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SILVER MINES LIMITED and its controlled entities
2018 Annual Report
CONTENTS
CORPORATE DIRECTORY ............................................................................................................................................. 3
REVIEW OF OPERATIONS ............................................................................................................................................. 4
INFORMATION ON BOARD ........................................................................................................................................... 19
REMUNERATION REPORT ........................................................................................................................................... 20
AUDITORS INDEPENDENCE DECLARATION ............................................................................................................. 26
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ......................... 27
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ......................................................................................... 28
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ......................................................................................... 29
CONSOLIDATED STATEMENT OF CASH FLOWS ...................................................................................................... 30
NOTES TO THE FINANCIAL STATEMENTS ................................................................................................................ 31
DIRECTORS’ DECLARATION ........................................................................................................................................ 49
INDEPENDENT AUDITOR’S REPORT .......................................................................................................................... 50
ADDITIONAL SECURITIES EXCHANGE INFORMATION AS AT 27 SEPTEMBER 2018 ........................................... 55
CORPORATE GOVERNANCE STATEMENT ................................................................................................................ 57
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2018 Annual Report
CORPORATE DIRECTORY
Directors
Keith Perrett – Non-Executive Chairman
Anthony McClure – Managing Director
Peter Langworthy – Non-Executive Director
Jonathan Battershill – Non-Executive Director
Company Secretary
Trent Franklin
Australian Company Number
107 452 942
Registered Office
Silver Mines Limited
Level 11
52 Phillip Street
Sydney NSW 2000
Australia
Tel: +61 2 8316 3997
Fax: +61 2 8316 3999
E-mail: info@silvermines.com.au
Website: www.silvermines.com.au
Share Registry
Boardroom Pty Limited
Level 11
225 George Street
Sydney NSW 2000
Tel : +61 2 9290 9600
Fax : +61 2 9279 0664
Email: enquiries@boardroomlimited.com.au
Auditors
Crowe Horwath Sydney
Level 15
1 O’Connell Street
Sydney NSW 2000
Tel: +61 2 9262 2155
Fax: +61 2 9262 2190
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2018 Annual Report
REVIEW OF OPERATIONS
Silver Mines Limited’s (Silver Mines or the Company) focus throughout the 2018 Financial Year has involved the
completion of the Company’s Feasibility Study and progression of the Environmental Impact Statement, along with
substantial exploration works in relation to the Bowdens Silver Project. The Company and its wholly owned subsidiaries
(together, “the Group”) also maintain the Webbs, Conrad and Tuena Projects.
PROJECTS
During the year, the Group controlled the following projects, all of which are located in New South Wales, Australia:
Bowdens Silver Project (silver/polymetallic);
Barabolar Project (copper/gold);
Webbs Project (silver/polymetallic);
Conrad Project (silver/polymetallic); and
Tuena Project (gold/silver).
Figure 1. Group Project Locations.
Bowdens Silver Project and Barabolar Metals Project
Introduction
During the 2018 Financial Year, the Company’s focus has been the continued Feasibility Study and Environmental
Impact Statement works at the Bowdens Silver Project located near Mudgee in the Central Tablelands Region of New
South Wales, Australia. In addition, the Company has further progressed mineral exploration at the Bowdens Silver
Project and during the 2018 Financial Year, discovered and progressed the Barabolar Project located approximately
10 kilometres northwest of the Bowdens Silver Project.
The projects comprise 2,007 km2 (496,000 acres) of titles covering approximately 80 kilometres of strike of the highly
mineralised Permian Rylstone Volcanics overlying Ordovician and Silurian Formations.
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2018 Annual Report
The Group holds 100% of Exploration Licence EL5920 which contains the Bowdens Silver Deposit and also holds
exploration licences EL6354, EL8159, EL8160, EL8168, EL8268, EL8403, EL8405, EL8480 and EL8682. In addition,
the Company is earning an 80% interest and manages a Joint Venture over exploration licence EL7391 with Thomson
Resources Limited. (Refer to Figure 2).
Figure 2: Silver Mines Limited Tenement and Project locations in Mudgee district.
Bowdens Silver Project
Description
The Bowdens Silver Project is the largest known undeveloped silver deposit in Australia with substantial mineral
resources.
The tenement portfolio is situated on the eastern margin of the Lachlan Orocline / Macquarie Arc where it is in contact
with the younger, unconformable overlying Permian aged units. These units comprise the highly mineralised early
Permian Rylstone Volcanics and the on-lapping later Permian, sedimentary units of the Shoalhaven Group within the
Sydney Basin. The Rylstone Volcanics unconformably overlie the Ordovician Coomber Formation and Silurian
Dungaree Volcanics (Refer to Figure 3).
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2018 Annual Report
Figure 3: Silver Mines Limited prospect locations in the Mudgee district.
In June 2018, the Company and its consultants completed a Feasibility Study comprising a single open-cut mine with
an initial mine life of 16 years. (for full details see ASX announcement of 14th June 2018). A new processing plant
designed to process 2.0 million tonnes per annum would include a conventional semi-autogenous grinding (SAG) and
ball mill circuit, differential flotation, thickening and dewatering to produce two concentrates that will be sold for smelting
and refining to finished metals. The Feasibility Study has demonstrated that the Bowdens Silver Project will produce
an average of 3.4 million ounces of silver per annum, together with approximately 6,900 tonnes of zinc and 5,100
tonnes of lead per annum. Due to higher silver grades in the early stages of mining, average production during the first
three years of operation will be approximately 5.4 million ounces of silver per annum and 6,000 tonnes of zinc per
annum and 5,200 tonnes of lead per annum.
Ore Reserve and Mineral Resource
The Bowdens Silver Ore Reserve is estimated at 29.9 million tonnes at 69.0 g/t silver, 0.44% zinc and 0.32% lead
containing 66.32 million ounces of silver, 130.8 kilotonnes of zinc and 95.3 kilotonnes of lead.
The Ore Reserve estimate was prepared by mining engineering consultancy firm AMC Consultants Pty Ltd (AMC
Consultants) and is based on the September 2017 Mineral Resource Estimate generated for Silver Mines by H & S
Consultants Pty Ltd (H & S Consultants) (see ASX announcement 19th September 2017).
Measured and Indicated Mineral Resources were converted to Proved and Probable Ore Reserves respectively,
subject to mine designs, modifying factors and economic evaluation. The Ore Reserve estimate for the Bowdens Silver
Project as at May 2018 is outlined in Table 1 below:
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2018 Annual Report
Table 1. Bowdens Silver Deposit Ore Reserve
Reserve
Category
Proved
Probable
Total
Tonnes
Reserve Grades
Contained Metal
(Mt)
28.6
1.3
29.9
Ag
(g/t)
69.75
53.15
69.01
Zn
(%)
0.44
0.43
0.44
Pb
(%)
0.32
0.29
0.32
Ag Metal
Moz
64.05
2.27
66.32
Zn
(kt)
125.11
5.74
130.84
Pb
(kt)
91.43
3.91
95.33
Notes:
1. Refer to ASX announcement 30 May 2018 for further details.
2. Calculations have been rounded to the nearest 100,000 t, 0.1 g/t silver and 0.01% zinc and lead grades respectively. The Ore Reserve is
reported by economic cut-off grade with appropriate consideration of modifying factors including costs, geotechnical considerations, mining
and process recoveries and metal pricing.
The Bowdens Silver Mineral Resource Estimate of September 2017 was completed by H & S Consultants using
recoverable Multiple Indicator Kriging and the reporting is compliant with the 2012 JORC Code and Guidelines (see
ASX announcement of 19th September 2017). The Mineral Resource estimate for the Bowdens Silver Project as at
September 2017 is outlined in Table 2 below:
Table 2. Bowdens Silver Deposit Mineral Resource
Category
Measured
Indicated
Inferred
Total
Tonnes
Silver Eq.
(Mt)
(g/t)
Silver
(g/t)
76
29
23
128
72
59
60
67
45
31
31
40
Zinc
(%)
0.37
0.38
0.40
0.38
Lead
(% )
0.25
0.25
0.28
0.26
Million
Ounces
Silver
Million
Ounces
Silver Eq.
111
29
23
163
175
55
45
275
Notes:
1. Refer to ASX announcement of 19th September 2017 for full details.
2. Bowdens’ silver equivalent: Ag Eq (g/t) = Ag (g/t) + 33.48*Pb (%) + 49.61*Zn (%) calculated from prices of US$20/oz silver, US$1.50/lb zinc,
US$1.00/lb lead and metallurgical recoveries of 85% silver, 82% zinc and 83% lead estimated from test work commissioned by Silver Mines
Limited.
3. Bowdens Silver Mineral Resource Estimate is reported to a 30g/t Ag Eq cut off and extends from surface and is trimmed to 300 metres RL
4.
which is approximately 320 metres below surface representing a potential volume for open-pit optimisation models.
In the Company’s opinion, the silver, zinc and lead included in the metal equivalent calculations have a reasonable potential to be recovered
and sold.
5. Variability of summation may occur due to rounding.
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Table 3. Bowdens Silver Deposit Mineral Resource Estimate by Cut-Off Grade
Cut-off g/t Ag Eq.
0
10
20
30
40
50
60
70
80
90
100
120
Tonnes
Silver Eq.
(Mt)
397.2
261.7
185.2
127.9
89.2
63.6
46.1
33.7
25.1
19.2
15.1
9.6
(g/t)
30.7
43.7
54.6
66.8
79.7
92.8
106.3
120.8
135.5
149.9
163.7
192.3
Silver
(g/t)
17.6
25.2
31.7
39.6
48.6
58.4
69.1
80.9
93.4
105.6
117.5
141.4
Zinc
(%)
0.18
0.26
0.32
0.38
0.43
0.47
0.51
0.54
0.57
0.59
0.62
0.67
Lead
(%)
0.12
0.17
0.21
0.26
0.29
0.33
0.36
0.39
0.42
0.45
0.47
0.53
Million
Million
Ounces
Ounces
Silver
Silver Eq.
225
212
189
163
139
119
102
87
75
65
57
44
392
368
325
275
229
190
158
131
109
93
80
59
Notes:
1. Refer to ASX announcement of 19th September 2017 for full details.
The model is a non-linear recoverable-type model incorporating proportional tonnages and grades above cut-off for
both silver equivalent grade (Ag Eq) and silver (Ag), while also incorporating linear ordinary kriged panel estimates for
lead (Pb), zinc (Zn) and other elements.
