Vault Minerals Limited | ASX: VAU | ABN 73 068 647 610 | Tel: (+61) 8 6313 3800 | www.vaultminerals.com
Suite 4, Level 3, South Shore Centre, 85 South Perth Esplanade, South Perth WA 6151
ASX ANNOUNCEMENT
23 October 2024
2024 Annual Report
Vault Minerals Limited (ASX:VAU) (formerly Red 5 Limited) is pleased to present its 2024 Annual Report, which
will be distributed to shareholders today.
This announcement was authorised for release to ASX by Luke Tonkin, Managing Director.
For further information, please contact:
Luke Tonkin
Managing Director
+61 8 6313 3800
investors@vaultminerals.com
Len Eldridge
Corporate Development Officer
+61 8 6313 3800
investors@ vaultminerals.com
2024
Annual Report
CONTENTS
Chairman & Managing Director’s Letter
1
Resources and Reserves Statement
3
Environmental, Social and
Governance Summary
9
Financial Report
Directors’ Report
12
Remuneration Report
21
Auditor’s Independence Declaration
36
Annual Financial Statements
37
Notes to Financial Statements
41
Directors’ Declaration
80
Independent Auditor’s Report
81
Additional ASX Information
86
CORPORATE Information
On 25 September 2024, Red 5 Limited officially
changed the Company’s name to Vault Minerals
Limited.
BOARD OF DIRECTORS
Russell Clark (Chair)
Luke Tonkin (Managing Director)
Ian Macpherson (Non-executive Director)
Andrea Sutton (Non-executive Director)
Peter Johnston (Non-executive Director)
David Quinlivan (Non-executive Director)
Kelvin Flynn (Non-executive Director)
Rebecca Prain (Non-executive Director)
COMPANY SECRETARY
David Berg
REGISTERED OFFICE
Suite 4, Level 3, South Shore Centre
85 South Perth Esplanade, South Perth WA 6151
Telephone: (08) 6313 3800
E-mail: info@vaultminerals.com
Web-site: www.vaultminerals.com
SHARE REGISTRY
Automic Group
Level 5, 191 St Georges Terrace
Perth, Western Australia 6000
Telephone: 1300 288 664
International: +61 2 9698 5414
E-mail: hello@automicgroup.com.au
Web-site: www.automicgroup.com.au
AUDITORS
KPMG
STOCK EXCHANGE LISTING
Shares in Vault Minerals Limited are quoted on
the Australian Securities Exchange (ASX).
Trading code: VAU
1
2024 ANNUAL REPORT
CHAIRMAN & MANAGING DIRECTOR’S Letter to Shareholders
Dear shareholders,
I am pleased to present the 2024 Annual Report
for Vault Minerals Limited (Vault).
Having been appointed as Chair of Red 5 Limited (Red 5) in
July 2023, I noted in last year’s Annual Report that it was
exciting to have the opportunity to join a rapidly growing
Australian gold company at a significant period in its history.
This turned out to be something of an understatement.
Vault is the product of the merger transaction implemented in
June 2024 between Red 5 and Silver Lake Resources Limited
(Silver Lake). The rationale for this combination transaction was
simple and compelling. It coupled a strategic long-life asset in
the prolific Leonora district (King of the Hills) with the substantial
financial capacity and proven operating history of the Silver
Lake asset portfolio and management team.
The resultant business is a diversified intermediate gold
producer with an organic pipeline of low capital intensity growth
and life extension options, matched with sector-leading financial
capacity to internally fund these investment opportunities. Core
to sustained value creation in the mining sector is time and
capital – we have both.
The new name for the combined business, Vault, was selected
for its significance to us as a profitable, financially disciplined
and returns-focussed gold producer. A ‘vault’ is a secure store
of value that is built to last. Through history to the current day, it
has often been used to store something of very high value –
gold. Embedded in the word ‘vault’ is also the chemical symbol
for gold (Au). As such, we consider the new name to embody
many of the key objectives of our long-term strategy, which is to
be a valuable producer and supplier of gold for the benefit of all
of our stakeholders.
The integration of the two component businesses within Vault
has proceeded well. A strong finish to FY24 was delivered with
all operations meeting or exceeding respective sales and cost
guidance ranges. The capital structure was also simplified and
strengthened, with repayment and extinguishment of the King
of the Hills project finance facility and the sale of the Red 5
treasury shares. Vault will continue to prioritise a strong balance
sheet in its approach to capital allocation, to maintain the
financial flexibility required to maximise the value of a natural
resources business, without the noise of short term market
fluctuations.
The 2024 operational and financial results demonstrated the
transformation of the Company, through the ramp up and
optimisation of the King of the Hills and the merger with
Silver Lake.
Some of the key results for the year ended 30 June 2024 include:
\
\ Group gold sales of 223,498 ounces, underpinned by
the 29% y-o-y increase in sales from King of the Hills to
211,939 ounces in its second full year of operations.
\
\ Revenue of $620 million, increased 47% y-o-y and
predominantly reflects the 29% increase in gold sales
from King of the Hills and the 6% higher average realised
gold price.
\
\ Underlying group operational EBITDA of $192.7 million at a
margin of 31%, underpinned by a 104% and 48% increase in
King of the Hills EBITDA and EBITDA margin respectively.
\
\ Cashflow from operations of $206.6 million, a 342% increase
y-o-y reflective of the increase in sales from the King of the
Hills operation and increased realised gold price.
\
\ Cash outflows from investing activities, excluding the
$378.3 million cash acquired through the merger with Silver
Lake, were 14% lower at $108.3 million, reflecting lower y-o-y
capital investment in infrastructure and waste stripping at
King of the Hills.
\
\ Cash outflows from finance activities predominantly reflect
the $44.7 million principal and interest payments associated
with the project finance facility.
\
\ Cash and bullion of $453.7 million and net cash of $360.8
million at period end, including $92.9 million outstanding on
the project finance facility. The project finance facility was
repaid in full on 8 July 2024, post period end.
Vault’s Mineral Resources at 30 June 2024 were 12 million
ounces of gold, with Ore Reserves of 3.4 million ounces of gold.
All of the Company’s Mineral Resources and Ore Reserves are
located within established mining centres and provide long life
with a strong platform for further Ore Reserve conversion and
Mineral Resource growth at all operations.
MINERALS
A secure store
of value that is
built to last
Embedded is the
chemical symbol
for gold – Au
Through history to the
current day, it is often
used to store something
of very high value – gold
In FY25, Vault is set to produce approximately 390,000 –
430,000 oz gold at a group All-In-Sustaining-Cost (AISC) of
approximately A$2,250 – A$2,450/oz. We also have a clear
plan to execute on key near-term growth opportunities over
the next 12 months. Focus areas include:
\
\ Undertaking a plant optimisation study at King of the
Hills to enable capture of the scale and strategic position
of the operation – targeting increased throughput to
deliver higher production, lower costs and improved free
cash flow.
\
\ Investing in high-priority, high-returning exploration
activities, particularly the reinstatement and acceleration
of underground drilling at King of the Hills and Darlot.
\
\ Harvesting free cash flow at Deflector, including
introduction of a new mining front (Spanish Galleon) to
supplement run of mine production and push out
stockpile milling.
\
\ Converting further resource development opportunities at
Mount Monger to leverage installed process and mining
infrastructure, including acceleration of further high-grade
feed sources into FY26 and FY27.
Importantly, our portfolio holds opportunities across all
phases of the invest and yield cycle. The longer-term growth
option presented by the substantial defined deposit and
installed process capacity at our Sugar Zone project in
Ontario, Canada, is an attractive one. Following the 93,000m
drill program undertaken there in FY24, we are evaluating
future mine production scenarios. Critically, as a brownfield
restart option, Sugar Zone also carries none of the cost,
complexity, risk or lead times of greenfield mine construction.
CHAIRMAN & MANAGING DIRECTOR’S Letter to Shareholders (cont.)
I take this opportunity to welcome all of those who have joined from
Silver Lake, and who are working hard to transition all parts of our
business to consistent, mature systems and processes. I am
confident that the aggregate value of the merged company far
outweighs the sum of its parts.
I would also like to thank select Red 5 senior management
personnel who stepped down as part of the merger implementation
and streamlining. This includes Mark Williams, our Managing
Director, David Coyne, our CFO and Company Secretary, and
Byron Dumpleton, our Chief Geologist. To Mark in particular, well
done and congratulations on building Red 5 to its position of
strength; owning and operating a strategic, long-life asset in the
Leonora region.
To my fellow directors, thank you for your hard work, insight and
advice during what has been a very busy period. It would also be
remiss of me to not also recognise and thank two long term
directors of Red 5 – Colin Loosemore and Steve Tombs – who
retired at the Red 5 Annual General Meeting in November 2023.
In closing, I am truly excited about what lies ahead for Vault. I thank
all the Vault team, contractors and suppliers for their continued
efforts in making the business one that we can all be proud of.
Finally, to all our shareholders, thank you for your ongoing support.
The past 12 months has been incredibly busy, and we have
transformed as a result. I look forward to what can be achieved in
the years ahead.
Russell Clark
Luke Tonkin
Non-Executive Chairman
Managing Director
2
2024 ANNUAL REPORT
3
2024 ANNUAL REPORT
RESOURCES AND RESERVES Statement
MINERAL RESOURCE STATEMENT AS AT 30 JUNE 2024
The Company’s total Measured, Indicated and Inferred Mineral Resources at 30 June 2024 are 155 million tonnes at 2.5 grams per tonne of
gold containing 12 million ounces of gold, including 2.7 million tonnes at 0.6 percent copper containing 15,000 tonnes of copper. The Mineral
Resources as at 30 June 2024 are estimated after allowing for FY2024 depletion.
Measured
Mineral Resources
Indicated
Mineral Resources
Inferred
Mineral Resources
Total
Mineral Resources
June 2024
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Mount Monger
Daisy Mining Centre
Daisy Complex
126
26.7
108
711
18.2
415
1,132
19.5
709
1,969
19.5
1,232
Mirror/Magic
493
2.5
39
1,003
2.3
74
682
2.5
55
2,178
2.4
168
Lorna Doone
-
-
-
1,501
2.0
98
785
2.0
51
2,286
2.0
149
Costello
-
-
-
37
1.7
2
237
2.0
15
274
1.9
17
Total Daisy Mining Centre
619
7.4
147
3,252
5.6
589
2,836
9.1
830
6,707
7.3
1,566
Mount Belches Mining Centre
Santa
6
1.9
0
7,610
2.8
689
1,023
3.5
116
8,639
2.9
805
Maxwells
154
5.3
26
1,443
4.0
185
1,752
3.4
194
3,349
3.8
405
Cock-eyed Bob
295
5.5
52
1,560
4.0
199
724
4.6
108
2,579
4.3
359
Rumbles
-
-
-
1,624
2.7
140
446
3.9
56
2,070
2.9
196
Total Mount Belches
Mining Centre
455
5.4
78 12,237
3.1
1,213
3,945
3.7
474 16,637
3.3
1,765
Aldiss Mining Centre
Karonie
-
-
-
2,493
1.9
150
1,150
1.6
60
3,643
1.8
210
French Kiss
-
-
-
986
2.2
70
122
1.5
6
1,108
2.1
76
Tank/Atreides
-
-
-
863
1.7
47
234
1.6
12
1,097
1.7
59
Harrys Hill
-
-
-
479
2.2
34
415
2.3
31
894
2.3
65
Italia/Argonaut
-
-
-
531
1.6
27
19
1.6
1
550
1.6
28
Spice
-
-
-
136
1.6
7
296
1.4
13
432
1.4
20
Aspen
-
-
-
112
1.7
6
139
1.6
7
251
1.6
13
Total Aldiss Mining Centre
-
-
-
5,600
1.9
341
2,375
1.7
130
7,975
1.8
471
Randalls Mining Centre
Lucky Bay
13
4.8
2
34
4.6
5
8
7.8
2
55
5.1
9
Randalls Dam
-
-
-
95
2.0
6
24
1.3
1
119
1.8
7
Total Randalls Mining Centre
13
4.8
2
129
2.7
11
32
2.9
3
174
2.9
16
Mount Monger Stockpiles
1,844
1.1
64
-
-
-
-
-
-
1,844
1.1
64
Total Mount Monger
2,931
3.1
291 21,218
3.2
2,154
9,188
4.9 1,437 33,337
3.6
3,882
Deflector
Deflector
379
13.9
170
1,127
10.0
363
758
7.3
178
2,264
9.8
711
Stockpile
449
2.4
34
-
-
-
-
-
-
449
2.4
34
Total Deflector
828
7.7
204
1,127
10.0
363
758
7.3
178
2,712
8.5
745
Rothsay
Rothsay
-
-
-
1,054
7.7
260
349
6.1
68
1,403
7.3
328
Stockpile
148
1.8
8
-
-
-
-
-
-
148
1.8
8
Total Rothsay
148
1.8
8
1,054
7.7
260
349
6.1
68
1,551
6.7
336
Total Deflector Region
976
6.8
213
2,181
8.9
623
1,107
6.9
246
4,264
7.9
1,082
4
2024 ANNUAL REPORT
RESOURCES AND RESERVES Statement (cont.)
MINERAL RESOURCE STATEMENT AS AT 30 JUNE 2024 (cont.)
Measured
Mineral Resources
Indicated
Mineral Resources
Inferred
Mineral Resources
Total
Mineral Resources
June 2024
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Sugar Zone
Sugar Zone
-
-
-
2,800
8.5
768
2,032
7.8
510
4,832
8.2
1,278
Stockpile
-
-
-
-
-
-
-
-
-
-
-
-
Total Sugar Zone
-
-
-
2,800
8.5
768
2,032
7.8
510
4,832
8.2 1,278
King of the Hills
KOTH OP
3,154
1.1
109 63,348
1.3 2,583
7,582
1.0
249
74,084
1.2
2,941
KOTH UG
-
-
-
5,875
3.1
584
1,909
2.8
169
7,783
3.0
752
Cerebus-Eclipse
-
-
-
2,036
1.3
86
473
1.2
19
2,509
1.3
105
Centauri
-
-
-
1,191
1.6
63
230
1.5
11
1,420
1.6
74
Rainbow
-
-
-
1,465
1.2
57
166
1.5
8
1,631
1.2
65
Severn
-
-
-
445
1.9
27
380
1.6
20
825
1.7
46
Stockpile
5,349
0.5
84
1,577
0.4
22
-
-
-
6,925
0.5
106
Total King of the Hills
8,503
0.7
193 75,935
1.4 3,420 10,740
1.4
476
95,177
1.3
4,090
Darlot
Darlot
102
1.1
4
8,644
3.9
1,092
8,495
2.9
800
17,241
3.4
1,896
Great Western
6
2.6
1
140
3.2
15
239
2.6
20
385
2.8
35
Stockpile
25
2.2
2
-
-
-
-
-
-
25
2.2
2
Total Darlot
133
1.4
6
8,784
3.9
1,107
8,734
2.9
820
17,650
3.4
1,933
Total Leonora Region
8,636
0.7
199
84,719
1.7
4,527
19,474
2.1
1,296 112,828
1.7
6,022
Group
Total Gold Resources
12,542
1.7
703 110,918
2.3
8,072
31,800
3.4
3,489 155,260
2.5 12,264
Measured
Mineral Resources
Indicated
Mineral Resources
Inferred
Mineral Resources
Total
Mineral Resources
June 2024
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
Deflector
Deflector
379
1.3
4,700
1,127
0.6
6,900
758
0.4
2,900
2,264
0.6 14,500
Stockpile
449
0.1
500
-
-
-
-
-
-
449
0.1
500
Total Deflector
828
0.6
5,200
1,127
0.6
6,900
758
0.4
2,900
2,712
0.6 15,000
Group
Total Copper Resources
828
0.6
5,200
1,127
0.6
6,900
758
0.4
2,900
2,712
0.6 15,000
5
2024 ANNUAL REPORT
RESOURCES AND RESERVES Statement (cont.)
ORE RESERVE STATEMENT AS AT 30 JUNE 2024
The total Proved and Probable Ore Reserves at 30 June 2024 are 85 million tonnes at 1.3 g/t gold containing 3.4 million ounces of gold,
including 1.4 million tonnes at 0.2 % copper containing 2,300 tonnes of copper. The Ore Reserves at 30 June 2024 are estimated after allowing
for FY2024 depletion. Mount Monger Ore Reserves were estimated using a gold price of A$3,000/oz for Santa, Flora Dora, and French Kiss
open pits. A$2,900/oz for Daisy Complex, A$2,300/oz for Maxwells and A$2,400/oz for Cock-eyed Bob. King of the Hills Ore Reserves were
estimated using a gold price of A$2,900/oz for King of the Hills Open Pit, King of the Hills Underground, Darlot, Rainbow, Centauri and
Cerebus-Eclipse. Sugar Zone Ore Reserves were estimated using C$2,610/oz. Deflector Ore Reserve NSR was estimated using A$2,900/oz
gold price and A$13,000/t copper price.
Proved Ore Reserves
Probable Ore Reserves
Total Ore Reserves
June 2024
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Mount Monger
Aldiss Mining Centre
French Kiss
-
-
-
404
1.9
25
404
1.9
25
Total Aldiss Mining Centre
-
-
-
404
1.9
25
404
1.9
25
Daisy Mining Centre
Daisy Complex
129
7.1
30
310
7.4
73
439
7.3
103
Total Daisy Mining Centre
129
7.1
30
310
7.4
73
439
7.3
103
Mount Belches Mining Centre
Cock-eyed Bob
25
3.6
3
194
3.9
24
219
3.8
27
Maxwells
20
3.2
2
154
3.5
17
174
3.5
19
Rumbles
-
-
-
316
1.3
13
316
1.3
13
Santa
7
1.4
0
5,961
1.5
327
5,968
1.5
328
Total Mount Belches
52
3.2
5
6,625
1.8
382
6,677
1.8
387
Mount Monger Stockpiles
1,844
1.1
64
-
-
-
1,844
1.1
64
Total Mount Monger
2,024
1.5
99
7,338
2.0
480
9,363
1.9
579
Deflector
Deflector OP
-
-
-
140
3.1
14
140
3.1
14
Deflector UG
206
5.2
34
794
4.2
108
1,000
4.4
142
Stockpile
449
2.4
34
-
-
-
449
2.4
34
Total Deflector
654
3.3
69
934
4.1
122
1,589
3.7
190
Rothsay
Rothsay
-
-
-
403
5.0
65
403
5.0
65
Stockpile
148
1.8
8
-
-
-
148
1.8
8
Total Rothsay
148
1.8
8
403
5.0
65
551
4.1
73
Total Deflector Region
803
3.0
77
1,337
4.3
187
2,140
3.8
264
Sugar Zone
Sugar Zone
-
-
-
1,942
5.2
325
1,942
5.2
325
Stockpile
-
-
-
-
-
-
-
-
-
Sugar Zone
-
-
-
1,942
5.2
325
1,942
5.2
325
6
2024 ANNUAL REPORT
ORE RESERVE STATEMENT AS AT 30 JUNE 2024 (cont.)
Proved Ore Reserves
Probable Ore Reserves
Total Ore Reserves
June 2024
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
King of the Hills
KOTH OP
4,152
0.7
97
50,961
0.9
1,554
55,113
0.9
1,651
KOTH UG
-
-
-
3,338
2.0
216
3,338
2.0
216
Centauri
-
-
-
331
1.2
13
331
1.2
13
Cerebus-Eclipse
-
-
-
1,561
0.9
47
1,561
0.9
47
Rainbow
-
-
-
2,173
0.8
58
2,173
0.8
58
Stockpile
5,349
0.5
84
1,577
0.4
22
6,925
0.5
106
Total King of the Hills
9,501
0.6
181
59,940
1.0
1,910
69,441
0.9
2,091
Darlot
Darlot
-
-
-
1,580
2.8
144
1,580
2.8
144
Stockpile
25
2.2
2
-
-
-
25
2.2
2
Total Darlot
25
2.2
2
1,580
2.8
144
1,605
2.8
146
Total Leonora Region
9,526
0.6
183
61,520
1.0
2,055
71,046
1.0
2,238
Group
Total Gold Ore Reserves
12,353
0.9
359
72,137
1.3
3,047
84,490
1.3
3,405
Proved Ore Reserves
Probable Ore Reserves
Total Ore Reserves
June 2024
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
Deflector
Deflector OP
-
-
-
140
0.3%
400
140
0.3%
400
Deflector UG
206
0.3%
600
637
0.1%
700
842
0.2%
1,400
Stockpile
449
0.1%
500
-
-
-
449
0.1%
500
Total Deflector
654
0.2%
1,100
777
0.2%
1,200
1,431
0.2%
2,300
Group
Total Copper Ore Reserves
654
0.2%
1,100
777
0.2%
1,200
1,431
0.2%
2,300
RESOURCES AND RESERVES Statement (cont.)
Notes to Mineral Resource and Ore Reserve tables:
1. Mineral Resources are reported inclusive of Ore Reserves.
2. Data is rounded to thousands of tonnes, thousands of ounces gold, and hundreds of tonnes copper. Discrepancies in totals
may occur due to rounding.
3. All Mineral Resource and Ore Reserve estimates are produced in accordance with the 2012 Edition of the Australian Code for
Reporting of Mineral Resources and Ore Reserves (the 2012 JORC Code).
7
2024 ANNUAL REPORT
RESOURCES AND RESERVES Statement (cont.)
MINERAL RESOURCE AND
ORE RESERVE GOVERNANCE
AND INTERNAL CONTROLS
Red 5 ensures that the Mineral Resource
and Ore Reserve estimates quoted are
subject to governance arrangements and
internal controls at site and corporately.
Internal reviews of Mineral Resource and
Ore Reserve estimation procedures and
results are carried out through a technical
review team which is comprised of
competent and qualified professionals.
The Company has finalised its governance
framework in relation to the Mineral
Resource and Ore Reserve estimates in line
with the conduct of its business. Red 5
reports its Mineral Resources and Ore
Reserves on an annual basis in accordance
with the ‘Australasian Code for Reporting of
Exploration Results, Mineral Resources and
Ore Reserves’ (the JORC Code) 2012
Edition (except where stated). Mineral
Resources are quoted inclusive of Ore
Reserves. Competent Persons named by
Red 5 are Members or Fellows of the
Australasian Institute of Mining and
Metallurgy and/or the Australian Institute of
Geoscientists and qualify as Competent
Persons as defined in the JORC Code.
The Mineral Resources and Ore Reserves
statements are based upon, and fairly
represent, information and supporting
documentation prepared by the Competent
Persons named below. The Mineral
Resources statement, as a whole, as
presented in this Annual Report, has been
approved by Phillip Stevenson a Competent
Person who is a member of The Australasian
Institute of Mining and Metallurgy. The Ore
Reserves statement, as a whole, as
presented in this Annual Report, has been
approved by Sam Larritt a Competent
Person who is a member of The Australasian
Institute of Mining and Metallurgy.
COMPETENT PERSON’S STATEMENT
The information in this Annual Report that relates to the Mineral Resources for the King of
the Hills (KOTH), Darlot, Great Western, Rainbow, Severn, Centauri and Cerebus-Eclipse
deposits is based upon information compiled by Patrick Huxtable, a Competent Person
who is a member of The Australasian Institute of Geoscientists. Mr Huxtable is a full-time
employee of the Company. Mr Huxtable has sufficient experience that is relevant to the
style of mineralisation and type of deposit 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 Huxtable consents to the inclusion in the Annual Report of matters based on
his information in the form and context in which it appears. The information in this Annual
Report that relates to the Mineral Resources for the Harrys Hill, Santa, Cock-eyed Bob,
Maxwells, Daisy Combined, Mirror/Magic, Tank/Atreides, Spice, Aspen, French Kiss, Italia/
Argonaut, Lorna Doone, Rumbles, Costello, Randalls Dam and Karonie deposits is based
upon information compiled by Aslam Awan, a Competent Person who is a member of The
Australasian Institute of Mining and Metallurgy. Mr Awan is a full-time employee of the
Company. Mr Awan has sufficient experience that is relevant to the style of mineralisation
and type of deposit 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 Awan consents to the
inclusion in the Annual Report of matters based on his information in the form and context
in which it appears. The information in this Annual Report that relates to the Mineral
Resources for the Deflector deposit is based upon information compiled by David Buckley,
a Competent Person who is a member of The Australasian Institute of Mining and
Metallurgy. Mr Buckley is a full-time employee of the Company. Mr Buckley has sufficient
experience that is relevant to the style of mineralisation and type of deposit 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 Buckley consents to the inclusion in the Annual
Report of matters based on his information in the form and context in which it appears.
The information in this Annual Report that relates to the Mineral Resources for the Sugar
Zone deposit is based upon information compiled by Kane Hutchinson, a Competent
Person who is a member of The Australasian Institute of Mining and Metallurgy. Mr
Hutchinson is a full-time employee of the Company. Mr Hutchinson has sufficient
experience that is relevant to the style of mineralisation and type of deposit 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 Hutchinson consents to the inclusion in the
Annual Report of matters based on his information in the form and context in which it
appears. The information in this Annual Report that relates to the Mineral Resources for the
Rothsay deposit is based upon information compiled by Lee Rummer, a Competent
Person who is a member of The Australasian Institute of Mining and Metallurgy. Mr
Rummer is a full-time employee of the Company. Mr Rummer has sufficient experience
that is relevant to the style of mineralisation and type of deposit 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 Rummer consents to the inclusion in the Annual Report of matters
based on his information in the form and context in which it appears.
All other information in this Annual Report relating to Mineral Resources is based on
information compiled by Phillip Stevenson, a Competent Person who is a member of The
Australasian Institute of Mining and Metallurgy. Mr Stevenson is employed by Red 5
Limited. Mr Stevenson has sufficient experience that is relevant to the style of
mineralisation and type of deposit 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 Stevenson
consents to the inclusion in the Annual Report of matters based on his information in the
form and context in which it appears.
8
2024 ANNUAL REPORT
COMPETENT PERSON’S STATEMENT (cont.)
The information in this Annual Report that relates to Ore Reserves for Deflector,
Daisy, Maxwells, Cock-eyed Bob, Santa, Rumbles, Tank and French Kiss is based
upon information compiled by Sam Larritt, a Competent Person who is a member of
The Australasian Institute of Mining and Metallurgy. Mr Larritt is a full-time employee
of the Company. Mr Larritt has sufficient experience that is relevant to the style of
mineralisation and type of deposit 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 Larritt consents to the inclusion in the Annual Report of matters based
on his information in the form and context in which it appears. The information in this
Annual Report that relates to Ore Reserves for Rothsay and Sugar Zone is based
upon information compiled by Jigar Patel, a Competent Person who is a member of
The Australasian Institute of Mining and Metallurgy. Mr Patel is a full-time employee of
the Company. Mr Patel has sufficient experience that is relevant to the style of
mineralisation and type of deposit 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 Patel consents to the inclusion in the Annual Report of matters based
on his information in the form and context in which it appears.
The information in this Annual Report that relates to Ore Reserves for King of the
Hills, Darlot, Rainbow, Centauri and Cerebus-Eclipse is based upon information
compiled by Kevin Oborne, a Competent Person who is a member of The
Australasian Institute of Mining and Metallurgy. Mr Oborne is a full-time employee of
the Company. Mr Oborne has sufficient experience that is relevant to the style of
mineralisation and type of deposit 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 Oborne consents to the inclusion in the Annual Report of matters
based on his information in the form and context in which it appears.
RESOURCES AND RESERVES Statement (cont.)
FORWARD LOOKING
STATEMENTS
This Annual Report may contain forward looking
statements that are subject to risk factors
associated with gold exploration, mining, and
production businesses. It is believed that the
expectations reflected in these statements are
reasonable but they may be affected by a variety
of variables and changes in underlying
assumptions which could cause actual results or
trends to differ materially, including but not limited
to price fluctuations, actual demand, currency
fluctuations, drilling and production results,
Reserve estimations, loss of market, industry
competition, environmental risks, physical risks,
legislative, fiscal and regulatory changes,
economic and financial market conditions in
various countries and regions, political risks,
project delay or advancement, approvals and
cost estimates. Forward-looking statements,
including projections, forecasts and estimates,
are provided as a general guide only and should
not be relied on as an indication or guarantee of
future performance and involve known and
unknown risks, uncertainties and other factors,
many of which are outside the control of Red 5.
Past performance is not necessarily a guide to
future performance and no representation or
warranty is made as to the likelihood of
achievement or reasonableness of any forward
looking statements or other forecast.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE Summary
ENVIRONMENT, COMMUNITY AND
SOCIAL GOVERNANCE OBJECTIVES
ENVIRONMENT STEWARDSHIP
Recognising the potential impacts of our operations on the environment,
we are committed to responsibly managing the land and resources on
which we operate. We continue to adopt approaches to responsibly
manage resources, prevent contamination and reduce waste, prioritising
the sustainability of the surrounding environment.
