2019 will reinforce confidence in what is already a robust
development opportunity with the potential to deliver strong
returns for PNX shareholders.
The Company continues to receive strong support from its
shareholders and in 2018, a number of successful fund raisings
were completed to new, professional investors as well as to
existing shareholders to support our activities in the NT.
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 growing our
flagship Hayes Creek project towards development for the
benefit of all shareholders.
I also take this opportunity to thank all shareholders for your
continued support of PNX and I look forward to providing further
updates as our activities move forward in 2019.
Yours sincerely,
Graham Ascough
C H A I R M A N
20th September 2018
4
PNX METALS LIMITED | ANNUAL REPORT 2018 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 precious
and base metals tenement
portfolio, primarily in the
Northern Territory (NT), as
shown in Figure 1.
The main activities of
the Company during the
2018 financial year were
progression of studies and
work programs to inform a
Definitive Feasibility Study
over the Hayes Creek zinc-
gold-silver project (Project
or Hayes Creek) in the
NT, as well as conducting
nearby mineral exploration,
in particular at Moline and
Fountain Head.
Darwin
Hayes Creek Project
Burnside Project
Moline Project
Chessman Project
The Fountain Head mineral leases were acquired during the year from Newmarket Gold
NT Holdings Pty Ltd (Newmarket), a subsidiary of Kirkland Lake Gold Ltd (KL Gold,
TSX:KL, ASX:KLA). The acquisition secures the preferred site for the Project’s proposed
processing plant and tailings facility, and also adds a new project area that is highly
prospective for gold. As part of the transaction with Newmarket, PNX acquired the
balance (49%) of the Moline tenements, taking its ownership of that project to 100%.
PNX also continues to hold a 51% interest in a further 19 tenements in the Pine Creek
region of the NT (Burnside and Chessman projects), and expects to increase its interest
to 90% by the end of calendar 2018 under a farm-in agreement with Newmarket. A full
listing of PNX’s tenements is contained in the Exploration Report.
HAYES CREEK PROJECT
The Hayes Creek Project is comprised of the Iron Blow and Mt Bonnie zinc-gold-silver
deposits, located less than 3km apart on 14 wholly owned mineral leases approximately
170km south of Darwin (Figure 2). The Project has a JORC indicated (85%) and inferred
(15%) mineral resource estimate of 4.1Mt containing 238koz of gold, 16.2Moz silver
and 177kt of zinc – outlined in detail in the Exploration Report.
Detailed feasibility studies are underway on the Project, following the successful
completion of a Pre-Feasibility Study (PFS) in July 2017 which confirmed Hayes Creek
to be a promising future low-cost, high margin zinc and precious metal mine that could
create significant value for the Company’s shareholders. The various studies and work
programs being undertaken are expected to provide increased confidence in all aspects
of the Project and investigate opportunities to improve overall Project economics,
increasing the prospect of favourable development finance terms and structure.
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
Adelaide River
Burnside Project
WESTERN AUSTRALIA
NORTHERN
TERRITORY
SOUTH AUSTRALIA
QUEENSLAND
Kilfoyle Project
Hayes Creek
Hayes Creek Project
Moline Project
NEW SOUTH WALES
kilometres
0
50
100
Adelaide
VICTORIA
TASMANIA
Chessman Project
PNX JV tenements
PNX 100% owned tenements
Katherine
Highway
Main road
Figure 1 PNX NT project locations.
NT 05
5
PNX METALS LIMITED | ANNUAL REPORT 2018 OVERVIEW
NT REGIONAL
EXPLORATION
PNX’s regional exploration strategy
is to identify significant additional
mineralisation with the potential to
complement and enhance the Hayes
Creek Project and to identify new,
potentially stand-alone resources. PNX
has divided its exploration portfolio into
five regional project areas:
• Fountain Head (100%) – gold
targets, includes the recently
discovered Banner prospect
• Moline (100%) – gold and
base metals
• Burnside (51% earning 90%) –
precious and base metals
• Chessman (51% earning 90%) –
precious and base metals
• Kilfoyle (0%, earning 90%) – precious
and base metals, lithium.
The project areas host numerous
prospects, and cover in excess of
2000 square kilometres in the Pine Creek
region of the NT. PNX commenced
a drilling program at Fountain Head
in June 2018, which produced some
excellent results including the discovery
of the Banner gold prospect. Subsequent
to year-end, PNX commenced drilling
campaigns at Moline and Burnside
(Cookies Corner prospect), and is
awaiting results. An airborne geophysical
survey was also recently completed
at the new Kilfoyle project, ahead of
Government co-funded drilling toward the
end of calendar 2018.
The Exploration Report contains detail
on activities during and since the end
of the financial year on the Company’s
exploration projects.
Figure 2 Hayes Creek Project.
Detail on progress made on feasibility
studies during the year is contained in the
Exploration Report, including progress on
the environmental approvals process.
The PFS forecasts the Project to generate
an NPV10 of $133 million, based on net
smelter revenue from the sale of zinc and
precious metals concentrates of $628 million
(based on consensus views as to future
metals prices and exchange rates) over a
6.5 year mine life through annual production
of 18,200t zinc, 14,700oz gold, and 1.4Moz
silver (39,100t of zinc equivalent). With a
low $58 million initial capital expenditure
requirement, the PFS forecast the Project to
have a 73% IRR, and very short pay-back
period of 15 months.1
The Project is located in a favourable
mining jurisdiction where the
development scenario considers and
utilises existing infrastructure that
includes rail, road, high voltage power
lines and water, further enhancing
Project fundamentals and lowering
development risks.
Subject to securing offtake agreements,
funding and various Government
approvals the Project is envisaged to
be ready for development in 2020 and
directly employ approximately 130
people.
Refer ASX announcement 12 July 2017 for full details. The material assumptions underpinning the
production targets, and the forecast financial information derived from the production targets,
continue to apply and have not materially changed.
1
6
PNX METALS LIMITED | ANNUAL REPORT 2018 KEY FINANCIAL RESULTS
($000’S, EXCEPT AS INDICATED)
30 JUNE 2018
30 JUNE 2017
Interest/other income
R&D tax refund
Corporate/administrative costs
Impairment – SA exploration assets
(Income)/loss on Sunstone investment
Interest charges
59
253
1,312
-
(297)
60
51
405
1,407
1,500
64
100
Comprehensive loss after tax
Comprehensive loss per share
700
0.1 cents
2,705
0.4 cents
Net operating cashflows
Exploration expenditure
Funds raised – equity (net of costs)
Funds raised – silver streaming
Cash on hand1
Net working capital2
Investment in Sunstone – at fair value
Capitalised exploration expenditure
Debt
Deferred Revenue – silver streaming
Net assets
(731)
(3,027)
2,308
800
860
698
490
9,707
-
2,400
8,449
(866)
(3,436)
4,108
-
1,430
1,414
193
6,899
1,200
1,600
5,551
Number of shares on issue3
1,088,930,020
741,055,537
Number of performance rights on issue
Number of unlisted options on issue4
Share price (ASX: PNX)
7,070,000
85,450,000
0.8 cents
11,410,000
65,450,000
1.0 cents
1
2
3
$3.46 million raised subsequent to year-end.
Excluding investment in Sunstone Metals Ltd.
1,352,680,020 as of the date of this report, with a further 169,375,000 shares approved for issue at a
general meeting held on 12 September 2018.
4 A further 433,125,000 unquoted options were approved for issue on 12 September 2018.
PNX reported an overall loss for the
year after tax of $0.7 million (2017:
$2.7 million, including a $1.5m South
Australian exploration asset impairment
charge). The loss for the year was net
of a $0.25 million income tax benefit
from the Company’s research and
development claims.
The pre-tax loss for the year was
$1.3m as compared to $1.5m
(excluding impairment charges) in 2017.
The reduced loss figure is primarily
due to non-cash items, notably lower
equity-based remuneration expense
and interest expense settled by issuing
shares. Professional fees were also
lower, as the prior year had some one-off
investor relations costs.
The comparable pre-tax loss is not
unexpected given PNX’s corporate
cost structure has not changed
much, and exploration costs in the
NT (representing the majority of
expenditure) are capitalised. Corporate
and administration costs include head
office wages, directors’ fees, insurance,
professional fees, regulatory, occupancy
and communication.
Excluding R&D receipts, operating cash
outflows for the year were $1.1 million
and reflect the pre-tax loss after excluding
non-cash charges. During the financial
year (September/October 2017) the
Company raised $2.3 million net of
costs from placements to sophisticated
and professional investors and a Share
Purchase Plan, and also received
$0.8 million from the forward sale of
an additional 112,000oz of silver from
the Hayes Creek project. PNX spent
$3.0 million on exploration during the
year, including $1.6 million on Hayes
Creek feasibility studies and $1.2 million
on its key regional exploration projects in
7
PNX METALS LIMITED | ANNUAL REPORT 2018 OUTLOOK
PNX’s aim is to establish an economic mining
project at Hayes Creek and to continue to make new
mineral discoveries in the Pine Creek region of the
Northern Territory.
In the first half of 2018-19, PNX’s key focus will be on its
regional exploration projects (Fountain Head and Moline
in particular), including assessing whether these projects
can be incorporated into the Hayes Creek Project or
developed separately. Detailed feasibility studies on the
Hayes Creek Project are expected to be completed
in 2019 including submission of the Environmental
Impact Statement.
OVERVIEW
the NT.
At 30 June 2018, the Group had cash
holdings of $0.9 million, net working
capital of $0.7 million excluding the
investment in Sunstone Metals Limited
which is valued at $0.5m, and no
debt. During the year, agreement was
reached with convertible note holders
and a lender to settle both the notes
($0.6 million) and the loan ($1.2 million)
by the issue of 24 million and 80 million
shares respectively.
Subsequent to year end, PNX announced
a $3.5m capital raising, consisting of
2 tranches of placement shares (total
433,125,000 shares):
• Tranche 1 – 263.8 million shares at
an issue price of 0.8c per share to
raise $2.1m (received in late July/early
August); and
• Tranche 2 – 169.4 million shares at
0.8c to raise $1.4m. This tranche
was approved for issue at a General
Meeting held on 12 September 2018
and the shares will be issued by the
end of September.
Also approved by shareholders on
12 September 2018 was the issue of
433,125,000 attaching options (one-for-
one). The options, which are expected
to be issued in October 2018 under a
disclosure document, will not be quoted
and have a 1.5 cent exercise price
expiring 30 September 2021.
Upon completion of the Tranche 2
placement (end of September), cash on
hand will be approximately $2.8 million.
Diamond drilling core, Tally Ho, Fountain Head.
8
PNX METALS LIMITED | ANNUAL REPORT 2018 EXPLORATION REPORT
STRATEGY
The Company’s strategy is
centred on development of
the Hayes Creek zinc-gold-
silver Project and exploring
for new gold and base
metal ore deposits in the
Northern Territory that could
complement and enhance
the size and value of the
Project, or be developed
stand-alone.
During the year the Company
progressed detailed
feasibility studies on the
Hayes Creek Project and
carried out exploration
activities at a number of very
promising greenfield and
brownfield prospects.
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
Examining core at Brocks Creek core shed.
9
PNX METALS LIMITED | ANNUAL REPORT 2018 EXPLORATION REPORT
PROJECT DEVELOPMENT
HAYES CREEK PROJECT
The Hayes Creek zinc-gold-silver Project
is 100% owned by PNX, and is the
principal asset which underpins the
Company’s strategy of becoming a near-
term 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).
PNX completed a Pre-Feasibility Study
(PFS) over the Project in 2017, as
announced to the ASX on 12 July 2017.
