2019
ANNUAL
REOR
TABLE OF CONTENTS
2019
ANNUAL
REPORT
West African Resources Limited
ABN 70 121 539 375
TABLE OF CONTENTS
Page
CORPORATE INFORMATION ................................................................................................................................ 1
CHAIRMAN’S MESSAGE ....................................................................................................................................... 2
DIRECTORS’ REPORT ............................................................................................................................................ 3
REMUNERATION REPORT (AUDITED) ................................................................................................................ 16
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ............................ 27
CONSOLIDATED STATEMENT OF FINANCIAL POSITION .................................................................................... 28
CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................................................. 29
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ..................................................................................... 30
NOTES TO THE FINANCIAL STATEMENTS .......................................................................................................... 31
DIRECTORS’ DECLARATION ................................................................................................................................ 67
AUDITOR’S INDEPENDENCE DECLARATION....................................................................................................... 68
INDEPENDENT AUDITOR’S REPORT ................................................................................................................... 69
ADDITIONAL INFORMATION .............................................................................................................................. 73
SUMMARY OF TENEMENTS ............................................................................................................................... 75
CORPORATE INFORMATION
Company
West African Resources Limited
Website
www.westafricanresources.com
ABN
70 121 539 375
Directors
Richard Hyde (Executive Chairman and CEO)
Lyndon Hopkins (Executive Director and COO)
Mark Connelly (Non-Executive Director)
Simon Storm (Non-Executive Director)
Nigel Spicer (Non-Executive Director)
Rod Leonard (Non-Executive Director)
Company Secretary
Simon Storm
Principal place of business
Level 1, 1 Alvan Street
Subiaco WA 6008 Australia
Registered office
Level 1, 1 Alvan Street
Subiaco WA 6008 Australia
T: +61 (8) 9481 7344
Burkina Faso office
Secteur 27, Quartier Ouayalghin,
Parcelles 07/08, Lot 22, Section SL,
Ouagadougou, Burkina Faso
T: +226 25 36 73 84
Share registry
Computershare Investor Services Pty Ltd
Level 11, 172 St George’s Terraces
Perth WA 6000 Australia
T: 1300 787 272
Solicitors
Australia
Allion Partners
9/863 Hay Street
Perth WA 6000
Canada
Stikeman Elliiot
Suite 1700, Park Place
666 Burrard Street
Vancouver BC V6C 2X6
Auditors
HLB Mann Judd
Level 4, 130 Stirling Street
Perth WA 6000 Australia
Security exchange
Australian Securities Exchange Ltd (ASX)
Level 40, Central Park
152-158 St George’s Terrace
Perth WA 6000
ASX trading code
WAF
P a g e | 1
CHAIRMAN’S MESSAGE
Dear Fellow Shareholders,
I am pleased to present the 2019 Annual Report for West African Resources Limited (ASX: WAF) as our Company has
just achieved its goal of becoming West Africa’s newest gold producer.
Our rapid transformation from small explorer to West African gold producer has been exceptional. We discovered ultra-
high-grade gold at the M1 South deposit in 2016; obtained the Mining Permit in 2017; secured project financing in 2018
and commenced construction of Sanbrado in early 2019. It is extremely satisfying to have come this far on the journey
of our Company and I look forward to reporting positive profits and operational cash flows over the coming year.
First gold was poured at Sanbrado on 18 March 2020, well ahead of our original schedule and under budget. Such a
result is a testament to the talent and dedication of our team in Burkina Faso and Australia. Getting any mining project
into development in Africa is not an easy task – achieving it in just four years following the M1 South discovery is rare
indeed.
Sanbrado was forecast to be the highest margin gold project under construction in West Africa over the past year, and
now it should produce about 300,000 ounces of gold in its first 12 months of operation at the lowest quartile production
costs globally. At the prevailing gold price Sanbrado is expected to generate significant cash flows and repay its project
debt ahead of schedule. In the coming years we aim to significantly improve the project’s production and cost
economics, creating further value for our shareholders and stakeholders.
We broke ground to start major works at Sanbrado in January 2019, and our project team, led by Executive Director
Lyndon Hopkins and Chief Development Officer Matthew Wilcox, have kept the project on track and on budget. This
achievement resoundingly demonstrates the commercial and technical capabilities of West African’s team and our
determination to deliver on our promises, and do it in an efficient, considered and cost-effective manner.
Although there has been some unrest in Burkina Faso, the area of the country in which West African operates continues
to be stable and our progress at Sanbrado has been unimpeded. Our Company remains committed to Burkina Faso and
to delivering a project that will provide widespread economic benefits for the Burkina Faso Government, the regional
communities, and our other stakeholders.
As the COVID-19 global pandemic has escalated, the gold price has held up very well as a safe haven asset and
shareholders can be assured that West African’s management and contractors are doing everything possible to maintain
gold production at Sanbrado while this global crisis runs its course. I would like to thank our dedicated site team who
have committed to keep Sanbrado operating in these uncertain times.
We are also looking ahead to further grow Sanbrado through targeted drilling and exploration. We are confident there
is plenty of upside at Sanbrado and in our surrounding project area. We will aim to increase the underground mine life
to at least 10 years, to match the open-pit mine plan, by exploring the M1 South gold system where mineralisation
remains open at depth to ensure we extract full value from the project.
I would like to thank my fellow Board members for their support through the past year, as well as the whole West
African team who have worked tirelessly to achieve our goals. I also thank our shareholders, especially those who have
been long-term holders of WAF, for their loyalty and belief that we could deliver on what we set out to do.
It is an exciting time for our Company, and I look forward to our future as a gold producer!
RICHARD HYDE
Executive Chairman
West African Resources Limited
P a g e | 2
DIRECTORS’ REPORT
The Directors present the financial report of West African Resources Limited (the “Company”) and its controlled subsidiaries (the
“Group”, “West African” or “WAF”) for year ended 31 December 2019.
INFORMATION ON DIRECTORS AND COMPANY SECRETARY
The names of Directors who held office during or since the end of the year and until the date of this report are as follows. Directors
were in office for this entire period unless otherwise stated.
CURRENT DIRECTORS
Richard Hyde
BSc (Geology and Geophysics),
MAusIMM, MAIG
Lyndon Hopkins
BSc (Geology), MAusIMM, MAIG
Simon Storm
BCom, BCompt (Hons) FGIA, CA
Executive Chairman and Chief Executive
Officer
Executive Director and Chief Operating
Officer
Non-Executive Director and Company
Secretary
Richard Hyde is a geologist with 24 years’
experience in the mining industry and
more than 19 years of experience in West
large
Africa. Richard has managed
exploration and development projects
for gold and base metals in Australia,
Africa and Eastern Europe. He has led the
Company from incorporation in 2006,
IPO in 2010 and through the discovery
and development of the Sanbrado Gold
Project. He has coordinated all of the
debt and equity funding for the Company
in A$78m equity and
culminating
US$200m in senior debt in 2018 to fully-
fund the Sanbrado Gold Project to
is Member of the
production. He
Institute of Mining and
Australian
Metallurgy and a Member of the
Australian Institute of Geoscientists. Mr
Hyde is a founding shareholder and
commenced as a Director in 2006.
of
aspects
Lyndon Hopkins is a geologist with more
in gold
than 30 years’ experience
exploration,
and
development
production. Mr Hopkins was Chief
Operating Officer of Equigold NL’s Ivory
Coast operations and managed the in-
country
project
development and feasibility study for the
Bonikro Gold Mine which commenced
production in 2008. More recently, he
was Mine Manager for the construction
of Regis Resources Ltd’s Rosemont Gold
involved with
Mine. He has been
numerous gold operations in Australia
and Africa in various roles with Equigold
and Regis.
the
Mr Hopkins has been West African’s
Chief Operating Officer since 2015 and
joined the Board on 6 September 2019.
Committee memberships: Technical
Committee memberships: Technical
Other ASX listed directorship: Nil
Previous ASX listed directorship in the last
3 years: Nil
Interest in shares: 18,280,769
Interest in options: 3,660,899
Other ASX listed directorship: Nil
Previous ASX listed directorship in the last
3 years: Nil
Interest in shares: 3,032,250
Interest in options: 1,516,949
international experience
Simon Storm is a Chartered Accountant
with more than 30 years of Australian
and
in the
accounting profession and commerce. He
commenced his career with Deloitte
Haskins & Sells in Africa then London
before joining Price Waterhouse in Perth.
He has held various senior finance and
company secretarial roles with listed and
in the agribusiness,
unlisted entities
construction,
banking,
telecommunications,
property
development and funds management
industries. In the last 17 years he has
provided consulting services covering
accounting,
company
financial and
secretarial matters to various companies
in these sectors.
resources,
Mr Storm
November 2007.
joined the Board on 15
Committee memberships: Audit (Chair),
Remuneration
Other ASX listed directorship: Nil
Previous ASX listed directorship in the last
3 years: Nil
Interest in shares: 2,590,769
Interest in options: 827,855
P a g e | 3
West African Resources Limited
Directors’ Report
Mark Connelly
BBus, MAICD
Nigel Spicer
BSc (Mining), CEng, MAusIMM
Rod Leonard
BSc and MSc (Metallurgical
Engineering), MAusIMM, MSME
Non-Executive Director
Non-Executive Director
Non-Executive Director
Mark Connelly has more than 30 years of
experience in the mining industry and
has held senior executive positions with
Newmont Mining Corporation and Inmet
Mining Corporation. He is the former
Managing Director and Chief Executive
Officer of Papillon Resources Limited, a
Mali-based gold developer which merged
with B2Gold Corp in a US$570 million
deal. He was Chief Operating Officer of
Endeavour Mining Corporation following
its merger with Adamus Resources,
where he was Managing Director and
CEO. Mark has extensive experience in
financing, development, construction
and operation of mining projects in a
variety of commodities including gold,
base metals and other resources in West
Africa, Australia, North America and
Europe.
Mr Connelly joined the Board on 23 June
2015.
Nigel Spicer is a Mining Engineer with
more than 40 years’ experience in mining
and has held operational and executive
management positions with mining
companies
in Africa, UK, Australia,
Indonesia, PNG, Brazil and Philippines.
He has extensive open pit and
underground (narrow vein and bulk
tonnage) mining experience across a
range of commodities, including gold and
copper. He has significant experience
managing both owner and contract
mining fleets and has been involved in
the successful commissioning of a
number of gold mines in Australia and
Africa.
Mr Spicer
September 2019.
joined the Board on 6
Rod Leonard is one of the founding
Directors of Lycopodium (ASX: LYL) and
served as an Executive Director of
Lycopodium Limited from 2004 to 2019.
He has more than 30 years’ experience in
the operation and project development
of major projects in North and South
America, Africa, Asia and Australia. He
has been involved in many aspects of the
mineral processing industry from process
development, feasibility studies, and
design
as
commissioning of projects.
assignments
as well
Mr Leonard has been directly involved
with Lycopodium’s strong track record in
Burkina Faso, recently delivering EPCM
projects at the Hounde and Karma gold
projects
Endeavour Mining,
Natougou gold project for Semafo, Bissa
and Bouly gold projects for Nordgold as
well as other many other recent projects
in West Africa.
for
Mr Leonard
September 2019.
joined the Board on 6
Audit,
memberships:
Committee
Remuneration (Chair)
Other ASX listed directorship: Calidus
Resources
Limited, Oklo Resources
Limited, Primero Group Limited, Tao
Commodities Ltd
Previous ASX listed directorship in the last
3 years: Cardinal Resources Limited,
Perenti Global
(previously
Ausdrill Ltd), Saracen Mineral holdings
Limited, Tiger Resources Limited
Interest in shares: 60,000
Interest in options: 2,103,806
Limited
memberships:
Committee
Technical
Other ASX listed directorship: Nil
Audit,
Committee memberships: Remuneration,
Technical (Chair)
Other
Lycopodium Limited
directorship:
listed
ASX
Previous ASX listed directorship in the last
3 years: Nil
Previous ASX listed directorship in the last
3 years: Nil
Interest in shares: Nil
Interest in options: Nil
Interest in shares: Nil
Interest in options: Nil
P a g e | 4
West African Resources Limited
Directors’ Report
PAST DIRECTORS WHO RESIGNED DURING THE YEAR
Ian Kerr BE (Civil) Hons II, MIE Aus
Non-Executive Director
Ian Kerr is an engineer with more than 30 years’ experience in mining construction and operations with several Australian and
international mining companies including Placer Dome and EMC. He has also held senior positions with engineering firms Lycopodium
and Mintrex.
Mr Kerr resigned as a director on 6 September 2019.
Committee memberships:
Other ASX listed directorship
Previous ASX listed directorship in the last 3 years:
Interest in shares:
Interest in options:
Audit, Remuneration
Nil
Gascoyne Resources Limited, Tiger Resources Limited
Nil
577,855
P a g e | 5
West African Resources Limited
Directors’ Report
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were:
• development of the Sanbrado Gold Project; and
• mineral exploration in Burkina Faso
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
BACKGROUND
The Company and its subsidiaries (the “Group”, “West African” or “WAF”) are engaged in mineral exploration and development in
West Africa. The Group’s key asset is the Sanbrado Gold Project (“Sanbrado”), located in Burkina Faso. West African owns a 90%
beneficial interest in Société des Mines de Sanbrado SA (“SOMISA”), which owns Sanbrado. The government of Burkina Faso retains
a 10% carried interest. The Group’s mineral portfolio also includes gold and copper-gold exploration permits in Burkina Faso.
SANBRADO CONSTRUCTION
During the year, West African made substantial progress in advancing Sanbrado towards gold production. By the date of this report,
the project has been commissioned, the first gold was poured on 18 March 2020, and open pit mining had ramped up at both the
M5 and M1 South pits.
As at 31 December 2019, the following project development milestones have been achieved:
• Construction of the processing plant and other project infrastructure for Sanbrado was more than 90% complete.
• Underground decline of M1 South advanced 1,390m in the year to be 153m below surface by year end.
• The open pit mining contractor had mobilised to site and commenced mining in December 2019.
Processing plant
P a g e | 6
West African Resources Limited
Directors’ Report
Ball and SAG mill
M1 South underground development
P a g e | 7
West African Resources Limited
Directors’ Report
SANBRADO OVERVIEW
The project is located in Burkina Faso 90 km east-southeast of the capital city of Ouagadougou and is accessed via a sealed highway
(RN4) which runs between the capital and Koupela. An existing gravel road intersects the highway near the village of Zempasgo and
crosses through the south-eastern corner of the Sanbrado tenement.
P a g e | 8
West African Resources Limited
Directors’ Report
The Sanbrado Gold Project will mine three deposits: M1, M3 and M5. The figure below presents the layout of the project, showing
the relative positions of the mining areas and the principal infrastructure.
Sanbrado Gold Project layout
The Company announced the results of its optimised Feasibility Study for Sanbrado on 16 April 2019. The study envisages an initial
10-year mine life, including 6.5 years of underground mining. Details of the study are available on the Company’s website at
www.westafricanresources.com.
