PNX METALS LIMITED ABN 67 127 446 271
ANNUAL REPORT 2019
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
Angelo Gaudio
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: Fountain
Head and Tally Ho pit.
2
PNX METALS LIMITED | ANNUAL REPORT 2019
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
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
4
6
11
23
27
30
34
39
40
44
48
66
INDEPENDENT AUDITOR’S REPORT TO MEMBERS 67
ADDITIONAL SHAREHOLDER INFORMATION
70
3
PNX METALS LIMITED | ANNUAL REPORT 2019 CHAIRMAN’S LETTER
Dear Fellow Shareholders,
On behalf of the Board of Directors, it is my pleasure to present the 2019 Annual Report for PNX Metals Limited (PNX or Company).
During the year, the Company focused on advancing the Hayes Creek Project in the Northern Territory towards a
development decision.
A Detailed Feasibility Study (DFS) is currently underway on Hayes Creek and this follows the successful completion of a Pre-Feasibility
Study (PFS) in July 2017 which confirmed that the project is a promising, high value, relatively low risk and technically strong
development opportunity. The DFS is expected to provide increased confidence in all aspects of the project and will also investigate
opportunities to improve overall project economics and meet the Company’s objective to be a successful explorer and a sustainable
and profitable gold and base metals producer.
The finalisation of the DFS is expected to take until at least the end of the first quarter of 2020, subject to any unplanned delays. A
significant amount of technical work is also underway that will be used to prepare the Project’s Environmental Impact Statement (EIS)
for submission by mid-2020.
Located less than 15km from the Hayes Creek deposits, the Fountain Head site is an integral part of the Hayes Creek Project as
it is the preferred location for the processing plant and tailings facility. Fountain Head is also host to a number of high-grade gold
prospects and drilling during the year identified new gold mineralisation that lead to development of a new geological model for the
area. As a result, the Company completed its first JORC compliant mineral resource estimate for Fountain Head containing 138Koz
of gold (see ASX announcement dated 11 July 2019). The relative values of PNX mining some or all of these mineral resources versus
utilising the historic open pits for tailings disposal from the Hayes Creek project is being assessed, including how the two strategies
might be combined.
The new gold mineral resource at Fountain Head provides confidence that a significant gold system may be emerging, and drilling
success during the year, including at Cookies Corner, highlights the potential of the Company’s large NT exploration tenure.
Regionally, our tenement interests cover in excess of 1,500 km2 and host numerous base metal and gold prospects. The exploration
strategy for this large area is to identify significant additional mineralisation with the potential to complement and enhance the Hayes
Creek Project as well as to identify new, potentially stand-alone resources.
The Company continues to receive strong support from its shareholders demonstrated through successful fund raisings completed
during the year. In May 2019 the Company completed a three (3) for five (5) underwritten non-renounceable pro-rata rights issue
raising $5.48 million (before costs and expenses). The proceeds are being used to fund the significant level of activity at Hayes Creek,
including the completion of the DFS, and ongoing assessment of the Fountain Head gold project.
The Board and management are confident that continued exploration work will be successful in growing the resource base and that
the completion of the DFS at the Hayes Creek project during 2020 will provide confidence in this development opportunity, with the
potential to deliver strong returns for PNX shareholders.
In closing, I would like to take this opportunity to express my thanks to my fellow directors, management and staff for their dedication
and work during the past 12 months. We are committed to progressing the Company and growing our flagship Hayes Creek project
towards development for the benefit of all stakeholders.
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 2020.
Yours sincerely,
Graham Ascough
Chairman
17 September 2019
4
PNX METALS LIMITED | ANNUAL REPORT 2019 5
PNX METALS LIMITED | ANNUAL REPORT 2019 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 holds a large and prospective
precious and base metals tenement portfolio, primarily located
in the Pine Creek region of the Northern Territory (NT) (Figure 1).
The main activities of the Company during the 2019 financial year were progression of
technical studies and work programs to inform a Detailed Feasibility Study (DFS) over the
Hayes Creek zinc-gold-silver project (Project or Hayes Creek), in addition to conducting
nearby precious metal exploration at the Fountain Head project, and Cookies Corner
gold prospect.
The Fountain Head mineral leases were acquired in 2018 from Newmarket Gold NT
Holdings Pty Ltd (Newmarket), a subsidiary of Kirkland Lake Gold Ltd (KL Gold, ASX:
KLA) as part of a land swap and royalty agreement. The acquisition secured the preferred
site for the Project’s proposed processing plant and tailings facility, and also added a new
project area that is highly prospective for gold. Since acquiring the Fountain Head mineral
leases a review of historical data and the results of PNX drilling has enabled PNX to
publish a new gold mineral resource estimate for the Fountain Head project in mid-2019.
As part of the agreement with Newmarket, PNX also acquired the then outstanding 49%
interest in the Moline project tenements, taking its ownership of that project to 100%.
PNX also holds a 90% interest in a further 19 tenements in the Pine Creek region of the
NT (Burnside and Chessman projects) under joint venture with Newmarket which now
holds a 10% interest free-carried until a decision to mine is made. A full listing of PNX’s
tenements is contained in the Exploration Report.
DARWIN
N O R T H E R N
T E R R I T O R Y
Fountain Head Project
Hayes Creek Project
Chessman Project
Burnside Project
Darwin
Moline Project
Burnside Project
Fountain HeadProject
Hayes Creek Project
Hayes Creek
Pine Creek
Moline Project
0
50
100
Katherine
kilometres
Chessman Project
NT 03
Figure 1 NT Project locations.
6
NORTHERN
TERRITORY
QUEENSLAND
WESTERN AUSTRALIA
SOUTH AUSTRALIA
NEW SOUTH WALES
Adelaide
VICTORIA
TASMANIA
Aust 03
PNX METALS LIMITED | ANNUAL REPORT 2019 HAYES CREEK PROJECT
The Hayes Creek Project
comprises the Mt Bonnie
(open-cut) and Iron Blow
(underground) zinc-gold-
silver deposits, and the
Fountain Head gold deposit,
located in close proximity to
each other on wholly-owned
mineral leases within the Pine
Creek region of the Northern
Territory, 170 km south
of Darwin.
The leases are located in a favourable
mining jurisdiction where the
development scenario considers utilising
existing infrastructure that includes rail,
road, high voltage power lines, gas
pipeline and water, further enhancing
Project fundamentals and lowering
development risks.
The Project hosts considerable Mineral
Resources, including at Mt Bonnie and
Iron Blow which together contain 238koz
of gold, 16.2Moz of silver and 177kt of
zinc, and the Fountain Head gold deposit
which hosts 138koz of gold – further
information is contained within the
Exploration Report.
The Company is well-funded to complete
the DFS which recommenced during
the year subsequent to completion of
a fully-underwritten rights issue to raise
$5.48 million, (before costs) in May 2019.
The DFS is progressing well and follows
on from a successful Pre-Feasibility
Study (PFS) published in mid-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 (PNX ASX release
12 July 2017).
The DFS is expected to provide increased
confidence in all aspects of the Project
as well as investigate opportunities to
improve mine life and overall Project
economics, thereby increasing the
prospect of favourable development
finance terms and structure.
The development of a Mineral Resource
at the Fountain Head Project and new
near-surface gold/silver mineralisation
intersected at Iron Blow (ASX release
27 June 2019) has the potential to
provide flexibility within the Company’s
development strategy with the prospect
of additional feed for Hayes Creek to
be assessed.
Project approvals are well advanced
with a referral being made to the
Commonwealth Department of
Environment and Energy in accordance
with the Environmental Protection
Biodiversity Act 1999, and development
of terms of reference to assist with
preparing an Environmental Impact
Statement (EIS) being completed.
The Company received the positive
decision from the Commonwealth
Department of Environment and Energy
that the Hayes Creek proposal is not
a controlled action, but, as expected,
it does require assessment under the
Environmental Assessment Act 1982 (NT)
at the level of an EIS.
Feedback from public consultation was
received from the NT Environmental
Protection Authority (EPA) during August
2019 which is being incorporated in the
EIS, due for submission from May 2020.
Technical work to inform the DFS is
ongoing and expected to be complete no
earlier than end of the first quarter 2020.
Subject to securing offtake agreements,
funding and various Government
approvals the Project is envisaged to be
ready for development to commence
later that year directly employing
approximately 130 people.
7
PNX METALS LIMITED | ANNUAL REPORT 2019 OVERVIEW
HAYES CREEK PROJECT
Figure 2 Hayes Creek Project.
8
PNX METALS LIMITED | ANNUAL REPORT 2019 NT REGIONAL EXPLORATION
PNX’s regional exploration project areas host numerous gold and base metals
exploration prospects, and cover in excess of 1,500 square kilometres in the Pine
Creek region of the Northern Territory.
The Company’s strategy is to discover 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 four regional project areas:
• Fountain Head (100%) – gold
• Moline (100%) – gold and base metals
• Burnside (90% earned) – gold and base metals
• Chessman (90% earned) – gold and base metals.
Drilling completed at Fountain Head in June 2019, resulted in a new mineral resource
estimate containing 138,000 oz gold being reported in accordance with the JORC
(2012) code, reported to the ASX on 11 July 2019. PNX also completed drilling
campaigns at Burnside (Cookies Corner prospect) with extensive gold mineralisation
identified over an 800m strike.
The Company elected to exit from the Litchfield farm-in agreement over the Kilfoyle
project during June 2019.
The Exploration Report contains detail on activities during and since the end of the
financial year on the Company’s exploration projects.
9
PNX METALS LIMITED | ANNUAL REPORT 2019 OVERVIEW
KEY FINANCIAL RESULTS
($000’s, except as indicated)
30 JUNE 2019
30 JUNE 2018
Interest/other income
Research & development tax offset refund
Corporate/administrative costs
Impairment – NT exploration assets
Fair value movement on Sunstone investment
Interest charges
95
220
(1,258)
(137)
39
-
59
253
(1,252)
-
297
(60)
Comprehensive loss after tax
(1,041)
(704)
Comprehensive loss per share
(0.07) cents
(0.10) cents
Net operating cashflows
Exploration expenditure
Funds raised – equity (net of costs)
Funds raised – silver streaming
Cash on hand
Financial assets – term deposits1
Net working-capital2
Investment in Sunstone – at fair value
Capitalised exploration expenditure
Debt
Contract liabilities – silver streaming
Net assets
(1,214)
(2,941)
8,552
-
2,804
2,500
5,315
529
12,505
-
2,400
15,969
(731)
(3,027)
2,308
800
860
-
698
490
9,707
-
2,400
8,449
Number of shares on issue
2,435,288,142
1,088,930,020
Number of performance rights on issue
12,440,000
7,070,000
Number of unlisted options on issue
453,125,000
85,450,000
Share price (ASX: PNX)3
0.8 cents
0.8 cents
1
2
Includes term deposits (with maturity terms greater than 90 days) as at 30 June 2019.
Excludes investment in Sunstone Metals Ltd.