The PFS indicates the Project is a high
value, relatively low risk and technically
strong development opportunity for the
Company. It contains an attractive mix
of commodities with strong outlook and
price upside potential. PNX believes there
is a very good chance of increasing the
scope of the Project given the potential of
the region surrounding Hayes Creek for
discoveries of other base and/or precious
metals deposits. During 2017/18 PNX
commenced a work program to inform
a Definitive Feasibility Study over the
Project, and detailed studies will continue
into 2019 toward the goals of securing
offtake contracts, project finance and
commencing construction.
10
Fountain Head
Figure 1 Hayes Creek Project.
PNX METALS LIMITED | ANNUAL REPORT 2018 PFS Summary1
The PFS forecast the project to return an NPV10 of $133 million over a 6.5 year
mine life, with a pay-back period on $58 million of initial capital expenditure of just
15 months. Under the PFS, the Project is expected to generate an average LoM pre-tax
net cashflow of approximately $41 million per year and $266 million in total from the
sale of zinc and precious metals concentrates.
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) – refer
Figures 2 and 3.
Key financial returns forecast for the Project are shown in Table 1 below. Returns are
most sensitive to movements in the commodity price and exchange rate assumptions
as well as variations in metal recoveries.
Table 1 PFS: Summary of estimated project financial returns
ESTIMATED PROJECT RETURNS
PFS FINANCIAL MODEL
Total net smelter revenue (Zn, Au, Ag, Pb + Cu)
$628 million
Zinc net revenue
Silver net revenue
Gold net revenue
Lead and copper net revenue
Pre-tax net cash flow (over LoM)
Annual average pre-tax net cash flow
$271 million, 43%
$187 million, 30%
$117 million, 19%
$53 million, 8%
$266 million
$41 million
Pre-tax net cash flow per tonne of ore over LoM
$90 per tonne
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
$58 million
$66 million
$133 million
73%
15 months
Underpinning the Project are JORC 2012 mineral resources estimates containing 177kt
of zinc, 238koz gold, 16.2Moz 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 26 to 27 for further detail). Production targets in the mine plan are based on
mineral resources that are 98% Indicated and 2% Inferred.
The proposed plant is to be constructed at the historic Fountain Head mining area
located approximately 12km to the north of Iron Blow and Mt Bonnie. Under the PFS,
two product streams will be produced, 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.
1
Refer ASX announcement 12 July 2017 for full details. The material assumptions underpinning the
production targets, and the forecast financial information derived from the production targets,
continue to apply and have not materially changed.
Iron Blow drill core.
11
PNX METALS LIMITED | ANNUAL REPORT 2018 EXPLORATION REPORT
PROJECT DEVELOPMENT
Figure 2 Mt Bonnie historical pit (left) and looking north toward Iron Blow from top of Mt Bonnie.
Figure 3 Iron Blow underground pit model (left) and Mt Bonnie open pit shell.
12
PNX METALS LIMITED | ANNUAL REPORT 2018 • 1m @ 7.68% Zn, 1.48g/t Au,
305g/t Ag, 1.88% Pb, 0.31% Cu
from 76m in MBDH069 (below the
pit design)
• 7m @ 2.24g/t Au and 81g/t Ag
from 88m in MBRC089 (gold-silver
zone below the pit design)
• 5m @ 3.28% Zn and 1.37g/t Au
from 35m in MBRC107 (up-dip from
pit design).
An extension to the pit design further
south and at depth would provide an
increase in the feed to the proposed
process plant, and reduce the open-pit
strip ratio by identifying mineralisation
in what was previously assumed to
be waste rock. An updated mineral
resource estimate for Mt Bonnie will
be completed for inclusion in the mine
plan, and could result in an increased
overall mine life.
Drilling program (Nov/Dec 2017)
The program was designed to provide
geotechnical, resource extension,
hydrological, and metallurgical information
for incorporation into the project feasibility
studies. A key outcome of the drilling was
the identification of high-grade, near-
surface zinc, gold and silver mineralisation
outside of the existing mineral resource
envelope at Mt Bonnie.
Resource extension – Mt Bonnie
Zinc, gold and silver mineralisation
in was intersected in 15 holes drilled
outside of the existing Mt Bonnie Mineral
Resource envelope extending the known
mineralisation by approximately 35
metres (Figures 4 and 5). Extensions
to the massive sulphide zinc-rich
mineralisation occur below the current pit
design and both up and down-dip to the
existing resource and include:
• 4m @ 6.14% Zn, 1.14g/t Au, 176g/t
Ag, 1.29% Pb, 0.11% Cu from 73m
in MBRC080, including:
»
2m @ 10.28% Zn, 1.92g/t Au,
304g/t Ag, 2.11% Pb, 0.17% Cu
from 74m (below the pit design)
Progress during 2017/18
During the year work programs relating
to Hayes Creek Project had the following
key outcomes:
• Completion of a 75 hole, 4,063 metre
RC and diamond drill program
which provided technical information
to inform the engineering and
environmental studies, including mine
planning, hydrology, metallurgical and
waste characterisation.
•
Identification from drill results of
additional high-grade, near-surface
mineralisation and resource extension
potential at the southern end of
Mt Bonnie.
• Ongoing metallurgical test-work
showed continued improvement in
recoveries and grades and reduction
in deleterious elements compared to
those used in the PFS.
• Engagement of GR Engineering
Services (ASX: GNG) to provide
process design and engineering
services, including all facilities,
equipment and capital works required
for construction, commissioning and
ramp-up of the Project.
• Ongoing geochemical (waste rock
characterisation) and hydrological
studies to populate baseline data to
support the environmental approvals
for the Project. An environmental
Notice of Intent was submitted during
the year.
Hydro analysis, Hayes Creek.
Figure 4 Mt Bonnie cross section showing new mineralisation in MBCR080.
13
PNX METALS LIMITED | ANNUAL REPORT 2018 Geochemical and
hydrological studies
Ongoing water quality analyses and
regular surface water samples continue to
populate baseline environmental data to
support the environmental approvals for
the Project.
Long-term column leach tests are
ongoing and are expected to run until at
least the end of calendar 2018 or until
such time as acid generation from the
columns is identified. These tests will
assess the leach characteristics of waste
rock dumps and stockpiles, materials in
the Mt Bonnie open pit and underground
at Iron Blow with the data being used to
model water quality from various areas
of the project both during operations and
following closure.
Metallurgy and process design
Interim metallurgical testwork programs
were conducted during the year which
showed improved recoveries and grade
for Hayes Creek concentrates compared
with the PFS results. Further optimisation
is anticipated during ongoing feasibility
testwork based on additional learnings
from interim testing.
The information obtained from this
interim program is essential for
ongoing marketing discussions leading
toward securing an offtake and/
marketing agreement.
EXPLORATION REPORT
PROJECT DEVELOPMENT
Figure 5 Drilling at Mt Bonnie: blue hashed area is the previous resource estimate projected
to surface; red hashed area is an estimate of the new mineralisation projected to surface.
White is the boundary of the current proposed pit shell.
14
PNX METALS LIMITED | ANNUAL REPORT 2018 EXPLORATION PROJECTS
The Pine Creek Orogen is
one of the most prospective
mineral provinces in Australia
and is host to PNX’s Fountain
Head (100%), Moline (100%),
Burnside (51%), Chessman
(51%) and Kilfoyle (0%
earning 90%) projects (refer
Figure 6).
PNX’s strategy regarding
regional exploration is to
discover and delineate
additional high-value base
metals and/or gold deposits
to complement the proposed
development at Hayes Creek
or feed into existing free
milling gold infrastructure in
the region.
During the year PNX acquired from
Newmarket Gold NT Holdings Pty Ltd
the Fountain Head mineral leases and
a further 49% of the Moline projects
(four tenements, now owned 100%).
The acquisition of the Fountain Head
leases also secured the preferred
location for the proposed Hayes Creek
process plant. The site is preferred for the
following reasons:
• close proximity to the mining
areas at Iron Blow and Mt Bonnie
(approximately 12km);
• excellent existing infrastructure
including high-voltage power, rail,
gas, water and roads; and
• being an existing disturbed site with
historic open pits, proposed for use
as tailings storage.
The transaction, which was completed
in July 2018, resulted in no cash outlay
for PNX. As consideration, PNX agreed
to carve out and transfer to Newmarket
Figure 6 PNX Projects – Northern Territory.
20 graticular blocks comprising three
exploration areas (Liberator, McCallum
Creek and Mt Paqualin) within PNX’s 51%
owned Burnside project area. Newmarket
will also receive a 2% net smelter return
royalty over any precious metals derived
from the Fountain Head and Moline
tenements.
The Burnside and Chessman projects
consist of 18 exploration licences and
one mineral lease and are subject to a
farm-in agreement with Newmarket. PNX
expects to complete the second stage of
the farm-in by the end of calendar 2018,
thereby increasing its interest in these
areas from 51% to 90%.
These projects, along with the
Company’s new farm-in project (Kilfoyle)
in the Litchfield area of the NT, are
discussed below.
FOUNTAIN HEAD
In June 2018, PNX commenced a
drilling program at the Fountain Head
mineral leases where a total of 31 reverse
circulation (RC) holes for 2,610 metres
was completed. The program targeted
four areas considered prospective for
gold along the Fountain Head anticline
over an approximate 2km strike extent to
the north-west from the existing Fountain
Head and Tally Ho historic mining areas
(Figure 7).
A number of significant drill intersections
have been reported including the
discovery of new high-grade gold
mineralisation at the Banner prospect.
Diamond drilling at Banner (one hole) and
three diamond tails targeting the potential
down-plunge extension of high-grade
gold mineralisation directly under the
historic Fountain Head and Tally Ho open
pits is ongoing.
The excellent assay results at the
Fountain Head, Tally Ho and Banner
prospects highlight the potential for the
area to host a sizeable gold system,
and the Company looks forward to
accelerating exploration to advance this
new opportunity.
15
PNX METALS LIMITED | ANNUAL REPORT 2018 EXPLORATION REPORT
EXPLORATION PROJECTS
Banner Prospect
Ten RC holes were drilled to test a
500 metre long >1g/t gold-in-soils
anomaly (Figure 7). High-grade gold
mineralisation was intersected in three of
ten holes drilled. Significant results include:
• 6m @ 39.5g/t Au from 54m in
FHRC085; including
»
1m @ 215g/t Au from 54m
• 1m @ 5.92g/t Au from 42m
• 2m @ 5.85g/t Au from 50m in
FHRC079
Fountain Head/Tally Ho Prospects
Drilling has demonstrated that
mineralised vein systems continue at
least 600 metres to the north-west of the
historic mining area along the Fountain
Head anticlinal structure. Mineralisation
remains open to the north-west and at
depth, indicating the potential for further
mineralised extensions over at least a
1km strike extent.
Significant results from the program
included (refer Figures 7 and 8):
• 3m @ 11.09g/t Au from 93m in
• 1m @ 1.70g/t Au from 46m in
FHRC062, including
FHRC081
• 2m @ 1.86g/t Au from 6m.
The high-grade gold intersected
in FHRC085 is below the base of
oxidation and represents the first known
occurrence of primary gold at Banner.
There are also numerous other zones
of lower grade gold mineralisation
within the drill holes which will require
further assessment.
»
1m @ 29.30g/t Au from 95m,
and
• 1m @ 28.00g/t Au from 83m in
FHRC070
• 1m @ 10.86g/t Au from 29m in
FHRC072
• 6m @ 2.05g/t Au from 2m in
FHRC073
• 16m @ 1.37g/t Au from surface in
FHRC074 (Fountain Head), including;
»
1m @ 8.39g/t Au from 5m
• 2m @ 4.04g/t Au from 21m in
FHRC076; and
• 5m @ 3.96g/t Au from 107m in
FHRC076 (Tally Ho lode), including
»
2m @ 9.17g/t Au from 110m.