Sanbrado Gold Project ore reserves were updated in the Feasibility Study to a Probable Ore Reserve of 21.6Mt at 2.4g/t Au for
1.65Moz of gold. The Project comprises several open pits, all within 1-2km of the plant site, and an underground mine accessed
through a box-cut and portal immediately to the south west of the M1 South open pit. The plant comprises a conventional SABC
(semi-autogenous, ball, crush) milling circuit, gravity and carbon in leach processing with a nominal throughput capacity of 2.2Mtpa
and average LOM recovery estimated to be 92.9%.
The Feasibility Study envisages that underground mining will be completed in Year 6 of gold production and open-pit mining continues
through until mid-way through Year 10 of production with processing carried out for a full 10 years. Mining and processing of the
high grade M1 South Probable Ore Reserve is prioritised, generating significant early cashflow.
The operating costs for Sanbrado in the Feasibility Study reflect that the project is a conventional, low cost operation. Life of mine
(“LOM”) all in sustaining costs (“AISC”) are estimated to be US$633/oz. This is a result of high-grade ore from M1 South and the
significant proportion of oxide and transition material in the mine schedule and the free milling nature of all ore types, low reagent
consumption and a high component of gravity recoverable gold.
P a g e | 9
West African Resources Limited
Directors’ Report
Sanbrado Gold Project
December 2019 Resource
Indicated Resource
Inferred Resource
Resource
Area
Category
Cutoff
(Au g/t)
O/P <180mRL
M1 South
U/G >180mRL
0.5
3
Tonnes
850,000
1,000,000
Total
Combined
1,850,000
M5
M1 North
M3
O/P
O/P
O/P
0.5
0.5
0.5
36,650,000
750,000
150,000
Grade
(Au g/t)
6.4
21.9
14.7
1.2
2.0
2.0
Total
1.9
Combined
*Due to rounding ounces may not precisely calculate to the amounts provided.
39,400,000
Au Oz*
Tonnes
178,000
697,000
875,000
50,000
300,000
350,000
1,470,000
14,600,000
49,000
11,000
500,000
200,000
2,405,000
15,650,000
Grade
(Au g/t)
5.2
11.2
10.7
1.1
2.0
1.5
1.3
Au Oz*
5,000
117,000
122,000
520,000
32,000
9,000
683,000
Mining Category
Open Pit
Underground
Total Probable Mineral Reserve*
Proven
Provable
Proven
Provable
Sanbrado Gold Project
Mineral Reserve by Category
Tonne
Mt
0.0
19.5
0.0
2.0
21.6
Gold Grade
g/t
0.0
Contained Gold
koz*
0
1.6
0.0
10.2
2.4
1,004
0
646
1,650
*Due to rounding the totals may not precisely add up to, and ounces may not precisely calculate to, the amounts provided.
SAFETY, ENVIRONMENTAL AND SUSTAINABILITY
There were no significant safety or environmental incidents during the year. The LTIFR for the project at the end of the period was
0.4, with more than 2.4 million hours worked.
West African has 375 employees at Sanbrado as at 31 December 2019, comprised of 95% Burkinabés of which 25% are women.
Sanbrado will contribute significant direct economic benefits to Burkina Faso through various taxes, royalties and fees, including a
community development fund of 1% of revenue.
In addition, the Company is continuing to develop its environmental and sustainability management programs that are aimed at
achieving the IFC Performance Standards.
New homes under construction for affected people
P a g e | 10
West African Resources Limited
Directors’ Report
CORPORATE
Debt facility
A project debt facility with a drawdown limit of US$200 million (A$285 million) was executed during the year with Taurus Funds
Management Pty Ltd (“Taurus”) for the development of the Sanbrado Gold Project. Interest is charged at 7.75% per annum on drawn
amounts and 2% per annum on the undrawn balance and is payable quarterly. The facility is secured against the assets of the Group
and contains no mandatory hedging requirements.
The balance drawn at 31 December 2019 under the facility was US$175 million. The remaining US$25 million was drawn in March
2020, making the facility fully drawn as at the date of this report. The facility contains a repayment schedule comprised of sixteen
quarterly repayments commencing March 2021 and ending December 2024, and can be repaid early at any time without penalty.
The finance facility also contains a contractual commitment for payment of a fee on the first 1.25 million ounces of gold sold from
the Sanbrado Gold Project. The fee for each ounce of gold sold will be calculated as the spread between the LBMA quoted am fix
price on the date the refined gold is credited to the Company’s metals account and the lowest LBMA quoted gold price (am fix or pm
fix) during the preceding 8 business day period.
The Group has the option to terminate the product fee commitment at any time by paying the net present value (applying a 5%
annual discount rate, and assuming the timing of gold sales as set out in the mine production schedule) of the pre-agreed price per
ounce for the remaining committed ounces.
Board composition changes
In September 2019, WAF announced several changes to its Board as it prepared for gold production at Sanbrado.
Richard Hyde, the founder of West African Resources, transitioned to the role of Executive Chairman and continues as full-time CEO.
Lyndon Hopkins joined the Board as Executive Director and continues as the Company’s Chief Operating Officer.
Rod Leonard and Nigel Spicer joined the Board as Independent Non-Executive Directors.
Mark Connelly transitioned from Non-Executive Chairman to Non-Executive Director. Simon Storm continues as a Non-Executive
Director and Company Secretary. Ian Kerr resigned from the Board.
Delisting from TSX
On 22 February 2019, the Company announced the voluntarily delisting of its ordinary shares from trading on the TSX Venture
Exchange (“TSXV”) effective from close of trading on 8 March 2019. The Company took this decision due to several factors, including
the limited trading volume of its shares on the TSXV over a sustained period. As a result, the Board considered the regulatory and
other costs associated with maintaining the TSXV listing were unnecessary. No change occurred to the quotation and trading of the
Company’s shares on the Australian Securities Exchange (“ASX”) and they remain available for trading on the ASX under the code
WAF.
OTHER PROJECTS
No work was completed during the year on the Group’s projects other than Sanbrado.
P a g e | 11
West African Resources Limited
Directors’ Report
RESULTS FOR THE YEAR
The net loss of the Group for year ended 31 December 2019 of $4,334,000 was $783,000 higher than the $3,551,000 net loss of the
comparative 6-month period. This is mainly due to $3,152,000 higher corporate costs, $550,000 higher exploration costs and
$986,000 higher realised foreign exchange losses partially offset by $834,000 higher interest income and $2,537,000 higher
unrealised foreign exchange gains. The above increase in corporate costs (including personnel, consultants, travel, and overheads)
reflects a combination of a full year of costs in the reporting period versus a half year in the comparative period, and the growth of
the Company during the current year as development of Sanbrado ramped up.
The $246,350,000 increase in total assets during the year was fully offset by the $249,883,000 increase in total liabilities resulting in
a $3,533,000 decrease in net assets over the year. The asset increase is mainly related to the construction of Sanbrado which is
reflected in a $223,646,000 increase in mine properties, while the liabilities increase is mainly related to the financing of the
construction of Sanbrado, which is reflected in a $235,063,000 increase in loans and borrowings.
Cash increased from $66,355,000 at the start of the period to $83,584,000 at 31 December 2019. This $17,009,000 cash increase is
mainly due to a $232,564,000 net cash inflow from financing activities, partially offset by a $208,968,000 net cash outflow from
investing activities and a $6,587,000 net cash outflow from operating activities. Cash outflows from operating activities mainly
represents corporate administration and non-Sanbrado exploration costs. Cash usage in financing activities during the year mainly
reflects expenditures for the construction of Sanbrado and capitalisation of interest paid on Sanbrado project debt. The cash inflows
from financing activities in the year mainly reflects $251,799,000 of drawdowns under the project debt facility, partially offset by
$19,077,000 of cash outflows for project debt facility transaction costs.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The Group significantly advanced construction and development of the Sanbrado Gold Project during the year, funded by drawdowns
under the Company’s project debt facility with Taurus.
SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE
First gold pour
On 19 March 2020 West African announced that it has completed commissioning of the Sanbrado project and poured its maiden gold
bars weighing 23.9 kg (768 troy oz).
COVID-19 global pandemic
Since early February the Company has been following the Western Australia Health Department guidelines for the COVID-19 global
pandemic and has been updating staff and contractors regularly as the situation evolves. At the time of this report no staff or
contractors of the Group have tested positive to the virus (SARS-CoV-2) nor have there been any suspected cases.
WAF executive and site management undertook a COVID-19 risk assessment workshop on site at Sanbrado in mid-March 2020. WAF’s
site management team includes key people who worked through the Ebola crisis in Guinea in 2014-2015. WAF medical staff are
monitoring the body temperatures of all people entering site and will implement a self-isolation policy for anyone suspected of being
COVID-19 positive. Site management has prepared an isolation block within camp for any suspected cases and have qualified medical
personnel and sufficient supplies to deal with a COVID-19 situation.
The Company has taken early action to maintain production at Sanbrado. From a supply perspective, key reagents and consumables
are on site for the next three to six months of production and the fuel farm is near full capacity and is receiving regular deliveries. In
terms of international travel restrictions, the necessary staff are on site to manage production for the next few months and West
African has received assurance from its mining contractors that they are doing everything possible to maintain their services to the
project.
The gold price has been holding up well due to its status as a safe haven asset during times of uncertainty and therefore the Company
does not consider that there is an indication that any assets of the Group may be impaired as a result of the COVID-19 global
pandemic.
P a g e | 12
West African Resources Limited
Directors’ Report
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
In the opinion of the Directors, likely developments in and expected results of the operations of the Group have been disclosed in
the “Review of Operations” and “Significant Events After Balance Sheet Date” sections of this report. Disclosure of any further
information regarding likely developments in the operations of the Group in future financial years and the expected results of those
operations is likely to result in unreasonable prejudice to the Company.
SHARE OPTIONS AND PERFORMANCE RIGHTS1
At the date of this report the unissued ordinary shares of the Company under option are:
Issue date
12-May-17
18-Oct-17
03-Nov-17
29-Mar-18
26-Sep-18
28-Nov-18
28-Dec-18
28-Dec-18
28-Dec-18
28-Dec-18
14-Feb-19
05-Mar-19
07-Jul-19
20-Jan-20
20-Jan-20
20-Jan-20
20-Jan-20
Total
Exercise price
$0.2400
$0.3750
$0.2400
$0.4100
$0.3100
$0.3100
$0.3200
$0.0000
$0.0000
$0.4300
$0.0000
$0.2950
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
Expiry date
12-May-20
18-Oct-20
09-Nov-20
29-Mar-21
26-Sep-21
28-Nov-21
28-Dec-21
28-Dec-21
28-Dec-23
28-Dec-22
14-Feb-21
05-Mar-22
07-Jul-22
20-Jan-23
20-Jan-23
20-Jan-25
20-Jan-24
Number of options
500,000
750,000
2,750,000
1,250,000
500,000
1,000,000
2,500,000
1,022,565
944,167
1,223,828
259,516
1,000,000
61,047
963,948
263,157
131,578
131,578
15,251,384
1Performance rights are granted subject to various performance hurdles.
DIVIDENDS
No dividends have been paid or declared since the start of the financial year and the Directors do not recommend the payment of a
dividend in respect of the financial year.
NON-AUDIT SERVICES
The Group may decide to employ the external auditor, HLB Mann Judd, on assignments additional to their statutory audit duties
where the auditor's expertise and experience with the Group are important. Fees that were paid or payable for non-audit services
provided by the auditor of the parent entity during the year are outlined in Note 22 of the accompanying financial statements. The
Directors are satisfied that the provision of non-audit services during the year by the auditor are compatible with the general standard
of independence for auditors imposed by the Corporations Act 2001. The Directors are of the opinion that the services as disclosed
in the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for
the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the
auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants issued by the Accounting Professionals and Ethical Standards Board, including reviewing or auditing the
auditor’s own work, acting in a management or decision-making capacity for the company, acting as advocate for the company
or jointly sharing economic risks and rewards.
P a g e | 13
West African Resources Limited
Directors’ Report
DIRECTORS’ MEETINGS
The number of Directors’ meetings held during the year and the number of meetings attended by each director were as follows:
Directors’ Meetings
Audit Committee
Meetings
Remuneration
Committee Meetings
Technical Committee
Meetings
Director
Richard Hyde
Lyndon Hopkins
Simon Storm
Mark Connelly
Nigel Spicer
Rod Leonard
Ian Kerr
A – the number of meetings held whilst a Director
B – the number of meetings the Director attended
A
7
1
7
7
1
1
5
B
7
1
7
7
1
1
4
A
-
-
2
2
1
-
1
B
-
-
2
2
1
-
1
A
-
-
1
1
-
1
-
B
-
-
1
1
-
1
-
A
1
1
1
1
1
1
-
B
1
1
-
-
1
1
-
ROUNDING OF AMOUNTS
The Company is of a kind referred to in “ASIC Corporations (Rounding in Financial/Directors’ Report) Instrument 2016/191”, issued
by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the Directors’ Report and
accompanying financial statements. Amounts in the Directors’ Report and accompanying financial statements have been rounded
off in accordance with that Rounding Instrument to the nearest thousand dollars, or in certain noted cases, to the nearest dollar.
P a g e | 14
West African Resources Limited
Directors’ Report
Qualified/Competent Person’s Statement
Information contained in this report that relates to exploration results, exploration targets or mineral resources is based on, and fairly represents,
information and supporting documentation prepared by Mr Brian Wolfe, an independent consultant specialising in mineral resource estimation,
evaluation and exploration. Mr Wolfe is a Member of the Australian Institute of Geoscientists. Mr Wolfe has sufficient experience which is relevant
to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person
(or “CP”) as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC
Code) and a Qualified Person under Canadian National Instrument 43-101. Mr Wolfe has reviewed the contents of this news release and consents to
the inclusion in this announcement of all technical statements based on his information in the form and context in which they appear.
Information contained in this report that relates to open pit ore reserves is based on, and fairly represents, information and supporting documentation
prepared by Mr Stuart Cruickshanks, a full-time employee. Mr Cruickshanks is a Fellow of the Australian Institute of Mining and Metallurgy. Mr
Cruickshanks has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity
which he is undertaking to qualify as a Competent Person (or “CP”) as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (the JORC Code) and a Qualified Person under Canadian National Instrument 43-101. Mr Cruickshanks
has reviewed the contents of this news release and consents to the inclusion in this announcement of all technical statements based on his information
in the form and context in which they appear.
Information contained in this report that relates to underground ore reserves is based on, and fairly represents, information and supporting
documentation prepared by Mr Peter Wade, an independent specialist mining consultant. Mr Wade is a Fellow of the Australian Institute of Mining
and Metallurgy. Mr Wade has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person (or “CP”) as defined in the 2012 Edition of the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) and a Qualified Person under Canadian National Instrument 43-101. Mr
Wade has reviewed the contents of this news release and consents to the inclusion in this announcement of all technical statements based on his
information in the form and context in which they appear.
Any other information contained in this report that relates to exploration results, exploration targets or mineral resources is based on information
compiled by Mr Richard Hyde, a Director, who is a Member of The Australian Institute of Mining and Metallurgy and Australian Institute of
Geoscientists. Mr Hyde has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a CP as defined in JORC Code and a QP under National Instrument 43-101. Hyde has reviewed and
approved the scientific and technical information and contents of this presentation, and consents to the inclusion in this presentation of the
statements based on his information in the form and context in which they appear.
P a g e | 15
West African Resources Limited
Remuneration Report
REMUNERATION REPORT (AUDITED)
Contents:
1.