3 Closing share price as at 30 June.
PNX reported an overall loss for the
year after tax of $1.1 million (2018:
$1.0 million), including a $0.137 million
impairment charge to reduce the
carrying value of the Kilfoyle tenements
to $Nil. The loss for the year was net
of a $0.22 million (2018: $0.25 million)
income tax benefit relating to the
Company’s research and development
tax offset claims.
Pre-tax loss for the year was $1.30 million
compared to $1.25 million in 2018.
The increased loss is primarily due to
the difference in non-cash items, notably
the Kilfoyle impairment charge in 2019
and interest expense of $60K settled by
issuing shares in 2018.
The Company raised $3.4 million net of
costs from placements to sophisticated
and professional investors in August/
September 2018, and completed a
fully underwritten non-renounceable
rights issue in May 2019 which raised
$5.1 million net of costs. PNX spent
$2.94 million on exploration activities
during the year, of which $0.94 million
related to Hayes Creek feasibility studies
and $2.0 million to its key regional
exploration projects in the NT.
At 30 June 2019, the Group had no
debt, and:
• cash holdings of $2.8 million,
•
term deposits of $2.5 million, and
• an investment in Sunstone Metals
Limited at a market value of
$0.5 million.
10
PNX METALS LIMITED | ANNUAL REPORT 2019 EXPLORATION REPORT
HAYES CREEK PROJECT
Figure 3 Hayes Creek Project.
DEVELOPMENT STUDIES
REPORT
Detailed feasibility studies are currently
underway on the Hayes Creek Project
and this follows the successful
completion of a PFS in July 2017
which confirmed that the Project is a
promising, high value, relatively low risk
and technically strong development
opportunity. The DFS is expected to
provide increased confidence in all
aspects of the Project and will also
investigate opportunities to improve
overall Project economics and meet the
Company’s objective to be a successful
explorer and a sustainable and profitable
gold and base metals producer.
The proposed process plant is planned
to be constructed at the historic Fountain
Head mining area located approximately
15 km to the north of the Iron Blow and
Mt Bonnie deposits. It is anticipated that
two product streams will be produced,
a zinc concentrate and a precious
metals concentrate, as well as tailings.
All concentrates would be trucked to
the main port of Darwin for shipment to
international markets.
Activities at Hayes Creek during the
year focused on the progression of
technical studies to inform the DFS,
and exploration drilling. These are
summarised below and include:
• Diamond drilling at Iron Blow
• Reverse circulation and diamond
drilling at Fountain Head and
Cookies Corner
• Metallurgical test-work and
process design
• Environmental permitting
and approvals
• Geochemical (waste rock
characterisation) and
hydrological studies
• Power and infrastructure studies
• Fountain Head resource estimate.
11
PNX METALS LIMITED | ANNUAL REPORT 2019 EXPLORATION REPORT
HAYES CREEK PROJECT
Figure 4 Long section of Iron Blow underground mine depicting;
stopes = green, decline = light blue, vent raise = blue, ore drives = grey.
Figure 5 Mt Bonnie open pit shell.
DIAMOND DRILLING AT IRON BLOW
In late 2018, two diamond drill holes were
completed at Iron Blow which provided
samples for DFS level metallurgical
test-work, additional geotechnical
information, and assay data for stope
design and scheduling of the proposed
underground development. The results
of the metallurgical test-work will also
assist in plant design and establish
parameters to be used in offtake and
marketing negotiations.
Thick intersections of massive sulphide
mineralisation were reported from within
the eastern and western lodes, consistent
with the geological model (ASX release
27 June 2019). Significant assays include:
• 85.22m at 11.87% zinc, 4.19g/t gold,
309g/t silver, 1.94% lead, 0.49% copper
from 115.9m in IBDH061 (eastern lode)
• 48.07m at 5.67% zinc, 2.45g/t gold,
and 90.6g/t silver from 230.3m
in IBDH063 (western lode)
12
Drill hole IBDH062 also intersected a
near-surface zone of oxide gold and silver
mineralisation in the western lode:
• 21.42m at 1.98g/t gold and 161g/t
silver from 2.3m in IBDH062
Significantly, this zone is situated up-
dip of previous testing and is outside
the current resource estimate and
mining plan.
Figure 6 Core samples from Iron Blow drilling, Hole IBDH023 – from 162m to 166m.
PNX METALS LIMITED | ANNUAL REPORT 2019 HAYES CREEK PROJECT
METALLURGY AND PROCESS DESIGN
Samples of the various ore types were
collected from Iron Blow and Mt Bonnie,
along with water from Fountain Head
(which will likely be used as process
water) for metallurgical test-work and
process design.
The first of the Iron Blow baseline batch
flotation tests have been completed to
confirm the grinding (initial and re-grind),
reagent and residence time conditions
for the subsequent locked cycle
testing conditions.
Previous test-work used master
composites, being a combination of
eastern and western lodes to reflect
the resource as a whole. The new
metallurgical locked cycle test-work
will assess Iron Blow eastern and
western lodes separately and then three
variability samples will also be tested to
ensure proposed operating parameters
are sufficient to manage the variable
ore grades and ore types likely to
be received.
Mt Bonnie samples will be used to re-
establish baseline flotation conditions.
Concentrate cleaner optimisation is also
to be completed to maximise the upside
in zinc recovery prior to undertaking the
locked cycle testing.
New innovative flotation and leaching
test-work was also completed on the Iron
Blow float tailings stream and achieved
additional recoveries of precious metals
to solution and then to doré (a semi-pure
alloy of gold and silver cast as a doré bar)
of at least 10.7% gold and 17.0% silver.
This indicates potential for the recovery
of approximately 13koz of gold and 1Moz
of silver over life-of-mine creating a new
revenue stream for the Project that would
otherwise be lost to tailings.
ENVIRONMENTAL PERMITTING
AND APPROVALS
A Notice of Intent (NOI) was submitted to
the NT Environment Protection Authority
(EPA) in August 2018. The NOI is the
first step in the environmental approval
process in the NT and provides a
description of the project including the
options being considered together with a
background environmental description.
As expected, the EPA determined that
the appropriate level of assessment of
the project should be an EIS. Final terms
of reference have been developed by the
EPA to assist PNX in preparing the EIS
for the Project after a period of public
consultation in August 2019.
In February 2019, the Company
submitted a referral regarding the Hayes
Creek development under the Australian
Government’s Environment Protection
and Biodiversity Conservation Act 1999
(EPBC Act). The Company has received
the positive notice that the Hayes
Creek development is not considered a
controlled action and does not require
further assessment and approval under
the EPBC Act.
Submission of the EIS is expected around
May 2020 with the operations mine
management plan to be drafted and
submitted thereafter.
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.
Technical studies to support the EIS
are underway and both an aquatic
survey and a site investigation and
water sampling survey have been
completed. Additional site ethnographic,
flora and fauna and air quality surveys
have commenced. The majority of the
technical and project inputs necessary to
underpin the specific studies have also
been provided.
Column leach tests utilising waste
rock collected during various drilling
campaigns have continued to collect
water quality data which will be used in
modelling of groundwater both during
and post completion of mining.
Figure 7 Flotation and leaching test-work.
13
PNX METALS LIMITED | ANNUAL REPORT 2019 EXPLORATION REPORT
HAYES CREEK PROJECT
POWER AND INFRASTRUCTURE STUDIES
Further work has taken place during the year to define potential infrastructure locations
and requirements, combined with reviews of numerous options for base power
generation and supply.
With the Bonaparte gas pipeline being less than 1km from the proposed processing
facility at Fountain Head, gas fired base load power appears to be the most
viable option for the Project and negotiations for gas supply and pipeline access
have commenced.
Detailed designs for office layout and plant locations have been reviewed that consider
access options and with the view to utilising as much previously disturbed ground as
possible. These details will be utilised in the EIS study moving forward and provide
more clarity to the DFS.
Figure 8 Process flowsheet.
14
PNX METALS LIMITED | ANNUAL REPORT 2019 REGIONAL EXPLORATION PROJECTS
In addition to the Hayes Creek Project,
PNX holds significant exploration tenure
in the highly prospective Pine Creek
Orogen (Figure 9).
PNX’s strategy regarding regional
exploration is to discover and delineate
additional high-value base metals and/
or gold deposits to complement and
enhance the proposed development at
Hayes Creek or feed into existing free
milling gold infrastructure in the region.
During the year under review exploration
drilling was completed at the Fountain
Head (100%), Moline (100%), and
Burnside Projects (90%).
The Burnside and Chessman Projects
(Figure 9) consist of 18 Exploration
Licences and one Mineral Lease and
are subject to a farm-in agreement with
Newmarket. PNX completed the second
stage of the farm-in during December
2018 increasing its interest in these areas
from 51% to 90%.
Figure 9 Regional exploration projects.
15
PNX METALS LIMITED | ANNUAL REPORT 2019 EXPLORATION REPORT
REGIONAL EXPLORATION PROJECTS
FOUNTAIN HEAD
In addition to being the preferred site for
the processing plant and tailings facility
for Hayes Creek, the Fountain Head area
is also host to a number of high-grade
gold prospects.
During July 2018, a large drill
program was completed at the
Fountain Head project consisting of
approximately 2,700 metres of RC
and 770 metres of diamond drilling
(see ASX releases 23 July 2018,
2 August 2018, 22 August 2018,
23 August 2018, 19 September 2018,
and 20 December 2018).
The program was designed to test
for gold mineralisation directly under
the existing Fountain Head and Tally
Ho historic mining areas and over an
approximate 1.6 km strike extent to the
north-west along the Fountain Head
anticline. The return of numerous high-
grade gold intersections along a 1.6 km
strike extent demonstrates that a sizeable
gold system is emerging at the Fountain
Head project.
Highlights from the drill program include:
Banner prospect
• 6m at 39.5g/t Au from 54m in
FHRC085, including:
»
1m at 215g/t Au from 54m
Fountain Head lode
• 1m at 10.86g/t Au from 29m in
FHRC072;
• 3m at 11.09g/t Au from 93m in
FHRC062;
• 1m at 28.00g/t Au from 83m in
FHRC070; and
• 16m @ 1.37g/t Au from surface in
FHRC074, including:
»
1m @ 8.39g/t Au from 5m
Tally Ho lode
• 5m @ 3.96g/t Au from 107m in
FHRC076, including:
»
2m @ 9.17g/t Au from 110m
Assays results from the diamond drill
component of the program containing
high-grade gold include:
• 6.67m at 11.35g/t Au from 201.15m
in FHRC077D (Tally Ho lode),
including:
»
0.85m at 84.8g/t Au from
201.15m
• 1m at 6.64g/t Au from 172.48m in
FHDD092 (Tally Ho lode)
Figure 10 Plan view of the Fountain Head and Tally Ho Mineral Resources showing proximity to historic
mining areas, mineral leases and drill collar locations. Fountain Head anticline is shown in green.
16
PNX METALS LIMITED | ANNUAL REPORT 2019 REGIONAL EXPLORATION PROJECTS
Figure 11 Fountain Head plan showing selection of mineralised drill hole intercepts
greater than 1 g/t Au outside of the mineral resource estimate.