COMPLIANCE
Red 5 operates in the Western Australia (WA) and Ontario, Canada
jurisdictions, which are governed by strict environment and social
legislation. All sites operate within an environment management system
to ensure accordance with the applicable legislation and standards.
BIODIVERSITY CONSERVATION
Our operations are designed to reduce disruptions to local ecosystems
where possible. We minimise the clearing of native vegetation, manage
invasive species and engage in rehabilitation activities aligned with the
Mine Closure Plans.
COMMUNITY ENGAGEMENT
We aim to foster positive and engaging relationships with the
communities in which we operate. This involves regular consultations,
transparent communication, and initiatives aimed at ensuring that local
communities’ benefit from our presence. Local businesses and people
are engaged where feasible to do so.
WORKPLACE HEALTH AND SAFETY
The safety and well-being of our workforce is paramount. We aim to
provide a safe, supportive and productive work environment for all of
our employees and contract partners by providing rigorous safety
protocols, regular training and information sessions, along with targeted
health initiatives.
ETHICAL GOVERNANCE AND
ANTI-CORRUPTION
We operate with the highest standards of integrity and transparency.
Our governance structures are designed to prevent bribery, corruption,
and other unethical practices, ensuring that we remain accountable to
our stakeholders.
KEY ENVIRONMENT ACTIVITIES
GREENHOUSE GAS (GHG) MANAGEMENT
Emissions of both greenhouse gases and pollutants are reported
through the mandatory National Pollutions Inventory (NPI) and the
National Greenhouse and Energy Reporting Scheme (NGERS).
In FY23, activities at the King of the Hill (KOTH) operations
exceeded the national Safeguard Mechanism generating over
100,000 tonnes CO2e and an emissions intensity audit
commenced in FY24. The audit findings will inform energy
efficiency and carbon sequestration opportunities and review to
reduce emissions in line with Australia’s emission reduction targets.
All other operations use predominantly natural gas fired powered
stations with a 2 MW solar farm operated at the KOTH facility.
Solar arrays are used to power production/reclamation bores
where possible.
WATER MANAGEMENT
Groundwater is a limited resource and mining activities pose
potential risks to the aquifer quantity and quality, the surrounding
environment, and other local resource users. Red 5 manages
optimal water use by implementing effective handling strategies,
monitoring quality and quantity, and mandatorily reporting on
the findings.
Dewatered groundwater to facilitate mining is primarily reused in
processing facilities and for dust suppression, provided the water
quality is appropriate, before additional groundwater is drawn from
production bores. Where feasible, Reverse Osmosis plants are
utilised to enhance groundwater quality for specific purposes,
reducing the need for scheme or trucked water. Where inadequate
volumes of groundwater are dewatered only the minimum ‘make up
water’ is extracted.
Dust generation is a potential impact at all Red 5 mining areas and
is required to be suppressed to meet air quality obligations.
Groundwater, often hypersaline, along with dust suppressants are
used responsibly to reduce potential dust impacts to the receiving
environment.
Sugar Zone is situated in a freshwater environment and all water/
snow melt within the catchment is treated to ensure discharges
meet strict Canadian regulatory requirements.
9
2024 ANNUAL REPORT
10
2024 ANNUAL REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE Summary (cont.)
WASTE MANAGEMENT
All sites are committed to reducing waste
generation, implementing recycling and
reusing resources where possible. Hazardous
waste is managed in accordance with legal
obligations and waste storage is compliant
with internal and external requirements.
TSF MANAGEMENT
Responsible tailings storage facility (TSF)
management includes designing and operating
our TSFs according to industry standards and
conformance with regulations. Design,
construction and operations of all TSFs is
undertaken by qualified, experienced and
competent personnel. Monitoring, measuring
and review is undertaken as per specialist
advice and reported annually to the regulatory
bodies. This ensures the safety of our workers
and surrounding communities, whilst
minimising potential environmental impacts.
MINE CLOSURE AND
LAND REHABILITATION
Red 5 has made adequate and audited
financial provision for required mine closure
activities and to support development of
appropriate post-mining land uses. Mine
Closure Plans have regulatory approval in all
jurisdictions with triennial updates at a
minimum. Closure activities in FY24 included
the rehabilitation and seeding of large open
pit landforms at the Mount Monger
operations and compliant exploration
rehabilitation across the group.
Progressive rehabilitation is conducted
where practicable.
BIODIVERSITY
The clearing of native vegetation is protected
by law in all jurisdictions. Reducing clearing
of native vegetation to the minimum areas
required to safely operate is a primary
objective in project planning.
Locations of conservation significant flora
and vegetation are understood, with no
unauthorised impacts to any species
recorded. Weeds are actively managed with
an observed increase in populations during
FY24 following normal rainfall after many
years of drought conditions across WA
operational areas.
Feral and pest fauna species are actively
targeted and removed from all WA
operations, engaging local assistance as
required. No impacts to conservation
significant species have been recorded.
11
2024 ANNUAL REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE Summary (cont.)
KEY SOCIAL ACTIVITIES
HUMAN RIGHTS, DIVERSITY
AND INCLUSION
Our commitment to human rights includes
ensuring fair treatment of employees, avoiding
discrimination, statutory reporting of gender
equity and fair remuneration in line with peer
companies. A zero tolerance to discrimination
is enforced at all operations.
EMPLOYEE ENGAGEMENT
The primary focus in FY24, was to attract
and retain the best talent in the industry.
Our employee engagement initiatives focused
on key areas designed to enhance workforce
satisfaction and drive company success.
Key highlights include:
\
\
Talent Acquisition & Retention:
We implemented a recruitment plan to
attract talented individuals, while bolstering
retention through performance reviews and
employee development initiatives.
\
\
Competitive Remuneration:
A thorough review of our compensation
framework ensured that we remain
competitive within the market, offering
attractive salary packages and
performance-based incentives to reward
high achievers and retain top talent.
\
\
Leadership Development:
Our leadership programs were expanded,
focusing on upskilling current and
emerging leaders, equipping them with the
tools to guide teams effectively and drive
organisational growth.
These initiatives have strengthened our
ability to attract, retain, and develop high-
calibre talent, positioning the Company for
continued success.
WORKPLACE HEALTH AND
SAFETY
With the introduction of the new Workplace
Health and Safety legislation, regulations
and codes of practice, Red 5 commenced
the implementation of the revised Mine
Safety Management System (MSMS) to
meet these new requirements.
The MSMS clearly outlines how our
operations will meet their legal obligations
while providing our personnel with simple
and robust processes to manage safety.
Red 5 operations have experienced an
overall improvement in the safety lag
indicators and the business continues to
focus field leadership and critical control
verification as a method to further improve
our safety performance in FY24.
CULTURAL HERITAGE
It is understood all cultural heritage sites,
either known or unknown, archaeological
and/or ethnographic, are protected by law
and hold significance with indigenous
people. We are committed to engaging and
consulting with local traditional owners to
ensure identification and protection of
important cultural heritage areas. Surveys
involving specialist archaeologists,
anthropologists and the traditional owners
have been undertaken at all areas of our
operations to identify areas of avoidance.
This understanding is considered in mine
planning process to ensure their
preservation for generations to come.
NATIVE TITLE
All of Red 5’s operations are on land claimed
or determined under Indigenous Native Title
legislation. Agreements continue to be
negotiated and/or implemented and there
were no non-compliance incidents involving
the rights of indigenous peoples throughout
the year. It is Red 5’s objective to foster
positive and ongoing relationships with local
aboriginal groups.
COMMUNITY RELATIONS
During FY24, Red 5 continued to support
the communities where we operate by
sponsoring local sporting teams,
educational facilities and community events
in Leonora, Perenjori, Kalgoorlie and
Morawa.
KEY GOVERNANCE
ACTIVITIES
ENVIRONMENTAL
APPROVALS AND
COMPLIANCE
During FY24, we conducted continuous
routine (monthly, quarterly, and annual)
compliance monitoring, sampling, and
reporting across the operations. There were
no fines or penalties imposed on the
Company, no serious environmental
incidents and no material environmental
harm. All Mines were operated within the
obligations of the regulatory instruments and
relative legislation, with transparent reporting
of performance to the applicable
government departments.
12
2024 ANNUAL REPORT
DIRECTORS’ Report
The Directors of Red 5 Limited (“Red 5” or “parent entity”) present
their report on the results and state of affairs of Red 5 and its
subsidiaries (“the Group” or the “consolidated entity”) for the year
ended 30 June 2024.
1.
DIRECTORS AND COMPANY
SECRETARY
The names of the Directors of Red 5 in office during the course of
the financial period and at the date of this report are as follows:
Russell Clark (Non-executive Chair, appointed 1 July 2023)
Luke Tonkin (Managing Director, appointed 19 June 2024)
Ian Macpherson (Non-executive Director)
Andrea Sutton (Non-executive Director)
David Quinlivan (Non-executive Director, appointed
19 June 2024)
Peter Johnston (Non-executive Director, appointed
10 July 2023)
Kelvin Flynn (Non-executive Director, appointed 19 June 2024)
Rebecca Prain (Non-executive Director, appointed
19 June 2024)
Mark Williams (Managing Director, resigned 19 June 2024)
Colin Loosemore (Non-executive Director, retired
6 November 2023)
Steve Tombs (Non-executive Director, retired 6 November 2023)
Mr Tonkin, Mr Quinlivan, Mr Flynn and Ms Prain were appointed to
the Board of Directors upon the merger of the Company with Silver
Lake Resources Limited (Silver Lake) on 19 June 2024. Previously
they were Directors of Silver Lake.
Unless otherwise indicated, all Directors held their position as a
Director throughout the entire financial period and up to the date of
this report.
1.1
INFORMATION ON DIRECTORS
Russell Clark
Non-Executive Chairman
Appointment
date
1 July 2023
Qualifications
BSc Mineral Resources Eng. (Hons),
GradDip FinInv, FAICD
Experience
Mr Clark is an internationally experienced
mining professional and director with over 40
years of experience in senior corporate,
operational and project development roles.
During his career, Mr Clark served as
Managing Director and CEO of Grange
Resources for five years, as Group Executive of
Operations for Newmont he managed the
group’s Australian and New Zealand
Operations including the KCGM mine in
Kalgoorlie, and he held a number of mine
general manager roles for Normandy Mining.
Mr Clark is a qualified Mining Engineer and has
worked across Australia, North and South
America, Africa, Europe and the Asia Pacific.
Other listed
company
directorships
Chair of CZR Resources Ltd (since September
2021);
Chair of Pearl Gull Iron Ltd (since July 2021);
and
Non-executive director of Tungsten Mining NL
(since February 2020)
Luke Tonkin
Executive Director
Appointment
date
Managing Director from 19 June 2024, since
the merger of the Group with Silver Lake
Special
responsibilities
Managing Director
Qualifications
BEng, Min Eng, MAusImm
Experience
Mr Tonkin is a Mining Engineering graduate of
the Western Australian School of Mines and his
extensive operations and management career
spans over 38 years within the minerals and
mining industry. He is a past Chairman of the
Western Australian School of Mines Advisory
Board. Mr Tonkin has held senior management
roles at WMC Resources Ltd, Sons of Gwalia
Ltd and was Managing Director of Mount
Gibson Iron Ltd for 7 years and Chief Executive
Officer and Managing Director of Reed
Resources Ltd.
Other listed
company
directorships
Mr Tonkin was previously the Managing
Director of Silver Lake (June 2024). He has held
no other directorships in public listed
companies in the last three years.
13
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
Mark Williams
Executive Director
Appointment
date
16 January 2014 and Managing Director from
16 April 2014 to 19 June 2024 (departed upon
the merger of the Group with Silver Lake)
Special
responsibilities
Managing Director
Qualifications
Dip CSM Mining, GAICD
Experience
Mr Williams was previously General Manager
of the Tampakan Copper-Gold Project in the
southern Philippines from 2007 to 2013. He
has over 27 years’ of mining experience
operating within a diverse range of open cut,
underground, quarrying and civil engineering
environments across the developed markets
of Australia, United Kingdom and New Zealand
as well as the emerging markets of Philippines,
Vietnam, Thailand and South Pacific.
Other listed
company
directorships
Mr Williams has not held directorships in any
other listed companies in the past three years.
David Quinlivan
Non-Executive Director
Appointment
date
19 June 2024, since the merger of the Group
with Silver Lake
Qualifications
BApp Sci, Min Eng, Grad Dip Fin Serv,
FAusImm, FFINSA, MMICA
Experience
Mr Quinlivan is a Mining Engineer with
significant mining and executive leadership
experience having 11 years of service at WMC
Resources Ltd, followed by a number of
high-profile mining development positions.
Since 1989, Mr Quinlivan has served as
Principal of Borden Mining Services, a mining
consulting services firm, where he has worked
on multiple mining projects in various
capacities. He has previously served as Chief
Executive Officer of Sons of Gwalia Ltd (post
appointment of administrators), as Chief
Operating Officer of Mount Gibson Iron Ltd
and President and Chief Executive Officer of
Alacer Gold Corporation.
Other listed
company
directorships
Mr Quinlivan was previously the Non-Executive
Director of Silver Lake (until June 2024). He
has previously served as Chief Executive
Officer of Sons of Gwalia Ltd (post
appointment of administrators), as Chief
Operating Officer of Mount Gibson Iron Ltd
and President and Chief Executive Officer of
Alacer Gold Corporation. Mr Quinlivan is
currently non-executive Chairman of Dalaroo
Metals and served as a Non-Executive
Director of Ora Banda Mining Limited until 28
September 2022. He has held no other
directorships in public listed companies in the
last three years.
Ian Macpherson
Non-Executive Director
Appointment
date
15 April 2014
Special
responsibilities
Chair of the Audit Committee; and
Member of the Remuneration and Nomination
Committee.
Qualifications
B.Comm, CA
Experience
Mr Macpherson is a Chartered Accountant
with over 35 years’ experience in the provision
of financial and corporate advisory services.
He was a former partner at Arthur Andersen &
Co, managing a specialist practice providing
corporate and financial advice to the mining
and mineral exploration industry. Mr
Macpherson established Ord Partners in 1990
(later to become Ord Nexia) and has
specialised in the area of corporate advice
with particular emphasis on capital structuring,
equity and debt raising, corporate affairs and
stock exchange compliance for publicly listed
companies.
Other listed
company
directorships
Chair of RBR Group Limited (since October
2010).
Andrea Sutton
Non-Executive Director
Appointment
date
18 November 2020
Special
responsibilities
Chair of the Sustainability Committee.
Member of the Audit and Risk Committee.
Member of the Remuneration and Nomination
Committee.
Qualifications
B.Eng Chemical (Hons), GradDipEcon, GAICD
Experience
Ms Sutton is a qualified Chemical Engineer and
has over 25 years’ experience with Rio Tinto
and ERA. Between 2013 and 2017, Ms Sutton
was Chief Executive and Managing Director of
ERA, then a Non-executive Director from 2018
to 2020. Ms Sutton had extensive executive
and operational leadership roles across Rio
Tinto. This experience included Head of Health,
Environment, Safety and Security; General
Manager Operations at the Bengalla Mine and
General Manager of Infrastructure, Iron Ore.
Other listed
company
directorships
Iluka Resources Limited (since March 2021);
Perenti Limited (since October 2023);
DDH1 Holdings Pty Ltd (February 2021 to
October 2023).
1.
DIRECTORS AND COMPANY SECRETARY (cont.)
1.1
INFORMATION ON DIRECTORS (cont.)
14
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
Peter Johnston
Non-Executive Director
Appointment
date
10 July 2023
Qualifications
BA, FAICD, FAusIMM
Experience
Mr Johnston is a highly experienced Australian
mining executive and Board Director who has
more than 35 years of operational and project
development experience. Mr Johnston’s
distinguished career has seen him hold senior
roles with major resource companies including
Head of Global Nickel Assets for Glencore,
Managing Director and Chief Executive Officer
of Minara Resources and Executive General
Manager at WMC Resources for Olympic Dam,
the Nickel Division and the Copper and
Fertilisers Division.
Other listed
company
directorships
Chair of Jervois Mining (since 2018).
Non-Executive Director of:
Tronox (US) (since 2012); and
NRW Holdings Limited (2016 to November
2023).
Kelvin Flynn
Non-Executive Director
Appointment
date
19 June 2024, since the merger of the Group
with Silver Lake
Qualifications
B.Com, CA
Experience
Mr Flynn is a qualified Chartered Accountant
with over 30 years’ experience in investment
banking and corporate advisory roles including
private equity and special situations
investments in the mining and resources
sector. He has held various leadership
positions in Australia and Asia, having
previously held the position of Executive
Director/Vice President with Goldman Sachs
and Managing Director of Alvarez & Marsal in
Asia. He has worked in complex financial
workouts, turnaround advisory and interim
management.
Other listed
company
directorships
Mr Flynn was previously a Non-Executive
Director of Silver Lake (until June 2024).
He was also previously a director of privately
held Global Advanced Metals Pty Ltd and was
previously a Non-Executive Director of Mineral
Resources Limited. Kelvin is the Managing
Director of the specialist alternative funds
manager Harvis, which focuses on investments
and financing in the real estate and real assets
sectors.
Rebecca Prain
Non-Executive Director
Appointment date
19 June 2024, since the merger of the Group
with Silver Lake
Qualifications
BSc (Geology)
Experience
Ms Prain has 30 years’ experience in the
mining industry as a geologist and mining
services provider. She has held a variety of
technical and management roles throughout
her career and is currently the Managing
Director of Cube Consulting, a specialist
resource estimation and mining engineering
services group that provides geological and
mining engineering expertise and systems.
Ms Prain’s experience includes technical and
advisory roles to multiple Australian, North
American and Southeast Asian mining
companies, with a particular focus on the
implementation and use of specialist resource
estimation and mining software.
Other listed
company
directorships
Ms Prain was previously a Non-Executive
Director of Silver Lake (until June 2024). She
has held no other Directorships in public
listed companies in the last three years.
Colin
Loosemore
Non-Executive Director
Appointment date
12 December 2014, retired 6 November 2023
Special
responsibilities
Member of the Sustainability Committee.
Member of the Audit Committee.
Qualifications
B.Sc.Hons., M.Sc., DIC., FAusIMM
Experience
Mr Loosemore is a Geologist with over 40
years’ experience in multi-commodity
exploration including over 30 years as a
director of public exploration companies
within Australia and overseas. He graduated
from London University in 1970 and the Royal
School of Mines in 1977. Mr Loosemore was
most recently Managing Director of
Archipelago Resources plc where he oversaw
the development of the Toka Tindung Gold
Mine in Sulawesi, Indonesia.
Other listed
company
directorships
Mr Loosemore has not held directorships in
any other listed companies in the last 3 years.
1.
DIRECTORS AND COMPANY SECRETARY (cont.)
1.1
INFORMATION ON DIRECTORS (cont.)
15
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
Steve Tombs
Non-Executive Director
Appointment
date
1 August 2018, retired 6 November 2023
Special
responsibilities
Chair of the Remuneration and Nomination
Committee.
Member of the Sustainability Committee.
Qualifications
B.Sc.Hons, FAusIMM
Experience
Mr Tombs is a Mining Engineer with over 40
years’ experience in the mining industry in
Australia and overseas. Mr Tombs graduated
from Nottingham University in 1976 and was
previously Red 5’s General Manager at Darlot
and the Underground Project Manager at
Siana. Mr Tombs previously held Senior
Management positions at AngloGold Ashanti,
Placer Dome and Newcrest.
Other listed
company
directorships
Mr Tombs has not held directorships in any
other public companies in the last 3 years.
1.2 INFORMATION ON
COMPANY SECRETARY
David Berg
Company Secretary
Appointment
date
19 June 2024, since the merger of the Group
with Silver Lake
Qualifications
LLB BComm (General Management)
Experience
Mr Berg is a corporate and commercial lawyer
with 25 years’ experience, having spent more
than 15 years working for listed mining
companies. Mr Berg’s areas of expertise
include advising on corporate governance,
M&A, capital raisings, commercial contracts
and litigation. Mr Berg previously held the
position of General Counsel and Company
Secretary at Silver Lake and has held similar
positions with Mount Gibson Iron Limited and
Ascot Resources Limited. Mr Berg began his
legal career in private practice working for the
predecessor firms of Herbert Smith Freehills
and King & Wood Mallesons.
Lisa Wynne
Company Secretary (Joint)
Appointment
date
18 August 2023 to 18 July 2024
Qualifications
B.Bus, CA, FGIA, MAICD
Experience
Ms Wynne is a Chartered Accountant with over
18 years’ experience in finance, accounting,
corporate governance, strategy, risk
management and mergers & acquisitions. Ms
Wynne has held senior roles as Chief Financial
Officer, Company Secretary and Non-
Executive Director for ASX-listed and not-for-
profit companies.
David Coyne
Company Secretary (Joint)
Appointment
date
4 September 2023 to 18 June 2024 (departed
upon the merger of the Group with Silver Lake)
Qualifications
B.Com, CPA, Grad. Dip, MAICD
Experience
Mr Coyne is a CPA with over 30 years’
experience in the mining, and engineering and
construction industries, both within Australia
and internationally. He is experienced in debt
and equity financing, corporate governance,
risk management, accounting and acquisitions
and divestments. In addition to previous
company secretarial roles, Mr Coyne has also
served as a director for ASX-listed mining
companies in both executive and non-
executive capacities.
1.
DIRECTORS AND COMPANY SECRETARY (cont.)
1.1
INFORMATION ON DIRECTORS (cont.)
16
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
1.
DIRECTORS AND COMPANY SECRETARY (cont.)
1.3
DIRECTOR’S MEETINGS
The number of meetings of the Board of Directors of Red 5 and of each Board committee held during the year ended 30 June 2024 and the
number of meetings attended by each Director whilst in office are as follows:
Board
meetings
Audit
Committee
Remuneration &
Nomination Committee
Sustainability
Committee
Director
Eligible
Attended
Eligible
Attended
Eligible
Attended
Eligible
Attended
Russell Clark
16
16
3
3
3
3
-
-
Mark Williams
15
15
-
-
-
-
-
-
Ian Macpherson
16
15
5
3
3
2
-
-
Andrea Sutton
16
16
5
5
1
1
2
2
Colin Loosemore
2
2
2
1
-
-
-
-
Steven Tombs
2
2
-
-
1
1
-
-
Peter Johnston
16
16
-
-
2
2
2
2
Luke Tonkin
1
1
-
-
-
-
-
-
David Quinlivan
1
1
-
-
-
-
-
-
Kelvin Flynn
1
1
-
-
-
-
-
-
Rebecca Prain
1
1
-
-
-
-
-
-
2.
PRINCIPAL ACTIVITIES
The principal activities of Red 5 and the consolidated group (which includes associated entities of Red 5) during the financial period were
gold mining and mineral exploration.
3.
RESULTS OF OPERATIONS
Red 5 incurred a loss after income tax for the year ended 30 June 2024 of $5.4 million (FY23: $8.7 million loss).
The current year results include an unaudited underlying EBITDA (a) of $192.7 million (FY23: $96.1 million).
The board considers EBITDA as an important metric in assessing the underlying operating performance of the Group. A reconciliation
between statutory profit after tax and the Group’s EBITDA is set out below.
30 June 2024
30 June 2023
$’000
$’000
Net loss after income tax
(5,438)
(8,730)
Finance income
(863)
(61)
Finance expenses
20,440
21,721
Depreciation and amortisation
135,145
83,151
Acquisition and stamp duty costs on business combination
43,388
-
EBITDA (a)
192,672
96,081
(a) Earnings before interest, taxes, depreciation and amortisation (EBITDA) is an unaudited non-IFRS measure and is a common measure used
to assess profitability before the impact of different financing methods, income taxes, depreciation of property, plant and equipment,
amortisation of intangible assets and fair value movements. Business combination costs including stamp duty have been excluded from
EBITDA.
3.1
REVIEW OF OPERATIONS
The Company successfully completed the merger with Silver Lake which become effective from 19 June 2024. The combination of the Silver
Lake and Red 5 balance sheets transformed Red 5’s balance sheet with the combined group ending the period with $428.8 million of cash
on hand. Post period end Red 5 repaid the $92.9 million outstanding on the Project Financing Facility and sold the 411.7 million Red 5 shares
which were acquired prior to the merger with Silver Lake for proceeds of approximately $136.8 million.
17
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
3.
RESULTS OF OPERATIONS (cont.)
3.1
REVIEW OF OPERATIONS (cont.)
The operations acquired through the merger with Silver Lake
comprise Mount Monger, Deflector and Sugar Zone. The
implementation of the merger on 19 June 2024 resulted in 12 days of
attributable production to Red 5 in FY24 and do not comprise a
material part of Red 5’s FY24 result. As such the review presented
below is largely confined to Red 5 operations. A brief description of
the acquired operations is presented further below and full FY24
production and costs can be found in Red 5’s June 2024 Quarterly
Activities Report released to the ASX on 31 July 2024.
King of the Hills (KOTH) mine and processing facility, located in the
Eastern Goldfields region of Western Australia delivered record gold
production of 210,940 ounces for the year and built 37,000 ounces
in ore stockpiles in its second full year of operations. Gold sales
were 211,939 ounces at A$2,043 per ounce meeting the FY24
guidance range.
Mine production through FY24 was predominantly from the KOTH
open pit, KOTH underground and Darlot underground. The KOTH
processing facility is the largest, lowest cost and most scalable
processing facility in the Leonora district with FY24 throughput of
5.01 million tonnes, a 17% increase on prior year. The operation is
mill constrained, which presents a significant opportunity through
optimisation programs and implementation of efficient operating
practices to deliver performance metrics consistent with industry
standards to increase throughput.
(a)
Operational performance
A summary of key production statistics (excluding Silver Lake
operations) for the year ended 30 June 2024 and 30 June 2023 is
provided below:
Year ended
Units
30 June 2024
30 June 2023
Mined tonnes
T
7,994,884
2,074,034
Mined grade
g/t
1.05
1.00
Tonnes milled
T
5,009,240
4,252,673
Average head grade
g/t
1.41
1.31
Recovery
%
92.7
92.2
Gold produced (i)
Oz
210,940
165,544
Gold sold (i)
Oz
211,939
164,974
(i) In addition to the above, Silver Lake operations produced
7,259 gold ounces and sold 11,559 gold ounces for the 12 days
from 19 June 2024 to 30 June 2024.
The production results illustrate the growing maturity of the KOTH
operations with all the mines operating consistently and the
processing plant continuing to improve its throughput rate. Given the
recent results and year on year improvements it is easy to lose sight
of the fact that the KOTH operating configuration is still in its infancy
and this presents a tremendous opportunity for optimisation and
implementation of more efficient operating practices and realise
economies of scale to drive growth in one of the most active gold
districts globally.
Exploration and Resource Development
The Company invested $10.7 million (FY23: $24.8 million) in
exploration activities during the year to advance projects within
established and proven mineralised corridors proximal to established
infrastructure. The Group has committed to exploration spend of
$30.9 million in FY25 across all mining centres.
KOTH and Darlot
At KOTH, underground drilling during FY24 focused on grade control
drilling of key mine production areas for FY24 and FY25.
Extensional drilling was also completed to identify major trends and
new mineralised zones down dip of the key mining horizons. Drilling
results confirmed Ore Reserve areas that underpin the FY25 mine
plan and proved that mineralisation continues below current mining
fronts. Further extensional drilling down the nose of the granodiorite
intrusion is planned in FY25 with the inclusion of a dedicated drill
platform to remove drill limitations.
In addition, in the Open Pit, a new mineralised fault structure was
identified as part of the Stage 1 cutback of the KOTH open pit. The
open pit drilling indicated the presence of gold mineralisation below
the current level of the Stage 1 pit, with additional drilling being
designed to test the viability of deepening Stage 1.
Darlot underground drilling focused on extending active mining
areas, de-risking FY25 planned stope mining areas, and defining
future ore sources for FY26 and beyond. This will be continued in
FY25 with continuous underground drilling planned to both de-risk
the plan through grade control drilling and extend known
mineralisation through exploration.
Red 5 successfully completed aircore (AC) and reverse circulation
(RC) drilling at its jointly owned Gale Prospect in the Mt Zephyr
Project area which forms part of the Red 5/Ardea Joint Venture. The
drill programs consisted of scout AC and infill RC drilling aimed at
assessing the grade and continuity of gold mineralisation within the
Gale Prospect area. The expenditure for work completed at Gale,
combined with previous exploration costs at Mt Zephyr, has fulfilled
the conditions of the second part of the Farm-In agreement.