Remuneration report overview
2.
3.
4.
5.
6.
7.
Remuneration governance
Non-Executive Director remuneration
Executive remuneration
Performance and executive remuneration outcomes
Executive employment arrangements
Additional statutory disclosures
1)
REMUNERATION REPORT OVERVIEW
The Directors of West African Resources Limited present the Remuneration Report (“the Report”) for the Group for the year
ended 31 December 2019. This Report forms part of the Director’s Report and has been prepared in accordance with the
Corporations Act 2001.
The Report details the remuneration arrangements for West African’s Key Management Personnel (“KMP”), being:
•
the Non-Executive Directors (“NEDs”);
•
•
the Executive Directors; and
the senior executives with authority for planning, directing and controlling the major activities of the Consolidated Entity.
The KMP are set out below:
Name
Position
Non-Executive Directors
Appointed
Resigned
Non-Executive Director & Company Secretary
November 2007
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
June 2015
September 2019
September 2019
June 2018
September 2019
Executive Chairman and Chief Executive Officer
Executive Director and Chief Operating Officer
September 2006
September 20191
Simon Storm
Mark Connelly
Nigel Spicer
Rod Leonard
Ian Kerr
Executive Directors
Richard Hyde
Lyndon Hopkins
Senior Executives
Padraig O’Donoghue
Chief Financial Officer
Matthew Wilcox
Chief Development Officer
1 Date appointed a Director (employed from 1 January 2017).
June 2018
September 2018
Performance on shareholder wealth
Period ending
December 2019
December 2018
June 2018
Reporting period length
EPS (cents)
Dividends (cents per share)
Net profit / loss ($’000)
Share price ($)
12 months
(0.5)
Nil
(4,334)
0.430
6 months
(0.5)
Nil
(3,551)
0.250
12 months
(4.3)
Nil
(25,300)
0.380
June 2017
12 months
(3.0)
Nil
(14,324)
0.355
June 2016
12 months
(2.6)
Nil
(7,805)
0.210
P a g e | 16
-
-
-
-
-
-
-
-
West African Resources Limited
Remuneration Report
2)
A.
REMUNERATION GOVERNANCE
REMUNERATION COMMITTEE RESPONSIBILITY
The Remuneration Committee is a subcommittee of the Board. It is primarily responsible for making recommendations to the Board
on:
• Non-Executive Director fees;
• Executive remuneration, including executive directors and other senior executives; and
• The executive remuneration framework and incentive plan policies.
The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of non-executive directors
and executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high performing director and executive team.
B.
USE OF REMUNERATION ADVISORS
During the prior year the Remuneration Committee engaged BDO Remuneration and Reward Pty Ltd (“BDO”) to review and
provide recommendations on the Consolidated Entity’s executive remuneration framework and policies. Both BDO and the
Remuneration Committee were satisfied the advice received from BDO was free from undue influence from the KMP to whom
the recommendations applied. The BDO recommendations were provided to the Committee as an input into decision making
only and were used to assist the Board in structuring remuneration packages in a form suitable for the Company. The Committee
considered the BDO recommendations along with other factors in making its remuneration decisions. The fees paid to BDO for
the remuneration recommendations were $Nil (2018: $22,500 (GST exclusive)).
C.
REMUNERATION FRAMEWORK
Following the BDO remuneration review the following remuneration framework overview was recommended by the
Remuneration Committee and adopted by the Board with effect from 1 January 2019.
Category
Total fixed remuneration
Definition of pay category
Pay which is linked to the present value or market rate
of the role.
Elements
Total fixed
remuneration
Purpose
Pay for meeting role
requirements
Incentive pay
Reward pay
Pay for delivering the plan and growth agenda for WAF
which must create value for shareholders. Incentive
pay will be linked to the achievement of ‘line-of-sight’
performance goals.
It reflects ‘pay for performance’.
Pay for creating value for shareholders. Reward pay is
linked to shareholder returns.
It reflects ‘pay for results’.
Short term
incentive
Long term
incentive
Incentive for the
achievement of annual
objectives and
sustained business
value
Reward for executive
performance over the
long term
The Company tabled and had approved at the Annual General Meeting (“AGM”) in November 2018, the Incentive Option &
Performance Rights Plan" (Incentive Plan) which provides for the granting of incentive and reward-based remuneration.
P a g e | 17
West African Resources Limited
Remuneration Report
The West African Resources Incentive Plan is comprised of:
• A Short-term and Deferred Incentive (“STI”) Plan designed to incentivize and reward Executives for the attainment of short-
term objectives, and to enable the executive to accumulate equity in the business, which not only ensures a better alignment
with shareholders (i.e. ‘skin in the game’), but also provides a retentive benefit. The ‘Short Term and Deferred Incentive
Plan’ will be ‘reset’ on an annual basis (i.e. a cash and option award opportunity will be made available at the beginning of
each year).
• A Long-term Incentive (“LTI”) Scheme is designed to ‘reward’ Executives for the creation of long-term shareholder value as
evidenced by market and non-market measures. A single award will be made at the beginning of year ‘0’ and will represent
a performance period of 3 years (i.e. it will not be ‘reset’ annually). At the end of this 3-year period, the Company will have
evolved from project development status to a fully-fledged producer. The 3-year long-term goal communicated a clear
direction as to what shareholders require from management at the end of 3 years.
3) NON-EXECUTIVE DIRECTOR REMUNERATION
A.
NED REMUNERATION POLICY
West African Resources Limited’s NED fee policy is designed to attract and retain high calibre directors who can discharge the
roles and responsibilities required in terms of good governance, strong oversight, independence and objectivity.
The Company’s constitution and the ASX listing rules specify that the NED fee pool limit shall be a pproved periodically by
shareholders. The last determination at an AGM was an aggregate fee pool of $500,000 per year. At the forthcoming AGM in
May 2020 shareholder approval will be sought to increase the aggregate fee pool to $900,000 per year to provide for the
Company’s transitions into production and the consequential considerations related to changes to the Board’s overall skillset
and composition.
The Remuneration Committee considered advice from the BDO remuneration review regarding the amount of the aggregate
remuneration and the manner in which it is paid to NEDs and this was based on a review against comparable development stage
Non-Executive Director fees will be reviewed once commercial production is achieved.
B.
NED REMUNERATION STRUCTURE
The remuneration of NEDs consists of director’s fees. There is no scheme to provide retirement benefits to NEDs other than
statutory superannuation. Aside from receiving 30% of their fees in the form of share options, NEDs will not participate in any
performance related incentive programs.
Whilst WAF has no minimum shareholding policy for NEDs, the BDO remuneration review recommended that each NED held a
percentage of their total fees in equity to align their interests with the Company’s shareholders. This recommendation was put
to the AGM in November 2018 and the issue of Options in lieu of 30% of Directors fees was approved. This fee structure supports
NEDs in building their shareholding in the company they represent and assists in facilitating NEDs building a ‘meaningful’
shareholding in the company. It should be noted that this equity component:
1. does not increase the NED fee above that of the market. It aligns NED fees with market median based on the time,
responsibilities and calibre of the incumbent; and
2. does not contain any performance conditions and the equity issued is in lieu of cash fees.
Fees paid to NEDs cover all activities associated with their role on the Board and any sub -committees. No additional fees are
paid to NEDs for being a Chair or Member of a sub-committee. However, NEDs are entitled to fees or other amounts as the
Board determines where they perform special duties or otherwise perform extra services on behalf of the Company. They may
also be reimbursed for out-of-pocket expenses incurred as a result of their Directorships.
P a g e | 18
West African Resources Limited
Remuneration Report
4)
A.
EXECUTIVE REMUNERATION
EXECUTIVE REMUNERATION POLICY
In determining executive remuneration, the Board aims to ensure that remuneration practices are:
• competitive and reasonable, enabling the Company to attract and retain high calibre talent;
• aligned to the Company’s performance, strategic and business objectives and the creation of shareholder value;
•
• acceptable to shareholders.
transparent and easily understood; and
The Company’s approach to remuneration ensures that remuneration is competitive, performance focused, clearly links
appropriate reward with desired business performance, and is simple to administer and understand by executives and
shareholders.
In line with the remuneration policy, remuneration levels are reviewed annually to ensure alignment to the market and the
Company’s stated objectives.
B.
EXECUTIVE REMUNERATION STRUCTURE
The Company’s remuneration structure provides for a combination of fixed and variable pay with the following components:
•
•
•
fixed remuneration;
short-term incentives (“STI”); and
long-term incentives (“LTI”).
In accordance with the Company’s objective to ensure that executive remuneration is aligned to Company performance, a
portion of executives’ remuneration is placed “at risk”. The relative proportion of total remuneration packages to be split
between the fixed and variable remuneration is shown below:
Executive
Managing Director
Chief Operating Officer
Other Executives
Fixed remuneration
42%
45%
50-54%
STI
23%
23%
30%
LTI
35%
32%
16-20%
The total income opportunities available to the Company’s Executives are as follows:
Level
1
Position
Executive Chairman/CEO
2
3
Chief Operating Officer
Senior Executives
Total income opportunity
140%
120%
85-100%
STIP:
1 Year
20%
20%
STIP:
2 Year
35%
30%
LTIP:
3 Year
85%
70%
10-20%
35-40%
30-40%
C.
(i)
ELEMENTS OF REMUNERATION
Fixed remuneration
Total fixed remuneration (‘TFR’) consists of base salary, superannuation and other non-monetary benefits and is designed to
reward for:
•
•
•
the scope of the executive’s role;
the executive’s skills, experience and qualifications; and
individual performance.
P a g e | 19
West African Resources Limited
Remuneration Report
(ii)
Short-term Incentive (STI) arrangements
Under the STI, all executives have the opportunity to earn an annual incentive award. The STI recognises and rewards
achievement of annual Short-Term Incentive (‘STI’) performance metrics. These are paid in the form of a cash bonus (up to 20%
of TFR) and Zero Exercise Priced Options (ZEPOs) (up to 30-40% of TFR).
The performance metrics under the STI are set out below. To ensure overall goal alignment amongst the executives and the
Company, a major component of the performance metrics is consistent amongst all the Executives.
2019 Performance metrics
Company performance (80%)
The Company set out the following performance metrics for achievement within 12 months of the date the STI ZEPOs were
issued:
Gateway hurdle: Completion of project finance, documentation and first debt drawdown.
Weighted hurdles: If the gateway hurdle is achieved, the number of options that will vest will be determined by the Board
relative to the maximum considering the extent to which the following weighted hurdles are achieved:
• 20%: DFS update to mineral resources, reserves and project optimisation;
• 20%: Commencement of box cut, portal establishment and decline development;
• 20%: Formal investment decision;
• 20%: Detailed design and commencement of construction; and
• 20%: Lost Time Injury Frequency Rate (LTIFR) of less than 1, and trending downwards.
2020 Performance metrics
Gateway hurdle: Sanbrado reaches commercial production in 2020.
Weighted hurdles: If the gateway hurdle is achieved, the number of 2020 STI ZEPOs that will vest will be determined by the
Board relative to the maximum considering the extent to which the following weighted hurdles are achieved:
• 30%: Sanbrado construction completed within Board approved budget and schedule;
• 30%: A minimum of 150,000 ounces of gold is poured in 2020;
• 20%: There is no default of the Taurus loan facility agreement;
• 10%: There are no significant social or environmental incidents; and
• 10%: The Sanbrado Total Injury Frequency Rate (TIFR) is less than the industry standard in Western Australia.
Individual performance (20%)
Individual performance is measured in relation to achievement of individual and departmental specific goals and supervisory
discretion.
(iii)
Long-term Incentive (LTI) arrangements
Long Term Incentive (‘LTI’) performance metrics are associated with achieving the vesting criteria for the associated option prior
to the option expiry date as follows:
• Premium Exercise Priced Options (‘PEPO’) for achieving a market measure (absolute share price appreciation , being a
minimum of 145% at the end of a 4-year performance period and service) which, in relation to the 2020 LTI ZEPOs, is 60.61
cents (2019: 43 cents); and
• Zero Exercise Priced Options (‘ZEPO’) for achieving a non-market measure (at least 500,000 ounces of gold poured within 3
years of the date the LTI ZEPOs are issued and will expire 5 years from the date of issue).
P a g e | 20
West African Resources Limited
Remuneration Report
5)
PERFORMANCE AND EXECUTIVE REMUNERATION OUTCOMES
The remuneration of the KMP for the year ended 31 December 2019 is detailed below. Please note that the prior period relates to the 6 months ending 31 December 2018.
Fixed remuneration
Variable remuneration
Performance based % of
remuneration
Annual
and Long
Service
Leave
$
-
-
Super
$
-
-
26,027
10,845
52,588
29,107
Executive Directors
Richard
Hyde
31 Dec 19
31 Dec 18
31 Dec 19
Lyndon
Hopkins1
31 Dec 18
Non-Executive Directors
31 Dec 19
Simon
31 Dec 18
Storm
31 Dec 19
Mark
31 Dec 18
Connelly
Nigel
Spicer
Rod
Leonard
Ian
Kerr
31 Dec 19
31 Dec 18
31 Dec 19
31 Dec 18
31 Dec 19
31 Dec 18
Executives
31 Dec 19
Padraig
O’Donoghue 31 Dec 18
31 Dec 19
Matthew
31 Dec 18
Wilcox
31 Dec 19
31 Dec 18
Total
Cash salary
and fees
$
400,000
150,000
273,973
114,155
80,850
46,495
100,000
32,500
60,292
-
20,358
-
70,445
15,982
251,142
105,023
273,973
84,475
1,531,033
548,630
1Mr Hopkins was part of the Executives in the prior year.
-
-
-
-
-
-
1,934
-
6,507
1,518
23,858
9,977
26,027
8,025
84,353
30,365
Total
$
400,000
150,000
352,588
154,107
80,850
46,495
100,000
32,500
60,292
-
22,292
-
76,952
17,500
-
-
-
-
-
-
-
-
-
-
32,132
10,966
24,631
2,787
109,351
42,860
307,132
125,966
324,631
95,287
1,724,737
621,855
Cash
Bonus
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Options
$
122,881
48,913
39,979
15,632
55,951
18,261
175,068
13,956
-
-
-
-
58,940
284
48,540
9,442
86,938
16,764
588,297
123,252
Performance
rights
(ZEPOs)
$
Fixed
remuneration
%
Total
$
Remuneration
linked to
performance
%
158,147
1,300
97,188
799
-
-
-
-
-
-
-
-
-
-
29,131
239
-
-
284,466
2,338
281,028
50,213
137,167
16,431
55,951
18,261
175,068
13,956
-
-
-
-
58,940
284
77,672
9,681
86,938
16,764
872,764
125,590
59%
75%
72%
90%
59%
72%
36%
70%
100%
0%
100%
0%
57%
98%
80%
93%
79%
85%
66%
83%
41%
25%
28%
10%
41%
28%
64%
30%
0%
0%
0%
0%
43%
2%
20%
7%
21%
15%
34%
17%
P a g e | 21
West African Resources Limited
Remuneration Report
STI performance and outcomes for 2019
For the year ended 31 December 2019 actual average performance and achievement of the performance metrics set out in
section 4(C)(ii) above for the KMP was 100% of target performance.