The Proved Ore Reserve estimate is based on Mineral Resources classified as Measured, after consideration of all
mining, metallurgical, social, environmental, statutory and financial aspects of the Project. The Probable Ore Reserve
estimate is based on Mineral Resources classified as Indicated, after consideration of all mining, metallurgical, social,
environmental, statutory and financial aspects of the Project.
Feasibility Study Financial Evaluation and Sensitivity Analysis
The financial model for the economic evaluation of the Bowdens Feasibility Study utilises the discounted cashflow
methodology. Key financial metrics are calculated on both a pre- and post-tax basis.
The financial model is constructed on a nominal basis with a revenue currency of USD, a base currency of AUD and
an interest/inflation rate of 2.5% is assumed. An exchange rate of 0.75 is used for AUD/USD.
Forecast metal pricing was based on consensus forecasts obtained by the Company in late 2017 and was sourced
from a range of Australian and internationally renowned financial institutions. Initial silver prices assumed for the model
were: CY20 = US$21.50 /oz, CY21 = US$22.00 /oz, CY22 = US$22.50 /oz. A zinc price of US$1.25 /lb was used and
a lead price of US$1.00 /lb.
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Table 4. Life of Mine (LOM) Project Metrics
Physical Metrics
Production Life
Ore Mined
Waste Mined
W:O Strip Ratio
Ag Recovered in Concentrate
Zn Recovered in Concentrate
Pb Recovered in Concentrate
Financial Metrics
Revenue
Operating Expenses
Operating Margin
Undiscounted Cashflow before Tax
Undiscounted Cashflow after Tax
Project NPV (Pre-Tax)
Project NPV (Post Tax)
Project IRR (Pre-Tax): Nominal
Project IRR (Post Tax): Nominal
Capital Costs
Initial
LOM Sustaining
Unit Costs (Ag Basis)
C1 Costs
All in Sustaining Cost (AISC)
Unit
Years
Mt
Mt
x
Moz
kt
kt
AUD M
1,899.5
1,340.8
558.7
257.7
155.7
143.9
70.6
AUD M
246.0
53.9
AUD/oz
15.47
17.25
20.8%
14.6%
Value
16
29.9
48.2
1.6
52.91
108.0
79.3
USD M
1,424.7
1,005.6
419.0
193.3
116.7
107.9
52.9
USD M
184.5
40.4
USD/oz
11.60
12.94
Cummulative Production by Metal
Silver LHS
Zinc RHS
Lead RHS
s
e
c
n
u
O
0
0
0
'
50,000
40,000
30,000
20,000
10,000
0
1
2
3
4
5
6
7
9
8
Years
10
11
12
13
14
15
16
Figure 4. Cumulative Production by Metal
1,000
900
800
700
600
500
400
300
200
100
0
s
e
n
n
o
T
0
0
0
'
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Cummulative Revenue by Metal
Silver
Zinc
Lead
s
n
o
i
l
l
i
M
D
U
A
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
1
2
3
4
5
6
7
8
9
Years
10
11
12
13
14
15
16
Figure 5. Cumulative Revenue by Metal
Sensitivity analysis was conducted on the Project against the following variables:
Silver, zinc and lead prices together;
Silver price;
Capital and sustaining capital costs;
Overall operating costs;
Mining operating costs;
Plant operating costs; and
Downstream operating costs (freight and smelting).
The results in Table 5 show that the Project is most sensitive to a combined move in the three metals prices, followed
by a move in silver price alone or overall operating cost and then capital. In general, the Project’s NPV is about 60%-
80% as sensitive to changes in operating costs as it is to all prices together and about 20% as sensitive to changes in
capex as to price. The Project is less sensitive to downstream costs, given the Project’s reasonable access to smelting
and port facilities.
The following Table 5 demonstrates a range of NPV outcomes utilising varying assumption parameters.
Table 5. Sensitivity Analysis
Sensitivity Analysis
Movement
(AUD M) NPV5 After Tax
-30%
-20%
-10%
Base Case
+10%
+20%
+30%
Silver, Lead & Zinc Prices
(217.78)
(113.39)
(17.27)
Silver Price
Overall Opex
Capex (incl. Sustaining.)
Mining Opex
Plant Opex
Downstream Opex
(128.35)
(59.01)
246.49
131.80
137.54
155.45
95.30
188.01
111.41
115.31
127.27
87.08
7.72
129.47
91.00
92.99
99.01
78.84
70.58
70.58
70.58
70.58
70.58
70.58
70.58
155.12
132.90
9.97
50.15
48.07
41.76
62.31
239.30
195.00
323.45
257.04
(58.33)
(127.04)
29.70
25.37
11.92
53.99
9.19
1.63
(21.20)
45.64
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Environmental Impact Statement, Approvals and Community Consultation
The Environmental Impact Statement (EIS) is in the process of being finalised and is expected to be lodged during the
2019 Financial Year.
A range of Commonwealth and New South Wales legislation and State, regional and local planning instruments apply
to the Project. These items of legislation and statutory instruments have been reviewed to identify any environmental
aspects requiring consideration in the EIS.
The Project is a “State Significant Development”, having a capital investment value of greater than $30 million. The
Development Application (DA) for the Project will be accompanied by a comprehensive EIS supported by a range of
specialist consultant studies. The EIS will also exhaustively address the specific requirements of the Secretary’s
Environmental Assessment Requirements (SEARs). An application for a Mining Lease will be submitted with the DA.
Throughout the 2018 Financial Year, the Group continued an expansive program of consultation with State and Local
Governments along with interested stakeholders and community and interest groups.
The Group’s community consultation processes examine the potential impacts and benefits of exploration and
development across the Bowdens Silver Project and focus on the current proposed mine development area and the
surrounding areas in which the Group is proposing exploration programs.
A new Community Consultative Committee was established during the 2018 Financial Year, as part of the
requirements of the Department of Planning and Environment.
Exploration
During the 2018 Financial Year, the Company continued and completed a substantial exploration drilling program with
a primary focus on:
further drilling of advanced exploration targets where substantial mineralisation has been discovered but not yet
fully evaluated; and
testing exploration targets proximate to the current resource beneath surface geochemical and geophysical
anomalies.
The completed deep drilling campaign has provided a platform to extend the Bowdens Silver Project with results from
Bowdens NW and Bundarra Deeps zones providing valuable geological data to allow exploration to be vectored
towards a source of mineralisation (refer to ASX Announcements of 5th February 2018 and 13th March 2018). Of
particular focus in future exploration will be the follow up to the recent discovery of the porphyritic felsic intrusion
beneath the Bowdens Silver Deposit (refer to ASX Announcement of 19th February 2018).
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Barabolar Project
Regional exploration work during the 2018 Financial Year has led to the discovery and initial definition of the Barabolar
Project located approximately 10 kilometres north of the Bowdens Silver Project (refer to ASX Announcement of 19th
July 2018).
Current exploration at the Barabolar Project is indicating considerable potential. Geological and structural mapping in
conjunction with a regional soil geochemical program has highlighted a corridor with surface geochemistry anomalies
in copper, silver, molybdenum, lead and zinc. Of particular interest is a mapped mineralised skarn over a strike extent
of approximately 5,000 metres and a width of 800 metres. Coincident with skarn is broad copper anomalism while
molybdenum anomalism is towards the east at Botobolar (refer to Figures 6 and 7.).
Figure 6: Barabolar prospect showing mineralised skarn in outcrop.
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Figure 7: Barabolar prospect showing copper anomalism in soil sampling (>100ppm) coincident with mineralised skarn.
The Company recently completed 30 line kilometres of dipole-dipole Induced Polarisation (IP) including the collection
of both chargeability and resistivity data. The survey was modelled and interpreted by the Company’s own geological
team with the assistance of specialist consultants. Areas of high chargeability are interpreted to potentially represent
accumulations of sulphide mineralisation whereas the resistivity is potentially indicative of increased quartz veining
and silicification.
The IP survey interpretation to date has generated several targets that are coincident or proximal to surface anomalism.
The Company is planning an initial drilling program of up to 7,500 metres of reverse circulation and diamond core
drilling. Broad targets will be initially tested with shallow drill holes amounting to up to 5,000 metres of drilling. Targeted
deeper holes totalling approximately 2,500 metres will also be undertaken. Drilling is expected to start in September
2018 subject to planning and approvals.
For further details of the Barabolar Project refer to ASX Announcement of 19th July 2018.
Webbs Silver Project
The Webbs Silver Project (EL 5674) is located in the New England region of northern New South Wales approximately
45 kilometres north of Glen Innes and lies within the New England Orogen, which extends from north-eastern New
South Wales into eastern Queensland.
The dominant geological feature in the wider region is the Mole Granite which is associated with extensive
mineralisation with over 2,000 separate mineral occurrences. At Webbs, mineralisation is hosted in sediments and
consists of polymetallic vein lode zones in a narrow two kilometre long north trending zone which is marked by
scattered historic workings. The veins contain high grades of silver along with lead, zinc and copper sulphide
mineralisation.
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The Webbs Silver Project has some of the highest grades of any undeveloped silver project in Australia. The previous
mineral resource estimate was completed under the JORC 2004 code and although it has been reviewed by Silver
Mines and is understood to be a reasonable estimate of the mineral system, it has not been updated to the JORC
2012 code. During the 2018 Financial Year, Silver Mines continued to review the Webbs Silver Project to assess
exploration and is presently exploring a divestment strategy for this project.
Conrad Silver Project
The Conrad Silver Project (EPL1050, EL5977, ML6040, ML6041 and ML 5992) is located in the New England region
of northern New South Wales approximately 25 kilometres south of Inverell.
The project is also located in the New England Orogen and is hosted in the Gilgai Granite with the nearby Tingha
Granite being the assumed mineralising source. Historically, Conrad was mined underground over a 1.4 kilometre
strike length and to a maximum depth of 260 metres. The mineralisation is hosted in sulphide-bearing narrow veins
with an additional body of near-surface greisen style disseminated and veinlet sulphide mineralisation, 20 metres to
40 metres wide. Mineralisation consists of high grades of silver along with lead, zinc, tin and copper sulphides and tin
oxide (cassiterite). Outside the main line of historic workings, there are more than 20 other historic shafts and diggings
that have not yet been adequately tested and as a result, Silver Mines believes that the project has considerable
potential to expand beyond the current known mineralised zone.
The previous mineral resource estimate was completed by Malachite Resources Limited under the JORC 2004 code
and although it has been reviewed by Silver Mines and is understood to be a reasonable representation of the
mineral system, it has not yet been updated to the JORC 2012 code. During the 2018 Financial Year, Silver Mines
continued to review the Conrad Silver Project to assess exploration and is presently exploring a divestment strategy
for this project.