Mount Monger
Drilling during the year focused on Mineral Resource definition and
extensions at established underground and open pit mines targeting
lode infill and extensions proximal to current workings.
At the Daisy Complex, underground resource definition drilling
targeted direct extensions and splays to the Easter Hollows and
Haoma West lodes. At Mount Belches, highly successful resource
definition drilling enabled improved optimisations at both Santa and
Flora Dora.
Regional discovery exploration activity was focused on the Mount
Belches and Aldiss Mining Centres. Drilling success and the
re-optimisation of open pit shells of existing Mineral Resources, given
the buoyed Australian Dollar gold price, has identified potential open
pits at both French Kiss and Rumbles.
Further drilling is planned in FY25 aiming to extend and improve the
resource confidence of known deposits that will feed into
optimisations leveraged by the prevailing gold price.
18
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
Deflector
Deflector underground drilling in FY24 was focused on grade control
drilling of the South West production areas, and targeted direct
extensions to the southern and lower margins of the South West lode
system. The Spanish Galleon prospect located 300 metres west
from Deflector South West underground infrastructure was further
defined with extensional and infill underground drilling. Optimisation
studies are underway as to the potential for underground expansion
to Spanish Galleon.
FY25 in-mine resource definition drilling will target further southern
extensions to the South West lodes and Spanish Galleon where
mineralisation remains open in multiple directions. Further drilling is
also planned in the eastern corridor following up along strike and
beneath historical targets in the Contact, Central and Poseidon
corridors. This strategy builds on the learnings of the successful
discovery at Spanish Galleon which was targeted based off historical
shallow surface drilling anomalies.
Deflector regional exploration activity focused on greenstone belt
corridors targeting highly prospective geology and structural features
which are underexplored. Aircore, RC and diamond drilling programs
were completed in FY24 on both greenfield and brownfield targets. A
program at the historical Mugga King area provided extensions to
known mineralisation whilst a deep stratigraphic diamond drillhole,
supported by a state government grant, significantly advanced the
understanding and improved target generation at Brandy Hill.
Reverse circulation drilling at Goldilocks identified a new target area
with further exploration to be completed in FY25 in these highly
prospective areas.
Sugar Zone
FY24 saw the completion of an extensive 93,000 metre drill program
at Sugar Zone targeting infill areas of the Sugar Main and Middle
Zone to increase the data density of near to medium term production
fronts and build on the exploration success at Sugar South.
Further drilling of the emerging Sugar South Zone, located
immediately South of the Sugar Main Zone lodes, is planned in FY25
with additional regional exploration already underway in the
Company’s significant land holding within the Dayohessarah
greenstone belt of Northern Ontario.
Silver Lake Operations
The Mount Monger Operation is located approximately 50 kilometres
southeast of Kalgoorlie and is a highly endowed gold camp with an
established track record of gold production. Through exploration and
development Mount Monger has transitioned to larger, longer life
Mining Centres which feed the 1.3mtpa Randalls Mill. In January
2024, Silver Lake announced the next project to progress through to
development with an upgraded operating strategy to mine the larger
stage 2 Santa open pit and Flora Dora deposit from the
commencement of mining and enhance base load mill feed visibility
and supplement high grade underground feed sources.
The Deflector Region Operation is in the Midwest region of Western
Australia and comprises the Deflector and Rothsay underground
mines and the Deflector mill. Mine production is sourced from the
3.
RESULTS OF OPERATIONS (cont.)
3.1
REVIEW OF OPERATIONS (cont.)
Deflector underground mine and the Rothsay satellite underground
mine. The Deflector mine comprises two main mining areas –
Deflector Main and Deflector South West – and is adjacent to the
Deflector processing facility. The Rothsay underground mine is a
high-grade satellite ore source, with ore road-hauled approximately
197 kilometres to Deflector.
Sugar Zone is located in the established mining province of Northern
Ontario, Canada, approximately 30 kilometres north of White River or
midway between Thunder Bay and Sault St. Marie. Mining at Sugar
Zone commenced in 2019, with Silver Lake acquiring the operation in
February 2022 following the acquisition of Harte Gold Corp (“Harte
Gold”) through a process under the Companies’ Creditors
Arrangement Act (Canada) (CCAA), following the default by Harte
Gold Corp. under its finance facilities. In July 2023, Silver Lake
announced a 93,000 metre drill program to be completed throughout
FY24 to deliver a step change in ore body knowledge. To facilitate
the program, including the development of three dedicated
exploration drives, mining and processing activities were idled in
August 2023. The drill program was successfully completed in
June 2024 with analysis of the results and incorporation into internal
studies evaluating various production scenarios for future production
between 800 – 1,000tpd and defining priority targets for follow
up drilling.
(b)
Corporate
In line with the Company’s announcement on 5 February 2024, the
Company merged with Silver Lake during the financial year, whereby
the Company acquired all of the issued shares in Silver Lake via a
scheme of arrangement. The transaction was completed on
19 June 2024.
As part of the scheme of arrangement, the Company issued
3,284,722,929 new shares as consideration to Silver Lake
shareholders whose Silver Lake shares were acquired by the
Company. Further details of the arrangement can be found on the
Company’s website and in Note 25 of the financial statements.
(c)
Sustainability
Red 5 is acutely aware of the unique challenges and responsibilities
that come with operating in the mining industry. Red 5’s commitment
is to build a sustainable business that delivers superior returns to its
shareholders without negatively impacting the environment, the
community and other stakeholders.
(d)
Workplace Health and Safety
The operational focus on safety field leadership during the reporting
period has contributed to an improved safety performance at both
the KOTH and Darlot sites. The continued improvement in safety
performance reflects our focus on ensuring the health and safety of
our workforce.
(e)
Regulations
Red 5 is subject to significant environmental regulation in respect to
its mineral exploration activities. These obligations are regulated
under relevant government authorities within Australia.
Compliance with environmental obligations is monitored by the
Sustainability Committee. There have been no significant
environmental breaches during the year ended 30 June 2024.
19
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
3.
RESULTS OF OPERATIONS (cont.)
3.2
FINANCIAL REVIEW
(a)
Income statement
Gold and silver sales for the reporting period totalled $620.0 million
including $38.4 million of Silver Lake sales for the period from 19
June 2024 to 30 June 2024. Red 5 operations sold 223,498 ounces
of gold at an average price of $2,758 per ounce (FY23: $422.7 million
with 164,974 gold ounces sold at an average price of $2,542 per
ounce). Cost of sales for the period of $529.6 million comprised of
production costs, royalties, movement in stockpiles and depreciation
charge and includes $50.3 million of Silver Lake costs.
The Group recorded a loss after income tax for the year ended 30
June 2024 of $5.4 million in comparison to a net loss for the year
ended 30 June 2023 of $8.8 million. The financial results include
acquisition and stamp duty costs on business combination of $43.4
million in relation to the merger with Silver Lake.
(b)
Balance sheet
The merger with Silver Lake has transformed the balance sheet of
Red 5 with the year-on-year movement being primarily attributed to
the assets and liabilities acquired through the business combination.
Summarised financial position at 30 June 2024:
\
\
Total assets increased by $1,497.1 million to $2,167.6 million.
\
\
Total liabilities increased by $206.4 million to $546.8 million.
(c)
Cash flow
During the year, cash and cash equivalents increased by
$408.7 million.
Cash inflows from operating activities for the year were $206.6
million. Cash receipts of $630.4 million reflect the sale of gold and
associated by-products. This was offset by other net operating cash
outflows of $423.8 million, driven by higher payments to suppliers
and employees resulting from increased operational costs.
Cash inflows from investing activities for the year were $270.0 million,
largely reflective of the cash acquired through the merger with Silver
Lake of $378.3 million. Investing outflows for the period were $108.3
million, reflecting expenditure of $84.1 million on development
activities in all three KOTH mining operations, and purchases of
property, plant and equipment amounting to $21.3 million and
exploration expenditure of $2.9 million.
Net financing outflows of $68.0 million are primarily from the debt
repayment of $34.9 million, payments of interest of $9.8 million and
lease liability payments of $24.7 million.
4.
DIVIDENDS
No amounts were paid by way of dividends since the end of the
previous financial year (FY23: Nil). At the time of this report, the
Directors have not declared a dividend.
5.
OPTIONS GRANTED OVER SHARES
No options were granted during or since the end of the financial year.
6.
PERFORMANCE RIGHTS
At the date of this report, there were no performance rights
outstanding as they were all converted or cancelled as part of the
merger with Silver Lake.
7.
INDEMNIFICATION AND INSURANCE
OF DIRECTORS, OFFICERS
The Company has made an agreement indemnifying all the Directors
and officers of the Company against all losses or liabilities incurred
by each Director or officer in their capacity as Directors or officers of
the Company to the extent permitted by the Corporations Act 2001.
The indemnification specifically excludes wilful acts of negligence.
8.
EVENTS SUBSEQUENT TO THE
END OF THE YEAR
On 8 July 2024 the Company repaid the full outstanding balance of
$92.9 million of the syndicate loan facility. In line with the loan
repayment, the Company entered into a restructured hedge facility
and security package which incorporates the gold forward sales held
by Silver Lake prior to the merger with Red 5. The new terms of the
package have limited covenants which are reflective of a standalone
hedging facility.
On 7 August 2024 the Company sold the 411.7 million Red 5 shares
in which it acquired an interest following the implementation of the
merger with Silver Lake in June 2024.
9.
LIKELY DEVELOPMENTS
AND EXPECTED RESULTS
OF OPERATIONS
In the opinion of the Directors, the merger with Silver Lake positions
Red 5 as a leading, diversified mid-tier gold producer of relevant
scale, today. The complementary nature of the respective
businesses and the strength of the consolidated portfolio is expected
to generate significant free cash flow for the foreseeable future.
Red 5 retains a strong balance sheet with sector leading financial
flexibility to optimise the King of the Hills operation and unlock the full
value of the established infrastructure without the constraints of a
project finance facility, whilst continuing to pursue broader growth
and life of mine extension opportunities across the portfolio.
10. BUSINESS STRATEGY AND
PROSPECTS FOR FUTURE YEARS
(a)
Business strategy
The Group’s business strategy is firmly anchored in the Company’s
vision of being a successful multi-operational exploration and mining
company, providing benefits to all stakeholders, through the
consistent application of technical excellence and responsible and
sustainable industry practices.
The merger with Silver Lake has resulted in a leading intermediate
gold producer primed to create meaningful growth.
20
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
10. BUSINESS STRATEGY AND PROSPECTS FOR FUTURE YEARS (cont.)
\
\
Climate Change:
\
\
Changes to climate-related regulations and government
policy have the potential to impact our future financial
results.
\
\
Capital and Liquidity:
\
\
The Company has processes in place to monitor and
manage its liquidity and capital structure to ensure sufficient
funds are available to meet the Group’s financial
commitments. As of early July 2024, Red 5 is debt free with
substantial cash on hand.
\
\
Health and Safety:
\
\
Red 5 has implemented management systems which
promote a strong safety culture and support a genuine
commitment to keep its people and stakeholders safe
and healthy.
\
\
Environmental:
\
\
The Company has environmental liabilities associated with
its tenements. The Company monitors its ongoing
environmental obligations and risks and implements
preventative, rehabilitation and corrective actions as
appropriate.
\
\
Community relations:
\
\
Red 5 has an established community relations function that
includes principles, policies and procedures designed to
provide a structured and consistent approach to community
activities. Red 5 recognises that a failure to manage local
community stakeholder expectations appropriately may
lead to dissatisfaction, potentially disrupting production and
exploration activities.
11.
NON-AUDIT SERVICES
During the year, Red 5’s external auditors, KPMG, have provided
other services in addition to their statutory audit function. Non audit
services provided by the external auditors comprised $215,027
(FY23: $95,428) for non-audit services. Further details of the
remuneration of the auditors are set out in Note 28.
The Board has considered the non-audit services provided during
the year and is satisfied that the provision of those services is
compatible with the general standard of independence for auditors
imposed by the Corporations Act and did not compromise the
auditor independence requirements of the Corporations Act, for the
following reasons:
\
\
All non-audit services were subject to the corporate governance
guidelines adopted by Red 5;
\
\
Non-audit services have been reviewed by the audit committee
to ensure that they do not impact the impartiality or objectivity of
the auditor; and
\
\
The non-audit services provided do not undermine the general
principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants, as they did
not involve reviewing or auditing the auditor’s own work, acting
in a management or decision-making capacity, acting as
an advocate for Red 5 or jointly sharing economic risks
and rewards.
Key factors which will drive this growth:
\
\
Diversified, intermediate gold business, underpinned by a
strategic long-life asset in the prolific Leonora district;
\
\
Extensive, established infrastructure across the portfolio removes
the cost, complexity and timeline of greenfield developments in
the prevailing environment;
\
\
Sector leading financial capacity provides the flexibility to
internally fund investment in operations to realise long term value
without the noise of short-term market fluctuations;
\
\
Diversified portfolio provides an organic pipeline of low capital
intensity growth and life of mine extension opportunities through
implementation of efficient operating practices, project
optimisation and exploration;
\
\
Refreshed leadership capability with a track record of achieving
guidance, free cash flow generation and delivering growth.
(b)
Material Business Risks
Red 5’s business, operating and financial results and performance
are subject to various risks and uncertainties, some of which are
beyond the Company’s reasonable control. Set out below are matters
that the Directors consider relevant and that have the potential to
impact the achievement of the business strategies. The matters
identified are not necessarily listed in order of importance and are not
intended as an exhaustive list of all business risks and uncertainties.
\
\
External economic drivers (including macroeconomic, metal
prices and exchange rates):
\
\
The Company is exposed to fluctuations in the Australian
dollar gold price, which can impact future revenue streams.
As a mitigation, the Company has a partial gold price hedging
program to assist in offsetting variations in the Australian
dollar gold price, providing price certainty over a fixed portion
of future production;
\
\
The Company is exposed to global inflationary pressures
across a range of input costs such as oil and gas, operating
and maintenance parts and consumables and labour. As a
mitigation, the company collaborates with its suppliers to
identify ways to manage these cost pressures.
\
\
Reserves and Resources:
\
\
The Mineral Resources and Ore Reserves for the Group’s
assets are estimates only in compliance with industry
standards, and no assurance can be given that future
production will achieve the expected tonnages and grades.
\
\
Operational risks:
\
\
The Group’s operations are subject to operational risks that
could result in decreased production, increased costs and
reduced revenues. To manage this risk the company seeks to
attract and retain high calibre employees and implement
suitable systems and processes to ensure production targets
are achieved.
\
\
Legal compliance and maintaining title:
\
\
The Company has systems and processes in place to ensure
title to all its properties, but these can be subject to dispute or
unforeseen regulatory changes.
21
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
12. AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act is included immediately following
the Directors’ Report and forms part of the Directors’ Report.
13. ROUNDING
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance
with that instrument, all financial information has been rounded to the nearest thousand dollars, unless otherwise stated.
Signed in accordance with a resolution of the Directors.
Russell Clark
Non-executive Chair
Perth, Western Australia
14. REMUNERATION REPORT
LETTER FROM THE CHAIR OF BOARD
Dear Shareholders,
I am pleased to present Red 5 Limited’s (Red 5) Remuneration Report for the Financial Year to 30 June 2024 (FY24).
FY24 Performance Highlights
The past year marked a historic year for Red 5 with the successful completion of the merger with Silver Lake Resources Limited
(Silver Lake) (Transaction). The Transaction saw the immediate establishment of a leading mid-tier diversified gold producer
presenting a compelling investment proposition amongst the global mid-tier gold sector, with a strong balance sheet positioned
for growth.
In addition to the merger, the past financial year has seen a number of significant achievements including gold production of
223,498 ounces and a substantial improvement in safety.
Executive KMP changes and remuneration
The merger saw the business transitioning to a new executive leadership team effective 19 June 2024 reflecting the depth and
significant expertise of both Red 5 and Silver Lake to deliver long-term success for the merged company.
Executive key management personnel (KMP) changes included the appointment of Mr Luke Tonkin as the Managing Director (MD)
& Chief Executive Officer (CEO) of the merged business, and Mr Struan Richards, Mr Len Eldridge and Mr David Berg to the Chief
Financial Officer (CFO), Corporate Development Officer, and General Counsel and Company Secretary roles respectively. Please
refer to Section 14.9.1 for a high-level summary of their Executive Service Contracts.
Mr Mark Williams (MD & CEO) and Mr David Coyne (CFO & Joint Company Secretary) ceased to be Executive KMP on 19 June
2024, and in accordance with the Red 5 policy, Mr Mark Williams and Mr David Coyne received a redundancy payment of $728,281
and $225,000 respectively in addition to actual remuneration received for their term during FY24. Please refer to Section 14.8 for
further details.
FY24 Remuneration Outcomes
The Board is proud of the excellent results achieved by the leadership team in FY24 through the merger process and in the former
Red 5 and Silver Lake operations. The results have been reflected in our FY24 KMP remuneration outcomes outlined below and in
further detail in this report.
22
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
14. REMUNERATION REPORT (cont.)
LETTER FROM THE CHAIRMAN OF BOARD (cont.)
The Board believes the KMP remuneration outcomes are reasonable (as outlined below), providing appropriate alignment between
executive performance, shareholder returns and recognition of executive retention which is critical over the next business phase.
Refer to Section 14.5 for further details.
\
\
Fixed Remuneration: total fixed remuneration for Mr Richard Hay, Chief Operating Officer (COO) increased by 3.6% (from
$574,600 to $590,000 effective 1 July 2023) to ensure market competitiveness based on external remuneration benchmarking
analysis and was subsequently revised to $621,668 following the merger reflecting the new Executive Service Contract.
Mr Mark Williams (former MD & CEO), Mr Patrick Duffy (former CFO to 4 September 2023 / Chief Corporate Development
Officer) and Mr David Coyne (former CFO & Joint Company Secretary) ceased to be a KMP during the year. Refer to Section
14.5.1 for further details.
\
\
Short Term Incentive Plan (STI): the Board approved a 158.5% STI outcome to two executive KMP (Mr Mark Williams and
Mr David Coyne) based on 108.4% achievement of company Key Performance Indicators (KPIs) and 40.0% of personal KPIs
and 10.1% additional redundancy amount. For Mr Richard Hay, the Board approved a 148.4% STI outcome based on 108.4%
achievement of company KPIs and 40.0% of personal KPIs. The STI award for FY24 was settled 100% in cash for KMP and all
other employees awarded an STI. Refer to Section 14.5.2 for further details.
\
\
Long Term Incentive Plan (LTI): As a result of the merger with Silver Lake, the Board approved the accelerated vesting of 100%
of all performance rights at the time of implementation of the Transaction. Accelerated vesting of all performance rights for both
Red 5 and Silver Lake was consistent with the premise of the ‘merger of equals’ concept to treat all employees from each
company on an equal basis to the extent possible. Refer to Section 14.5.3 for further details.
\
\
One-off retention grant: as part of enhancing the employee value proposition (EVP) to attract, engage and retain existing and
prospective talent, the Board made a one-off grant of retention rights (valued at $65,660 and $50,080) to Mr Richard Hay and
Mr David Coyne on 1 January 2024 with a 12-month vesting period following the grant. On the date of implementation of the
merger with Silver Lake, the Rights vested in full, also in keeping with the premise of the ‘merger of equals’ concept to treat all
employees from each company on an equal basis to the extent possible.
\
\
Non-Executive Directors (NED) Fees: The fee for the position of Chair of the Board increased from $145,000 to $190,000 on 1
December 2023. Ms Andrea Sutton was awarded a one-off fee of $25,000 in recognition of her tenure as interim Chair prior to
my appointment on 1 July 2023. As a result of the Silver Lake merger, non-executive director fees increase on 1 July 2024 to
levels befitting a gold mining company of this scale. Refer to Section 14.7.
Looking forward
During FY25, the Board will remain focused on working with the Nomination and Remuneration Committee of the merged company
to ensure the ongoing appropriateness of the KMP remuneration framework and the ability to support the financial and strategic
goals of the business as a leading mid-tier gold company.
On behalf of the Board, I invite you to review the full report and thank you for your continued support of Red 5.
Sincerely
Russell Clark
Non-executive Chair
23
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
14. REMUNERATION REPORT (cont.)
TABLE OF CONTENTS
This Remuneration Report (Report) outlines the remuneration arrangements in place for key management personnel (KMP) of Red 5 for the
year ended 30 June 2024 (FY24) in accordance with the requirements of the Corporations Act 2001 and its Regulations. The Report contains
the following main sections:
14.1
Who is covered by this Remuneration Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
14.2
Remuneration Governance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
14.3
Principles of Remuneration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
14.4
Executive Remuneration Framework and Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
14.5
FY24 Executive Remuneration Outcomes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
14.6
Non-Executive Directors’ Remuneration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
14.7
FY25 Planned Non-Executive Directors Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.8
Details of Remuneration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.9
Additional Remuneration Disclosures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.1 WHO IS COVERED BY THIS REMUNERATION REPORT
For the purposes of this Report, KMP’s are defined as those persons having authority and responsibility for planning, directing and controlling
the major activities of the consolidated entity, including any Director (whether Executive KMP or Non- Executive Director (NED)) of Red 5.
The following were the KMP’s of the Company at any time during the year ended 30 June 2024 and unless otherwise indicated, KMP for the
entire period:
Name
Position
Term as KMP
Executive Director
Mark Williams
Managing Director & Chief Executive Officer (MD/CEO)
Part year (a)
Luke Tonkin
Managing Director & Chief Executive Officer (MD/CEO)
Part year (b)
Executive KMP’s
Richard Hay
Chief Operating Officer (COO)
Full year
Patrick Duffy
Corporate Development Officer
Part year (c)
David Coyne
Chief Financial Officer (CFO) & Joint Company Secretary
Part year (d)
Struan Richards
Chief Financial Officer
Part year (e)
Len Eldridge
Corporate Development Officer
Part year (f)
David Berg
General Counsel and Company Secretary
Part year (g)
Non-Executive Directors
Russell Clark
Independent Non-Executive Chair
Full year
Peter Johnston
Independent Non-Executive Director
Part year (h)
David Quinlivan
Independent Non-Executive Director
Part year (i)
Andrea Sutton
Independent Non-Executive Director
Full year
Ian Macpherson
Independent Non-Executive Director
Full year
Kelvin Flynn
Independent Non-Executive Director
Part year (i)
Rebecca Prain
Independent Non-Executive Director
Part year (i)
Colin Loosemore
Independent Non-Executive Director
Part year (j)
Steven Tombs
Independent Non-Executive Director
Part year (j)
24
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
14. REMUNERATION REPORT (cont.)
14.1 WHO IS COVERED BY THIS REMUNERATION REPORT (cont.)
Note:
(a) Mr Williams ceased to be a KMP on 19 June 2024.
(b) Mr Tonkin commenced the MD/CEO role on 19 June 2024.
(c) Mr Duffy ceased being the Chief Financial Officer on 4 September 2023 and reverted back to the role of Chief Corporate Development
Officer. He resigned from this role on 31 December 2023.
(d) Mr Coyne was appointed as the CFO & Joint Company Secretary on 4 September 2023 and ceased to be a KMP on 19 June 2024.
(e) Mr Richards was appointed to the role of CFO on 19 June 2024.
(f) Mr Eldridge was appointed to the role of Corporate Development Officer on 19 June 2024.
(g) Mr Berg was appointed to the role of General Counsel and Company Secretary on 19 June 2024.
(h) Mr Johnston was appointed as a non-executive director on 10 July 2023.
(i) Mr Quinlivan, Mr Flynn and Ms Prain were appointed as non-executive directors on 19 June 2024.
(j) Mr Loosemore and Mr Tombs resigned from the Board on 6 November 2023.
14.2 REMUNERATION GOVERNANCE
KMP remuneration decision making is directed by Red 5’s remuneration governance framework as follows:
Board
Take an active role in the governance and oversight of Red 5’s remuneration policies and have overall
responsibility for ensuring that the Company’s remuneration strategy aligns with Red 5’s short- and
long-term business objectives and risk profile.
Nomination and
Remuneration Committee
(Committee)
Responsible for reviewing the remuneration arrangements for KMP’s and make recommendations to the
Board including:
\
\
reviewing remuneration levels and other terms of employment on an annual basis having regard to
relevant market conditions, qualifications and experience of the KMP, and performance against
targets set for each year where applicable.
\
\
advising the Board on the appropriateness of remuneration packages / structures of the Company,
given trends in comparative peer companies both locally and internationally with the overall objectives
of ensuring maximum stakeholder benefit from the retention of a high-calibre board and executive
team.
The Committee’s charter can be found on the Company’s website at:
https://vaultminerals.com/about/corporate-governance
External Remuneration
Consultants
To ensure the Committee is fully informed when making remuneration decisions, it may seek external,
independent remuneration advice on remuneration related issues.
During the year, the Committee engaged a consultant, The Reward Practice Pty Ltd (TRP), to provide
remuneration services in respect to external benchmarking and general insights for executive incentive
arrangements and remuneration report drafting. No remuneration recommendations were received
during the year.
Share trading policy
Red 5’s share trading policy prohibits a KMP (that are granted share-based payments as part of their
remuneration) from entering into other arrangements that limit their exposure to losses that would result
from share price decreases. Entering into such arrangements is also prohibited by law.
25
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
Managing
Director
Other KMP’s
Total at risk
61%
55%
39%
45%
23%
22%
38%
33%
100%
0%
TFR
STI (at risk)
LTI (at risk)
2024 Remuneration Mix (at Target Opportunity)
14. REMUNERATION REPORT (cont.)
14.3 PRINCIPLES OF REMUNERATION
Four principles guide Red 5’s remuneration policies and practices:
It should be noted, Non-Executive Directors do not receive performance-related remuneration or participate in any incentive plans.
14.4 EXECUTIVE REMUNERATION FRAMEWORK AND COMPONENTS
Executives receive fixed and variable remuneration consisting of short- and long-term incentive opportunities. Executive remuneration levels
are reviewed annually by the Remuneration Committee with reference to the remuneration guiding principles and market movements.
The following diagram presents a high-level summary of remuneration components for executive KMP’s for FY24:
Fixed remuneration
Base salary + superannuation + benefits
Variable remuneration
STI Plan
LTI Plan
Cash
Service Rights (1 year)
Rights (3 years)
80% company KPIs
20% personal KPIs
70% relative
TSR 30% growth
The following diagram sets out the mix for fixed and “at risk” remuneration for executive KMP at target opportunity level for FY24 based on
the potential of a 100% vesting of STI and LTI. Note given the one-off nature of the retention grants, it is excluded from the remuneration mix
analysis:
*
The Executive KMP who commenced roles following the merger with Silver Lake are excluded from the analysis due to their incentive
arrangements only being effective from 1 July 2024.
Fixed remuneration
Fixed remuneration consists of base salary, superannuation and optional salary sacrifice benefits. It is designed to recognise the
execution of business strategy and executives’ qualifications, experience and accountability. It is set with reference to comparable roles
in similar companies.
Remuneration quantum
should target the middle to
upper quartile of the market
that Red 5 operates in to
attract and retain the key
talent required.
At-risk reward should be
based on the achievement of
challenging targets over the
short term (1 year) and long
term (3+ years).
Emphasis of reward
programs should be to
motivate and retain key
talent over the long term.
An appropriate mix of cash
and equity awards so that
over time executives and
employees are aligned
with the long-term interests
of shareholders.
26
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
14. REMUNERATION REPORT (cont.)
14.4.1 STI
The following table outlines the FY24 STI arrangements in detail:
What is the purpose?
\
\
Reward executive KMP for the achievement of Red 5’s annual targets linked to business
strategy and shareholder value;
\
\
Ensure that executives have commonly shared objectives related to the delivery of annual
business plans;
\
\
Encourage share ownership among senior roles; and
\
\
Provide a component of remuneration to enable the Company to compete effectively for
the calibre of talent required for it to be successful on a short to medium term basis.
How is it paid?
For FY24, the Board elected to pay 100% of the STI in cash. As all performance rights held
by previous Silver Lake employees (now Red 5 employees) and for all Red 5 employees were
subject to accelerated vesting due to the implementation of the Silver Lake Scheme of
Arrangement on 19 June 2024, the Board determined that it was appropriate to pay the STI
on the same basis as that paid to the Silver Lake employees and ensure that the Group
commenced FY25 with nil rights on issue.
What is the target incentive
opportunity?