The 5m @ 3.96g/t Au intercept from 107m
in drill hole FHRC076 is interpreted as an
extension of the Tally Ho lode with the
result suggesting a steepening of the lode
structure, a concept not tested by previous
drilling. The recently completed diamond
tail FHRC077D was drilled to enhance
this theory and intersected a sulphide-rich
quartz vein system over approximately
20m that is situated 100m along strike
from FHRC076 with assays pending
(Figure 8). The Tally Ho lode is the higher
grade of the two historically mined zones
at Fountain Head and its extension is a
significant outcome for this drill program.
Figure 7 Historic Fountain Head and TallyHo mining area and location of PNX drill holes. Red = assays reported; blue = diamond holes;
green line is the Fountain Head Anticline thought to control mineralisation.
16
PNX METALS LIMITED | ANNUAL REPORT 2018 Figure 8 Isometric view of mineralisation (modelled from historic drilling) looking approximately north-east from below surface showing
Tally Ho lode (red), Fountain Head lodes (green/orange), and PNX drill holes. The limited extent of historic mining is also shown.
MOLINE PROJECT
The Moline Project, now wholly owned by
PNX, is located approximately 65km to
the east of Hayes Creek in the Pine Creek
region of the Northern Territory, less than
1.5km off the Kakadu Highway (Figure 6).
The Moline Project comprises three
main “lines of lode” hosting numerous
gold and gold-zinc prospects, including
Moline, School, Tumbling Dice, Swan,
and Hercules (Figure 10). The Evelyn
base metal skarn deposit also occurs
within the tenure. 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. Although most
historical pits were mined only to shallow
depths in the oxide zone, studies have
indicated that the primary mineralisation
at depth could be recovered and
upgraded to a high-value concentrate
through the proposed Hayes Creek
process plant.
A host of untested gold and base metal
targets also occurs on the surrounding
exploration licence.
Progress 2017/18
In August 2017, PNX conducted a
16-hole RC drill program at Moline,
resulting in some very good gold and zinc
sulphide intersections:
• 3m @ 7.6g/t Au from 138m in
MORC15 at School;
• 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, including
»
1m @ 11.37g/t Au, 128g/t Ag,
4.66% Zn, 0.98% Pb, and
0.48% Cu from 45m
• 3m @ 2.5g/t Au from 71m and
9m @ 1.55g/t Au from 96m in
MORC028 underneath the historic
Moline pit
This new mineralisation is particularly
encouraging due to the similarities with
the Hayes Creek Project and because in
most instances, mineralisation is open
at depth and along strike. These results
complement the similarly good results
from drilling in 2016. The new results and
the previous mining history show that
this is part of a major mineralised system
containing significant quantities of gold.
PNX continued with regional mapping and
geochemical soil sampling to evaluate
the numerous regional targets that exist
outside of the historical mining centre. A
number of new, high priority zinc targets
were identified at Moline (Waterhole,
17
PNX METALS LIMITED | ANNUAL REPORT 2018 EXPLORATION REPORT
EXPLORATION PROJECTS
Figure 9 Tumbling Dice historical pit.
Mango and Swan – Figure 10) by their
strong zinc/gold in soils geochemical
signatures which were subsequently
refined through ground Induced
Polarisation (IP) geophysical surveys.
The Swan and Waterhole areas in
particular remain high priority targets for
future drill testing.
Further work 2018/19
PNX views the Moline area as having
good potential to host sizeable
resources that would be compatible
with the Hayes Creek Project. To further
evaluate the resource potential and to
collect preliminary metallurgical data, an
11 hole, ~1,300 metre RC drill program
commenced in August 2018. The initial
focus is on the Moline and Tumbling Dice
prospects (Figure 9) in order to increase
geological confidence and continue
to define mineralisation within the
boundaries of potential open-pit mining.
PNX intends to continue the regional
mapping program and assess the
regional targets for later drill testing.
Figure 10 Zinc in soil image over aerial photo, showing prospect areas and historical open
pit mines.
18
PNX METALS LIMITED | ANNUAL REPORT 2018 BURNSIDE PROJECT
The Burnside Exploration Project is
located along the Stuart Highway, only
150km south of Darwin. It surrounds
the Hayes Creek and Fountain Head
deposits, and therefore is strategically
important in the future growth plans
of PNX. There are numerous mineral
deposits and mineral occurrences within
the area that attest to the mineral wealth
of the tenure, including Cosmo-Howley,
Woolwonga, the Brocks Creek group,
and Goodall, with around 2Moz gold
produced historically. PNX believes there
are strong similarities between the model
for gold mineralisation here and the
Callie deposit (7Moz+) in the Tanami. The
recent discovery by PNX at Banner has
many similarities to the discovery of Callie
– in both cases found after following up
shallow gold anomalism in soils or RAB
drilling. Banner is one of many such
targets that exist within the large (approx.
1000km2) Burnside tenement package.
There are already indications that
mineral resources will be defined within
the Burnside project: prospects such
as Ithaca, Ios and Santorini along
the Howley Anticline are already well
advanced; Cookies Corner and C6 in the
Goodall area have what could now be
considered economic drill intersections
which were not followed up by Western
Mining in the 1980s; and the Golden
Dyke Dome contains numerous oxide pits
that have not had their sulfide zones drill
tested (Figure 11).
The base metals potential is evidenced
by the Iron Blow and Mt Bonnie zinc-
gold-silver VMS deposits and the historic
Mt Ellison copper mine. A number of
exciting EM targets, typical of this have
been identified in the last 12 months,
which need to be evaluate through
fieldwork over the next year.
Progress during 2017/18
A significant geochemical soils and
mapping program continued at the
Burnside Project in 2017/18. Much of
the work centred on the northern extent
Figure 11 Burnside Project area.
of the Mt Ellison-Deloraine zinc target
and into the “Farside” target. This has
identified coherent base metals and gold-
arsenic targets and is ongoing.
A SkyTEM survey was undertaken in
late 2017, as a means of detecting further
VMS mineralisation as seen at Iron Blow
and Mt Bonnie. The survey identified a
number of very high priority targets that
need to be evaluated through fieldwork.
The best of them lie in the Grove Hill area,
close to Fountain Head.
Planned work 2018/19
A selection of priority gold targets
are planned to be drilled, including
Snakebite, Davies 2 and Ithaca.
Drilling at Cookies Corner was
completed in September 2018, with
assay results pending.
Grassroots targets will continue to be
advanced through soil sampling and
mapping programs. This will include new
SkyTEM targets.
19
PNX METALS LIMITED | ANNUAL REPORT 2018 EXPLORATION REPORT
EXPLORATION PROJECTS
KILFOYLE FARM-IN PROJECT –
LITCHFIELD AREA, NT
On 31 May 2018, PNX executed a binding
term sheet with May Drilling Pty Ltd to
commence a farm-in over three exploration
licences in the Litchfield area of the NT,
approximately 80km to the west of Hayes
Creek (Figures 12 and 13). PNX can earn
a 90% interest in the tenements with
expenditure of $1.2 million over 3 years.
Fieldwork at Kilfoyle commenced in June
2018, with ground-truthing activities
including field mapping and soil and rock-
chip sampling across a range of existing
targets. As announced to the ASX on
16 July 2018, the initial field visit clearly
confirmed the prospectivity of the Kilfoyle
area for multiple styles of mineralisation.
Surface rock chip samples
yielded high-grade lithium and
lead-silver-gold, in particular:
Subsequent to year-end PNX
completed a detailed airborne magnetic
survey over the Woolianna Gabbro
and northern extension of the Daly
River mineral field to detect massive
sulphide accumulations.
A combined RC and diamond drilling
program (co-funded as noted above) is
planned to be completed by December
2018 to investigate the Ni-Cu-Co
(+/- PGE) mineralisation and Zn-Pb-Ag
VMS potential.
The Kilfoyle exploration project
is considered to be an excellent
strategic fit with, and complements,
PNX’s growing NT landholding in one
of Australia’s most prospective yet
underexplored mineral provinces.
• Numerous outcropping
pegmatites mapped over a
broad area with up to 7.16%
(White Rocks prospect) and
6.24% Li2O (Goosewing
prospect) in surface
sampling; and
• Up to 1.92% lead, 115g/t
silver and 1.04g/t gold
in surface sampling at
White Rocks.
The area is also considered
prospective for zinc and
nickel-copper-cobalt. In June
2018, PNX was successful
in its application for drill co-
funding to test the potential for
nickel-copper-cobalt sulphide
mineralisation at the Woolianna
prospect. 50% of the costs of
a planned drill program, to a
maximum of $83k, will be funded
by the Northern Territory’s
Geophysics and Drilling
Collaborations Program, which
is part of the NT Government’s
Resourcing the Territory initiative.
20
Figure 12 Kilfoyle Project prospective areas and zones of interest (green = lithium-
tin-tantalum-gold) (purple = nickel-copper-cobalt & zinc-lead VMS).
Green dots = copper deposits, purple = VMS, red = sample locations.
PNX METALS LIMITED | ANNUAL REPORT 2018 CHESSMAN PROJECT
The Chessman Project is located
approximately 20km due east of
Katherine (Figure 6) 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
considered for development by Kirkland
Lake Gold Ltd. Work at Chessman was
limited due to the prioritisation of other
exploration targets within the Company’s
NT project portfolio.
SOUTH AUSTRALIA - BURRA
REGION & YORKE PENINSULA
No on-ground exploration activities were
undertaken during the year by PNX on
the Company’s tenements in the Burra
region (prospective for copper/gold) or
Yorke Peninsula (prospective for IOCG).
Ausmex Mining Group Limited has
commenced a farm-in over PNX’s eight
exploration licences in the Burra area, to
earn up to a 90% interest over two stages
(60% and 90%) by spending a minimum
of $300,000 in each stage on diamond
drilling or other agreed exploratory work.
The first stage must be completed by
30 September 2019.
All South Australian tenements remain in
good standing.
21
Figure 13 Kilfoyle Project location.
Amblygonite at Goosewing, Kilfoyle.
PNX METALS LIMITED | ANNUAL REPORT 2018 EXPLORATION REPORT
ENVIRONMENT
SOCIAL AND
COMMUNITY
OCCUPATIONAL HEALTH
AND SAFETY
Mine Management Plans (MMPs) are
prepared and approved by the NT
Department of Primary Industry &
Resources for all of PNX’s project areas
in the NT, including the lodgement of
required environmental bonds, prior
to exploration activities taking place.
Progressive rehabilitation of disturbed
areas has occurred in accordance with
licence conditions, and will continue to
occur in the future.
PNX recognises and responds to the
growing expectation from community,
regulators and industry leaders for more
open community engagement and
stakeholder consultation. The Company
engages with local stakeholders,
including government, pastoral
leaseholders, Aboriginal groups, and
local community as an integral part of the
exploration process.
The Company recently participated in the
Mining the Territory Conference in early
September 2018.
PNX is committed to the health and
safety of its employees, contractors and
visitors. No reportable incidents occurred
during the year.
The Company reviews its Health and
Safety policies and procedures on a
regular basis to ensure it maintains a
high standard. All field staff take part
in ongoing training to develop skills for
supervising and conducting exploration
activities in remote environments.