Mineral Resource Estimate
Analysis of this drilling and re-interpretation of historic drill hole data has resulted in the
development of a new geological model, and the Company’s’ first mineral resource
for Fountain Head containing 138,000oz gold (reported in accordance with the JORC
Code 2012) for the Fountain Head and Tally Ho deposits, (refer to Table 5 on Page 28,
see ASX announcement dated 11 July 2019).
This new resource is an important development as it highlights the significant potential
of the Company’s large NT exploration tenure. Detailed studies are being undertaken to
determine if all or some of these mineral resources may be incorporated into the overall
Hayes Creek Project.
Additional drill testing is required to target depth extensions to mineralised zones and
to increase the density of drill data along strike to support additional mineral resources.
Interpretation of the newly developed geological model suggests that drilling of the
hinge of the anticline and associated sub-vertical structures could provide the greatest
return; this concept is part of a drill program ongoing as at the date of this report.
17
PNX METALS LIMITED | ANNUAL REPORT 2019 EXPLORATION REPORT
REGIONAL EXPLORATION PROJECTS
REGIONAL EXPLORATION PROJECTS
MOLINE
The 100% owned Moline project is located
approximately 65km to the east of Hayes
Creek and less than 1.5 km off the Kakadu
Highway (Figure 9). Moline comprises three
main “lines of lode” hosting numerous gold
and gold-zinc prospects, including Moline,
School, Tumbling Dice, Swan, and Hercules.
The majority of historical mining only
extended to shallow depths in the oxide zone
and studies have indicated that the primary
mineralisation at depth could potentially be
recovered and upgraded to a high-value
concentrate utilising the proposed Hayes
Creek process plant.
Following up on positive results from 2016
and 2017 drill campaigns, PNX carried out
RC and diamond drilling for approximately
1,500m in late 2018 to further evaluate the
resource potential and to collect samples for
preliminary metallurgical data (Figure 12).
The initial program was focused on the
Moline and Tumbling Dice prospects in
order to increase geological confidence and
continue to define mineralisation within the
boundaries of potential open-pit mining.
Highlights of drilling include:
• 5m at 1.08g/t Au and 1.6g/t Ag from
92m in MORC035;
»
Including 1m at 2.45g/t Au, 7.0g/t Ag
and 1.33% Zn
• 6m at 1.50g/t Au, 1.03% Zn from 104m
and 4.13m at 1.62g/t Au from 144.42m
in MORC036;
• 14m at 0.9g/t Au from 97m in MORC038;
»
Including 6m at 1.5g/t Au from 99m
• 1m at 8.4g/t Au from 69m in MORC039;
• 1m at 1.33% Zn from 72m and 2m at
1.61% Zn from 81m in MORC040;
• 2.49m at 3.38g/t Au from 134.48m in
MORC014; and
• 1.64m at 2.28g/t Au from 132.42m and
2.79m at 1.85g/t Au from 142.2m in
MORC042
18
Figure 12 Core samples at Moline.
Figure 13 Moline Project drill collar locations.
PNX METALS LIMITED | ANNUAL REPORT 2019 REGIONAL EXPLORATION PROJECTS
BURNSIDE
The Burnside project (90%) is located
along the Stuart Highway, 150km south
of Darwin. It surrounds Hayes Creek and
Fountain Head project, and therefore
is strategically important in the future
growth plans of PNX. There are numerous
mineral deposits and mineral occurrences
within the Pine Creek Orogen that attest
to the mineral wealth of the area, these
include the third-party owned Cosmo-
Howley, Woolwonga, the Brocks Creek
group, and Goodall deposits, with around
2Moz of gold produced historically.
Drilling was completed at Cookies Corner,
one of a cluster of gold targets in the
north-west of PNX’s Burnside exploration
project, located at the convergence of
two major gold-producing structural
corridors, the Pine Creek Shear Zone
and the Howley Anticline (host to Kirkland
Lake Gold Limited’s Cosmo gold mine).
The Cookies Corner geochemical
anomaly is directly analogous to that
observed over the historic Goodall mine
located 4km to the south-west. Goodall
was discovered via geochemical sampling
in 1981, mined from 1988-1993 and
produced, on average over that time,
41,500oz Au per year1.
Twenty-three holes were drilled to test
the source of a consistent >0.1g/t gold in
soils anomaly. All holes drilled intersected
gold mineralisation over an approximate
800m strike length (Figure 14) (ASX release
9 October 2018 and 29 January 2019).
Highlights from the program include:
• 8m at 3.13g/t Au from 12m in
CCRC005; including:
»
1m @ 11. g/t Au from 12m
• 6m at 3.72g/t Au from 71m in
CCRC002;
• 19m at 1.15g/t Au from 10m in
CCRC012;
• 11m at 1.13g/t Au from 75m in
CCRC023; including:
»
1m at 5.62g/t Au from 75m
The Company is growing increasingly
confident in the potential for additional
mineral resources within the Burnside
project area; prospects such as Ithaca,
Ios and Santorini along the Howley
Anticline are already well advanced
with Cookies Corner now also in
that category. The Goodall area also
contains what now would be considered
potentially economic gold intersections
which were not followed up by previous
explorers, including Western Mining in
the 1980s. The Golden Dyke Dome area,
located close to Hayes Creek contains
numerous historic open-pits and gold
in near-surface oxide mineralisation
that has not been drill-tested within this
gold-price environment.
Base metals potential is evidenced by
the Iron Blow and Mt Bonnie zinc-gold-
silver massive sulphide deposits, and
the historic Mt Ellison copper mine.
Further exploration work is warranted
and on-ground mapping and follow up of
geophysical targets will continue.
1
Exploration and Geology of the Goodall
Gold Mine, D R Quick, AusIMM Annual
Conference 1994
19
PNX METALS LIMITED | ANNUAL REPORT 2019 EXPLORATION REPORT
REGIONAL EXPLORATION PROJECTS
REGIONAL EXPLORATION PROJECTS
Figure 14 Cookies Corner plan view showing PNX completed drilling,
gold-in-soil anomaly and target structure on geology.
20
PNX METALS LIMITED | ANNUAL REPORT 2019 REGIONAL EXPLORATION PROJECTS
CHESSMAN PROJECT
The Chessman Project is located approximately 20km due east of Katherine at the
southern margin of the Pine Creek Orogen. Easy access is via the Stuart Highway and
then along roads that were established in 2000 for ore haulage to and from the Maud
Creek mining area. The Chessman Project surrounds the ~1Moz Maud Creek gold
deposit which is being contemplated for development by Kirkland Lake Gold. No work
was completed by PNX on the Chessman Project Area during this reporting period.
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.
During June 2019, the Company withdrew from the Kilfoyle farm-in due to prioritisation of
the Hayes Creek DFS and Fountain Head activities over regional exploration on non-PNX
assets, and no high-priority base metals targets having been identified to drill test.
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 (Ausmex) 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 is to be completed by 30 September 2019 but
can be extended to 31 December 2019. Ausmex may then elect to continue to Stage 2
at which time PNX may instead elect to form a joint venture and contribute to 40% of
future exploration expenditure.
All South Australian tenements remain in good standing.
21
PNX METALS LIMITED | ANNUAL REPORT 2019 EXPLORATION REPORT
ENVIRONMENT
SOCIAL AND
COMMUNITY
OCCUPATIONAL HEALTH
AND SAFETY
The Company has approved
exploration and care and maintenance
Mine Management Plans (MMPs)
for all project areas in the NT; these
include environmental bonds which
are required prior to any 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 2019.
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 2019 HOLDER
AREA (HECTARE)
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^
EL31893
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
Ryan Creek
Bridge Creek
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%
PNX Metals Ltd 100%
TOTAL EXPLORATION LICENCES
^ Acquisition of Fountain Head tenements and additional 49% of Moline was completed in July 2018.
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
262.5 km2
23.4 km2
60.2 km2
346.1 km2
23
PNX METALS LIMITED | ANNUAL REPORT 2019 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
Mt Ringwood
Golden Dyke
Thunderball
Brocks Creek
Jenkins
Cosmo North
Hayes Creek
Margaret River
Yam Creek
PNX Metals Limited 90%, Newmarket 10%
PNX Metals Limited 90%, Newmarket 10%
PNX Metals Limited 90%, Newmarket 10%
PNX Metals Limited 90%, Newmarket 10%
PNX Metals Limited 90%, Newmarket 10%
PNX Metals Limited 90%, Newmarket 10%
PNX Metals Limited 90%, Newmarket 10%
PNX Metals Limited 90%, Newmarket 10%
PNX Metals Limited 90%, Newmarket 10%
McCallum Creek
PNX Metals Limited 90%, Newmarket 10%
Yam Creek
PNX Metals Limited 90%, Newmarket 10%
Brocks Creek South
PNX Metals Limited 90%, Newmarket 10%
Mt Masson
PNX Metals Limited 90%, Newmarket 10%
Margaret Diggings
PNX Metals Limited 90%, Newmarket 10%
Burnside
Mt Bonnie
Name
Maud
Maud
PNX Metals Limited 90%, Newmarket 10%
PNX Metals Limited 90%, Newmarket 10%
PNX Metals Limited 90%, Newmarket 10%
PNX Metals Limited 90%, Newmarket 10%
Chessman
PNX Metals Limited 90%, Newmarket 10%
TOTAL EXPLORATION LICENCES
*
PNX has earned 90% interest under a farm-in agreement with Newmarket – awaiting completion of formal transfer of 90% interest.
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
1,113
24
PNX METALS LIMITED | ANNUAL REPORT 2019 SOUTH AUSTRALIA
PNX TENEMENTS
EXPLORATION LICENCES
NAME
HOLDER
AREA (km2)
Adelaide Geosyncline**
EL6326
EL5874
EL6150
EL6327
EL5918
EL6386
EL5910
ELA2019/00085
TOTAL
Yorke Peninsula
ELA 2018/00013
ELA 2017/00169
ELA 2019/00062
ELA 2017/00099
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.
#
Tenenment under subsequent renewal.
84
69
300
60
314
71
157
135
1,190
509
38
255
254
1,056
25
PNX METALS LIMITED | ANNUAL REPORT 2019 26
PNX METALS LIMITED | ANNUAL REPORT 2019 MINERAL RESOURCES AND ORE RESERVES
As at 30 June 2019
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
1,375
3.96
Oxide/Transitional
0.5g/t Au
32
0.43
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
27
PNX METALS LIMITED | ANNUAL REPORT 2019
MINERAL RESOURCES AND ORE RESERVES
As at 30 June 2019
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 Hayes Creek Project 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 eastern lode (Zn-Au-Ag-Pb) and
western lode (Zn-Au), and four subsidiary lodes with a 1 g/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
0.5 g/t gold and silver domains are reported above a cut-off grade of 50 g/t silver.
