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Great Panther Mining2020
ANNUAL
REPORT
TABLE OF CONTENTS
CORPORATE INFORMATION ......................................................................................................................................... 1
CHAIRMAN’S LETTER .................................................................................................................................................... 2
2020 IN BRIEF ............................................................................................................................................................... 3
DIRECTORS’ REPORT ..................................................................................................................................................... 4
REMUNERATION REPORT (AUDITED) ......................................................................................................................... 24
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ..................................... 35
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................................................................. 36
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .............................................................................................. 37
CONSOLIDATED STATEMENT OF CASH FLOWS .......................................................................................................... 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ......................................................................................... 39
DIRECTORS’ DECLARATION ......................................................................................................................................... 75
AUDITOR’S INDEPENDENCE DECLARATION ................................................................................................................ 76
INDEPENDENT AUDITOR’S REPORT ............................................................................................................................ 77
ASX ADDITIONAL INFORMATION................................................................................................................................ 81
SUMMARY OF TENEMENTS ........................................................................................................................................ 83
West African Resources Limited
CORPORATE INFORMATION
Company
West African Resources Limited
ABN
70 121 539 375
Directors
Richard Hyde (Executive Chairman and CEO)
Lyndon Hopkins (Executive Director and COO)
Rod Leonard (Non-Executive Director)
Libby Mounsey (Non-Executive Director)
Nigel Spicer (Non-Executive Director)
Stewart Findlay (Non-Executive Director)
Company Secretary
Padraig O’Donoghue
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, Lot 22, Section SL,
Ouagadougou, Burkina Faso
T: +226 25 36 73 84
Website
www.westafricanresources.com
Share registry
Computershare Investor Services Pty Ltd
Level 11, 172 St George’s Terrace
Perth WA 6000 Australia
T: +61 (8) 9323 2000
Auditors
HLB Mann Judd (WA Partnership)
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
West African Resources Limited|1
CHAIRMAN’S LETTER
Dear Fellow Shareholders,
I am pleased to present the 2020 Annual Report for West
African Resources Limited (ASX: WAF).
2020 was a tremendously successful year for WAF and its
shareholders considering the challenges we faced while
ramping up during the global pandemic. The consolidated group
generated strong financial results during the first year of gold
production with A$148 million of operating cash flow, A$99
million profit, and a healthy A$95 million cash balance at year
end after making an early debt repayment of US$25 million.
Additionally, investments in the acquisition of the Toega gold
deposit and deep exploration drill holes at M1 South Deeps
were well rewarded with a 65% increase in Sanbrado’s Mineral
Resources to 5.1 million ounces at 2 grams per tonne gold.
The Company’s 2020 achievements also included completing
the construction of Sanbrado ahead of schedule and under
budget, pouring first gold on 18 March 2020, declaring
commencement of commercial production on 1 May 2020 and
producing 136,476 ounces of gold at an AISC of US$1,021 per
ounce. These achievements strongly demonstrate
the
commercial and technical capabilities of West African’s team
and our determination to deliver on our promises, in a safe,
efficient, considered and cost-effective manner.
This Annual Report
includes a sustainability summary
highlighting the Company’s commitment to delivering on its
environmental and social responsibility programs using
is
internationally
committed to Burkina Faso and to operating Sanbrado in a
manner that will provide widespread economic benefits for the
Burkina Faso Government, local and regional communities, and
our other stakeholders.
standards. Our Company
recognised
WAF updated its Board in 2020 as the Company repositioned
for the production-phase of Sanbrado. Two new independent
Non-executive Directors, Libby Mounsey and Stewart Findlay,
joined the board while Simon Storm and Mark Connelly retired
as Non-executive Directors on 29 May 2020. Ms Mounsey chairs
the Remuneration Committee and has brought valuable HR and
industrial relations skills to the Board. Mr Findlay has an
extensive background in financial markets and chairs the Audit
Committee. Our other two Non-executive
independent
Directors, Rod Leonard and Nigel Spicer have world-class
mineral processing and mining backgrounds, respectively
including significant experience in Africa. The Board recently
appointed Mr Leonard as Lead Independent Director to
enhance the Company’s governance framework.
Whilst I am proud of the Company’s achievements in 2020 our
focus continues to be on the future of the Company. We
recently set West African’s maiden guidance at 250,000 to
280,000 ounces of gold for 2021 at an AISC of US$720 to US$800
per ounce. We also released the 10-year production outlook
with Sanbrado set to average over 200,000 ounces of gold per
annum from 2021 to 2030. These metrics provide an incredibly
strong base upon which the Company can continue to grow
through targeted drilling and exploration creating further value
for our shareholders and stakeholders.
I would like to congratulate West African’s dedicated team who
have worked safely to achieve our goals and thank my fellow
Board members for their support.
RICHARD HYDE
Executive Chairman & CEO
2|West African Resources Limited
2020 IN BRIEF
18 Mar
First gold poured at Sanbrado
29 Apr
Definitive agreement to acquire Toega gold deposit
1 May
Sanbrado commences commercial production
30 Sep
High-grade gold mineralisation intercepted beneath ore
reserves at M1 South
6 Nov
Early US$25 million debt repayment
136,476 ounces
US$1,021 AISC/oz
GOLD PRODUCTION
A$98.9 million
NET PROFIT
5.1 million ounces
YEAR-END RESOURCES
1.5 million ounces
YEAR-END RESERVES
West African Resources Limited|3
DIRECTORS’ REPORT
The Directors present their report together with the consolidated financial report of West African Resources Limited (the “Company”)
and its controlled subsidiaries (the “Group”, “West African” or “WAF”) for the-year ended 31 December 2020.
ABOUT WEST AFRICAN RESOURCES LIMITED
West African Resources Limited (the “Company”) and its subsidiaries (the “Group”, “WAF”, or “West African”) is the operator and
90% owner of the Sanbrado Gold Project (Sanbrado) in Burkina Faso. The government of Burkina Faso retains a 10% equity interest
in Sanbrado.
The Group’s mineral portfolio also includes gold and copper-gold exploration permits in Burkina Faso.
OPERATING REVIEW
LOCATION
Sanbrado is located in central Burkina Faso, 90 kilometres east-southeast of the capital city of Ouagadougou.
4|West African Resources Limited
SANBRADO CONSTRUCTION COMPLETED IN FIRST HALF OF 2020
Construction of Sanbrado was completed in early 2020 ahead of schedule and under-budget, with first gold pour occurring in March
2020 and commercial production declared on 1 May 2020.
figure 1 - Sanbrado processing plant
SANBRADO PRODUCTION STATISTICS
West African Resources completed its maiden year of operations at Sanbrado with 136,476 ounces of gold produced. The key 2020
production statistics for Sanbrado used by management are contained in the following table. As 2020 is the first year of operation
for Sanbrado, prior year comparatives are not available.
OP mining
Total movement
Total movement
Strip ratio
Ore mined
Mined grade
Contained gold
UG mining
Ore mined
Mined grade
Contained gold
Processing
Ore milled
Head grade
Recovery
Gold produced
Gold poured
Unit
Year 2020
BCM '000
kt
w:o
kt
g/t
oz
kt
g/t
oz
kt
g/t
%
oz
oz
8,909
21,415
5.1
3,494
1.3
145,803
119
10.0
38,232
2,616
1.7
93.4
136,476
133,534
West African Resources Limited|5
SAFETY
The Company is pleased to report Sanbrado’s safety performance for 2020:
•
•
there were no significant health or safety incidents during the year; and
the annual TRIFR rate was 2.6 1.
OPEN PIT MINING
After initial mobilisation by the open pit mining contractor in December 2019, open pit mining ramped up to full production capacity
during the first quarter of 2020. The mining plan for 2020 was to initially develop the higher-grade M5 South Stage 1 and M1 South
pits with the M1 North pit being developed towards the end of the year. Due to the early completion of construction, subsequent
performance of the process plant (processing softer oxide and transition ores at a rate 30% above the nameplate design capacity)
the mining of the M5 North Stage 1 pit was brought forward by 12 months to provide a low strip ratio ore source to meet the process
plant demand. Site layout of the project is shown below in figure 2 and a long section through M5 is show in figure 3.
figure 2 - Sanbrado layout
1 Western Australian Total Mining Average TRIFR of 6.2. Department of Mines, Industry Regulation and Safety, 2020, Safety performance
in the Western Australian mineral industry — accident and injury statistics 2019-20: Department of Mines, Industry Regulation and
Safety, Western Australia. https://www.dmp.wa.gov.au/Documents/Safety/MSH_Stats_Reports_SafetyPerfWA_2019-20.pdf
6|West African Resources Limited
During 2020 the total material movement from the open pits was 21 Mt at a strip ratio of 5:1 to provide 3.5 Mt of ore at an average
grade of 1.3 g/t Au. Lower grade ore was stockpiled with preferential treatment of higher-grade material. Total stockpiles at the end
of 2020 were 1.0 Mt at a grade of 1.2 g/t Au.
UNDERGROUND MINING
figure 3 – Long section through the M5 Pit
During 2020 some 2.6 km of development for the decline and stope access was completed. At the end of 2020 the decline was 297 m
below surface (vertically) providing access to the base of the second mining panel. Ore mined from the underground during 2020
was comprised of 60 kt of stoping ore at 9.0 g/t Au and 60 kt of ore from development drives at 11.0 g/t Au.
Development and stoping completed to 31 December 2020 is illustrated in Figure 5 below.
PROCESSING
Commissioning of the process plant commenced in March 2020 with commercial production achieved in May. During 2020 a total
of 2.6 Mt was milled at a grade of 1.7 g/t Au producing 136,476 ounces of gold.
figure 4 – Sanbrado process plant
West African Resources Limited|7
figure 5 – Isometric diagram of M1 South
8|West African Resources Limited
GROWTH
Toega acquisition
On 29 April 2020 WAF announced it had signed a definitive agreement to acquire 100% of the Toega gold deposit from B2Gold and
their partner GAMS-Mining F&I Ltd with the aim of upgrading the Toega resource for future processing though the Sanbrado process
plant. The Toega deposit is located 14km southwest of the Sanbrado.
On 9 March 2021 WAF announced on ASX that it had completed work to report an Inferred Mineral Resource for the Toega deposit
of 22 million tonnes at a grade of 2.1 g/t for 1.3 million contained ounces of gold.
M1 South Deeps
During 2020 WAF returned positive results from extension drilling beneath the currently defined M1 South Ore Reserve (“M1 South
Deeps”).
On 9 March 2021 WAF announced on ASX that it had completed a technical evaluation including resource estimation and mine
planning to determine the development requirements to extend the M1 South underground mine. It also reported an Inferred
Mineral Resource for M1 South Deeps of 2.1 million tonnes at a grade of 12.4 g/t for 820,000 contained ounces of gold.
Long term production targets
In the above-noted 9 March 2021 ASX announcement WAF outlined its long-term production targets for Sanbrado which include
both M1 South Deeps and Toega material in the life-of-mine plan to extend the life of the Sanbrado project by 5 years from 2028 to
2033 with:
•
Toega open pit mining to commence with the pre-strip in 2023 and Toega material being included in the processing schedule
from 2024; and
• M1 South Deeps underground material being included in the processing schedule from 2025.
Inferred Mineral Resources have lower confidence levels than an Indicated Mineral Resources and there is no certainty that further
resource definition work will result in the conversion of Inferred Mineral Resources to the Indicated category.
figure 6 – Sanbrado accommodation camp
West African Resources Limited|9
SUSTAINABILITY REVIEW
This sustainability summary report highlights the Group’s activities in three interrelated areas for the period of January to December
2020, including:
•
•
•
governance,
community engagement and socio-economic contribution and
environmental performance.
Development of West African’s sustainability reporting is ongoing as the Group aligns with reporting frameworks. For 2020 the
reporting focuses on Sanbrado and includes references to the recently acquired Toega gold deposit situated 14km south west of
Sanbrado.
In 2019 West African engaged independent international experts to undertake a comprehensive review of the Sanbrado operations,
including the Group’s environmental and social management programs, stakeholder engagement, socio-economic contribution, and
governance practices.
“By undertaking a rigorous review of our environmental, social and governance practices, we have an understanding
of where our key environmental and social risks are and what we need to do to eliminate, reduce and manage them.”
This extensive review was structured using leading global industry practices and sustainability frameworks, including the Equator
Principles and the International Finance Corporation’s Performance Standards for management of environmental and social risks.
The result of the review was an Environmental and Social Action Plan (ESAP) that has guided the environmental and social activities
being undertaken at Sanbrado in conjunction with compliance requirements and industry practices. Additional focus and training in
areas such as the United Nations Voluntary Principles on Security and Human Rights has placed matters of significance in doing
business internationally at the forefront of Sanbrado operations.
Despite the challenges presented by the COVID-19 pandemic in 2020, WAF continued to meet or exceed its sustainability targets. By
the end of December 2020, a majority of the actions and improvements identified in the ESAP had been completed or were in
advanced stages of completion across areas of environment, social and health and safety.
OUR PEOPLE
Health and safety
Although 2020 was a challenging year for businesses and communities around the world, West African maintained its health and
safety standards and practices. The Company’s management team responded to the COVID-19 situation by ensuring staff and
contractors were aware of the current health guidelines set out by the World Health Organisation and the Government of Burkina
Faso. Actions such as social distancing, maintaining personal hygiene, and wearing appropriate personal protective equipment were
made mandatory. The Sanbrado on-site clinic became equipped to administer COVID-19 tests and a policy for managing the pandemic
was issued. National and international staff were kept informed of the quickly changing conditions around the world.
Employee engagement
The Group’s renumeration and employment policies are non-
discriminatory and are based on experience and skill set. West
African recognises its responsibility to seek local and national
talent. Local employment at the Sanbrado project accounted for
45% of total staff while regional employment accounted for 49%.
These figures are similar to 2019 but with a slight increase in
regional employment in 2020. Employees are encouraged to share
regular feedback with senior management and the rest of the
Group. Sanbrado transitioned from exploration into construction
in 2019, and 2020 marked the first year of operations.
Rest of
Burkina
Faso
42%
Ganzourgou
Province
(regional)
4%
Employee origin
International
employees
9%
Commune of
Boudry
(local)
45%
10|West African Resources Limited
Diversity
West African is committed to its Diversity Policy and to providing an inclusive workplace for all staff and contractors and this includes
being an equal opportunity employer that embraces diversity. The Group recognises that the benefits of diversity are many, including
creating a friendly and supportive work environment and improved communication and collaboration.
An overview of WAF’s diversity performance for the reporting period is presented below. For each indicator presented our
performance has remained the same or improved from 2019.
In 2020 West African provided 42 internship positions in a range of technical areas to national personnel. Twelve of these positions
were held by females.
The majority of interns (31) were from the local communities and 16 of them went on to be employed by Sanbrado following the
completion of their internships.