500,000 STI PEPOs vested during the year ended 31 December 2019 and 963,948 STI ZEPO remain unvested. Shareholder
approval will be sought for 334,927 of the unvested 2019 STI ZEPOs that Executive Directors, Richard Hyde and Lyndon Hopkins,
have elected to receive in place of the cash component of the STI entitlement.
LTI performance and outcomes for 2019
For the year ended 31 December 2019 actual average performance and achievement of the performance metrics set out in
section 4(C)(iii) above for the KMP was 56% of target performance.
1,223,828 (LTI PEPOs) have vested and 944,167 (LTI ZEPOs) remain unvested.
Clawback of remuneration
In the event of serious misconduct, the Board has the discretion to reduce, cancel or clawback any unvested short -term or long-
term incentives.
6)
EXECUTIVE EMPLOYMENT ARRANGEMENTS
A summary of the key terms of employment agreements for executives is set out below. There is no fixed term for executive
service agreements and all executives are entitled to participate in the Company’s STI and LTI plans. The Company may terminate
employment agreements immediately for cause, in which the executive is not entitled to any payment other than the value of
fixed remuneration and accrued leave entitlements up to the termination date.
Name
Richard Hyde (Executive Director and CEO)1
Lyndon Hopkins (Executive Director and COO)
Padraig O’Donoghue (Chief Financial Officer)
Matthew Wilcox (Chief Development Officer)
Salary (inclusive of
Super)
$400,0002
$300,000
$275,000
$300,000
Notice period
3-6 months3
Termination payment
3-6 months salary4
2 months
1 month
2 months
per NES5
per NES5
per NES5
Notes
1Executive service agreement (ESA) entered into post year end and effective from 1 March 2020
2ESA provides for a salary increase from $400,000 to $585,000 starting from the date of commercial production of Sanbrado
33 months’ notice period if terminated by Director or 6 months’ notice period if terminated by Company
43months salary in lieu of notice if terminated by Director or 6 months’ salary if terminated by Company
5NES are National Employment Standards as defined in the Fair Work Act 2009 (Cth)
P a g e | 22
West African Resources Limited
Remuneration Report
7)
ADDITIONAL STATUTORY DISCLOSURES
This section sets out the additional disclosures required under the Corporations Act 2001.
A.
SHARE-BASED COMPENSATION
Options granted as compensation during the year
Grant date
14-Feb-2019
Total
Number granted
Value per option at grant date
Value of options at grant date
259,516
259,516
$0.2890
$75,000
$75,000
Options forfeited / lapsed during the year
Director
Mark Connelly
Lyndon Hopkins
Total
Grant date
03-Jun-2016
03-Jun-2016
Number forfeited / lapsed during the period
1,000,000
500,000
1,500,000
Share holdings of Key Management Personnel
Balance
1 Jan 2019
Issued as
remuneration
Issued on exercise
of options
Net change
other
Balance
31 Dec 2019
Directors
Richard Hyde
Lyndon Hopkins
Simon Storm
Mark Connelly
Nigel Spicer
Rod Leonard
Ian Kerr1
Executives
Padraig O'Donoghue
Matthew Wilcox
Total
18,280,769
3,000,000
3,090,769
60,000
-
-
-
112,995
400,000
24,944,533
1Mr Kerr resigned as a Director on 6 September 2019.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(500,000)
-
-
-
-
-
-
18,280,769
3,000,000
2,590,769
60,000
-
-
-
112,995
400,000
(500,000)
24,444,533
P a g e | 23
West African Resources Limited
Remuneration Report
Option holdings of Key Management Personnel
Directors
Richard Hyde
Lyndon Hopkins
Simon Storm
Mark Connelly
Nigel Spicer
Rod Leonard
Ian Kerr1
Executives
Padraig O'Donoghue
Matthew Wilcox
Total
Balance
1 Jan 2019
Granted as
remuneration
Options
exercised
Net change
other
Balance
31 Dec 2019
Total
Vested
Unvested
At 31 December 2019
3,660,899
2,016,949
750,000
3,000,000
-
-
500,000
1,012,712
1,000,000
11,940,560
-
-
77,855
103,806
-
-
77,855
-
-
259,516
-
-
-
-
-
-
-
-
-
-
-
(500,000)
-
(1,000,000)
-
-
(577,855)
-
-
(2,077,855)
3,660,899
1,516,949
827,855
2,103,806
-
-
-
3,660,899
1,516,949
827,855
2,103,806
-
-
-
588,235
355,932
-
-
-
-
-
1,012,712
1,000,000
10,122,221
1,012,712
1,000,000
10,122,221
279,661
500,000
1,723,828
3,072,664
1,161,017
827,855
2,103,806
-
-
-
733,051
500,000
8,398,393
1Mr Kerr resigned as a Director on 6 September 2019.
P a g e | 24
West African Resources Limited
Remuneration Report
B.
LOANS TO KEY MANAGEMENT PERSONNEL
A loan of $290,000 was provided to Richard Hyde in a prior year to exercise 2,000,000 options at 14.5 cents. The loan charges
interest at 5.5% per annum and the maturity date has been extended from 31 December 2018 to 30 June 2020. At year end, the
balance due was $319,673 (31 December 2018: $303,723).
C.
ADDITIONAL DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL
Consolidated
31 December 2019 31 December 2018
$'000
$'000
Directors
Transaction: Fees paid to Dorado Corporate Services Pty Ltd which has provided
company secretarial and accounting services (ceased in 2019) to the company on
normal commercial terms, for whom Mr Storm, a Director and Company Secretary,
is a director and shareholder. This excludes fees included as remuneration noted
under 5.
Balance: Amount payable to Dorado Corporate Services Pty Ltd at balance date $Nil
(31 December 2018: $14,967).
Transaction: The Executive Chairman Richard Hyde’s spouse rented office premises
to the Company for $440 per week at 14 Southbourne Street, Scarborough,
Western Australia until 28 October 2018.
Balance: Amount payable to Executive Chairman’s spouse at balance date $Nil
(31 December 2018: $Nil).
End of Audited Remuneration Report.
-
-
-
18
11
29
P a g e | 25
West African Resources Limited
Directors’ Report
AUDITOR INDEPENDENCE
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the Directors of the Company with an
Independence Declaration in relation to the audit of the financial report. This written Auditor’s Independence Declaration is set out
on page 66 and forms part of this Directors’ Report.
Signed in accordance with a resolution of the Directors.
RICHARD HYDE
Executive Chairman
Perth, 26 March 2020
P a g e | 26
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
Revenue from continuing operations
Personnel costs
Consultants
Contractors
Occupancy costs
Legal costs
Travel and accommodation
Exploration and evaluation expenses
Listed entity costs
Overheads
Interest expense – lease
Forex realised gain (loss)
Forex unrealised gain (loss)
Other expenses
Impairment of other receivables
Depreciation expense
Loss before tax
Income tax expense
Loss after tax
Note
3(a)
3(b)
3(c)
4
OTHER COMPREHENSIVE INCOME:
Items that may be reclassified subsequently to profit
or loss:
Foreign currency translation differences for foreign
operations
Other comprehensive profit (loss), net of income tax
Total comprehensive profit (loss) for the period
Profit (loss) attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive loss attributable to:
Owners of the parent
Non-controlling interest
Basic and diluted loss per share (cents per share)
5
Consolidated
Twelve months ended
31 December 2019
$'000
Six months ended
31 December 2018
$'000
1,239
(2,918)
(628)
(16)
(71)
(22)
(318)
(2,221)
(194)
(370)
(5)
(987)
2,361
-
-
(184)
(4,334)
-
(4,334)
(1,213)
(1,213)
(5,547)
(4,275)
(59)
(4,334)
(5,488)
(59)
(5,547)
(0.5)
405
(639)
(283)
(4)
(42)
(110)
(71)
(1,672)
(176)
(99)
-
-
(175)
(13)
(582)
(90)
(3,551)
-
(3,551)
717
717
(2,834)
(3,536)
(15)
(3,551)
(2,819)
(15)
(2,834)
(0.5)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
P a g e | 27
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
Note
31 December 2019
31 December 2018
Consolidated
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Right-of-use assets
Mine properties
Other non-current assets
Total non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Lease liabilities
Total current liabilities
NON-CURRENT LIABILITIES
Loans and borrowings
Lease liabilities
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Equity attributable to owners of the parent
Non-controlling interest
6
7
8
9
10
11
12
13
14
13
14
15
16
17
$'000
83,584
1,501
38
85,123
224
8,135
242,477
-
250,836
335,959
13,890
22
1,866
15,778
235,063
6,609
4,278
245,950
261,728
74,231
162,919
7,373
(93,940)
76,352
(2,121)
$'000
66,355
851
37
67,243
388
-
18,830
3,148
22,366
89,609
9,690
-
-
9,690
-
-
2,155
2,155
11,845
77,763
161,947
7,544
(89,640)
79,851
(2,088)
TOTAL EQUITY
74,231
77,763
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
P a g e | 28
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
Consolidated
Note
31 December 2019
$'000
31 December 2018
$'000
OPERATING ACTIVITIES
Payments to suppliers and employees
Exploration and evaluation expenditure
Interest received
Interest paid
Finance costs
Other income
Net cash outflow from operating activities
INVESTING ACTIVITIES
Payments for plant and equipment
Development expenditure
Capitalised interest paid during construction
Net cash outflow from investing activities
FINANCING ACTIVITIES
Proceeds from issue of shares
Proceeds from exercise of share options
Proceeds from borrowings
Payments for share issue costs
Payments for lease liabilities
Transaction costs related to loans and borrowings
Net cash inflow from financing activities
6
13
13
Net increase (decrease) in cash held
Cash at the beginning of the financial period
Effect of exchange rate changes on the balance of cash held
in foreign currencies
Cash at the end of the financial period
6
(6,398)
(1,452)
1,266
(5)
-
2
(6,587)
(54)
(200,027)
(8,887)
(208,968)
219
770
251,799
(17)
(1,130)
(19,077)
232,564
17,009
66,355
220
83,584
(1,777)
(2,880)
428
-
(1)
-
(4,230)
(116)
(11,756)
-
(11,872)
43,175
-
-
(2,043)
-
(1,066)
40,066
23,965
42,565
(175)
66,355
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
P a g e | 29
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
Balance at 1 July 2018
Loss after tax
Other comprehensive income
Total comprehensive loss for the period
Shares issued during the period net of transaction costs
Transfer to non-controlling interest
Share-based payments
Balance at 31 December 2018
Balance at 1 January 2019
Loss after tax
Other comprehensive loss for the year
Total comprehensive loss for the year
Shares issued during the year net of transaction costs
Transfer to non-controlling interest
Share-based payments
Balance at 31 December 2019
Consolidated
Issued capital
$'000
Accumulated losses
$'000
Foreign currency
translation reserve
$'000
Share-based
payments reserve
$'000
Non-controlling
interest
$'000
120,815
-
-
-
41,132
-
-
161,947
161,947
-
-
-
972
-
-
162,919
(88,176)
(3,536)
-
(3,536)
-
2,073
-
(89,639)
(89,639)
(4,275)
-
(4,275)
-
(26)
-
(93,940)
(47)
-
717
717
-
-
-
670
670
-
(1,213)
(1,213)
-
-
-
(543)
6,701
-
-
-
-
-
172
6,873
6,873
-
-
-
-
-
1,043
7,916
-
(15)
-
(15)
-
(2,073)
-
(2,088)
(2,088)
(59)
-
(59)
-
26
-
(2,121)
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Total
$'000
39,292
(3,551)
717
(2,834)
41,132
-
172
77,763
77,763
(4,334)
(1,213)
(5,547)
972
-
1,042
74,231
P a g e | 30
West African Resources Limited
Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1)
A.
BASIS OF PREPARATION
BASIS OF ACCOUNTING
These financial statements are presented in Australian dollars and are general purpose financial statements which have been
prepared in accordance with applicable accounting standards, the Corporations Act 2001 and mandatory professional reporting
requirements in Australia (including the Australian equivalents of International Financial Reporting Standards). They have also
been prepared on the basis of historical cost and do not take into account changing money values. The accounting policies are
consistent with those of the previous financial period, unless otherwise stated.
On 13 November 2018, the Company announced a change in its financial year end from 30 June to 31 December. This change
more closely aligns the Company’s reporting period with its subsidiaries’ operations in Burkina Faso. The Company is therefore
reporting on a twelve-month accounting period from 1 January 2019 to 31 December 2019 with comparative accounting period
being the 6 months from 1 July 2018 to 31 December 2018.
West African Resources Limited (the “Company”) is a public company, incorporated and operating in Australia. The Company
was incorporated on 1 September 2006 as a proprietary company and converted to a public company on 16 November 2007.
The Company listed on the Australian Securities Exchange Ltd on 11 June 2010.
Information for West African Resources Limited as an individual parent entity is provided in Note 27.
B.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the Group. The financial statements of the
subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.
All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been
eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered. Subsidiaries are consolidated from the
date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred
out of the Group. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for
the part of the reporting period during which West African Resources Limited has control.
C.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in Rounding Instrument 2016/191, issued by the Australian Securities and Investments
Commission, relating to the “rounding off” of amounts in the financial statements. Amounts in the financial statements have
been rounded off in accordance with that Rounding Instrument to the nearest thousand dollars ($000’s), unless otherwise
stated.
D.
STATEMENT OF COMPLIANCE
These consolidated financial statements are general purpose financial statements prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations, International Financial
Reporting Standards and complies with other requirements of the law. The consolidated financial statements were authorised
for issue on 26 March 2020.
P a g e | 31
West African Resources Limited
Notes to the Financial Statements
1) BASIS OF PREPARATION (CONTINUED)
E.
SIGNIFICANT ACCOUNTING JUDGEMENTS AND KEY ESTIMATES
The preparation of this financial report requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates.
In preparing this financial report, the following key judgements, estimates and assumptions were made by management in
applying the Group’s accounting policies:
Accounting for leases
• Assessment of contracts to determine whether they contain a lease and if so, whether they also contain non-lease
components.
• Estimated useful lives and depreciation of right-of-use assets.
• Discount rate of the lease used in the calculation of lease liabilities.
Exploration and evaluation expenditure
• Whether a decision had been made to proceed with development in respect of a particular area of interest.
Mine rehabilitation provision
• Best estimate of future cash flows to settle mine restoration obligations.
• Discount rate used in the calculation of the rehabilitation provision.
Property plant and equipment
• The useful lives and depreciation rates for plant and equipment.
• Assessment of assets for impairment of their carrying value.
Consolidation
• Functional currency of each entity in the Group.
F.
EXPLORATION AND EVALUATION EXPENDITURE
Mineral exploration and evaluation costs are expensed as incurred. Acquisition costs will normally be expensed but will be
assessed on a case by case basis and if appropriate may be capitalised. These acquisition costs are only carried forward to the
extent that they are expected to be recouped through the successful development or sale of the tenement. Accumulated
acquisition costs in relation to an abandoned tenement are written off in full against profit or loss in the year in which the
decision to abandon the tenement is made.
Where a decision has been made to proceed with development in respect of a particular area of interest, all future costs are
recorded as a development asset.
Following the issuance of the updated exploitation permit for the Sanbrado Gold Project on 18 July 2018, exploration and
evaluation costs incurred within the Sanbrado mining licence subsequent to that date have been recorded as a development
asset.