22
PNX METALS LIMITED | ANNUAL REPORT 2018 TENEMENTS
NORTHERN TERRITORY
PNX TENEMENTS
TENEMENT
Hayes Creek
ML30512
ML30589
MLN1033
MLN1039
MLN214
MLN341
MLN342
MLN343
MLN346
MLN349
MLN405
MLN459
MLN811
MLN816
TOTAL
Other
MLN794
MLN795
ML30936
TOTAL
Fountain Head^
ML31124
MLN1020
MLN4
MLN1034
TOTAL
Moline^
ML24173
MLN1059
MLN41
TOTAL MINERAL LEASES
EL28616^
EL31099
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
Good Shepherd
Fountain Head
Fountain Head
Fountain Head
Fountain Head
Moline
Moline
Mt Evelyn
Moline
Bridge Creek
TOTAL EXPLORATION LICENCES
^ Acquisition of Fountain Head tenements and additional 49% of Moline was completed in July 2018
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%
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
168.0
8.1
8.1
106
122.6
33.5
12.0
529.9
304.2
879.6
3126.0
418.7
8.9
4,723.4
262.5km2
60.2km2
322.7km2
23
PNX METALS LIMITED | ANNUAL REPORT 2018 TENEMENTS
NORTHERN TERRITORY
FARM-IN TENEMENTS
TENEMENT
NAME
HOLDER
AREA (km2)
Burnside Project*
EL10012
EL10347
EL23431
EL23536
EL23540
EL23541
EL24018
EL24051
EL24058
EL24351
EL24405
EL24409
EL24715
EL25295
EL25748
EL9608
Chessman Project*
Tenement
EL25054
EL28902
ML30293
Kilfoyle Project**
EL29731
EL28462
EL30521
Mt Ringwood
Golden Dyke
Thunderball
Brocks Creek
Jenkins
Cosmo North
Hayes Creek
Margaret River
Yam Creek
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
PNX Metals Limited 51%, Newmarket 49%
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
Name
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%
Kilfoyle
Kilfoyle
Kifoyle
PNX 0%, May Drilling Pty Ltd 100%
PNX 0%, May Drilling Pty Ltd 100%
PNX 0%, May Drilling Pty Ltd 100%
TOTAL EXPLORATION LICENCES
*
PNX earning 90% interest under a farm-in agreement with Newmarket.
** PNX earning 90% interest under a farm-in agreement with May Drilling Pty Ltd.
14.9
10.0
13.4
70.4
16.7
3.3
23.4
86.9
3.3
13.4
4.1
22.1
56.8
10.0
584.5
10.0
64.0
104.5
1.1
51.5
360.6
157.8
1,683
24
PNX METALS LIMITED | ANNUAL REPORT 2018 SOUTH AUSTRALIA
PNX TENEMENTS
EXPLORATION LICENCES
NAME
HOLDER
AREA (km2)
Adelaide Geosyncline***
EL5382
EL5874
EL6150
EL5411
EL5918
EL5473
EL5910
EL5557
TOTAL
Yorke Peninsula
ELA 2018/00013
ELA 2017/00169
EL5491
EL5196
Burra Central
Burra West
Burra North
Mongolata
Princess Royal
Bagot Well
Spalding
Washpool
Minlaton
Point Pearce
Koolywurtie
Coonarie
TOTAL EXPLORATION LICENCES
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%
Wellington Exploration Pty Ltd 100%
PNX Metals Ltd 100%
PNX Metals Ltd 100%
*** Ausmex Mining Group earning up to 90% in these tenements over 2 stages under a farm-in agreement.
84
69
300
60
314
71
157
135
1,190
509
38
255
254
1,056
25
PNX METALS LIMITED | ANNUAL REPORT 2018 MINERAL RESOURCES AND ORE RESERVES
As at 30 June 2018
NORTHERN TERRITORY
HAYES CREEK MINERAL RESOURCES
Table 1: Iron Blow Mineral Resources by JORC Classification as at 3 May 2017
JORC
CLASSIFICATION
LODE
AuEq CUT-OFF
(g/t)
TONNAGE
(kt)
Zn
(%)
Indicated
East Lode
Total Indicated
Inferred
West Lode
East Lode
West Lode
FW Gold
HW Gold
Interlode Gold
Interlode Base Metal
Total Inferred
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
800
7.64
1,280
4.14
2,080
5.49
20
20
0.48
0.76
210
0.25
40
40
120
450
0.06
0.21
3.52
1.11
Total Indicated + Inferred Mineral Resource
2,530
4.71
Pb
(%)
1.83
0.33
0.91
0.34
0.96
0.07
0.09
0.03
0.32
0.18
0.78
Cu
(%)
0.30
0.31
0.30
0.16
0.13
0.03
0.01
0.07
0.14
0.07
0.26
Ag
(g/t)
275
60
143
132
109
16
6
8
35
27
122
Au
(g/t)
2.90
1.73
2.19
6.01
1.02
2.03
1.68
1.66
0.69
1.71
2.10
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
11.79
9.43
4.44
2.62
1.94
2.10
4.42
3.30
8.87
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
TONNAGE
(kt)
Zn
(%)
Oxide/Transitional
0.5g/t Au
195
0.94
Fresh
1% Zn
1,180
4.46
Oxide/Transitional
0.5g/t Au
32
0.43
1,375
3.96
Fresh
Ag Zone
1% Zn
50g/t Ag
118
2.91
21
0.17
171
2.11
Total Indicated + Inferred Mineral Resource
1,545
3.76
Pb
(%)
2.43
0.94
1.15
1.33
0.90
0.03
0.87
1.12
Cu
(%)
0.18
0.23
0.23
0.29
0.15
0.04
0.16
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)
Zn
(%)
3,455
4.88
622
1.39
4,077
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
26
PNX METALS LIMITED | ANNUAL REPORT 2018
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
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%
*
consensus prices at the time of the resources estimates.
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)
27
PNX METALS LIMITED | ANNUAL REPORT 2018 MINERAL RESOURCES AND ORE RESERVES
As at 30 June 2018
SOUTH AUSTRALIA
EL5918 – PRINCESS ROYAL
Table 5: Inferred Mineral Resource at Princess Royal
Princess Royal
CUT-OFF GRADE
TONNAGE
GRADE
% COPPER
TONNES COPPER
CONTAINED
>0.3%
>0.4%
>0.5%
286,757
216,586
184,995
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 and 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 consultant to 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.
28
PNX METALS LIMITED | ANNUAL REPORT 2018 DIRECTORS’ REPORT
29
PNX METALS LIMITED | ANNUAL REPORT 2018 DIRECTORS’ REPORT
The Directors of PNX Metals Limited (‘PNX’ or ‘Company’) present their report for the
financial year ended 30 June 2018.
DIRECTORS
The names and details of directors in office during and since the end of the financial year are as follows.
GRAHAM ASCOUGH
Non-executive Chairman
Appointed 7 December 2012
PAUL J DOWD
Non-executive Director
Appointed 27 September 2007
PETER WATSON
Non-executive Director
Appointed 7 September 2007
Graham Ascough (BSc, PGeo, MAusIMM)
is a senior resources executive with more
than 25 years of industry experience
evaluating mineral projects and resources
in Australia and overseas.
Mr Ascough, a geophysicist by training,
has had broad industry involvement
playing a leading role in setting the
strategic direction for companies,
completing financing and in implementing
successful exploration programmes.
Mr Ascough was the Managing Director
of Mithril Resources Ltd from October
2006 until June 2012. Prior to joining
Mithril in 2006, he was the Australian
Manager of Nickel and PGM Exploration
at a major Canadian resources house,
Falconbridge Limited, which was acquired
by Xstrata Plc in 2006. He 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 2018, Graham Ascough held
the following directorships of other listed
companies for the following periods:
• Non-executive Chairman, 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
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
2018, 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
2018, Peter Watson held no directorships
of other listed companies.
30
PNX METALS LIMITED | ANNUAL REPORT 2018 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 subsidiary (‘Group’)
during the financial year was progression
of a Definitive Feasibility Study (‘DFS’)
over its zinc-gold-silver Hayes Creek
Project, as well as conducting near-mine
and regional mineral exploration at its
Moline, Burnside, and Chessman projects
in the Pine Creek region of the Northern
Territory (‘NT’).
Refer to the Overview and Exploration
Report sections of this Annual Report for
detail on the Hayes Creek Project and
regional exploration activities conducted
during the year in the NT.
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 2018,
David Hillier held no 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
over 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 2018, James Fox held no
directorships of other listed companies.
COMPANY SECRETARY
Tim Moran
Tim Moran is a Chartered Accountant
with over 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 3,791,581 Shares.
Paul Dowd,
Non-Executive Director
Paul Dowd has a direct interest in
500,000 Shares, and an indirect interest
in 7,096,648 Shares.
Peter Watson,
Non-Executive Director
Peter Watson has a direct interest in
1,767,231 Shares and an indirect interest
in 8,428,571 Shares.
David Hillier,
Non-executive Director
David Hillier has an indirect interest in
3,428,571 Shares.
James Fox,
Managing Director & CEO
James Fox holds 3,200,000 Performance
Rights, and a related party of Mr Fox
holds 6,577,381 Shares.
31
PNX METALS LIMITED | ANNUAL REPORT 2018 DIRECTORS’ REPORT
REVIEW OF OPERATIONS
The Group reported an overall loss after
tax for the year of $0.7 million (2017:
$2.7 million). The pre-tax loss from
continuing operations was $1.3 million
compared to $1.5 million (excluding
impairment charges) in the prior year.
The lower loss figure was due primarily
to lower non-cash equity-based
compensation (down $0.1 million) and
lower interest expense on a loan that was
settled during the year.
The Group’s other corporate costs,
which include head office wages,
directors’ fees, professional fees, and
insurance, regulatory, occupancy
and communication costs have not
changed significantly.
Net operating cash outflows of
$0.7 million for the year reflect the loss
after tax. Exploration cash outflows of
$3.0 million consisted of $1.6 million
on the Hayes Creek DFS, including a
75 hole drilling program for resource
definition and geotechnical, hydrological
and metallurgical purposes. NT regional
exploration costs for the year were
$1.4 million, notably drilling at Moline
($0.5 million) and Fountain Head
($0.2 million), with the latter program
ongoing at year end.
In the first half of the 2018 financial year,
the Company raised a total of $3.3m
($3.1m after costs) via a share placement
at 1.05 cents per share to sophisticated
and institutional investors ($1.9 million),
a Share Purchase Plan ($0.6m), and
through the receipt of $0.8m from a
second forward sale of silver from the
Hayes Creek Project. PNX also reached
agreement with convertible note holders
and a lender to settle both the notes
($0.6 million) and the loan ($1.2 million)
via the issue of 24 million and 80 million
shares in PNX respectively. The notes
were converted in late November
2017 and the loan was converted in
February 2018.
32
There has been no other 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
advancing the Hayes Creek Project
to development and production, and
by making new mineral discoveries in
the Pine Creek region of the Northern
Territory to either supplement Hayes
Creek or to be developed as stand-
alone operations.
In 2018-19, PNX plans to complete
detailed feasibility studies over the Hayes
Creek Project, including finalisation
of metallurgical studies and process
plant design. The Company also
hopes to secure marketing and sales
agreements, and to prepare the Project’s
Environmental Impact Statement for
publication.
The Company will continue near-mine
and regional exploration, targeting
gold and base metals mineralisation
that could supplement the established
mineral resources at Hayes Creek. PNX
expects to complete the second stage
of its farm-in agreement with Newmarket
by December 2018, thereby earning an
incremental 39%, and total 90%, interest
in the Burnside and Chessman projects.
At 30 June 2018, the Group had cash
holdings of $0.9 million and net working
capital of $0.7 million excluding the
investment in Sunstone Metals Limited.
In August 2018, the Company raised
$2.1 million from the first tranche
of a two-part share placement to
sophisticated and professional investors.
A further $1.36 million is expected to
be received in late September 2018,
including $115,000 from Company
Directors, following receipt on
12 September 2018 of shareholder
approval for the issue of the second
tranche of shares. All shares (total
433,125,000) have an issue price of
0.8 cents per share, and each share
includes an attaching free unquoted
option, exercisable at 1.5 cents and
expiring on 30 September 2021.