The mineral resource estimates for Webbs and Conrads were reviewed during the year. There have been no further
drilling or changes to the geological model for either project and as a result the resource estimates have not changed.
For historical mineral resource estimates for the Webbs & Conrad Projects, see pages 17.
Tuena Project
During the 2018 Financial Year, the Group continued to hold EL8526, being the Tuena Project tenement which is
located to the south of Orange, New South Wales. The area is targeted for precious metals. Silver Mines is presently
exploring a divestment strategy for this project.
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Tenement Information as at 30th June 2018
Tenement
Project Name
Location
EL 5920
EL 6354
EL 8159
EL 8160
EL 8168
EL 8268
EL 73911
EL 8403
EL 8405
EL 8480
EL 8682
EL 8526
EL 5674
EPL1050
EL 5977
ML 6040
ML 6041
ML 5992
Bowdens Silver
Bowdens Silver
Bowdens Silver
Bowdens Silver
Bowdens Silver
Bowdens Silver
Bowdens Silver
Bowdens Silver
Bowdens Silver
Bowdens Silver
Bowdens Silver
Tuena
Webbs
Conrad
Conrad
Conrad
Conrad
Conrad
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
NSW
1. Under Joint Venture with Thomson Resources Limited. Silver Mines Limited earning 80%.
Silver Mines
Ownership
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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CORPORATE
PLACEMENT
In October 2017, the Company successfully completed a placement to sophisticated investors raising A$4.3 million
(before costs) to institutional, professional and sophisticated investors, via the issue of 53,750,000 shares. The funds
raised under this placement were primarily utilised for exploration and the progression of the Company’s Feasibility
Study and Environmental Impact Statement for the Bowdens Silver Project.
In April 2018, the Company successfully completed a placement to sophisticated investors raising A$2.75 million
(before costs) to institutional, professional and sophisticated investors, via the issue of 68,750,000 shares. The funds
raised under this placement were primarily utilised for the completion of the Company’s Feasibility Study, progression
of the Environmental Impact Statement and also for further exploration at the Bowdens Silver Project.
RESULTS AND DIVIDENDS
The loss of Group for the financial year after providing for income tax amounted to $2,066,433 compared to a loss of
$2,278,907 for the previous year.
The Group incurred exploration and development expenditure of $6,245,150 during the year (2017: $9,085,266). The
total net assets of the Group stands at $56,790,853 (2017: $52,190,340) of which investment in exploration
expenditure accounts for $47,373,902 (2017: $41,128,752).
The Group is a mining exploration company, and as such does not earn income from the sale of product. No
dividends have been declared or paid during the year.
ENVIRONMENTAL REGULATIONS
The Group’s operations are subject to various environmental controls under State regulations. The directors are not
aware of any material breaches during the financial year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS DURING THE FINANCIAL YEAR AND AFTER THE END
OF THE REPORTING PERIOD
On 5th September 2018, the Company announced the completion of a renounceable entitlements issue and shortfall
placement. The Offer was for one new share for every four shares held by eligible shareholders at an issue price of
$0.03 per share (“New Shares”) to raise $3.85 million (before costs), together with one free attaching option for every
two New Shares subscribed for, exercisable at $0.06 with an expiry date three years from the date of issue (“New
Options”).
The successful Offer and shortfall placement resulted in the issue of 128,200,214 New Shares and 64,100,107
Options.
The funds raised are primarily to be utilised for exploration at the Barabolar Project, the completion of the Bowdens
Silver Environmental Impact Statement and other working capital purposes.
The Group has not had any other significant changes in the state of the affairs of the Group during the year. Since
year end, the Group has not had any significant events that have affected, or may significantly affect, the Group
operations, the results of the Group or the Group’s state of affairs in future financial years.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The directors believe, on reasonable grounds, that it would unreasonably prejudice the interests of the Group if any
further information on likely developments, future prospects and business strategies in the operations of the Group
and the expected results of these operations, were included in this report.
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PREVIOUS AND HISTORICAL MINERAL RESOURCES ESTIMATES
The mineral resource estimates for the Conrads Silver Deposit and the Webbs Silver Deposit were completed under
JORC code 2004 and have not been updated to JORC code 2012 and hence are classed as ‘historical estimates’ and
not reported in accordance with the JORC Code. A competent person has not done sufficient work to classify the
historical estimates of mineral resources in accordance with the JORC code. It is uncertain that following evaluation
and/or further exploration work that the historical estimates will be able to be reported as a mineral resource in
accordance with the JORC code 2012.
The Conrads Silver Deposit Resource Estimate was first presented by Malachite Resources NL 16th December 2008
based on work by Hellman and Schofield Pty Ltd and disclosed under the JORC code 2004. Since the mineral resource
estimate was last calculated there has been no further material drill results from the project and as a result the historical
resource estimate has not been updated. It is the intention to continue to review the historical estimates and, in time,
update these estimates to be compliant with JORC code 2012. This will be conducted prior to any economic studies,
when these historical estimates will be updated accordingly.
The Webbs Silver Deposit Resource Estimate was presented by Silver Mines Limited on 27th February 2012 based on
work compiled by GeoRes Pty Ltd and disclosed under the JORC code 2004. Since the mineral resource estimate
was last calculated there has been no further material drill results from the project and as a result the historical resource
estimate has not been updated. It is the intention to continue to review the historical estimates and, in time, update
these estimates to be compliant with JORC code 2012. This will be conducted prior to any economic studies, when
these historical estimates will be updated accordingly.
Webb’s Mineral Resource Estimate February 20121
Resource
Category
Measured
Indicated
Inferred
Total
Tonnes
(Million)
Silver
(g/t)
Copper
(%)
0.194
0.775
0.522
1.49
364
245
201
245
0.29
0.26
0.27
0.27
Lead
(%)
0.75
0.70
0.71
0.71
Zinc
(%)
1.67
1.49
1.61
1.56
Ag Eq
(g/t)
Ag Eq
(Moz)
470
341
302
345
2.9
8.5
5.1
16.5
Webbs Mineral Resource estimate as released by Silver Mines Limited on 27th February 2012. Based on work compiled by GeoRes Pty Ltd. Totals
may vary due to rounding.
Notes:
[1] The Group confirms that it is not aware of any new information received since the original disclosure (27th February 2012) or data that materially affects the
information included in this table. The Group confirms that all material assumptions and technical parameters underpinning the mineral resource estimates
continue to apply and have not materially changed.
[2] Webbs silver equivalent calculation based on equal recoveries of all metals based on silver price of US$17.30 per ounce, copper price of US$4935 per tonne, lead
price of US$1773 per tonne and zinc price of US$1871 per tonne as recorded as spot prices on 27th April 2016.
[3]
In the Group’s opinion, the silver, lead, copper and zinc included in the metal equivalent calculations have a reasonable potential to be recovered.
Conrad Mineral Resource Estimate December 20081
Resource
Category
Indicated
Inferred
Total
Tonnes
(Million)
0.658
1.994
2.652
Silver
(g/t)
128.8
97.6
105.4
Copper
(%)
0.24
0.19
0.20
Lead
(%)
1.69
Zinc
(%)
0.68
1.21
0.48
1.33
0.53
Tin
(%)
0.28
0.21
0.22
Ag Eq
(g/t)
254.0
190.2
206.1
Ag Eq
(Moz)
5.37
12.19
17.5
Conrad Mineral Resource estimate as released by Malachite Resources Limited on 16th December 2008. Based on work compiled by Hellman & Schofield Pty Ltd,
Geological Consultants. Totals may vary due to rounding.
Notes:
[1] The Group confirms that it is not aware of any new information received since the original disclosure (16th December 2008 or data that materially affects the
information included in this table. The Group confirms that all material assumptions and technical parameters underpinning the mineral resource estimates
continue to apply and have not materially changed.
[2] Conrad silver equivalent is presented as calculated in the original release 16th December 2008 which were AgEq = Ag (g/t) + 22.5 Pb (%) + 20.0 Zn (%) + 73.3 Cu
(%)+203.1 Sn (%) Based on a ratio of metal prices on 8th December 2008 of US$9.50 per oz Ag, US$1000/t Pb, US$1100/t Zn, US$3100/t Cu,US$11600/t Sn,
estimated Net Smelter Return with factored process recoveries estimated by Malachite Resources on metallurgical testing and previous experience.
[3]
In the Group’s opinion, the silver, lead, copper, tin and zinc included in the metal equivalent calculations have a reasonable potential to be recovered.
17
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2018 Annual Report
FORWARD LOOKING STATEMENTS
This Annual Report may contain forward looking information and statements that are subject to risk factors associated
with mineral exploration, mining, processing and production businesses.
It is believed that the expectations reflected in these statements are reasonable however such information is not a
guarantee of future performance and involve unknown risks and uncertainties, as well as other factors, many of which
are beyond the control of the Company. Actual results and developments may differ materially from those expressed
or implied by these forward-looking statements depending on a variety of factors including but not limited to price
fluctuations, commodity demand, currency fluctuations, drilling and production results, Mineral Resource and Ore
Reserve estimations, loss of market, competition, environmental risks, physical risks, legislative, fiscal and regulatory
changes, economic and financial market conditions, political risks, project delay or advancement, approvals and cost
estimates.
Forward-looking information and statements, including projections, forecasts and estimates, are provided as a general
guide only and should not be relied on as an indication or guarantee of future performance. No representation or
warranty, expressed or implied, is made or given by or on behalf of the Company, any of the Company’s directors, or
any other person as to the accuracy or completeness or fairness of the information or opinions contained in this
announcement and no responsibility or liability is accepted by any of them for such information or opinions or for any
errors, omissions, misstatements, negligent or otherwise, or for any communication written or otherwise, contained or
referred to in this announcement.
COMPETENT PERSONS STATEMENTS
Bowdens Silver Project
The information in this report that relates to Mineral Resources is based on work compiled by Mr Arnold van der
Heyden who is a Director of H & S Consultants Pty Ltd. Mr van der Heyden is a Member and Chartered Professional
(Geology) of The Australasian Institute of Mining and Metallurgy and has sufficient experience that is relevant to the
style of mineralisation and type of deposit under consideration, and to the activity being undertaken, to qualify as a
Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’ (JORC code). Mr van der Heyden consents to the inclusion in this report of the
matters based on the information in the form and context in which it appears.