Number of interns in technical areas
Human Resources
Social Relations
Process
Industrial Maintenance
Finance
Medical
Metallurgy
Mine Engineering
Logistics
Geology
Electrical
Surveying
Industrial Engineering
0
5
10
15
20
25
Male
Female
West African Resources Limited|11
OUR COMMUNITY
WAF is committed to having a positive impact on its communities. This is driven by the Code of Conduct and Community Relations policy.
Stakeholder engagement
From its early exploration days to current Sanbrado operations diversity in our communities has dictated how we engage with our
stakeholders. Updated stakeholder mapping in 2020 provided an insight into changes to the Group’s stakeholders and what that
means to the way we communicate with them.
The Group shares information through its website, press releases, annual reports and subject-specific reports. In Burkina Faso, the
Stakeholder Engagement Plans (“SEPs”) set out how the Group engages with the community, civil society and government
stakeholders. The SEPs are living documents. Through the pandemic the management team responded in keeping with national
health advice and that of the World Health Organisation. When restrictions on gatherings were in effect public gatherings such as
townhall meetings and visits from Community Relations Officers were temporarily replaced with regular telephone calls and an
increase in the number of community notice board news bulletins.
When restrictions for gatherings were lifted WAF resumed face-to-face community engagement activities, including the CCCPAS
meetings. The CCCPAS is the Communal Consultative Framework of the Sanbrado Gold Project (Cadre Consultatif Communal du
Projet Aurifiere de Sanbrado), established to oversee engagement between Sanbrado operations and its stakeholders. The
committee meets regularly to discuss progress with resettlement and community development activities and information
management. The committee has representatives from local and regional government departments, male and female
representatives of Sanbrado’s communities and mine management staff.
A grievance redress mechanism is utilised to receive community feedback and complaints. Grievances can be submitted by different
means to ensure the process is accessible to all and is considerate of literacy, gender and cultural practices. The mechanism has
proven to work well.
Economic contribution
WAF recognises its role in local and national economic development. In 2020, the Group contributed more than A$21 million in
royalties and taxes to the Burkina Faso economy. Of this, more than A$3.4 million was contributed to the Local Development Fund.
Local employment and procurement policies also played an important role in ensuring WAF contributed to the local economy.
Other contributions included construction of 14 new water wells including arsenic filtration units to ensure the wells produce potable
water, and one livestock vaccination park.
Social programs and understanding our neighbourhood
In 2020 WAF aimed at strengthening its social management programs and planning for an updated socio-economic baseline survey
for the first quarter of 2021. One of the key plans finalised in 2020 was the Social Monitoring and Evaluation Plan (SMEP) designed
to track and report implementation of WAF’s social management programming. The SMEP integrates management of specific areas
such as community development, livelihood restoration, influx management, local employment and procurement, among others. In
keeping with industry good practice, the socio-economic baseline data update is planned to take place approximately every 3 years
to provide an understanding into how our “neighbourhood” is evolving and to keep informed of the positive and negative impacts of
the Group’s operations and how it can improve its support to local development.
12|West African Resources Limited
Health and education
Health and Education are key pillars of WAF’s community
development and for its own staff. In addition to building a new
community health centre in the village of Pousghin, WAF
launched an education campaign on communicable diseases
and family planning. The campaign saw almost 100,000
participants with a near even split of males to females (51% and
49%, respectively).
local communities
In response to the pandemic, the Group donated personal
to administrative authorities and
protective equipment
impacted
including face masks, hand
sanitiser, soap and hand washing stations. Medications and
medical consumables were also provided to national and local
health centres, and health associations working to support
HIV/AIDS programs.
For youth specifically, WAF has supported training of 20 young
people from the Commune of Boudry in trades including
electrical, construction, welding and metal construction,
mechanical, and masonry. Other support programs focused on
providing driving lessons to 25 youth. The Group also continued
with donations of school supplies and equipment.
Livelihood Restoration and Relocation
The Sanbrado Mine was designed to minimise physical
displacement without compromising the safe and efficient
operation of the mine. This meant that some residents needed
to be relocated to a safe distance from the mine’s operations.
Extensive consultation and negotiation were undertaken with
affected landowners who lost access to their land. Support from
the local authorities was also sought in order to determine
compensation and entitlement agreements. As of September
2020, construction was completed on 290 new homes, and 127
latrines, shower and cooking facilities for project affected
people. Land titles have also been acquired for physically
displaced persons and 100% of first year compensation
payments have been made and 90% of second year payments.
An intensive livelihood restoration program was also kicked off which focused on enhancing the local agricultural sector and helping
families affected by Sanbrado. Various projects were undertaken including distribution of 75 tonnes of agricultural inputs to 310
recipients, preparation of more than 300 hectares of fields for cultivation and education programs centred on improving crop yields
of maize, cowpea, millet, and sesame seed. A pilot irrigation project was commenced with input from the communities.
Other livelihood restoration activities included alternative livelihood training for artisanal miners, personal finance training for affected
families, weaving, fabric dying workshops and provision of microcredit facilities to women in the local communities.
West African Resources Limited|13
ENVIRONMENT
Environmental Management Systems
A major Company milestone in 2020 included the development of a comprehensive Environmental and Social Management System
(ESMS) following ISO 14001 & ISO 45001 guidelines. Each department received training on how to implement the ESMS, and on the
development and use of performance measurement tools. Underpinning the system are departmental risk registers and associated
action plans which help ensure that each risk has been characterised and an approach, timeline and a point of responsibility assigned.
Our internal and external progress reports have been adjusted to allow for close tracking of our progress in completing the action
plans, undertaking audits and identifying where additional resources may be required to continue the positive momentum this
process has started. The Group had no major environmental incidents in 2020.
Where possible West African looks for ways of improving water management. In 2020, Sanbrado reused approximately 583,583
kilolitres of water in its operation. Here are some of the main ways this was accomplished:
Water source
Grey water
Re-used for
Re-usage (kilolitres)
Re-used for watering vegetable gardens,
plants and lawns in camp, and for
general gardening
2,433
581,100
50
Water from tailings storage facility (TSF)
Re-used for process plant operation
Water from machinery wash bays
Re-used for dust suppression
Monitoring and Emergency Readiness
Emergency response readiness and competency were assessed in the last quarter of 2020 and demonstrated to be reflective of our
operating needs. WAF continuously monitors environmental parameters such as air quality and water quality in and surrounding its
areas of operations to make sure the Group’s activities are compliant with national regulatory requirements for pollution
management and follow international guidelines such as the World Bank Environmental, Health and Safety Guidelines (2007) and
specific guidelines developed by the World Health Organisation.
Climate Change
Like other mining operations, Sanbrado uses large amounts of fuel and energy to power the operation. Recognising this, WAF
completed an initial inventory of its scope-1 greenhouse gas emissions (GHG) as part of an environmental review prior to Sanbrado
commencing operations. The key sources of projected emissions from Sanbrado were power generation and vehicle exhaust. The
projected total CO2 emissions for Sanbrado during operations was approximately 45,864 tpa, of which the power station accounted
for 81%. As part of its approach for climate change mitigation WAF will be undertaking an updated GHG emissions inventory in 2021
to characterise actual emissions from Sanbrado. Results from the inventory will shape WAF’s efforts in mitigating its emissions.
During 2021 WAF will also complete a study investigating the potential addition of solar power to the energy matrix used to generate
power on site with the aim of reducing carbon emissions and reliance on fossil fuels.
In addition to understanding its contributions to climate change, WAF celebrated National Tree Day with the local communities by
launching a reforestation campaign consisting of planting more than 3,300 trees of local ecological, nutritional and economic value.
WAF recognises the value of trees as carbon sinks and their economic value to the local communities.
Mine rehabilitation
Progressive rehabilitation was another area of focus during the reporting period. An updated Mine Reclamation and Closure Plan and
a Reclamation and Revegetation Management Plan were developed. Early seed trials have commenced. The Sanbrado Mine is
designed in such a way that allows the Group to undertake progressive rehabilitation from the start of our operations and continue
as the project evolves. Following industry good practice and updated guidelines such as the ICMM Integrated Mine Closure: Good
Practice Guide (2019), WAF understands its responsibility to plan for closure early on and to leave a positive legacy. In the coming
year WAF will shift its focus to furthering its knowledge in the natural resources surrounding the Sanbrado operation. Although the
existing habitat was highly degraded from decades of over grazing and clearing, with the help of subject matter experts and traditional
local knowledge, the team will conduct further biodiversity studies to find opportunities for improving biodiversity values where it
can. Progressive rehabilitation projects of impacted areas, revegetation and building a vegetation propagation nursery and local seed
bank will form part of WAF’s ongoing environmental management programs.
14|West African Resources Limited
FINANCIAL REVIEW
COST PER OUNCE PERFORMANCE
The ‘Adjusted operating cost’, ‘all-in sustaining cost’ (AISC), and ‘all-in cost’ are per-ounce cost performance metrics recommended
by the World Gold Council for use in the gold mining industry, but they are not defined by Australian Accounting Standards Board
rules (i.e. they are non-AASB measures). WAF follows the World Gold Council’s guidelines in the calculation of these metrics.
The below table presents these non-AASB per ounce performance metrics for the Group including the underlying costs from which
they are calculated. As 2020 is the first year of operation for Sanbrado, prior year comparatives are not available.
Underlying measure
Gold sold
Gold revenue
OP mining cost
UG mining cost
Processing cost
Site administration cost
Change in inventory
Royalties & production taxes
Refining and by-product
Adjusted operating cost
Rehabilitation
Capital development
Sustaining capital
Sustaining leases
Corporate & share-based payments
All-in sustaining cost
Exploration non-sustaining
All-in cost
Performance metrics per gold ounce sold
Adjusted operating cost
All-in sustaining cost
All-in cost
Average sales price
Unit
oz
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$ '000
A$/oz
A$/oz
A$/oz
A$/oz
Year 2020
118,093
309,856
55,517
12,213
32,668
20,490
(15,350)
20,483
430
126,451
667
25,582
11,527
2,949
7,422
174,597
17,791
192,387
1,071
1,478
1,629
2,624
Average FX rate used for USD unit costs
AUD/USD
0.6907
Adjusted operating cost
All-in sustaining cost (AISC)
All-in cost
Average sales price
US$/oz
US$/oz
US$/oz
US$/oz
740
1,021
1,125
1,812
WAF’s AISC and all-in cost of US$1,021 and US$1,125 per ounce, respectively, compare favourably to the average gold sales price per
ounce of US$1,812 for 2020.
West African Resources Limited|15
RECONCILIATION OF NON-AASB MEASURES TO FINANCIAL STATEMENTS
A reconciliation of ‘Adjusted Operating Cost per ounce and AISC per ounce is presented below:
Description
Cost of sales
(Less)/plus items:
Depreciation
Non-cash inventory movements
By-product credits
Adjusted operating costs
plus items:
Reclamation & remediation (accretion & amortisation)
Corporate and technical services
Share-based payments
Capital development
Sustaining capital
Sustaining leases
Total All-in sustaining cost (AISC)
Gold sold (ounces)
Adjusted operating cost per ounce ($A/oz)
AISC per ounce (A$/oz)
*
Financial
Statement
reference*
P/L
Note 4
Note 4
N/A
N/A
P/L
P/L
Note 10
Note 10
CF
2020
$'000
145,148
(23,985)
5,746
(458)
126,451
667
5,079
2,343
25,582
11,527
2,949
174,597
118,093
740
1,478
The financial Statement references in above table are abbreviated as follows:
P/L = Consolidated Statement of Profit or Loss and Other Comprehensive Income
CF = Consolidated Statement Of Cash Flows
N/A= a direct cross reference to the Financial Statements is not available
GROUP FINANCIAL RESULTS
All amounts are in Australian dollars, unless otherwise stated.
Net profit after tax of $98,900,000 for the year compares favourably to the $4,334,000 net loss of the comparative year reflecting
that Sanbrado commenced commercial production on 1 May 2020. Finance expenses of $26,139,000 were recorded in the year
versus nil in the comparative period due to the accounting treatment to capitalise the Sanbrado project financing costs to mines
under construction during whole of the prior year while Sanbrado was in the construction phase and to commence expensing them
from the start of commercial production. Corporate and technical services cost of $5,079,000 in the year were higher than the
$3,994,000 of the comparative year mainly due to higher salaries expenses.
The $194,755,000 increase in total assets during the year was partly offset by the $96,721,000 increase in total liabilities resulting in
a $98,034,000 increase in net assets over the period. The increase in total assets mainly reflects the construction and operation of
Sanbrado with a $86,886,000 increase in property, plant and equipment (“PPE”), a $15,255,000 increase in exploration and evaluation
(“E&E”) assets, a $33,983,000 increase working capital (cash, plus trade and other receivables, plus inventories less trade and other
payables less deferred revenue), and a $8,753,000 decrease in loans and borrowings, partially offset by a $42,468,000 increase in tax
liabilities (current plus deferred tax liabilities). The PPE increase reflects construction of Sanbrado in the year. The increase in E&E
assets mainly reflects acquisition costs for the Toega gold deposit. The working capital increase reflects the commencement of
commercial gold production at Sanbrado in the year and the build-up of $19,275,000 of value-added tax receivables due from the
Burkina Faso government. The decrease in loans and borrowings reflects US$25 million of drawings of the Taurus syndicated debt
facility fully offset by US$25 million of facility repayments with the decrease being due to foreign exchange gains recorded on the
USD loan balance. The increase in tax liabilities reflects the Group’s profit result for the year.
16|West African Resources Limited
RESOURCES AND RESERVES STATEMENT
SANBRADO MINERAL RESOURCES
The following two tables provide a year-on-year Mineral Resources comparison for Sanbrado, showing a 64.5% increase in Total Resources to 5.1 million ounces of gold.
Sanbrado 31 December 2020 Resources
Deposit
M1 South
M1 South UG
M1 South Deeps
M5
M1 North
M3
Stockpile
Toega
Total*
Cutoff
g/t
0.5
1.5
1.5
0.5
0.5
0.5
0.5
Measured Resource
Grade
g/t
Contained Au
oz
Tonnes
Indicated Resource
Grade
g/t
Contained Au
oz
Tonnes
Inferred Resource
Grade
g/t
Contained Au
oz
Tonnes
Total Resource*
Tonnes
Grade
g/t
Contained Au
oz
260,000
410,000
2.7
15.1
23,000
510,000
200,000
1,200,000
6.3
14.1
100,000
540,000
10,000
140,000
3.5
4.4
1,000
20,000
780,000
1,700,000
-
110,000
140,000
-
1.8
1.6
1,000,000
1.2
-
-
-
6,000 35,000,000
7,000
-
38,000
-
640,000
170,000
-
-
1.2
2.1
2.0
-
2,100,000
12.4
820,000
2,100,000
1,400,000 17,000,000
42,000
11,000
-
400,000
190,000
-
- 22,000,000
1.1
2.0
1.5
1.9
2.1
580,000
52,000,000
26,000
1,200,000
9,000
360,000
-
1,000,000
1,300,000
22,000,000
2,800,000
81,000,000
1,900,000
4.4
270,000
37,000,000
1.7
2,100,000 41,000,000
Sanbrado 31 December 2019 Resources
5.1
13.6
12.4
1.2
2.0
1.7
1.2
1.9
2.0
130,000
760,000
820,000
2,000,000
75,000
20,000
38,000
1,300,000
5,100,000
Deposit
M1 South
M1 South UG
M5
M1 North
M3
Total*
Measured Resource
Indicated Resource
Inferred Resource
Total Resource*
Cutoff
g/t
Tonnes
Grade
g/t
Contained Au
oz
Tonnes
Grade
g/t
Contained Au
oz
Tonnes
Grade
g/t
Contained Au
oz
Tonnes
Grade
g/t
Contained Au
oz
0.5
3
0.5
0.5
0.5
-
-
-
-
-
-
-
-
-
-
-
-
850,000
6.4
178,000
50,000
5.2
5,000
900,000
6.3
1,000,000
21.9
697,000
300,000
11.2
117,000
1,300,000
19.5
36,650,000
750,000
150,000
39,400,000
1.2
2.0
2.0
1.9
1,470,000 14,600,000
49,000
500,000
11,000
200,000
2,405,000 15,650,000
1.1
2.0
1.5
1.3
520,000 51,000,000
32,000
1,250,000
9,000
350,000
683,000 55,000,000
1.2
2.0
1.8
1.7
183,000
810,000
2,000,000
81,000
20,000
3,100,000
*Due to rounding the totals in the above two tables may not precisely add up to, and ounces may not precisely calculate to, the amounts provided.