The options (total 433,125,000) are
expected to be issued under a disclosure
document in October 2018, following
receipt of shareholder approval for the
issue on 12 September 2018.
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
Aside from the capital raising noted
above, subsequent to year end PNX
formally completed the acquisition of
100% of the Fountain Head mineral
leases and an incremental 49% interest
(total now 100%) in the Moline project
tenements. The Fountain Head and
Moline tenements were acquired from
Newmarket Gold NT Holdings Pty Ltd
(‘Newmarket’), a subsidiary of dual listed
(ASX and TSX) gold producer Kirkland
Lake Gold Limited.
PNX METALS LIMITED | ANNUAL REPORT 2018 DIRECTORS’ ATTENDANCE AT
MEETINGS
There were 9 Board meetings held during
the financial year. Graham Ascough and
James Fox attended all 9, while Paul
Dowd, Peter Watson, and David Hillier
attended 8 of the 9 meetings.
4 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 by invitation.
Paul Dowd attended 3 of the 4 meetings
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.
ENVIRONMENT REGULATION
AND PERFORMANCE
The Group continues to meet all
environmental obligations across its
tenements. An environmental Notice
of Intent was lodged with the NT’s
Department of Primary Industry &
Resources in August 2018, as the first
step toward completing an Environmental
Impact Statement over the Hayes Creek
Project.
OPTIONS AND PERFORMANCE
RIGHTS
During the year, 3,090,000 shares were
issued in satisfaction of Performance
Rights that vested under the Company’s
Performance Rights Plan. 1,250,000
Performance Rights expired at 30 June
2018 as the vesting conditions were not
met. At the date of this report, 7,070,000
Performance Rights are on issue.
During the year 20,000,000 unquoted
options were issued to a subsidiary
of Hartleys Limited under the terms of
a service agreement. The options, of
which 10,000,000 have vested, have an
exercise price of 1.47 cents and expire on
30 October 2020. As at the date of this
report, a total of 85,450,000 Options are
on issue, including 65,450,000 held by
participants in a 2016 capital raising, with
a 5.0 cent exercise price and expiring on
31 May 2019.
As noted previously under Significant
Events Subsequent to the end of the
Financial Year, following receipt of
shareholder approval on 12 September
2018, 433,125,000 unquoted options
will be issued in October 2018 to
participants in the August/September
share placement, with an exercise
price of 1.5 cents and expiring on 30
September 2021.
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 of the
Company. The contracts of insurance
contain confidentiality provisions that
preclude disclosure of the premium paid.
33
PNX METALS LIMITED | ANNUAL REPORT 2018 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
– resigned 16 August 2018)
RELATIONSHIP BETWEEN
REMUNERATION POLICY AND
GROUP PERFORMANCE
There is no direct link between the
Group’s financial and operating
performance and the setting of
remuneration except as discussed below
in relation to certain 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
operating performance and
shareholder value by the granting
of Performance Rights with
performance-based vesting
conditions; and
• ensure total remuneration is
competitive by market standards.
The Group does not currently have
a policy on trading in derivatives that
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-
34
PNX METALS LIMITED | ANNUAL REPORT 2018 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.
Summary details of remuneration for non-
executive Directors are given in the tables
on pages 36 and 37. Remuneration is
not dependent on the satisfaction of
performance conditions. The maximum
aggregate remuneration of non-executive
Directors, other than for extra services or
special exertions, is $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,
vehicle and telephone benefits to
a maximum of $20,000, as well as
mandated superannuation contributions,
20 days annual leave and 10 days sick
leave per annum.
At 30 June 2018 and as of the date of
this report, Mr Fox held no Shares in the
Company. At 30 June 2018 and the date
of this report, a related party of Mr Fox
held 6,577,381 Shares in the Company.
During the year, 800,000 of a total of a
4,000,000 Performance Rights issued to
Mr Fox in the prior financial year vested,
and 800,000 shares were consequently
issued to Mr Fox’s nominee. Mr Fox
continues to hold 3,200,000 Performance
Rights which have performance
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 2018, 1,250,000 Performance
Rights issued to Mr Fox in 2016 expired
as the performance conditions were
not met.
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 breaches any term of his
contract of employment and this is
not remedied within 14 days of notice
of the breach to him by the Company;
• materially contravenes any share
dealing code relating to shares;
•
•
is the subject of, or causes the
Company or Group to be the subject
of, a material penalty or serious
reprimand imposed by any regulatory
authority; or
independently acts in a manner
contravening the directives and
expressed wishes of the Board.
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 2018 financial
year, Mr Moran’s fees were $155,640
inclusive of superannuation.
In the prior financial year, Mr Moran was
granted 1,200,000 Performance Rights,
with similar performance conditions to
those noted above for Mr Fox. During
the year 300,000 of these Performance
Rights vested and the related 300,000
shares were issued to Mr Moran.
At 30 June 2018 and as at the date of
this report, Tim Moran holds 300,000
Shares and 900,000 Performance Rights.
EXPLORATION MANAGER
REMUNERATION
Andy Bennett commenced as Exploration
Manger on 1 January 2015, and resigned
on 16 August 2018. Mr Bennett’s annual
salary was $195,000 plus mandated
superannuation contributions, and he
was entitled to 20 days annual leave and
10 days sick leave each year.
In the prior financial year, Mr Bennett was
granted 3,000,000 Performance Rights
under the Plan, with similar performance
conditions to those noted previously
for Mr Fox. During the year 750,000 of
these Performance Rights vested and
the related 750,000 shares were issued
to Mr Bennett. At 30 June 2018 and
at the date of this report, Mr Bennett
held 988,095 Shares and 2,250,000
Performance Rights.
35
PNX METALS LIMITED | ANNUAL REPORT 2018 DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED
REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
Directors’, Company Secretary and Key Management Personnel remuneration (all amounts are paid or payable) for the year ended
30 June 2018:
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 Dowd
Peter Watson
David Hillier
James Fox
$75,000
$36,530
$36,530
$40,000
-
$3,470
$3,470
-
-
-
-
-
$75,000
$40,000
$40,000
$40,000
$275,000
$26,125
$11,5541
$312,679
Chief Financial Officer & Company Secretary
Tim Moran
$142,137
$13,503
$2,6411
$158,281
Other Key Management Personnel
Andy Bennett
TOTALS
$195,000
$800,197
$18,525
$65,093
$7,5291
$221,054
$21,724
$887,014
1
Value of Performance Rights that have not yet vested that is attributable to the 2018 financial year.
0%
0%
0%
0%
3.7%
1.7%
3.4%
Directors’, Company Secretary 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
Chief Financial Officer & Company Secretary
Tim Moran
Other Key Management
Personnel
Andy Bennett
TOTALS
$75,000
$18,265
$34,247
$40,000
-
$19,235
$3,253
-
-
-
-
-
$75,000
$37,500
$37,500
$40,000
$262,500
$24,938
$46,4472,3
$333,885
$148,151
$14,074
$9,3703
$171,595
$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, and $25,447 being the value of Performance Rights issued to
Mr Fox 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.
Other than the amounts disclosed in the column for equity, all other remuneration amounts are fixed.
36
PNX METALS LIMITED | ANNUAL REPORT 2018 EQUITY HOLDINGS OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
i) Fully paid ordinary shares issued by PNX Metals Limited:
Directors
Graham Ascough
Paul Dowd
Peter Watson1
David Hillier
James Fox2
Key Management Personnel
Tim Moran
Andy Bennett
BALANCE
01/07/17
2,363,010
6,168,077
8,767,231
2,000,000
-
-
-
NET CHANGES3
1,428,571
1,428,571
1,428,571
1,428,571
-
300,000
988,095
BALANCE
30/06/18
3,791,581
7,596,648
10,195,802
3,428,571
-
300,000
988,095
1 Additional shares held by related parties: 1,354,165 (2017: 1,354,165)
2 Shares held by related party at 30 June 2018: 6,577,381 (2017: 4,825,000)
3 Movement in Director holdings from participation in an SPP during the year
ii) Performance Rights issued by PNX Metals Limited and outstanding:
2015
BALANCE 01/07/17
GRANTED
VESTED
LAPSED
James Fox
Tim Moran
Andy Bennett
5,250,000
1,200,000
3,000,000
-
-
-
800,000
300,000
750,000
1,250,000
-
-
BALANCE
30/06/18
VESTED
UNVESTED
-
-
-
3,200,000
900,000
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 cost of these services during the financial year inclusive of GST was $40,524 (2017:$24,518).
END OF REMUNERATION REPORT
Signed on 20th September 2018 in accordance with a resolution of the Board made pursuant to section 298(2) of the Corporations
Act 2001.
Graham Ascough
C H A I R M A N
37
PNX METALS LIMITED | ANNUAL REPORT 2018
AUDITORS INDEPENDENCE DECLARATION
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. www.grantthornton.com.au Grant Thornton Audit Pty Ltd Grant Thornton House Level 3 170 Frome Street Adelaide, SA 5000 T +61 8 8372 6666 F +61 8 8372 6677 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 2018, I declare that, to the best of my knowledge and belief, there have been: a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b no contraventions of any applicable code of professional conduct in relation to the audit. Grant Thornton Audit Pty Ltd Chartered Accountants J L Humphrey Partner – Audit & Assurance Adelaide, 20 September 2018 PNX METALS LIMITED | ANNUAL REPORT 2018 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 21 September 2018 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 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
opportunities and reviewing the
effectiveness of the Company’s
internal controls to manage risks;
• Appointing, removing and monitoring
the performance of the Chairman, MD
& CEO, senior executives, consultants
and the Company Secretary;
• Approving the remuneration of
Directors within the limits approved by
shareholders, and the remuneration of
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 providing a new Director
with 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 2018 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 with
aspirations to becoming a successful
mining 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. The Board, however, 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, four are male and one
is 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. The last formal board
performance evaluation was completed
in January 2017. No major deficiencies in
Board or individual director performance
were noted, although some improvement
areas were identified and actioned.
The next board performance review is
scheduled to occur in 2018/19.
A performance appraisal process
exists regarding the Company’s senior
executives, whereby the performance of
executives is formally reviewed against
previously set goals relating to both
Company and individual performance.
The performance of the MD & CEO
is monitored by the Board, and his
performance is informally reviewed
each year.
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 2018 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
other 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 activities,
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.
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. Grant Thornton
has a policy, in accordance with the
Corporations Act, of rotating the partner
responsible for the PNX Metals Limited
audit engagement every five years.
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 documents the controls in place to
manage these risks.
41
PNX METALS LIMITED | ANNUAL REPORT 2018 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.
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 and permitting
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 have been and
continue to be used for feasibility studies
in relation to the Company’s Hayes
Creek Project.