The information in this report that relates to Ore Reserves within the Bowdens Silver Project is based on information
compiled or reviewed by Mr Adrian Jones of AMC Consultants Pty Ltd who is a consultant to the Company. Mr Jones
is a member of The Australasian Institute of Mining and Metallurgy and has sufficient experience that is relevant to the
style of mineralisation and type of deposit under consideration, and to the activity being undertaken, to qualify as a
Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’ (JORC code). Mr Jones consents to the inclusion in this report of the matters
based on the information in the form and context in which it appears.
Mr Jones visited the Bowdens mine site during April 2017 and August 2018 to review the operations, consider the
conditions of the site, and assess the data collection methods and techniques used by site personnel.
The Ore Reserve has been prepared by Mr Adrian Jones, AMC Consultants Pty Ltd, after peer review of the mining
section of the Feasibility Study. Other experts relied upon include H & S Consultants Pty Ltd, GR Engineering Services
Limited, ATC Williams Pty Limited. and Jacobs Australia Pty Limited, for Mineral Resources, Metallurgy & Process
Design and Tailing Storage Facility design. Work on environmental, marketing and logistics and the financial modelling
were undertaken by other consultants on behalf of the Company and certified by representatives of Silver Mines.
Exploration and Drill Results
The information in this report that relates to mineral exploration drill results from Bowdens Silver and exploration at the
Barabolar Project, the Webbs Silver Project and the Conrads Silver Project is based on information compiled or
reviewed by Mr Darren Holden who is an advisor to the company. Mr Holden is a member of The Australasian Institute
of Mining and Metallurgy and has sufficient experience that is relevant to the style of mineralisation and type of deposit
under consideration, and to the activity being undertaken, to qualify as a Competent Person as defined in the 2012
edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC
code). Mr Holden consents to the inclusion in this report of the matters based on the information in the form and context
in which it appears.
18
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SILVER MINES LIMITED and its controlled entities
2018 Annual Report
INFORMATION ON BOARD
DIRECTORS
The Directors of Silver Mines Limited during the financial year and until the date of this report are:
Keith Perrett
Anthony McClure
Peter Langworthy
Jonathan Battershill
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Mr Keith Perrett, Non-Executive Chairman
Mr Perrett has had a long involvement in agriculture as a producer and industry leader at local, state, national and
international levels. He was formerly Chairman of the Grains Research and Development Corporation (GRDC), the
National Rural Advisory Council (NRAC), the Wheat Research Foundation, and President of the Grains Council of
Australia. Mr Perrett brings substantial experience in stakeholder and government relations, governance and holds
substantial agricultural interests in north-west New South Wales.
Mr Perrett joined the Board of Silver Mines as a Director in June 2016 and was appointed the Non-Executive Chairman
in August 2016.
Mr Anthony McClure, Managing Director
Mr McClure graduated with a Bachelor of Science (Geology) degree from Macquarie University in 1986. He has had
30 years technical, management and financial experience in the resource sector worldwide in project management
and executive development roles. He has also worked in the financial services sector within the mineral and energy
sectors.
Mr McClure is currently a director of listed company Planet Gas Limited (since August 2003) and unlisted public
company Mekong Minerals Limited since (2010). He is also a past director of Bolnisi Gold NL and European Gas
Limited.
Mr McClure joined the Board of Silver Mines as Managing Director in June 2016.
Mr Peter Langworthy, Non-Executive Director
Mr Langworthy graduated with a Bachelor of Science (Geology) degree (Hons) from Macquarie University in 1986. His
career spans 30 years in mineral exploration and project development both in Australia and internationally. His industry
experience includes senior management roles with WMC Resources Limited, PacMin Mining Limited, and Jubilee
Mines NL. Mr Langworthy headed the management team that was responsible for numerous discoveries that led to
the outstanding success of Jubilee Mines.
Mr Langworthy is currently Chairman of Syndicated Metals Limited (since March 2012), Managing Director of Gateway
Mining Limited and Technical Director at Capricorn Metals Limited (since July 2013.) Mr Langworthy previously held
non-executive directorships with Northern Star Resources Limited, Talisman Mining Limited, Falcon Minerals Limited
and Pioneer Resources Limited.
Mr Langworthy joined the Board of Silver Mines as Non-Executive Director in June 2016.
Mr Jonathan Battershill, Non-Executive Director
Mr Battershill graduated with a Bachelor of Engineering (Geology) degree (Hons) from the Camborne School of Mines,
United Kingdom in 1995. His career spans over 20 years in mining, business development and finance both in Australia
and internationally. His industry experience includes senior operational and business development roles with WMC
Resources Limited as well as significant stockbroking experience at Hartleys, Citigroup and UBS both in Sydney and
London. Mr Battershill was consistently voted one of the leading mining analysts in Australia between 2009 and 2015
by institutional investors.
Mr Battershill is also a director of TSX listed company Black Dragon Gold Corp. Until recently, Mr Battershill was the
Global Mining Strategist (Executive Director) with the UBS investment bank in London and is currently the Principal of
JJB Advisory Limited, a private advisory and consulting firm based in the UK.
Mr Battershill was appointed as Non-Executive Director of Silver Mines in June 2017.
19
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SILVER MINES LIMITED and its controlled entities
2018 Annual Report
COMPANY SECRETARY
Mr Trent Franklin, Company Secretary
Mr Franklin holds qualifications in finance, risk management, a Bachelor of Science (Geology/Geophysics) from the
University of Sydney, and is a graduate of the Australian Institute of Company Directors. Mr Franklin is Managing
Director of Enrizen Financial Group, a financial services, accounting and legal firm. He is also a director of listed
company Gateway Mining Limited, and Company Secretary of listed company ATC Alloys Limited and has previously
served as a director of Mandalong Resources Limited, the Australian Olympic Committee Inc and the Australian
Olympic Foundation.
Meetings of Directors
During the financial year, six meetings of directors were held:
A McClure
K Perrett
P Langworthy
J Battershill
Meetings eligible to attend
6
6
6
6
Meetings attended
6
6
6
6
REMUNERATION REPORT
Remuneration policy
The remuneration policy of the Group has been designed to align director and executive objectives with shareholder
and business objectives by providing a fixed remuneration component and offering specific long-term incentives
based on key performance indicators affecting the Group's financial results. The Board of Silver Mines Limited
believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives
and directors to run and manage the Group.
The Board's policy for determining the nature and amount of remuneration for board members and senior executives
of the Group is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives,
was developed by the Board. All executives receive a base salary (which is based on factors such as length of service
and experience) and superannuation. The Board reviews executive packages annually by reference to the Group's
performance, executive performance and comparable information from industry sectors and other listed companies
in similar industries.
The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed
to attract the highest calibre of executives and reward them for performance that results in long term growth in
shareholder wealth.
Executives are also entitled to participate in the employee share and option arrangements. The executive directors
and executives receive a superannuation guarantee contribution required by the government, which is currently 9.5%,
and do not receive any other retirement benefits. All remuneration paid to directors and executives is valued at the
cost to the Group and expensed. Options are valued using the Black & Scholes methodology.
The Board policy is to remunerate non-executive directors at market rates for comparable companies for time,
commitment and responsibilities. The Board determines payments to the non-executive directors and reviews their
remuneration annually, based on market practice, duties and accountability. Independent external advice is sought
when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to
approval by shareholders at the Annual General Meeting (currently $250,000). Fees for non-executive directors are
not linked to the performance of the Group. However, to align directors' interests with shareholder interests, the
directors are encouraged to hold shares in the Group and are able to participate in employee share option plans.
20
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SILVER MINES LIMITED and its controlled entities
2018 Annual Report
Performance based remuneration
The Group currently has no performance based remuneration component built into the managing director’s
executive remuneration package.
Group performance, shareholder wealth and directors' and executives' remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders and directors and
executives. Currently, this is facilitated through the issue of options to the majority of directors and executives to
encourage the alignment of personal and shareholder interests. The Group believes this policy will be effective in
increasing shareholder wealth. At commencement of mine production, performance-based bonuses based on key
performance indicators are expected to be introduced. The Group has not employed any executive officers, other
than directors, who were involved in, concerned in, or who took part in the management of the Group’s affairs.
The Group does not have any schemes for retirement benefits for non-executive directors.
Key Service Agreements
Mr Keith Perrett. The service agreement with Lehavo Pty Ltd provides non-executive chairman services to the
Group for non-executive chairman’s fees of $80,000 per annum. Mr Perrett provides services to the Group on behalf
of Lehavo Pty Ltd. The agreement is ongoing on a month-to-month basis and Mr Perrett is required to provide 90
days’ written notice if he wishes to resign from the Group.
Mr Anthony McClure has entered into an arrangement with the Group in which he receives total remuneration of
$450,000 per annum (inclusive of superannuation). The agreement provides a notice period of six months in the
event of termination. Since the end of the 2018 Financial Year, Mr McClure’s total remuneration has been reduced
to $337,500 per annum (inclusive of superannuation).
Mr Peter Langworthy has entered into a non-executive director service agreement with the Group whereby he
receives non-executive director fees of $60,000 per annum. The agreement between Mr Langworthy and the Group
is ongoing on a month-to-month basis. Mr Langworthy is required to provide 90 days’ written notice if he wishes to
resign from the Group.
Mr Jonathan Battershill has entered into a non-executive director service agreement with the Group whereby he
receives non-executive director fees of $60,000 per annum. The agreement between Mr Battershill and the Group
is ongoing on a month-to-month basis. Mr Battershill is required to provide 90 days’ written notice if he wishes to
resign from the Group.
Mr Trent Franklin The service agreement with Enrizen Accounting Pty Ltd provides company secretarial and
accounting services to the Group for a fee of $8,500 per month. Mr Franklin acts as Company Secretary to the
Group on behalf of Enrizen Accounting Pty Ltd.
Voting and comments made at the Group’s 2017 Annual General Meeting (AGM).