FOUNTAIN HEAD MINERAL RESOURCES
Table 5: Fountain Head and Tally Ho initial Mineral Resources by JORC Classification as at 11 July 2019
JORC
CLASSIFICATION
TALLY HO
Indicated
Inferred
Total
FOUNTAIN HEAD
Indicated
Inferred
Total
GLOBAL
Indicated
Inferred
Total
TONNAGE
(Mt)
0.94
–
0.94
0.50
1.15
1.64
1.43
1.15
2.58
AU
(g/t)
2.0
–
2.0
1.5
1.5
1.5
1.8
1.5
1.7
OUNCES
(Koz)
59
–
59
23
55
79
83
55
138
Notes relating to Fountain Head Mineral Resources
• 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 Fountain Head and Tally Ho deposits have occurred since they were originally reported (please refer to ASX
Release dated 11 July 2019).
• Fountain Head and Tally Ho mineralisation reported above a cut-off grade of 0.7 g/t Au/t gold, consistent with the proposed open
pit mining method.
28
PNX METALS LIMITED | ANNUAL REPORT 2019 SOUTH AUSTRALIA
EL5918 – PRINCESS ROYAL
Table 6: 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 respectively and there
have been no material changes in the estimated resources, underlying assumptions or technical parameters since then.
The reported mineral resources for Fountain Head and Tally Ho were initially reported on 11 July 2019 (Refer to ASX Release dated
11 July 2019) 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, and in particular PNX employee
Mr Bradley Ermel, (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 Bradley Ermel, a Competent
Person who is a Member of the Australian Institute of geoscientists (AIG). Mr Ermel 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 Ermel is a full-time employee of PNX Metals Ltd and consents to the inclusion in this report of the matters based on his information
in the form and context in which it appears.
29
PNX METALS LIMITED | ANNUAL REPORT 2019 DIRECTORS’ REPORT
The Directors of PNX Metals Limited (‘PNX’ or ‘Company’) present their report for the
financial year ended 30 June 2019.
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 30 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 2019, 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 – from 9 October
2006 to 15 May 2019
• 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 2019, 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 48 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 (an Adelaide headquartered
firm with Sydney, Melbourne and
Brisbane offices). 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 essential
oil products and over-the-counter
therapeutic products) and a trustee of a
perpetual charitable trust.
In the 3 years immediately prior to
30 June 2019, Peter Watson held no
directorships of other listed companies.
30
PNX METALS LIMITED | ANNUAL REPORT 2019 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
fields, including Lawson Gold Limited
and Buka Gold Limited. He was Chief
Financial Officer and an executive director
of AIM listed Minerals Securities Limited,
based in London. Over a period of
14 years 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 2019, 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 2019, James Fox held no
directorships of other listed companies.
COMPANY SECRETARY
Angelo Gaudio
(Appointed 10 January 2019)
Angelo Gaudio has significant
experience in senior financial
positions within the resource
sector. Previous roles include;
the Chief Financial Officer
and Company Secretary for
Investigator Resources Limited,
Renascor Resources Limited,
as well as Vice President,
Finance and Administration with
Heathgate Resources.
Angelo is a qualified accountant
with over forty years of finance,
management and accounting
experience. His expertise
includes corporate finance, risk
management, financial reporting
and corporate development.
Angelo is a Fellow of the Institute
of Public Accountants and
a certificated member of the
Governance Institute of Australia.
Tim Moran
(resigned 10 January 2019)
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, unlisted options and
Performance Rights of PNX are as follows:
Graham Ascough, Non-
Executive Chairman
Graham Ascough has an indirect interest in
11,066,532 Shares and 3,125,000 unquoted
options with an exercise price of 1.5 cents
each, expiring on 30 September 2021.
Paul Dowd, Non-Executive Director
Paul Dowd has a direct interest in 500,000
Shares, an indirect interest in 21,354,638
Shares and 6,250,000 unquoted options
with an exercise price of 1.5 cents each,
expiring on 30 September 2021.
Peter Watson, Non-Executive Director
Peter Watson has a direct interest in
2,827,571 Shares and an indirect interest in
13,485,714 Shares.
David Hillier, Non-executive Director
David Hillier has an indirect interest in
10,500,001 Shares and 3,125,000 unquoted
options with an exercise price of 1.5 cents
each, expiring on 30 September 2021.
James Fox, Managing Director & CEO
James Fox holds 11,600,000 Performance
Rights, and a related party of Mr Fox holds
9,999,999 Shares and 1,875,000 unquoted
options with an exercise price of 1.5 cents
each, expiring on 30 September 2021.
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
Detailed Feasibility Study (‘DFS’) over its
zinc-gold-silver Hayes Creek Project, as well
as conducting near-mine and regional mineral
exploration at its Fountain Head, Moline,
Burnside, and Chessman projects in the Pine
Creek region of the Northern Territory (‘NT’).
31
PNX METALS LIMITED | ANNUAL REPORT 2019 DIRECTORS’ REPORT
REVIEW OF OPERATIONS
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.
The Group reported an overall loss after
tax for the year of $1.1 million (2018:
$1.0 million). The higher loss figure
(up $0.1 million) was due primarily to the
$137k impairment of exploration and
evaluation expenditure.
The Group’s other corporate costs, which
include head office wages, directors’ fees,
professional fees, insurance, regulatory,
occupancy and communication costs
have not changed significantly.
Net operating cash outflows of
$1.2 million for the year reflect the loss
after tax. Exploration cash outflows of
$2.9 million consisted of $0.9 million on
the Hayes Creek DFS, including drilling
undertaken during the year for resource
definition and geotechnical, hydrological
and metallurgical purposes. NT regional
exploration costs for the year were
$2.0 million, including drilling at Fountain
Head ($1.0 million), that resulted in a
JORC resource estimate being completed
and reported in an ASX Release dated
11 July 2019.
The Company raised $2.1 million from
the first tranche of a two-part share
placement at 0.8 cents per share to
sophisticated and professional investors
during August 2018. A second tranche
of the share placement approved
by shareholders was completed on
20 September 2018 and raised a further
$1.36 million. Each share issued as
part of the two tranche placement (total
433,125,000) included an attaching free
unquoted option – for details see Options
and Performance Rights below.
32
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
completed the second stage of its farm-
in agreement with Newmarket during
December 2018, and has now earned an
incremental 39%, and total 90%, interest
in the Burnside and Chessman projects.
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. A
project referral was submitted to
the Commonwealth Department of
Environment and Energy in accordance
with the Environmental Protection
Biodiversity Act 1999 to assess the
proposed development of Hayes
Creek Project and the level of approval
required. The referral was released for
public comment for a period of two
weeks during March 2019 and the
Company recently received a decision
that the proposal to develop Hayes
Creek is not a controlled action.
As expected, NT EPA has determined
that the Hayes Creek Project requires
assessment under the Environmental
Assessment Act 1982 at the level of an
Environmental Impact Statement (EIS).
Draft Terms of Reference were developed
by the NT EPA to assist PNX in preparing
an EIS for the Project.
A fully underwitten non-renounceable
rights issue was completed on
20 May 2019 with the issue of
913,233,122 shares at 0.6 cents per
share, raising $5.1 million (after costs).
At 30 June 2019, the Group had cash
holdings of $2.8 million plus a further
$2.5 million in Term Deposits, with terms
greater than 90 days, and as such
these are classified in the statement of
financial position as Financial assets –
Term Deposits.
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
There has been no 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 2019-20, PNX plans to complete
detailed feasibility studies over the Hayes
Creek Project, including finalisation
of metallurgical studies and process
plant design and the completion of the
Project’s Environmental Impact Statement
for publication. The Company also
continues with efforts to secure marketing
and sales agreements.
PNX METALS LIMITED | ANNUAL REPORT 2019 REVIEW OF OPERATIONS
OPTIONS AND PERFORMANCE
RIGHTS
During the year there were 10,000,000
Performance Rights issued to the
Managing Director, James Fox, as
approved by shareholders at the Annual
General Meeting held on 24 October
2018. During the year there were
no shares issued in satisfaction of
Performance Rights that vested under
the Company’s Performance Rights Plan.
4,630,000 Performance Rights expired
during the year as the vesting conditions
were not met. At the date of this report,
12,440,000 Performance Rights are
on issue.
During the year, 433,125,000 unquoted
options exercisable at a price of 1.5 cents
and expiring on 30 September 2021
were issued to participants of a share
placement completed on 2 October
2018. The options were issued on
the basis of one attaching unquoted
option for each share subscribed for,
as approved by shareholders at an
EGM held on 12 September 2018.
65,450,000 unquoted options with a
5.0 cent exercise price expired on 31 May
2019. As at the date of this report, a total
of 453,125,000 unquoted options are on
issue, including 20,000,000 unquoted
options previously issued to and held by
a subsidiary of Hartleys Limited under the
terms of a service agreement.
INDEMNIFICATION AND
INSURANCE OF DIRECTORS
AND OFFICERS
The Company entered into a Deed
of Access, Insurance and Indemnity
with Peter Watson and Paul Dowd on
12 November 2007, David Hillier on
22 September 2010, Graham Ascough
on 11 December 2012, and James
Fox on 26 November 2014. Under the
terms of these Deeds, the Company has
undertaken, subject to restrictions in the
Corporations Act 2001, to:
•
indemnify each Director in certain
circumstances;
• advance money to a Director for
the payment of legal costs incurred
by a Director in defending legal
proceedings before the outcome of
those proceedings is known (subject
to an obligation by the Director to
repay money advanced if the costs
become costs in respect of which
the Director is not entitled to be
indemnified under the Deed);
• maintain Directors’ and Officers’
insurance cover (if available) in favour
of each Director whilst they remain a
Director of the Company and for a run
out period after ceasing to be such a
director; and
• provide each Director with access to
Board papers and other documents
provided or available to the Director
as an Officer of the Company.
Throughout and since the end of
the financial year, the Company has
had in place and paid premiums for
insurance policies, with a limit of liability
of $10 million, indemnifying Directors
and Officers of the Company against
certain liabilities incurred in the conduct
of business or in the discharge of their
duties as Directors or Officers of the
Company. The contracts of insurance
contain confidentiality provisions that
preclude disclosure of the premium paid.
DIRECTORS’ ATTENDANCE AT
MEETINGS
There were 9 Board meetings held during
the financial year. Graham Ascough, Peter
Watson, David Hillier and James Fox
attended all 9, while Paul Dowd attended
7 of the 9 meetings.
Three Audit Committee meetings were
held during the financial year. Audit
Committee members David Hillier,
Graham Ascough and Peter Watson
attended each meeting, as did James
Fox and Paul Dowd by invitation.
AUDITOR’S INDEPENDENCE
DECLARATION
The auditor’s independence declaration is
included on page 39.
NON-AUDIT SERVICES
During the year no services other than
the external audit were provided by the
Company’s auditor Grant Thornton.