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 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
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 2018 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2018
Interest income
Other income
Employee benefits
Professional fees
Directors’ fees
Exploration – tenement maintenance
Occupancy
Insurance
Share registry and regulatory
Communication
Audit fees
Equity-based remuneration
Other expenses
Depreciation
Impairment – exploration and evaluation assets
Impairment – financial assets
Interest charges
Loss before income tax – 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:
NOTE
4(a)
11
4(c)
23
21
4(b)
4(d), 11
10
14
5
6
Increase in fair value of investment (tax: nil)
10, 19
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)
28
28
YEAR ENDED
30/06/18
$
34,160
24,920
(247,490)
(369,824)
(195,000)
(87,158)
(66,284)
(28,226)
(88,019)
(11,275)
(38,436)
(24,134)
(91,421)
(5,263)
-
-
(59,845)
(1,253,295)
252,620
(1,000,675)
-
(1,000,675)
296,516
(704,159)
(0.1)
(0.1)
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)
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 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2018
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments and deposits
Other financial assets
Total current assets
NON-CURRENT ASSETS
Other receivable
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
30/06/18
$
860,076
143,071
153,739
489,896
30/06/17
$
1,430,630
293,179
133,832
193,380
1,646,782
2,051,021
-
9,706,714
22,161
9,728,875
11,375,657
358,075
101,670
459,745
67,340
-
2,400,000
2,467,340
2,927,085
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
8,448,572
5,550,694
36,917,796
32,665,302
-
336,746
600,000
90,687
(28,805,970)
(27,805,295)
8,448,572
5,550,694
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
44
PNX METALS LIMITED | ANNUAL REPORT 2018 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2018
ISSUED CAPITAL
OTHER EQUITY
RESERVES
$
$
Balance at 30 June 2016
28,377,292
600,000
Total comprehensive loss for the year
Shares issued
Share issue costs
-
4,586,250
(268,240)
Interest on convertible notes – reduction to equity
(30,000)
Fair value of equity settled payments
-
-
-
-
-
-
$
-
-
-
-
-
90,687
ACCUMULATED
LOSSES
$
TOTAL
$
(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
Total loss for the year
Other comprehensive income
Total comprehensive loss for the year
Shares issued
Share issue costs
-
-
-
2,619,213
(155,007)
-
-
-
-
-
Shares issued – settlement of convertible
notes and loan principal
1,800,000
(600,000)
Interest on convertible notes – reduction to equity
(11,712)
Fair value of equity settled payments
Balance at 30 June 2018
-
36,917,796
-
-
-
-
(1,000,675)
(1,000,675)
296,516
-
296,516
296,516
(1,000,675)
(704,159)
(74,591)
-
-
24,134
-
-
-
-
-
2,544,622
(155,007)
1,200,000
(11,712)
24,134
336,746
(28,805,970)
8,448,572
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
45
PNX METALS LIMITED | ANNUAL REPORT 2018 CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2018
CASH FLOWS RELATING TO OPERATING ACTIVITIES
Receipt of Research and Development tax refunds (Note 5)
Payments to suppliers and employees
Net operating cash flows
CASH FLOWS RELATING TO INVESTING ACTIVITIES
Interest received
Loan repaid/(advanced) (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 (Note 16)
Proceeds from share issues (Note 17)
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
Non-cash miscellaneous income
Equity-based remuneration
Interest expense – equity settled
Depreciation and amortisation
Equity-settled marketing services
Exploration not capitalised – investing
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
Net operating cash flows
INFLOWS/(OUTFLOWS)
YEAR ENDED
30/06/18
$
INFLOWS/(OUTFLOWS)
YEAR ENDED
30/06/17
$
402,620
(1,133,950)
(731,330)
32,736
50,000
(3,027,395)
(2,773)
(2,947,432)
800,000
2,463,215
(155,007)
3,108,208
(570,554)
1,430,630
860,076
(1,000,675)
(34,160)
(24,398)
24,134
52,845
5,263
-
87,158
-
-
142,133
(1,266)
(5,329)
22,965
(731,330)
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
(866,408)
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
46
PNX METALS LIMITED | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
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 entity (“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 21st September 2018.
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 ending 30 June
2018 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 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.
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 2020: AASB 16 Leases
This standard replaces AASB 117 Leases and some lease-
related Interpretations. The new standard:
»
»
»
»
requires all leases to be accounted for ‘on-balance sheet’ by
lessees, other than short-term and low value asset leases
provides new guidance on the application of the definition of
lease and on sale and lease back accounting
largely retains the existing lessor accounting requirements in
AASB 117
requires new and different disclosures about leases
When this standard is first adopted for the year ending 30 June
2020, it is not expected that there will be a material impact
on the transactions and balances recognised in the financial
statements or on the notes to the financial statements. The
Group has only a few operating leases currently in place.
47
PNX METALS LIMITED | ANNUAL REPORT 2018
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.
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 2018, the Group made
a total comprehensive loss of $704,159 (2017: total
comprehensive loss of $2,705,004) and recorded a net
cash outflow from operating and investing activities of
$3,678,762 (2017: $4,320,762). At 30 June 2018, the
Group had cash of $860,076 (2017: $1,430,630), net
current assets excluding the investment in Sunstone Metals
Ltd of $697,141 (2017: $1,200,877) and net assets of
$8,448,572 (2017: $5,550,694).
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 $3.4 million after costs via the placement of
433 million shares at 0.8 cents per share to sophisticated
and professional investors, and Company directors. The
placement was conducted in two parts, with $2.1 million
received in August 2018, and a further $1.4 million will be
received by the end of September 2018, following receipt of
shareholder approval on 12 September 2018.
Notwithstanding the raising of these funds, additional capital
will be required in 2019 to complete detailed feasibility
studies 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:
¬ has power over the investee;
¬ is exposed, or has rights, to variable returns from its
involvement with the investee; and
¬ has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control
listed above.
48
PNX METALS LIMITED | ANNUAL REPORT 2018 d) Discontinued operations & assets held for sale
Other financial assets – available 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.
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.
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 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.
49
PNX METALS LIMITED | ANNUAL REPORT 2018
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.
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:
¬ the rights to tenure of the area of interest are current;
and
¬ 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 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.
50
PNX METALS LIMITED | ANNUAL REPORT 2018 n) Employee benefits
q) Leases
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.
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.
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.
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.
51
PNX METALS LIMITED | ANNUAL REPORT 2018
Tax consolidation
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.
Impairment
Determining whether assets are impaired requires an
estimation of the value in use or fair value of the assets or
cash-generating units to which assets are allocated. The 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 prior year an impairment loss of $1,500,000 was
recognised in relation to certain Exploration and Evaluation
Assets – refer to Note 11 for detail.
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.
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.
s) Goods and service tax
Revenues, expenses, assets and liabilities are recognised
net of the amount of goods and services tax (GST), except:
i) where the amount of GST incurred is not recoverable
from the taxation authority, in which case it is recognised
as part of the cost of acquisition of an asset or as part of
an item of expense; or
ii)
for receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables.
Cash flows are included in the cash flow statement on a
gross basis. The GST component of cash flows arising from
investing and financing activities which is recoverable from,
or payable to, the taxation authority is classified as operating
cash flows.
t) Earnings per share
Basic earnings per share is calculated by dividing the profit
or loss attributable to owners of the Company (excluding
any costs of servicing equity other than ordinary shares)
by the weighted average number of ordinary shares
outstanding during the financial year.
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account:
¬ the after tax effect of interest and other financing costs
associated with dilutive potential ordinary shares; and
¬ the weighted average number of additional ordinary
shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
52
PNX METALS LIMITED | ANNUAL REPORT 2018
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% (2017: 27.5%)
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 current tax year
Recognition of actual research and development
tax refund related to the previous tax year
YEAR ENDED
30/06/18
$
YEAR ENDED
30/06/17
$
32,125
2,035
34,160
5,263
66,284
49,105
1,500
50,605
7,605
66,294
-
1,500,000
YEAR ENDED
30/06/18
$
(100,000)
(152,620)
(252,620)
1,253,295
(344,656)
6,637
338,019
(100,000)
(152,620)
YEAR ENDED
30/06/17
$
(250,000)
(154,958)
(404,958)
3,109,962
(855,240)
24,938
830,302
(250,000)
(154,958)
Tax expense (benefit)
(252,620)
(404,958)
The tax rate used in the above reconciliation is the corporate
tax rate of 27.5% payable by Australian small business
entities (those with less than $10 million of revenue).
b) Recognised tax assets and liabilities
Deferred tax assets and (liabilities) are attributable to the following:
Exploration and evaluation expenditure
(2,861,314)
(2,033,098)
Plant and equipment
Trade and other payables
Employee benefits
Share issue costs
Net deferred tax liabilities
Tax losses recognised
Net deferred tax assets / (liabilities)
(6,648)
7,200
50,703
89,600
(2,720,459)
2,720,459
-
(11,404)
35,998
43,814
75,344
(1,889,346)
1,889,346
-
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.
53
PNX METALS LIMITED | ANNUAL REPORT 2018 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)
30/06/18
$
8,143,312
160,307
30/06/17
$
8,004,469
115,307
Of the total operating tax losses of approximately $36 million in the Group at 30 June 2018, $27 million are unrecognised as shown
above as an $8.1 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 prior year, the Company completed the sale of its wholly owned subsidiary Leigh Creek Copper Mine Pty Ltd (‘LCCM’) to Resilience
Mining Australia Limited (‘RMA’), effective 21 November 2016.
There was no up-front cash consideration; however, RMA assumed 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 was repaid in March 2018 in full. Interest on the loan received during the 2018 financial year was
$2,035 (2017: $1,500) as shown in Note 4(a).
The loss incurred on discontinued operations at Leigh Creek up to 21 November 2016 has been shown in the prior year’s Statement of
Profit or Loss as a separate line, and is detailed below:
LCCM SALE – 21/11/2016
Mine site maintenance
Loss – discontinued operations
Loss per share (cents) basic and diluted
Cash outflows
30/06/17
$
38,535
38,535
0.01
38,535
Detail of the assets and liabilities of the disposal group at the point of sale and the net nil gain or loss on sale from the prior year is shown
below:
LCCM SALE – 21/11/2016
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
54
30/06/17
$
150,000
3,634,902
(3,634,902)
410,250
560,250
(560,250)
-
-
-
PNX METALS LIMITED | ANNUAL REPORT 2018 7. CASH AND CASH EQUIVALENTS
Cash at bank
Term deposits
30/06/18
$
360,076
500,000
860,076
30/06/17
$
780,630
650,000
1,430,630
At year end, term deposits were invested for 90 days earning 2.4% 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
30/06/18
$
2,942
100,000
29,013
11,116
143,071
30/06/17
$
1,519
250,000
41,544
116
293,179
The Research & development claim for the 2017-18 year of $100,000 has been accrued based on estimated qualifying expenditure, and
will be finalised with the lodgement of PNX’s 2018 tax return.
9. PREPAYMENTS AND DEPOSITS
Prepayments
Environmental Deposits – Northern Territory
Deposit – office bond
30/06/18
$
16,755
104,224
32,760
153,739
30/06/17
$
16,988
84,084
32,760
133,832
Environmental deposits are required to be lodged with the Department of Primary Industry & Resources in the Northern Territory prior to
the commencement of exploration activities.
The office bond is invested in a 365 day term deposit maturing February 2019 and earning 2.4% interest.
10. OTHER FINANCIAL ASSETS
Investment in Sunstone Metals Ltd
30/06/18
$
489,896
30/06/17
$
193,380
The Company continues to hold 12,892,013 shares in ASX listed Sunstone Metals Limited (‘Sunstone’, previously Avalon Minerals
Limited).
At each reporting date, the carrying value of the investment in Sunstone is revalued to fair value. Under AASB 13 Fair Value Measurement,
and consistent with prior periods, the fair value of the investment in Sunstone is determined with reference to its quoted market price on
the ASX.
At 30 June 2018, the investment was revalued up to $489,896, with the incremental movement recorded in Other Comprehensive
Income/Loss in accordance with AASB 139 Financial Instruments: Recognition and Measurement – refer Note 19.
In the prior year, an impairment charge of $64,460 was recorded based on the market value of Sunstone’s shares at that time. The
impairment was recorded in profit or loss in accordance with AASB 139.
55
PNX METALS LIMITED | ANNUAL REPORT 2018 11. EXPLORATION AND EVALUATION EXPENDITURE
Costs brought forward
Expenditure incurred during the year
Recognised as an expense (tenements previously impaired)
Impairment charges
30/06/18
$
6,899,372
2,894,500
(87,158)
-
9,706,714
30/06/17
$
4,688,184
3,798,152
(86,964)
(1,500,000)
6,899,372
Expenditure during the year related to ongoing detailed feasibility studies on the Hayes Creek Project (100% owned) as well as near-mine
and regional mineral exploration activity on the Group’s Northern Territory tenements (51% owned progressing toward 90% under a farm-
in agreement).