At the 2017 AGM, 98.9% of the votes received supported the adoption of the remuneration report for the year ended
30 June 2017. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
21
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SILVER MINES LIMITED and its controlled entities
2018 Annual Report
Details of remuneration:
Short-term benefits
Cash
salary
and
fees
$
80,000
60,000
62,500
410,959
102,000
715,459
2018
Non-Executive
Directors:
K Perrett
(Chairman)
P Langworthy
J Battershill
Executive
Directors:
A McClure1
Other Key
Management
Personnel:
T Franklin2
Cash
bonus
Non-
monetary
Post-
employment
benefits
Super-
annuation
Long-
term
benefits
Long
service
leave
Share-based
payments
Total
Equity-
settled
shares
Equity-
settled
options
$
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
39,041
-
39,041
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80,000
60,000
62,500
- 450,000
- 102,000
- 754,500
Short-term benefits
Cash
bonus
Non-
monetary
Post-
employment
benefits
Super-
annuation
Long-
term
benefits
Long
service
leave
Share-based
payments
Total
Equity-
settled
shares
Equity-
settled
options
$
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
39,041
-
39,041
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80,000
60,000
-
9,965
- 450,000
-
85,000
- 684,965
Cash
salary
and
fees
$
80,000
60,000
-
9,965
410,959
85,000
645,924
2017
Non-Executive
Directors:
K Perrett
(Chairman)
P Langworthy
J Battershill
N Featherby
(Resigned)
Executive
Directors:
A McClure1
Other Key
Management
Personnel:
T Franklin2
1. Since the end of the 2018 Financial Year total remuneration for Anthony McClure has been reduced to
$337,500 per annum (inclusive of superannuation).
2. Fees payable to Mr Franklin are paid to Enrizen Accounting Pty Ltd and encompass Company Secretarial as
well as accounting services to the Group.
22
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SILVER MINES LIMITED and its controlled entities
2018 Annual Report
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the consolidated entity, directly and indirectly, including their personally related parties, is
set out below:
Ordinary shares
Balance
30 June 2017
Net change
Balance
30 June 2018
Directors
A McClure
K Perrett
P Langworthy
J Battershill
Specified executives
T Franklin
17,875,000
1,000,000
500,000
-
-
-
-
500,000
17,875,000
1,000,000
500,000
500,000
1,000,000
1,571,306
2,571,306
Option holding
The number of options over ordinary shares in the Company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Options
Balance
30 June 2017
Net change
Options
lapsed/written
off
Balance
30 June
2018
Directors
A McClure
P Langworthy
K Perrett
J Battershill
Specified executives
T Franklin
-
1,000,000
500,000
-
-
-
-
-
6,000,000
-
-
-
-
-
-
-
1,000,000
500,000
6,000,000
-
23
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SILVER MINES LIMITED and its controlled entities
2018 Annual Report
CORPORATE GOVERNANCE
The Company’s Corporate Governance Statement, is attached to this report and located on the Company’s website.
The Company has mostly complied with the applicable principles of corporate governance, and if it has not, it has
explained why that is so.
Proceedings on behalf of the Group
No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings
to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those
proceedings. The Group was not a party to any such proceedings during the year.
Non-audit services
There were no non-audit services performed by the external auditor during the financial year.
Directors and officers indemnification
The Group has paid a premium to insure the directors and officers of the Group. The insurance agreement limits
disclosure of premium details. The insurance premiums relate to:
• Costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and
whatever their outcome; and
• Other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty or
improper use of information or position to gain a personal advantage.
AUDITORS INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is
enclosed and forms part of this annual report.
Events subsequent to reporting date
On 5th September 2018, the Company announced the completion of a renounceable entitlements issue and shortfall
placement. The Offer was for one new share for every four shares held by eligible shareholders at an issue price of
$0.03 per share (“New Shares”) to raise $3.85 million (before costs), together with one free attaching option for every
two New Shares subscribed for, exercisable at $0.06 with an expiry date three years from the date of issue (“New
Options”).
The successful Offer and shortfall placement resulted in the issue of 128,200,214 New Shares and 64,100,107
Options. The Directors of Silver Mines have subscribed for 12,885,417 New Shares and 6,442,709 New Options
totalling $386,563 as part of the Offer and Shortfall Placement. The Shortfall Placement component to Directors
comprising $237,500 will be subject to shareholder approval.
No other matter or circumstance has arisen since the reporting date that has significantly affected, or may significantly
affect, the consolidated entity’s operations, the results of those operations or the consolidated entity’s state of affairs
in future financial years.
24
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SILVER MINES LIMITED and its controlled entities
2018 Annual Report
This report is made in accordance with a resolution of the Directors.
Keith Perrett
Chairman
27th September 2018
Anthony McClure
Managing Director
25
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Crowe Horwath Sydney
ABN 97 895 683 573
Member Crowe Horwath International
Audit and Assurance Services
Level 15 1 O'Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Fax +61 2 9262 2190
www.crowehorwath.com.au
27 September 2018
The Board of Directors
Silver Mines Limited
Level 11, 52 Phillip Street
Sydney NSW 2000
Dear Board Members
Silver Mines Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the Directors of Silver Mines Limited.
As lead audit partner for the audit of the financial report of Silver Mines Limited for the financial year
ended 30 June 2018, I declare that to the best of my knowledge and belief, that there have been no
contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
CROWE HORWATH SYDNEY
LEAH RUSSELL
Senior Partner
Crowe Horwath Sydney is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and
independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation. Liability limited other than for the acts or
omissions of financial services licensees.
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2018 Annual Report
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2018
Revenue
Cost of sales
Gross Profit from continuing operations
Other income
Share registry and exchange fees
Auditors
Marketing
Office expenses
IT and communication
Depreciation
Accountancy
Professional and technical advisors
Employee benefits expenses
Travel and accommodation
Foreign exchange gains/(losses)
Other expenses
Loss from continuing operations before interest
and income tax
Interest income
Finance costs
Loss from continuing operations before income
tax
Income tax
Loss from continuing operations after income
tax
Comprehensive income
2018
$
2017
$
109,759
(50,433)
59,326
667
(90,356)
(47,111)
(107,936)
(64,563)
(13,198)
(225,168)
(101,682)
(529,220)
(751,326)
(161,855)
(421)
(51,894)
55,643
(27,008)
28,635
5,603
(171,614)
(77,000)
(98,268)
(67,637)
(15,838)
(250,848)
(85,000)
(616,258)
(641,595)
(157,814)
-
(93,209)
(2,084,737)
(2,240,843)
25,404
(7,100)
65,816
(103,880)
(2,066,433)
(2,278,907)
-
-
(2,066,433)
(2,278,907)
-
-
Total comprehensive income (loss) (attributable
to owners of the company)
(2,066,433)
(2,278,907)
Earnings per share (cents per share)
Basic & diluted earnings per share
(0.46)
(0.63)
The consolidated statement of comprehensive income is to be read in conjunction with the notes to the financial
statements.
27
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2018 Annual Report
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
Notes
2018
$
2017
$
Current assets
Cash and cash equivalent
Receivables
Inventory - livestock
Total current assets
Non-current assets
Financial assets
Deferred exploration and development
Intangible assets
Land and buildings
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Payables
Employee provisions
Total current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserve
Accumulated losses
Total Equity
3
4
5
6
7
8
9
10
11
12
13
13
730,679
75,037
164,310
970,026
91,000
47,373,902
1,770,000
7,625,013
360,415
57,220,330
3,641,237
281,387
170,794
4,093,418
50,000
41,128,752
875,000
7,718,031
500,922
50,272,705
58,190,356
54,366,123
1,212,474
187,029
1,399,503
2,045,938
129,845
2,175,783
1,399,503
2,175,783
56,790,853
52,190,340
77,764,760
4,000,000
(24,973,907)
71,097,814
4,000,000
(22,907,474)
56,790,853
52,190,340
The consolidated statement of financial position is to be read in conjunction with the notes to the financial statements.
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2018 Annual Report
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
Ordinary
Shares
$
Notes
Share
capital
reserve
$
Accumulated
losses
$
Total
$
Balance at 1 July 2016
63,502,086
-
(20,628,567) 42,873,519
Correction of error
Restated total equity at the
beginning of the financial year
Transactions with owners, in their
capacity as owners
Equity funds received, issue of
shares
Shares buy-back
Cost of funds raised
Total transactions with owners, in
their capacity as owners
Comprehensive income for period
Loss attributable to owners of the
company
Total comprehensive income for the
period
-
4,000,000
-
4,000,000
63,502,086
4,000,000
(20,628,567) 46,873,519
8,316,936
(107,784)
(613,424)
7,595,728
-
-
-
-
-
-
-
-
-
-
-
-
8,316,936
(107,784)
(613,424)
7,595,728
(2,278,907)
(2,278,907)
(2,278,907)
(2,278,907)
Balance at 30 June 2017
71,097,814
4,000,000
(22,907,474) 52,190,340
Balance at 1 July 2017
71,097,814
4,000,000
(22,907,474) 52,190,340
Transactions with owners, in their
capacity as owners
Equity funds received, issue of
shares
Shares buy-back
Costs of funds raised
Total transactions with owners, in
their capacity as owners
Comprehensive income for period
Loss attributable to owners of the
company
Total comprehensive income for the
period
7,050,600
-
(383,654)
6,666,946
-
-
-
-
-
-
-
-
-
-
-
-
7,050,600
-
(383,654)
6,666,946
(2,066,433)
(2,066,433)
(2,066,433)
(2,066,433)
Balance at 30 June 2018
13
77,764,760
4,000,000
(24,973,907) 56,790,853
The consolidated statement of changes in equity is to be read in conjunction with the notes to the financial
statements.
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2018 Annual Report
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers & employees
Interest received
Finance costs
Notes
2018
$
2017
$
110,426
(1,975,771)
25,404
(7,100)
59,449
(2,745,140)
65,816
(103,880)
Net cash outflows from operating activities
16
(1,847,041)
(2,723,755)
Cash flows from investing activities
Payments for deferred exploration
R&D Tax Benefit
Payment to acquire intangible
Payment for property, plant and equipment
Proceeds from sale of property, plant and equipment
(7,097,309)
266,071
(895,000)
(4,225)
-
(13,402,141)
-
(875,000)
(487,078)
2,273
Net cash outflows from investing activities
(7,730,463)
(14,761,946)
Cash flows from financing activities
Proceeds from issues of shares
Option conversion
Payments for share buy-back
Payments for capital raising costs
7,050,000
600
-
(383,654)
10,290,907
-
(107,784)
(613,424)
Net cash inflows from financing activities
6,666,946
9,569,699
Net (decrease)/increase in cash and cash equivalent
Cash and cash equivalent at the beginning of the financial year
(2,910,558)
3,641,237
(7,916,002)
11,557,239
Cash and cash equivalent at the end of the financial year
3
730,679
3,641,237
The consolidated statement of cash flows is to be read in conjunction with the notes to the financial
statements.
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Preparation
The financial statements are general purpose financial statements that have been prepared in accordance with
Australian Accounting Standards (AASB) and the requirements of Corporations Act 2001 and International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board as applicable
to a for-profit entity. The Group is a for-profit entity for financial reporting purposes under Australian Accounting
Standards.
The financial report is intended to provide users with an update on the latest annual financial statements of Silver
Mines Limited and its controlled entities.