The STI target opportunity is set as a percentage of TFR. Subject to performance, the MD
was entitled to an STI of up to 60% on Total Fixed Remuneration and other executive KMP’s
were entitled to an STI of up to 50% of Base Salary.
What is the performance period?
The STI is offered annually and is measured over a single financial year.
How is performance assessed?
An executive’s actual award is based on meeting KPIs set in advance of the financial year.
The KPIs comprise financial and non-financial objectives which directly align the individual’s
reward to the Company’s annual business plans. The KPIs set for the FY24 awards were:
\
\
Company Financial: budgeted Earnings before Interest, Taxes, Depreciation and
Amortisation (EBITDA) (20%);
\
\
Gold production: across both Darlot and KOTH (20%);
\
\
Safety: assessed by Total Recordable Injury Frequency Rate (TRIFR) and no
fatalities (20%);
\
\
Cost management: via All-in-Sustaining-Cost (AISC) per ounce (20%);
\
\
Individual effectiveness: personal contribution as measured by Board or Managing
Director (where applicable) (20%).
KPIs are set at threshold, target, and stretch levels resulting in payout at 50%, 100% and
200% of the target opportunity.
What is the gateway?
No gateway applies in line with external market peers and the business need to support
retention of key talent over the long term.
How is the STI award treated at
cessation of employment?
Unless subject to a bona fide redundancy, participants will not be eligible for an STI outcome
where they are not employed with the Company or have provided notice to cease
employment, at the time of any STI payment. Any unvested Rights on issue for the participant
will lapse by default unless the Board exercises its discretion to allow vesting, in whole or in
part.
How is the STI award treated upon a
change of control?
In the event of a change of control as defined in the Plan Rules, the equity awards may vest
in full or be pro-rated based on time and performance as determined by the Board.
27
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
14. REMUNERATION REPORT (cont.)
14.4.2 LTI
The following table outlines the FY24 LTI arrangements in detail:
What is the purpose?
\
\
To promote the alignment of interests between executives and shareholders through the
holding of equity in the Company. As such, LTI awards are generally granted to executives
and management who are able to influence the future of Red 5, and/or are in a position to
contribute to shareholder wealth creation;
\
\
Ensure that executives have commonly shared goals related to producing relatively high
returns for shareholders;
\
\
Encourage share ownership among senior roles;
\
\
Provide a component of remuneration to enable the Company to compete effectively for
the calibre of talent required for it to be successful on a long-term basis; and
\
\
Help retain employees, thereby minimising turnover and providing a stable workforce.
How is it paid?
LTI awards are paid in Performance Rights for nil cash consideration.
What is the LTI opportunity
The LTI opportunity is set as a percentage of TFR. Subject to performance, the MD was
entitled to an LTI of up to 100% and other executive KMP were entitled to an LTI of up to 75%.
What is the performance period
The LTI is considered annually and is measured over a 3-year performance period.
How is performance assessed?
LTI awards are granted at the beginning of the performance period and vest based on:
\
\
Total Shareholder Return (TSR) compared to a custom peer group comprising 17 ASX
entities as approved by the Board considering. These peer companies are considered
directly comparable to Red 5 (e.g. based on size, stage of operations and geographical
location of mines) (70%); and
\
\
Growth of the Company’s proved and probable ore reserves (30%).
What is the gateway?
The following gateway must be satisfied in order for the awards to vest:
\
\
A positive TSR being achieved.
How the LTI vesting is determined?
LTI vesting is subject to the following sliding scale:
Relative TSR (70%)
Performance level to be achieved
Percentage vesting
Threshold: < 50th percentile of the peer group
0%
Target = 50th percentile of the peer group
50%
Performance between Target and Stretch
Sliding scale vesting
Stretch: = > 75th percentile of the peer group
100%
Growth in ore reserves (30%)
Performance level to be achieved
Percentage vesting
<15%
0%
Threshold = 15%
25%
Target = 20%
50%
Stretch = > 35%
100%
What are the restrictions of the equity
components of the LTI awards?
There are no further restrictions to the vested awards following the end of the performance
period.
How is the LTI award treated at
cessation of employment
Generally, should a Participant voluntarily cease employment or engagement with the
Company they will forfeit any unvested Rights unless the Board exercises its discretion to allow
vesting, in whole or in part.
How the LTI award is treated at
change of control
In the event of a change of control as defined in the Plan Rules, the equity awards may vest in
full or be pro-rated based on time and performance as determined by the Board.
While the Silver Lake Scheme of Arrangement did not result in a change of control for the
Company, under the ‘merger of equals’ concept, and with a view to treat Company employees
as equal as possible to their Silver Lake counterparts, the Board exercised the discretion
available to it under the Plan Rules to accelerate vesting of all Performance / Retention Rights
on 19 June 2024.
28
2024 ANNUAL REPORT
14. REMUNERATION REPORT (cont.)
14.4.3 One-off retention rights
To ensure the retention of key critical talent to support Red 5 through the progression toward a steady-state production at the King of The
Hills mine, the Board approved the implementation of a one-off retention plan (in addition to existing STI and LTI plans) to further enhance the
employee value proposition (EVP) to attract, engage and retain existing and prospective talent.
Under the plan, the award was offered in the form of Retention Rights which were granted at the start of calendar year 2024. The Rights will
vest over a 12-month period subject to continued employment. The grant is one-off, and the Board has the discretion to make further grants
in the future based on business need. Grant quantum of either 10% or 15% of fixed remuneration applies.
For those ceasing employment with the Company, any unvested Retention Rights will lapse unless the Board exercises its discretion to vest,
in whole or in part, the Retention Rights or allow them to continue unvested.
If, prior to conversion of the Retention Rights, a Change of Control Event occurs, then the Vesting Condition will be deemed to be waived and
each Retention Right will automatically vest. As noted in Section 14.4.2 above, the Board exercised the discretion available to it under the Plan
Rules to accelerate vesting of the Retention Rights on 19 June 2024, the implementation date of the Silver Lake Scheme of Arrangement.
14.5 FY24 EXECUTIVE REMUNERATION OUTCOMES
The following table summarises key measures of Company performance for FY24 and the previous four financial years:
Performance outcomes over the past five Financial Years
FY24
FY23
FY22
FY21
FY20
ASX share price at year end
$0.36
$0.19
$0.25
$0.19
$0.20
Profit/(loss) after income tax attributable
to owners of the company for continuing
operations ($’000)
(5,438)
(8,730)
(48,664)
(9,478)
4,544
Profit/(loss) after income tax attributable
to owners of the company ($’000)
(5,438)
(8,730)
(28,615)
(43,245)
4,544
Dividends paid ($’000)
-
-
-
-
-
Underlying EBITDA (a) ($’000)
192,672
96,081
(4,258)
11,635
53,978
(a) Underlying EBITDA is a non-IFRS measure that is unaudited.
14.5.1 Fixed remuneration outcomes
Following the review of executive remuneration levels against relevant market comparators (with the benchmarking analysis provided by
The Reward Practice Pty Ltd), the following table outlines fixed remuneration (FR) changes for executive KMP’s in FY24.
FY24 Executive KMP Fixed Remuneration Outcomes
FY24 FR
FY23 FR
Mark Williams, Managing Director (ceased to be a KMP on 19 June 2024)
$728,281
$725,000
Richard Hay, Chief Operating Officer
$590,000
$356,596
Patrick Duffy, Corporate Development Officer (ceased to be a KMP on 4 September 2023)
$452,036
$373,562
David Coyne, CFO & Joint Company Secretary (ceased to be a KMP on 19 June 2024)
$450,000
N/A
Please refer to Section 14.9.1 for the executive KMP’s who commenced the roles of the merged company towards the end of the
reporting period.
The Board will continue to monitor remuneration levels based on the factors set out in the executive remuneration framework.
DIRECTORS’ Report (cont.)
29
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
14. REMUNERATION REPORT (cont.)
14.5.2 FY24 STI outcome
While determining the STI outcomes, the Board carefully assessed the FY24 performance against set targets considering the requirements
arising from the merger. Due to the transaction with Silver Lake completing on 19 June 2024, the Board determined that it was appropriate to
use annualised performance for the 11 months to 31 May 2024 as the basis to determine the outcome of the FY24 STI. Accordingly, the
Board approved to proceed with a 148.4% of STI outcome based on 108.4% achievement of company KPIs and 40.0% of personal KPIs for
executive KMP’s, with 158.5% for executives who were made redundant as a result of the merger. The STI award was fully satisfied in cash.
The following table outlines KPI performance outcomes for FY24:
FY24 STI KPIs and Performance Outcomes
KPI
KPI Weighting
Performance Outcomes
STI Outcomes
TRIFR
20%
Stretch Target achieved
40.0%
Gold production (oz)
20%
Below Target achieved
17.5%
Group EBITDA ($m)
20%
Above target achieved
38.5%
AISC ($)
20%
Below target achieved
12.4%
Individual effectiveness
20%
Stretch target achieved
40.0%
STI performance outcomes (FY24 awards):
148.4%
Based on the above outcomes, the following provides further detail for the FY24 STI awards:
FY24 Executive KMP STI Award Outcomes
Target STI
Opportunity $
STI Awarded %
STI Outcomes (a)
$
Number of Service
Rights awarded
Mark Williams, MD (until 19 June 2024)
486,354
158.5%
770,871
-
Richard Hay, COO
295,000
148.4%
437,780
-
David Coyne, CFO & Joint Company Secretary
(until 19 June 2024)
188,242
158.5%
298,363
-
Total
969,596
1,507,014
-
(a) STI awards were paid in cash, includes superannuation.
14.5.3 FY24 LTI outcome
As result of the implementation of the Scheme of Arrangement with Silver Lake on 19 June 2024, the Board exercised the discretion available
to it to accelerate the vesting of all Performance and Retention Rights on issue. The discretion exercised was in keeping with the ‘merger of
equals’ concept between the Company and Silver Lake during negotiations prior to execution of the Scheme Implementation Deed (SID).
Under the terms of the SID, the Company acquired Silver Lake, with Red 5 shareholders controlling 51.7% of the post completion group. This
triggered a change of control event for Silver Lake, resulting in accelerated vesting of Silver Lake performance rights held by Silver Lake
employees prior to the implementation of the Scheme. To assist with integration activities and to treat employees from both Red 5 and Silver
Lake equal to the maximum extent possible, the Board deemed it appropriate to accelerate the vesting of all rights held by Red 5 employees.
As Mr Williams and Mr Coyne were subject to redundancy as a result of the Silver Lake Scheme of Arrangement, their respective
Performance / Retention Rights were subject to acceleration due to their redundancies.
8
7
6
193,025oz
214,472oz
235,919oz
$161.5
$179.5
$197.4
$2,125/oz
$1,935/oz
$1,742/oz
50%
100%
200%
Threshold
Target
Stretch
FY24 Actual
30
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
14. REMUNERATION REPORT (cont.)
14.5.3 FY24 LTI outcome (cont.)
FY24 LTI KPIs and Performance Outcomes
KPI
KPI Weighting
Performance Outcomes
LTI Outcomes
Relative TSR (against the TSR
of a comparator peer group)
70%
Target achieved
70%
Growth in ore reserves
30%
Target achieved
30%
Gateways:
\
\
A positive Company TSR
\
\
90% of budgeted gold
production met
-
Target achieved, accelerated vesting approved.
-
LTI performance outcomes (FY22-24 awards):
100%
Executive KMP – FY22-24 LTI Awards Vesting Outcomes
Executive KMP
Maximum LTI
Opportunity $
Number of LTI
Rights held
LTI Rights vested
%
LTI Rights
Forfeited $
Number of LTI
Rights forfeited
Mark Williams
1,567,482
8,697,951
100%
-
-
Richard Hay
596,692
3,521,125
100%
-
-
Patrick Duffy (a)
365,221
1,922,255
0%
(365,221)
(1,922,255)
David Coyne
254,672
1,334,096
100%
-
-
Total
2,784,067
15,475,427
88%
(365,221)
(1,922,255)
(a) Mr Duffy’s performance rights were forfeited due to his resignation from the Company prior to their vesting.
14.5.4 Vesting of Retention Rights
The Retention Rights granted to Mr Richard Hay and Mr David Coyne (valued at $65,661 and $50,580 respectively) on 1 January 2024
vested in full on the date of Transaction.
14.6 NON-EXECUTIVE DIRECTORS’ REMUNERATION
In accordance with current corporate governance practices, the structure for the remuneration of NEDs and executive KMP is separate and
distinct. Shareholders approve the maximum aggregate fees payable to NEDs, with the current limit being $850,000 per annum. Under the
terms of the Silver Lake Scheme Booklet, it is the merged group’s intention to seek shareholder approval to raise the NED fee cap to $1.8
million for FY25 and beyond, so as to accommodate the additional NEDs on the merged group board, and to ensure that the merged group’s
remuneration arrangement is market-competitive such that it can attract and retain high calibre individuals with the requisite skills,
competence and experience for the merged group.
14.6.1 FY24 Non-Executive Director Fee Policy
The following table sets out the policy fee for NEDs for FY24 (exclusive of statutory superannuation of 11%):
Chair
Member
Board and Committee Fees
FY24
FY23
FY24
FY23
Board
$171,250 (a)
$135,000
$100,000
$100,000
Audit and Risk Committee
$15,000
$15,000
Nil
Nil
Remuneration and Nomination Committee
$10,000
$10,000
Nil
Nil
Sustainability Committee
$10,000
$10,000
Nil
Nil
Health, Safety and Community Committee
n/a
$10,000
Nil
Nil
(a) The fee for the Chair of the Board increased from $145,000 to $190,000 on 1 December 2023.
<=Index
>10%
>20%
15%
20%
35%
Threshold
Target
Stretch
FY22-24 Actual
31
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
14. REMUNERATION REPORT (cont.)
14.6.1 FY24 Non-Executive Director Fee Policy (cont.)
The Board may approve any consultancy arrangements (at a rate) for NEDs providing additional services outside their Board and/or
Committee duties.
NEDs are not entitled to participate in performance-based incentive schemes. The Board may seek annual shareholder approval for a share
plan, under which NEDs can elect to receive a portion of their fees in shares in Red 5.
All Directors are entitled to have premiums on indemnity insurance paid by Red 5. The liabilities insured are for costs and expenses that may
be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the
consolidated entity.
14.6.2 FY24 Non-Executive Director Statutory Remuneration Disclosures
The following table outlines the fees paid to NEDs in FY24 as prepared in accordance with the requirements of the Corporations Act 2001
and the relevant Australian Accounting Standards.
Base fees
Committee
Chair fees
Consulting
fees
Superannuation
Total
NED
$
$
$
$
$
Russell Clark, Chair
FY24
171,250
-
-
18,838
190,088
(appointed 1 July 2023)
FY23
-
-
-
-
-
Peter Johnston, NED
FY24
100,000
10,000
-
12,100
122,100
(appointed 10 July 2023)
FY23
-
-
-
-
-
David Quinlivan, NED
FY24
9,105
-
-
1,002
10,107
(appointed 19 June 2024)
FY23
-
-
-
-
-
Andrea Sutton, NED
FY24
125,000 (a)
10,000
-
14,850
149,850
FY23
100,000
10,000
-
11,550
121,550
Ian Macpherson, NED
FY24
100,000
15,000
-
12,650
127,650
FY23
100,000
15,000
-
12,075
127,075
Kelvin Flynn, NED
FY24
5,249
-
-
577
5,826
(appointed 19 June 2024)
FY23
-
-
-
-
-
Rebecca Prain, NED
FY24
5,249
-
-
577
5,826
(appointed 19 June 2024)
FY23
-
-
-
-
-
Colin Loosemore, NED
FY24
35,055
3,505
-
4,242
42,802
(resigned 6 November 2023)
FY23
100,000
10,000
-
11,688
121,688
Steven Tombs, NED
FY24
35,055
3,505
-
4,242
42,802
(resigned 6 November 2023)
FY23
100,000
10,000
-
11,688
121,688
Kevin Dundo, Chair
FY24
-
-
-
-
-
until 12 March 2023
FY23
94,125
-
-
9,883
104,008
Fiona Harris, NED
FY24
-
-
-
-
-
(until 6 December 2022)
FY23
43,207
-
-
4,537
47,744
TOTAL
FY24
585,963
42,010
-
69,078
697,051
FY23
537,332
45,000
-
61,421
643,753
(a) Included in Ms Sutton’s base fee is an ex-gratia payment of $25,000 in lieu of her time as Acting Chair during FY23.
32
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
14. REMUNERATION REPORT (cont.)
14.7 FY25 PLANNED NON-EXECUTIVE DIRECTORS FEES
Following the merger with Silver Lake and the increase in the number of members of the Board, the Company is proposing to seek
shareholder approval at the 2024 Annual General Meeting for an increase in the annual non-executive director fee pool to $1,800,000.
If approved, the FY25 Non-Executive Directors fees will be as follows:
Chair
Member
Board and Committee Fees FY25
$
$
Board
$260,000
$168,000
Audit and Risk Committee
$20,000
-
Remuneration and Nomination Committee
$15,000
-
Sustainability Committee
$15,000
-
14.8 DETAILS OF REMUNERATION
The following table discloses details of the nature and amount of each element of the remuneration paid to executive KMP for the years
ended 30 June 2024 and 30 June 2023.
Short term
Long term
Cash salary (a)
Termination
benefits
Cash
STI service
rights (d)
Superannuation
Annual and long
service leave
PIO cash award
Performance
rights expense (e)
Performance
rights forfeited (f)
Total
Executive remuneration
$
$
$
$
$
$
$
$
$
$
Executive Director
Mark Williams
FY24
697,500
728,281
770,871
34,669
27,500
28,600
-
1,095,384
-
3,382,805
FY23
697,500
-
-
69,338
27,500
48,862
55,000
602,831
(515,872)
985,159
Luke Tonkin (b)
FY24
31,892
-
-
-
3,508
-
-
-
-
35,400
FY23
-
-
-
-
-
-
-
-
-
-
Executive KMP’s
Richard Hay
FY24
562,500
-
437,780
-
27,500
4,232
-
545,046
-
1,577,058
FY23
329,096
-
86,049
-
27,500
18,583
54,839
21,961
-
538,028
Patrick Duffy (c)
FY24
68,490
-
-
9,927
6,850
5,221
-
20,290
(215,047)
(104,269)
FY23
346,062
-
-
46,277
27,500
14,097
55,000
255,958
(198,230)
546,664
David Coyne (c)
FY24
336,150
225,000
298,363
-
24,080
25,858
-
244,622
-
1,154,073
FY23
-
-
-
-
-
-
-
-
-
-
Struan Richards (b)
FY24
14,728
-
-
-
1,543
-
-
-
-
16,271
FY23
-
-
-
-
-
-
-
-
-
-
Len Eldridge (b)
FY24
13,635
-
-
-
1,435
-
-
-
-
15,070
FY23
-
-
-
-
-
-
-
-
-
-
David Berg (b)
FY24
13,908
-
-
-
1,462
-
-
-
-
15,370
FY23
-
-
-
-
-
-
-
-
-
-
TOTAL
FY24
1,738,803
953,281
1,507,014
44,596
93,878
63,911
-
1,905,342
(215,047)
6,091,778
FY23
1,372,658
-
86,049
115,615
82,500
81,542
164,839
880,750
(714,102)
2,069,851
(a) Includes salary and any superannuation contributions above the concessional cap that are expensed.
(b) Mr Tonkin, Mr Richards, Mr Eldridge and Mr Berg joined the Company as executives upon the merger of the Company with Silver Lake on
19 June 2024. Their remuneration has been apportioned for the period between the date of joining to the end of the financial year.
(c) Mr Duffy resigned as Chief Finance Officer on 4 September 2023. Mr Coyne was appointed as Chief Finance Officer from 4 September
2023 to 19 June 2024. Their salaries have been apportioned accordingly for the period that they were KMP’s.
(d) No share-based service rights were granted to KMP’s for FY24. However, service rights granted to KMP’s in respect of FY22, vested on 31
December 2023 having been expensed up to the vesting date.
33
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
14. REMUNERATION REPORT (cont.)
14.8 DETAILS OF REMUNERATION (cont.)
(e) Relates to performance rights expense for the 2024, 2025 and 2026 series. The fair value at the grant date of Tranche A, which has
market-based performance conditions, was estimated using a Monte Carlo simulation. The fair value at the grant date of Tranche B which
has market and non-market-based performance conditions, was valued using a single share price barrier model incorporating a Monte
Carlo simulation. Due to the merger with Silver Lake, vesting of all outstanding performance rights was accelerated and took place on the
date of the merger. These were fully expensed during FY24.
(f) Performance rights of employees who resigned from the Company prior to the vesting dates were forfeited. Forfeited performance rights in
the prior year relates to non-achievement of their performance conditions.
The relative proportions of remuneration that are fixed and those that are linked to performance are as follows:
Fixed
At risk – short term incentives
At risk – long term incentives
2024
2023
2024
2023
2024
2023
Executive Director
Mark Williams
21%
79%
24%
7%
55%
14%
Luke Tonkin
100%
-
-
-
-
-
Executives
Richard Hay
37%
70%
28%
16%
35%
14%
Patrick Duffy
N/A
71%
N/A
8%
N/A
21%
David Coyne
31%
-
26%
-
43%
-
Struan Richards
100%
-
-
-
-
-
Len Eldridge
100%
-
-
-
-
-
David Berg
100%
-
-
-
-
-
Non-Executive Directors
Russell Clark
100%
-
-
-
-
-
Peter Johnston
100%
-
-
-
-
-
David Quinlivan
100%
-
-
-
-
-
Andrea Sutton
100%
100%
-
-
-
-
Ian Macpherson
100%
100%
-
-
-
-
Kelvin Flynn
100%
-
-
-
-
-
Rebecca Prain
100%
-
-
-
-
-
Colin Loosemore
100%
100%
-
-
-
-
Steven Tombs
100%
100%
-
-
-
-
14.9 ADDITIONAL REMUNERATION DISCLOSURES
14.9.1 Executive Service Contracts
The following remuneration and other terms of employment for executive KMP’s were formalised in service agreements commencing from 19
June 2024. The service agreements specify the components of remuneration, benefits and notice periods. Participation in STI and LTI plans
is subject to the Board’s discretion. Other major provisions of the agreements relating to remuneration are set out below:
Executive KMP’s
Position
Terms of
agreement
FR including
superannuation at
FY24 rate
Notice period
Termination
benefit
Luke Tonkin
MD/CEO
No fixed term
$1,064,000
6 months
12 months
Richard Hay (a)
COO
No fixed term
$621,668
6 months
6 months
Struan Richards
CFO
No fixed term
$506,160
6 months
6 months
Len Eldridge
Corporate
Development Officer
No fixed term
$470,640
6 months
6 months
David Berg
General Counsel &
Company Secretary
No fixed term
$479,520
6 months
6 months
(a) Richard Hay’s salary rate for FY24 was $590,000. The new rate of $621,668 is effective from 19 June 2024.
34
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
14. REMUNERATION REPORT (cont.)
14.9.1 Executive Service Contracts (cont.)
Former
Executive KMP’s
Position
Terms of
agreement
FR including
superannuation at
FY24 rate
Notice period
Termination
benefit
Mark Williams (b)
MD/CEO
No fixed term
$728,281
3 months
12 months
Patrick Duffy (c)
Corporate Development
Officer
No fixed term
$452,036
3 months
3 months
David Coyne (d)
CFO & Joint Company
Secretary
No fixed term
$450,000
3 months
3 months
(b) Mr Williams ceased to a KMP on 19 June 2024.
(c) Mr Duffy ceased being the CFO on 4 September 2023 and reverted back to the role of Chief Corporate Development Officer. Mr Duffy
resigned from this role on 31 December 2023.
(d) Mr Coyne was appointed as the CFO & Joint Company Secretary on 4 September 2023 and ceased to be a KMP on 19 June 2024.
14.9.2 Shareholdings of directors and KMP’s
The number of shares in Red 5 held during the financial year by key management personnel, including personally related entities,
are set out below:
2024
Balance at
previous year
reporting date
Received through
vesting of
performance
rights
Received through
conversion of SLR
shares on merger
with the Company
Other purchases /
(disposals) during
the year
Balance at date
of this report
Executive Director
Mark Williams
16,048,391
9,568,964
-
-
25,617,355 (a)
Luke Tonkin
-
-
11,664,766
(5,388,000)
6,276,766
Executive KMP’s
Richard Hay
-
3,650,311
-
-
3,650,311
Patrick Duffy
559,037
-
-
-
559,037 (a)
David Coyne
-
1,334,096
-
-
1,334,096 (a)
Struan Richards
-
-
1,899,854
-
1,899,854
Len Eldridge
-
-
3,704,916
-
3,704,916
David Berg
-
-
4,948,446
-
4,948,446
Non-Executive Directors
Russell Clark
-
-
-
-
-
Peter Johnston
-
-
5,151,000
200,000
5,351,000
David Quinlivan
25,000
-
-
-
25,000
Andrea Sutton
500,000
-
-
-
500,000
Ian Macpherson
2,047,500
-
-
-
2,047,500
Kelvin Flynn
-
-
-
-
-
Rebecca Prain
-
-
-
-
-
Colin Loosemore
10,108,190
-
-
-
10,108,190 (a)
Steven Tombs
2,719,579
-
-
-
2,719,579 (a)
Total
32,007,697
14,553,371
27,368,982
(5,188,000)
68,742,050
(a) Balance held by the NED or KMP at the date that they left the Company or ceased to be a KMP.
35
2024 ANNUAL REPORT
DIRECTORS’ Report (cont.)
14. REMUNERATION REPORT (cont.)
14.9.3 Service rights held by KMP’s under the STI
There were no new service rights awarded during the financial year. Service rights held by KMP’s relating to the previous performance
measurement period are set out below:
KMP
Grant Date
Vesting Date
Fair Value at
Grant Date
Granted
Exercised up to
reporting date
Outstanding at
reporting date
Mark Williams (a)
25-Oct-22
31-Dec-23
$104,007
671,013
(671,013)
-
Patrick Duffy (a)
09-Aug-22
31-Dec-23
$83,848
274,912
(274,912)
-
Total
$187,855
945,925
(945,925)
-
(a) Service Rights for Mr Williams and Mr Duffy were issued under the Red 5 FY22 Rights Plan. They had an 18 month service test and vested
on 31 December 2023.
14.9.4 Performance rights of KMP’s under the LTI
The number of performance rights in Red 5 held as at the date of this report by executive KMP’s are set out below:
KMP
Balance at prior
year reporting
date
Received
through issuing
of LTI
performance
rights (a)
LTI performance
rights vested
and exercised (b)
LTI performance
rights
forfeited (c)
Balance at
reporting date
Mark Williams
4,625,196
4,072,755
(8,697,951)
-
-
Luke Tonkin
-
-
-
-
-
Richard Hay
-
3,650,311
(3,650,311)
-
-
Patrick Duffy
1,922,255
-
-
(1,922,255)
-
David Coyne
-
1,334,096
(1,334,096)
-
-
Struan Richards
-
-
-
-
-
Len Eldridge
-
-
-
-
-
David Berg
-
-
-
-
-
Total
6,547,451
9,057,162
(13,682,358)
(1,922,255)
-
(a) During the year LTI performance rights were issued to employees with a three year measurement period to 30 June 2026. These
performance rights have a market based tranche comparing the Company’s TSR performance relative to a peer group of similar companies’
TSR, and a non-market tranche which is based on the growth of the Company’s reserves.
In addition, the Company issued further performance rights with a one year measurement period with the objective of the retention of senior
employees. These have a vesting date of 31 December 2024 for employees still employed at the Company at the time.
(b) In light of the merger with Silver Lake Resources, the Board authorised the accelerated vesting of all LTI performance rights held at the date
of the merger.
(c) Mr Duffy resigned from the Company during the year and his performance rights were forfeited.
Share based payments expense for the shares issued, service and performance rights for KMP’s was $1,734,891 (FY23: $1,141,240). The fair
value is based on the observable market share price at the grant date.
14.9.5 Options granted to KMP’s
No options over ordinary shares were held by or granted to executive officers of Red 5 during the year as part of their remuneration. No
shares were issued during the year as a result of the exercise of options granted as part of remuneration.
14.9.6 Transactions with KMP and their related parties
The NEDs Andrea Sutton, Ian Macpherson, Peter Johnson and Kelvin Flynn invoiced for their directors’ fees through their private companies.
They were not separate entities that provided consulting services to the Company. NEDs Russell Clark, Colin Loosemore, Steven Tombs,
David Quinlivan and Rebecca Prain were paid directors fees through the Company’s payroll. All the NEDs met the definition and maintained
their status as independent NEDs, thus retaining objectivity and their ability to meet their oversight role.