33
PNX METALS LIMITED | ANNUAL REPORT 2019 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:
• Angelo Gaudio
(Company Secretary & Chief Financial
Officer – appointed 10 January 2019)
• Tim Moran
(Company Secretary & Chief Financial
Officer – resigned 10 January 2019)
• Andy Bennett
(Exploration Manager – resigned
6 September 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
34
PNX METALS LIMITED | ANNUAL REPORT 2019 REMUNERATION REPORT – AUDITED
directors are each entitled to receive
$40,000 per annum inclusive of
superannuation. Non-executive Directors
are entitled to be paid reasonable
travelling, accommodation and other
expenses incurred as a consequence of
their attendance at meetings of Directors
and otherwise in the execution of their
duties as Directors. Non-Executive
Directors are also entitled to additional
remuneration for extra services or
special exertions, in accordance with
the Company’s Constitution. There
are no schemes for retirement benefits
other than government mandated
superannuation. No additional amounts
were paid to any director during the
financial year (2018: $ Nil). There has
been no changes to these fees or
entitlemets since the inception of the
Company in 2007.
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 2019 and as of the date of
this report, Mr Fox held no Shares in the
Company directly. At 30 June 2019 and
the date of this report, a related party
of Mr Fox held 9,999,999 Shares in
the Company.
During the year, 1,600,000 of 3,200,000
Performance Rights held by Mr Fox lapsed
as a result of performance conditions
not being met. A further 10,000,000
Performance Rights, as approved by
shareolders, were issued to Mr Fox on
3 December 2018. The Performance
Rights 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 3 December
2021) in order for the Rights to vest.
At 30 June 2019, a total of 11,600,000
Performance Rights subject to performance
conditions were held by Mr Fox.
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
Angelo Gaudio was appointed as Chief
Financial Officer and Company Secretary
of the Company on 10 January 2019.
Through his company, Angelo Gaudio
provides his services on a part time basis
and at a rate of $10,000 per month plus
GST plus reimbursement of expenses.
The services may be terminated by either
party on one months’ notice. During the
2019 financial year, Mr Gaudio was paid
fees of $70,000 (excluding GST).
Tim Moran resigned as Chief Financial
Officer and Company Secretary on
10 January 2019. Mr Moran had filled
this role since January 2012. Any
Performance Rights held by Mr Moran,
at resignation, lapsed. During the 2019
financial year, Mr Moran’s fees were
$126,743 inclusive of superannuation and
termination payments.
35
PNX METALS LIMITED | ANNUAL REPORT 2019 DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED
EXPLORATION MANAGER REMUNERATION
Andy Bennett resigned as Exploration Manager on 6 September 2018. Mr Bennett was employed as Exploration Manager since
January 2015 and his annual salary was $195,000 plus mandated superannuation contributions and entitlements of 20 days annual
leave and 10 days sick leave per year. During the 2019 financial year, Mr Bennett’s remuneration, in his capacity as Exploration
Manager, was $78,955 inclusive of superannuation and entitlements at resignation. Mr Bennett has continued to provide consultancy
services to the Company and any Performance Rights held by Mr Bennett were retained. During the year, 1,500,000 of 2,250,000
Performance Rights held by Mr Bennett lapsed as a result of performance conditions not being met. The remaining Performance
Rights have performance conditions related to key Company objectives, including exploration discoveries. 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
2019 and at the date of this report, Mr Bennett held 988,095 Shares and 750,000 Performance Rights.
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 2019:
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
$276,125
$25,000
$22,5501
$323,675
Chief Financial Officer & Company Secretary
Angelo Gaudio2
Tim Moran3
$70,000
$116,372
Other Key Management Personnel
Andy Bennett4
TOTALS
$74,977
$725,534
-
$10,371
$3,978
$46,289
-
($4,665)1
-
$17,885
$70,000
$122,078
$78,955
$789,708
0%
0%
0%
0%
7.0%
0%
0%
0%
1
Value of Performance Rights that have not yet vested that is attributable to the 2019 financial year (includes adjustments for lapsed Performance Rights).
2 Angelo Gaudio was appointed as Company Secretary/CFO on 10 January 2019.
3
Tim Moran resigned from his role of Company Secretary/CFO on 10 January 2019.
4 Andy Bennett resigned from his role as Exploration Manager on 6 September 2018.
36
PNX METALS LIMITED | ANNUAL REPORT 2019 REMUNERATION REPORT – AUDITED
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
$21,724
$221,054
$887,014
1
Value of Performance Rights that had not yet vested that was attributable to the 2018 financial year.
Other than the amounts disclosed in the column for equity, all other remuneration amounts are fixed.
EQUITY HOLDINGS OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
i) Fully paid ordinary shares issued by PNX Metals Limited:
BALANCE
1 JULY 2018
NET CHANGES3
BALANCE
30 JUNE 2019
Directors
Graham Ascough
Paul Dowd
Peter Watson1
David Hillier
James Fox2
Key Management Personnel
Angelo Gaudio6
Tim Moran 4
Andy Bennett5
3,791,581
7,596,648
10,195,802
3,428,571
-
-
7,274,951
14,257,990
6,117,483
7,071,430
-
-
300,000
988,095
(300,000)7
(988,095)7
11,066,532
21,854,638
16,313,285
10,500,001
-
-
-
-
1 Additional shares held by related parties at 30 June 2019: 1,570,165 (2018: 1,354,165).
2 Shares held by related party at 30 June 2019: 9,999,999 (2018: 6,577,381).
3 Movement in Directors’ holdings from participation in a Placement and a Rights Issue during the year.
4 Moran resigned from his role of Company Secretary/CFO on 10 January 2019.
5 Andy Bennett resigned from his role as Exploration Manager on 6 September 2018.
6 Angelo Gaudio was appointed as Company Secretary/CFO on 10 January 2019.
7
Tim Moran and Andy Bennett resigned during the year.
0%
0%
0%
0%
1.3%
1.7%
3.4%
37
PNX METALS LIMITED | ANNUAL REPORT 2019
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED
ii) Unquoted options exercisable at 1.5 cents, expiring on 30 September 2021 issued by PNX Metals Limited:
BALANCE
1 JULY 2018
NET CHANGES1
BALANCE
30 JUNE 2019
Directors
Graham Ascough
Paul Dowd
Peter Watson
David Hillier
James Fox2
Key Management Personnel
Angelo Gaudio3
Tim Moran4
Andy Bennett5
-
-
-
-
-
-
-
-
3,125,000
6,250,000
-
3,125,000
6,250,000
-
3,125,000
3,125,000
-
-
-
-
-
-
-
-
1 Unlisted Options issued on 4 October 2018 from participation in a placement.
2 Options held by related parties at 30 June 2019: 1,875,000 (2018: Nil).
3 Angelo Gaudio was appointed as Company Secretary/CFO on 10 January 2019.
4
Tim Moran resigned from his role of Company Secretary/CFO on 10 January 2019.
5 Andy Bennett resigned from his role as Exploration Manager on 6 September 2018.
iii) Performance Rights issued by PNX Metals Limited and outstanding:
BALANCE
1 JULY 2018
BALANCE
1 JULY 2018
VESTED
UNVESTED
GRANTED
VESTED
James Fox
Tim Moran1
Andy Bennett2
-
-
-
3,200,000
10,000,000
900,000
2,250,000
-
-
-
-
-
1
Tim Moran resigned from his role of Company Secretary/CFO on 10 January 2019.
2 Andy Bennett resigned from his role as Exploration Manager on 6 September 2018.
BALANCE
30 JUNE 2019
BALANCE
30 JUNE 2019
VESTED
UNVESTED
-
-
-
11,600,000
-
750,000
EXPIRED/
LAPSED
1,600,000
900,000
1,500,000
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 $78,657 (2018:$40,524).
END OF REMUNERATION REPORT
Signed on 17 September 2019 in accordance with a resolution of the Board made pursuant to section 298(2) of the
Corporations Act 2001.
Graham Ascough
Chairman
38
PNX METALS LIMITED | ANNUAL REPORT 2019
AUDITORS INDEPENDENCE DECLARATION
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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 2019, 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, 17 September 2019
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘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.
39
PNX METALS LIMITED | ANNUAL REPORT 2019
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 17 September 2019 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.
40
PNX METALS LIMITED | ANNUAL REPORT 2019 CORPORATE GOVERNANCE STATEMENT
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.
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 four
contractors, six are male and two
are female.
PERFORMANCE EVALUATION
AND REMUNERATION
The performance of the Board, Audit
Committee and individual Directors is
periodically reviewed by self-assessing
whether or not the Company is
achieving its strategic objectives, and
by assessing the Company’s exploration
success, project development, financial
performance and movement in its market
capitalisation. The last formal board
performance evaluation was completed
in June 2019. 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
expected to occur during 2020.
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.
41
PNX METALS LIMITED | ANNUAL REPORT 2019 CORPORATE GOVERNANCE STATEMENT
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 Hillier,
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 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. 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. The auditor is available
at each annual general meeting of the
Company to answer questions related to
the audit from shareholders.
RISK MANAGEMENT
Whilst the Board is ultimately responsible
for identifying and managing areas of
significant business risk, it has delegated
the management of this function to
the Audit Committee as noted above.
The Audit Committee is responsible for
maintaining effective Risk Management
systems, identifying and managing
key Company risks, establishing and
maintaining effective controls, ensuring
compliance with risk management
policies and reporting of any non-
compliance occurrences. The Company
has created a Corporate Risk Register,
which lists and rates these risks in
terms of likelihood and consequence,
and documents the controls in place to
manage these risks.
42
PNX METALS LIMITED | ANNUAL REPORT 2019 ONGOING MONITORING AND
IMPROVEMENT
The Corporate Governance policies of the
Company are reviewed on an ongoing
basis by the Directors to ensure they
meet the standards set by the Board, as
well as those required by ASX, ASIC and
other stakeholders.
CORPORATE GOVERNANCE STATEMENT
The key areas of risk that have been
identified are as follows:
• Financial
• Statutory/regulatory
• Legal
• Personnel and safety
• Asset management and protection
• Tenement management
•
Information Technology and Security
• Community
• Environmental
The Company has no material exposure
at present to economic, social, or
sustainability risks. The Company is
exposed to environmental 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.
43
PNX METALS LIMITED | ANNUAL REPORT 2019 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2019
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
Interest charges
Loss before income tax
Income tax benefit
Loss for the year
Other comprehensive income/loss:
Financial assets - Fair Value through OCI
Total comprehensive loss for the year, attributable
to equity holders of the parent
Loss per share – continuing operations
Basic and diluted (cents per share)
Loss Per Share - Total
Basic and Diluted (cents per share)
NOTE
4(a)
10
4(c)
20
4(b)
4(d), 10
5
25
25
YEAR ENDED
30/06/19
$
34,887
60,431
(238,061)
(421,321)
(195,000)
(64,758)
(68,177)
(31,057)
(90,663)
(20,042)
(28,599)
(9,785)
(83,696)
(6,598)
(137,379)
-
(1,299,818)
219,836
(1,079,982)
38,677
(1,041,305)
(0.07)
(0.07)
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)
296,516
(704,159)
(0.10)
(0.10)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income
should be read in conjunction with the accompanying notes.