P a g e | 32
West African Resources Limited
Notes to the Financial Statements
1) BASIS OF PREPARATION (CONTINUED)
G. MINE PROPERTIES
Mines under construction
Exploration and evaluation costs are added to ‘Mines under construction’ which is a sub-category of ‘Mine properties’ after a
decision has been made to proceed with development in respect of a particular area of interest and such development receives
appropriate approvals.
All subsequent expenditure on the construction, installation or completion of infrastructure facilities is capitalised in ‘Mines
under construction’. Development expenditure is net of proceeds from the sale of ore extracted during the development phase
to the extent that it is considered integral to the development of the mine. Any costs incurred in testing the assets to determine
if they are functioning as intended, are capitalised, net of any proceeds received from selling any product produced while
testing. Where these proceeds exceed the cost of testing, any excess is recognised in the statement of profit or loss and other
comprehensive income. After production starts, all assets included in ‘Mines under construction’ are then transferred to
’Producing mines’ which is also a sub-category of ‘Mine properties’. No mine under construction costs were recognised prior
to the transition period.
H.
CASH AND CASH EQUIVALENTS
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined
above.
I.
INCOME TAX
The income tax expense or benefit for the year is based on the profit or loss for the year adjusted for any non-assessable or
disallowed items. It is calculated using tax rates that have been enacted or are substantially enacted as at balance date.
Deferred tax is provided on all temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or
liability, excluding a business combination, where there is no effect on accounting or taxation profit or loss.
Deferred income tax assets are recognised to the extent that it is probable that the future tax profits will be available against
which deductible temporary differences will be utilised. The amount of the benefits brought to account or which may be
realised in the future is based on the assumption that no adverse change will occur in the income taxation legislation and the
anticipation that the economic unit will derive sufficient future assessable income to enable the benefits to be realised and
comply with the conditions of deductibility imposed by law.
J.
OTHER TAXES
Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case
the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in
the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as operating cash
flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
P a g e | 33
West African Resources Limited
Notes to the Financial Statements
1) BASIS OF PREPARATION (CONTINUED)
K.
PLANT AND EQUIPMENT
Each class of property, plant and equipment is carried at cost or fair value, less where applicable, any accumulated depreciation
and impairment losses. The carrying amount of the plant and equipment is reviewed annually by the Directors to ensure it is
not in excess of the recoverable amount of these assets. The recoverable amount is assessed on the basis of the expected net
cash flows that will be received from the assets employed and their subsequent disposal. The expected net cash flows have
been discounted to their present value in determining recoverable amounts.
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is
depreciated on a straight-line basis over their useful lives to the Company commencing from the time the asset is held ready
for use. The asset’s residual value and useful lives are reviewed and adjusted if appropriate, at each balance sheet date.
An asset’s carrying value is written down immediately to its recoverable amount if the asset’s carrying value is greater than the
estimated recoverable amount. Gains and losses on disposal are determined by comparing proceeds with the carrying amount.
These gains and losses are included in the statement of profit or loss and other comprehensive income.
L.
RECOVERABLE AMOUNT OF NON-CURRENT ASSETS
The carrying amounts of non-current assets are reviewed annually by Directors to ensure they are not in excess of the
recoverable amounts from those assets. The recoverable amount is assessed on the basis of the expected net cash flows, which
will be received from the assets employed and subsequent disposal. The expected net cash flows have been or will be
discounted to present values in determining recoverable amounts.
M.
TRADE AND OTHER ACCOUNTS PAYABLE
Trade and other accounts payable represent the principal amounts outstanding at balance date, plus, where applicable, any
accrued interest.
N.
BORROWINGS
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised
over the period of the facility to which it relates.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or
transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is
recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting period.
O.
ISSUED CAPITAL
Ordinary Shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a
business, are included in the cost of the acquisition as part of the purchase consideration.
P a g e | 34
West African Resources Limited
Notes to the Financial Statements
1) BASIS OF PREPARATION (CONTINUED)
P.
EMPLOYEE BENEFITS
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date.
These benefits include wages and salaries, annual leave, and long service leave.
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within
12 months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to
be paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated
future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the
present value of future cash outflows, the market yield as at the reporting date on national government bonds, which have
terms to maturity approximating the terms of the related liability, are used.
Q.
SHARE-BASED PAYMENTS
The Group provides benefits to employees (including Directors) of the Group in the form of share-based payment transactions,
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 at which they are
granted. The fair value is determined by a valuation using Black-Scholes or Binomial option pricing models.
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 (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the
Directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. 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.
R.
FOREIGN CURRENCY TRANSLATION
Both the functional and presentation currency of West African Resources Limited and its Australian subsidiary are Australian
dollars. Each entity in the Group determines its own functional currency and items included in the financial statements of each
entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of
exchange ruling at the balance date.
All exchange differences in the consolidated financial report are taken to profit or loss with the exception of differences on
foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity
until the disposal of the net investment, at which time they are recognised in profit or loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate
as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the
fair value was determined.
P a g e | 35
West African Resources Limited
Notes to the Financial Statements
1) BASIS OF PREPARATION (CONTINUED)
R.
FOREIGN CURRENCY TRANSLATION (CONTINUED)
The functional currency of the foreign subsidiaries, Wura Resources Pty Ltd SARL, West African Resources Development SARL,
Tanlouka SARL and Société des Mines de Sanbrado SARL, is the Communaute Financière Africaine Franc (CFA). The functional
currency of the foreign subsidiary, Channel Resources Ltd is the Canadian Dollar (CAD). The functional currency of the foreign
subsidiaries, Channel Resources (Cayman I) Ltd and Channel Resources (Cayman II) Ltd is the United States Dollar (USD).
As at the reporting date the assets and liabilities of the subsidiaries are translated into the presentation currency of West
African Resources Limited at the rate of exchange ruling at the balance date and their income and expenses are translated at
the average exchange rate for the year.
The exchange differences arising on the translation are taken directly to a separate component of equity, being recognised in
the foreign currency translation reserve.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign
operation is recognised in profit or loss.
S.
FINANCIAL ASSETS
Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, at fair value through other
comprehensive income (OCI), or fair value through profit or loss (FVTPL).
The classification of financial assets at initial recognition that are debt instruments depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do
not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially
measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction
costs. Trade receivables that do not contain a significant financial component or for which the Group has applied the practical
expedient for contracts that have a maturity of one year or less, are measured at the transaction price determined under AASB
15.
In order for a financial asset to be classified and measured at amortised cost of fair value through OCI, it needs to give rise to
cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate
cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the
financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention
in the market place (regular way trades) are recognised on the trade date, i.e. the date that the Group commits to purchase or
sell the asset.
Subsequent measurement
For the purposes of subsequent measurement, financial assets are classified in four categories:
i.
ii.
iii.
Financial assets at amortised cost (debt instruments)
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
iv.
Financial assets at fair value through profit or loss
P a g e | 36
West African Resources Limited
Notes to the Financial Statements
1) BASIS OF PREPARATION (CONTINUED)
S.
FINANCIAL ASSETS (CONTINUED)
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following
conditions are met:
• The financial asset is held within a business model with the objectives to hold financial assets in order to collect contractual
cash flows; and
• The contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to
impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other
comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial assets at fair value through profit or loss
Financial assets that do not meet the criteria for amortised cost are measured at fair value through profit or loss.
T.
INTANGIBLE ASSETS
Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset
acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets
are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible
assets, excluding capitalised development costs, are not capitalised and expenditure is charged against profits in the year in
which the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised
over the useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired.
The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at
each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, which is a
change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in
the expense category consistent with the function of the intangible asset.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating
unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed each
reporting period to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful
life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a
prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.
U.
PARENT ENTITY FINANCIAL INFORMATION
The financial information for the parent entity, West African Resources Limited, disclosed in Note 27 has been prepared on the
same basis as the Group.
P a g e | 37
West African Resources Limited
Notes to the Financial Statements
2)
SEGMENT REPORTING
AASB 8 requires a “management approach” under which segment information is presented on the same basis as that used for
internal reporting purposes.
Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker has been identified as the Board of West African Resources Limited.
The Group operates in only one business and geographical segment being predominantly in the area of mineral exploration
and development in Burkina Faso, Africa. The Group considers its business operations in mineral exploration and development
to be its primary reporting function.
3)
REVENUE AND EXPENSES
(a) Revenue
Interest received
(b) Personnel costs
Salaries and wages
Other employment expenses
(c) Depreciation expense
Plant and equipment
Right-of-use asset
Consolidated
Twelve months ended
31 December 2019
$'000
Six months ended
31 December 2018
$'000
1,239
1,239
1,791
1,127
2,918
89
95
184
405
405
345
294
639
90
-
90
P a g e | 38
West African Resources Limited
Notes to the Financial Statements
4)
A.
B.
INCOME TAX
INCOME TAX RECOGNISED IN PROFIT OR LOSS
No income tax is payable by the consolidated entity as it recorded losses for income tax purposes for the year.
NUMERICAL RECONCILIATION BETWEEN INCOME TAX EXPENSE AND THE LOSS BEFORE INCOME
TAX.
The prima facie income tax benefit on pre-tax accounting loss from operations reconciles to the income tax benefit in the
financial statements as follows:
Consolidated
Twelve months ended
Six months ended
31 December 2019
31 December 2018
Accounting loss before tax
Income tax benefit at 27.5%
Non-deductible expenses:
Foreign exchange (gain) loss
Share-based payments
Impairment of loan to third party
Impairment of other receivables
Other non-deductible expenses
Temporary differences not recognised
Income tax benefit not recognised
Tax losses utilised not previously brought to account
Income tax benefit attributable to loss from ordinary activities
before tax
Unrecognised deferred tax balances
Tax losses attributable to members of the group - revenue
Potential tax benefit at 27.5%
Deferred tax liabilities
Taxable temporary differences:
- accrued interest
- prepayments
Deferred tax asset not booked
Amounts recognised in profit and loss:
- accrued expenses
- provisions
- share issue costs
Net unrecognised deferred tax asset at 27.5%
$’000
(4,334)
1,192
(601)
268
-
-
(4)
(1,456)
-
601
-
87,076
23,946
(13)
(100)
1,503
1,841
1,191
28,368
$’000
(3,551)
976
41
(47)
(4)
(160)
(1)
(292)
(493)
-
75,185
20,676
-
-
807
1,290
1,187
23,960
P a g e | 39
West African Resources Limited
Notes to the Financial Statements
5)
LOSS PER SHARE
Consolidated
Twelve months ended
31 December 2019
$
Six months ended
31 December 2018
$
Basic and diluted loss per share (cents per share)
(0.5)
(0.5)
The loss and weighted average number of ordinary shares used in
the calculation of basic earnings per share is as follows:
Loss for the year
(4,333,608)
(3,550,653)
Weighted average number of shares outstanding during the year
used in calculations of basic loss per share
868,631,331
707,811,612
6)
CASH AND CASH EQUIVALENTS
Consolidated
31 December 2019
$'000
31 December 2018
$'000
Cash at bank and in hand
Short-term deposits
83,584
-
83,584
CASHFLOW RECONCILIATION
Reconciliation of net profit (loss) after income tax to net cashflows from operating activities
Profit (Loss) after income tax
Depreciation
Share-based payments
Foreign exchange (gain) loss
Impairment of non-current assets and other receivables
Changes in assets and liabilities
(Increase) Decrease in trade and other receivables
(Decrease) Increase in trade and other payables
Net cashflows from operating activities
(4,334)
184
1,043
(2,363)
-
(5,470)
173
(1,290)
(6,587)
7,297
59,058
66,355
(3,551)
90
172
175
595
(2,519)
(377)
(1,334)
(4,230)
P a g e | 40
West African Resources Limited
Notes to the Financial Statements
7)
TRADE AND OTHER RECEIVABLES
Current
Interest receivable
Prepayments
Other receivables
Loan to Director
Allowance for impairment
Consolidated
31 December 2019
$'000
31 December 2018
$'000
45
362
2,858
320
(2,084)
1,501
91
204
2,417
304
(2,166)
851
Other receivables include value added taxes receivable of $2,084,487 from the revenue authorities of Burkina Faso. An
allowance for impairment for this amount has been made pending the outcome of a submission to the revenue authorities in
Burkina Faso.
Movement in the allowance for doubtful debts
Balance at the beginning of the year
Impairment losses and reversals recognised on receivables
Balance at the end of the year
Ageing of past due but not impaired
30 - 60 days
60 - 90 days
90 - 120 days
Total
Consolidated
31 December 2019
$'000
31 December 2018
$'000
(2,166)
82
(2,084)
819
-
320
1,139
(1,584)
(582)
(2,166)
343
-
304
647
P a g e | 41
West African Resources Limited
Notes to the Financial Statements
8)
PROPERTY, PLANT AND EQUIPMENT
Consolidated
31 December 2019
$'000
31 December 2018
$'000
Buildings
Gross carrying amount at cost
Accumulated depreciation
Net carrying amount
Office equipment
Gross carrying amount at cost
Accumulated depreciation
Net carrying amount
Plant and equipment
Gross carrying amount at cost
Accumulated depreciation
Net carrying amount
Motor vehicle
Gross carrying amount at cost
Accumulated depreciation
Net carrying amount
Total property, plant and equipment owned
188
(137)
51
302
(246)
56
1,665
(1,580)
85
928
(896)
32
224
191
(89)
102
264
(214)
50
1,690
(1,503)
187
933
(885)
48
388
P a g e | 42
West African Resources Limited
Notes to the Financial Statements
8)
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Consolidated
31 December 2019
$'000
31 December 2018
$'000
Movement in property, plant and equipment owned
Buildings
At the beginning of the year
Additions
Depreciation expensed for the year
Depreciation capitalised for the year
Effects of movement in foreign exchange
At 31 December net of accumulated depreciation
Office equipment
At the beginning of the year
Additions
Depreciation expensed for the year
Depreciation capitalised for the year
Effects of movement in foreign exchange
At 31 December net of accumulated depreciation
Plant and equipment
At the beginning of the year
Additions
Depreciation expensed for the year
Depreciation capitalised for the year
Effects of movement in foreign exchange
At 31 December net of accumulated depreciation
Motor vehicle
At the beginning of the year
Additions
Depreciation expensed for the year
Depreciation capitalised for the year
Effects of movement in foreign exchange
At 31 December net of accumulated depreciation
At 31 December
The useful life of the assets is estimated as 3 years.
102
-
(3)
(47)
(1)
51
50
40
(12)
(22)
-
56
188
-
(50)
(51)
(2)
85
48
8
(24)
-
-
32
224
123
1
(25)
3
102
19
40
(9)
-
50
230
-
(47)
5
188
3
54
(9)
-
48
388
P a g e | 43
West African Resources Limited
Notes to the Financial Statements
9)
RIGHT-OF-USE ASSETS
Balance at 1 January 2019
Additions
Depreciation charge for the year
Effects of movement in foreign exchange
Balance at 31 December 2019
10) MINE PROPERTIES
Mines under construction
Balance at the start of the period
Additions
Change in rehabilitation provision
Effects of movement in foreign exchange
Balance at the end of the period
11) OTHER NON-CURRENT ASSETS
Transaction costs
Property
$'000
Equipment
$'000
-
127
(95)
-
32
-
9,479
(1,391)
15
8,103
Total
$'000
-
9,606
(1,486)
15
8,135
Consolidated
31 December 2019
$'000
31 December 2018
$'000
18,830
222,878
2,098
(1,329)
242,477
-
16,555
2,121
154
18,830
Consolidated
31 December 2019
$'000
31 December 2018
$'000
-
-
3,148
3,148
At 31 December 2018, the transaction costs represent amounts directly attributable to establishing the project debt facility
prior to execution and drawdown of the facility. These amounts were reclassified to loans and borrowings upon initial
drawdown of the facility in the year ended 31 December 2019 (refer to Note 13A).