Except for the cash flow information, the financial statements have been prepared on an accruals basis and are
based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current
assets, financial assets and financial liabilities. The financial statements are presented in Australian dollars which
is the Group’s functional currency.
b. Going Concern
The Directors believe that the going concern basis is appropriate for the preparation and presentation of the
financial statements, notwithstanding continued operating losses, negative operating cash flows, and no ongoing
revenue streams, as the directors believe that the Group will raise sufficient cash and liquid assets.
The Directors have prepared a forecast for the foreseeable future reflecting the abovementioned expectations
and their effect on the Group. The forecast is conservative, and reflects current market prices, reduction in interest
income, and the further development of the Group’s purchase of tenements along with exploration.
In the unlikely event that the above results in a negative outcome, then the going concern basis may not be
appropriate with the result that the Group may have to realise its assets and extinguish its liabilities other than in
the ordinary course of business and in amounts different from those stated in the Financial Report. No allowance
for such circumstances has been made in the Financial Report.
c. Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Silver Mines
Limited as at 30 June 2018 and the results of its subsidiaries for the period then ended. Silver Mines Limited and
its subsidiaries together are referred to in these financial statements as the 'consolidated entity' or ‘the Group’.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls
an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated
entity are eliminated.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (continued)
d. New Accounting Standards and Interpretations not yet mandatory or early adopted.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June
2018. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the consolidated entity, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces
all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition
and Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial
asset shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in
order to collect contractual cash flows, which arise on specified dates and solely principal and interest. All other
financial instrument assets are to be classified and measured at fair value through profit or loss unless the entity
makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not
held-for-trading) in other comprehensive income (OCI). For financial liabilities, the standard requires the portion of
the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an
accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the
accounting treatment with the risk management activities of the entity. New impairment requirements will use an
'expected credit loss' (ECL) model to recognise an allowance. Impairment will be measured under a 12-month ECL
method unless the credit risk on a financial instrument has increased significantly since initial recognition in which
case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The consolidated
entity will adopt this standard and the amendments from 1 July 2018. It is not expected for the application of the
new standard to have a significant impact on the Group’s financial statements.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides
a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or services.
The standard will require:
contracts (either written, verbal or implied) to be identified, together with the separate performance obligations
within the contract;
determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the
transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each
distinct good or service, or estimation approach if no distinct observable prices exist; and
recognition of revenue when each performance obligation is satisfied.
Credit risk will be presented separately as an expense rather than adjusted to revenue.
For goods, the performance obligation would be satisfied when the customer obtains control of the goods. For
services, the performance obligation is satisfied when the service has been provided, typically for promises to
transfer services to customers. For performance obligations satisfied over time, an entity would select an
appropriate measure of progress to determine how much revenue should be recognised as the performance
obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial position as a
contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance
and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to
understand the contracts with customers; the significant judgments made in applying the guidance to those
contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The consolidated
entity will adopt this standard from 1 July 2018 and as the entity is not generating revenue at present it is not
expected to impact on the Group.
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (continued)
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces
AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject
to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured as the present
value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-
term leases of 12 months or less and leases of low-value assets (such as personal computers and small office
furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease
payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be
recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate
of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be
replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on
the recognised lease liability (included in finance costs).
In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when
compared to lease expenses under AASB 117. However Earnings Before Interest, Tax, Depreciation and
Amortisation (EBITDA) results will be improved as the operating expense is replaced by interest expense and
depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease
payments will be separated into both a principal (financing activities) and interest (either operating or financing
activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for
leases. The consolidated entity will adopt this standard from 1 July 2019.
e.
Identification of reportable operating segments
During the period, the consolidated entity was organised into one operating segment, being exploration
operations. This operating segment is based on the internal reports that are reviewed and used by the directors
(who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in
determining the allocation of resources.
The CODM review operating expenses in relation to the exploration activities and the Group’s cash position. The
accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial
statements.
The information reported to the CODM is on at least a monthly basis. Information is presented on a consolidated
cash flow basis. Cash flow funding is treated as one pool of liquid assets noting relevant terms of any maturity or
exercise of any investments for the purpose of funding exploration. Types of products and services – the principal
products and services of this operating segment are in exploration operations and mine development in Australia.
33
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (continued)
f. Critical accounting estimates and significant judgments used in applying accounting policies
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually evaluates its
judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on historical experience and on other various
factors, including expectations of future events, management believes to be reasonable under the circumstances.
The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements,
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed below.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life
intangible assets at each reporting date by evaluating conditions specific to the consolidated entity and to the
particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset
is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a
number of key estimates and assumptions.
It is reasonably possible that the underlying metal price assumption may change which may then impact the
estimated life of mine determinant and may then require a material adjustment to the carrying value of mining
development assets. Furthermore, the expected future cash flows used to determine the value-in-use of these
assets are inherently uncertain and could materially change over time. They are significantly affected by a number
of factors including reserves and production estimates, together with economic factors such as metal spot prices,
discount rates, estimates of costs to produce reserves and future capital expenditure.
Exploration and evaluation costs
Exploration and evaluation costs have been capitalised on the basis that the consolidated entity will commence
commercial production in the future, from which time the costs will be amortised in proportion to the depletion of
the mineral resources. Key judgements are applied in considering costs to be capitalised which includes
determining expenditures directly related to these activities and allocating overheads between those that are
expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered either through
successful development or sale of the relevant mining interest. Factors that could impact the future commercial
production at the mine include the level of reserves and resources, future technology changes, which could
impact the cost of mining, future legal changes and changes in commodity prices. To the extent that capitalised
costs are determined not to be recoverable in the future, they will be written off in the period in which this
determination is made.
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 2: INCOME TAX
(a) Reconciliation of income tax expense to prima facie tax payable
2018
$
2017
$
Operating loss before income tax
(2,066,433)
(2,278,907)
Prima facie income tax benefit/(expense) at 27.5% on operating
profit/(loss)
Add tax effect of:
Tax losses and temporary differences not recognised
Non temporary differences
568,269
622,361
(568,269)
-
(622,361)
-
Income tax attributable to operating (loss)/profit
-
-
Directors are of the view that there is insufficient probability that the Group will derive sufficient income in
the foreseeable future to justify booking the tax losses and temporary differences as deferred tax assets and
deferred tax liabilities.
(b) Deferred tax assets and (liabilities) are attributable to the
following:
Exploration expenditure
Tax losses
(c) Tax losses
(3,857,486)
3,857,486
-
-
-
-
Unused tax losses for which no tax loss has been booked as a deferred
tax asset adjusted for non temporary differences
29,282,950
33,654,622
Potential tax benefit at 27.5%
8,052,811
9,255,020
(d) Unrecognised temporary differences
Non deductible amounts as temporary differences
Accelerated deductions for book compared to tax
Total
504,053
-
8,556,864
565,801
-
9,820,821
Potential effect on future tax expense
8,556,864
9,820,821
The Group’s ability to recover unrecognised tax losses depends on the Group’s earnings as well as the Group meeting
the Same Business Test or the Continuity of Ownership Test
NOTE 3: CASH AND CASH EQUIVALENTS
Current
Cash at bank and on hand
2018
$
730,679
2017
$
3,641,237
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 4: RECEIVABLES
Current
Sundry debtors
2018
$
75,037
75,037
2017
$
281,387
281,387
Sundry debts comprise of GST refundable amounting to $74,881 (2017: $266,176) and prepayment amounting to
$156 (2017: $15,211).
NOTE 5: INVENTORY - LIVESTOCK
Current
Livestock
NOTE 6: FINANCIAL ASSETS
Non-current
Performance guarantee bonds
NOTE 7: DEFERRED EXPLORATION AND DEVELOPMENT EXPENDITURE
Non-current
Exploration expenditures
Costs carried forward in respect of areas of interest in:
Exploration and evaluation phase
Opening balance
Expenditure in the period
Closing balance
2018
$
164,310
2017
$
170,794
2018
$
91,000
2017
$
50,000
2018
$
2017
$
41,128,752
6,245,150
47,373,902
32,043,486
9,085,266
41,128,752
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These
costs are only carried forward to the extent that they are expected to be recouped through the successful
development of an area or where activities in the area have not yet reached a stage which permits reasonable
assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profits in the year in which the
decision to abandon the area is made.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward
costs in relation to that area of interest.
Costs of site restoration are provided over the life of the facility from where exploration commences and are included
in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant equipment and
building structures, waste removal and rehabilitation of the site in accordance with clauses of the mining permits.
Such costs have been determined using estimates of future costs, current legal requirements and technology on an
undiscounted basis.
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 7: DEFERRED EXPLORATION AND DEVELOPMENT EXPENDITURE (continued)
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations
and future legislation. Accordingly, the costs have been determined on the basis that the restoration will be completed
within one year of abandoning the site.
Exploration and evaluation assets are tested for impairment each year. When the facts and circumstances suggest
that the carrying amount exceeds the recoverable amount, the carrying amount is written down to its likely
recoverable amount.
NOTE 8: INTANGIBLE ASSETS
Non-current
Opening balance
Additions
Disposals
Closing balance
2018
$
2017
$
875,000
895,000
-
1,770,000
-
875,000
-
875,000
The Group has entered into a number of option agreements to purchase properties attaching to the tenements. As
consideration for these agreements, the Group has paid total option fees of $895,000 (2017: $875,000) during the
year. However, if the Group chooses not to exercise with the option agreements, the rights to purchase the land will
be forfeited and the amount will be written off through the Profit and Loss statement.