During the year, PNX executed an agreement with Newmarket Gold NT Holdings Pty Ltd (‘Newmarket’) for the acquisition of 4 mineral
leases at Fountain Head in the Pine Creek region of the Northern Territory, thereby securing the preferred location for the proposed
processing plant and tailings facility for the Hayes Creek Project. As part of the agreement, PNX took 100% ownership of the Moline
Exploration Project (previously 51% owned).
In return, PNX agreed to carve out (and return to Newmarket its 100% ownership of) three exploration areas within the Burnside project
area that were part of the farm-in agreement with Newmarket, and to provide a 2% royalty over any future gold and silver produced from
the Moline and Fountain Head tenements. Completion of this transaction occurred in July 2018.
In the prior year, an impairment charge of $1.5 million 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. At 30 June 2018, the fair value of PNX’s SA tenements remains at
$0.5 million, assessed on the same basis as the prior year.
12. PLANT AND EQUIPMENT
COST
Balance at 30 June 2016
Additions
Disposals
Balance at 30 June 2017
Additions
Disposals
Balance at 30 June 2018
Accumulated depreciation
Balance at 30 June 2016
Depreciation expense
Depreciation capitalised to exploration assets
Disposals
Balance at 30 June 2017
Depreciation Expense
Depreciation capitalised to exploration assets
Disposals
Balance at 30 June 2018
Net book value – plant and equipment
Balance at 30 June 2017
Balance at 30 June 2018
The useful lives applied in the determination of depreciation for all items of plant and equipment is 3-5 years.
56
$
440,235
20,654
-
460,889
2,773
-
463,662
402,765
7,605
12,504
-
422,874
5,263
13,364
-
441,501
38,015
22,161
PNX METALS LIMITED | ANNUAL REPORT 2018 13. TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Other payables
Average credit period on trade payables is 30 days.
14. LOAN
Loan
30/06/18
$
303,419
32,221
22,435
358,075
30/06/18
$
-
30/06/17
$
363,455
153,942
24,272
541,669
30/06/17
$
1,200,000
During the year, the Company reached agreement with Marilei International Limited to settle the $1.2 million loan through the issue
of 80,000,000 ordinary shares (1.5 cents per share). This agreement was negotiated in conjunction with an agreement to settle the
convertible notes held by Marilei and Sochrastem SA, as outlined in Note 18.
In February 2018 81.4 million shares were issued to settle and extinguish the loan principal and final interest owing (refer Note 17 (d) and
(f)). Total interest incurred during the year was $59,845 (2017:$100,000), of which $52,845 was settled by issuing shares.
15. PROVISIONS
Current
Employee benefits
Non-current
Employee benefits
16. DEFERRED REVENUE
Silver streaming receipts
30/06/18
$
30/06/17
$
101,670
95,095
67,340
50,950
30/06/18
$
30/06/17
$
2,400,000
1,600,000
During the year the two parties to the silver streaming and royalty agreements with the Company each exercised their option to acquire an
additional 56,000 troy ounces of silver, for a forward payment of $400,000 each (total $0.8 million).
The Company has received a total of $2.4 million under these agreements, for the forward sale of a total of 336,000 oz of silver, to be
delivered over a 3 year period once commissioning and ramp up of the Hayes Creek Project is complete. At the end of the three year
silver delivery period, each investor is to receive a 0.36% 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 $0.4 million.
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. In the event the Hayes Creek Project is not
developed, the forward payments will be converted to shares in the Company.
57
PNX METALS LIMITED | ANNUAL REPORT 2018 17. ISSUED CAPITAL
1,088,930,020 fully paid ordinary shares (2017: 741,055,537)
36,917,796
32,665,302
30/06/18
$
30/06/17
$
Movement in ordinary shares for the year:
Ref
NO.
30/06/18
$
NO.
30/06/17
$
Balance at beginning of year
741,055,537
32,665,302
507,783,980
28,377,292
Shares issued under Performance Rights Plan
3,090,000
74,591
Shares issued at 1.05 cents
234,591,886
2,463,215
Shares issued to settle convertible notes
24,000,000
600,000
Shares issued to settle loan
80,000,000
1,200,000
-
-
-
-
-
-
-
-
Shares issued to settle interest
on convertible notes
1,156,698
15,000
1,551,938
30,000
Shares issued to settle interest on loan
5,035,899
66,407
4,153,830
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
Interest on convertible notes –
reduction in share capital
Share issue costs
Balance at end of year
-
-
-
-
-
-
-
-
-
-
-
-
(11,712)
(155,007)
1,000,000
1,000,000
90,000
19,000
21,000
93,065,789
1,768,250
130,900,000
2,618,000
1,600,000
-
-
40,000
(30,000)
(268,240)
1,088,930,020
36,917,796
741,055,537
32,665,302
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
Fully paid shares carry one vote per share and a right to dividends.
a) 3,090,000 shares were issued in August 2017 to PNX personnel or their associates following the vesting of an equivalent number of
performance rights.
b) Shares were issued under a placement to sophisticated and professional investors (179,830,000 shares, September 2017) and a
Share Purchase Plan (54,761,886 shares, October 2017) at 1.05 cents per share, raising a total of $2.5 million before costs.
c) 24,000,000 shares were issued to settle $0.6 million of convertible notes (refer Note 18).
d) 80,000,000 shares were issued to settle a $1.2 million loan (refer Note 14).
e) Shares were issued in November 2017 at the Company’s preceding 30 day volume-weighted average share price (VWAP) of 1.3
cents to settle a total of $15,000 (2017: $30,000) of interest payable on convertible notes.
f) Shares were issued in November 2017 (3,599,194 shares) and February 2018 (1,436,705 shares) at the Company’s 30 day VWAP of
1.25 cents and 1.49 cents respectively to settle a total of $66,407 (2017: $90,000) of interest payable on a $1.2 million loan.
g) Prior year: 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.
h) Prior year: Shares were issued in November 2016 to the Company’s Managing Director as a performance bonus.
i) Prior year: 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 November 2016 at 1.9 cents per share raising $1.75 million before costs.
j) Prior year: 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.
k) Prior year: Shares were issued in return for investor relations services, at an agreed value of 2.5 cents per share.
l)
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.
58
PNX METALS LIMITED | ANNUAL REPORT 2018 18. OTHER CONTRIBUTED EQUITY
Convertible notes – equity settled
30/06/18
$
-
30/06/17
$
600,000
During the year, the Company reached agreement with Marilei International Limited and Sochrastem SA to convert the notes into
24,000,000 shares (12 million each), at a price of 2.5 cents per share. The shares were issued in November 2017. The agreement was
negotiated in conjunction with the settlement of a loan due to Marilei, as detailed in Note 14.
Final six monthly interest payable of $15,000 was settled in November 2017 by issuing shares as outlined in Note 17(e).
19. RESERVES
Available for sale investment
Equity-settled benefits
30/06/18
$
296,516
40,230
336,746
30/06/17
$
-
90,687
90,687
The available for sale investment reserve reflects the movement in the fair value of the Company’s investment in Sunstone Metals Ltd,
which increased during the year.
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. Amounts are transferred out of the reserve and into issued capital when the
rights are converted into shares, or to accumulated losses if rights lapse.
During the year $74,591 was transferred from the reserve to share capital following the conversion of 3,090,000 performance rights to
shares as outlined in Note 17(a).
There was also an increase to the reserve of $24,134 from share-based payment expense for the year, which reflects that portion of the
value of performance rights granted under the Plan in 2017 that is applicable to the 2018 financial year.
Further information on share-based payments is disclosed in Note 21.
20. ACCUMULATED LOSSES
Balance at beginning of year
Loss for the year
Balance at end of year
30/06/18
$
27,805,295
1,000,675
28,805,970
30/06/17
$
25,100,291
2,705,004
27,805,295
21. SHARE OPTIONS AND PERFORMANCE RIGHTS
Under PNX’s Employee Performance Rights Plan (‘Plan’), 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.
No Performance Rights were issued during the year.
In relation to 11,410,000 Performance Rights issued to PNX personnel under the Plan in the previous financial year:
»
»
»
1,250,000 rights held by the Company’s Managing Director & CEO expired on 30 June 2018 as the performance conditions were
not met;
3,090,000 vested and 3,090,000 shares were issued in August 2017 (refer Note 17(a)); and
7,070,000 remaining rights remain unvested at 30 June 2018.
The remaining 7,070,000 Performance Rights have performance vesting 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.
Share-based payment expense of $24,134 was recognised during the year in relation to the 7,070,000 unvested Performance Rights,
based on the grant date fair value and the estimated number of Performance Rights likely to ultimately vest. This assessment, which
is done at each reporting date, involves estimating the probability of each performance condition being achieved within the specified
time period.
59
PNX METALS LIMITED | ANNUAL REPORT 2018 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.
During the year, 20,000,000 unquoted options were issued to a subsidiary of a corporate advisor, with an exercise price of 1.47 cents
each and an expiry date of 30 October 2020.
In the prior year, 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 each and expire on 31 May 2019.
At 30 June 2018, a total of 85,450,000 options were on issue, as shown in the table below.
OPTIONS
Balance at beginning of the year
Options granted
Options exercised or lapsed
Balance at end of the year
30/06/18
NUMBER OF
OPTIONS
30/06/18
WEIGHTED
AVERAGE
EXERCISE PRICE $
30/06/17
NUMBER OF
OPTIONS
30/06/17
WEIGHTED
AVERAGE
EXERCISE PRICE $
65,450,000
20,000,000
0.05
-
0.0147
65,450,000
-
-
-
85,450,000
0.042
65,450,000
-
0.05
-
0.05
As discussed in Note 31, in conjunction with a capital raising subsequent to year end, the Company will issue 433,125,000 unquoted
options with an exercise price of 1.5 cents each and an expiry date of 30 September 2021.
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
30/06/18
$
800,197
65,093
21,724
887,014
Details of key management personnel compensation are disclosed within the Remuneration Report in the Directors’ Report.
23. REMUNERATION OF AUDITOR
Audit and review of the financial reports
The Company’s auditor is Grant Thornton Audit Pty Ltd.
24. RELATED PARTY DISCLOSURES
a) Subsidiaries
30/06/18
$
38,436
30/06/17
$
773,163
80,025
79,590
932,778
30/06/17
$
30,882
Detail of the percentage of ordinary shares held in the Company’s subsidiary is 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 cost of those services during the financial year inclusive of GST was $40,524 (2017: $24,518). $7,893 inclusive
of GST was owed to Piper Alderman at 30 June 2018 (2017: $1,997) and paid subsequent to year end.
60
PNX METALS LIMITED | ANNUAL REPORT 2018 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 the Northern Territory and 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 2018 in respect of minimum expenditure requirements not provided for in the financial
statements are approximately:
Minimum exploration expenditure on exploration licences
30/06/18
$
450,000
30/06/17
$
1,000,000
Ausmex Mining Group Limited has commenced a farm-in to earn up to 90% of the Group’s 8 Burra South Australia tenements, and
all farm-in expenditure will go towards the Group’s expenditure requirements in SA.
The Group’s office lease in Rose Park, South Australia, with annual lease payments of $68,754 exclusive of GST, extends to
August 2019.
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 5382 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 5382 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 5382 of at least 15,000 tonnes of contained copper.
c) Royalty agreements
The Company has granted the following royalties:
¬ Newmarket Gold NT Holdings Pty Ltd – 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.
¬ Newmarket – 2% net smelter return royalty on precious metals produced from the Moline and Fountain Head tenements.