END OF AUDITED REMUNERATION REPORT
36
2024 ANNUAL REPORT
AUDITOR’S Independence Declaration
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Red 5 Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Red 5 Limited for the
financial year ended 30 June 2024 there have been:
i.
No contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
ii.
No contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Jane Bailey
Partner
Perth
28 August 2024
37
2024 ANNUAL REPORT
Consolidated Statement of
PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2024
CONSOLIDATED
30 June 2024
30 June 2023
Note
$’000
$’000
Revenue
4(a)
620,002
422,745
Cost of sales
4(b)
(529,605)
(394,620)
Gross profit
90,397
28,125
Other income
4(c)
1,073
811
Exploration expensed
13
(8,710)
(7,181)
Acquisition and stamp duty costs on business combination
(43,388)
-
Administration and other expenses
4(d)
(25,233)
(8,825)
Results from operating activities
14,139
12,930
Finance income
5(a)
863
61
Finance expenses
5(b)
(20,440)
(21,721)
Net finance expenses
(19,577)
(22,661)
Loss before income tax
(5,438)
(8,730)
Income tax
6
-
-
Loss for the year
(5,438)
(8,730)
Other comprehensive loss
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences
(9)
(54)
Total comprehensive loss attributable to the owners of the Company
(5,447)
(8,784)
Earnings per share attributable to shareholders
Cents
Cents
Basic earnings/(loss) per share
7
(0.15)
(0.31)
Diluted earnings/(loss) per share
7
(0.15)
(0.31)
The accompanying notes form part of these financial statements.
38
2024 ANNUAL REPORT
Consolidated Statement of FINANCIAL POSITION as at 30 June 2024
CONSOLIDATED
30 June 2024
30 June 2023
Note
$’000
$’000
Assets
Current assets
Cash and cash equivalents
8
428,812
20,112
Trade and other receivables
9
34,334
28,973
Inventories
10
144,042
76,550
Total current assets
607,188
125,635
Non-current assets
Property, plant and equipment
11
568,220
289,329
Mine properties
12
799,997
228,498
Exploration and evaluation assets
13
46,898
10,767
Trade and other receivables
9
6,182
8,168
Inventories
10
136,098
7,911
Investments
14
2,471
-
Intangible assets
499
169
Total non-current assets
1,560,365
544,842
Total assets
2,167,553
670,477
Liabilities
Current liabilities
Trade and other payables
15
160,240
63,683
Financial liability
19
92,723
21,854
Provisions
16
35,123
447
Employee benefits
17
25,244
7,130
Lease liabilities
18
37,629
18,557
Total current liabilities
350,959
111,671
Non-current liabilities
Financial liability
19
-
104,286
Provisions
16
114,130
59,239
Employee benefits
17
1,060
797
Lease liabilities
18
77,483
64,413
Deferred tax liabilities
6
3,163
-
Total non-current liabilities
195,836
228,735
Total liabilities
546,795
340,406
Net assets
1,620,758
330,071
Equity
Contributed equity
23
2,085,423
596,668
Other equity
23
(185,248)
930
Reserves
24
370
8,168
Accumulated losses
(279,770)
(275,678)
Total equity attributable to equity holders of the Company
1,620,775
330,088
Non-controlling interests
(17)
(17)
Total equity
1,620,758
330,071
The accompanying notes form part of these financial statements.
39
2024 ANNUAL REPORT
Consolidated Statement of CHANGES IN EQUITY for the year ended 30 June 2024
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT ENTITY
Contributed equity
Other equity
Accumulated
losses
Foreign currency
translation reserve
Share-based
payments
Non-controlling
interest
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Balance at 1 July 2023
596,668
930
(275,678)
379
7,789
(17)
330,071
Net loss for the year
-
-
(5,438)
-
-
-
(5,438)
Foreign currency translation
-
-
-
(9)
-
-
(9)
Total comprehensive income/ (loss)
for the period
-
-
(5,438)
(9)
-
-
(5,447)
Issue of ordinary shares
1,478,125
-
-
-
-
-
1,478,125
Share issue expenses
(585)
-
-
-
-
-
(585)
Transferred to accumulated losses
-
(930)
1,346
-
(416)
-
-
Treasury shares reclassified
-
(185,248)
-
-
-
-
(185,248)
Vested performance rights (LTI)
10,824
-
-
-
(10,824)
-
-
Service and deferred rights (STI) converted
to ordinary shares
391
-
-
-
(391)
-
-
Performance rights (LTI) forfeited
-
-
-
-
(4,339)
-
(4,339)
Share based payments (LTI & STI)
-
-
-
-
8,181
-
8,181
Balance at 30 June 2024
2,085,423
(185,248)
(279,770)
370
-
(17)
1,620,758
Balance at 1 July 2022
443,160
930
(268,196)
433
6,485
(17)
182,795
Net loss for the year
-
-
(8,730)
-
-
-
(8,730)
Foreign currency translation
-
-
-
(54)
-
-
(54)
Total comprehensive income/ (loss) for
the period
-
-
(8,730)
(54)
-
-
(8,784)
Issue of ordinary shares
158,904
-
-
-
-
-
158,904
Share issue expenses
(6,838)
-
-
-
-
-
(6,838)
Vested performance rights (LTI)
1,367
-
-
-
(1,367)
-
-
Service and deferred rights (STI)
75
-
-
-
(75)
-
-
Performance rights (LTI) forfeited
-
-
1,248
-
(1,248)
-
-
Share based payments (LTI & STI)
-
-
-
-
3,994
-
3,994
Balance at 30 June 2023
596,668
930
(275,678)
379
7,789
(17)
330,071
The accompanying notes form part of these financial statements.
40
2024 ANNUAL REPORT
Consolidated Statement of CASH FLOWS for the year ended 30 June 2024
CONSOLIDATED
30 June 2024
30 June 2023
Note
$’000
$’000
Cash flows from operating activities
Cash received from customers
630,396
420,013
Payments to suppliers and employees
(417,665)
(366,325)
Payments for exploration and evaluation
(7,656)
(7,181)
Sundry receipts
1,331
473
Interest received
1,560
61
Interest paid
(1,331)
(376)
Net cash from operating activities
8
206,635
46,665
Cash flows from investing activities
Payments for property, plant equipment and intangibles
(21,313)
(29,499)
Payments for mine development
(84,051)
(95,786)
Payments for exploration and evaluation
(2,920)
(880)
Cash acquired in a business combination
25
378,318
-
Net cash from/(used in) investing activities
270,034
(126,165)
Cash flows from financing activities
Proceeds from issue of shares
-
158,904
Payments for share issue transaction costs
(585)
(6,838)
Repayment of loans
19
(34,873)
(47,250)
Receipt from restricted cash
2,000
-
Payments of borrowing costs and interest
(9,792)
(12,021)
Payments of lease liabilities
(24,735)
(25,616)
Net cash (used in)/from financing activities
(67,985)
67,179
Net increase/(decrease) in cash and cash equivalents
408,684
(12,321)
Cash at the beginning of the period
20,112
32,526
Effects of exchange rate fluctuations on cash and cash equivalents
16
(93)
Cash and cash equivalents at the end of the period
8
428,812
20,112
The accompanying notes form part of these financial statements.
41
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024
SECTION
Page
Corporate information and basis of preparation
41
1. Reporting entity
2. Basis of preparation
Financial Performance
43
3. Segment information
4. Revenue and expenses
5. Finance income and expenses
6. Income tax and deferred tax
7. Earnings per share
Operating assets and liabilities
50
8. Cash and cash equivalents
9. Trade and other receivables
10. Inventories
11. Property, plant and equipment
12. Mine properties
13. Exploration and evaluation
14. Investments
15. Trade and other payables
16. Provisions
17. Employee benefits
18. Lease liabilities
SECTION
Page
Capital structure and financial risk management
61
19. Financial liability
20. Fair value measurement
21. Financial instruments
22. Financial risk management
23. Contributed equity
24. Reserves
Other disclosures
67
25. Business Combination
26. Related parties
27. Share-based payment arrangements
28. Auditor’s remuneration
29. Investments in controlled entities
30. Joint operations
31. Deed of cross guarantee
32. Parent entity disclosures
33. Silver Lake Resources Limited disclosures
34. Commitments
35. Contingent liabilities
36. Subsequent events
37. New accounting standards and interpretations
1.
REPORTING ENTITY
Red 5 Limited (“parent entity” or “the Company”) is a for profit
company limited by shares incorporated in Australia whose shares
are publicly traded on the Australian Securities Exchange. The
Consolidated Financial Report for the year ended 30 June 2024
comprises the Company and its subsidiaries (together referred to as
the “Group” and individually as “Group entities”) and the Group’s
interest in any associates and jointly controlled entities. The Company
successfully completed the merger with Silver Lake Resources
Limited (Silver Lake) on 19 June 2024 and the Silver Lake entities
have been included in the Group from 19 June 2024.
The Group is primarily involved in the exploration and mining of gold
and gold/copper concentrate in Australia and Canada.
2.
BASIS OF PREPARATION
2.1
STATEMENT OF COMPLIANCE
The consolidated financial statements are general purpose financial
statements which have been prepared in accordance with Australian
Accounting Standards (AASBs) adopted by the Australian Accounting
Standards Board (AASB) and the Corporations Act 2001. The
consolidated financial statements comply with International Financial
Reporting Standards (IFRSs) adopted by the International Accounting
Standards Board (IASB).
The consolidated financial statements were authorised for issue by
the Board of Directors on 28 August 2024.
2.2
BASIS OF MEASUREMENT
The consolidated financial statements have been prepared on the
historical cost basis, except for derivative financial instruments and
certain other financial assets and liabilities which are required to be
measured at fair value. Share based payments are measured at fair
value. The methods used to measure fair values of share based
payments are discussed further in the Note 27. Rehabilitation
provisions are based on net present value and are discussed in
Note 16.
2.3
FUNCTIONAL AND PRESENTATION
CURRENCY
The consolidated financial report is presented in Australian dollars,
which is the Group’s presentation currency. The functional currency
of each of the Group’s entities is measured using the currency of the
primary economic environment in which that entity operates. For the
Australian subsidiaries in which the Group holds its Australian assets
the functional currency is Australian dollars, and for the Canadian
subsidiaries it is Canadian dollars.
2.4
ROUNDING
The Company is of a kind referred to in ASIC Corporations (Rounding
in Financial/Directors’ Reports) Instrument 2016/191 and in
accordance with that instrument, all financial information has been
rounded to the nearest thousand dollars, unless otherwise stated.
CORPORATE INFORMATION AND BASIS OF PREPARATION
42
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
2.
BASIS OF PREPARATION (cont.)
2.5
REMOVAL OF PARENT ENTITY
FINANCIAL STATEMENTS
The Group has applied amendments to the Corporations Act 2001
that remove the requirement for the Group to lodge parent entity
financial statements. Parent entity financial statements have been
replaced by the specific parent entity disclosures in Note 32.
2.6
PRINCIPLES OF CONSOLIDATION
The consolidated financial report incorporates the assets and
liabilities of all entities controlled by the Company as at 30 June 2024
and the results of all controlled entities for the year then ended. The
Company and its controlled entities together are referred to in this
financial report as the consolidated entity. The financial statements of
controlled entities are prepared for the same reporting period as the
parent entity, using consistent accounting policies. Intra-group
balances and transactions, and any unrealised income and expenses
arising from intra-group transactions are eliminated in preparing the
consolidated financial statements.
Where control of an entity is obtained during a financial period, its
results are included only from the date upon which control
commences. Where control of an entity ceases during a financial
period, its results are included for that part of the period during which
control existed. Non-controlling interests in equity and results of the
entities which are controlled by the consolidated entity are shown as
a separate item in the consolidated financial statements.
2.7
FOREIGN CURRENCIES
Foreign currency transactions:
Transactions in foreign currencies are translated at the foreign
exchange rate ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the statement of
financial position date are translated to Australian dollars at the foreign
exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the Statement of Profit or Loss
and Other Comprehensive Income. Non-monetary assets and
liabilities that are measured in terms of historical cost in a foreign
currency are translated using the exchange rate at the date of the
transaction. Non-monetary assets and liabilities denominated in
foreign currencies that are stated at fair value are translated to
Australian dollars at foreign exchange rates ruling at the dates the fair
value was determined.
The following significant exchange rates have been applied:
Average rate
Year-end spot rate
AUD:
2024
2023
2024
2023
Canadian dollar (CAD)
1.13
1.11
1.10
1.13
United States dollar
(USD)
0.66
0.67
0.67
0.66
Philippine peso (PHP)
37.25
37.55
38.99
36.83
Financial statements of foreign operations:
Each entity in the consolidated entity determines its functional
currency, being the currency of the primary economic environment in
which the entity operates, reflecting the underlying transactions,
events and conditions that are relevant to the entity. The functional
currency of the Australian entities is the Australian dollar and the
functional currencies of the Canadian and Philippine entities is
Canadian dollars and the Philippine Peso respectively. The assets and
liabilities of foreign operations, including goodwill and fair value
adjustments arising on consolidation, are translated from the entity’s
functional currency to the consolidated entity’s presentation currency
of Australian dollars at foreign exchange rates ruling at reporting date.
The revenues and expenses of foreign operations are translated to
Australian dollars at the exchange rates approximating the exchange
rates ruling at the date of the transactions. Foreign exchange
differences arising on translation are recognised directly in a separate
component of equity.
2.8
IMPAIRMENT
At each reporting date, the consolidated entity reviews and tests the
carrying value of assets when events or changes in circumstances
indicate that the carrying amount may not be recoverable. Where an
indicator of impairment exists, the consolidated entity makes a formal
estimate of recoverable amount. Where the carrying amount of an
asset exceeds its recoverable amount the asset is considered
impaired and is written down to its recoverable amount. Impairment
losses are recognised in the Statement of Profit or Loss and Other
Comprehensive Income unless the asset has previously been
revalued, in which case the impairment loss is recognised as a
reversal to the extent of that previous revaluation with any excess
recognised through the Statement of Profit or Loss and Other
Comprehensive Income.
Calculation of recoverable amount
Recoverable amount is the greater of fair value less costs of disposal
and value in use. It is determined for a cash-generating unit, unless it
does not generate cash inflows that are largely independent of those
from other assets or groups of assets, in which case the recoverable
amount is determined for the cash-generating unit to which the asset
belongs. The estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific
to the asset.
2.9
KEY ESTIMATES AND JUDGEMENTS
The preparation of the Consolidated Financial Statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities, and the accompanying disclosures, and the disclosure of
contingent liabilities at the date of the consolidated financial
statements. Estimates and assumptions are continually evaluated and
are based on management’s experience and other factors, including
expectations of future events that are believed to be reasonable under
the circumstances. Uncertainty about these assumptions and
estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected
in future periods.
43
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
2.
BASIS OF PREPARATION (cont.)
2.9
KEY ESTIMATES AND JUDGEMENTS (cont.)
In particular, the Group has identified a number of areas where
significant judgements, estimates and assumptions are required.
Further information on each of these areas and how they impact the
various accounting policies are described with the associated
accounting policy note within the related qualitative and
quantitative note.
The selection and disclosure of the consolidated entity’s critical
accounting policies and estimates and the application of these
policies, estimates and judgements is the responsibility of the Board
of Directors. The estimates and judgements that may have a
significant impact on the carrying amount of assets and liabilities are
discussed below.
\
\
Inventories: refer Note 10
\
\
Mine properties: refer Note 12
\
\
Rehabilitation and mine closure provisions: refer Note 12
\
\
Reserves and resources: refer Note 12
\
\
Capitalised exploration and evaluation assets: refer Note 13
\
\
Share based payment transactions: refer Note 27
\
\
Business Combinations: refer Note 25
Impairment of Assets:
At each reporting date, the Group makes an assessment for
impairment of all assets if there has been an impairment indicator by
evaluating conditions specific to the Group and to the particular
assets that may lead to impairment. The recoverable amount of
Property, Plant & Equipment and Mine Development Expenditure is
determined as the higher of value-in-use and fair value less costs
of disposal.
Given the nature of the Group’s mining activities, future changes in
assumptions upon which these estimates are based may give rise to
a material adjustment to the carrying value. This could lead to the
recognition of impairment losses in the future. The inter-relationship of
the significant assumptions upon which estimated future cash flows
are based is such that it is impracticable to disclose the extent of the
possible effects of a change in a key assumption in isolation.
Future cash flow estimates are based on expected production
volumes and grades, gold price and exchange rate estimates,
budgeted and forecasted development levels and operating costs.
Management is required to make these estimates and assumptions
which are subject to risk and uncertainty. As a result, there is a
possibility that changes in circumstances may alter these projections,
which could impact on the recoverable amount of the assets. In such
circumstances, some or all of the carrying value of the assets may be
impaired. Impairment losses are recognised in the Statement of Profit
or Loss unless the asset has previously been revalued.
Management considered if there were any indicators of impairment of
the operational assets as at 30 June 2024 and determined that no
such indicators of impairment existed.
Business Combinations:
The Group accounts for business combinations using the acquisition
method when control is transferred to the Group. Estimates and
judgements are required by the Group, via valuation methods such as
discounted cashflow rates, to measure the fair value of the identifiable
net assets acquired. Any goodwill that arises is tested annually for
impairment. Transaction costs are expensed as incurred, except if
related to the issue of debt or equity securities.
Going concern:
A key assumption underlying the preparation of the financial
statements is that the Group will continue as a going concern. An
entity is a going concern when it is considered to be able to pay its
debts as and when they are due, and to continue in operation without
any intention or necessity to liquidate or otherwise wind up its
operations.
The Directors believe it is appropriate to prepare the consolidated
financial report on a going concern basis, which contemplates the
continuity of normal business activities and the realisation of assets
and settlement of liabilities in the ordinary course of business.
FINANCIAL PERFORMANCE
3.
SEGMENT INFORMATION
The Group is managed primarily on the basis of its production,
development and exploration assets. Separate operating segments
are determined on that basis. The King of the Hills operations and
Mount Monger operation produce gold bullion. The Deflector
operation produces gold bullion and gold-copper concentrate, and
the Sugar Zone operation, which had been placed into an idle state
as at the reporting date, produced gold bullion and gold concentrate.
Sugar Zone is based in Canada, while the other operations all based
in Western Australia.
Unless otherwise stated, all amounts reported to the Board of
Directors with respect to operating segments are determined in
accordance with accounting policies that are consistent to those
adopted in the consolidated annual financial statements of the Group.
44
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
3.
SEGMENT INFORMATION (cont.)
(i)
Segment performance
King of the
Hills (b)
Mount
Monger
Deflector (c)
Sugar Zone
Unallocated (a)
Total
$’000
$’000
$’000
$’000
$’000
$’000
Year ended 30 June 2024
Revenues
581,620
15,958
22,424
-
-
620,002
Segment result before tax
74,717
(12,556)
(5,597)
(1,320)
(60,682)
(5,438)
Included within the segment result:
Other income
907
-
-
-
166
1,073
Interest income
105
358
146
-
254
863
Finance expenses
(8,151)
(285)
(43)
(63)
(11,898)
(20,440)
Stamp duty and business combination
-
-
-
-
(43,388)
(43,388)
Exploration costs expensed
(7,656)
(75)
(943)
(36)
-
(8,710)
Depreciation and amortisation
(122,402)
(5,901)
(6,516)
(391)
(341)
(135,551)
Year ended 30 June 2023
Revenues
422,745
-
-
-
-
422,745
Segment result before tax
9,480
-
-
-
(18,210)
(8,730)
Included within the segment result:
Other income
445
-
-
-
366
811
Interest income
9
-
-
-
52
61
Finance expenses
(8,549)
-
-
-
(13,172)
(21,721)
Exploration costs expensed
(7,181)
-
-
-
-
(7,181)
Depreciation and amortisation
(82,820)
-
-
-
(331)
(83,151)
(ii)
Segment Assets
As at 30 June 2024
Segment assets
645,844
446,768
381,848
231,859
461,234
2,167,553
Additions to non-current assets:
Plant and equipment expenditure
24,552
535
-
-
-
25,087
Mine properties
84,053
-
-
-
-
84,053
As at 30 June 2023
Segment assets
648,311
-
-
-
22,166
670,477
Additions to non-current assets:
Plant and equipment expenditure
31,007
-
-
-
81
31,088
Mine properties
95,786
-
-
-
-
95,786
iii)
Segment liabilities
As at 30 June 2024
Segment liabilities
206,735
97,333
78,626
23,111
140,990
546,795
As at 30 June 2023
Segment liabilities
204,028
-
-
-
136,378
340,406
(a) Includes corporate and administrative costs of the group.
(b) King of the Hills operation includes the Darlot mine.
(c) Deflector operation includes the Rothsay mine.
45
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
4.
REVENUE AND EXPENSES
Accounting policy
Gold sales:
The Group recognises revenue when control has passed to the buyer; the Company has no significant continuing involvement; and the amount
of revenue and costs incurred or costs to be incurred in respect of the transaction can be measured reliably. The Group’s assessment is that
this occurs when the sales contract has been entered into and the customer has physical possession of the gold as this is the point at which
the customer obtains the ability to direct the use and obtains substantially all of the remaining benefits of ownership of the asset.
The transaction price is determined based on the agreed upon price and the number of ounces delivered. Payment is due upon delivery into
the sales contract.
Concentrate sales:
The Group recognises revenue upon receipt of the bill of lading when the concentrate is delivered for shipment or when control has passed to
the buyer. Contract terms for concentrate sales allow for a final price adjustment after the date of sale, based on average market prices and
final assays in the period after the concentrate is sold. Average market prices are derived from independently published data with material
adjustments between the provisional and final price separately disclosed below. This typically occurs between 60-80 days after the initial date
of sale.
Gold forward contracts:
As part of the risk management policy, the Group enters into gold forward contracts to manage the gold price of a proportion of anticipated
gold sales. The counterparties to the gold forward contracts are BNP Paribas, Australia Branch, the Hongkong and Shanghai Banking
Corporation Limited, Sydney Branch, Macquarie Bank Limited (“MBL”) and the Commonwealth Bank of Australia (the counterparties).
It is management’s intention to settle each contract through physical delivery of gold and as such, the gold forward sale contracts disclosed
below do not meet the criteria of financial instruments for accounting purposes. This is referred to as the “normal purchase/sale” exemption.
Accordingly, the contracts will be accounted for as sale contracts with revenue recognised once the gold has been delivered to the
counterparties.
CONSOLIDATED YEAR ENDED
30 June 2024
30 June 2023
$’000
$’000
(a) Revenue
Gold sales (1)
614,534
419,763
Silver sales
5,306
2,982
Copper sales (1)
162
-
620,002
422,745
(b) Cost of sales
Operating costs
(394,460)
(311,875)
Depreciation and amortisation of mine assets
(135,145)
(82,745)
(529,605)
(394,620)
(c) Other income
Royalty income
165
366
Other income
908
445
1,073
811
(1) Included in the current year’s gold sales are 111,931 ounces of gold delivered into various hedge programs at an average price of A$2,309
per ounce. At 30 June 2024 the group has a total of 291,188 ounces of gold left to be delivered under these programs over the next 27
months, at an average price of A$2,769 per ounce (FY23: 313,119 ounces, at an average of A$2,526 per ounce). Included in gold and
copper sales is $1.25 million of revenue attributable to provisionally priced contracts (FY23: Nil).
46
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
4.
REVENUE AND EXPENSES (cont.)
CONSOLIDATED YEAR ENDED
30 June 2024
30 June 2023
$’000
$’000
(d) Administration and other expenses
Employee related expenses
(8,325)
(1,987)
Share based-payments expense
(3,842)
(3,994)
Consultancy costs
(4,282)
(886)
Employee termination costs
(1,841)
-
Corporate and other costs
(6,943)
(1,958)
(25,233)
(8,825)
5.
FINANCE INCOME AND EXPENSES
Accounting policy
Finance income comprises interest income on funds invested. Interest income is recognised as it accrues, using the effective interest rate
method.
Finance expenses comprise interest expense on borrowings, amortisation of loan borrowing costs, leases, unwinding discount on provisions
and change in the value of investments measured at fair value through the profit of loss. Loan borrowing costs are amortised using the effective
interest rate method. Interest incurred on loans for the construction of a qualifying asset is capitalised to the qualifying asset.
CONSOLIDATED YEAR ENDED
30 June 2024
30 June 2023
$’000
$’000
(a) Finance income
Interest income
863
61
863
61
(b) Finance expenses
Interest expense on borrowings and leases
(16,851)
(18,881)
Unwinding of discount on rehabilitation provision
(2,322)
(1,720)
Amortisation of borrowing costs
(896)
(1,120)
Change in fair value of listed investments (Note 14)
(371)
-
(20,440)
(21,721)
6.
INCOME TAX AND DEFERRED TAX
Accounting policy
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates
to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting
date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are
expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by
the reporting date.
47
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
6.
INCOME TAX AND DEFERRED TAX (cont.)
Tax consolidation
The Company and its Australian wholly owned entities are part of a tax-consolidated group. As a consequence, all members of the Australian
tax-consolidated group are taxed as a single entity (Red 5 Limited is the head entity within the tax-consolidation group).
Current tax expense/benefit, 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 the group’ approach by reference to the carrying amounts of assets and liabilities in the separate financial statements of each
entity and the tax values applying under tax consolidation.
Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the subsidiaries are assumed by the head entity
in the tax-consolidated group and are recognised by the Company as amounts payable/(receivable) to/(from) other entities in the tax-
consolidated group. Any differences between these amounts are recognised by the Company as an equity contribution or distribution.
The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that
the future taxable profits of the tax-consolidated group will be available against which the asset can be utilised.
Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability
of recoverability is recognised by the head entity only.
Tax losses
The potential benefit of carried forward tax losses will only be obtained if taxable profits are derived of a nature, and of an amount sufficient, to
enable the benefit from the deductions to be realised or the benefit can be utilised by the Group provided that:
i)
the provisions of deductibility imposed by law are complied with; and
ii)
no change in tax legislation adversely affects the realisation of the benefit from the deductions.
In accordance with the Group’s accounting policies for deferred taxes, a deferred tax asset is recognised for unrecognised tax losses only if it
is probable that future taxable profits will be available to utilise those losses. Determination of future taxable profits requires estimates and
assumptions as to future events and circumstances, in particular, whether successful development and commercial exploitation, or alternatively
sale, of the respective areas of interest will be achieved. This includes estimates and judgments about commodity prices, ore resources,
exchange rates, future capital requirements, future operational performance and the timing of estimated cash flows. Changes in these
estimates and assumptions could impact on the amount and probability of estimated taxable profits and accordingly the recoverability of
deferred tax assets.
CONSOLIDATED YEAR ENDED
30 June 2024
30 June 2023
$’000
$’000
Current income tax
Current income tax charge
-
-
Adjustment for prior period
-
-
-
-
Deferred income tax
Deferred income tax
-
1,018
Adjustment for prior period
-
(1,018)
-
-
Income tax (benefit)/charge
-
-
48
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
6.
INCOME TAX AND DEFERRED TAX (cont.)
A reconciliation between income tax charge and the loss before income tax at the applicable income tax rate is as follows:
CONSOLIDATED YEAR ENDED
30 June 2024
30 June 2023
$’000
$’000
Loss before income tax
(5,438)
(8,730)
At statutory income tax rate of 30% (FY23: 30%)
1,632
2,619
Temporary difference not recognised / (recognised)
-
59
Items not allowable for income tax purposes:
Non-deductible items
(1,300)
(1,256)
Prior year and current year movement for which net deferred tax asset
is not recognised
(332)
-
Current year losses for which deferred tax asset is not recognised
-
(404)
Prior period adjustment
-
(1,018)
Income tax benefit (benefit)/charge
-
-
Tax losses and temporary differences not brought to account (tax effected):
Tax losses
119,602
17,930
A portion of the tax losses and deductible temporary differences have not been recognised as a deferred tax asset at 30 June 2024
because the Directors do not presently believe that their realisation can be regarded as probable, except to the extent that they offset
deferred tax liabilities.