44
PNX METALS LIMITED | ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2019
CURRENT ASSETS
Cash and cash equivalents
Financial Assets – Term Deposits
Trade and other receivables
Prepayments and deposits
Other financial assets
Total current assets
NON-CURRENT ASSETS
Exploration and evaluation expenditure
Plant and equipment
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Provisions
Contract liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Accumulated losses
Total equity
NOTE
6
6
7
8
9
10
11
12
13
13
14
15
16
17
30/06/19
$
2,803,691
2,500,000
356,443
150,682
528,573
30/06/18
$
860,076
-
143,071
153,739
489,896
6,339,389
1,646,782
12,505,077
25,760
12,530,837
18,870,226
352,394
143,106
495,500
5,795
2,400,000
2,405,795
2,901,295
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
15,968,931
8,448,572
45,469,675
385,208
(29,885,952)
15,968,931
36,917,796
336,746
(28,805,970)
8,448,572
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
45
PNX METALS LIMITED | ANNUAL REPORT 2019 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2019
AVAILABLE FOR
SALE RESERVES
FAIR VALUE OCI
RESERVES
ACCUMULATED
LOSSES
TOTAL
ISSUED
CAPITAL
OTHER
EQUITY
$
$
EQUITY-BASED
PAYMENT
RESERVES
$
Balance at 30 June 2017
32,665,302
600,000
90,687
Total loss for the year
Other comprehensive income
Total comprehensive
loss for the year
Shares issued
Share issue costs
Shares issued – settlement
of convertible notes
and loan principal
Interest on convertible
notes - see Note 15 (j)
Fair value of equity
settled payments
-
-
-
2,619,213
(155,007)
-
-
-
-
-
1,800,000
(600,000)
(11,712)
-
-
-
-
(74,591)
-
-
-
24,134
$
-
-
296,516
296,516
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
$
$
(27,805,295)
5,550,694
(1,000,675)
(1,000,675)
-
296,516
(1,000,675)
(704,159)
-
-
-
-
-
2,544,622
(155,007)
1,200,000
(11,712)
24,134
(28,805,970)
8,448,572
Balance at 30 June 2018
36,917,796
Reclassification - See Note 3 (f)
-
Balance at 1 July 2018
36,917,796
Total loss for the year
Other comprehensive income
Total comprehensive
loss for the year
Shares issued
Share issue costs
Interest on convertible
notes – reduction to equity
Fair value of equity
settled payments
-
-
-
8,944,398
(392,519)
-
-
Balance at 30 June 2019
45,469,675
40,230
296,516
-
(296,516)
296,516
-
-
40,230
-
-
-
-
-
-
9,785
50,015
-
-
-
-
-
-
-
-
-
296,516
(28,805,970)
8,448,572
-
(1,079,982)
(1,079,982)
38,677
-
38,677
38,677
(1,079,982)
(1,041,305)
-
-
-
-
-
-
-
-
8,944,398
(392,519)
-
9,785
335,193
(29,885,952)
15,968,931
-
-
-
-
-
-
-
-
-
-
-
-
-
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
46
PNX METALS LIMITED | ANNUAL REPORT 2019 CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2019
Cash flows relating to operating activities
Receipt of research and development tax offsets
Payments to suppliers and employees
Net operating cash flows
Cash flows relating to investing activities
Purchase of term deposits (terms greater than 90 days)
Interest received
Loan repaid/(advanced)
Payments for exploration activities
Payments for plant and equipment
Proceeds on disposal of plant & equipment
Net investing cash flows
Cash flows relating to financing activities
Proceeds from metal streaming transactions
Proceeds from share issues (Note 15)
Payments for capital raising costs (Note 15)
Net financing cash flows
Net increase/(decrease) in cash
Cash at beginning of financial year
Cash at end of financial year (Note 6)
Loss for the year
Interest income
Non-cash miscellaneous income
Equity-based remuneration
Interest expense – equity settled
Depreciation and amortisation
Exploration not capitalised – investing
Impairment charges – exploration and evaluation assets
(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
30/06/19
$
INFLOWS/(OUTFLOWS)
YEAR ENDED
30/06/18
$
-
(1,214,207)
(1,214,207)
(2,500,000)
36,317
-
402,620
(1,133,950)
(731,330)
-
32,736
50,000
(2,940,550)
(3,027,395)
(20,255)
30,431
(2,773)
-
(5,394,057)
(2,947,432)
-
8,944,398
(392,519)
8,551,879
1,943,615
860,076
2,803,691
800,000
2,463,215
(155,007)
3,108,208
(570,554)
1,430,630
860,076
(1,079,982)
(1,000,675)
(34,886)
(60,431)
9,785
-
6,598
64,758
137,379
(225,149)
6,164
(18,333)
(20,110)
(1,214,207)
(34,160)
(24,398)
24,134
52,845
5,263
87,158
-
142,133
(1,266)
(5,329)
22,965
(731,330)
47
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
PNX METALS LIMITED | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
There is no lifetime expected credit loss based on zero
historical customer default. Therefore, there is no impact
on transition to AASB 9 for trade receivables.
The derecognition of financial instruments rules have been
transferred from AASB 139 and have not been changed.
The new hedge accounting rules under AASB 9 have
no impact as the group has no hedges in place.
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.
The adoption of this standard for the year ending 30 June
2019, does not materially impact on the transactions
and balances recognised in the financial statements.
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 the following 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 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 few operating leases currently in place.
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 17th September 2018.
2 NEW AND REVISED ACCOUNTING STANDARDS
New standards and amendments to standards that are
mandatory for the first time for the financial year ending
30 June 2019 do not have any material effect on any amounts
recognised or disclosed in the current or prior period.
The accounting policies applied by the Group in the consolidated
financial statements are consistent with those applied in the prior
year except for the application of AASB 9 and 15 as described
below. The Group has adopted the new, revised or amending
standards that are mandatory. The Group has for the first time
applied AASB 9 Financial Instruments and AASB 15 Revenue
from Contracts with Customers with effect from 1 July 2018.
AASB 15: Revenue from contracts with customers
There is no impact in relation to the adoption of
AASB 15 Revenue from Contracts with Customers
other than a reclassification of amounts held in
relation to metal streaming contracts from deferred
revenue to non current contract liabilities.
AASB 9: Financial instruments
AASB 9 Financial Instruments replaces the provisions of AASB
139 that relate to the recognition, classification and measurement
of financial assets and financial liabilities, derecognition of financial
instruments, impairment of financial assets and hedge accounting.
The financial assets held by the group are detailed as follows:
»
Equity investments at Fair Value through Other
Comprehensive Income (FVOCI) – see Note 3 (f);
» Cash and cash equivalents (including current
accounts and short-term term deposits);
»
Trade receivables currently held at cost, measured at
amortised cost under the classification conditions for AASB 9.
48
PNX METALS LIMITED | ANNUAL REPORT 2019
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(s).
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 2019, the Group made a
total comprehensive loss of $1,041,305 (2018: total
comprehensive loss of $704,159) and recorded a net cash
outflow from operating and investing activities of $6,608,264
(2018: $3,678,762). At 30 June 2019, the Group had
cash of $2,803,691 (2018: $860,076) plus bank Term
Deposits totalling $2,500,000, net current assets, including
cash and Term Deposits but excluding the investment
in Sunstone Metals Ltd of $5,315,316 (2018: $697,141)
and net assets of $15,968,931 (2018: $8,448,572).
The Directors believe that it is appropriate to prepare the
financial statements on the going concern basis, as the
Group raised sufficient capital during the year to allow
planned feasibility studies to be completed, together
with mineral exploration and administrative activities.
The Group’s ability to continue as a going concern in the
longer term is contingent on raising additional capital and/
or the successful exploration and subsequent exploitation
of its areas of interest through sale or development.
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.
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) Revenue
Revenue is measured at the fair value of
consideration received or receivable.
Contract liabilities
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.
d) 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.
e) 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. Any
Term Deposits with terms greater than a 3 month
maturity are classified as Financial assets – Term
Deposits on the statement of financial position.
49
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019
f) Financial assets
Other Financial Assets – Fair Value OCI
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and
Measurement, for annual periods beginning on or after 1 January 2018.
When adopting AASB 9, the Group has applied transitional relief and elected not to restate prior periods.
Rather, differences arising from the adoption of AASB 9 in relation to classification, measurement,
and impairment are recognised in opening retained earnings as at 1 July 2018.
The reclassifications and adjustments arising from the introduction of AASB 9 have not been reflected in the statement
of financial position as at 30 June 2018, but are recognised in the opening balances from 1 July 2018.
On 1 July 2018 (the date of initial application of AASB 9 by PNX), the group’s management assessed which business models
apply to the financial assets held by the group and has classified its financial instruments into the appropriate categories.
The group elected to present changes for the fair value of all its equity investments previously classified as available-
for-sale, in Other Comprehensive Income, as these investments are medium to long-term investments that are
not expected to be sold in the short term. As a result, assets with a fair value of $489,896 were reclassified
from available-for-sale financial assets to financial assets at FVOCI and fair value gains of $296,516 were
reclassified from the available-for-sale financial assets reserve to the FVOCI reserve on 1 July 2018.
Statement of financial position extract:
Current financial assets
Financial assets at fair value through
other comprehensive income (OCI)
30 JUNE 2018
AS ORIGINALLY
PRESENTED
$
AASB 9
1 JULY 2018
$
$
-
489,896
489,896
Available-for-sale financial assets
489,896
(489,896)
-
The following table shows the adjustments recognised for each applicable line item:
Closing Balance 30 June 2018 - AASB 139
Reclassify non trading equities from
available-for-sale to FVOCI
AFS1
RESERVE
$
296,516
(296,516)
FVOCI2
RESERVE
$
-
296,516
Opening Balance 1 July 2018 - AASB 9
-
296,516
1
2
Equity investments previously classified as available-for-sale (AFS).
Fair value through Other Comprehensive Income (FVOCI).
AASB 9 Financial Instruments – Accounting Policies applied from 1 July 2018
CLASSIFICATION AND MEASUREMENT
As outlined above, on 1 July 2018 management assessed which business models apply to the financial assets held by the group
and classified its financial instruments into the appropriate categories. There was no change to the measurement of these assets.
IMPAIRMENT
The group has two types of financial assets that are subject to AASB 9’s new expected credit loss model, being equity
investments and other receivables. The group was required to revise its impairment methodology for these assets under AASB 9.
There was no material impact of the change in impairment methodology on the group’s retained earnings and equity.
While cash and cash equivalents are also subject to the impairment requirements
of AASB 9, there was no material impairment loss identified.
The adoption of the expected credit loss requirements of AASB 9 have not materially impacted the expected recoverability
of financial assets and accordingly no adjustment or restatement was required to be recognised by the Group.
50
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019
g) Exploration and evaluation expenditure
h) Plant and equipment
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
i.
of interest are current; and
ii. at least one of the following conditions is also met:
¬ the exploration and evaluation expenditure is expected
to be recouped through successful development of the
mineral exploration project, or alternatively, by its sale;
or
¬ exploration and evaluation activities in the area of
interest have not at the reporting date reached a
stage which permits a reasonable assessment of
the existence of economically recoverable reserves,
and active and significant operations in, or in
relation to, the area of interest are continuing.
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.