17|West African Resources Limited
SANBRADO ORE RESERVES
The below two tables provide a year-on-year Ore Reserves comparison for Sanbrado.
Mining Category
Open Pit
Underground
Total Proved and Probable Ore Reserve*
Mining Category
Open Pit
Underground
Total Proved and Probable Ore Reserve*
Sanbrado 31 December 2020
Ore Reserve by Category
Proved
Provable
Proved
Provable
Tonne
Mt
1.4
16.0
0.046
1.6
20.0
Gold Grade
g/t
1.5
Contained Gold
koz*
68
1.6
8.6
9.2
2.3
800
130
480
1,500
Sanbrado 31 December 2019
Ore Reserve by Category
Proved
Provable
Proved
Provable
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 in the above two tables may not precisely add up to, and ounces may not precisely calculate to, the amounts provided.
The changes to the Ore Reserve from December 2019 to December 2020 are comprised of:
• Depletion due to mining is 146,000 oz.
•
Re-estimation of the M1 South Mineral Resources and changes to cut-off grade led to a decrease in open pit Ore Reserves of
46,000 oz.
Redesign of the M5 final pit has increased Ore Reserves by 42,000 oz.
•
COMPETENT PERSONS STATEMENT
All information on the Sanbrado Gold Project Mineral Resources and Ore Reserves has been extracted from the ASX announcement
related by West African on 9th March 2021 entitled “West African set for +1- years of +200,000oz average gold production”. West
African confirms that it is not aware of any new information or data that materially affects the information included in the original
ASX announcement and that all material assumptions and technical parameters underpinning the estimates in the ASX
announcement continue to apply and have not materially changed. West African confirms that the form and context in which the
Competent Persons findings are presented have not been materially modified form the original ASX announcement.
Information in this report that relates to Mineral Resources and Ore Reserves is based on information complied by Brian Wolfe
(Mineral Resources with the exclusion of M1 South Deeps), Neil Silvio (M1 South Deeps Mineral Resources), Andrew Fox (M1 South
underground Ore Reserves) and Stuart Cruickshanks (open pit Ore Reserves) who are Competent Persons. Mr Wolfe is an
independent consultant and a Member of the Australian Institute of Geoscientists. Mr Silvio is a full-time employee of the company
and a Member of the Australian Institute of Mining and Metallurgy. Mr Fox is an independent consultant and a Member of the
Australian Institute of Mining and Metallurgy. Mr Cruickshanks is a full-time employee of the company and a Fellow of the Australian
Institute of Mining and Metallurgy.
West African Resources Limited|18
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
ROD LEONARD
BSc and MSc (Metallurgical Engineering),
MAusIMM, MSME
Executive Chairman and
Chief Executive Officer
Executive Director and
Chief Operating Officer
Lead Independent Director and
Non-Executive Director
Richard Hyde is a geologist with
25 years’ experience in the mining
industry and more than 19 years of
experience in West Africa. Richard has
managed large exploration and
development projects for gold and base
metals in Australia, Africa and Eastern
Europe. He led the Company from
incorporation in 2006, IPO in 2010, and
through the discovery, development,
and operation of the Sanbrado Gold
Project.
Mr Hyde is a founding shareholder and
commenced as a Director in 2006.
Lyndon Hopkins is a geologist with more
than 30 years’ experience in gold
exploration, development and production
in Australia and Africa. He was Chief
Operating Officer of Equigold NL’s Ivory
Coast operations and managed the in-
country aspects of the project
development and feasibility study for the
Bonikro Gold Mine. More recently, he
was Mine Manager for the construction
of Regis Resources Ltd’s Rosemont Gold
Mr Hopkins has been West African’s Chief
Operating Officer since 2015 and joined
the Board on 6 September 2019.
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 assignments as well as
commissioning of projects.
Mr Leonard joined the Board on
6 September 2019 and was appointed as
Lead Independent Director on 2 February
2021.
Committee memberships:
Technical
Committee memberships:
Technical
Committee memberships:
Remuneration, Technical and Audit
Other ASX listed directorship:
Nil
Other ASX listed directorship:
Nil
Other ASX listed directorship:
Lycopodium Limited
Previous ASX listed directorship in the
last 3 years: Nil
Previous ASX listed directorship in the
last 3 years: Nil
Previous ASX listed directorship in the
last 3 years: Nil
West African Resources Limited|19
ELIZABETH (LIBBY) MOUNSEY
BBus (Human Resources and Industrial
Relations), MAICD
NIGEL SPICER
BSc (Mining), CEng, MAusIMM
STEWART FINDLAY
BCom (Accounting and Finance), MAICD
Non-Executive Director
Non-Executive Director
Non-Executive Director
Libby Mounsey has over 30 years’
experience in human resources and
industrial relations across the mining,
construction, health, fisheries, and
aviation industries. Over the last 15
years she has held senior positions with
resource companies in various stages of
development through feasibility,
construction and operations. Libby holds
a Bachelor of Business (Human
Resources & Industrial Relations) from
Edith Cowan University and is a Member
of the Australian Institute of Company
Directors.
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.
Stewart Findlay has over 25 years
financial markets experience and has
provided project finance (senior secured
debt and corporate facilities), equity
investments, commodity hedging
arrangements and corporate advice to a
large number of resource companies. He
has held senior positions in the metals
and mining divisions of Macquarie Bank
and National Australia Bank. Stewart
holds a Bachelor of Commerce
(Accounting & Finance) from the
University of New South Wales and is a
Member of the Australian Institute of
Company Directors.
Ms Mounsey joined the Board on
29 May 2020.
Mr Spicer joined the Board on
6 September 2019.
Mr Leonard joined the Board on
6 September 2019.
Committee memberships:
Remuneration (Chair)
Committee memberships:
Audit, Technical (Chair)
Committee memberships: Audit (Chair),
Remuneration
Other ASX listed directorship:
Nil
Other ASX listed directorship:
Nil
Other ASX listed directorship:
Nil
Previous ASX listed directorship in the
last 3 years: Nil
Previous ASX listed directorship in the
last 3 years: Nil
Previous ASX listed directorship in the
last 3 years: Nil
PAST DIRECTORS WHO RETIRED DURING THE YEAR
MARK CONNELLY
SIMON STORM
retired 29 May 2020
retired 29 May 2020
COMPANY SECRETARY
PADRAIG O’DONOGHUE appointed as CFO on 4 June 2018 and as Company Secretary on 29 May 2020
West African Resources Limited|20
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were development and operation of the Group’s key asset, the Sanbrado Gold
Project (“Sanbrado”), located in Burkina Faso; and mineral exploration in Burkina Faso.
West African Resources Limited owns a 90% beneficial interest in Société des Mines de Sanbrado SA (“SOMISA”), which owns 100%
of Sanbrado. The government of Burkina Faso retains a 10% equity interest in SOMISA.
DIVIDENDS
No dividends have been paid or declared since the start of the year and the Directors do not recommend the payment of a dividend
in respect of the year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The Group completed construction and commenced commercial production at the Sanbrado gold project during the year.
SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE
There has not arisen in the interval between the end of the reporting period and the date of this report, any item, transaction or
event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect substantially the operations
of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years.
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 “Operating and Financial Review” and “Significant Events After Balance Sheet Date” sections of this Annual Report. Disclosure of
any further information regarding likely developments in the operations of the Group in future years and the expected results of
those operations is likely to result in unreasonable prejudice to the Company.
West African Resources Limited|21
SHARE OPTIONS AND PERFORMANCE RIGHTS1
At the date of this report the unissued ordinary shares of the Company under option are:
Issue date
Exercise price
Expiry date
Number issued
Options
29-Mar-18
26-Sep-18
28-Dec-18
28-Dec-18
20-Jan-20
29-Apr-20
11-Jun-20
Performance Rights
20-Jan-20
20-Jan-20
11-Jun-20
11-Jun-20
8-Jul-20
8-Jul-20
22-Sep-20
8-Dec-20
17-Dec-20
17-Dec-20
22-Jan-21
22-Jan-21
$0.4100
$0.3100
$0.3200
$0.4300
$0.6061
$0.7346
$0.6061
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
29-Mar-21
26-Sep-21
28-Dec-21
28-Dec-22
20-Jan-24
29-Apr-24
11-Jun-25
20-Jan-23
20-Jan-25
11-Jun-23
11-Jun-25
8-Jul-22
8-Jul-23
22-Sep-23
8-Dec-24
17-Dec-22
17-Dec-24
22-Jan-23
22-Jan-24
Total options and performance rights on issue
1Performance rights are granted subject to various performance hurdles.
NON-AUDIT SERVICES
250,000
500,000
500,000
1,223,828
131,578
250,000
657,894
3,513,300
459,406
131,578
867,041
657,894
137,822
249,827
86,758
3,295,000
57,172
2,500,000
89,108
82,942
8,614,548
12,127,848
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 26 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.
22|West African Resources Limited
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
Rod Leonard
Nigel Spicer
Stewart Findlay
Libby Mounsey
Mark Connelly
Simon Storm
A – the number of meetings held whilst a Director or a committee member
B – the number of meetings the Director or committee member attended
A
-
-
2
2
1
-
1
1
A
7
7
7
7
5
5
3
3
B
7
7
7
7
5
5
3
3
B
-
-
2
2
1
-
1
1
A
-
-
2
-
2
2
-
-
B
-
-
2
-
2
2
-
-
A
4
4
4
4
-
-
-
-
B
4
4
4
4
-
-
-
-
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. All
amounts are in Australian dollars, unless otherwise stated.
West African Resources Limited|23
REMUNERATION REPORT (AUDITED)
The Directors of West African Resources Limited present the Remuneration Report for the Group for the year ended 31
December 2020. This Remuneration Report forms part of the Directors’ Report and has been prepared in accordance with the
Corporations Act 2001.
1 REMUNERATION REPORT OVERVIEW
This Remuneration Report details the remuneration arrangements for West African’s Key Management Personnel (“KMP”),
being:
•
•
the Executive Directors and the other senior executives with authority for planning, directing and controlling the major
activities of the Group (together the “Executives”).
the Non-Executive Directors (“NEDs”); and
The KMP during the year are set out below:
Name
Position
Non-Executive Directors
Appointed
Retired
Nigel Spicer
Rod Leonard
Stewart Findlay
Libby Mounsey
Mark Connelly
Simon Storm
Executive Directors
Richard Hyde
Lyndon Hopkins
Senior Executives
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
September 2019
September 2019
May 2020
May 2020
June 2015
Non-Executive Director & Company Secretary
November 2007
Executive Chairman and Chief Executive Officer
September 2006
Executive Director and Chief Operating Officer
September 2019
Padraig O’Donoghue
Chief Financial Officer and
Company Secretary
Matthew Wilcox
Chief Development Officer
June 2018
May 2020
September 2018
-
-
-
-
May 2020
May 2020
-
-
-
-
-
2 GROUP PERFORMANCE AND ITS LINK TO SHAREHOLDER RETURNS
The following table provides the earnings per share, dividends per share, net profit (loss) and share price of West African
Resources at 31 December 2020 compared to the 4 previous reporting periods.
Period ending
December 2020
December 2019
December 2018
June 2018
Reporting period length
12 months
12 months
6 months
12 months
EPS (cents)
Dividends (cents per share)
Net profit / loss ($’000)
Share price ($)
11.3
Nil
98,900
1.050
(0.5)
Nil
(4,334)
0.430
(0.5)
Nil
(3,551)
0.250
(4.3)
Nil
(25,300)
0.380
June 2017
12 months
(3.0)
Nil
(14,324)
0.355
West African Resources Limited|24
3 REMUNERATION GOVERNANCE
A. 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 (“NED”) remuneration;
• Executive remuneration, including the executive incentive scheme framework and associated policies, targets, and awards;
and
• matters related to Executive and NED recruitment, retention, performance measurement and termination.
The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of NEDs and Executives by
reference to relevant employment market conditions with the overall objective of maximising stakeholder benefit from the retention
and incentivization of a high performing director and executive team. Further information on the duties and responsibilities of the
Remuneration Committee is contained in the Remuneration Committee Charter which is available on the Company’s website.
B. USE OF REMUNERATION ADVISORS
In 2018 the Remuneration Committee engaged BDO Remuneration and Reward Pty Ltd (“BDO”) to review and provide
recommendations on the design of Group’s overall executive remuneration and incentive framework and policies. BDO was
consulted again by the Remuneration Committee in 2020 to advise on the overall executive incentive framework and a special
remuneration initiative by the Company to address identified retention risks of Executives and other key senior employees
related to mining industry employment market conditions, COVID-19-related travel restriction, and the transition of Sanbrado
from construction phase to operations phase. BDO’s recommendations were provided to the Remuneration Committee as an
input into decision making and were used to assist the Committee and the Board in setting out remuneration packages suitable
for the Company. The Board considered BDO’s recommendations along with other factors in making its remuneration decisions.
Both BDO and the Board were satisfied the advice received from BDO was free from undue influence from the KMP to whom
the recommendations applied. The amount paid to BDO for remuneration advice in 2020 was $15,750 (2019: $Nil), excluding
GST.
C. 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.
West African Resources Limited|25
D. REMUNERATION FRAMEWORK
After considering the 2018 executive remuneration recommendations from BDO, the following executive remuneration
framework was recommended by the Remuneration Committee and adopted by the Board.
Type
Category
Definition of category
Purpose summary
Fixed remuneration
Total fixed remuneration
Pay which is linked to the present
value and market rate of the role.
Pay for fulfilling the
requirements of the role
At-risk remuneration
Short term incentive
At-risk remuneration
Long term incentive
value
create
Pay for delivering the plan and
growth agenda for WAF which
for
must
shareholders. Incentive pay will
be linked to the achievement of
‘line-of-sight’ performance goals.