Movement in deferred tax balances:
Net balance
at 1 July 2023
Recognised in
profit or loss
Recognised in
equity
Over/(under)
provision
Business
combin-ation
Recognised/
(un-recognised
Net balance at
30 June 2024
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Deferred tax assets
Inventories
4,120
617
-
(2,275)
(2,302)
-
160
Leases
786
909
-
(394)
1,510
-
2,811
Provisions and employee benefits
18,742
13,363
-
1,614
17,048
-
50,767
Other items
1,802
(855)
176
410
(7,411)
-
(5,878)
Tax losses (Revenue)
69,900
(17,411)
-
39,509
97,778
(93,851)
95,925
Tax losses (Capital)
-
-
-
25,750
-
(25,750)
-
95,350
(3,377)
176
64,614
106,623
(119,601)
143,785
Deferred tax liabilities
Property, plant and equipment
(92,383)
2,037
-
(8,070)
(13,909)
-
(112,325)
Exploration and evaluation assets
(2,967)
(402)
-
(18)
(28,804)
-
(32,191)
Intangible assets
-
395
-
(2,827)
-
-
(2,432)
(95,350)
2,030
-
(10,915)
(42,713)
-
(146,948)
(Unrecognised)/recognised net
deferred tax asset
-
1,347
(176)
(53,699)
(67,073)
119,601
-
-
-
-
-
(3,163)
-
(3,163)
49
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
6.
INCOME TAX AND DEFERRED TAX (cont.)
Net balance at
1 July 2022
Recognised in
profit or loss
Recognised in
equity
Over/(under)
provision
Business
combin-ation
Recognised /
(un-recognised
Net balance at
30 June 2023
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Property, plant and equipment and
intangible assets
(71,074)
(21,309)
-
-
-
-
(92,383)
Exploration and evaluation assets
(11,941)
8,974
-
-
-
-
(2,967)
Inventories
3,994
126
-
-
-
-
4,120
Provisions and employee benefits
17,000
1,742
-
-
-
-
18,742
Leases
(460)
1,246
-
-
-
-
786
Other items
2,029
(227)
-
-
-
-
1,802
Tax losses recognised
60,452
9,448
-
-
-
-
69,900
-
-
-
-
-
-
-
7.
EARNINGS PER SHARE
Accounting policy
Earnings per share (“EPS”) is the amount of post-tax profit or loss attributable to each share. The Group presents basic and diluted EPS data
for ordinary shares.
Basic earnings per share is determined by dividing net operating results after income tax attributable to members of the parent entity, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial
year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax
effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to potential ordinary shares, being unlisted employee performance and service
rights on issue.
CONSOLIDATED
30 June 2024
30 June 2023
$’000
$’000
Net loss after income tax used in calculating basic and
diluted earnings per share
(5,438)
(8,730)
50
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
7.
EARNINGS PER SHARE (cont.)
Weighted-average number of ordinary shares (basic):
CONSOLIDATED
Weighted average number of shares
2024
2023
Thousands
Thousands
Opening issued ordinary shares
3,459,483
2,356,359
Effect of shares issued 14 September 2023
2,158
-
Effect of shared issued 3 January 2024
792
-
Effect of shares issued 19 June 2024
1,769
-
Effect of shares issued 19 June 2024
107,696
-
Effect of shares issued 4 July 2022
-
409
Effect of shares issued 28 August 2022
-
4,535
Effect of shares issued 10 October 2022
-
256,279
Effect of shares issued 2 November 2022
-
36,746
Effect of shares issued 28 November 2022
-
12,179
Effect of shares issued 2 March 2023
-
138,876
Effect of shares issued 13 April 2023
-
16,032
Effect of shares issued 18 April 2023
-
35,210
Weighted average number of ordinary shares at 30 June (basic)
3,571,898
2,856,625
Weighted-average number of ordinary shares (basic):
3,571,898
2,856,625
Effect of performance rights contingently issuable
-
-
Effect of service rights contingently issuable
-
-
Weighted average number of ordinary shares at 30 June (diluted)
3,571,898
2,856,625
Earnings per share (cents per share)
Basic earnings/(loss) per share
(0.15)
(0.31)
Diluted earnings/(loss) per share
(0.15)
(0.31)
OPERATING ASSETS AND LIABILITIES
8.
CASH AND CASH EQUIVALENTS
Accounting policy
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less. The Group ensures that as far as
possible it maintains excess cash and cash equivalents in short-term high interest bearing deposits. Cash at bank earns interest at floating
rates based on bank deposit rates. The Group’s exposure to interest rate risk and sensitivity analysis of financial assets and liabilities are
disclosed in Note 22.
CONSOLIDATED
30 June 2024
30 June 2023
$’000
$’000
Cash at bank (a)
428,811
20,111
Cash on hand
1
1
428,812
20,112
(a) The Group is required to maintain a minimum cash balance of $7.5 million in its account at Hongkong and Shanghai Bank Corporation
Limited. Upon repayment of the syndicate loan in July 2024, this minimum cash balance requirement is no longer necessary.
51
2024 ANNUAL REPORT
8.
CASH AND CASH EQUIVALENTS (cont.)
Reconciliation of profit/(loss) after income tax to net cash flow from operating activities:
CONSOLIDATED
30 June 2024
30 June 2023
$’000
$’000
Operating loss after income tax
(5,438)
(8,730)
Adjustments for:
Amortisation and depreciation
135,552
83,151
Deferred tax
3,163
-
Share based payment
3,842
3,994
Interest expenses
16,851
19,257
Write down of obsolete inventory
2,058
769
Write down of gold-in-circuit inventory
59
2,133
Change in fair value of investments
(371)
-
Unwinding of asset retirement obligation
2,322
1,720
Amortisation of borrowing costs
896
1,120
Changes in operating assets and liabilities:
(Increase)/decrease in inventories
(8,601)
(47,745)
(Increase)/decrease in receivables
11,349
(9,948)
Increase/(decrease) in payables
15,040
2,238
Increase/(decrease) in other liabilities
(12,679)
741
Increase/(decrease) in provisions
42,592
(2,035)
Net cash flow from operating activities
206,635
46,665
9.
TRADE AND OTHER RECEIVABLES
Accounting policy
Trade and other receivables are carried at amortised cost. Where there is evidence that a receivable is not recoverable, it is impaired with a
corresponding charge to the profit or loss statement. Trade receivables are non-interest bearing. Exposure to credit risk in relation receivables
is not material.
CONSOLIDATED
30 June 2024
30 June 2023
$’000
$’000
Current
Trade debtors (a)
13,297
10,933
Restricted cash (b)
7,500
7,500
Prepayments
3,383
5,273
Sales tax receivable
8,395
4,656
Sundry debtors
1,759
611
34,334
28,973
Non-current
Security deposits (c)
6,162
8,162
VAT receivable
20
6
6,182
8,168
(a) Trade debtors includes amounts receivable for 1,750 ounces of gold sold on 30 June 2024, equivalent to $6.1 million (FY23: 3,563 ounces
equivalent to $10.1 million).
(b) Restricted cash is made up of $7.5 million of funds in a debt service reserve account which may be utilised for syndicate loan repayments.
Upon repayment of the syndicate loan in July 2024, the debt service reserve account was released to operating cash and cash equivalents.
(c) Security deposits mainly includes a bank guarantee in place over a leased asset. This was reduced by $2.0 million during the year in terms
of the leased asset contract.
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
52
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
10. INVENTORIES
Accounting policy
Gold in circuit, bullion on hand and ore stockpiles are physically measured or estimated and valued at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the
estimated cost necessary to perform the sale.
Stockpiles that are not forecast to be processed over the next 12 months are classified as non-current inventory. At the reporting date the
Group carried out a net realisable value assessment of inventory and assessed that all inventory was carried at the lower of cost and net
realisable value.
Cost represents the weighted average cost and comprises direct material, labour, and an appropriate portion of fixed and variable production
overhead expenditure on the basis of normal operating capacity, including depreciation and amortisation incurred in converting materials to
finished products.
Inventories of consumable supplies and spare parts expected to be used in production are valued at the lower of cost and net realisable value.
Any provision for obsolescence or damage is determined by reference to specific stock items identified. The carrying value of those items
identified, if any, is written down to net realisable value.
CONSOLIDATED
30 June 2024
30 June 2023
$’000
$’000
Current
Stores, spares and consumables at cost
46,922
20,810
Provision for slow-moving stores, spares and consumables (a)
(8,209)
(6,151)
38,713
14,659
Run of mine stockpiles (b)
9,310
52,236
Gold in circuit
18,013
6,326
Crushed ore stockpile
66,865
3,329
Gold Bullion
11,141
-
144,042
76,550
Non-current
Run of mine stockpiles (b)
136,098
7,911
136,098
7,911
(a) During the period the provision for slow-moving stores, spares and consumables inventory at the Darlot and King of the Hills mines was
increased by $2.1 million (FY23: $0.6 million).
(b) Net realisable value adjustments of $21.9 million were made during the year (FY23: $5.9 million).
11.
PROPERTY, PLANT AND EQUIPMENT
Accounting policy
Property, plant and equipment includes land and buildings, plant and equipment, fixtures and fittings, right-of-use assets and assets under
construction. All assets acquired are initially recorded at their cost of acquisition, being the fair value of the consideration provided plus
incidental costs directly attributable to the acquisition.
Land and buildings are measured at cost less accumulated depreciation on the buildings. Buildings are depreciated on a straight-line basis
over the life of mine.
Plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Items of plant and
equipment are depreciated using a combination of units of production, straight line and diminishing value methods, commencing from the time
they are installed and ready for use, or in respect of internally constructed assets, from the date the asset is completed and ready for use.
Depreciation of the processing plant is based on life of mine. The expected useful lives of plant and equipment are between 3 and 13 years.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Fixtures and fittings include office equipment and computer hardware and are depreciated on a straight-line basis over their expected useful
lives between 3 and 13 years.
53
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
11.
PROPERTY, PLANT AND EQUIPMENT (cont.)
Right-of-use assets are measured at cost less accumulated depreciation and any accumulated impairment losses. They are depreciated using
the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying
asset to the Group by the end of the lease term, or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In
that case the right-of-use assets are depreciated over the useful life of the underlying asset.
Intangible assets mainly comprise capitalised software. Intangible assets are initially recorded at cost of acquisition, being the fair value of the
consideration provided plus incidental costs directly attributable to the acquisition. Capitalised software is amortised on a straight-line basis
over three years commencing when it is available for use.
Land and
buildings
Plant and
equipment
Right of use
assets
Assets under
construction
Total
$’000
$’000
$’000
$’000
$’000
Cost
Balance at 1 July 2023
35,410
250,745
128,278
1,692
416,125
Additions
226
10,527
1,822
12,512
25,087
Acquired in business combination (Note 25)
21,649
228,220
43,273
14,668
307,810
Transfer from assets under construction
106
1,538
4
(1,648)
-
Balance at 30 June 2024
57,391
491,030
173,377
27,224
749,022
Balance at 1 July 2022
35,170
216,652
126,639
6,576
385,037
Additions
240
27,849
1,639
1,360
31,088
Transfer from assets under construction
-
6,244
-
(6,244)
-
Balance at 30 June 2023
35,410
250,745
128,278
1,692
416,125
Accumulated depreciation
Balance at 1 July 2023
(11,050)
(70,137)
(45,609)
-
(126,796)
Depreciation for the year
(2,688)
(25,951)
(25,367)
-
(54,006)
Balance at 30 June 2024
(13,738)
(96,088)
(70,976)
-
(180,802)
Balance at 1 July 2022
(7,507)
(49,574)
(24,578)
-
(81,659)
Depreciation for the year
(3,543)
(20,563)
(21,031)
-
(45,137)
Balance at 30 June 2023
(11,050)
(70,137)
(45,609)
-
(126,796)
Carrying amounts
At 1 July 2022
27,663
167,078
102,061
6,576
303,378
At 30 June 2023
24,360
180,608
82,669
1,692
289,329
At 30 June 2024
43,653
394,942
102,401
27,224
568,220
12. MINE PROPERTIES
Accounting policy
Production stripping costs and Other mine development:
Pre-Production: Costs incurred in the development of a mine before production commences are capitalised as part of the mine development
costs, with the exception of any costs relating to the pre-production sale of products which is expensed to the Statement of Profit or Loss.
These include pre-strip costs which are costs incurred in open pit mining operations, to remove overburden and waste materials to access the
ore. The Group capitalises stripping costs incurred during the development of a mine as part of the investment in constructing the mine.
All capitalised development costs incurred within that area of interest are carried at cost. They are amortised from the commencement of
commercial production over the productive life of the project according to the mine plan, on a units-of-production basis.
54
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
12. MINE PROPERTIES (cont.)
Post-Production: Costs incurred in developing further areas of the mine are capitalised as part of the mine development costs and are
amortised over the productive life of the project on a unit-of-production basis, based on reserves.
Deferred waste mining costs: Stripping costs incurred after the commencement of production are generally considered to create two benefits,
being either the production of inventory or improved access to the ore to be mined in the future. Where the benefits are realised in the form of
inventory produced in the period, the production stripping costs are accounted for as part of the cost of producing those inventories. Where
the benefits are realised in the form of improved access to ore to be mined in the future, the costs are capitalised, if the following criteria is met:
\
\
Future economic benefits (being improved access to the ore body) are probable;
\
\
The component of the ore body for which access will be improved can be accurately identified; and
\
\
The costs associated with the improved access can be reliably measured.
If all the criteria are not met, the production stripping costs are charged to profit or loss as they are incurred.
Depreciation of the stripping activity asset is determined on a unit of production basis over the life of the asset based on reserves for each area
of interest.
Asset retirement obligation:
Asset retirement obligation represents the estimated future cost of closure and rehabilitation of the mine site. It is amortised over the life of the
mine. Changes in the asset retirement obligation (also referred to as a rehabilitation provision, refer Note 16) resulting from changes in the size
or timing of the cost or from changes in the discount rate are also recognised as part of the asset cost.
Mineral rights:
Mineral rights comprise identifiable exploration and evaluation assets, mineral resources and ore reserves, which are acquired as part of a
business combination or joint venture acquisition and are recognised at fair value at the date of acquisition. Where possible, mineral interests
are attributable to specific areas of interest and are classified within mine properties and are amortised over the life of the mine.
Production
stripping costs
Other mine
development
Asset
retirement
obligation
Mineral
rights
Total
$’000
$’000
$’000
$’000
$’000
Cost
Balance at 1 July 2023
129,513
141,885
26,997
30,717
329,112
Additions
58,250
25,689
-
114
84,053
Acquired in a business combination (Note 25)
-
560,951
-
-
560,951
Transfer from exploration and evaluation
-
3,498
-
-
3,498
Rehabilitation cost estimate change
-
-
6,781
-
6,781
Rehabilitation economic variables change
-
-
(2,467)
-
(2,467)
Balance at 30 June 2024
187,763
732,023
31,311
30,831
981,928
Balance at 1 July 2022
53,348
91,018
19,106
30,717
194,189
Additions
76,165
19,621
-
-
95,786
Transfer from exploration and evaluation
-
31,246
-
-
31,246
Rehabilitation cost estimate change
-
-
9,765
-
9,765
Rehabilitation economic variables change
-
-
(1,874)
-
(1,874)
Balance at 30 June 2023
129,513
141,885
26,997
30,717
329,112
55
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
12. MINE PROPERTIES (cont.)
Production
stripping costs
Other mine
development
Asset
retirement
obligation
Mineral
rights
Total
$’000
$’000
$’000
$’000
$’000
Accumulated amortisation
Balance at 1 July 2023
(20,717)
(52,578)
(5,914)
(21,405)
(100,614)
Amortisation
(36,029)
(38,184)
(5,323)
(1,781)
(81,317)
Balance at 30 June 2024
(56,746)
(90,762)
(11,237)
(23,186)
(181,931)
Balance at 1 July 2022
(79)
(39,370)
(3,190)
(20,134)
(62,773)
Amortisation
(20,638)
(13,208)
(2,724)
(1,271)
(37,841)
Balance at 30 June 2023
(20,717)
(52,578)
(5,914)
(21,405)
(100,614)
Carrying amounts
At 1 July 2022
53,269
51,648
15,916
10,583
131,416
At 30 June 2023
108,796
89,307
21,083
9,312
228,498
At 30 June 2024
131,017
641,261
20,074
7,645
799,997
Key estimates and judgements
Impairment testing of assets in the development or production phase:
The carrying amounts of assets in the development or production phase are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal (FVLCD). In
assessing FVLCD, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent
of the cash inflows of other assets or groups of assets (the “cash-generating unit”).
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment
losses are recognised in the Statement of Profit or Loss. Impairment losses recognised in respect of cash-generating units are allocated first
to reduce the carrying amount of any goodwill and then to reduce the carrying amount of the other assets in the unit (group of units) on a
pro-rata basis.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been recognised. An impairment loss in respect of goodwill is not reversed.
Long term development and production phase assets that relate to unmined resources are assessed in light of current economic conditions.
Assumptions on the economic returns on and timing of specific production options may impact on the timing of development of these assets.
The carrying values of these assets are assessed where an indicator of impairment exists using a fair value less cost to sell technique. This is
done based on implied market values against their existing resource and reserve base and an assessment on the likelihood of recoverability
from the successful development or sale of the asset. The implied market values are calculated based on recent comparable transactions
within Australia converted to a value per ounce. This is considered to be a Level 3 valuation technique.
Stripping costs:
The Group capitalises mining costs incurred during the production stage of its operations in accordance with the accounting policy described
above. Once it has identified its production stripping for each surface mining operation, it identifies the separate components of the ore bodies
for each of its mining operations. An identifiable component is a specific volume of the ore body that is made more accessible by the stripping
activity. Significant judgement is required to identify and define these components, and also to determine the expected volumes (e.g. in tonnes)
of waste to be stripped and ore to be mined in each of these components. These assessments are undertaken for each individual mining
operation based on the information available in the mine plan. The mine plans and, therefore, the identification of components, will vary
between mines for a number of reasons. These include, but are not limited to, the type of commodity, the geological characteristics of the ore
body, the geographical location and/or financial considerations.
56
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
12. MINE PROPERTIES (cont.)
Judgement is also required to identify a suitable production measure to be used to allocate production stripping costs between inventory
and any stripping activity asset(s) for each component. The Group considers that the ratio of the expected volume (e.g. in tonnes) of waste to
be stripped for an expected volume (e.g. in tonnes) of ore to be mined for a specific component of the ore body, is the most suitable
production measure.
Reserves and resources:
The Group determines and reports ore reserves under the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves Code (“JORC”) as revised December 2012 JORC for underground reserves and the JORC 2012 edition for open pit reserves. The
JORC code requires the use of reasonable investment assumptions to calculate reserves. Reserves determined in this way are taken into
account in the calculation of depreciation of mining plant and equipment (refer to Note 11), amortisation of capitalised development expenditure
(refer to Note 12 above), and impairment relating to these assets.
Changes in reported reserves may affect the Group’s financial results and financial position in a number of ways, including:
\
\
Asset carrying values may be impacted due to changes in estimated cash flows;
\
\
Depreciation and amortisation charged in the statement of profit or loss and other comprehensive income may change where such charges
are calculated using the units of production basis;
\
\
Deferred waste amortisation, based on estimates of reserve to waste ratios;
\
\
Decommissioning, site restoration and environmental provisions may change where changes in estimated reserves alter expectations about
the timing or cost of these activities.
13. EXPLORATION AND EVALUATION
Accounting policy
Exploration and evaluation assets are accumulated at cost in respect of each identifiable area of interest. Costs incurred in respect of
generative, broad scale exploration activities are expensed in the period in which they are incurred, other than costs relating to acquisitions.
Costs incurred for each area of interest where a resource or reserve estimated in accordance with JORC guidelines has been identified, are
capitalised. The costs are only carried forward to the extent they are expected to be recouped through the successful development of the area,
or where further work is to be performed to provide additional information.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that
area of interest. When production commences, the accumulated costs for the relevant area of interest will be reclassified to mine properties
and amortised over the life of the area according to the rate of depletion of reserves. No amortisation is charged during the exploration and
evaluation phase.
Accumulated costs in relation to an abandoned area will be written off in full to the Statement of Profit or Loss and Other Comprehensive
Income in the year in which the decision to abandon the area is made.
CONSOLIDATED
30 June 2024
30 June 2023
$’000
$’000
Opening balance
10,767
41,133
Acquired in a business combination (Note 25)
37,683
-
Exploration and evaluation expenditure incurred in current period
10,656
8,061
Exploration expenditure transferred to profit or loss
(8,710)
(7,181)
Exploration expenditure transferred to mine development
(3,498)
(31,246)
Closing balance
46,898
10,767
57
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
13. EXPLORATION AND EVALUATION (cont.)
Key estimates and judgements
Impairment testing of exploration and evaluation assets:
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility and commercial viability,
or facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
Exploration and evaluation assets are tested for impairment when any of the following facts and circumstances exist:
\
\
the term of exploration licence in the specific area of interest has expired during the reporting period or will expire in the near future, and is
not expected to be renewed;
\
\
substantive expenditure on further exploration and evaluation of mineral resources in the specific area are not budgeted or planned;
\
\
exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of
mineral resource and the decision was made to discontinue such activities in the specific area; or
\
\
sufficient data exists to indicate that, although development in the specific area of interest is likely to proceed, the carrying amount of the
exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.
When a potential impairment is indicated, an assessment is performed for each cash generating unit which is no larger than the area
of interest.
Exploration expenditure commitments:
Exploration expenditure commitments represent tenement rentals and minimum spend requirements that are required to be met under the
relevant legislation should the Group wish to retain tenure on all its current tenements.
14. INVESTMENTS
Accounting policy
Financial assets designated at fair value through profit or loss comprise investments in equity securities.
A financial asset is classified at fair value through profit or loss if it is classified as held-for-trading or is designated as such on initial recognition.
Financial assets are designated at fair value through profit or loss if the Group manages such investments and makes purchase and sale
decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Attributable
transaction costs are recognised in profit or loss as incurred. Financial assets are measured at fair value and changes are recognised in the
profit or loss.
The fair values of investments in equity securities are determined with reference to their quoted ASX closing price at balance date (considered a
Level 1 fair value measurement).
CONSOLIDATED
30 June 2024
30 June 2023
$’000
$’000
Opening balance
-
-
Acquired in a business combination
2,471 (a)
-
Closing balance
2,471
-
(a) Represents Silver Lake’s investments in entities other than Red 5.
58
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
15. TRADE AND OTHER PAYABLES
Accounting policy
Trade and other payables are recognised at the value of invoices received from suppliers. They represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future
payments in respect of the purchase of these goods and services. They are non-interest bearing and are normally settled in 15 to
45 day terms.
CONSOLIDATED
30 June 2024
30 June 2023
$’000
$’000
Current
Creditors and accruals
149,409
56,527
Royalties and other indirect taxes
8,170
6,666
Other creditors
2,661
490
Total
160,240
63,683
16. PROVISIONS
Accounting policy
A provision is recognised in the Statement of Financial Position when the consolidated entity has a present legal or constructive obligation as a
result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined
by discounting the expected future cash flows at the pre-tax rate that reflects current market assessments of the time value of money and
where appropriate, the risk specific to the liability.
Rehabilitation and mine closure provisions:
A provision for rehabilitation costs is made based on the net present value of the Group’s estimated cost of restoring the environmental
disturbance that has occurred up to the balance date. Increases due to additional environmental disturbances are capitalised to the asset
retirement obligation (refer Note 12) and amortised over the remaining lives of the operations where they have future economic benefit,
otherwise they are expensed. These increases are accounted for on a net present value basis.
Annual increases in the provision relating to the change in the net present value of the provision and inflationary increases are accounted for in
the Statement of Profit and Loss as a finance expense. The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate
for changes in legislation, technology or other circumstances.
In the case of provisions for assets which remain in use, adjustments to the carrying value of the provision are offset by a change in the carrying
value of the related asset. Where the provisions are for assets no longer in use or for obligations arising from the production process, the
adjustment is reflected directly in the Statement of Profit or Loss.
Key estimates and judgements
The discounted value reflects a combination of the Group’s assessment of the costs of performing the work required, the timing of the cash
flows and the discount rate. A change in any, or a combination, of the three key assumptions used to determine the provisions could have a
material impact to the carrying value of the provision.
59
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
16. PROVISIONS (cont.)
Risks that could affect the cost of the work required are unforeseen changes in regulations, changes in levels of contamination or changes in
the risk-free rate of the applicable government bond being used as the discount rate.
CONSOLIDATED
Rehabilitation
provision
Other
provisions (a)
Total
$’000
$’000
$’000
Opening balance
57,293
2,393
59,686
Acquired in a business combination (Note 25)
48,255
-
48,255
Provisions made (a)
-
34,676
34,676
Provisions utilised
-
-
-
Change in estimate of rehabilitation disturbance cost (b)
6,781
-
6,781
Change in economic variables of rehabilitation estimate
(2,467)
-
(2,467)
Unwinding of discount
2,322
-
2,322
Closing balance
112,184
37,069
149,253
Current
-
35,123
35,123
Non-current
112,184
1,946
114,130
Total
112,184
37,069
149,253
(a) Other provisions: Includes provision for stamp duty resulting from the business combination of $33.5 million, and provision for Mine
Rehabilitation Fund (MRF) Levy.
(b) At the end of the reporting period a review of the Group’s closure and rehabilitation provision was undertaken using updated cost
assumptions and updated rehabilitation plans. As a result of this review the provision was increased by $6.8 million (FY23: $9.8 million
increase).
17.
EMPLOYEE BENEFITS
Accounting policy
Defined Contribution Superannuation Funds:
Obligations for contributions to defined contribution superannuation funds and pension plans are recognised as an expense in the profit or loss
when they are incurred.
Other long-term employee benefits:
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefits that employees have earned in return for
their service in the current and prior periods plus related on-costs. The obligation is measured at the present value of the estimated future cash
outflow to be made in respect of those services provided by employees up to the balance date.
Short-term benefits:
Liabilities arising in respect of employee benefits expected to be settled within twelve months of the balance date are measured at their nominal
amounts based on remuneration rates which are expected to be paid when the liability is settled.
CONSOLIDATED
30 June 2024
30 June 2023
$’000
$’000
Provision for employee entitlements
Provision for annual leave
10,368
3,823
Provision for long-service leave
4,119
1,690
Provision for other employee benefits
11,817
2,414
Total
26,304
7,927
Current
25,244
7,130
Non-current
1,060
797
Total
26,304
7,927
60
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
18. LEASE LIABILITIES
Accounting policy
At the inception of a contract the Group assesses whether the contract is or contains a lease. A contract is, or contains, a lease if it conveys
the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group recognises it as a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the
lessee, except for short term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases,
the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic
basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by
using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the
following lease payments:
\
\
fixed payments (including in-substance fixed payments), less any lease incentives receivable
\
\
variable lease payments that are based on an index or a rate
\
\
amounts expected to be payable by the lessee under residual value guarantees
\
\
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
\
\
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest
method) and by reducing the carrying amount to reflect the lease payments made. The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset) whenever:
\
\
The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of
a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate;
\
\
The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in
which case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease
payments change is due to a change in a floating interest rate, in which case a revised discount rate is used);
\
\
A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is
remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the
effective date of the modification.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated
depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the
underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under AASB 137.
To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are
incurred to produce inventories.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership
of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-
use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The Group applies AASB 136 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as
described in the ‘Property, Plant and Equipment’ policy (as outlined in the financial report for the annual reporting period).
Variable rents that do not depend on an index or rate are not included in the measurement the lease liability and the right-of-use asset. The
related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are
included in profit or loss.
As a practical expedient, AASB 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated
non-lease components as a single arrangement. The Group has not used this practical expedient. For a contract that contains a lease
component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease
component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease
components.
61
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
18. LEASE LIABILITIES (cont.)
CONSOLIDATED
Future minimum
lease payments
Interest
Present value of
minimum lease payments
2024
2023
2024
2023
2024
2023
$’000
$’000
$’000
$’000
$’000
$’000
Less than one year
44,959
24,393
7,330
5,836
37,629
18,557
Between one and five years
74,131
56,772
11,837
12,155
62,294
44,617
Five years and later
17,098
23,190
1,909
3,394
15,189
19,796
Total
136,188
104,355
21,076
21,385
115,112
82,970
Current
44,959
24,393
7,330
5,836
37,629
18,557
Non-current
91,229
79,962
13,746
15,549
77,483
64,413
Total
136,188
104,355
21,076
21,385
115,112
82,970
Lease liabilities include electricity and gas power plants, vehicles and equipment, and corporate office buildings. Ownership of the vehicles and
equipment will revert to the Company at the end of the leases at no additional cost.
The Company’s obligations under the leases are secured by the lessor’s title to the leased assets. They expire between August 2024 and April
2032 and bear interest at rates between 2.3% and 8.4%.
Variable lease payments on right-of-use assets amounted to $304.0 million for the year (FY23: $164.4 million).