Plant and equipment is stated at cost less accumulated
depreciation and accumulated impairment. Cost includes
expenditure that is directly attributable to the acquisition
of the item. In the event that settlement of all or part of the
purchase consideration is deferred, cost is determined
by discounting the amounts payable in the future to
their present value as at the date of acquisition.
Depreciation is provided on plant and equipment.
Depreciation is calculated on a straight line basis so
as to write off the cost of each asset over its expected
useful life to its estimated residual value. The estimated
useful lives, residual values and depreciation method are
reviewed at the end of each annual reporting period.
Estimated useful lives of 3-5 years are used in the
calculation of depreciation for plant and equipment.
i)
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.
j) 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.
51
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019
k) 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.
l) Employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave and long service
leave when it is probable that settlement will be required
and amounts are capable of being measured reliably.
Liabilities recognised in respect of employee benefits
expected to be settled within 12 months are measured
at their nominal values using the remuneration rate
expected to apply at the time of settlement.
Liabilities recognised in respect of employee benefits
which are not expected to be settled within 12 months
are measured as the present value of the estimated future
cash outflows to be made by the Group in respect of
services provided by employees up to reporting date.
The present value is calculated using a discount rate
that references market yields on high quality corporate
bonds that have maturity dates that approximate
the timing of the estimated future cash flows.
Contributions to accumulated benefit superannuation
plans are expensed when incurred.
m) 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.
n) 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.
52
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.
o) Leases
Operating lease payments made by the Group are
recognised as an expense on a straight-line basis over
the lease term, except where another systematic basis is
more representative of the time pattern in which economic
benefits from the leased asset are consumed. Contingent
rentals arising under operating leases are recognised as
an expense in the period in which they are incurred.
p) 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 Offset 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.
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019
Deferred tax assets and liabilities are offset when
they relate to income taxes levied by the same
taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Current and deferred tax recognition
Current and deferred tax is recognised as an expense
or income in the Statement of Profit or Loss and Other
Comprehensive Income, except when it relates to items
credited or debited directly to equity (in which case the
deferred tax is also recognised directly in equity), or where it
arises from the initial accounting for a business combination.
Tax consolidation
The Company and its wholly-owned Australian resident
entity are part of a tax-consolidated group under Australian
taxation law. The members of the tax consolidated group are
disclosed in Note 26. 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.
q) 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.
r) 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.
s) 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 year an impairment loss of $137,379
was recognised in relation to certain Exploration and
Evaluation Assets - refer to Note 10 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 18 for more information
regarding equity-based payments made during the year.
Research and development (R&D) tax offset incentive
The Company is entitled to claim R&D tax offset
incentives in Australia. The R&D tax offset incentive
is calculated based on management’s assessment
of eligible expenditure multiplied by 43.5%.
53
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019
4 LOSS FROM CONTINUING OPERATIONS
a)
Interest income
Interest on bank deposits
Interest on loan receivable
b) Depreciation
YEAR ENDED
30/06/19
$
YEAR ENDED
30/06/18
$
34,887
-
34,887
32,125
2,035
34,160
Depreciation of plant and equipment
6,598
5,263
c) Occupancy
Operating lease rental expenses
d)
Impairment
68,177
66,284
Exploration and evaluation assets
137,379
-
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% (2018: 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 offset refund related to the current tax year
Recognition of actual research and development tax
offset refund related to the previous tax year
YEAR ENDED
30/06/19
$
(150,000)
(69,836)
(219,836)
1,299,818
(357,450)
2,691
354,759
YEAR ENDED
30/06/18
$
(100,000)
(152,620)
(252,620)
1,253,295
(344,656)
6,637
338,019
(150,000)
(100,000)
(69,836)
(152,620)
Tax expense (benefit)
(219,836)
(252,620)
The tax rate used in the above reconciliation is the corporate tax rate of 27.5% payable by Australian base rate entities (those with
turnover less than $50 million of revenue, and 80% or less of their assessable income is base rate entity passive income). In the 2018
income year, the turnover threshold was $25 million.
54
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019 b) Recognised tax assets and liabilities
Deferred tax assets and (liabilities) are attributable to the following:
Exploration and evaluation expenditure
(3,185,402)
(2,622,871)
Plant and equipment
Trade and other payables
Employee benefits
Share issue costs
Net deferred tax liabilities
Tax losses recognised
Net deferred tax assets / (liabilities)
(7,084)
12,100
40,948
139,733
(2,999,705)
2,999,705
-
(6,094)
6,600
46,478
82,133
(2,493,755)
2,493,755
-
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 27.5% tax rate. The potential benefit of unrecognised
tax losses (shown below) has similarly been calculated utilising a 27.5% tax rate.
c) Unrecognised tax losses:
A deferred tax asset has not been recognised in respect of the following:
Tax losses – operating (tax effected)
Tax losses – capital (tax effected)
30/06/19
$
7,995,639
146,948
30/06/18
$
7,464,702
146,948
Of the total operating tax losses of approximately $39 million in the Group at 30 June 2019, $29 million are unrecognised as shown
above as a $7.99 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 CASH AND CASH EQUIVALENTS AND TERM DEPOSITS
Cash and cash equivalents
Term deposits (Terms greater than 3 months maturity)
30/06/19
$
2,803,691
2,500,000
30/06/18
$
860,076
-
Cash and cash equivalents comprise cash on hand, cash held at financial institutions
and bank term deposits with a maturity of less than 3 months.
At 30 June 2019, the Group held $2,500,000 in term deposits with maturity terms of greater than 3 months and have been reclassified
to Financial assets – Term deposits on the statement of financial position. The term deposits earn interest between 1.5% and 2.1%.
7 TRADE AND OTHER RECEIVABLES
Interest
Research & Development Tax Offset Incentive
Goods & Services Tax
Other
30/06/19
$
1,513
319,836
34,334
760
356,443
30/06/18
$
2,942
100,000
29,013
11,116
143,071
The expected Research & Development tax offset refund of $169,836 relating to the year ended 30 June 2018 remained outstanding at
year end and was received subsequent to year end. A Research & Development tax offset claim amount of $150,000 for the year ended
30 June 2019 has been accrued based on estimated qualifying expenditure, and will be finalised with the lodgement of PNX’s 2019
tax return.
55
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019 8 PREPAYMENTS AND DEPOSITS
Prepayments
Environmental Deposits – Northern Territory
Deposit – office bond
30/06/19
$
27,146
90,776
32,760
150,682
30/06/18
$
16,755
104,224
32,760
153,739
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 2020 and earning 2.4% interest.
9 OTHER FINANCIAL ASSETS
Investment in Sunstone Metals Ltd
30/06/19
$
528,573
30/06/18
$
489,896
The Company continues to hold 12,892,013 shares in ASX listed Sunstone Metals Limited (‘Sunstone’, previously Avalon Minerals
Limited). This investment was previously classified as “Available for sale financial asset” and from 1 July 2018 this investment is
recognised as “Fair value through other comprehensive income (FVOCI)”, under AASB 9 Financial Instruments – refer to Note 3 (f).
At 30 June 2019, the investment was reflected at fair value of $528,573, with the incremental movement recorded at fair value through
other comprehensive income (FVOCI) – refer to Note 16.
10 EXPLORATION AND EVALUATION EXPENDITURE
Costs brought forward
Expenditure incurred during the year
Recognised as an expense (tenements previously impaired)
Impairment charges
30/06/19
$
9,706,714
3,000,500
(64,758)
(137,379)
30/06/18
$
6,899,372
2,894,500
(87,158)
-
12,505,077
9,706,714
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 (during the year the Company earned additional
39% interest increasing from 51% owned to 90% under a farm-in agreement).
During July 2018, the Company’s 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 was completed, 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 returned 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.
In June 2019, an impairment charge of $137,379 was recognised following the exit from the Kilfoyle Farm-in agreement with May Drilling
Pty Ltd. In 2017 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 and the prevailing market conditions. At 30 June 2019, the fair value of PNX’s SA tenements
remains unchanged at $0.5 million, based on the previous assessment made.
56
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019 11 PLANT AND EQUIPMENT
Cost
Balance at 30 June 2017
Additions
Disposals
Balance at 30 June 2018
Additions
Disposals
Balance at 30 June 2019
Accumulated depreciation
Balance at 30 June 2017
Depreciation expense
Depreciation capitalised to exploration assets
Disposals
Balance at 30 June 2018
Depreciation expense
Depreciation capitalised to exploration assets
Disposals
Balance at 30 June 2019
Net book value – plant and equipment
Balance at 30 June 2018
Balance at 30 June 2019
The useful lives applied in the determination of depreciation for all items of plant and equipment is 3-5 years.
12 TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Other payables
Average credit period on trade payables is 30 days.
13 PROVISIONS
Current
Employee benefits – annual leave
Employee benefits – long service leave
Non-current
Employee benefits – long service leave
30/06/19
$
246,377
89,007
17,010
352,394
30/06/19
$
77,774
65,332
$
604,040
2,773
-
606,813
20,255
(81,392)
545,676
566,024
5,263
13,364
-
584,651
9,596
7,061
(81,392)
519,916
22,161
25,760
30/06/18
$
303,419
32,221
22,435
358,075
30/06/18
$
101,670
-
During the year an amount of $61,369 relating to non-current long service leave was reclassified as
current benefits as the employee had completed seven years of continuous service.
5,795
67,340
57
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019 14 CONTRACT LIABILITIES
Silver streaming receipts
30/06/19
$
30/06/18
$
2,400,000
2,400,000
Two parties have entered into silver streaming and royalty agreements with the Company.
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 a contract liability, 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.
15 ISSUED CAPITAL
30/06/19
$
30/06/18
$
2,435,288,142 fully paid ordinary shares (2018: 1,088,930,020)
45,469,675
36,917,796
Movement in ordinary shares for the year:
Balance at beginning of year
1,088,930,020
36,917,796
741,055,537
32,665,302
NO.
30/06/19
$
NO.
30/06/18
$
a) Shares issued at 0.8 cents
263,750,000
2,110,000
b) Shares issued at 0.8 cents
169,375,000
1,355,000
c) Shares issued at 0.6 cents
913,233,122
5,479,398
d) Shares issued at 2.0 cents
e) Shares issued at 2.0 cents
f) Shares issued at 2.0 cents
g) Shares issued to settle loan
h) Shares issued to settle interest
on convertible notes
i) Shares issued to settle interest on loan
j)
Interest on convertible notes –
reduction in share capital
Share issue costs
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(392,519)
-
-
-
-
-
-
3,090,000
74,591
234,591,886
2,463,215
24,000,000
600,000
80,000,000
1,200,000
1,156,698
15,000
5,035,899
-
-
66,407
(11,712)
(155,007)
Balance at end of year
2,435,288,142
45,469,675
1,088,930,020
36,917,796
Fully paid shares carry one vote per share and a right to dividends.
a) 263,750,000 Shares were issued at 0.8 cents under tranche 1 of a placement to sophisticated and professional investors on
2 August 2018.
b) 169,375,000 Shares were issued at 0.8 cents under under tranche 2 of a placement to sophisticated and professional investors and
Directors of the Company on 20 September 2018.
c) 913,233,122 shares were issued at 0.6 cents under a fully underwritten non-renounceable rights Issue on 20 May 2019.
d) 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.
e) 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.