It reflects ‘pay for performance’.
for
Pay
shareholders. Reward pay
is
linked to shareholder returns.
It reflects ‘pay for results’.
creating value
for
Incentive for the achievement
of annual objectives and
sustained business value
Incentive for performance over
the long term
An important governance and legal component of the remuneration framework is the Company’s Incentive Option &
Performance Rights Plan (“Plan”). All equity incentives issued to Executives and other employees, including options and
Performance Rights, are issued by the Company under the terms and conditions of the Plan. The Plan was most recently
approved by shareholders at the Company’s Annual General Meeting on 30 November 2018. The purpose of the Plan is to:
assist in the reward, retention and motivation of participants;
link the reward of participants to performance and the creation of shareholder value;
align the interests of participants more closely with the interests of shareholders; and
a.
b.
c.
d. provide greater incentive for participants to focus on the Company's longer-term goals.
E. FIXED REMUNERATION
Total fixed remuneration (“TFR”) consists of the base salary, superannuation, and other non-monetary benefits such as
employee leave. TFR is intended to compensate the Executives for:
• Competently and professionally fulfilling the scope of the Executive’s roles and responsibilities; and
•
the Executive’s skills, experience, and qualifications.
F. AT-RISK REMUNERATION
In order to ensure that executive remuneration is aligned to Company performance, a portion of Executives’ remuneration is
placed “at risk”. The STI and LTI categories comprise the at-risk component of Executive remuneration.
Short-term incentive (“STI”):
• The primary purpose of the STI is to incentivise Executives to achieve the annual STI performance targets set by the Board
at the beginning of the year. The STI performance targets clearly set out the annual performance targets the Board requires
from management and achievement of the targets is determined by the Board at the end of the year.
• The STI also enables the Executives to accumulate equity in the business which provides alignment with the shareholders
for sustained strong business results.
• The STI also provides an employee-retention benefit to the Company from the STI equity incentive, which contains a
vesting condition that requires a period of continuous service before the STI equity awards vest. This service condition is
typically two years.
26|West African Resources Limited
Long-term Incentive (“LTI”):
• The LTI is designed to incentivise Executives in the creation of long-term shareholder value as evidenced by market and non-
market measures, by rewarding the Executives for the achievement of long-term performance targets set by the board at
the beginning of the long-term performance period. The long-term targets are set out by the Board to provide clear and
measurable direction as to what the Board and shareholders require from management by the end of the long-term
performance period, which is typically a minimum of 3 years.
• The LTI also enables the Executives to accumulate equity in the business which provides alignment with the shareholders
for sustained strong business results.
• The LTI also provides an employee-retention benefit to the Company from the LTI equity awards that contain a vesting
condition that requires the Executive to remain in continuous service to the Company until the equity awards vest.
4 NON-EXECUTIVE DIRECTOR REMUNERATION
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 approved periodically by
shareholders. The last determination at an AGM was an aggregate fee pool of $900,000 per year to ensure the Company can
continue to attract and retain a high-performing Board of Directors with the appropriate overall skillset and composition.
The Remuneration Committee considered advice from BDO regarding the remuneration paid to NEDs. This advice was largely
based on a review against comparable companies. NED remuneration consists solely of their director fees. There is no scheme
to provide retirement benefits to NEDs other than statutory superannuation. Aside from being offered the option of receiving
30% of their director fees in the form of Performance Rights, NEDs do not participate in any performance related incentive
programs.
Whilst WAF has no minimum shareholding policy for NEDs, the Board is of the view that it is beneficial for NEDs to hold an equity
interest because it is an alignment with the Company’s shareholders. The NED fee structure for 2020 was either one of the
following, at the election of each individual NED.
100% of NED fees, being $75,000 annually, paid in cash; or
i)
ii) 70% of the above NED fees paid in cash and 30% paid in Performance Rights (30% equity component).
The 30% equity component of the structure has been approved, in respect of each participating Director, at a General Meeting
of Shareholders of the Company. All of the Company’s NEDs elected to participate in the 30% equity component respect of their
2020 NED fees.
During 2020, the NED fees covered all activities associated with the Directors’ role on the Board and no additional fees were
paid to NEDs for being a chairperson or member of a committee.
NEDs are entitled to be paid, as the Board determines, for additional services provided to the Group outside of their Director
responsibilities. They may also be reimbursed for out-of-pocket expenses they incur as a result of their directorships.
West African Resources Limited|27
5
EXECUTIVE REMUNERATION
A. EXECUTIVE REMUNERATION STRUCTURE
The remuneration framework provides for total remuneration for each Executive to be split between the fixed and at-risk
components in the following portions:
Executive
Executive Chairman & CEO
Chief Operating Officer
Other Executives
Fixed
remuneration
42%
45%
50%
At-risk
remuneration
(STI and LTI)
58%
55%
50%
The ‘at-risk’ apportionment for each Executive is comprised as follows, which shows a significant weighting towards the long-
term (LTI) component, which in the Board’s view provides a balance of Executive incentivization that aligns with shareholders
for both short-term results and long-term sustainable returns.
Executive
Executive Chairman & CEO
Chief Operating Officer
Other Executives
STI
cash
incentive
14%
17%
20%
STI
equity
incentive
25%
25%
40%
LTI
equity
incentive
61%
58%
40%
The proportions in the above tables are used as a guide by the Remuneration Committee to recommend to the Board the maximum
of each component of at-risk remuneration that can be earned by the Executives each year. The equity incentives are awarded by
the Board early in the year, with the number awarded calculated based on the 7-day VWAP of WAF shares at the beginning of the
incentive performance period. The number of equity incentives that will ultimately vest and be available to be exercised by the
Executives is determined by the Board based on the assessment and achievement of the vesting conditions set out when the equity
incentives were awarded. The vesting conditions of the equity awards represent both market and non-market performance targets
that the Board needs management to achieve in order to earn that portion of their at-risk remuneration.
The equity incentives also provide an employee-retention benefit to the Company, in addition to the performance target incentives.
For example, the STI equity incentives include a 2-year continuous service vesting condition and the LTI equity incentives include a
condition that the incentive will lapse if the Executive’s employment terminates before the board determines that the performance
hurdle vesting conditions have been satisfied.
B. EXECUTIVE SERVICE AGREEMENTS
Commensurate with construction of the Sanbrado Gold Project and its transition to commercial production, the Remuneration
Committee undertook a review of the Executives’ Service Agreements (“ESAs”) and TFRs. The review included external
independent legal advice on the ESAs and comparisons of TFRs to similar peer companies. As 2020 was the first year of mining
operations for WAF, the comparative peer group changed from being other exploration and development companies to WAF’s
new mining-company peers. The review resulted in the Company entering into new ESAs with each of the Executives that
included adjustments to their TFRs. The TRF changes took effect from 1 May 2020, being the date that Sanbrado commenced
commercial production. The other provisions of the new ESAs took effect from 1 March 2020 for Richard Hyde and 1 April 2020
for the other Executives. Key changes to the Executives ESAs are shown in the following table.
28|West African Resources Limited
Executive
Salary change^
Richard Hyde
Lyndon Hopkins
Padraig
O’Donoghue
Increased from
$400,000 to
$585,000
Increased from
$300,000 to
$450,000
Increased from
$275,000 to
$350,000
Contract term
change
Changed from
3-year term to
ongoing (until
terminated by
either party)
No change from
ongoing (until
terminated by
either party)
Company
notice-period
change
Changed from
1-month’s notice to
6-months
Employee
notice-period
change
No change from
3-months’ notice
Changed from
2-month’s notice to
6-months
Changed from
2-months’ notice to
3-months
Termination
benefit change*
Change from
termination
payment of
6-months’ salary to
nil
No change from nil
termination benefit
Same as above
Same as above
Same as above
Same as above
Same as above
Matthew Wilcox
Increased from
$300,000 to
$375,000
^ Amount shown includes annual salary plus superannuation.
* Termination benefits shown assume that termination was not due to a change of control of the Company. Shareholder approval was obtained
at the 31 May Annual General Meeting for purposes of sections 200B and 200E of the Corporations Act in relation to termination benefits
each individual Executive may become entitled to if their employment under the ESA is terminated.
Same as above
Same as above
Same as above
C. AT-RISK REMUNERATION
At the beginning of 2020 the Board set out STI and LTI performance targets for Executives to earn their at-risk remuneration.
The following table summarises the Executive’s 2020 STI targets and their level of achievement as determined by the Board at
the end of the year. These targets were the same for all of the Executives and the same targets applied to both the cash
incentive portion of the STI and the equity incentive portion (as set out in section 4A of this report).
STI Target
Sanbrado reaches commercial production in 2020
Sanbrado construction completed within board-approved
budget and schedule
A minimum of 150,000 oz's of gold is poured in 2020
There is no default of the project loan facility agreement
There are no significant social or environmental incidents
The Sanbrado TIFR is less than the industry standard for Western Australia
Weighted average level of achievement
Weighting
Gateway hurdle which
determines if any STI will be
paid for 2020
Level of
achievement
Gateway achieved
30%
30%
20%
10%
10%
100%
89%
100%
100%
100%
96.7%
For 2020 the Executives earned 96.7% of the cash portion of their 2020 STI. The 2020 STI equity incentive portion was comprised
of Performance Rights with an expiry period of 3 years and an additional vesting condition that the Executive must remain an
employee of the Company for two years from the date the Performance Rights were issued. Subject to Executives satisfying
this 2-year service period, the Board has determined that 96.7 % of their 2020 STI Performance Rights will vest.
West African Resources Limited|29
The following table sets out the vesting conditions of the 2020 LTI equity instruments issued to Executives at the beginning of
2020 along with their vesting status.
LTI equity instrument
Vesting conditions
Performance Rights with a 5-year expiry period
At least 500,000 ounces of gold is poured
within three years of the date the
Performance Rights were issued (being
20 January 2023).
Vesting status
Unvested
Options with 4-year expiry period and an exercise price
of 145% of the share price on 31 December 2019 (being
$0.616)
Recipient is an employee of the Company
when the market price first equals the
exercise price
Vested
The 2020 STI and LTI equity awards issued to the Executive Directors were approved by shareholders at the Company’s 29 May
2020 Annual General Meeting and additional details of these awards are contained in the notice of meeting.
D. SPECIAL ISSUE OF RETENTION AND SHARE-PRICE GROWTH PERFORMANCE RIGHTS IN 2020
The Board considered that the Group had assembled a skilled and experienced Executive and senior operational management
team that had taken the Company and Sanbrado from construction to successful operations during 2020 during a global
pandemic and in a challenging African jurisdiction. However, during 2020 the Remuneration Committee identified employee-
retention risks related to:
•
•
•
Increasingly competitive mining industry employment market conditions,
COVID-19-related travel restriction, and
the transition of Sanbrado from construction to operations phase.
It also identified the risk that it would be difficult to replace the current Executives and senior operational management team
in the current labour market.
In response to the above risks and to align the Executives and other senior employees with shareholders to continue strong
share price growth the Board approved a special grant of Performance Rights which was in addition to the Company’s normal
annual incentive scheme. In December 2020, the Company undertook a special issue of Performance Rights to the Executives
and other key senior employees that was outside the Company’s normal remuneration framework explained in section 2 of this
Remuneration Report. The Performance Rights were issued pursuant to the Plan in two categories with the following key terms
and conditions.
Category
Retention (50%)
Share price growth (50%)
Vesting conditions
The recipient holds continuous office as a
Director of the Company or an employee of
the Group for three consecutive years from
the date of issue.
WAF shares trade at $2.00 or higher for a 20-
day VWAP period within 3 years of issue, and
the recipient remains an employee of the
Group or Director of the Company.
Expiry dates
4 years from date of issue.
4 years from date of issue.
The Retention and Share-price growth Performance Rights issued to the Executive Directors were approved by shareholders at
the Company’s 17 December 2020 General Meeting and additional details of these awards are contained in the notice of
meeting.
30|West African Resources Limited
6 KMP REMUNERATION OUTCOMES
The remuneration disclosures of the KMP for the year ended 31 December 2020 in accordance with Australian Accounting Standards are detailed in the following table.
Fixed remuneration
Annual
and Long
Service
Leave
$
Super
$
Cash salary
and fees
$
489,814
400,000
372,842
273,973
45,993
20,358
52,500
60,292
31,049
-
73,311
-
21,593
100,000
25,340
80,850
-
70,445
299,276
251,142
366,692
273,973
40,199
-
31,491
26,027
6,507
1,934
-
-
-
-
3,814
-
-
-
-
-
-
6,507
28,431
23,858
34,836
26,027
40,527
-
46,327
52,588
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31,742
32,132
33,735
24,631
1,778,410
1,531,033
145,278
84,353
152,331
109,351
Total
$
570,540
400,000
450,660
352,588
52,500
22,292
52,500
60,292
31,049
-
77,125
-
21,593
100,000
25,340
80,850
-
76,952
359,449
307,132
435,263
324,631
2,076,019
1,724,737
Variable remuneration
Performance based % of
remuneration
Cash
bonus
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51,778
-
51,778
-
Options
$
282,750
122,881
159,998
39,979
-
-
-
-
-
72,528
175,068
20,837
55,951
-
58,940
161,113
48,540
58,970
86,938
756,196
588,297
Performance
Rights
$
Fixed
remuneration
%
Total
$
Remuneration
linked to
performance
%
374,866
158,147
247,206
97,188
32,526
-
32,526
-
1,118
-
1,118
-
9,254
-
9,254
-
-
-
85,598
29,131
173,647
-
967,113
284,466
657,616
281,028
407,204
137,167
32,526
-
32,526
-
1,118
-
1,118
-
81,782
175,068
30,091
55,951
-
58,940
246,711
77,672
284,395
86,938
1,775,087
872,764
46%
59%
53%
72%
62%
100%
62%
100%
97%
-
99%
-
21%
36%
46%
59%
0%
57%
59%
80%
60%
79%
54%
66%
54%
41%
47%
28%
38%
0%
38%
0%
3%
-
1%
-
79%
64%
54%
41%
0%
43%
41%
20%
40%
21%
46%
34%
31 Dec 20
31 Dec 19
31 Dec 20
31 Dec 19
Executive Directors
Richard
Hyde
Lyndon
Hopkins
Non-Executive Directors
Rod
Leonard
Nigel
Spicer
Stewart
Findlay
31 Dec 20
31 Dec 19
31 Dec 20
31 Dec 19
31 Dec 20
31 Dec 19
Libby
Mounsey*
Mark
Connelly
Simon
Storm
Ian
Kerr
Executives
Padraig
O’Donoghue
Matthew
Wilcox
Total
31 Dec 20
31 Dec 19
31 Dec 20
31 Dec 19
31 Dec 20
31 Dec 19
31 Dec 20
31 Dec 19
31 Dec 20
31 Dec 19
31 Dec 20
31 Dec 19
31 Dec 20
31 Dec 19
*Cash salary and fees includes $46,076 paid to Just HR Pty Ltd, for whom Ms Mounsey is a director and shareholder, for HR consulting services on normal commercial terms whilst she was a Director of the Company
31|West African Resources Limited
7 DETAILS OF SHARE-BASED COMPENSATION
Options held by Key Management Personnel
Balance
1 Jan 2020
Granted as
remuneration
Number
exercised
Net change
other
Balance
31 Dec 2020
Total
Vested
Unvested
At 31 December 2020
Directors
Richard Hyde
Lyndon Hopkins
Simon Storm#
Mark Connelly#
Executives
Padraig O'Donoghue
Matthew Wilcox
2,588,235
855,932
750,000
2,000,000
779,661
1,000,000
406,698
251,196
-
-
131,578
78,419
Total
# For retired Directors the amounts are reported for the period they were a Director.
7,973,828
867,891
(2,000,000)
(500,000)
-
-
-
-
(2,500,000)
-
-
-
-
-
-
-
994,933
607,128
750,000
2,000,000
911,239
1,078,419
6,341,719
994,933
607,128
750,000
2,000,000
911,239
1,000,000
6,341,719
994,933
607,128
750,000
2,000,000
911,239
1,000,000
6,263,300
-
-
-
-
-
78,419
78,419
Performance Rights held by Key Management Personnel
Balance
1 Jan 2020
Granted as
remuneration
Number
exercised
Net change
other
Balance
31 Dec 2020
Total
Vested
Unvested
At 31 December 2020
1,072,664
661,017
-
-
-
-
Directors
Richard Hyde
Lyndon Hopkins
Rod Leonard
Nigel Spicer
Stewart Findlay
Libby Mounsey
Simon Storm#
Mark Connelly#
Executives
Padraig O'Donoghue
Matthew Wilcox
Total
* Performance Rights held by Ms Mounsey prior to her appointment as a Director.