¬ Mr Matthew Reilly – 6% of the aggregate net revenue in respect of all metals derived from EL 5382.
¬ Avanti Resources Pty Ltd – 2.5% of the net smelter return on all metals derived from ELs 5874, 6150, and 5910.
¬ Leigh Creek Energy Limited (previously Marathon Resources Limited) - 2.5% net smelter return on all metals derived
from EL 5411.
¬ Copper Range (SA) Pty Limited – 1.5% net smelter return on all metals derived from EL 5918.
¬ Copper Range (SA) Pty Limited – 50% of a 1.5% net smelter return on all metals derived from EL 5557.
¬ Flinders Mines Limited – 50% of a 1.5% net smelter return on all metals derived from 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 2018 financial year, and no costs incurred by the Company in relation to it.
e) Other rights held by Newmarket Gold NT Holdings Pty Ltd
Newmarket can re-acquire 90% of any gold or silver deposits with a JORC compliant resource on the tenements subject to a farm-in
agreement by paying PNX three times the Company’s accumulated expenditure on the deposit(s).
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 tenements that are subject to a farm-in agreement between the
two companies.
61
PNX METALS LIMITED | ANNUAL REPORT 2018 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 Sunstone
Financial liabilities
Trade and other payables
Loan
30/06/18
$
860,076
136,984
143,071
-
489,896
358,075
-
30/06/17
$
1,430,630
116,844
293,179
50,000
193,380
541,669
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 including 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. However, the Group has no direct exposure to foreign
exchange or commodity price risk at present.
The Group has some exposure to movements in the share price of 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.
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 $9,000 (2017: increase or decrease by approximately $11,000).
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 manage 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.
62
PNX METALS LIMITED | ANNUAL REPORT 2018
The table includes both interest and principal cash flows.
WEIGHTED AVERAGE
EFFECTIVE INTEREST RATE
%
LESS THAN
ONE MONTH
$
1-3 MONTHS
3-12 MONTHS
1-5 YEARS
$
2018
Non-interest bearing
Fixed Interest bearing
2017
Non-interest bearing
Fixed Interest bearing
-
-
-
334,000
24,000
-
-
521,281
17,100
7.5
-
-
$
-
-
3,288
90,000
$
-
-
-
1,365,000
Fair value of financial instruments
The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial
statements approximate their fair values.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns 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 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
Discontinued operation
Unallocated/corporate
Total loss before tax
Income tax benefit
Total loss for the year
REVENUE YEAR
ENDED
30/06/18
$
REVENUE YEAR
ENDED
30/06/17
$
SEGMENT LOSS
YEAR ENDED
30/06/18
$
SEGMENT LOSS
YEAR ENDED
30/06/17
$
-
-
-
-
-
-
-
-
-
-
(87,158)
(1,586,964)
-
(38,535)
(1,166,137)
(1,484,463)
(1,253,295)
(3,109,962)
252,620
404,958
(1,000,675)
(2,705,004)
1 Prior year 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.
63
PNX METALS LIMITED | ANNUAL REPORT 2018
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
30/06/18
$
30/06/17
$
9,348,815
500,000
1,526,842
11,375,657
232,049
-
2,695,036
2,927,085
6,548,116
500,000
1,990,292
9,038,408
368,643
-
3,119,071
3,487,714
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, loans, 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:
30/06/18
CENTS PER SHARE
30/06/17
CENTS PER SHARE
(0.1)
-
(0.1)
(0.4)
(0.0)
(0.4)
Loss after tax – continuing operations $
Loss after tax – discontinued operations $
(1,000,675)
-
(2,666,469)
(38,535)
Weighted average number of ordinary shares
974,058,242
654,172,546
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.
64
PNX METALS LIMITED | ANNUAL REPORT 2018
29. CONTROLLED ENTITIES
NAME OF ENTITY
Parent Entity
PNX Metals Limited
Subsidiaries
Wellington Exploration Pty Ltd
(i) Head entity in tax consolidated group
(ii) Member of tax consolidated group
COUNTRY OF
INCORPORATION
OWNERSHIP INTEREST
2018
%
OWNERSHIP INTEREST
2017
%
(i)
(ii)
Australia
Australia
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 entity and advanced interest free loans to the entity. Tax losses have
been transferred to PNX Metals Limited by way of inter-company loans.
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 August 2018 the Company raised $2.1 million from the first tranche of a two-part share placement to sophisticated and professional
investors. A further $1.36 million will be received in late September 2018 following receipt on 12 September 2018 of shareholder approval
to issue the second tranche of shares. All shares (total 433,125,000) have an issue price of 0.8 cents per share, and include an attaching
free unquoted option, exercisable at 1.5 cents and expiring 30 September 2021. The 433,125,000 options will be issued under a
disclosure document in October 2018.
There are no other matters or circumstances that have arisen since 30 June 2018 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.
65
PNX METALS LIMITED | ANNUAL REPORT 2018 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 2018
and of its performance for the financial year ended on that date;
b) the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board;
c)
there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable; and
d) at the date of this declaration, there are reasonable grounds to believe that the
members of the Group will be able to meet any obligations or liabilities to which they
are, or may become subject.
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
C H A I R M A N
20th September 2018
66
PNX METALS LIMITED | ANNUAL REPORT 2018 INDEPENDENT AUDITOR’S REPORT
to the Members of PNX Metals Limited
67
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. www.grantthornton.com.au Grant Thornton Audit Pty Ltd Grant Thornton House Level 3 170 Frome Street Adelaide, SA 5000 T +61 8 8372 6666 F +61 8 8372 6677 Independent Auditor’s Report To the Members of PNX Metals Limited Report on the audit of the financial report Opinion 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 2018, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the Directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance for the year ended on that date; and b complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draw attention to Note 3(a) in the financial statements, which indicates that the Group incurred a total comprehensive loss of $704,159 and cash outflows from operating and investing activities of $3,678,762 during the year ended 30 June 2018. As stated in Note 3(a), these events or conditions, along with other matters as set forth in Note 3(a), indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. PNX METALS LIMITED | ANNUAL REPORT 2018 INDEPENDENT AUDITOR’S REPORT
to the Members of PNX Metals Limited
68
Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 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. Key audit matter How our audit addressed the key audit matter Exploration and evaluation assets - Note 11 At 30 June 2018 the carrying value of exploration and evaluation assets was $9,706,714. In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources, the Group is required to assess at each reporting date if there are any triggers for impairment which may suggest the carrying value is in excess of the recoverable value. The process undertaken by management to assess whether there are any impairment triggers in each area of interest involves an element of management judgement. This area is a key audit matter due to the significant judgement involved in determining the existence of impairment triggers. Our procedures included, amongst others: obtaining the management reconciliation of capitalised exploration and evaluation expenditure and agreeing to the general ledger; reviewing management’s area of interest considerations against AASB 6; conducting a detailed review of management’s assessment of trigger events prepared in accordance with AASB 6 including; - tracing projects to statutory registers, exploration licenses and third party confirmations to determine whether a right of tenure existed; - enquiry of management regarding their intentions to carry out exploration and evaluation activity in the relevant exploration area, including review of management’s budgeted expenditure; - understanding whether any data exists to suggest that the carrying value of these exploration and evaluation assets are unlikely to be recovered through development or sale; assessing the accuracy of impairment recorded for the year as it pertained to exploration interests; evaluating the competence, capabilities and objectivity of management’s experts in the evaluation of potential impairment triggers; and assessing the appropriateness of the related financial statement disclosures. Information other than the financial report and auditor’s report thereon The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2018, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. PNX METALS LIMITED | ANNUAL REPORT 2018 69
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/ar2.pdf. This description forms part of our auditor’s report. 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 2018. In our opinion, the Remuneration Report of PNX Metals Limited, for the year ended 30 June 2018 complies with section 300A of the Corporations Act 2001. Responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Grant Thornton Audit Pty Ltd Chartered Accountants J L Humphrey Partner – Audit & Assurance Adelaide, 20 September 2018 PNX METALS LIMITED | ANNUAL REPORT 2018 ADDITIONAL SHAREHOLDER INFORMATION
SHARES
The total number of shares issued as at 21 September 2018 was 1,352,680,020 held by 1283 registered shareholders.
500 shareholders hold less than a marketable parcel, based on the market price of a share as at 21 September 2018.
Each share carries one vote.
PERFORMANCE RIGHTS/OPTIONS
As at 21 September 2018, the Company had 7,070,000 Performance Rights and 85,450,000 unquoted options on issue. 20 million
options have a 1.47 cent exercise price and expire 30 October 2020 and the remaining 65,450,000 have a 5.0 cent exercise price
expiring 31 May 2019.
TWENTY LARGEST SHAREHOLDERS
As at 21 September 2018, the twenty largest Shareholders were as shown in the following table and held 61.7% of the Shares.
RANK
NAME
SHARES
% OF SHARES
MARILEI INTERNATIONAL LIMITED
BNP PARIBAS NOMS PTY LTD
DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT
SOCHRASTEM SA
POTEZNA GROMADKA LIMITED
TALIS SA
AUSTRALIAN MINERAL & WATERWELL DRILLING PTY LTD
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
ESM LIMITED
FORSYTH BARR CUSTODIANS LTD
MCNEIL NOMINEES PTY LIMITED
MR JOHN PHILIP DANIELS
QIU FAMILY SUPER PTY LTD
MR PAUL DOSTAL
LATSOD PTY LTD
JETOSEA PTY LIMITED
KOMON NOMINEES PTY LTD
MR ROGER DOUGLAS STABLES
CITICORP NOMINEES PTY LIMITED
Total
156,766,095
143,706,928
134,536,793
85,653,239
81,457,053
39,319,603
31,250,000
20,139,278
18,737,919
15,000,000
13,638,179
13,000,000
12,000,000
11,908,397
11,428,571
10,000,000
9,196,316
9,174,395
9,131,578
8,720,519
11.59
10.62
9.95
6.33
6.02
2.91
2.31
1.49
1.39
1.11
1.01
0.96
0.89
0.88
0.84
0.74
0.68
0.68
0.68
0.64
834,764,863
61.71
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
70
PNX METALS LIMITED | ANNUAL REPORT 2018 SUBSTANTIAL SHAREHOLDERS
As at 21 September 2018, the substantial Shareholders as disclosed in substantial
holding notices given to the Company are:
Marilei International Limited
Delphi Unternehmensberatung
Aktiengesellschaft
Asia Image Limited
Sochrastem SA
Potezna Gromadka Limited
HOLDING
156,766,095
134,536,793
80,302,204
63,153,239
30,799,159
%
14.40%
9.95%
7.37%
5.80%
5.23%
DISTRIBUTION SCHEDULES
A distribution schedule of the number of Shareholders, by size of holding,
as at 21 September 2018 is set out below:
SIZE OF HOLDINGS
1 – 1000
1,001 – 10,000
10,001 – 100,000
100,001 and over
Total
NUMBER OF
SHAREHOLDERS
48
104
492
639
1283
There is no current on-market buy-back.
A distribution schedule of the number of Optionholders, by size of holding,
as at 31 August 2018 is set out below:
SIZE OF HOLDINGS
1 – 1000
1,001 – 10,000
10,001 – 100,000
100,001 and over
Total
NUMBER OF
OPTIONHOLDERS
0
0
2
68
70
ENQUIRIES FROM SHAREHOLDERS
Shareholders wishing to record a change of address or other holder details or with
queries regarding their Shareholding should contact the Company’s share registry,
Computershare, as detailed in the Corporate Directory at the front of this Annual
Report. Shareholders with any other query are invited to contact the Company’s
registered office as detailed in the Corporate Directory at the front of this Annual Report.
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PNX METALS LIMITED | ANNUAL REPORT 2018