12) TRADE AND OTHER PAYABLES
Current
Trade payables
Accruals
Other payables
Consolidated
31 December 2019
$'000
31 December 2018
$'000
8,091
5,465
334
13,890
6,383
2,936
371
9,690
Trade payables are non-interest bearing and are normally settled on 30-day terms.
P a g e | 44
West African Resources Limited
Notes to the Financial Statements
13) LOANS AND BORROWINGS
Current
Non-current
A.
PROJECT DEBT FACILITY
Non-current
Project debt facility
Consolidated
31 December 2019
$'000
31 December 2018
$'000
22
235,063
235,085
-
-
-
Consolidated
31 December 2019
$'000
31 December 2018
$'000
230,325
230,325
-
-
A project debt facility with a drawdown limit of US$200 million was executed during the year with Taurus Funds Management
Pty Ltd for the development of the Sanbrado gold project. The facility is secured against the assets of the Group, with interest
charged at 7.75% per annum on drawn amounts and 2% per annum on the undrawn amount. The balance drawn at 31
December 2019 was US$175 million (A$251,799,000), with US$25 million (A$33 million) remaining undrawn. The Group is also
obligated to pay a product fee under the facility (refer to Note 19(C)(i)).
B.
SUPPLIER LOAN FACILITIES
Current
Non-current
Consolidated
31 December 2019
$'000
31 December 2018
$'000
22
4,738
4,760
-
-
-
A loan facility was entered into with Byrnecut Burkina Faso SARL as a component of the Sanbrado underground mining services
contract, with a limit of US$10 million. Interest is charged at a rate of 9.75% per annum. The balance outstanding under the
facility, inclusive of interest, at 31 December 2019 was US$3.3 million (A$4,760,000). The interest is payable half-yearly and
the principal is due 6 months before termination of the 5-year services contract.
Loans and borrowings repayment profile
The principal repayment plus interest profile of the project debt and supplier facilities at 31 December 2019 appears in the
table below.
Project debt facility
Supplier facility
Total
6 months or less
$'000
6-12 months
$'000
10,708
22
10,730
11,291
-
11,291
1-5 years
$'000
312,631
4,738
317,369
More than 5 years
$'000
-
-
-
P a g e | 45
West African Resources Limited
Notes to the Financial Statements
14) LEASES
Current
Non-current
Amounts recognised in profit or loss
Interest on lease liabilities
Expenses relating to short-term leases
Amounts recognised in the statement of cash flows
Consolidated
31 December 2019
$'000
31 December 2018
$'000
1,866
6,609
8,475
-
-
-
Consolidated
31 December 2019
$'000
31 December 2018
$'000
5
70
75
-
39
39
Consolidated
31 December 2019
$'000
31 December 2018
$'000
Total cash outflow for leases
784
-
Maturity analysis – contractual undiscounted cash flows
Leases
Less than one year
$'000
2,387
1-5 years More than 5 years
$'000
-
$'000
7,417
Changes in liabilities arising from financing activities
Loans and borrowings
$’000
Consolidated
Lease liabilities
$’000
Balance at the beginning of the year
Net cash from (used in) financing activities
Transfer of prior year capitalised borrowing
costs
Amortisation of borrowing costs
Effects of movement in foreign exchange
Other changes
Supplier facility utilised
Leases entered into during the year
Balance at the end of the year
-
232,722
(1,066)
1,208
(2,511)
(28)
4,760
-
235,086
127
(1,130)
-
-
-
-
-
9,478
8,475
Total
$'000
9,804
Total
$’000
127
231,592
(1,066)
1,208
(2,511)
(28)
4,760
9,478
243,560
P a g e | 46
West African Resources Limited
Notes to the Financial Statements
15) PROVISIONS
Non-current
Long service leave provision
Rehabilitation provision
Reconciliation of movements in rehabilitation provision:
Balance at the start of the period
Increase in rehabilitation provision during the period
Balance at the end of the period
Consolidated
31 December 2019
$'000
31 December 2018
$'000
60
4,218
4,278
2,121
2,098
4,218
35
2,121
2,155
-
2,121
2,121
The rehabilitation provision is the best estimate of the present value of the future cash flows required to settle the Sanbrado
mine site restoration obligations at the reporting date, based on current legal requirements and technology. The amount
provided each period is also capitalised as an asset in mine properties.
16)
ISSUED CAPITAL
Fully paid ordinary shares
(a) Number of shares
At start of period
Issue of shares 13 December 2018
Issue of shares 30 January 2019
Issue of shares 27 March 2019
Issue of shares on exercise of options
Balance at end of period
(b) Value of shares
At start of period
Issue of shares 13 December 2018
Issue of shares 30 January 2019
Issue of shares 27 March 2019
Issue of shares on exercise of options
Share issue costs
Balance at end of period
Consolidated
31 December 2019
$'000
31 December 2018
$'000
162,919
161,947
No.
No.
863,524,727
-
876,000
5,000,000
6,078,125
870,478,852
$'000
161,947
-
219
423
347
(17)
162,919
690,824,727
172,700,000
-
-
-
863,524,727
$'000
120,815
43,175
-
-
-
(2,043)
161,947
P a g e | 47
West African Resources Limited
Notes to the Financial Statements
17) RESERVES
Consolidated
31 December 2019
$'000
31 December 2018
$'000
Reserves
7,373
7,544
Reserves comprise the following:
(a) Foreign currency translation reserve
At start of period
Currency translation differences
Balance at end of period
(b) Share-based payments reserve
At start of period
Options issued - share based payment expense
Options issued in lieu of directors fees
Balance at end of period
Nature and purpose of reserves
(a) Foreign currency translation reserve
670
(1,213)
(543)
6,874
974
68
7,916
(47)
717
670
6,701
172
-
6,873
The foreign currency translation reserve is used to record exchange differences arising from the translation of loans to foreign
subsidiaries that are expected to be repaid in the long term and the translation of the financial statements of foreign
subsidiaries.
(b) Shared-based payments reserve
The shared-based payments reserve is used to recognise the fair value of options issued to Directors, employees and other
suppliers or consultants but not exercised.
18) DIVIDENDS
No dividends have been paid or declared payable during the reporting period (31 December 2018: $Nil).
P a g e | 48
West African Resources Limited
Notes to the Financial Statements
19) COMMITMENTS AND OTHER CONTINGENCIES
A.
EXPLORATION AND MINING LEASE COMMITMENTS
In order to maintain current rights of tenure to exploration tenements, the Group is required to outlay rental fees and to meet
the minimum expenditure requirements. These discretionary costs are not provided for in the financial statements and will be
payable as follows:
Due within 1 year
Due after 1 year but not more than 5 years
Due after 5 years
B.
CAPITAL COMMITMENTS
Consolidated
31 December 2019
31 December 2018
$'000
424
33
-
457
$'000
697
539
-
1,236
Capital commitments in relation to the construction of the Sanbrado Gold Project mine site will be payable as follows:
Consolidated
31 December 2019
31 December 2018
$'000
21,626
-
-
21,626
$'000
22,336
-
-
22,336
Due within 1 year
Due after 1 year but not more than 5 years
Due after 5 years
C.
(i)
CONTINGENT LIABILITIES
Product fee (Taurus cash-settled offtake)
Under the project finance facility for the Sanbrado Gold project the Group has a contractual commitment to pay a fee on the
first 1.25 million ounces of gold sold from the Sanbrado Gold project. The fee for each ounce of gold sold will be calculated as
the spread between the LBMA quoted am fix price on the date the refined gold is credited to the Company’s metals account
and the lowest LBMA quoted gold price (am fix or pm fix) during the preceding 8 business day period.
The Group has the option to terminate the product fee commitment at any time by paying the net present value (applying a
5% annual discount rate, and assuming the timing of gold sales as set out in the mine production schedule) of an agreed price
per ounce for the remaining committed ounces.
(ii)
Other contingent liabilities
There were no other material contingent liabilities at the end of the year (31 December 2018: nil).
P a g e | 49
West African Resources Limited
Notes to the Financial Statements
20)
INTEREST IN SUBSIDIARIES
The consolidated financial statements include the financial statements of West African Resources Limited and the subsidiaries
listed in the following table:
Controlled entities
Parent Entity:
West African Resources Limited
Subsidiaries of West African Resources Limited:
WAF Finance Pty Ltd
Wura Resources Pty Ltd SARL
West African Resources Development SARL
Channel Resources Ltd
which owns
Channel Resources (Cayman I) Ltd
which owns
Channel Resources (Cayman II) Ltd
which owns
Tanlouka SARL
Société des Mines de Sanbrado SA 1
Country of
incorporation
Australia
Australia
Burkina Faso
Burkina Faso
Canada
Cayman Islands
Cayman Islands
Burkina Faso
Burkina Faso
Ownership interest
31 December 2019
31 December 2018
%
%
100
100
100
100
100
100
100
90
-
100
100
100
100
100
100
90
1The remaining 10% of Société des Mines de Sanbrado SA is held by the government of Burkina Faso which is entitled to a free carried 10%
interest in the project.
Intercompany transactions between the parent entity and its subsidiaries are eliminated on consolidation.
Consolidated
Parent Entity
31 December
2019
$'000
31 December
2018
$'000
31 December
2019
$'000
31 December
2018
$'000
Amounts owed by/(to) related parties
Subsidiaries
WAF Finance Pty Ltd
Wura Resources Pty Ltd SARL
Société des Mines de Sanbrado SA
West African Resources Development
SARL
Tanlouka SARL
Channel Resources (Cayman I) Ltd
Channel Resources (Cayman II) Ltd
Channel Resources Ltd
Total
Provision for impairment
Amounts payable to Directors for
directors' fees (including GST)
Amounts payable to Directors for
consulting fees (including GST)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
42
Further information with respect to related party transactions are included in Note 23.
14,212
22,788
44,150
560
18,717
43
44
(8)
100,506
(54,806)
45,700
-
-
-
21,865
30,576
503
17,525
-
26
(23)
70,472
(70,469)
3
16
42
P a g e | 50
West African Resources Limited
Notes to the Financial Statements
20) INTEREST IN SUBSIDIARIES (CONTINUED)
Summarised financial information for Société des Mines de Sanbrado SA before intragroup eliminations, is set out below.
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
Revenue
-
867
Twelve months ended
31 December 2019
$'000
Six months ended
31 December 2018
$'000
Profit (Loss) for the period:
Attributable to owners of the parent
Attributable to non-controlling interest
STATEMENT OF FINANCIAL POSITION
Assets
Current assets
Non-current assets
Liabilities
Current liabilities
Non-current liabilities
Equity
Attributable to owners of the parent
Attributable to non-controlling interest
STATEMENT OF CASH FLOWS
Net used in operating activities
Net used in investing activities
Net cash from (used in) financing activities
(621)
(59)
(680)
1,860
214,887
216,747
225,354
12,600
237,954
(19,086)
(2,121)
(21,207)
(1,436)
(164,211)
165,571
(76)
(138)
(15)
(153)
1,636
10,372
12,008
32,892
-
32,892
(18,796)
(2,088)
(20,884)
(245)
(10,184)
11,019
590
P a g e | 51
West African Resources Limited
Notes to the Financial Statements
21) SUBSEQUENT EVENTS AFTER THE BALANCE DATE
First gold pour
On 19 March 2020 West African announced that it has completed commissioning of the Sanbrado project and poured its
maiden gold bars weighing 23.9 kg (768 troy oz).
COVID-19 global pandemic
Since early February the Company has been following the Western Australia Health Department guidelines for the COVID-19
global pandemic and has updated staff and contractors regularly as the situation evolved. At the time of this report no staff or
contractors of the Group have tested positive for the virus (SARS-CoV-2) nor have there been any suspected cases.
WAF executive and site management undertook a COVID-19 risk assessment workshop on site at Sanbrado in mid-March 2020.
WAF’s site management team includes key people who worked through the Ebola crisis in Guinea in 2014-2015. WAF medical
staff are monitoring the body temperatures of all people entering site and will implement a self-isolation policy for anyone
suspected of being COVID-19 positive. Site management has prepared an isolation block within camp for any suspected cases
and have qualified medical personnel and sufficient supplies to deal with a COVID-19 situation.
The Company has taken early action to maintain production at Sanbrado. From a supply perspective, key reagents and
consumables are on site for the next three to six months of production and the fuel farm is near full capacity and is receiving
regular deliveries. In terms of international travel restrictions, the necessary staff are at site to manage production for the next
few months and West African has received the assurance of its mining contractors that they are doing everything possible to
maintain their services to the project.
22) AUDITORS’ REMUNERATION
The auditor of West African Resources Limited is HLB Mann Judd
Audit or review of the financial statements
All other services
Amounts received or due and receivable by non HLB Mann Judd
audit firms
Audit or review of the Burkina Faso financial reports
Consolidated
31 December 2019
$'000
31 December 2018
$'000
46
-
46
18
18
18
1
19
5
5
P a g e | 52
West African Resources Limited
Notes to the Financial Statements
23) DIRECTORS AND EXECUTIVE DISCLOSURES
A.
DETAILS OF KEY MANAGEMENT PERSONNEL
Non-Executive Directors
Simon Storm
Mark Connelly
Nigel Spicer
Rod Leonard
Ian Kerr
Executive Directors
Richard Hyde
Lyndon Hopkins*
Other Executives (KMPs)
Non-Executive Director and Company Secretary
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Chairman and CEO
Executive Director and COO
Padraig O’Donoghue
Chief Financial Officer
Matthew Wilcox
Chief Development Officer
*Date appointed a Director (employed since January 2017).
Appointed
November 2007
June 2015
September 2019
September 2019
June 2018
September 2006
September 2019
June 2018
September 2018
Resigned
-
-
-
-
September 2019
-
-
-
-
B.
COMPENSATION OF KEY MANAGEMENT PERSONNEL
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
Twelve months ended
31 December 2019
$'000
Six months ended
31 December 2018
$'000
1,640
84
873
2,597
592
30
125
747
C.
COMPENSATION BY CATEGORY OF KEY MANAGEMENT PERSONNEL FOR THE YEAR ENDED 31
DECEMBER 2019
Consulting fees were paid to Directors, details of which are included in the Remuneration Report in the Director’s Report. A
salary was paid to the Chief Operating Officer, Chief Financial Officer and Chief Development Officer, details of which are
included in the Remuneration Report in the Director’s Report.
D.