^ Performance Rights that lapsed during the year.
# For retired Directors the amounts are reported for the period they were a director of the Company.
2,433,013
1,610,047
68,911
68,911
28,586
28,586
22,139
22,139
233,051
-
2,148,393
1,210,524
1,489,865
6,982,721
77,855
103,806
-
-
-
-
-
-
-
-
-
-
-
(11,033)^
(7,092)^
-
-
-
23,923*
-
-
(8,668)^
(6,027)^
(8,897)
3,494,644
2,263,972
68,911
68,911
28,586
52,509
99,994
125,945
1,434,907
1,562,257
9,122,217
3,494,644
2,263,972
68,911
68,911
28,586
52,509
99,994
125,945
1,434,907
1,562,257
9,122,217
1,072,664
661,017
-
-
-
-
99,994
125,945
233,051
78,419
2,271,090
2,421,980
1,602,955
68,911
68,911
28,586
52,509
-
-
1,201,856
1,405,419
6,851,127
West African Resources Limited|32
Total value
$19,908
$336,842
$39,672
$396,422
Total value
$408,462 Other A = in lieu of STI cash incentive
$18,508 Other B = in lieu of 30% of Directors fees
$743,539
$552,631
$121,972
$161,936
$69,401
$58,315
$678,750 Other C = Retention and Share-price
growth Performance Rights
$172,500
$1,275,000
$287,500
$4,548,514
Options granted during the year as remuneration to KMP
Grant date
20-Jan-20
29-May-20
02-Jul-20
Total
Type
LTI
LTI
LTI
Number granted
131,578
Value each
$0.151
657,894
78,419
867,891
$0.512
$0.506
Performance Rights granted during the year as remuneration to KMP
Grant date
09-Jan-20
29-May-20
29-May-20
29-May-20
Type
Other A
Other B
STI
LTI
29-May-20
Other B
02-Jul-20
02-Jul-20
17-Dec-20
08-Dec-20
08-Dec-20
17-Dec-20
17-Dec-20
Total
STI
LTI
Other B
Other C
Other C
Other C
Other C
Number granted
938,992
Value each
$0.435
44,278
885,166
657,894
137,822
182,978
78,419
57,172
750,000
750,000
1,250,000
1,250,000
6,982,721
$0.418
$0.840
$0.840
$0.885
$0.885
$0.885
$1.020
$0.905
$0.230
$1.020
$0.230
Options and Performance Rights exercised during the year by KMP
Exercise date
16-Oct-20
Number
500,000
09-Nov-20
2,500,000
Total
2,500,000
Value each on
exercise date
$1.101
$1.040
Options and Performance Rights forfeited / lapsed during the year by KMP
Lapse date
31-Dec-20
Total
Number
32,820
32,820
Financial year in
which options were
granted
2020
Share holdings of Key Management Personnel
Balance
1 Jan 2020
Issued as
remuneration
Issued on exercise
of options
Net change
other
Balance
31 Dec 2020
Directors
Richard Hyde
Lyndon Hopkins
Nigel Spicer
Rod Leonard
Stewart Findlay
Libby Mounsey
Simon Storm
Mark Connelly
Executives
18,280,769
3,032,250
-
-
-
-
2,590,769
60,000
Padraig O'Donoghue
Matthew Wilcox
Total
112,995
981,395
25,058,178
33|West African Resources Limited
-
-
-
-
-
-
-
-
-
-
-
2,000,000
500,000
-
-
-
-
849,994
2,125,945
(2,000,000)
-
-
-
-
16,000
(1,450,000)
(2,185,945)
-
-
-
(400,000)
18,280,769
3,532,250
-
-
-
16,000
1,990,763
-
112,995
581,395
5,475,939
(5,619,945)
24,514,172
8
LOAN TO KMP
A loan was provided to Richard Hyde in a prior year to exercise 2,000,000 options at 14.5 cents. The loan carried interest at 5.5%
per annum with a maturity date of 30 June 2021. Mr Hyde fully repaid the loan during the year and the balance outstanding at
year end was nil (2019: $319,673).
End of Audited Remuneration 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 76 and forms part of this Directors’ Report.
Signed in accordance with a resolution of the Directors.
RICHARD HYDE
Executive Chairman & CEO
Perth, 26 March 2021
West African Resources Limited|34
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
Revenue from continuing operations
Cost of sales
Exploration and evaluation expenses
Corporate and technical services
Share-based payments
Other expenses
Finance expenses
Forex realised loss
Forex unrealised gain
Profit (Loss) before tax
Income tax expense
Profit (Loss) after tax
OTHER COMPREHENSIVE INCOME:
Items that may be reclassified subsequently to profit
or loss:
Foreign currency translation differences for foreign
operations
Other comprehensive loss, net of income tax
Total comprehensive profit (loss) for the year
Profit (loss) attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive profit (loss) attributable to:
Owners of the parent
Non-controlling interest
Basic profit (loss) per share (cents per share)
Diluted profit (loss) per share (cents per share)
Note
3
4(a)
4(b)
5
24
24
6
6
2020
$'000
311,167
(145,148)
(2,517)
(5,079)
(2,343)
(2,769)
(26,139)
(806)
15,002
141,368
(42,468)
98,900
(5,553)
(5,553)
93,347
89,362
9,538
98,900
83,809
9,538
93,347
11.3
11.2
2019
$'000
1,239
(179)
(2,236)
(3,994)
(533)
-
(5)
(986)
2,362
(4,334)
-
(4,334)
(1,213)
(1,213)
(5,547)
(4,275)
(59)
(4,334)
(5,488)
(59)
(5,547)
(0.5)
(0.5)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
West African Resources Limited|35
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
Note
7
8
9
10
11
13
14
15
16
15
16
17
18
19
20
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Financial assets
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Right-of-use assets
Exploration and evaluation assets
Total non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Deferred revenue
Loans and borrowings
Lease liabilities
Current tax payable
Total current liabilities
NON-CURRENT LIABILITIES
Loans and borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Equity attributable to owners of the parent
Non-controlling interest
TOTAL EQUITY
2020
$'000
95,027
22,635
51,950
39
169,651
329,587
16,220
15,255
361,062
530,713
40,479
23,957
132,664
4,581
20,819
222,500
93,669
11,225
9,406
21,648
135,948
358,448
172,265
165,263
3,851
(3,885)
165,229
7,036
172,265
2019
$'000
83,584
1,501
-
38
85,123
242,701
8,135
-
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)
74,231
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
West African Resources Limited|36
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
Balance at 1 January 2019
Loss after tax
Other comprehensive income for the period
Total comprehensive profit (loss) for the period
Shares issued during the year net of transaction costs
Transfer to non-controlling interest
Share-based payments
Balance at 31 December 2019
Balance at 1 January 2020
Profit after tax
Other comprehensive profit (loss) for the period
Total comprehensive profit (loss) for the period
Shares issued during the period net of transaction costs
Transfer to non-controlling interest
Share-based payments
Reclassification of expired options
Balance at 31 December 2020
Issued capital
$'000
Accumulated losses
$'000
Foreign currency
translation reserve
$'000
Share-based
payments reserve
$'000
Non-controlling
interest
$'000
161,947
-
-
-
972
-
-
162,919
162,919
-
-
-
2,344
-
-
-
165,263
(89,640)
(4,275)
-
(4,275)
-
(26)
-
(93,940)
(93,940)
89,362
-
89,362
-
381
-
312
(3,885)
670
-
(1,213)
(1,213)
-
-
-
(543)
(543)
-
(5,553)
(5,553)
-
-
-
-
(6,096)
6,874
-
-
-
-
-
1,043
7,916
7,916
-
-
-
-
-
2,343
(312)
9,947
(2,088)
(59)
-
(59)
-
26
-
(2,121)
(2,121)
9,538
-
9,538
-
(381)
-
-
7,036
Total
$'000
77,763
(4.334)
(1,213)
(5,547)
972
-
1,042
74,231
74,231
98,900
(5,553)
93,347
2,344
-
2,343
-
172,265
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
West African Resources Limited|37
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
Note
21(a)
OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Other income
Net cash inflow (outflow) from operating activities
INVESTING ACTIVITIES
Payments for property, plant and equipment
Development expenditure
Capitalised exploration and evaluation expenditure
Capitalised interest paid during construction
Repayment of loan by related party
Net cash outflow from investing activities
FINANCING ACTIVITIES
Proceeds from issue of shares
Proceeds from exercise of share options
Proceeds from borrowings
Repayment of borrowings
Payments for share issue costs
Payments for lease liabilities
Interest paid on borrowings
Financing costs
Transaction costs related to loans and borrowings
Net cash inflow (outflow) from financing activities
Net increase 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
7
2020
$'000
334,271
(186,702)
681
(576)
247
147,921
(93,052)
-
(16,404)
(7,738)
290
(116,904)
-
2,369
37,832
(35,463)
(22)
(2,949)
(15,020)
(7,369)
(489)
(21,111)
9,906
83,584
1,537
95,027
2019
$'000
-
(7,850)
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
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
West African Resources Limited|38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
1 BASIS OF PREPARATION
A. 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.
Information for West African Resources Limited as an individual parent entity is provided in Note 31.
B. 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.
C. 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.
D. CHANGE IN PRESENTATION OF COMPARATIVES
New expense classification components have been introduced into the Consolidated Statement of Profit and Loss and Other
Comprehensive Income to improve understanding of the profit and loss results of the Sanbrado mining operation that commenced
commercial production in the reporting period. Accordingly, certain expenses in the comparative period have been reclassified from
the presentation component used in the 31 December 2019 financial statements as follows:
Prior to change in presentation New classification component
31 December 2019
$'000
Personnel costs
Consultants
Contractors
Occupancy costs
Legal costs
Travel and accommodation
Listed entity costs
Overheads
Interest expense - lease
Depreciation expense
2,918 Cost of sales
628 Cost of sales
16 Cost of sales
71 Cost of sales
22 Cost of sales
318 Corporate and technical services
194 Corporate and technical services
370 Corporate and technical services
5 Finance expenses
184 Cost of sales
Also, prior to the change in presentation $1,452,000 of ‘exploration and evaluation expenditure’ was shown as a separate line in the
Consolidated Statement of Cash Flows. These exploration and evaluation expenditures are now included in the line item for ‘payments
to suppliers and employees’ in the comparative period of the Consolidated Statement of Cash Flows.
West African Resources Limited|39
1 BASIS OF PREPARATION (CONTINUED)
E. ADOPTION OF NEW AND REVISED STANDARDS
The Directors have reviewed all of the new and revised Standards and Interpretations on issue not yet adopted by the Group for the
period ended 31 December 2020. The Group has adopted all the new or amended Accounting Standards and Interpretations issued by
the Australian Accounting Standard’s Board that are mandatory to the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
F. 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:
Date of commencement of commercial production
Setting the pre-determined levels of operating capacity intended by management for deciding when development of the Sanbrado
gold project was completed and production started. This date is known as the ‘date of commencement of commercial production’ and
is used for establishing when project costs of an operating nature are no longer capitalised to mines under construction and when
depreciation and amortisation of the associated assets commences.
Accounting for leases
• Assessing contracts to determine whether they contain a lease and if so, whether they also contain non-lease components.
• Estimating the useful lives and depreciation rates of right-of-use assets.
• Setting the discount rate of the lease contracts, which is used in the calculation of lease liabilities.
Exploration and evaluation costs
On a case-by-case basis, assessing whether the acquisition costs of particular mineral properties will be expensed or whether it is
appropriate to capitalised them as exploration and evaluation (E&E) assets.
Valuation of rehabilitation provision
• Estimating the future cash flows to settle mine restoration obligations.
• Setting the discount rate used in the calculation of the rehabilitation provision.
Property, plant and equipment
• Setting the useful lives and depreciation rates for plant and equipment.
• Assessing assets for impairment of their carrying value.
Group consolidation
Setting the functional currency used for each entity in the Group.
Income tax
•
• Estimating future tax outcomes.
Interpreting tax legislation in a number of countries.
Classification of borrowings
Estimating future cash flows which impact on the classification of the syndicated debt facility as current versus non-current borrowings.
Share-based payments
•
•
Estimating the fair value of the share-based payments at the date at which they are granted.
Estimating number of share-based payment awards to employees that will ultimately vest at each reporting date.
Value added tax receivable
Estimating the amount recoverable and timing of recovery of VAT receivable from the Burkina Faso government.
40|West African Resources Ltd
1 BASIS OF PREPARATION (CONTINUED)
G. REVENUE
The Group primarily generates revenue from the sale of gold bullion. This sales revenue is recognised when ownership of the metal is
transferred to the buyer. This typically occurs when physical bullion, from a contracted sale, is transferred from the Group’s metal
account to the metal account of the buyer.
Where the Group receives provisional payments from buyers in advance of transfer of ownership, the Group classifies the provisional
payment as a deferred revenue liability until ownership is transferred and the associated revenue is recognised.
H.
INCOME TAXES
The income tax expense or benefit for the period 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.
I. OTHER TAXES
Revenues, expenses and assets are recognised net of the amount of value added taxes (“VAT”) except:
• when the VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the VAT
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 VAT included.
•
Australian goods and services tax (“GST”) is a type of VAT.
The net amount of VAT 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 VAT 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 VAT recoverable from, or payable to, the taxation authority.