NOTE 9: LAND AND BUILDINGS
Non-current
Properties at cost
Accumulated Depreciation
2018
$
8,140,619
(515,607)
7,625,013
2017
$
8,140,619
(422,588)
7,718,031
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Consolidated
Balance at 1 July 2016
Additions
Depreciation expense
Balance at 30 June 2017
Additions
Depreciation expense
Land
Buildings
Buildings
improvements
$
$
$
Total
$
7,181,532
-
-
7,181,532
-
-
237,836
-
(6,750)
237,836
-
(6,750)
386,013
6,000
(86,600)
7,805,381
6,000
(93,350)
305,413
-
(86,268)
7,718,031
-
(93,018)
Balance at 30 June 2018
7,181,532
224,336
219,145
7,625,013
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 9: LAND AND BUILDINGS (continued)
Land and buildings are shown at cost, less subsequent depreciation and impairment for buildings.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of buildings and building
improvements (excluding land) over their expected useful lives as follows:
Buildings
Building improvements
40 years
4-8 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
Items of land and buildings are derecognised upon disposal or when there is no future economic benefit to the
consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or
loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
NOTE 10: PROPERTY, PLANT AND EQUIPMENT
Plant and equipment - at cost
Less: accumulated depreciation
2018
$
1,173,263
(812,848)
360,415
2017
$
661,541
(160,145)
500,922
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Consolidated
Balance at 30 June 2016 and
1 July 2016
Additions
Disposals
Depreciation expense
Balance at 30 June 2017 and
1 July 2017
Additions
Disposals
Depreciation expense
Plant &
Mining
Equipment
$
Office &
Camp
Equipment
$
Motor
Vehicles
$
Other
Assets -
Farming
$
Computer
Equipment
Total
$
$
85,618
46,842
33,380
15,057
-
180,896
63,813
-
(61,638)
137,752
-
(58,756)
276,264
(475)
(34,501)
-
-
(4,058)
2,817
-
(1,193)
480,646
(475)
(160,145)
87,793
125,839
274,667
10,998
1,625
500,922
-
-
(33,926)
-
-
(60,224)
-
-
(44,068)
-
-
(4,058)
4,225
-
(2,456)
4,225
-
(144,732)
Balance at 30 June 2018
53,867
65,615
230,599
6,940
3,394
360,415
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 10: PROPERTY, PLANT AND EQUIPMENT (continued)
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and
equipment over their expected useful lives as follows:
Plant & Mining Equipment
Office & Camp Equipment
Motor Vehicles
Other Assets - Farming
Computer Equipment
4-20 years
3-8 years
6-8 years
5 years
2 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit
to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to
profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
NOTE 11: PAYABLES
Current
Trade creditors and accruals
2018
$
2017
$
1,212,474
2,045,938
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the
financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not
discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
NOTE 12: EMPLOYEE PROVISIONS
Current - employee provisions
2018
$
187,029
2017
$
129,845
Short-term employee benefits
Liabilities for wages and salaries, including annual leave to be settled wholly within 12 months of the reporting date are
measured at the amounts expected to be paid when the liabilities are settled.
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 13: CAPITAL AND RESERVES
(a) Movements in ordinary share capital
Date
Details
1-Jul-16
31-Dec-16
31-Dec-16
30-Jun-17
30-Jun-17
30-Jun-17
30-Jun-17
10-Oct-17
10-Oct-17
13-Oct-17
4-Apr-18
4-Apr-18
30-Jun-18
Issued capital
Capital Raising costs
Issued capital
Shares buy-back
Capital Raising costs
Placement
Capital Raising costs
Option exercise
Placement
Capital Raising costs
Number of
shares
340,475,643
32,223,856
18,181,968
(582,611)
390,298,856
53,750,000
2,000
68,750,000
512,800,856
Issue
price
0.165
0.165
0.185
0.08
0.30
0.04
$
63,502,086
5,316,936
(463,424)
3,000,000
(107,784)
(150,000)
71,097,814
4,300,000
(264,675)
600
2,750,000
(118,979)
77,764,760
(b) Issued and paid up capital
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion
to the number of and amounts paid on the shares held. On a show of hands, every holder of fully paid ordinary shares
present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote.
(c) Share options
At 30 June 2018 details of Listed and Unlisted Options are as follows:
Details
Number
Exercise
price
Expiry date
Unlisted options
Unlisted options
Total
9,000,000
5,000,000
14,000,000
$0.30
$0.20
20-Jun-19
3 years from
milestone
achievement1
1. Expiry which is three years from the date of achievement of Project Financing, which must achieve a minimum of
$150 million (Financing Milestone). This was set out in the Company’s Notice of Annual General meeting dated 30
October 2017.
Movements in options
Balance at the beginning of the financial year
Options lapsed
Options exercised
Options issued
Balance at the end of the financial year
2018
Number
2017
Number
42,098,614
(34,096,614)
(2,000)
6,000,000
14,000,000
38,951,614
(58,000)
-
3,205,000
42,098,614
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 13: CAPITAL AND RESERVES (continued)
(d) Reserves
In June 2016, the Company completed the acquisition of Silver Investment Holdings Australia Ltd (SIHA) and
Bowdens Silver Pty Ltd. As part of the consideration for the purchase of SIHA, 40,000,000 ordinary shares in the
capital of the Group are to be issued as a deferred consideration. On review of the accounting for the acquisition, the
Company discovered the recognition of the deferred consideration had been misinterpreted. This error has now been
amended by restating the deferred exploration and development expenditure and share capital reserve.
Consolidated
Balance at 1 July 2016
Movement during the year
Balance at 30 June 2017
Movement during the year
Balance at 30 June 2018
(e) Capital risk management
Equity
Reserve
$
4,000,000
-
4,000,000
-
4,000,000
The Group’s objectives when managing capital is to safeguard the ability to continue as a going concern, so that it can
continue to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital
structure in response to changes in these risks and in the market. There have been no changes in the strategy adopted
by management to control the capital of the Group since the prior year.
NOTE 14: RELATED PARTY TRANSACTIONS
(a) Directors
The names and positions held of Group key personnel are:
Key Management Person
Keith Perrett
Anthony McClure
Peter Langworthy
Jonathan Battershill
Trent Franklin
Position
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Company Secretary
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated
entity is set out below:
Short-term employee benefits
Post-employment benefits
2018
$
2017
$
715,459
39,041
754,500
645,924
39,041
705,965
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 14: RELATED PARTY TRANSACTIONS (continued)
(b) Trading transactions
During the year, the Company entered into the following trading transactions with related parties of Trent Franklin, the
Company Secretary, as follows: Enrizen Capital Pty Ltd received $50,000 (2017: $300,000 and was issued 1 million
fully paid ordinary shares in the Company at an issue price of $0.15) in relation to corporate advisory, capital raising and
underwriting services; Enrizen Pty Ltd received $950 (2017: $900) in relation to insurance services; and Enrizen Lawyers
Pty Ltd received $38,482 (2017: $44,151) in relation to legal services.
(c) Consolidated Entities
The Group operates in the exploration industry in Australia only. The Group has the following 100% wholly owned
subsidiaries whose transactions have been consolidated into the Group accounts:
Silver Investment Holdings Australia Pty Limited
Bowdens Silver Pty Limited
Conrad Resources Pty Ltd
Tuena Resources Pty Ltd
Webbs Resources Pty Ltd
NOTE 15: PARENT ENTITY INFORMATION
Statement of profit or loss and other comprehensive income
Profit (loss ) after income tax
Total comprehensive income/(loss)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Retained profits
Total equity
Parent
2018
$
(1,678,248)
(1,678,248)
2017
$
(1,707,497)
(1,707,497)
Parent
2018
$
614,445
57,899,828
182,382
182,382
2017
$
2,965,729
52,929,749
201,001
201,001
81,764,760
(24,047,314)
57,717,446
75,097,814
(22,369,066)
52,728,748
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 16: RECONCILIATION OF OPERATING (LOSS)/PROFIT AFTER
INCOME TAX TO NET CASH FLOWS FROM OPERATING ACTIVITIES
Operating (loss)/profit after income tax
Depreciation
Employee provisions
Movements in working capital:
(Increase)/decrease in receivables and prepayments
(Increase)/decrease in inventory
Increase/(decrease) in payables and provision
Net cash outflows from operating activities
NOTE 17: FINANCIAL INSTRUMENT DISCLOSURES
2018
$
(2,066,433)
225,168
57,184
(1,784,081)
2017
$
(2,278,907)
250,848
(2,028,059)
27,965
6,484
(97,410)
(1,847,041)
85,221
(53,244)
(727,673)
(2,723,755)
The Group’s activities expose it to a variety of financial risks: market risk (including 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 adverse affects on the financial performance of the Group. The Group uses different
methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case
of interest rates and other price risks and aging analysis for credit risk.
Risk management is carried out by the Company Secretary under policies approved by the Board of Silver Mines.
The Company Secretary identifies and evaluates the risks in close cooperation with the Group’s management and
Board.
(a) Market risk
(i) Foreign exchange risk
The Group does not have any significant exposure to foreign exchange risk.
(ii) Price risk
The Group in the current year did not have any significant exposure to investment or commodity price risk. The Group
will have exposure to silver price risk if and when mining operations begin. Directors have not made any determination
at this stage as to whether they will consider commodity price hedge arrangements.
(iii) Cash flow and fair value interest rate risk
The Group has exposure to interest rate risk which is the risk that a financial instrument’s value will fluctuate as a result
of changes in market interest rates and the effective weighted average interest rates on those financial assets and the
financial liabilities.
The Group policy is to ensure that the best interest rate is received for the short-term deposits. The Group uses a number
of banking institutions, with a mixture of fixed and variable interest rates. Interest rates are reviewed prior to deposits
maturing and re-invested at the best rate.
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 17: FINANCIAL INSTRUMENT DISCLOSURES (continued)
(iii) Cash flow and fair value interest rate risk (continued)
Weighted
average
effective
interest
rate
Floating
interest
rate
Fixed interest rate
maturing
Non-
interest
bearing
Total
%
$
Within 1
year
$
Over 1
year
$
$
$
2018
FINANCIAL ASSETS
Cash assets
Performance guarantee
bonds
Other financial assets
FINANCIAL LIABILITIES
Payables (current)
Borrowings (current)
Payables (non-current)
730,679
-
-
730,679
-
-
-
-
NET FINANCIAL
ASSETS/(LIABILITIES)
730,679
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
730,679
91,000
91,000
75,037
166,037
75,037
896,716
(1,212,474)
-
-
(1,212,474)
(1,212,474)
-
-
(1,212,474)
-
(1,046,437)
(315,758)
Weighted
average
effective
interest
rate
Floating
interest
rate
Fixed interest rate
maturing
Non-
interest
bearing
Total
%
$
Within 1
year
$
Over 1
year
$
$
$
2017
FINANCIAL ASSETS
Cash assets
Performance guarantee
bonds
Other financial assets
FINANCIAL LIABILITIES
Payables (current)
Borrowings (current)
Payables (non-current)
3,641,237
-
-
3,691,237
-
-
-
-
NET FINANCIAL
ASSETS/(LIABILITIES)
3,691,237
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,641,237
50,000
50,000
281,387
331,387
281,387
3,972,623
(2,045,938)
-
-
(2,045,938)
(2,045,938)
-
-
(2,045,938)
-
(1,714,552)
1,926,685
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 17: FINANCIAL INSTRUMENT DISCLOSURES (continued)
(b) Reconciliation of net financial assets per statement of financial position:
Net financial assets per above
Inventory (current)
Plant & equipment
Land & buildings
Intangible assets
Deferred exploration & development
Employees provision
2018
$
2017
$
(315,758)
164,310
360,415
7,625,013
1,770,000
47,373,902
(187,029)
1,926,685
170,794
500,922
7,718,031
875,000
41,128,752
(129,844)
Net assets per statement of financial position
56,790,853
52,190,340
(c) Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security in respect of recognised
financial assets, is the carrying amount as disclosed in the statements of financial position and notes to the financial
statements.