58
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019 f) 24,000,000 shares were issued in November 2017 to Marilei International Limited
and Sochrastem SA to settle $0.6 million of convertible notes.
g) 80,000,000 shares were issued to settle a $1.2 million loan.
h) 1,156,698 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.
i) 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.
j)
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.
16 RESERVES
Available for sale investment
FVOCI investment
Equity-settled benefits
30/06/19
$
-
335,193
50,015
385,208
30/06/18
$
296,516
-
40,230
336,746
The fair value through other comprehensive income (FVOCI) investment reserve reflects the current year increase in
the fair value of the Company’s investment in Sunstone Metals Ltd of $38,677 together with the reclassification of the
prior year increase of $296,516 previously shown as Available for Sale Investment reserve - refer to Note 3 (f).
The equity-settled benefits reserve arises on the annual fair value assessment of the the vesting of Performance Rights granted
to employees, consultants and executives under the PNX Metals Limited Employee Performance Rights Plan. The reserve at 30
June 2019, includes any adjustments for lapsed/expired rights and any changed probability of the vesting of the Performance
Rights together with changes in fair value due to the passage of time to 30 June 2019. 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 there were no Performance Rights that vested and converted to share capital.
Further information on share-based payments is disclosed in Note 18.
17 ACCUMULATED LOSSES
Balance at beginning of year
Loss for the year
Balance at end of year
18 SHARE OPTIONS AND PERFORMANCE RIGHTS
Performance rights
30/06/19
$
28,805,970
1,079,982
29,885,952
30/06/18
$
27,805,295
1,000,675
28,805,970
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.
10,000,000 Performance Rights, approved by shareholders at the AGM held on 24 October2018 , were issued to the Managing Director
on 3 December 2018. The fair value at the time of issue was $84,107. These Performance Rights remain unvested at 30 June 2019.
In relation to the unvested 7,070,000 Performance Rights held by PNX personnel under the Plan as at 1 July 2018:
»
»
»
1,600,000 Perfrormance Rights held by the Company’s Managing Director & CEO
expired during the year as the performance conditions were not met;
3,030,000 Performance Rights held by PNX personnel lapsed during the year as the performance conditions were not met; and
2,440,000 Performance Rights remain unvested at 30 June 2019.
The total remaining 12,440,000 unvested Performance Rights at 30 June 2019 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 2021) in order for the Performance Rights to vest.
59
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019 Options
At the discretion of the Directors, and subject to shareholder approval if required, 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, 433,125,000 unquoted free attaching options were issued to share placement participants.
These unquoted options are exercisable at 1.5 cents each and expire on 30 September 2021.
The Company had previously issued 20,000,000 unquoted options to a subsidiary of a corporate
advisor, with an exercise price of 1.47 cents each and an expiry date of 30 October 2020.
On 31 May 2019, 65,450,000 unlisted options exercisable at 5.0 cents each, expired unexercised. These were previously
issued to placement participants in December 2016 as part of a share placement that raised $2.6 million
At 30 June 2019, a total of 453,125,000 unlisted options were on issue, as shown in the table below.
OPTIONS
30/06/19
NUMBER
OF OPTIONS
30/06/19
WEIGHTED AVERAGE
EXERCISE PRICE $
30/06/18
NUMBER
OF OPTIONS
30/06/18
WEIGHTED AVERAGE
EXERCISE PRICE $
Balance at beginning of the year
Options granted
Options expired or lapsed
Balance at end of the year
85,450,000
433,125,000
65,450,000
453,125,000
0.042
0.015
0.05
65,450,000
20,000,000
-
0.01499
85,450,000
0.05
0.0147
-
0.042
19 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)
Angelo Gaudio – appointed 10 January 2019 (Chief Financial Officer and Company Secretary)
Tim Moran – resigned 10 January 2019 (Chief Financial Officer and Company Secretary)
Andy Bennett – resigned 6 September 2018 (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
30/06/19
$
725,534
46,289
17,885
789,708
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.
60
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019 20 REMUNERATION OF AUDITOR
Audit and review of the financial reports
The Company’s auditor is Grant Thornton Audit Pty Ltd.
21 RELATED PARTY DISCLOSURES
a) Subsidiaries
30/06/19
$
28,599
30/06/18
$
38,436
Detail of the percentage of ordinary shares held in the Company’s subsidiary is disclosed in Note 26.
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 $78,657 (2018: $40,524). $Nil inclusive of
GST was owed to Piper Alderman at 30 June 2019 (2018: $7,893).
22 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 2019 in respect of minimum expenditure requirements not provided for in the financial
statements are approximately:
Minimum exploration expenditure on exploration licences
30/06/19
$
1,168,000
30/06/18
$
450,000
Ausmex Mining Group Limited continues to 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 South Australia.
The Group’s office lease in Rose Park, South Australia, with annual lease payments of $68,754 exclusive of GST, extends to
August 2020.
b) Reilly Tenement Acquisition Agreement (relating to Burra South Australia tenements)
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 6326) 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 6326 (previously 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 6326 (previously 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 6326 (previously EL 5382) of at least 15,000 tonnes of contained copper.
61
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019 c) Royalty agreements
The Company has granted the following royalties (relating to Northern Territory tenements):
¬ 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.
The Company has granted the following royalties (relating to Burra South Australia tenements):
¬ Mr Matthew Reilly - 6% of the aggregate net revenue in respect of all metals derived from EL 6326 (previously 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 6327 (previously 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 2019 financial year, and no costs incurred by the Company in relation to it.
e) Other rights held by Newmarket Gold NT Holdings Pty Ltd (relating to Northern Territory tenements)
Newmarket can re-acquire 90% of any gold or silver deposits with a JORC compliant resource on the tenements subject
to PNX’s 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 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.
23 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Categories of financial instruments
Financial assets
Cash and cash equivalents
Financial assets – Term deposits
Deposits
Trade and other receivables
Other financial assets –
Investment in Sunstone
Financial liabilities
Trade and other payables
30/06/19
$
2,803,691
2,500,000
123,535
356,4441
528,573
30/06/18
$
860,076
-
136,984
143,071
489,896
352,394
358,075
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.
62
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019
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 $8,000 (2018: increase or decrease by approximately $9,000).
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.
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
2019
Non-interest bearing
Fixed Interest bearing
2018
Non-interest bearing
Fixed Interest bearing
%
-
-
-
-
$
263,387
-
334,000
-
$
89,007
-
24,000
-
$
-
-
-
-
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 (see Note 14) 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.
$
-
-
-
-
63
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019
24 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 – SA
Unallocated/corporate
Total loss before tax
Income tax benefit
Total loss for the year
REVENUE
YEAR ENDED
30/06/19
$
REVENUE
YEAR ENDED
30/06/18
$
-
-
-
-
-
-
SEGMENT LOSS
YEAR ENDED
30/06/19
$
(137,379)
(64,758)
(1,097,681)
(1,299,818)
219,836
SEGMENT LOSS
YEAR ENDED
30/06/18
$
-
(87,158)
(1,166,137)
(1,253,295)
252,620
(1,079,982)
(1,000,675)
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.
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
30/06/19
$
30/06/18
$
12,125,402
500,000
6,244,824
18,870,226
159,964
-
2,741,101
2,901,065
9,348,815
500,000
1,526,842
11,375,657
232,049
-
2,695,036
2,927,085
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, contract liabilities and corporate/administrative payables.
64
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019
25 EARNINGS PER SHARE
Basic and Diluted loss per share- continuing operations
(0.07)
(0.10)
30/06/19
CENTS PER SHARE
30/06/18
CENTS PER SHARE
The earnings and weighted average number of ordinary shares used in
the calculation of basic and diluted earnings per share are as follows:
Loss after tax – continuing operations $
(1,079,982)
(1,000,675)
Weighted average number of ordinary shares
1,566,428,763
974,058,242
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.
26 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
2019
%
OWNERSHIP INTEREST
2018
%
(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.
27 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 22 discloses the Group’s commitments for expenditure and contingent liabilities, which are also applicable to the parent entity.
28 SUBSEQUENT EVENTS
There are no other matters or circumstances that have arisen since 30 June 2019 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
NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2019 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 2019
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
The Directors have been given the declarations by the Chief Executive Officer and Chief
Financial Officer required by Section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors made pursuant to Section
295(5) of the Corporations Act 2001.
Graham Ascough
Chairman
17 September 2019
66
PNX METALS LIMITED | ANNUAL REPORT 2019 INDEPENDENT AUDITOR’S REPORT
to the Members of PNX Metals Limited
Level 3, 170 Frome Street
Adelaide SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T +61 8 8372 6666
F +61 8 8372 6677
E info.sa@au.gt.com
W www.grantthornton.com.au
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 subsidiary (the Group), which
comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss
and other comprehensive income, 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 2019 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 net comprehensive loss
of $1,041,305 during the year ended 30 June 2019, and net cash outflows (excluding the acquisition of term deposits) from
operating and investing activities of $4,108,264. As stated in Note 3(a), these events or conditions indicate that a material
uncertainty exists that may cast doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘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.
67
PNX METALS LIMITED | ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
to the Members of PNX Metals Limited
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 - Notes 3(i) and 10
At 30 June 2019 the carrying value of exploration and
evaluation assets was $12,505,077.
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 2019, but does not include the financial report and our auditor’s report
thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
68
PNX METALS LIMITED | ANNUAL REPORT 2019
Responsibilities of the Directors’ for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
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 2019.
In our opinion, the Remuneration Report of PNX Metals Limited, for the year ended 30 June 2019 complies with section
300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
J L Humphrey
Partner – Audit & Assurance
Adelaide, 17 September 2019
69
PNX METALS LIMITED | ANNUAL REPORT 2019
ADDITIONAL SHAREHOLDER INFORMATION
SHARES
The total number of shares issued as at 2 September 2019 was 2,435,288,142 held by 1,179 registered shareholders.
438 shareholders hold less than a marketable parcel, based on the market price of a share as at 2 September 2019.
Each share carries one vote.
PERFORMANCE RIGHTS/OPTIONS
As at 2 September 2019, the Company had 12,440,000 Performance Rights and 453,125,000 unquoted options on
issue.20,000,000 options have a 1.47 cent exercise price and expire on 30 October 2020 and Zenix Nominees Pty Limited holds
100% of this class.The remaining 423,125,000 options have a 1.5 cent exercise price expiring 30 September 2021 of which 46% is
held by Delphi Unternehmensberatung Aktiengesellschaft.
TWENTY LARGEST SHAREHOLDERS
As at 2 September 2019, the twenty largest Shareholders were as shown in the following table and held 77.59% of the Shares.
RANK
NAME
SHARES
% OF SHARES
DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT\C
MARILEI INTERNATIONAL LIMITED
SOCHRASTEM SA\C
POTEZNA GROMADKA LTD
ROBERT LEON
BNP PARIBAS NOMS PTY LTD
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