J.
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.
K.
INVENTORIES
Ore stockpiles, gold in circuit and finished goods (being gold doré and gold bullion) inventories are valued at the lower of weighted
average cost and net realisable value. Costs include direct production costs and an appropriate allocation of attributable overheads.
Depreciation and amortisation attributable to production of the inventory are also included in the cost of inventory.
Inventories of consumable supplies and spare parts are valued at the lower of weighted average cost and net realisable value. Net
realisable value is the estimated selling price in the ordinary course of business less estimated cost of completion, and the estimated
costs necessary to make the sale.
West African Resources Limited|41
1 BASIS OF PREPARATION (CONTINUED)
L. PROPERTY, PLANT AND EQUIPMENT
Each class of property, plant and equipment (“PP&E”) is carried at cost or fair value, less where applicable, any accumulated
depreciation and impairment losses. The cost of an item of PP&E consists of the purchase price, applicable borrowing costs, any costs
directly attributable to bringing the asset to the location and condition necessary for its intended use, and an initial estimate of the
costs of dismantling and removing the item and restoring the site on which it is located.
The carrying amount of the PP&E is reviewed at each balance sheet date to assess whether there is any indication that the assets may
be impaired. If any such indication exists, then the recoverable amount of the assets is estimated. An asset’s carrying amount is written
down immediately to its recoverable amount if the asset’s carrying amount is greater than the estimated recoverable amount.
Gains and losses on disposal of PP&E 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.
Mines under construction
Expenditure on the construction, installation, and completion of infrastructure facilities for mining properties is capitalised to mines
under construction. The expenditure includes direct costs of construction, drilling costs and removal of overburden to gain access to
the ore, borrowing costs capitalised during construction and an appropriate allocation of attributable overheads. The capitalised
amount is net of proceeds from the sale of ore extracted during the construction 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 reaching pre-determined levels of operating capacity intended by management, known as ‘commencement of commercial
production’, the assets included in mines under construction are transferred out of mines under construction to their appropriate PP&E
category and depreciation and amortisation commence.
Mine development assets
Mine development represents expenditure incurred in relation to overburden removal based on underlying mining activities and
related mining data and construction costs and underground development incurred by, or on behalf of, the Group previously
accumulated and carried forward in relation to mineral properties in which mining has now commenced. Such expenditure comprises
direct costs and an allocation of directly related overhead expenditure.
All expenditure incurred prior to the commencement of production from each development property is carried forward to the extent
to which recoupment out of future revenue from the sale of production, or from the sale of the property, is reasonably assured. When
further development expenditure is incurred in respect of a mine property after the commencement of commercial production, such
expenditure is carried forward as part of the cost of the mine property only when future economic benefits are reasonably assured,
otherwise the expenditure is classified as part of the cost of production and expensed as incurred. Such capitalised development
expenditure is added to the total carrying value of the mine development being amortised.
Mine development costs (as transferred from exploration and evaluation and/or mines under construction) are amortised on a units-
of-production basis over the life of mine to which they relate. In applying the units of production method, amortisation is calculated
using the expected total contained ounces as determined by the life of mine plan specific to that mine property. For development
expenditure undertaken during production, the amortisation rate is based on the ratio of total development expenditure (incurred and
anticipated) over the expected total contained ounces as estimated by the relevant life of mine plan to achieve a consistent
amortisation rate per ounce. The rate per ounce is typically updated annually as the life of mine plans are revised.
42|West African Resources Ltd
1 BASIS OF PREPARATION (CONTINUED)
L. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Depreciation
Depreciation of non-mine specific PP&E is calculated using the straight-line method to allocate their cost or revalued amounts, net of
their residual values, over their estimated useful lives determined as follows:
Land and buildings
Office equipment
Plant and equipment
Light vehicles
3 to 10 years
3 to 10 years
3 to 10 years
3 years
The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each balance sheet date.
M. EXPLORATION AND EVALUATION
Mineral exploration and evaluation (“E&E”) costs are expensed as incurred. Acquisition costs related to mineral properties 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 as an E&E asset to the extent that they are expected to be recouped through the successful development or sale of the mineral
property. Accumulated acquisition costs in relation to abandoned mineral properties are written off in full against profit or loss in the
year in which the decision to abandon is made.
Where a decision has been made to proceed with development in respect of a particular area of interest, the associated E&E assets
are transferred to PP&E and all future E&E costs for the area of interest are classified as PP&E within either mines under construction
or mine development assets, as appropriate.
N. RECOVERABLE AMOUNT OF NON-CURRENT ASSETS
The carrying amounts of non-current assets are reviewed annually 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.
O. TRADE AND OTHER ACCOUNTS PAYABLE
Trade and other accounts payable represent the principal amounts outstanding at balance date, plus, where applicable, any accrued
interest.
P. 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.
West African Resources Limited|43
1 BASIS OF PREPARATION (CONTINUED)
Q. LEASE LIABILITIES
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the
lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value
guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated
termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they
are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a
change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty
of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-
of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in
which they are incurred.
Right-of-use assets
Right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the
initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of
any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of
costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the
asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease
term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement
of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with
terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.
R.
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.
S. 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.
44|West African Resources Ltd
T. 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 estimated number of awards that will ultimately vest. This estimate 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.
U. 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.
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.
West African Resources Limited|45
1 BASIS OF PREPARATION (CONTINUED)
V. 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. Financial assets at amortised cost (debt instruments)
ii. Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
iii. 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
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.
46|West African Resources Ltd
1 BASIS OF PREPARATION (CONTINUED)
W. PARENT ENTITY FINANCIAL INFORMATION
The financial information for the parent entity, West African Resources Limited, disclosed in Note 31 has been prepared on the same
basis as the Group.
2
SEGMENT REPORTING
A. DESCRIPTION OF SEGMENTS
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board and the
executive management team in assessing performance and in determining the allocation of resources.
As there were no operating mines in previous reporting periods the Group considered its business operations to be one reporting
segment in mineral exploration and development. During the current reporting period, the Group changed the internal reporting basis
of its operations to match changes in the operational structure of the business, with the resultant operating segments being as follows:
(a) Mining Operations: in the current period comprise the Sanbrado Gold Project operations located in Burkina Faso.
(b) Exploration: in the current period comprises exploration and evaluation activities in locations other than Sanbrado.
B. SEGMENT INFORMATION
31 December 2020
Total segment revenue
Total segment expenses
Total segment results
Segment assets at 31 December 2020
Segment liabilities at 31 December 2020
Mining
operations
$'000
310,667
145,148
165,519
471,222
137,036
Exploration
$'000
129
2,516
(2,388)
17,339
232
Other
$'000
371
5,079
(4,708)
42,152
221,180
Segment result is reconciled to the profit before income tax as follows:
Total segment results
Share-based payments
Finance expenses
Other expenses
Net foreign exchange losses
Profit before income tax
All metal sales in the year were made to MKS (Switzerland) SA.
Total
$'000
311,167
152,743
158,423
530,713
358,448
2020
$’000
158,423
(2,343)
(26,139)
(2,769)
14,196
141,368
West African Resources Limited|47
3 REVENUE
Metal sales
Interest received
Other income
4 EXPENSES
(a) Cost of sales
Production expenses
Royalties and other selling costs
Depreciation and amortisation
Changes in inventory (cash)
Changes in inventory (non-cash)
(b) Other expenses
Accretion of rehabilitation provision
Depreciation and amortisation
Withholding tax expense
5
INCOME TAX
A.
INCOME TAX RECOGNISED IN PROFIT OR LOSS
Current tax
Deferred tax
(Under) Over provided in prior years
2020
$'000
310,315
605
247
311,167
2020
$'000
120,888
21,371
23,985
(15,350)
(5,746)
145,148
125
76
2,568
2,769
2020
$'000
20,819
21,649
-
42,468
2019
$'000
-
1,237
2
1,239
2019
$'000
-
-
-
-
-
-
-
-
-
-
2019
$'000
-
-
-
-
48|West African Resources Ltd
5
INCOME TAX (CONTINUED)
B. NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACIE TAX PAYABLE
Accounting profit (loss) before tax
Income tax benefit (expense) at 30% (31 December 2019: 27.5%)
Add (Deduct):
Non-deductible expenses
Effect of differences in foreign tax rates
Effect of differences in foreign exchange
Deferred tax movement re borrowing costs
Other permanent adjustment
Movement in unrecognised deferred tax assets
Temporary differences not recognised
Tax losses utilised not previously brought to account
Income tax expense (benefit)
C. UNRECOGNISED DEFERRED TAX BALANCES
(a) Unrecognised deferred tax assets
Annual leave provision
Accrued expenses
Employee provisions
Long service leave provision
Borrowings
Leases
Share issue costs
Tax losses
Section 40-880 undeducted losses
(b) Unrecognised deferred tax liabilities
Prepayments
Accrued interest
Right-of-use assets
Borrowing costs
Net unrecognised deferred tax asset
2020
$’000
141,368
42,410
4,302
(3,657)
(904)
2,361
(3,769)
1,725
-
-
42,468
2020
$’000
75
46
59
13
16,961
93
-
14,496
82
(2)
-
(90)
(1,032)
30,701
2019
$’000
(4,334)
1,192
(4)
-
(601)
-
-
-
(1,456)
601
-
2019
$’000
-
1,503
1,841
-
-
-
1,191
23,946
-
(100)
(13)
-
-
28,368
West African Resources Limited|49
6 EARNINGS PER SHARE
Basic profit (loss) per share (cents per share)
Diluted profit (loss) per share (cents per share)
The profit (loss) and weighted average number of ordinary shares
used in the calculation of basic earnings per share is as follows:
2020
$
11.3
11.2
2019
$
(0.5)
(0.5)
Profit (Loss) for the year
98,900,509
(4,333,608)
Weighted average number of shares outstanding during the period
used in calculations of basic profit (loss) per share
Weighted average number of diluted shares outstanding during the
period used in calculations of diluted profit (loss) per share
873,899,037
868,631,331
880,451,906
876,071,746
7 CASH AND CASH EQUIVALENTS
Cash at bank
Cash in hand
2020
$'000
94,944
83
95,027
2019
$'000
83,567
17
83,584
50|West African Resources Ltd
8 TRADE AND OTHER RECEIVABLES
Current
Interest receivable
Prepayments
Other receivables
Loan to Director
Allowance for impairment
2020
$'000
-
2,945
19,690
-
-
22,635
2019
$'000
45
362
2,858
320
(2,084)
1,501
Other receivables include value added tax receivable from the Burkina Faso government of $19,275,000 (2019: $2,084,000).
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
9
INVENTORIES
Ore stockpiles – cost
Finished goods – cost
Gold in circuit – cost
Consumable supplies and spares – cost
2020
$'000
(2,084)
2,084
-
19,690
-
-
19,690
2020
$'000
24,895
14,131
2,278
10,646
51,950
2019
$'000
(2,166)
82
(2,084)
819
-
320
1,139
2019
$'000
-
-
-
-
-
West African Resources Limited|51
10 PROPERTY, PLANT AND EQUIPMENT
Cost and accumulated depreciation
31 December 2019
Gross carrying amount at cost
Accumulated depreciation
Net carrying amount
31 December 2020
Gross carrying amount at cost
Accumulated depreciation
Net carrying amount
Carrying value
31 December 2019
At the beginning of the period
Additions
Depreciation expensed for the period
Depreciation capitalised for the period
Change in rehabilitation provision
Effects of movement in foreign exchange
Net of accumulated depreciation
31 December 2020
At the beginning of the period
Transfers from mine under construction
Transfers to inventory
Additions
Depreciation expensed for the period
Depreciation capitalised for the period
Change in rehabilitation provision
Effects of movement in foreign exchange
Net of accumulated depreciation
52|West African Resources Ltd
Mine
development
assets
$’000
Mines under
construction
$’000
Capital in
progress
$’000
Land and
buildings
$’000
Office
equipment
$’000
Plant and
equipment
$’000
Light vehicles
$’000
-
-
-
242,477
-
242,477
-
-
-
100,427
(6,601)
93,826
-
-
-
11,527
-
11,527
-
-
-
-
-
-
-
-
69,783
-
25,582
(6,885)
-
5,062
284
93,826
18,830
223,675
-
-
2,098
(2,126)
242,477
242,477
(308,014)
(28,669)
100,719
-
41
-
(6,554)
-
-
-
-
-
-
-
-
-
-
11,527
-
-
-
-
188
(137)
51
31,137
(2,074)
29,063
102
-
(4)
(47)
-
(1)
51
51
30,951
-
-
(2,005)
(16)
-
82
302
(246)
56
298
(273)
25
50
40
(12)
(22)
-
-
56
56
-
-
-
(24)
(8)
-
1
25
1,665
(1,580)
85
205,828
(13,183)
192,645
188
-
(51)
(51)
-
(2)
85
85
204,178
-
-
(12,100)
(17)
-
499
-
11,527
29,063
192,645
2,501
4,021
(1,520)
2,501
353,238
(23,651)
329,587
Total
$’000
245,560
(2,859)
242,701
19,218
223,723
(89)
(120)
2,098
(2,129)
242,701
242,701
-
(28,669)
137,828
(21,674)
-
5,062
(5,661)
329,587
928
(895)
32
48
8
(23)
-
-
-
32
32
3,102
-
-
(660)
-
-
27
11 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
Balance at 1 January 2020
Additions
Depreciation charge for the year
Effects of movement in foreign exchange
Balance at 31 December 2020
12 MINE PROPERTIES
Mines under construction
Balance at 1 January
Additions
Change in rehabilitation provision
Transfers to property, plant and equipment
Transfers to other assets
Depreciation capitalised for the year
Effects of movement in foreign exchange
Balance at 31 December
13 EXPLORATION AND EVALUATION ASSETS
Balance at 1 January
Additions
Balance at 31 December
Property
$'000
Equipment
$'000
-
127
(95)
-
32
32
359
(92)
-
299
-
9,479
(1,391)
15
8,103
8,103
10,838
(3,073)
53
15,921
2020
$'000
242,477
100,719
-
(308,014)
(28,669)
41
(6,554)
-
2020
$'000
-
15,255
15,255
Total
$'000
-
9,606
(1,486)
15
8,135
8,135
11,197
(3,165)
53
16,220
2019
$'000
18,830
222,878
2,098
-
-
-
(1,329)
242,477
2019
$'000
-
-
-
During the year, the Group recognised $15,255,000 of exploration and evaluation asset additions relating to acquisition costs for the
Toega gold deposit (2019: nil).
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is dependent on the
successful development and commercial exploitation or sale of the respective areas.