CAPITAL STRUCTURE AND FINANCIAL RISK MANAGEMENT
19. FINANCIAL LIABILITY
Bank syndicate debt facility
30 June 2024
30 June 2023
$’000
$’000
Nominal Interest Rate
BBSY bid rate + 4.5%
BBSY bid rate + 4.5%
Loan Term
69 months
69 months
Carrying Value
92,723
126,140
Current
92,723
21,854
Non-current
-
104,286
Total
92,723
126,140
Red 5 has a $175.0 million debt facility commitment which was entered into in May 2021 with a syndicate comprising BNP Paribas, Australia
branch, The Hongkong and Shanghai Banking Corporation Limited, Sydney Branch and Macquarie Bank Limited (Syndicated Facility
Agreement). The terms of the Syndicated Facility were varied in March, October and November 2023. These were non-substantial variations
relating to the calculation method of one of the covenants, the payment profile and interest rate, resulting in a fair value loss of $0.8 million
which is being amortised over the remaining duration of the debt facility.
The key terms of the Syndicated Facility include:
\
\
$160.0 million senior secured project loan facility;
\
\
$15.0 million cost overrun and working capital facility;
\
\
Loan term of 5.5 years, maturing on 30 June 2026;
\
\
An interest rate in respect of the senior secured project loan facility of BBSY-bid plus a margin of 4.5% p.a.;
\
\
Certain financial covenants; and
\
\
Guaranteed and secured on a first-ranking basis over all Australian assets of Red 5, Greenstone Resources (WA) Pty Ltd, Opus Resources
Pty Ltd and Darlot Mining Company Pty Ltd.
62
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
19. FINANCIAL LIABILITY (cont.)
The initial draw-down on the debt facility took place in July 2021 and $82.1 million was repaid up to 30 June 2024 with $34.9 million repaid in
the current financial year. The remaining balance of $92.9 million was repaid on 8 July 2024. Loan acquisition costs of $2.8 million have been
offset against the $175.0 million drawn down.
Under the Syndicated Facility Agreement which governs the long-term debt, the Company was subject to amended covenants from the March
2023 quarter for which it has to report on a quarterly basis or in the event of a default. The Company has been compliant under those
amended financial covenants. On 28 June 2024, following the acquisition of Silver Lake, a refinancing implementation deed was entered into
that substantially reduced the covenants around the debt facility.
20. FAIR VALUE MEASUREMENT
The fair values of financial assets and financial liabilities carried at amortised cost approximate their carrying value.
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest - level input that is significant to the fair value measurement is directly or indirectly
observable
Level 3 - Valuation techniques for which the lowest - level input that is significant to the fair value measurement is unobservable
The following financial assets and liabilities are classified as level 2:
\
\
Financial liabilities - borrowings of $92.7 million (FY23: $126.1 million)
21. FINANCIAL INSTRUMENTS
Accounting policy
Non-derivative financial instruments:
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash
equivalents, loans and borrowings and trade and other creditors. Non-derivative financial instruments are recognised initially at fair value plus
any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described
below.
Trade and other receivables are carried at amortised cost. Trade receivables are non-interest bearing. Loans and borrowings are measured at
amortised cost using the effective interest method, less any impairment losses. Liabilities for trade creditors and other amounts are carried at
amortised cost. Trade payables are non-interest bearing and are normally settled on 30 day terms.
For trade receivables, the Group uses the simplified approach to recognise impairments based on the lifetime expected credit loss. For other
receivables, the Group applies the general approach and recognises impairments based on a 12-month expected credit loss. Impairment
allowances are based on a forward-looking expected credit loss model. Where there has been a significant increase in credit risk, a loss
allowance for lifetime expected credit losses is required.
Exposures are grouped by external credit rating and security options and an expected credit loss rate is calculated accordingly. Where
applicable, actual credit loss experience is also taken into account. For remaining receivables without an external credit rating or security
option, a rating of BB (Standard and Poor’s) is used, on the basis that there is no support that it is investment grade, nor is there any evidence
of default.
For the purposes of the statement of cash flows, cash includes deposits at call which are readily convertible to cash on hand and which are
used in the cash management function on a day to day basis, net of outstanding bank overdrafts.
Gold hedges:
It is management’s intention to settle each contract through physical delivery of gold and as such, the gold forward sale contracts entered
into by the Company do not meet the criteria of financial instruments for accounting purposes which is referred to as the “own use” exemption.
Accordingly, the contracts will be accounted for as sale contracts with revenue recognised once the gold has been delivered to
the counterparty.
63
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
22. FINANCIAL RISK MANAGEMENT
(a)
Overview
This note presents information about the consolidated entity’s exposure to credit, liquidity and market risks, their objectives, policies and
processes for measuring and managing risk, and the management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors
and manages the financial risks relating to the operations of the consolidated entity through regular reviews of the risks.
The Board has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and
manages the financial risks relating to the operations of the Group through regular reviews of the risks.
(b)
Credit risk
Credit risk is the risk of financial loss to the consolidated entity if a customer or counterparty to a financial instrument fails to meet its
contractual obligations and arises principally from the consolidated entity receivables from customers and investment securities. For the
Company it arises from receivables due from subsidiaries.
Presently, the consolidated entity undertakes exploration, mining and gold production activities.
The Group sells gold to several customers in Australia and has managed its exposure to credit risk by analysing the creditworthiness of the
customers.
(i)
Cash and cash equivalents
The consolidated entity limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have an
acceptable credit rating. Any excess cash and cash equivalents are maintained in short term deposits with more than one major Australian
commercial bank at interest rates maturing over 30 to 120 day rolling periods.
(ii)
Trade and other receivables
The Group’s trade and other receivables relate mainly to gold sales and sales tax refunds. The Group has determined that its exposure to trade
receivable credit risk is low, given that it sells gold bullion to a single reputable refiner with short contractual payment terms and sales tax
refunds are due from Government tax bodies namely the Australian Tax Office, Canada Revenue Agency and the Philippines Bureau of Internal
Revenue.
(iii)
Exposure to credit risk
The carrying amount of the consolidated entity’s financial assets represents the maximum credit exposure. The maximum exposure to credit
risk at the reporting date was:
CONSOLIDATED
Carrying amount
30 June 2024
30 June 2023
$’000
$’000
Cash and cash equivalents
428,812
20,112
Trade and other receivables
34,334
28,973
Non-current receivables
6,182
8,168
(c)
Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due. The consolidated entity
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the consolidated entity.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves from funds raised in the market and by continuously
monitoring forecast and actual cash flows.
64
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
22. FINANCIAL RISK MANAGEMENT (cont.)
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting
agreements:
CONSOLIDATED
Carrying
amount
Contractual
cash flows
Less than one
year
Between one
and five years
More than five
years
$’000
$’000
$’000
$’000
$’000
As at 30 June 2024
Trade and other payables (a)
160,240
(160,240)
(160,240)
-
-
Lease liabilities
115,112
(136,188)
(44,959)
(74,131)
(17,098)
Financial liabilities
92,723
(92,877)
(92,877)
-
-
368,075
(389,305)
(298,076)
(74,131)
(17,098)
As at 30 June 2023
Trade and other payables (a)
63,683
(63,683)
(63,683)
-
-
Lease liabilities
82,970
(104,355)
(24,393)
(56,772)
(23,190)
Financial liabilities
126,140
(150,638)
(32,961)
(117,677)
-
272,793
(318,676)
(121,037)
(174,449)
(23,190)
(a) The carrying value at balance sheet date approximates fair value.
(d)
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and commodity prices will affect the
consolidated entity’s income or the value of its holdings of financial instruments. Changes in the market gold price will affect the derivative
valuation at each reporting date. The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return.
(i)
Commodity risk and gold price sensitivity
The Group’s exposure to commodity price risk arises largely from the underlying commodity spot price and from Australian dollar and
Canadian dollar gold price fluctuations. The Group’s exposure to movements in the gold price is managed through the use of Australian dollar
gold forward contracts. The gold forward sale contracts do not meet the criteria of financial instruments for accounting purposes on the basis
that they meet the normal purchase/sale exemption because physical gold will be delivered into the contracts.
At balance sheet date, there were commitments over future sales of gold from the King of the Hills and Mount Monger operations (refer to
Note 34). No sensitivity analysis is provided for these contracts as they are outside the scope of AASB 9 Financial Instruments.
(ii)
Currency risk
Currency risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the
Group’s functional currency. The Group does not hedge currency risks.
At reporting date the Group held US$0.6 million in USD bank accounts (FY23: US$0.3 million), C$4.5 million in CAD bank accounts relating to
Sugar Zone (FY23: Nil) and had outstanding receivables of C$4.3 million relating to Sugar Zone (FY23: Nil). An increase/decrease in the
AUD:USD and AUD:CAD foreign exchange rates of 10% would result in a $1.1 million impact to net assets and pre-tax profit
(FY23: $0.1 million).
The Group is exposed to translation-related risks arising from the Sugar Zone Operation having a functional currency (CAD) difference from the
Group’s presentation currency (AUD). An increase/decrease in AUD:CAD foreign exchange rate of 10% would result in $12.2 million impact to
net assets and equity reserves.
(iii)
Interest rate risk
The consolidated entity is exposed to interest rate risk, primarily on its borrowings and on its cash and cash equivalents. This is the risk that a
financial instrument’s value will fluctuate as a result of changes in the market interest rates on interest-bearing financial instruments. The
consolidated entity does not currently use derivatives to mitigate these exposures.
For cash and cash equivalents, the consolidated entity adopts a policy of ensuring that any excess cash is utilised to pay down long term debt
under the terms of the Syndicated Facility Agreement.
65
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
22. FINANCIAL RISK MANAGEMENT (cont.)
At the reporting date the interest rate exposure of the consolidated entity’s interest-bearing financial instruments was:
CONSOLIDATED
Carrying amount
30 June 2024
30 June 2023
$’000
$’000
Cash and cash equivalents
428,812
20,112
Restricted cash
7,500
7,500
Security deposits
6,162
8,162
Borrowings
(92,723)
(126,140)
349,751
(90,366)
Cash flow sensitivity analysis for variable rate instruments
An increase of 200 basis points or decrease of 200 basis points in interest rates at the reporting date would have increased/(decreased) equity
and profit or loss by the amounts shown below:
CONSOLIDATED
Profit or loss
Equity
200pb increase
200bp decrease
200bp increase
200bp decrease
$’000
$’000
$’000
$’000
30 June 2024
Variable rate instruments
6,995
(6,995)
6,995
(6,995)
30 June 2023
Variable rate instruments
(1,807)
1,807
(1,807)
1,807
(iv)
Equity price risk
Equity investments are long-term investments that have been classified as financial assets at fair value through profit or loss.
(e)
Net fair values
The carrying value of financial assets and financial liabilities is considered to a fair approximation of their fair values. The carrying amounts of
equity investments are valued at year end at their quoted market price.
(f)
Capital management
The consolidated entity’s objective when managing capital is to safeguard its ability to continue as a going concern, so as to maintain a strong
capital base sufficient to maintain future exploration and development of its projects. In order to maintain or adjust the capital structure, the
consolidated entity may return capital to shareholders, issue new shares or sell assets to reduce debt.
Risk management is facilitated by regular monitoring and by reporting to the Board and key management personnel. Neither the Company nor
any of its subsidiaries are subject to externally imposed capital requirements.
66
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
23. CONTRIBUTED EQUITY
Accounting policy
Ordinary shares are classified as equity. They entitle the holder to participate in dividends and proceeds on the winding up of the parent entity
in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting
in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
CONSOLIDATED
30 June 2024
30 June 2023
$’000
$’000
(a) Share capital
6,802,473,382 (FY23: 3,459,483,380) ordinary fully paid shares
2,085,423
596,668
CONSOLIDATED
Thousand shares
$’000
(b) Movements in ordinary share capital
On issue at 30 June 2022
2,356,361
443,160
Capital raising for cash
1,097,319
158,904
Performance rights vested and converted to shares
5,391
1,367
Service rights vested and converted to shares
412
75
Share issue costs
-
(6,838)
On issue at 30 June 2023
3,459,483
596,668
On issue at 1 July 2023
3,459,483
596,668
Issued on business combination (refer Note 25)
3,284,723
1,478,125
Performance rights vested and converted to shares
56,656
10,824
Service rights vested and converted to shares
1,611
391
Share issue costs
-
(585)
On issue at 30 June 2024
6,802,473
2,085,423
(c) Other equity
On issue at 30 June 2023
581
930
Released to retained earnings (a)
(581)
(930)
Treasury shares (b)
(411,662)
(185,248)
On issue at 30 June 2024
(411,662)
(185,248)
(a) In 2010 Red 5 provided for 581,428 shares to be issued at a value of $930,285 to settle possible outstanding tax liabilities in relation to the
acquisition of Merrill Crowe Corporation (MCC) by Philippine subsidiaries of the Red 5 Group. It is considered highly unlikely that any such
liability will now materialise following the divestiture of the Philippine mining operation by the Group in September 2021.
(b) Treasury shares relating to Silver Lake’s investment in the Company prior to the merger between the Company and Silver Lake. These were
reclassified as treasury shares on merger and were sold on market in August 2024.
67
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
24. RESERVES
Accounting policy
Share-based payment reserve:
The share-based payment reserve is used to record the value of share-based payments and performance rights provided to employees
(including KMP’s) as part of their remuneration.
Foreign currency translation reserve:
The foreign currency translation reserve comprises of foreign currency differences arising from the translation of the financial information of
foreign operations where the functional currency is different from the presentation currency of the reporting entity.
CONSOLIDATED
30 June 2024
30 June 2023
$’000
$’000
Share-based payment reserve
-
7,789
Foreign currency translation reserve
370
379
Total
370
8,168
OTHER DISCLOSURES
25. BUSINESS COMBINATION
Accounting policy
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration
transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested
annually for impairment. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
Merger with Silver Lake Resources Limited
On 19 June 2024 the Group obtained control of Silver Lake by acquiring 100 percent of the shares and voting interests in that company. The
merger created a diversified, leading mid-tier gold company with a strong balance sheet positioned for growth.
Since acquisition date, Silver Lake contributed revenue of $38.4 million to the Group’s results. If the acquisition had occurred on 1 July 2023,
management estimates that Silver Lake would have contributed revenue of $773.7 million and profit after tax of $34.2 million to the Group’s
annual results. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose
on the date of acquisition would have been the same if the acquisition had occurred on 1 July 2023.
The Group incurred acquisition-related costs of $9.9 million on fees associated with the merger, including legal fees and due diligence costs.
These have been included in the Statement of Profit and Loss under administrative expenses as well as estimated stamp duty of $33.5 million
payable to Western Australian Office of State Revenue.
In addition to recognising the effects of acquiring the assets and liabilities of Silver Lake, the transaction has resulted in Red 5 obtaining control
over Silver Lake, and thus is deemed the acquirer in respect of AASB 3, Business Combinations.
The following summarises the consideration transferred, and the fair value of assets and liabilities acquired at the acquisition date:
Purchase consideration
30 June 2024
$’000
Ordinary shares issued (a)
1,478,125
(a) 3,284,722,929 ordinary shares were issued to Silver Lake shareholders as consideration with a deemed fair value based on the spot share
price on Implementation date of $0.45 per share.
68
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
25. BUSINESS COMBINATION (cont.)
The assets and liabilities recognised as a result of the acquisition are as follows:
30 June 2024
$’000
Cash and cash equivalents
378,318
Trade and other receivables
16,710
Inventories
187,077
Prepayments
1,022
Exploration, evaluation and development expenditure
598,634
Property, plant and equipment
307,810
Investments
187,660
Total assets
1,677,231
Trade and other payables
(81,411)
Lease liabilities
(49,293)
Employee benefits
(16,653)
Rehabilitation and restoration provision
(48,255)
Deferred tax liabilities
(3,494)
Total liabilities
(199,106)
Net assets acquired
1,478,125
The value of assets acquired and liabilities assumed has been measured on a provisional basis. If new information is obtained within one year
of the date of acquisition about facts and circumstances that existed at the date of acquisition, then the accounting for the acquisition will be
revised.
26. RELATED PARTIES
Compensation of key management personnel:
CONSOLIDATED
30 June 2024
30 June 2023
$
$
Key management personnel
Short term benefits including service rights (a)
4,827,071
2,012,948
Post-employment benefits
162,956
104,057
Long term benefits
63,911
97,559
Share based payments (b)
1,734,891
(423,290)
Total
6,788,829
1,791,274
(a) FY24 includes redundancy costs associated with the corporate merger with Silver Lake.
(b) FY23 includes share based payments expensed and cancelled.
Loans to key management personnel
There were no loans to key management personnel during the period.
Transactions with related parties in the wholly owned group
During the financial year, unsecured loan advances were made between the parent entity and its controlled entities. All such loans were
interest-free. Intra entity loan balances have been eliminated in the financial report of the consolidated entity. The ownership interests in related
parties in the wholly owned group are set out in Note 29.
69
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
27. SHARE-BASED PAYMENT ARRANGEMENTS
Accounting policy
The consolidated entity may provide benefits to employees (including the managing director) and other parties as necessary in the form of
share-based payments, whereby employees render services in exchange for shares or rights over shares (“equity settled transactions”).
The cost of these equity settled transactions with employees is measured by reference to the fair value at the date they are granted. The value
is determined using a Monte Carlo model or equivalent valuation technique. The cost of equity settled transactions is recognised, together with
a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award (“vesting date”).
The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects the extent to which the
vesting period has expired and the number of awards that, in the opinion of the Directors, will ultimately vest.
No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the
determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
conditional upon a market condition.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for
the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award
on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award.
Following the announcement of the merger with Silver Lake, the Board authorised the vesting of all performance rights held by eligible
employees on the date of the merger. This is to ensure like for like treatment of employees of both companies prior to the merger.
The following is the movement in performance rights during the period:
For the year ended 30 June 2024:
Balance at
30 June 2023
Granted (a)
Vested (b)
Cancelled (c)
Balance at
30 June 2024
Performance Rights Series
No. rights
No. rights
No. rights
No. rights
No. rights
2023 Series
7,945,729
-
-
(7,945,729)
-
2023 PIO Series
11,550,613
-
(2,705,780)
(8,844,833)
-
2024 Series
18,410,000
-
(9,637,684)
(8,772,316)
-
2025 Series
16,779,780
1,245,791
(12,469,727)
(5,555,844)
-
2026 Series
-
28,292,616
(28,292,616)
-
-
Retention Award
-
3,549,877
(3,549,877)
-
-
Total
54,686,122
33,088,284
(56,655,684)
(31,118,722)
-
For the year ended 30 June 2023:
Balance at
30 June 2022
Granted (a)
Vested
Cancelled
Balance at
30 June 2023
Performance Rights Series
No. rights
No. rights
No. rights
No. rights
No. rights
2023 Series
7,945,729
-
-
-
7,945,729
2023 PIO Series
11,550,613
-
-
-
11,550,613
2024 Series
18,410,000
-
-
-
18,410,000
2025 Series
-
16,779,780
-
-
16,779,780
Total
37,906,342
16,779,780
-
-
54,686,122
(a)
Performance rights granted during the year
LTIP Performance rights were granted to the Managing Director, Key Management Personnel, Senior Management and other operational
employees during the period. The performance rights for the 2025 and 2026 Series are split into two tranches based on different performance
conditions measured over a period commencing 1 July 2023 to the vesting date which is 30 June 2026 if the conditions are met. The vesting
conditions are outlined in sections 14.4.2 and 14.4.3 of the Remuneration Report.
70
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
27. SHARE-BASED PAYMENT ARRANGEMENTS (cont.)
Details of the performance rights granted during the period are summarised below:
2025 Series
2026 Series
Retention Award
Number of performance rights
18,025,571
28,292,616
3,549,877
Exercise price
$0.00
$0.00
$0.00
Issue date
24 November 2022
22 December 2023
12 January 2024
Measurement period
1 Jul 2022 – 30 Jun 2025
1 Jul 2023 – 30 Jun 2026
1 Jan 2024 – 31 Dec 2024
Weighted valuation per right
$0.147
$0.168
n/a
Underlying 20 day VWAP
n/a
n/a
$0.336
Dividend yield
nil
nil
nil
Risk free rate
3.29%
3.83%
n/a
Volatility
70%
70%
n/a
Total valuation
$2,649,759
$4,753,159
$1,192,759
The fair value of the performance rights was measured using a hybrid employee share option pricing model (correlation simulation and
Montecarlo model) and was calculated by independent consultants.
The total expense recognised in the Statement of Comprehensive Income for performance rights for the current financial year is $3.8 million
(FY23: $4.0 million).
(b)
Performance rights vested during the year ended 30 June 2024:
As result of the implementation of the Scheme of Arrangement with Silver Lake on 19 June 2024, the Board exercised the discretion available
to it to accelerate the vesting of all Performance and Retention Rights on issue. The discretion exercised was in keeping with the ‘merger of
equals’ concept between the Company and Silver Lake during negotiations prior to execution of the Scheme Implementation Deed (SID).
Under the terms of the SID, the Company acquires Silver Lake, yet Red 5 shareholders control 51.7% of the post completion group. This was a
change of control for Silver Lake, resulting in accelerated vesting of Silver Lake performance rights held by Silver Lake employees prior to the
implementation of the Scheme. To assist with integration activities and to treat employees from both Red 5 and Silver Lake equal to the
maximum extent possible, the Board deemed it appropriate to accelerate the vesting all rights held by Red 5 employees.
(c)
Performance rights cancelled during the year ended 30 June 2024:
Performance rights were cancelled due to either performance hurdles not being satisfied, or where employees had resigned from the Company
prior to their vesting.
Service rights in issue
The following is the movement in service rights during the period:
Fair value at grant
date
Granted
Vested
Cancelled
Outstanding at 30
June 2024
Name
$
No. rights
No. rights
No. rights
No. rights
Mark Williams
206,250
671,016
(671,016)
-
-
John Tasovac
100,000
325,340
-
(325,340)
-
Patrick Duffy
84,500
274,912
(274,912)
-
-
Jason Greive
125,000
406,674
-
(406,674)
-
Other employees
204,517
665,374
(665,374)
-
-
Total
720,267
2,343,316
(1,611,302)
(732,014)
-
Services rights were granted on 19 August 2022 under the Red 5 FY22 Rights Plan. They had an 18-month service test and vested on 1
January 2024 if the holder was still employed by the Company on 31 December 2023. Previous KMP’s, Mr Tasovac and Mr Greives, had
resigned prior to the vesting date and their rights were cancelled.
71
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
27. SHARE-BASED PAYMENT ARRANGEMENTS (cont.)
Key estimates and judgements
Share based payment transactions:
The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity instruments at the date
at which they are granted. The fair value is determined by using Monte Carlo modelling. This estimate also requires determination of the most
appropriate inputs to the valuation model, including the expected life of the equity instrument, volatility and dividend yield and making
assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in
the note above.
28. REMUNERATION OF THE AUDITOR
During the year the following fees were paid or payable for services provided by the auditor of the parent entity and its related practices:
CONSOLIDATED
30 June 2024
30 June 2023
$
$
Audit services
Audit and review of financial statements - KPMG Australia
488,800
219,900
Non-audit services
Tax advisory services - KPMG Australia
215,027
95,428
Other assurance services (sustainability)
121,080
-
824,907
315,328
The FY24 audit cost relates to the combined audit services for both Red 5 and Silver Lake merged group. Tax advisory services provided by
the auditor also includes tax advice relating to the merger.
29. INVESTMENTS IN CONTROLLED ENTITIES
Accounting policy
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that control commences until the date that control ceases.
The Group’s subsidiaries at the end of the year are set out in the table below:
Equity holding
Name of controlled entity
Country of
incorporation
2024
2023
%
%
Bremer Resources Pty Ltd
Australia
100
100
Estuary Resources Pty Ltd
Australia
100
100
Greenstone Resources (WA) Pty Ltd
Australia
100
100
Oakborough Pty Ltd
Australia
100
100
Opus Resources Pty Ltd
Australia
100
100
Red 5 Philippines Pty Ltd
Australia
100
100
Red 5 Mapawa Pty Ltd
Australia
100
100
Red 5 Dayano Pty Ltd
Australia
100
100
Darlot Mining Company Pty Ltd
Australia
100
100
Red 5 Mapawa Incorporated
Philippines
100
100
Red 5 Dayano Incorporated
Philippines
100
100
Red 5 Asia Incorporated
Philippines
100
100
Surigao Holdings and Investments Corporation (a)
Philippines
40
40
72
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
29. INVESTMENTS IN CONTROLLED ENTITIES (cont.)
Equity holding
Name of controlled entity
Country of
incorporation
2024
2023
%
%
Silver Lake Resources Limited
Australia
100
-
Backlode Pty Ltd
Australia
100
-
Brandy Hill Iron Pty Ltd
Australia
100
-
Brandy Hill Iron SPV Pty Ltd
Australia
100
-
Central Infrastructure Pty Ltd
Australia
100
-
Central Infrastructure SPV Pty Ltd
Australia
100
-
Cue Minerals Pty Ltd
Australia
100
-
Deflector Gold Pty Ltd
Australia
100
-
Deflector Gold SPV Pty Ltd
Australia
100
-
Doray Gold Operations Pty Ltd
Australia
100
-
Egan Street Victoria Bore Pty Ltd
Australia
100
-
Gullewa Gold Project Pty Ltd
Australia
100
-
Gullewa Gold Project SPV Pty Ltd
Australia
100
-
Loded Pty Ltd
Australia
100
-
Meehan Minerals Pty Ltd
Australia
100
-
Murchison Resources Pty Ltd
Australia
100
-
MYG Tenement Holdings Pty Ltd
Australia
100
-
MYG Tenement Holdings SPV Pty Ltd
Australia
100
-
Paylode Pty Ltd
Australia
100
-
Silver Lake (Deflector) Pty Ltd
Australia
100
-
Silver Lake (Doray) Pty Ltd
Australia
100
-
Silver Lake (Egan Street) Pty Ltd
Australia
100
-
Silver Lake (Integra) Pty Ltd
Australia
100
-
Silver Lake (Rothsay) Pty Ltd
Australia
100
-
Roonela Pty Ltd
Australia
100
-
Silver Lake (SPV) Pty Ltd
Australia
100
-
Silver Lake Canada Inc
Canada
100
-
Silver Lake Ontario Inc
Canada
100
-
(a) The Company holds a 40% direct interest in Surigao Holdings and Investments Corporation (SHIC) voting stock. Agreements are in place
which deals with the relationship between Red 5 and other shareholders of these entities. In accordance with Australian accounting
standard, AASB 10 Consolidated Financial Statements, Red 5 has consolidated these companies in these financial statements.
30. JOINT OPERATIONS
As at 30 June 2024, the Group had the following interests in unincorporated joint ventures:
\
\
Mt Zephyr - Darlot Mining Company Pty Ltd (80% interest) / Ardea Exploration Pty Ltd (20% interest)
\
\
Darlot South/CIO – South Darlot Mines Pty Ltd (51%) / Darlot Mining Company Pty Ltd (49%)
\
\
Darlot South B – Darlot Mining Company Pty Ltd (83.5%) / Panaust Limited (16%) / Baker, Robert Albert Lawrence (0.5%)
73
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
31. DEED OF CROSS GUARANTEE
Pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785, the wholly owned subsidiaries listed below are relieved from
the Corporations Act 2001 requirements for the preparation, audit and lodgement of financial reports and Directors’ Reports.
It is a condition of the Instrument that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the Deed
is that the Company guarantees each creditor payment in full of any debt in the event of the winding up of any of the subsidiaries under certain
provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company will only be liable in the event
that, after six months, any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event that the Company
is wound up.
The subsidiaries subject to the Deed are:
\
\
Opus Resources Pty Ltd
\
\
Darlot Mining Company Pty Ltd
\
\
Greenstone Resources (WA) Pty Ltd
\
\
Silver Lake Resources Pty Ltd
\
\
Silver Lake (Integra) Pty Ltd
\
\
Silver Lake (Doray) Pty Ltd
\
\
Silver Lake (Deflector) Pty Ltd
\
\
Silver Lake (Egan Street) Pty Ltd
\
\
Silver Lake (Rothsay) Pty Ltd
Opus Resources Pty Ltd and Darlot Mining Company Pty Ltd both became parties to the Deed of Cross Guarantee on 30 June 2018.
Greenstone Resources (WA) Pty Ltd became a party to the Deed of Cross Guarantee on 30 June 2021. Silver Lake Resources Pty Ltd, Silver
Lake (Integra) Pty Ltd, Silver Lake (Doray) Pty Ltd, Silver Lake (Deflector) Pty Ltd, Silver Lake (Egan Street) Pty Ltd and Silver Lake (Rothsay)
Pty Ltd became parties to the Deed of Cross Guarantee on 28 June 2024.