LOANS TO KEY MANAGEMENT PERSONNEL
A loan of $290,000 with 5.5% interest per annum was provided to the Mr Richard Hyde in a prior year to fund the exercise of
2,000,000 options at 14.5 cents. During the year the maturity date of the loan was extended from 31 December 2019 to 30
June 2020. The loan balance outstanding at 31 December 2019 was $311,632 (31 December 2018: $303,723).
P a g e | 53
West African Resources Limited
Notes to the Financial Statements
23) DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED)
E.
OTHER TRANSACTIONS AND BALANCES WITH KEY MANAGEMENT PERSONNEL
Transaction: Fees paid to Dorado Corporate Services Pty Ltd which
has provided company secretarial and accounting services to the
company on normal commercial terms, for whom Mr Storm,
Director and Company Secretary, is a director and shareholder.
This excludes fees included as remuneration noted under 6(a).
Balance: Amount payable to Dorado Corporate Services Pty Ltd at
balance date $Nil (31 December 2018: $14,967).
Transaction: The Executive Chairman, Richard Hyde's spouse
rented office premises to the Company for $440 per week at 14
Southbourne Street, Scarborough, Western Australia until 28
October 2018.
Balance: Amount payable to Executive Chairman’s spouse at
balance date $Nil (31 December 2018: $Nil).
24) FINANCIAL INSTRUMENTS
Financial assets
Cash and cash equivalents (Note 6)
Trade and other receivables (Note 7)
Financial assets
Financial liabilities
Trade and other payables (Note 12)
Loans and borrowings* (Note 13)
Lease liabilities (Note 14)
Consolidated
Twelve months ended
31 December 2019
$'000
Six months ended
31 December 2018
$'000
-
-
-
18
11
29
Consolidated
31 December 2019
$'000
31 December 2018
$'000
83,584
1,501
38
85,123
(13,890)
(256,559)
(8,475)
(278,924)
66,355
851
37
67,243
(9,690)
-
-
(9,690)
*Loan and borrowings amount as disclosed in Note 13 includes capitalised transaction costs of $21,473,000.
P a g e | 54
West African Resources Limited
Notes to the Financial Statements
25) FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit
risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the Group.
A. MARKET RISK
(i)
Interest rate risk
The Group’s main interest rate risk arises from its cash balances. Cash held at variable rates expose the Group to cash flow
interest rate risk while cash deposits at fixed rates expose the Group to fair value interest rate risk. During the period, the
Group’s cash deposits at variable rates were denominated in Australian Dollars (“AUD”), United States Dollars (“USD”), Euros,
and Communaute Financière Africaine Francs (“CFA”).
The tables below analyse the Group's financial assets and financial liabilities into maturity groupings based on the remaining
period at the reporting date to the contractual maturity date.
Consolidated
Fixed Interest Rate Maturing
Weighted
Average
Effective
Interest
Rate
Floating
Interest
Rate
$’000
Within
Year
$’000
1 to 5
Years
$’000
Over 5
Years
$’000
Non-
interest
bearing
$’000
Total
$’000
31 December 2018
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
31 December 2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total financial assets
Financial liabilities
Trade and other payables
Loans and borrowings
Lease liabilities
Total financial liabilities
1.7%
5.5%
2.7%
7,297
-
-
7,297
51,821
304
37
52,162
-
-
-
-
1.7%
5.5%
2.7%
76,366
-
-
76,366
-
320
38
358
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,315
1,866
-
235,244
6,609
23,181
241,853
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,237
547
-
7,784
66,355
851
37
67,243
9,690
9,690
9,690
9,690
7,218
1,181
-
8,399
83,584
1,501
38
85,123
13,890
-
13,890
256,559
-
8,475
13,890
278,924
P a g e | 55
West African Resources Limited
Notes to the Financial Statements
25) FINANCIAL RISK MANAGEMENT (CONTINUED)
A. MARKET RISK (CONTINUED)
(ii)
Interest rate sensitivity
At 31 December 2019, if variable interest rates for the full year were -/+ 0.5% from the year-end rate with all other variables
held constant, pre-tax profit for the year would have moved as per the table below.
31 December 2019
31 December 2018
+0.5%
$'000
374
174
-0.5%
$'000
(374)
(174)
The sensitivity is calculated using the average cash position for the year ended 31 December 2019. The interest income in Note
3(a) of $1,239,000 (31 December 2018: $405,000) reflects cash balances in the period that ranged between $30,480,000 and
$83,584,000 (31 December 2018: $33,480,000 and $66,354,000).
(iii)
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk primarily arising from costs denominated in CFA
and USD, and loans and borrowings denominated in USD.
The Group also has transactional currency exposures. Such exposure arises from purchases by an operating entity in currencies
other than the functional currency.
The Group does not have a policy to enter into forward contracts or other hedge derivatives.
At 31 December 2019 and 31 December 2018, the Group had the following exposure to CFA, Euro, and USD foreign currencies
expressed in AUD equivalents:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Loans and borrowings
Lease liabilities
Consolidated
31 December 2019
$'000
31 December 2018
$'000
76,484
2,272
78,756
16,134
258,946
8,442
283,522
14,269
2,166
16,435
2,352
-
-
2,352
P a g e | 56
West African Resources Limited
Notes to the Financial Statements
25) FINANCIAL RISK MANAGEMENT (CONTINUED)
A. MARKET RISK (CONTINUED)
(iv)
Exchange rate sensitivity
A 10 per cent strengthening of the AUD against the following currencies at 31 December would have increased (decreased)
profit or loss by the amounts shown in the below table. This analysis assumes that all other variables, in particular interest
rates, remain constant. The analysis is performed on the same basis for the year ended 31 December 2018.
USD
CFA
EUR
Profit or Loss
Twelve months ended
31 December 2019
$'000
Six months ended
31 December 2018
$'000
17,413
1,854
(651)
(488)
(148)
(645)
A 10 per cent weakening of the Australian dollar against the same currencies at 31 December would have had the effect shown
below, on the basis that all other variables remain constant.
USD
CFA
EUR
B.
CREDIT RISK
Profit or Loss
Twelve months ended
31 December 2019
$'000
Six months ended
31 December 2018
$'000
(21,282)
(2,266)
796
488
148
645
Credit risk arises primarily from the Group’s cash and cash equivalents held with financial institutions. The banks the Group
uses for cash deposits and transactions are limited to high credit quality financial institutions.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised at the
beginning of this note.
P a g e | 57
West African Resources Limited
Notes to the Financial Statements
25) FINANCIAL RISK MANAGEMENT (CONTINUED)
C.
LIQUIDITY RISK
Liquidity risk is the risk the Group will not be able to meet its financial obligations as they fall due. Liquidity risk management
involves maintaining sufficient cash on hand or undrawn credit facilities to meet the operating requirements of the business.
This is currently managed through cash and cash equivalents ($83,584,000 as at 31 December 2019) combined with the
undrawn balance of the project finance debt (US$25 million as at 31 December 2019) and prudent cash flow and financial
commitment management. The tables below analyse the Group's financial assets and liabilities into maturity groupings based
on the remaining period at the reporting date to the contractual maturity date.
Maturity analysis of financial assets and liability based on management's expectation
Consolidated
<6 months
$'000
6-12 months
$'000
1-5 years
$'000
>5 years
$'000
Total
$'000
31 December 2018
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
Net maturity
31 December 2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total financial assets
Financial liabilities
Trade and other payables
Loans and borrowing
Lease liabilities
Total financial liabilities
Net maturity
66,355
851
37
67,243
(9,690)
(9,690)
57,553
83,584
1,501
38
85,123
(13,890)
(8,058)
(915)
(22,863)
62,260
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(13,257)
(951)
(14,208)
(14,208)
-
(235,244)
(6,609)
(241,853)
(241,853)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
66,355
851
37
67,243
(9,690)
(9,690)
57,553
83,584
1,501
38
85,123
(13,890)
(256,559)
(8,475)
(278,924)
(193,801)
P a g e | 58
West African Resources Limited
Notes to the Financial Statements
26) SHARE-BASED PAYMENTS
A.
RECOGNISED SHARE-BASED PAYMENTS
The expenses recognised for services received during the year are shown in the table below:
Share-based payments to Directors
Share-based payments to employees
Share-based payments to third party
Consolidated
Twelve months ended
31 December 2019
$'000
Six months ended
31 December 2018
$'000
708
330
5
1,043
83
84
6
172
The share-based payment plans are described below. There have been no cancellations or modifications to the plan during the
year.
B.
TRANSACTIONS SETTLED USING SHARES
No transactions were settled in the current year using shares.
C.
EMPLOYEE SHARE AND OPTION PLAN
Under the Incentive Options and Performance Rights Plan, grants are made to senior executives and other staff members who
have made an impact on the Group’s performance. Grants are delivered in the form of share options or performance rights
which vest over periods as determined by the Board of Directors.
D.
PERFORMANCE RIGHTS
Performance rights are issued for nil consideration in the form of zero exercise price options (ZEPO) and premium exercise
price options (PEPO). Performance rights are subject to vesting conditions as determined by the Board of Directors. Any
performance rights that do not vest by their expiry date will lapse. Upon vesting, these performance rights will be settled in
ordinary fully paid shares of the Company.
(a) Summary of performance rights granted under the Employee Share and Option Plan
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Lapsed/cancelled during the year
Outstanding at the end of the year
Exercisable at the end of the year
*WAEP = weighted average exercise price
2019 Number
2019 WAEP*
2018 Number
2018 WAEP*
3,190,560
61,047
-
-
3,251,607
1,223,828
$0.1649
-
-
-
$0.1618
$0.4300
-
3,190,560
-
-
3,190,560
-
-
-
-
-
$0.1649
-
The performance rights outstanding at the end of the year had a weighted average remaining contractual life of 1,027 days (31
December 2018: 1,449 days)
P a g e | 59
West African Resources Limited
Notes to the Financial Statements
26) SHARE-BASED PAYMENTS (CONTINUED)
D.
PERFORMANCE RIGHTS (CONTINUED)
(b) Fair value of performance rights granted
The fair value of the performance rights granted during the period was determined using the Black-Scholes pricing method.
Further details of the basis of valuation appear below. During the year the company issued 61,047 performance rights, with
fair value of $22,893, to employees of the company pursuant to the terms and conditions of the West African Resources
Limited’s Incentive Options and Performance Rights Plan (31 December 2018: 3,190,560).
Number
issued
61,047
Grant date
Expected
life of rights
Dividend
yield
Expected
volatility
Risk-free
interest rate
05-Jul-19
2 years
0%
71%
1.65%
Exercise
price
$0.0000
Share price
on grant
date
$0.3750
E.
SHARE OPTIONS
Share options are issued for nil consideration. The exercise price, vesting conditions and expiry date are determined by the
Board of Directors. Any options that are not exercised by the expiry date will lapse. Upon vesting, these options will be settled
in ordinary fully paid shares of the Company.
(a) Summary of options granted by the Group
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Lapsed/cancelled during the year
Outstanding at the end of the year
Exercisable at the end of the year
*WAEP = weighted average exercise price
2019 Number
2019 WAEP*
2018 Number
2018 WAEP*
17,728,125
1,259,516
(6,078,125)
(2,000,000)
10,909,516
-
$0.2231
$0.2342
$0.1267
$0.1250
$0.2960
-
14,728,125
5,250,000
-
(2,250,000)
17,728,125
-
$0.1692
$0.3386
-
$0.1400
$0.2231
-
The share options outstanding at the end of the year had a weighted average remaining contractual life of 469 days (31
December 2018: 671 days)
(b) Fair value of options granted
The fair value of the options granted during the period was determined using the Black-Scholes pricing method. Further details
of the basis of valuation appear below. During the year the company issued 1,259,516 options, with a fair value of $200,000,
to Directors and employees of the company pursuant to the terms and conditions of the West African Resources Limited’s
Incentive Options and Performance Rights Plan (31 December 2018: 5,250,000).
Number
issued
259,516
1,000,000
Grant date
14-Feb-19
09-Mar-19
Expected
life of rights
2 years
3 years
Dividend
yield
0%
0%
Expected
volatility
71%
71%
Risk-free
interest rate
1.65%
1.65%
Exercise
price
$0.0000
$0.2950
Share price
on grant
date
$0.2600
$0.2800
P a g e | 60
West African Resources Limited
Notes to the Financial Statements
26) SHARE-BASED PAYMENTS (CONTINUED)
E.
SHARE OPTIONS (CONTINUED)
The outstanding balance of options and rights as at 31 December 2019 is represented by the following table:
Grant date Vesting date
ZEPOs
28-Dec-18
28-Dec-18
When the Company achieves the certain milestones in
relation to its Sanbrado Gold Project within 12 months of
the date the performance rights are issued
First gold pour and commercial production
Hold continuous office as a director of the Company for 1
year from the date the options were issued
14-Feb-19
07-Jul-19 When KPIs are achieved
PEPOs
21-Mar-17
12-May-17
First gold production
First gold production
18-Oct-17
03-Nov-17
First gold production
First gold production
29-Mar-18
26-Sep-18
First gold production
First gold production
28-Nov-18
28-Dec-18
28-Dec-18
First gold production and first concrete pour for the plant
First gold pour and commercial production
When the company’s share price first equals the option
exercise price ($0.43)
05-Mar-19
First gold pour and commercial production
Total
Expiry date
Exercise
price
Granted
Lapsed /
Cancelled
Exercised
On issue
Vested
Number of options and rights
28-Dec-21
28-Dec-23
$0.0000
$0.0000
1,022,565
944,167
14-Feb-21
01-Jun-22
$0.0000
$0.0000
21-Mar-20
12-May-20
18-Oct-20
09-Nov-20
29-Mar-21
26-Sep-21
28-Nov-21
28-Dec-21
28-Dec-22
05-Mar-22
$0.2400
$0.2400
$0.3750
$0.2400
$0.4100
$0.3100
$0.3100
$0.3200
$0.4300
$0.2950
259,516
61,047
2,287,295
400,000
500,000
750,000
2,750,000
1,250,000
500,000
1,000,000
2,500,000
1,223,828
1,000,000
14,161,123
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,022,565
944,167
259,016
61,047
2,287,295
400,000
500,000
750,000
2,750,000
1,250,000
500,000
1,000,000
2,500,000
-
-
-
-
-
-
-
500,000
-
1,223,828
1,223,828
-
14,161,123
-
1,723,828
P a g e | 61
27) PARENT ENTITY FINANCIAL INFORMATION
The individual financial statements for the parent entity show the following aggregate amounts:
BALANCE SHEET
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
PROFIT (LOSS) FOR THE REPORTING PERIOD
Income tax benefit
Total comprehensive loss
Parent
31 December 2019
$'000
31 December 2018
$'000
18,258
77,011
95,269
1,998
57
2,056
93,213
162,919
7,917
(77,623)
93,213
23,219
-
23,219
65,367
11,854
77,221
7,086
2,155
9,241
67,980
161,947
6,875
(100,842)
67,980
(757)
-
(757)
Net assets of the parent entity are greater than that of the Group due to the Board’s assessment of future recoverability of
intercompany loans of $45.7 million.
Guarantees, commitments and contingencies
There are no guarantees, commitments or contingencies in the parent entity other than $187,006 of rental property lease
commitments due within one year (31 December 2018: $178,130).
28) NEW STANDARDS AND INTERPRETATIONS
A.