West African Resources Limited|53
14 TRADE AND OTHER PAYABLES
Current
Trade payables
Accruals
Other payables
15 LOANS AND BORROWINGS
Current
Non-current
A. SYNDICATED DEBT FACILITY
Current
Non-current
2020
$'000
24,418
15,366
695
40,479
2020
$'000
132,664
93,669
226,333
2020
$'000
132,455
81,488
213,943
2019
$'000
8,091
5,465
334
13,890
2019
$'000
22
235,063
235,085
2019
$'000
-
230,325
230,325
Syndicated debt facility denominated in USD arranged by Taurus Mining Finance for the development of the Sanbrado gold project,
which is secured against the assets of the Group. Interest is charged at 7.75% per annum and scheduled monthly repayments
commence on 31 March 2021. As at 31 December 2020 the balance due was US$175 million and no additional drawings are available
(2019: balance due was $175 million and US$25 million was available to be drawn). The Group is also obligated to pay a product fee
under the facility (refer to note 23C(i)). Estimates of future cash flows used for classification of the debt facility between current and
non-current may differ from the actual outcomes in the next financial year.
B. SUPPLIER LOAN FACILITIES
Current
Non-current
2020
$'000
209
12,181
12,390
2019
$'000
22
4,738
4,760
In 2019 a loan facility was entered into with Byrnecut Burkina Faso SARL as a component of the Sanbrado underground mining services
contract. The facility has a limit of US$10 million and interest is charged at a rate of 9.75% per annum. Interest is payable half-yearly
and the principal is due 6 months before termination of the 5-year services contract. The balance outstanding under the facility at 31
December 2020 was US$9.6 million inclusive of accrued interest.
54|West African Resources Ltd
16 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
Total cash outflow for leases
17 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 year
Effects of movement in foreign exchange
Balance at the end of the period
2020
$'000
4,581
11,225
15,806
576
41
617
2,949
2020
$'000
44
9,362
9,406
4,218
5,182
(38)
9,362
2019
$'000
1,866
6,609
8,475
5
70
75
784
2019
$'000
60
4,218
4,278
2,121
2,097
-
4,218
The Group’s 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 under mine development assets in property, plant and equipment.
18 DEFERRED TAX LIABILITIES
Deferred tax liabilities
Trade and other receivables
Property, plant and equipment
Trade and other payables
Borrowings
Borrowing costs
Net deferred tax liabilities
2020
$'000
7
6,911
175
7,070
7,485
21,648
2019
$'000
-
-
-
-
West African Resources Limited|55
2020
$'000
165,263
No.
870,478,852
-
8,203,794
878,682,646
$'000
162,919
-
2,369
(25)
165,263
2020
$'000
3,851
(543)
(5,553)
(6,096)
7,916
2,251
92
(312)
9,947
2019
$'000
162,919
No.
863,524,727
876,000
6,078,125
870,478,852
$'000
161,947
219
770
(17)
162,919
2019
$'000
7,373
670
(1,213)
(543)
6,874
974
68
-
7,916
19 ISSUED CAPITAL
Fully paid ordinary shares
(a) Number of shares
At start of period
Issue of shares 30 January 2019
Issue of shares on exercise of options
Balance at end of period
(b) Value of shares
At start of period
Issue of shares 30 January 2019
Issue of shares on exercise of options
Share issue costs
Balance at end of period
20 RESERVES
Reserves
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
Reclassification of expired options
Balance at end of period
56|West African Resources Ltd
20 RESERVES (CONTINUED)
Nature and purpose of reserves
(a) Foreign currency translation reserve
The foreign currency translation reserve is used to record the Group’s 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 by the Company to Directors, employees and
other suppliers or consultants that are not exercised or expired.
21 CASH FLOW INFORMATION
A. RECONCILIATION OF PROFIT (LOSS) AFTER INCOME TAX TO NET CASHFLOWS FROM OPERATING ACTIVITIES
Profit (Loss) after income tax
Adjustment for:
Depreciation and amortisation
Share-based payments
Accretion of rehabilitation provision
Financing costs
Net foreign exchange (gain) loss
Changes in assets and liabilities
(Increase) Decrease in trade and other receivables
(Increase) Decrease in inventories
(Decrease) Increase in trade and other payables
(Decrease) Increase in current tax payable
(Decrease) Increase in deferred tax liabilities
Net cash flows from operating activities
2020
$'000
98,900
24,061
2,343
125
25,563
(15,002)
135,990
(18,260)
(26,461)
14,185
20,819
21,648
147,921
2019
$'000
(4,334)
184
1,043
-
-
(2,363)
(5,470)
173
-
(1,290)
-
-
(6,587)
West African Resources Limited|57
21 CASH FLOW INFORMATION (CONTINUED)
B. RECONCILIATION OF LOANS AND BORROWINGS AND LEASES TO NET CASH FLOWS FROM FINANCING
ACTIVITIES
Balance at 1 January 2019
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 31 December 2019
Balance at 1 January 2020
Net cash from (used in) financing activities
Amortisation of borrowing costs
Effects of movement in foreign exchange
Supplier facility utilised
Leases entered into during the year
Balance at 31 December 2020
Loans and borrowings
Lease liabilities
$’000
-
232,722
(1,066)
1,208
(2,511)
(28)
4,760
-
235,086
235,086
(13,140)
5,054
(8,626)
7,959
-
226,333
$’000
127
(1,130)
-
-
-
-
-
9,478
8,475
8,475
(2,949)
-
(558)
-
10,838
15,806
Total
$’000
127
231,592
(1,066)
1,208
(2,511)
(28)
4,760
9,478
243,561
243,561
(16,089)
5,054
(9,184)
7,959
10,838
242,139
22 DIVIDENDS
No dividends have been paid or declared payable during the year (2019: nil).
58|West African Resources Ltd
23 COMMITMENTS AND OTHER CONTINGENCIES
A. COMMITMENTS IN RELATION TO EXPLORATION AND MINING LEASE
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
2020
$'000
10,635
14,340
-
24,975
2019
$'000
424
33
-
457
B. COMMITMENTS IN RELATION TO OPERATIONS
Commitments of the Group in relation to the operations of the Sanbrado Gold Project mine site will be payable as follows:
Due within 1 year
Due after 1 year but not more than 5 years
Due after 5 years
C. CONTINGENT LIABILITIES
(i)
Product fee
2020
$'000
5,528
-
-
5,528
2019
$'000
21,626
-
-
21,626
Under the syndicated debt facility the Group has a contractual commitment to pay a fee on the first 1,250,000 ounces of gold refined
from the Sanbrado Gold project (the “Product Fee”). The Product Fee for each ounce of gold refined is calculated as the spread between
the LBMA quoted am fix price on the date the refined gold is credited to the Group’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 buy back the Product Fee commitment at any time by paying cash consideration equal to the net present
value (applying a 5% annual discount rate, and assuming the timing of gold production as set out in the mine production schedule) of
the pre-agreed price per ounce for the remaining committed ounces.
During the year the Group incurred US$4,324,519 (A$6,261,000) of Product Fees in relation to 118,093 ounces of refined gold (2019:
nil) that are recorded under ‘finance expenses’ in the ‘statement of profit or loss and other comprehensive income’. This represents an
average payment per ounce of US$36.62. The Group had 1,131,907 ounces remaining under the Product Fee commitment at 31
December 2020 (31 December 2019: 1,250,000).
(ii) Other contingent liabilities
There were no other material contingent liabilities at the end of the year (31 December 2019: nil).
West African Resources Limited|59
24 INTEREST IN SUBSIDIARIES
The consolidated financial statements include the financial statements of West African Resources Limited and the subsidiaries listed in
the following table:
Ownership interest
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
2020
%
100
100
100
100
100
100
100
90
2019
%
100
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.
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
Consolidated
2020
$'000
2019
$'000
Parent Entity
2020
$'000
2019
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
40,496
23,926
12,784
16,950
3,457
56
59
1
97,729
(56,230)
41,499
14,212
22,788
44,150
560
18,717
43
44
(8)
100,506
(54,806)
45,700
Further information with respect to related party transactions are included in Note 27.
60|West African Resources Ltd
24 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
Profit (Loss) for the year:
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 cash from (used in) operating activities
Net cash from (used in) investing activities
Net cash from (used in) financing activities
2020
$'000
309,856
85,845
9,538
95,383
123,601
345,489
469,090
329,052
69,671
398,723
63,330
7,037
70,367
165,477
(92,532)
(18,701)
54,244
2019
$'000
-
(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)
25 SUBSEQUENT EVENTS AFTER THE BALANCE DATE
There has not arisen in the interval between the end of the reporting period and the date of this report, any item, transaction or event
of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect substantially the operations of the
Group, the results of those operations or the state of affairs of the Group in subsequent financial years.
West African Resources Limited|61
26 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
2020
$'000
53
-
53
19
19
27 DIRECTORS AND EXECUTIVE DISCLOSURES
A. DETAILS OF KEY MANAGEMENT PERSONNEL
Non-Executive Directors
Rod Leonard
Nigel Spicer
Stewart Findlay
Libby Mounsey
Mark Connelly
Simon Storm
Executive Directors
Richard Hyde
Lyndon Hopkins1
Other Executives (KMPs)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director and Company Secretary
Executive Chairman and CEO
Executive Director and COO
Padraig O’Donoghue
Chief Financial Officer and Company Secretary
Matthew Wilcox
Chief Development Officer
1Date appointed a Director (employed since January 2017).
2Date appointed as Company Secretary was May 2020 (employed since June 2018).
Appointed
September 2019
September 2019
29 May 2020
29 May 2020
June 2015
November 2007
September 2006
September 2019
June 20182
September 2018
B. COMPENSATION OF KEY MANAGEMENT PERSONNEL
Short-term employee benefits
Post-employment benefits
Share-based payments
2020
$'000
1,938
145
1,723
3,806
2019
$'000
46
-
46
18
18
Resigned
-
-
-
-
29 May 2020
29 May 2020
-
-
-
-
2019
$'000
1,640
84
873
2,597
C. COMPENSATION BY CATEGORY OF KEY MANAGEMENT PERSONNEL FOR THE YEAR
Consulting fees were paid to Directors, details of which are included in the Remuneration Report in the Directors’ Report. Salaries were
paid to the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Chief Development Officer, details of which are
included in the Remuneration Report in the Directors’ Report.
62|West African Resources Ltd
27 DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED)
D. LOANS TO KEY MANAGEMENT PERSONNEL
A loan was provided to Richard Hyde in a prior year to exercise 2,000,000 options at 14.5 cents. The loan carried interest at 5.5% per
annum with a maturity date of 30 June 2021. Mr Hyde fully repaid the loan during the year and the balance outstanding at year end
was nil (2019: $319,673).
E. OTHER TRANSACTIONS AND BALANCES WITH KEY MANAGEMENT PERSONNEL
There were no other transactions and outstanding balances with key management personnel for the year ended 31 December 2020
that are not already included in the Remuneration Report in the Directors’ Report.
28 FINANCIAL INSTRUMENTS
Financial assets
Cash and cash equivalents (Note 7)
Trade and other receivables (Note 8)
Financial assets
Financial liabilities
Trade and other payables (Note 14)
Loans and borrowings* (Note 15)
Lease liabilities (Note 16)
2020
$'000
95,027
22,635
39
117,701
(40,479)
(239,781)
(15,807)
(296,066)
2019
$'000
83,584
1,501
38
85,123
(13,890)
(256,559)
(8,475)
(278,924)
*Loans and borrowings amount as disclosed in Note 15 includes capitalised transaction costs of $13,448,000.
29 FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk, and price 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 year, 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”).
West African Resources Limited|63
29 FINANCIAL RISK MANAGEMENT (CONTINUED)
A. MARKET RISK (CONTINUED)
(i)
Interest rate risk (continued)
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
1.7%
5.5%
2.7%
76,366
-
-
76,366
-
320
38
358
-
-
-
-
-
-
-
-
-
21,315
1,866
23,181
-
235,244
6,609
241,853
0.7%
0.0%
1.0%
0.00%
7.62%
6.50%
63,464
-
-
63,464
-
-
39
39
-
-
-
-
-
-
-
-
-
133,672
-
108,253
4,581
11,225
138,253
119,478
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
31,563
22,635
-
95,027
22,635
39
54,198
117,701
40,479
-
40,479
241,925
-
15,806
40,479
298,210
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
31 December 2020
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
64|West African Resources Ltd
29 FINANCIAL RISK MANAGEMENT (CONTINUED)
A. MARKET RISK (CONTINUED)
(ii)
Interest rate sensitivity
At 31 December 2020, 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.
+0.5%
-0.5%
2020
$'000
447
(447)
2019
$'000
374
(374)
The sensitivity is calculated using the average cash position for the year ended 31 December 2020. The interest income in Note 4 of
$605,024 (31 December 2019: $1,239,000) reflects cash balances in the year that ranged between $40,878,483 and $73,476,229 (31
December 2019: $30,480,000 and $83,584,000).
(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, 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
Tax liabilities
2020
$'000
82,172
21,456
103,628
72,362
236,848
15,491
41,590
366,291
2019
$'000
76,484
2,272
78,756
16,134
258,946
8,442
-
283,522
West African Resources Limited|65
29 FINANCIAL RISK MANAGEMENT (CONTINUED)
A. MARKET RISK (CONTINUED)
(iv) Exchange rate sensitivity
A 10 per cent strengthening or weakening of the AUD against the following currencies at 31 December would have increased
(decreased) net assets 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 2019.
+10%
2020
$'000
19,019
(34,862)
1,958
2019
$'000
17,413
1,854
(651)
-10%
2020
$'000
(23,245)
42,609
(2,394)
2019
$'000
(21,282)
(2,266)
796
USD
CFA
EUR
(v) Price risk
The Group is exposed to commodity price risk on its future gold production. This risk is estimated by management using forecasts of
the quantity and cost of future gold production. While the Group’s price risk could be partially managed using a range of different
types of hedging instruments, the Group did not have any open hedge instruments at 31 December 2020 (2019: nil).
B. CREDIT RISK
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.
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 ($95,027,000 as at 31 December 2020) 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.
66|West African Resources Ltd
29 FINANCIAL RISK MANAGEMENT (CONTINUED)
Maturity analysis of financial assets and liabilities based on management's expectation
31 December 2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total financial assets
Financial liabilities
Trade and other payables
Loan and borrowings
Lease liabilities
Total financial liabilities
Net maturity
31 December 2020
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
<6 months
$'000
6-12 months
$'000
Consolidated
1-5 years
$'000
>5 years
$'000
Total
$'000
83,584
1,501
38
85,123
(13,890)
(8,058)
(915)
(22,863)
62,260
95,027
22,635
39
117,701
(40,479)
(58,600)
(2,524)
(101,603)
16,098
-
-
-
-
-
-
-
-
-
(13,257)
(951)
(14,208)
(14,208)
-
(235,244)
(6,609)
(241,853)
(241,853)
-
-
-
-
-
-
-
-
-
(89,151)
(2,524)
(91,675)
(91,675)
-
(116,252)
(12,101)
(128,353)
(128,353)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
83,584
1,501
38
85,123
(13,890)
(256,559)
(8,475)
(278,924)
(193,801)
95,027
22,635
39
117,701
(40,479)
(264,003)
(17,149)
(321,631)
(203,930)
West African Resources Limited|67
30 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
2020
$'000
1,254
955
133
2,343
2019
$'000
708
330
5
1,043
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 (“Incentive 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 options or performance rights
which vest over periods as determined by the Board of Directors.