A consolidated statement of comprehensive income and a consolidated statement of financial position, comprising of the Company and
controlled entities which are party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, for the year
ended 30 June 2024, is set out as follows:
Statement of Comprehensive Income:
CLOSED GROUP
YEAR ENDED
30 June 2024
30 June 2023
$’000
$’000
Revenue
620,002
422,745
Cost of sales
(528,383)
(394,620)
Gross profit
91,619
28,125
Other income
907
446
Exploration expensed
(8,674)
(7,181)
Acquisition and stamp duty costs on business combination
(33,515)
-
Administration and other expenses
(34,812)
(8,514)
Results from operating activities
15,525
12,876
Financing income
863
61
Financing expenses
(20,378)
(21,722)
Net financing income/(expenses)
(19,515)
(21,661)
Profit/(loss) before income tax
(3,990)
(8,785)
Income tax benefit/(expense)
-
-
Profit/(loss) for the year
(3,990)
(8,785)
Other comprehensive income
Foreign currency translation differences
-
-
Total comprehensive profit/(loss) for the year
(3,990)
(8,785)
74
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
31. DEED OF CROSS GUARANTEE (cont.)
Statement of Financial Position:
CLOSED GROUP
YEAR ENDED
30 June 2024
30 June 2023
$’000
$’000
Current assets
Cash and cash equivalents
423,633
20,075
Trade and other receivables
33,574
28,456
Inventories
139,327
76,550
Total current assets
596,534
125,081
Non-current assets
Property, plant and equipment
490,153
289,329
Mine properties
651,512
228,498
Exploration and evaluation assets
46,898
10,767
Trade and other receivables
6,145
7,499
Inventories
135,605
7,911
Intangible assets
498
168
Investments
2,471
658
Total non-current assets
1,333,282
544,830
Total assets
1,929,816
669,911
Current liabilities
Trade and other payables
158,958
63,564
Employee benefits
24,258
7,130
Borrowings
92,723
21,854
Provisions
35,123
-
Lease liabilities
33,940
18,557
Total current liabilities
345,002
111,105
Non-current liabilities
Employee benefits
1,060
797
Provisions
105,887
59,239
Borrowings
-
104,286
Lease liabilities
71,163
64,413
Total non-current liabilities
178,110
228,735
Total liabilities
523,112
339,840
Net assets
1,406,704
330,071
Equity
Contributed equity
1,914,443
598,919
Other equity
(185,248)
930
Reserves
368
38,491
Accumulated losses
(322,859)
(308,269)
Total equity
1,406,704
330,071
75
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
32. PARENT ENTITY DISCLOSURES
The following details information relating to the parent entity, Red 5 Limited:
PARENT ENTITY
YEAR ENDED
30 June 2024
30 June 2023
$’000
$’000
Results of the parent entity:
Loss for the year
(140,308)
(18,263)
Other comprehensive income
-
-
Total comprehensive loss for the year
(140,308)
(18,263)
Financial position of the parent entity:
Current assets
17,113
20,641
Non-current assets
1,738,438
396,202
Total assets
1,755,551
416,843
Current liabilities
132,521
29,329
Non-current liabilities
2,272
106,483
Total liabilities
134,793
135,812
Equity of the parent entity comprising of:
Contributed equity
2,085,422
596,668
Other equity
-
930
Reserves
-
7,789
Accumulated losses
(464,664)
(324,356)
Total equity
1,620,758
281,031
Financial commitments of the parent entity:
Low value and short term leases:
- not later than one year
-
-
Total financial commitments
-
-
Contingent liabilities of the parent entity:
The parent entity did not have any contingent liabilities at 30 June 2024 (FY23: Nil).
The parent entity has entered into a Deed of Cross Guarantee with the effect that the Company guarantees debts in respect of certain
subsidiaries.
Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed are disclosed in Note 31.
76
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
33. SILVER LAKE RESOURCES LIMITED: ASIC DISCLOSURE
On 3 July 2024 ASIC granted relief to Silver Lake analogous to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 for the
company’s financial year ending 30 June 2024 without applying the disclosing entity exclusion in subparagraph 6(1)(b)(i) but subject to all other
requirements in the legislative instrument and a further requirement that Red 5 will include the following additional notes for Silver Lake in the
notes to Red 5’s financial statements for the financial year ending 30 June 2024.
a. a statement of comprehensive income for Silver Lake setting out the information specified by paragraphs 82 to 87 of Accounting Standard
AASB 101 Presentation of Financial Statements (AASB 101) in force at the end of the financial year; and
b. opening and closing retained earnings, dividends provided for or paid, and transfers to and from reserves.
There has been no change in ownership of any of the members of the closed group as parties to the Deed of Cross Guarantee between
Red 5 and any of its controlled entities that occurs following the year ended 30 June 2024 and the date of lodgement of the consolidated
financial statements.
The tables below represent the full 12 months of Silver Lake (1 July 2023 to 30 June 2024), notwithstanding that Red 5 only obtained its 100%
ownership in Silver Lake from 19 June 2024. Accordingly, the Statement of Comprehensive Income and Equity tables in items (a) and (b) below
is not all attributable to the Company. The basis of preparation of the disclosures in this note is consistent with the basis of preparation
referenced in the Silver Lake Annual Financial Statements for the year ended 30 June 2023.
a.
Statement of Comprehensive Income
CONSOLIDATED
30 June 2024
30 June 2023
Note
$’000
$’000
Silver Lake Resources Limited 1
Revenue
773,706
719,628
Cost of sales
(618,529)
(639,031)
Gross profit
155,177
80,597
Other income
21
228
Exploration expensed / impaired
(6,738)
(5,044)
Profit on sale of assets
1,156
412
Administration and other expenses
(43,218)
(23,744)
Impairment losses
2
(62,630)
-
Results from operating activities
43,768
52,449
Finance income
47,711
13,516
Finance expenses
(4,129)
(6,640)
Net finance income
43,582
6,876
Profit before income tax
87,350
59,325
Income tax expense
(53,163)
(28,489)
Profit for the year
34,187
30,836
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences
1,320
1,963
Total comprehensive profit attributable to the owners of Silver Lake
35,507
32,799
1. The Statement of Comprehensive Income above represents Silver Lake and its subsidiaries (Group Entities) for the years ended
30 June 2024 and 30 June 2023 respectively.
2. Red 5 engaged an independent valuation report for the purposes of purchase price allocation associated with the Business Combination
between Red 5 and Silver Lake (Refer to Note 25 for additional information). The fair value ascribed to the Sugar Zone operation was below
the carrying value of the asset held by Silver Lake, resulting in a $62.6 million impairment to the stand-alone Silver Lake Group as at
30 June 2024.
77
2024 ANNUAL REPORT
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
33. SILVER LAKE RESOURCES LIMITED: ASIC DISCLOSURE (cont.)
b.
Retained Earnings / Reserves / Dividends
CONSOLIDATED
30 June 2024
30 June 2023
Note
$’000
$’000
Silver Lake Resources Limited 1
Reserves
2
249
17,710
Retained earnings
9,452
(24,735)
Dividends
3
-
-
1. The above table represents Silver Lake and its subsidiaries (Group Entities) for the year ended 30 June 2024 and 30 June 2023 respectively.
2. Movement in reserves relates to vesting and exercising of all outstanding performance rights as a result of the Red 5 merger. Please refer to
the Scheme Booklet registered with ASIC as published on 26 April 2024 for additional information.
3. Silver Lake has not paid any dividends or provided for any dividends in respect of the financial years ending 30 June 2024 and
30 June 2023.
34. COMMITMENTS
CONSOLIDATED
30 June 2024
30 June 2023
$’000
$’000
Capital expenditure commitments
Contracted but not provided for:
- not later than one year
10,253
-
10,253
-
Contractual sale commitments
Sale commitments: (a)
- not later than one year
425,315
247,005
- later than one year but not later than two years
352,467
257,302
- later than two years but not later than five years
28,596
286,728
806,378
791,035
Contractual expenditure commitments
Non-capital expenditure commitments:
- not later than one year
-
267
-
267
Tenement expenditure commitments:
- not later than one year
10,917
6,493
10,917
6,493
(a) Gold forward contracts in place at 30 June 2024 relating to gold produced at the King of the Hills and Mount Monger operations, total
291,188 ounces (FY23: 313,119 ounces for King of the Hills operation) of gold produced amounting to $806.4 million (FY23: $791.0 million
for King of the Hills operation) at an average price of A$2,769 per ounce (FY23: $2,526 per ounce) and settle between July 2024 and
September 2026.
Included in the above, gold forward contracts relating to gold produced at the Mount Monger operation, total 86,000 ounces of gold
produced amounting to $262.5 million at an average price of A$3,053 per ounce and settle between July 2024 and December 2025.
It is management’s intention to settle each contract through the physical delivery of gold and, accordingly, are accounted for as sale
contracts with revenue recognised once the gold has been delivered to the purchaser or agent.
78
2024 ANNUAL REPORT
35. CONTINGENT LIABILITIES
The consolidated entity had no material contingent liabilities as at the reporting date and as at the end of the year.
36. SUBSEQUENT EVENTS
On 8 July 2024 the Company repaid the full outstanding balance of $92.9 million of the syndicate loan facility. In line with the loan repayment,
the Company entered into a restructured hedge facility and security package which incorporates the gold forward sales held by Silver Lake
prior to the merger with Red 5. The new terms of the package have limited covenants which are reflective of a standalone hedging facility.
On 7 August 2024 the Company sold the 411.7 million Red 5 shares in which it acquired an interest following the implementation of the merger
with Silver Lake in June 2024 for consideration of $136.8 million.
Apart from the items mentioned above, there has not arisen in the interval between the end of the reporting period and the date of this report
any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the
operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years.
37. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
Certain new accounting standards and interpretations have been published that are not effective for the 30 June 2024 reporting period. The
Group has not elected to early adopt any new standards.
END OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Entity DISCLOSURE STATEMENT for the year ended 30 June 2024
Set out below is relevant information relating to entities that are consolidated in the consolidated financial statements as the end of the financial
year as required by the Corporations Act 2001 (s.295(3A)(a)) and Australian Accounting Standards.
Entity name
Body corporate,
partnership
or trust
Place
incorporated
/formed
% of
share capital
held by the
Company
Australian
or Foreign
tax resident
Jurisdiction
for Foreign
tax resident
Red 5 Limited
Body corporate
Australia
N/A
Australian
N/A
Bremer Resources Pty Ltd
Body corporate
Australia
100
Australian
N/A
Estuary Resources Pty Ltd
Body corporate
Australia
100
Australian
N/A
Greenstone Resources (WA) Pty Ltd
Body corporate
Australia
100
Australian
N/A
Oakborough Pty Ltd
Body corporate
Australia
100
Australian
N/A
Opus Resources Pty Ltd
Body corporate
Australia
100
Australian
N/A
Red 5 Philippines Pty Ltd
Body corporate
Australia
100
Australian
N/A
Red 5 Mapawa Pty Ltd
Body corporate
Australia
100
Australian
N/A
Red 5 Dayano Pty Ltd
Body corporate
Australia
100
Australian
N/A
Darlot Mining Company Pty Ltd
Body corporate
Australia
100
Australian
N/A
Red 5 Mapawa Incorporated
Body corporate
Philippines
100
Foreign
Philippines
Red 5 Dayano Incorporated
Body corporate
Philippines
100
Foreign
Philippines
Red 5 Asia Incorporated
Body corporate
Philippines
100
Foreign
Philippines
Surigao Holdings and Investments Corporation (a)
Body corporate
Philippines
40
Foreign
Philippines
(a) The Company holds a 40% direct interest in Surigao Holdings and Investments Corporation (SHIC) voting stock. Agreements are in place
which deals with the relationship between Red 5 and other shareholders of these entities. In accordance with Australian accounting
standard, AASB 10 Consolidated Financial Statements, Red 5 has consolidated these companies in these financial statements.
Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2024 (cont.)
79
2024 ANNUAL REPORT
Entity name
Body corporate,
partnership
or trust
Place
incorporated
/formed
% of
share capital
held by the
Company
Australian
or Foreign
tax resident
Jurisdiction
for Foreign
tax resident
Silver Lake Resources Limited
Body corporate
Australia
100
Australian
N/A
Backlode Pty Ltd
Body corporate
Australia
100
Australian
N/A
Brandy Hill Iron Pty Ltd
Body corporate
Australia
100
Australian
N/A
Brandy Hill Iron SPV Pty Ltd
Body corporate
Australia
100
Australian
N/A
Central Infrastructure Pty Ltd
Body corporate
Australia
100
Australian
N/A
Central Infrastructure SPV Pty Ltd
Body corporate
Australia
100
Australian
N/A
Cue Minerals Pty Ltd
Body corporate
Australia
100
Australian
N/A
Deflector Gold Pty Ltd
Body corporate
Australia
100
Australian
N/A
Deflector Gold SPV Pty Ltd
Body corporate
Australia
100
Australian
N/A
Doray Gold Operations Pty Ltd
Body corporate
Australia
100
Australian
N/A
Egan Street Victoria Bore Pty Ltd
Body corporate
Australia
100
Australian
N/A
Gullewa Gold Project Pty Ltd
Body corporate
Australia
100
Australian
N/A
Gullewa Gold Project SPV Pty Ltd
Body corporate
Australia
100
Australian
N/A
Loded Pty Ltd
Body corporate
Australia
100
Australian
N/A
Meehan Minerals Pty Ltd
Body corporate
Australia
100
Australian
N/A
Murchison Resources Pty Ltd
Body corporate
Australia
100
Australian
N/A
MYG Tenement Holdings Pty Ltd
Body corporate
Australia
100
Australian
N/A
MYG Tenement Holdings SPV Pty Ltd
Body corporate
Australia
100
Australian
N/A
Paylode Pty Ltd
Body corporate
Australia
100
Australian
N/A
Silver Lake (Deflector) Pty Ltd
Body corporate
Australia
100
Australian
N/A
Silver Lake (Doray) Pty Ltd
Body corporate
Australia
100
Australian
N/A
Silver Lake (Egan Street) Pty Ltd
Body corporate
Australia
100
Australian
N/A
Silver Lake (Integra) Pty Ltd
Body corporate
Australia
100
Australian
N/A
Silver Lake (Rothsay) Pty Ltd
Body corporate
Australia
100
Australian
N/A
Roonela Pty Ltd
Body corporate
Australia
100
Australian
N/A
Silver Lake (SPV) Pty Ltd
Body corporate
Australia
100
Australian
N/A
Silver Lake Canada Inc (b)
Body corporate
Canada
100
Foreign
Canada
Silver Lake Ontario Inc
Body corporate
Canada
100
Foreign
Canada
(b) Silver Lake Canada Inc may be considered as a tax resident of both Canada and Australia. A formal determination of tax residency is
currently being undertaken by the Group.
Basis of preparation
Section 295 (3A) of the Corporation Acts 2001 requires that the tax residency of each entity which is included in the Consolidated Entity
Disclosure Statement (CEDS) be disclosed. In the context of an entity which was an Australian resident, “Australian resident” has the meaning
provided in the Income Tax Assessment Act 1997. The determination of tax residency involves judgment as it is highly fact dependent and
there are currently several different interpretations that could be adopted, and which could give rise to a different conclusion on residency. In
determining tax residency, the consolidated entity has applied current legislation and judicial precedent, including having regard to the
Commissioner of Taxation’s public guidance in Tax Ruling TR 2018/5.
END OF CONSOLIDATED ENTITY DISCLOSURE STATEMENT
Consolidated Entity DISCLOSURE STATEMENT for the year ended 30 June 2024 (cont.)
80
2024 ANNUAL REPORT
DIRECTORS’ Declaration
In the opinion of the Board of Directors of Red 5 Limited:
(a) the consolidated financial statements, accompanying notes and the remuneration disclosures that are contained in the Remuneration
Report in the Directors’ Report are in accordance with the Corporations Act 2001, including:
\
\
giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its performance for the financial year ended
on that date;
\
\
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001; and
\
\
declaring that the consolidated entity disclosure statement as required by the Treasury Laws Amendment (Making Multinationals
Pay Their Fair Share – Integrity and Transparency) Act 2024 (Amendments), is true and correct as at 30 June 2024.
(b) the financial statements also comply with International Financial Reporting Standards as disclosed in Note 2.1; and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due; and
(d) as at 30 June 2024, there are reasonable grounds to believe that the Company and each Group entity identified in Note 31 will be able to
meet any liabilities to which they are, or may become, subject because of the Deed of Cross Guarantee between the Company and that
Group entity pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the
Corporations Act 2001 by the Managing Director and Chief Financial Officer, for the year ended 30 June 2024.
Signed in accordance with a resolution of the Directors.
Russell Clark
Chairman
Perth, Western Australia
28 August 2024
81
2024 ANNUAL REPORT
Independent AUDITOR’S REPORT
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a
scheme approved under Professional Standards Legislation.
Independent Auditor’s Report
To the shareholders of Red 5 Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Red 5 Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company gives a true and fair
view, including of the Group’s financial
position as at 30 June 2024 and of its financial
performance for the year then ended, in
accordance with the Corporations Act 2001, in
compliance with Australian Accounting
Standards and the Corporations Regulations
2001.
The Financial Report comprises:
• Consolidated statement of financial position as at
30 June 2024;
• 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;
• Consolidated entity disclosure statement and
accompanying basis of preparation as at
30 June 2024;
• Notes, including material accounting policies; and
• Directors’ Declaration.
The Group consists of the Company and the entities
it controlled at the year end or from time to time
during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of
the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with
these requirements.
Key Audit Matters
The Key Audit Matters we identified are:
• Acquisition of Silver Lake Resources
Limited; and
• Rehabilitation provision.
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.
82
2024 ANNUAL REPORT
Independent AUDITOR’S REPORT (cont.)
Acquisition of Silver Lake Resources Limited ($1,478m)
Refer to Note 25 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group's acquisition of Silver Lake
Resources Limited on 19 June 2024, for a total
consideration of $1,478 million, was a
significant transaction. This was a key audit
matter due to the additional audit effort for the
following reasons:
• The acquisition's size had a pervasive
impact on the financial statements.
• The Group made significant judgements
related to the determination of the
accounting acquirer and the purchase price
allocation (PPA). The Group engaged an
external expert to assist in the identification
and valuation of acquired assets and
liabilities.
Our audit focused on the significant
assumptions the Group applied in their
assessment of the allocation of purchase
consideration to Mine properties, property,
plant and equipment, and the rehabilitation
provision.
For Mine properties, the determination of the
fair value included significant assumptions such
as:
• Forecast sales volume and production
costs.
• Forecast gold prices.
• Forecast foreign exchange rate.
• Discount rate.
• Quantum of mineral reserves.
• Resource multiple of comparable
companies.
For property, plant and equipment, this
included the valuation methodology applied to
each class of assets.
For rehabilitation, this included the quantum
and expected timing of rehabilitation
expenditure, and the associated inflation and
discount rate to determine the net present
value of the rehabilitation provision.
We involved our valuation specialists to
supplement our senior audit team members in
assessing this key audit matter.
Our procedures included:
We read the Scheme of Arrangement related to
the acquisition to understand its structure, key
terms, conditions, and purchase consideration.
We then assessed the Group’s acquisition
accounting against accounting standards,
focusing on the determination of the accounting
acquirer and purchase consideration.
We assessed the scope, competence and
objectivity of the Group’s external expert involved
in estimating the PPA.
We worked with our valuation specialists to
assess and challenge the key assumptions used
in the PPA. We challenged the Group’s
methodology valuing the identified Mine
properties, and property plant and equipment by
comparing to accepted industry practice and the
requirements of the accounting standards.
Valuation of Mine properties
We assessed key assumptions including forecast
sales volume and production costs, comparing
them to Silver Lake’s past performance, their
underlying life of mine plan and our industry
experience.
We compared the forecast gold prices to
published views of market commentators on
expected future trend.
Working with our valuation specialist, we
independently developed a discount rate range
considered comparable, using publicly available
market data for comparable entities.
We assessed the scope, competence and
objectivity of Group’s internal expert involved in
the estimation process of mineral reserves.
We compared the life of mineral reserves in the
valuation of the reserves statement for
consistency, in particular application across
production assumptions.
We assessed the adequacy of the resource
multiple by assessing the list of comparable
companies the external expert used.
Valuation of property, plant, and equipment
Working with our property, plant, and equipment
valuation specialists, we assessed the valuation
83
2024 ANNUAL REPORT
Independent AUDITOR’S REPORT (cont.)
methodologies applied to each class of property
plant and equipment.
Rehabilitation provision
Our approach to testing the rehabilitation
provision was consistent with the approach
outlined in the section on the rehabilitation
provision key audit matter.
We assessed the adequacy of disclosures in the
financial report using our understanding from our
testing and against the requirements of the
accounting standard.
Rehabilitation provision ($112m)
Refer to Note 16 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group has a significant rehabilitation
provision as a consequence of its operational
activities. This provision increased significantly
following the acquisition of Silver Lake
Resources Limited during the year.
The rehabilitation provision is identified as a key
audit matter due to the additional audit effort
required for the following reasons:
• The Group’s estimation of future
environmental restoration and rehabilitation
costs is inherently complex.
• The Group applies significant judgement,
and we exert considerable effort in
gathering persuasive audit evidence on the
expected costs, especially for those costs
to be incurred several years in the future.
The estimate of the rehabilitation provision is
influenced by:
• The complexity in current environmental
and regulatory requirements, and the
impact to completeness of the
rehabilitation provision.
• The expected environmental strategy of the
Group and the nature of the costs
incorporated into the rehabilitation
provision.
• The expected timing of expenditure which
is planned to occur several years into the
future, and the associated inflation and
discounting of costs in the present value
calculation of the rehabilitation provision.
Our procedures included:
• Comparing the basis for recognition and
measurement of the rehabilitation provision for
consistency with environmental and regulatory
requirements and criteria in the accounting
standards.
• Evaluating the methodology applied by the
Group’s internal and third-party experts in
determining the nature and extent of rehabilitation
activities by comparing to industry practice.
• Critically evaluating the Group’s rehabilitation
provision estimation by:
– Involving our closure specialists, we tested
key environmental related assumptions
incorporated into the financial modelling of
closure cost activities against environmental
laws and regulations and industry guidelines.
– Assessing the planned timing of rehabilitation
activities through comparison to the Group’s
strategy and plans for commencement and
completion of rehabilitation activities.
– Assessing the competence, scope and
objectivity of the Group’s internal and third-
party experts used in the determination of
the rehabilitation provision estimate.
– Working with our valuation specialists,
comparing inflation rate and discount rate
assumptions in the Group’s rehabilitation
provision determination to published reports
for Australian bond rates and Australian
inflation targets.
84
2024 ANNUAL REPORT
Independent AUDITOR’S REPORT (cont.)
The Group uses third party and internal experts
when assessing their obligations for restoration
and rehabilitation activities and associated
estimates of future costs.
We involved our closure and valuation
specialists to supplement our senior audit team
members in assessing this key audit matter.
• Evaluating the completeness of the rehabilitation
provision against the Group’s analysis of where
disturbance requires rehabilitation and comparing
to our understanding of the Group’s operations.
Assessing the disclosures in the financial report
against the requirements of the accounting standard.
This included evaluating the current and non-current
rehabilitation provision disclosure for consistency to
the planned timing of the rehabilitation expenditure.
Other Information
Other Information is financial and non-financial information in Red 5 Limited’s annual reporting which is
provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for
the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ Report
and the Corporate Information. The Chairman’s Review, Managing Director’s Report, Resources and
Reserves Statement, Tenement Schedule and Statement of Shareholders are expected to be made
available to us after the date of the Auditor's Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of
the Remuneration report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date
of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• Preparing the Financial Report in accordance with the Corporations Act 2001, including giving a true
and fair view of the financial position and performance of the Group, and in compliance with
Australian Accounting Standards and the Corporations Regulations 2001;
• Implementing necessary internal control to enable the preparation of a Financial Report in
accordance with the Corporations Act 2001, including giving a true and fair view of the financial
position and performance of the Group, and that is free from material misstatement, whether due to
fraud or error; and
• Assessing the Group and Company’s ability to continue as a going concern and whether the use of
the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend
to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do
so.
85
2024 ANNUAL REPORT
Independent AUDITOR’S REPORT (cont.)
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
• 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 Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They 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 the 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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration Report of
Red 5 Limited for the year ended
30 June 2024, complies with Section 300A of
the Corporations Act 2001.
Directors’ 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 responsibilities
We have audited the Remuneration Report included in
pages 15 to 27 of the Directors’ report for the year
ended 30 June 2024.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
KPMG
Jane Bailey
Partner
Perth
28 August 2024
86
2024 ANNUAL REPORT
SECURITIES
At 20 September 2024, the Company had on issue 6,802,473,382 fully paid ordinary shares (24,349 holders).
DISTRIBUTION OF SHAREHOLDERS
Number of fully paid
shareholders
Percentage of fully paid
shareholders
1
-
1,000
753
0.00%
1,001
-
5,000
6,271
0.26%
5,001
-
10,000
3,751
0.41%
10,001
-
100,000
10,586
5.49%
100,001
and over
2,988
93.83%
24,349
100.00%
1,587 holders held less than a marketable parcel (<$500) of fully paid ordinary shares.
CLASSES OF SHARES AND VOTING RIGHTS
At meetings of members or classes of members, each member entitled to vote may vote in person or by proxy or attorney. On a show of
hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and on a poll, every person present
in person or by proxy has one vote for each ordinary share held.
TOP 20 SHAREHOLDERS OF QUOTED SECURITIES
Holder Name
Number held
%
1
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2,107,780,626
30.99%
2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
1,372,900,236
20.18%
3
CITICORP NOMINEES PTY LIMITED
721,923,517
10.61%
4
BNP PARIBAS NOMS PTY LTD
195,871,329
2.88%
5
BNP PARIBAS NOMINEES PTY LTD
110,631,029
1.63%
6
VBS EXCHANGE PTY LTD
86,672,804
1.27%
7
NATIONAL NOMINEES LIMITED
84,474,097
1.24%
8
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
75,055,306
1.10%
9
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO EDA
69,573,099
1.02%
10
BNP PARIBAS NOMINEES PTY LTD
63,641,199
0.94%
11
BNP PARIBAS NOMINEES PTY LTD
50,464,316
0.74%
12
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
29,677,096
0.44%
13
UBS NOMINEES PTY LTD
27,569,357
0.41%
14
GANNET CAPITAL PTY LTD (THE VICTOR SMORGON PARTNERS GLOBAL
MULTI-STRATEGY FUND)
26,984,029
0.40%
15
MOORGATE INVESTMENTS PTY LTD
23,851,265
0.35%
16
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
22,193,547
0.33%
17
CITICORP NOMINEES PTY LIMITED
18,782,589
0.28%
18
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
18,484,654
0.27%
19
GARY B BRANCH PTY LIMITED
13,800,000
0.20%
20
BRIKEN NOMINEES PTY LTD
13,736,000
0.20%
Totals
5,134,066,095
75.47%
ADDITIONAL ASX Information as at 20 September 2024
87
2024 ANNUAL REPORT
SUBSTANTIAL SHAREHOLDERS
The following shareholders have lodged a notice of substantial shareholding in the Company.
Registered Holder
Beneficial Owner
Number
of Shares
Percentage
of Issued Shares
Various entities as set out in a Notice of Change of
Interests of Substantial Holder given to ASX on
25 June 2024
Van Eck Associates Corporation
and its associates
625,597,214
9.27%
Various entities as set out in a Notice of Initial
Substantial Holder given to ASX on 24 August 2024
UBS and its related bodies corporate
451,008,351
6.63%
UBS Nominees Pty Ltd
Regal Funds Management PTY Limited
421,247,496
6.19%
HSBC Custody Nominees(Australia) Limited A/C 2
Regal Partners Limited
Merrill Lynch (Aus) Nominees Pty Ltd
Regal Asian Investments Management
Pty Limited
J.P. Morgan Prime Nominees Ltd
Regal Asian Investments Limited
HSBC Custody Nominees (Australia) Limited
HSBC Custody Nominees (Australia) Limited-Gsco Ecsa
Brown Brothers Harriman
The Vanguard Group, Inc. and its
controlled entities
340,156,966
5.00%
BNY Mellon
JP Morgan Chase Bank, N.A.
State Street Bank and Trust Company
CORPORATE GOVERNANCE STATEMENT
The Company’s 2024 corporate governance statement can be viewed at https://vaultminerals.com/about/corporate-governance
ADDITIONAL ASX Information as at 20 September 2024 (cont.)
ABN 73 068 647 610