ADOPTED
In the period ended 31 December 2019, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Company and effective for the current reporting periods beginning on or after 1
January 2019. As a result of this review, the Group has initially applied AASB 16 from 1 January 2019.
AASB 16: Leases
AASB 16 replaces:
• AASB 117: Leases,
•
•
•
Interpretation 4: Determining whether an Arrangement contains a Lease,
Interpretation 115: Operating Leases-Incentives; and
Interpretation 127: Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
P a g e | 62
28) NEW STANDARDS AND INTERPRETATIONS (CONTINUED)
A.
ADOPTED (CONTINUED)
For the lessee, AASB 16 removes the classification of leases as either operating leases or finance leases, effectively treating all
leases as finance leases. Most leases will be capitalised on the balance sheet by recognising a lease liability for the present
value obligation and a 'right-of-use' asset. The right-of-use assets are calculated based on the lease liability plus initial direct
costs, prepaid lease payments and estimated restoration costs less lease incentives received. This results in an increase in the
recognised assets and liabilities in the statement of financial position as well as a change in expense recognition, with interest
and deprecation replacing operating lease expense. There are exemptions for short-term leases and leases of low-value items.
For the lessor, the accounting remains similar to current practice, i.e. lessors continue to classify leases as finance and operating
leases.
The Group has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not
been restated and continues to be reported under AASB 117.
Policy applicable from 1 January 2019
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To
assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:
•
•
•
the contract involves the use of an identified asset – this may be specified explicitly or implicitly and should be physically
distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive
substitution right, then the asset is not identified;
the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of
use; and
the Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that
are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and
for what purpose the asset is used is predetermined, the Group has the right to direct the use of the asset if either:
▪
▪
the Group has the right to operate the asset; or
the Group designed the asset in a way that predetermines how and for what purpose it will be used.
This policy is applied to contracts entered into, or changed, on or after 1 January 2019.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the
contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings
in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and non-lease
components as a single lease component.
Policy applicable prior to 1 January 2019
For contracts entered into before 1 January 2019, the Group determined whether the arrangement was or contained a lease
based on the assessment of whether:
•
•
the fulfilment of the arrangement was dependent on the use of a specific asset or assets; and
the arrangement had conveyed a right to use the asset. An arrangement conveyed the right to use the asset if one of the
following was met:
▪
▪
▪
the purchaser had the ability or right to operate the asset while obtaining or controlling more than an insignificant
amount of the output;
the purchaser had the ability or right to control physical access to the asset while obtaining or controlling more
than an insignificant amount of the output; or
facts and circumstances indicated that it was more remote that other parties would take more than an insignificant
amount of the output, and the price per unit was neither fixed per unit of output nor equal to the current market
price per unit of output.
P a g e | 63
28) NEW STANDARDS AND INTERPRETATIONS (CONTINUED)
A.
ADOPTED (CONTINUED)
As a lessee
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before
the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier
of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use
assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental
borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
•
fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
• amounts expected to be payable under a residual value guarantee; and
•
the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional
renewal period if the Group is reasonably certain to exercise and extension option, and penalties for early termination of
a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount
expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a
purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-
use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and
equipment’ and lease liabilities in the statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of property and equipment
that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Group recognises the
lease payments associated with these leases as an expense on a straight-line basis over the lease term.
B.
NOT YET ADOPTED
The Directors have also reviewed all of the new and revised Standards and Interpretations in issue not yet adopted for the
period ended 31 December 2019. As a result of this review the Directors have determined that there is no material impact of
the Standards and Interpretations in issue not yet adopted on the Group and, therefore, no change is necessary to Group
accounting policies.
P a g e | 64
29) CHANGES IN ACCOUNTING POLICIES
Except for the changes below, the Group has consistently applied the accounting policies to all periods presented in this
financial report.
The Group applied AASB 16 with a date of initial application of 1 January 2019. As a result, the Group has changed its accounting
policy for lease contracts as detailed below.
The Group applied AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application
is recognised in retained earnings at 1 January 2019. The details of the changes in accounting policies are disclosed below.
Definition of a lease
Previously, the Group determined at contract inception whether an arrangement is or contains a lease under AASB 117. Under
AASB 16, the Group assess whether a contract is or contains a lease based on the definition of a lease, as explained in Note
29(A).
On transition to AASB 16, the Group elected to apply the practical expedient to grandfather the assessment of which
transactions are leases. It applied AASB 16 only to contracts that were previously identified as leases. Contracts that were not
identified as leases under AASB 117 were not reassessed for whether there is a lease. Therefore, the definition of a lease under
AASB 16 was applied only to contracts entered into or changed on or after 1 January 2019.
As a lessee
As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease
transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Group. Under AASB
16, the Group recognises right-of-use assets and lease liabilities for most leases – i.e. these leases are on-balance sheet.
The Group decided to apply recognition exemptions to short-term leases of machinery, IT equipment and leases of property.
For leases of other assets, which were classified as operating under AASB 117, the Group recognised right-of-use assets and
lease liabilities.
Leases classified as operating leases under AASB 117
At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s
incremental borrowing rate as at 1 January 2019. Right-of-use assets are measured at either:
•
their carrying amount as if AASB 16 had been applied since the commencement date, discounted using the lessee’s
incremental borrowing rate at the date of initial application – the Group applied this approach to its property and
equipment leases; or
• an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.
The Group used the following practical expedients when applying AASB 16 to leases previously classified as operating leases
under AASB 117.
• Applied a single discount rate to a portfolio of leases with similar characteristics.
• Adjusted the right-of-use assets by the amount of onerous contract provision provided in AASB 137 immediately before
the date of initial application, as an alternative to an impairment review.
• Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term.
• Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
• Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.
P a g e | 65
29) CHANGES IN ACCOUNTING POLICY (CONTINUED)
A.
PRACTICAL EXPEDIENTS APPLIED
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the standard:
• The accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-
term leases, with no right-of-use asset nor lease liability recognised; and
• The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
B. MEASUREMENT OF LEASE LIABILITIES
Operating lease commitments disclosed as at 31 December 2018
Discounted using the lessee’s incremental borrowing rate at the date of initial application
Less: short-term leases recognised on a straight-line basis as an expense
Less: low value leases recognised on a straight-line basis as an expense
Less: outgoings
Add: adjustment as a result of a different treatment of extension and termination options
Lease liability as at 1 January 2019
Current lease liabilities
Non-current lease liabilities
C. MEASUREMENT OF RIGHT-OF-USE ASSETS
The recognised right-of-use asset relate to the following types of assets:
Property leases
Equipment
D.
IMPACT ON FINANCE LEASES
2019
$'000
573
(32)
(290)
-
(124)
-
127
31 December 2019
$'000
1,866
6,609
8,475
31 December 2019
$'000
32
8,103
8,135
Based on an analysis of the Group’s finance leases as at 31 December 2019 on the basis of the facts and circumstances that
exist at that date, the Directors of the Company have assessed that the impact of this change will not have an impact on the
amounts recognised in the Group’s interim financial statements.
E.
IMPACT ON LESSOR ACCOUNTING
Based on an analysis of the Group’s leases as at 31 December 2019 on the basis of the facts and circumstances that exist at
that date, the Directors of the Company have assessed that the impact of this change will not have an impact on the amounts
recognised in the Group’s financial statements.
P a g e | 66
DIRECTORS’ DECLARATION
In the opinion of the Directors:
a.
The financial statements, notes and the additional disclosures included in the Directors' Report designated as audited, of the
consolidated entity are in accordance with the Corporations Act 2001 including:
(i) giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its performance for the
year then ended; and
(ii) complying with Accounting Standards and Corporations Regulations 2001.
b. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
c.
The financial statements also comply with International Financial Reporting Standards as disclosed in Note 1(D).
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 for the year ended 31 December 2019.
This declaration is signed in accordance with a resolution of the Board of Directors.
RICHARD HYDE
Executive Chairman
26 March 2020
P a g e | 67
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of West African Resources Limited
for the year ended 31 December 2019, I declare that, to the best of my knowledge and belief, there
have been no contraventions of:
(a)
the auditor independence requirements as set out in the Corporations Act 2001 in relation to
the audit; and
(b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
26 March 2020
B G McVeigh
Partner
P a g e | 68
INDEPENDENT AUDITOR’S REPORT
To the members of West African Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of West African Resources Limited (“the Company”) and its
controlled entities (“the Group”), which comprises the consolidated statement of financial position
as at 31 December 2019, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its
financial performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
P a g e | 69
Key Audit Matter
How our audit addressed the key audit matter
Carrying amount of development expenditure
Note 10 to the financial report
As at 31 December 2019, the carrying value
of
the Group’s mine properties was
$242,477,000 and is a material asset of the
Group.
At balance date the Group had one mine
property being a 90% share in the Sanbrado
Gold Project. This asset
is still under
development. There is a risk that costs are
incorrectly capitalised to the development
asset.
Further per AASB 136 Impairment of Assets,
development assets are required to be tested
for impairment indicators, as such there is a
risk that the development expenditure is not
recoverable.
Our procedures included but were not limited to the
following:
• We considered if there were any indicators of
impairment at balance date with no such
indicators noted.
• We considered the Directors’ assessment of
potential indicators of impairment.
•
In relation to the substantial capitalisation of
expenditure during the year as mine properties,
we performed detailed testing, including verifying
the authorisation, accuracy and completeness of
the
recording and classification of capital
expenditure.
• We examined the disclosures made in the
financial report.
Adoption of AASB 16 Leases
Notes 9, 14 and 29 to the financial report
AASB 16 Leases is effective for annual
reporting beginning on or after 1 January
2019. The Company decided to apply the
modified retrospective approach
the
transition accounting.
for
AASB 16 is significant to our audit, as the
balances recorded are material, the update of
the accounting policy
requires policy
elections, the implementation process to
identify and process all
relevant data
associated with the pre-existing leases as
well as new contracts entered into is complex
and the measurement of the right-of-use
asset and
is based on
assumptions such as discount rates and the
lease
termination and
renewal options.
including
liability
terms,
lease
Our procedures included but were not limited to the
following:
• We reviewed the commitments in place as at the
date of initial application and determined if any of
the recognition exemptions outlined in AASB 16
were applicable.
• We reviewed contracts entered during the year
ended 31 December 2019 and where leases were
identified ensured that they were brought to
account
• We have assessed the reasonableness of the
assumptions included in the lease calculations.
• We have reviewed management’s calculations of
the lease liability and right to use asset and
ensured that they have been calculated correctly.
• We examined the disclosures made in the
financial report.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 31 December 2019, but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
P a g e | 70
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
-
-
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
-
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
P a g e | 71
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year ended
31 December 2019.
In our opinion, the Remuneration Report of West African Resources Limited for the year ended 31
December 2019 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
26 March 2020
B G McVeigh
Partner
P a g e | 72
ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The
information is current as at 18 March 2020.
DISTRIBUTION OF SHARES
Category (size of holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,000 – 100,000
100,001 – and over
Number of holders
172
863
604
1,157
379
3,175
The number of shareholdings held in less than marketable parcels is 181.
TWENTY LARGEST SHAREHOLDERS
The names of the twenty largest holders of quoted shares are:
Shareholders
CITICORP NOMINEES PTY LIMITED
CS THIRD NOMINEES PTY LIMITED
ZERO NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
STICHTING LICHFIELD US\C
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
3 NATIONAL NOMINEES LIMITED
4
5
6 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
7
8
9
10 MR PHILLIP RICHARD PERRY
11 BNP PARIBAS NOMINEES PTY LTD
12 ALOHA INVESTMENTS PTY LTD
13 AIGLE ROYAL CAPITAL PTY LTD
14 MR RICHARD HYDE
15 AMP LIFE LIMITED
16 EXPLORATION CAPITAL PARTNERS 2014 LIMITED PARTNERSHIP
17 MR GRAEME JOHN HAINES + MRS SHARNI GAY HAINES
18
19 NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
20 MR PHILLIP RICHARD PERRY + MRS TETYANA PERRY
LUJETA PTY LTD
No. of shares held
230,465,362
160,732,638
41,416,423
39,526,401
36,916,917
30,660,554
22,450,000
13,821,956
13,250,000
12,989,129
12,181,855
10,050,000
8,900,000
7,730,769
5,037,343
4,806,250
4,763,000
3,846,154
3,707,582
3,377,719
666,630,052
% Holding
26.48%
18.46%
4.76%
4.54%
4.24%
3.52%
2.58%
1.59%
1.52%
1.49%
1.40%
1.15%
1.02%
0.89%
0.58%
0.55%
0.55%
0.44%
0.43%
0.39%
76.58%
STOCK EXCHANGE LISTING
Listing has been granted for the ordinary shares (ASX code: WAF) of the Company on the Australian Securities Exchange Limited "ASX")
with 870,478,852 ordinary shares on the Company’s register.
P a g e | 73
SUBSTANTIAL SHAREHOLDERS
The names of substantial shareholders are:
Shareholder
Mitsubishi UFJ Financial Group, Inc.
VanEck Associates Corporation
Number of shares
76,365,270
56,970,000
VOTING RIGHTS
All shares carry one vote per unit without restriction.
UNLISTED OPTIONS
15,251,384 options and performance rights are held by 18 option holders. Options do not carry a right to vote.
There are no holders of more than 20% of the unlisted options and performance rights.
P a g e | 74
SUMMARY OF TENEMENTS
AT 18 MARCH 2020
Registered Holder
%
Held
Tenement Number
Grant
Date
Expiry
Date
Tenement
Type
Tenement
Area km2
Geographical Location
Tenement
Name
Damongto
Wura Resources Pty Ltd
SARL
100% No 2018-184/MMC/SG/DGCM
05/09/2018
01/03/2021
Goudré
Wura Resources Pty Ltd
SARL
100% No 2018-186/MMC/SG/DGCM
05/09/2018
23/03/2021
Manessé
Tanlouka SARL
100% N2017/014/MEMC/SG/DGCMIM
13/01/2017
13/01/2020
Sartenga
West African Resources
Development SARL
Toghin
Vedaga
Bollé
Wura Resources Pty Ltd
SARL
Wura Resources Pty Ltd
SARL
Wura Resources Pty Ltd
SARL
Zam Sud
Wura Resources Pty Ltd
SARL
Sanbrado
Société des Mines de
Sanbrado SA
100% No 2018-190/MMC/SG/DGMC
05/08/2017
04/08/2020
100% No 17 - 182/MMC/SG/DGCM
18/07/2017
17/07/2020
100% No 17 - 232/MMC/SG/DGCM
18/07/2017
17/07/2020
100% No 17 – 223//MMC/SG/DGCM
21/11/2017
20/11/2020
100% No 2018-183/MMC/SG/DGCM
05/09/2018
01/03/2021
90%
Décret No 2017 –
104/PRES/PM/MEMC/MINEFID/MEEVCC
Arrêté No 2018-139/MMC/SG/DGMG
13/03/2017
12/03/2024
ML
25.9
Ganzourgou Province
P a g e | 75
EL
EL
EL
EL
EL
EL
EL
EL
26
Ganzourgou Province
175
Ganzourgou Province
90.35
Ganzourgou Province
130.7
Namentenga Province
166
Ganzourgou Province
154.7
Gnagna, Kouritenga
Provinces
205.5
Ganzourgou Province
17.46
Ganzourgou Province