D. PERFORMANCE RIGHTS
Performance rights are granted under the Incentive Plan for nil consideration and 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 Incentive 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
2020 Number
2020 WAEP*
2019 Number
2019 WAEP*
2,287,295
10,636,406
(303,794)
(62,180)
12,557,727
2,027,779
-
-
-
-
-
-
1,966,732a
320,563b
-
-
2,287,295
-
-
-
-
-
-
-
The performance rights outstanding at the end of the year had a weighted average remaining contractual life of 1,200 days (31
December 2019: 1,027 days)
a1,223,828 opening performance rights from 2019 have been reclassified as options. They are now included in Note 31E(a) below.
b259,516 options granted in 2019 have now been reclassified as performance rights.
68|West African Resources Ltd
30 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 year was determined using the Black-Scholes, Monte Carlo Simulation and
Binomial pricing methods.
Number
issued
963,948
263,157
131,578
44,278
885,166
657,894
182,978
78,419
137,822
75,358
113,636
2,275,500
2,275,500
57,172
1,250,000
1,250,000
Grant date
9-Jan-20
9-Jan-20
9-Jan-20
29-May-20
29-May-20
29-May-20
2-Jul-20
2-Jul-20
29-May-20
8-Jul-20
22-Sep-20
27-Nov-20
27-Nov-20
17-Dec-20
17-Dec-20
17-Dec-20
Original
expiry
period
3 years
5 years
4 years
2 years
3 years
5 years
3 years
5 years
2 years
3 years
3 years
4 years
4 years
2 years
4 years
4 years
Dividend
yield
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Expected
volatility
54%
54%
54%
60%
60%
74%
64%
72%
64%
59%
67%
62%
62%
67%
62%
61%
Risk-free
interest rate
2.75%
2.75%
2.75%
5.75%
5.75%
3.25%
5.75%
3.25%
5.75%
5.75%
2.25%
0.25%
0.25%
2.25%
0.25%
0.25%
Exercise
price
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
Share price
on grant
date
$0.4350
$0.4350
$0.4350
$0.8400
$0.8400
$0.8400
$0.8850
$0.8850
$0.8400
$0.9600
$1.0500
$0.9050
$0.9050
$1.0200
$1.0200
$1.0200
E. OPTIONS
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
2020 Number
2020 WAEP*
2019 Number
2019 WAEP*
11,873,828
1,117,891
(7,900,000)
(250,000)
4,841,719
4,841,719
$0.3163
$0.6486
$0.2998
$0.2400
$0.4228
$0.4228
18,692,437a
1,000,000b
(6,078,125)
(2,000,000)
11,873,828
1,223,828
$0.2364
$0.2594
$0.1267
$0.1250
$0.3163
$0.4300
The share options outstanding at the end of the year had a weighted average remaining contractual life of 374 days (31 December
2019: 469 days).
a1,223,828 opening performance rights from 2019 have been reclassified as options.
b259,516 options granted in 2019 have now been reclassified as performance rights. They are now included in Note 31D(a) above.
West African Resources Limited|69
30 SHARE-BASED PAYMENTS (CONTINUED)
E.
SHARE OPTIONS (CONTINUED)
(b)
Fair value of options granted
The fair value of the options granted during the period was determined using the Black-Scholes and Monte Carlo Simulation pricing
methods.
Further details of the basis of valuation appear below. During the year the company granted 867,891 options, with a fair value of
$396,422, to Directors and employees under the Incentive Plan (31 December 2019: 1,259,516) in addition to 250,000 options, with a
fair value of $98,350, to a third party.
Number
issued
131,578
250,000
657,894
78,419
Grant date
9-Jan-20
29-Apr-20
29-May-20
2-Jul-20
Original
expiry
period
4 years
4 years
4 years
4 years
Dividend
yield
0%
0%
0%
0%
Expected
volatility
54%
67%
67%
66%
Risk-free
interest rate
2.75%
3.25%
3.25%
3.25%
Exercise
price
$0.6061
$0.7346
$0.6061
$0.7309
Share price
on grant
date
$0.4350
$0.7400
$0.8400
$0.8850
70|West African Resources Ltd
30 SHARE-BASED PAYMENTS (CONTINUED)
E. OPTIONS AND PERFORMANCE RIGHTS BALANCES
The outstanding balance of performance rights as at 31 December 2020 is presented in the following table.
Grant date Vesting date
Expiry date
Exercise
price
Granted
Lapsed /
Cancelled
Exercised
On issue
Vested
Number of performance rights
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 rights
were issued
First gold pour and commercial production
Hold continuous office as a director of the Company for 1 year from
the date the rights were issued
14-Feb-19
07-Jul-19 When KPIs are achieved
9-Jan-20
9-Jan-20
9-Jan-20
29-May-20
29-May-20
29-May-20
29-May-20
2-Jul-20
2-Jul-20
Hold continuous office as an employee or a director of the Company
for 1 year from the date the rights were issued
When KPIs are achieved and hold continuous office as an employee
of the Company for 2 years from the date the rights were issued
500,000oz gold poured within 3 years from the date the rights were
issued
Hold continuous office as a director of the Company for 1 year from
the date the rights were issued
Hold continuous office as an employee of the Company for 1 year
from the date the rights were issued
When KPIs are achieved and hold continuous office as an employee
of the Company for 2 years from the date the rights were issued
500,000oz gold poured within 3 years from the date the rights were
issued
When KPIs are achieved and hold continuous office as an employee
of the Company for 2 years from the date the rights were issued
500,000oz gold poured within 3 years from the date the rights were
issued
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
259,516
61,047
20-Jan-23
$0.0000
963,948
-
-
-
-
-
20-Jan-23
$0.0000
263,157
(8,668)
20-Jan-23
$0.0000
131,578
11-Jun-22
$0.0000
44,278
11-Jun-23
$0.0000
334,927
-
-
-
11-Jun-23
$0.0000
550,239
(18,125)
11-Jun-25
$0.0000
657,894
-
8-Jul-23
$0.0000
182,978
(6,027)
8-Jul-25
$0.0000
78,419
-
-
-
1,022,565
944,167
1,022,565
944,167
(259,516)
-
-
-
-
-
61,047
963,948
254,489
131,578
(44,278)
-
-
-
-
-
-
334,927
532,114
657,894
176,951
78,419
-
61,047
-
-
-
-
-
-
-
-
-
West African Resources Limited|71
30 SHARE-BASED PAYMENTS (CONTINUED)
E. OPTIONS AND PERFORMANCE RIGHTS BALANCES (CONTINUED)
Continuation of table from previous page.
Grant date Vesting date
Expiry date
Exercise
price
Granted
Lapsed /
Cancelled
Exercised
On issue
Vested
Number of performance rights
29-May-20
8-Jul-20
Hold continuous office as a director of the Company for 1 year from
the date the rights were issued
When KPIs are achieved and hold continuous office as an employee
of the Company for 2 years from the date the rights were issued
When KPIs are achieved and hold continuous office as an employee
of the Company for 2 years from the date the rights were issued
22-Sep-20
27-Nov-20 8-Dec-23
Hold office as an employee of the Group until the first time the
volume weighted average price of WAF Shares for a 20 trading day
period is $2.00 or higher within 3 years from the date of issue of the
rights
Hold continuous office as a director of the Company for 1 year from
the date the rights were issued
27-Nov-20
17-Dec-20
17-Dec-20 17-Dec-23
Hold continuous office as an employee or Director of the Company
until the first time the volume weighted average price of WAF
Shares for a 20 trading day period is $2.00 or higher within 3 years
from the date of issue of the rights
17-Dec-20
8-Jul-22
$0.0000
137,822
-
8-Jul-23
$0.0000
75,358
(2,482)
29-Sep-23
8-Dec-24
$0.0000
$0.0000
113,636
2,272,500
(26,878)
-
8-Dec-24
$0.0000
2,272,500
17-Dec-22
17-Dec-24
$0.0000
$0.0000
57,172
1,250,000
17-Dec-24
$0.0000
1,250,000
-
-
-
-
-
-
-
-
-
-
-
137,822
72,876
86,758
2,272,500
2,272,500
57,172
1,250,000
-
1,250,000
-
-
-
-
-
-
-
-
Total Performance Rights
12,923,701
(62,180)
(303,794)
12,557,727
2,027,779
72|West African Resources Ltd
30 SHARE-BASED PAYMENTS (CONTINUED)
E. SHARE OPTIONS (CONTINUED)
The outstanding balance of options as at 31 December 2020 is presented in the following table:
Grant date Vesting date
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
05-Mar-19
20-Jan-20
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
($0.4300)
First gold pour and commercial production
When the company’s share price first equals the option exercise price
($0.6061)
29-Apr-20 29 April 2020
11-Jun-20
2-Jul-20
When the company’s share price first equals the option exercise price
($0.6061)
When the company’s share price first equals the option exercise price
($0.7309)
Total options
Number of options
Expiry date
21-Mar-20
12-May-20
18-Oct-20
09-Nov-20
29-Mar-21
26-Sep-21
28-Nov-21
28-Dec-21
Exercise
price
$0.2400
$0.2400
$0.3750
$0.2400
$0.4100
$0.3100
$0.3100
$0.3200
Granted
400,000
500,000
750,000
2,750,000
1,250,000
500,000
1,000,000
2,500,000
28-Dec-22
05-Mar-22
$0.4300
$0.2950
1,223,828
1,000,000
20-Jan-24
29-Apr-24
$0.6061
$0.7346
131,578
250,000
11-Jun-24
$0.6061
657,894
Lapsed /
Cancelled
(250,000)
-
-
-
-
-
-
-
-
-
-
-
-
Exercised
On issue
Vested
(150,000)
(500,000)
(750,000)
(2,750,000)
(1,000,000)
-
-
(2,000,000)
-
-
-
-
-
-
-
-
250,000
500,000
1,000,000
500,000
250,000
500,000
1,000,000
500,000
-
1,223,828
1,223,828
(750,000)
250,000
250,000
-
-
-
131,578
250,000
131,578
250,000
657,894
657,894
8-Jul-24
$0.7309
78,419
12,991,719
-
(250,000)
-
(7,900,000)
78,419
4,841,719
78,419
4,841,719
West African Resources Limited|73
31 PARENT ENTITY FINANCIAL INFORMATION
The individual financial statements for the parent entity show the following aggregate amounts:
STATEMENT OF FINANCIAL POSITION
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 FOR THE REPORTING PERIOD
Income tax benefit
Total comprehensive profit
Guarantees, commitments and contingencies
Parent
2020
$'000
16,579
82,620
99,199
990
272
1,262
97,937
165,263
9,948
(77,274)
97,937
37
-
37
2019
$'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
There are no guarantees, commitments or contingencies in the parent entity other than $194,507 of rental property lease
commitments due within one year (31 December 2019: $187,006).
74|West African Resources Ltd
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)
(ii)
giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its performance for the year
then ended; and
complying with Australian 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 1A.
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 2020.
This declaration is signed in accordance with a resolution of the Board of Directors.
RICHARD HYDE
Executive Chairman & CEO
26 March 2021
West African Resources Limited|75
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 2020, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
a)
the auditor independence requirements of 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 2021
B G McVeigh
Partner
76|West African Resources Limited
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 2020, the consolidated statement of profit or loss and other 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 2020 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. We have determined the matters described below to
be the key audit matters to be communicated in our report.
West African Resources Ltd|77
Key Audit Matter
Property, plant and equipment
Note 10 to the financial report
How our audit addressed the key audit
matter
The Sanbrado Gold Project transitioned from
the development phase to the production
phase during the year. The existence,
accuracy and completeness of capitalised
the
expenditure
incurred as part of
the
development and construction of
Sanbrado Gold Project was considered a key
audit matter. This is due to the size of the
capitalised expenditure of $329,587,000.
Our audit procedures included but were not limited to
the following:
• We evaluated the Group’s processes and controls
in place with respect to purchasing.
• Assessment of the allocation of costs between
operating expenditure and capital expenditure by
inspecting documentation on a sample basis and
assessing the nature of the underlying activity.
judgement
the
The Group used
identification and allocation of cost between
operating
capitalised
expenditure. The risks we focussed on
included:
expenditure
and
in
• The existence of capital expenditure; and
• The capital nature of expenditure
particularly the determination of when the
Sambrado Gold Project was considered
capable of operating at commercial
production and in a manner intended by
the Group.
Revenue recognition
Notes 3 to the financial report
• Challenging
the Group’s determination of
commercial production declaration from 1 May
2020 by evaluating the criteria by which the
declaration was made against the underlying
documentation and industry practice.
• Assessing the disclosures in the financial report
the accounting
the requirements of
against
standards.
• Consideration of any Impairment indicators
The Group generates revenue predominantly
from the sale of gold. The Group recognised
sales revenue of $311,167,000 for the year
(2019: $1,239,000).
Our audit procedures included but were not limited to
the following:
• Understanding the Group’s process for revenue
and controls in place around gold sales.
Revenue recognition is considered to be a
key audit matter given the significance of
revenue to the Group’s results as well as the
fraud risk around cut-off including:
• An overstatement of revenues through
or
revenue
premature
recording of fictious revenues.
recognition
• Testing all gold sales transactions during the year
to invoice and receipt of cash.
• Assessing the Group’s policies for recognition of
revenue against
the
the
accounting standards and checked these were
adequately disclosed in the financial statements.
requirements of
• Sales cut-off procedures focussing on sales in
December 2020 and January 2021, testing a
sample
underlying
documentation and assessing the period in which
they were recognised.
transactions
of
to
• Revenue not being recognised when
control is transferred to the customer,
resulting in revenue not being recognised
in the correct accounting period.
Revenue is recognised when control is
transferred to the buyer and the amount of
revenue can be reliably determined. This
occurs for the Group when the refining
process is completed and ownership is
transferred.
78|West African Resources Ltd
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 2020, 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.
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.
West African Resources Ltd|79
-
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.
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 2020.
In our opinion, the Remuneration Report of West African Resources Limited for the year ended 31
December 2020 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 2021
B G McVeigh
Partner
80|West African Resources Ltd
ASX 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 12 March 2021.
DISTRIBUTION OF SHARES
Distribution
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,000 – 100,000
100,001 – and over
Total
Number of holders
534
1,270
764
1,479
372
4,419
Securities held
288,849
3,594,282
6,278,189
52,065,028
820,571,527
882,797,875
The number of shareholdings held in less than marketable parcels is 262.
SUBSTANTIAL SHAREHOLDERS
An extract of the Company’s Register of Substantial Shareholders (who hold 5% or more of the issued capital) is set out below.
Shareholder Name
VANECK ASSOCIATES CORPORATION
L1 CAPITAL PTY LTD
SPROTT INC.
VANGUARD GROUP
1
2
3
4
Total
TWENTY LARGEST SHAREHOLDERS
Shareholder Name
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
2
CITICORP NOMINEES PTY LIMITED
3
CS THIRD NOMINEES PTY LIMITED
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