(d) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through adequate
amount of committed credit facilities and the ability to close out market positions. The Group manages liquidity risk by
continuously monitoring forecast and actual cash flows matching maturity profiles of financial assets and liabilities.
Surplus funds are generally only invested in instruments that are tradable in highly liquid markets.
The Group at trading date had deposits which mature within three months and cash at bank. Due to the cash available
to the Group there is no use of any credit facilities at balance date.
(e) Net fair values
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes. The net fair values of the financial assets and financial liabilities approximate their carrying values.
No financial assets and financial liabilities are readily traded on organised markets.
The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the
statements of financial position and in the notes to the financial statements.
(f) Sensitivity analysis
The Group has not performed a sensitivity analysis on interest rate risk and price risk and its impact on current year
results and equity which could result from a change in this risk as the likely impact is insignificant given the minimal
revenue generated from sales during the year, and minimal balances with interest.
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 18: EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating basic and diluted earnings per share
and alternative diluted earnings per share
2018
Cents
2017
Cents
(0.46)
(0.46)
(0.63)
(0.63)
Number
Number
445,375,629 360,378,354
$
$
Reconciliation of earnings used in calculating basic and diluted earnings
per share
Earnings used in calculating basic and diluted earnings per share
(2,066,433)
(2,278,907)
NOTE 19: REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by Crowe Horwath Sydney,
the auditor of the company:
Audit services - Crowe Horwath Sydney
Audit or review of the financial statements
Other services - Crowe Horwath Sydney
Preparation of tax advice
2018
$
2017
$
52,244
53,000
-
10,975
52,244
63,975
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 20: COMMITMENTS
2018
$
2017
$
Capital commitments-option
Committed at the reporting date but not recognised as liabilities, payable:
Intangible assets
5,690,000
3,465,000
Lease commitments-operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
-
18,962
Tenement minimum spend for a year
4,145,000
4,395,000
Capital commitments include contracted amounts for options agreement for the right to purchase properties at the
execution date. However, if the company chooses not to execute the agreements, the rights will be forfeited and the
amount will be written off through the Profit and Loss statement.
Operating lease commitments include contracted amounts for motor vehicle operating leases expiring within one year.
To maintain the right to a tenement the Group is committed to a minimum spend on the tenement in a 12 month period
NOTE 21: EVENTS SUBSEQUENT TO REPORTING DATE
On 5th September 2018, the Company announced the completion of a renounceable entitlements issue and shortfall
placement. The Offer was for one new share for every four shares held by eligible shareholders at an issue price of
$0.03 per share (“New Shares”) to raise $3.85 million (before costs), together with one free attaching option for every
two New Shares subscribed for, exercisable at $0.06 with an expiry date three years from the date of issue (“New
Options”).
The successful Offer and shortfall placement resulted in the issue of 128,200,214 New Shares and 64,100,107 Options.
The Directors of Silver Mines have subscribed for 12,885,417 New Shares and 6,442,709 New Options totalling
$386,563 as part of the Offer and Shortfall Placement. The Shortfall Placement component to Directors comprising
$237,500 will be subject to shareholder approval.
No other matter or circumstance has arisen since the reporting date that has significantly affected or may significantly
affect the consolidated entity’s operations, the results of those operations or the consolidated entity’s state of affairs in
future financial years.
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2018 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 22: COMPANY DETAILS
The registered office and principal place of business of the Group is:
Silver Mines Limited
Level 11
52 Phillip Street,
Sydney NSW 2000
Australia
Tel: +61 2 8316 3997
Fax: +61 2 8316 3999
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2018 Annual Report
DIRECTORS’ DECLARATION
The directors declare that:
1
The financial statements and notes, as set out on pages 27 to 48 are in accordance with the Corporations Act 2001
and:
(a) comply with Accounting Standards and the Corporations Regulations 2001;
(b) give a true and fair view of the financial position as at 30th June 2018 and of the performance for the year
ended on that date of the Group and economic entity; and
(c) comply with International Financial Reporting Standards as issued by the International Accounting Standard
Board as described in note 1 to the financial statements;
2
The Managing Director and the Company Secretary, who perform the functions of Chief Executive Officer and Chief
Financial Officer respectively, have each declared that:
(a) the financial records of the Group for the financial year have been properly maintained in accordance with
section 286 of the Corporations Act 2001;
(b) the financial statements and notes for the financial year comply with the Accounting Standards; and
(c) the financial statements and notes for the financial year give a true and fair view.
3
In the Directors’ opinion there are reasonable grounds to believe that the Group will be able to pay its debts as and
when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Keith Perrett
Chairman
27th September 2018
Anthony McClure
Managing Director
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Crowe Horwath Sydney
ABN 97 895 683 573
Member Crowe Horwath International
Audit and Assurance Services
Level 15 1 O'Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Fax +61 2 9262 2190
www.crowehorwath.com.au
Independent Auditor’s Report to the Members of Silver Mines Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Silver Mines Limited (the Company and its subsidiaries (the
Group)), which comprises the consolidated statement of financial position as at 30 June 2018, the
consolidated statement of 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 30 June 2018 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.
Crowe Horwath Sydney is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and
independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation. Liability limited other than for the acts or
omissions of financial services licensees.
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Key Audit Matter
How we addressed the Key Audit Matter
Deferred Exploration and Development Expenditure – Note 7
The carrying amount of deferred exploration and
development expenditure was a significant
component of the Group’s total assets at
$47,373,905 at 30 June 2018, representing
three active areas of interest, Bowdens, Webbs
and Conrad, in New South Wales.
As outlined in Note 7 of the financial report, the
application of the Group’s accounting policy in
respect of capitalised (deferred) exploration and
development expenditure required significant
judgment, as follows:
▪ The assessment of areas of interest;
▪ Relating the expenditure to an area of
interest; and
▪ Determining the extent to which expenditure
is expected to be recouped through
successful development of the area.
Furthermore, exploration assets are required to
be tested for impairment when facts and
circumstances suggest that the carrying amount
of exploration and evaluation asset may exceed
its recoverable amount.
This required a high degree of judgement by
directors, particularly in respect of impairment
indicators which included:
▪ The Group’s title to the tenement lapses;
▪ The Group ceasing to explore, or is unable
to fund the minimum capital commitments to
maintain the tenement title; and
▪ Reports indicating the asset will not be
viable because of the impact of changes in
the industry, geography of project,
committed expenditure and tenement expiry
date.
Our procedures included, amongst others:
▪ Reviewing the Group’s accounting policy to
ensure it met the requirements of AASB 6 –
Exploration for and Evaluation of Mineral
Resources.
▪ Evaluating the Group’s processes and
controls in regards the recognition and
deferral of exploration and development
expenditure.
▪ Selecting a sample of exploration and
development expenditure and testing the
allocation of the expenditure to the project
reference and evaluating that the
capitalisation (deferral) of expenditure was
in accordance with the Group’s accounting
policy.
▪ Obtaining the Resource Authority Public
Report to verify the Group’s ownership
interest of each of the tenements to which
the exploration and development
expenditure relates.
We challenged the director’s assumptions that
support the evaluation of impairment indicators
by:
▪ Reviewing the Group’s budgets and drilling
programs and assessing whether they
covered the committed expenditure before
the expiry date.
▪ Ensuring that substantive exploration and
development expenditure was planned and
budgeted for each tenement.
▪ Assessing the Group’s capacity to fund
future committed exploration expenditure.
▪ Obtaining the Resource Authority Public
Report to verify the Group’s ownership
interest for each of the tenements to which
the exploration expenditure relates.
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Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Group will require further
funding in the next twelve months from the date of this report to fund its planned exploration and
development projects and operating costs. These conditions, along with other matters as set forth in
Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability
to continue as a going concern. Our opinion is not modified in respect to this matter.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2018, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and 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 on the other information obtained prior to the date of this
auditor’s report, 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, International Financial
Reporting 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 the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
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As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
▪
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
▪ Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
▪ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
▪ Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
▪ Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
▪ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the group financial report. The
auditor is responsible for the direction, supervision and performance of the group audit. The
auditor remains solely responsible for the audit opinion.
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 the 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 the 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 the auditor’s report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
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Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 20 to 23 of the directors’ report for the
year ended 30 June 2018.
In our opinion, the Remuneration Report of Silver Mines Limited, for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
CROWE HORWATH SYDNEY
LEAH RUSSELL
Senior Partner
Dated at Sydney this 27th day of September 2018
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SILVER MINES LIMITED and its controlled entities
2018 Annual Report
ADDITIONAL SECURITIES EXCHANGE INFORMATION AS AT 27 SEPTEMBER 2018
•
•
At 27th September 2018 the issued capital in the Company was comprised of:
633,084,403 fully paid ordinary shares held by 3,125 holders;
60,141,774 listed options, held by 700 holders, with and exercise price of $0.06 and an expiry date of
6th September 2021;
9,000,000 unlisted options held by 7 holders, with an exercise price of $0.30 and an expiry date of 20th June
2019; and
5,000,000 unlisted options held by one holder, with an exercise price of $0.20 and an expiry date which is three
years from the date of achievement of certain milestones, set out in the Company’s Notice of Annual General
Meeting dated 31th October 2017.
•
•
Each fully paid ordinary share in the Company entitles the holder to one vote at a meeting of shareholders. Options do
not carry voting rights.
At 27th September 2018, the Company has 1,171 shareholders whose holdings are less than a marketable parcel of
shares (total value of A$500, assuming a share price of $0.027).
Substantial shareholders at 27th September 2018
Silver Mines Limited has the following substantial shareholders:
Holder
SENECA SECURITIES PTY LTD
20 Largest Holders of Ordinary Shares and their holdings at 27 September 2018
Position Holder Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
SENECA SECURITIES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
MR ANTHONY MCCLURE
J P MORGAN NOMINEES AUSTRALIA LIMITED
COOLHAND NOMINEES PTY LIMITED
ALDON FINANCE PTY LTD
MR JINHUA GUAN
MS GEORGINA SUSAN KING
GASCOYNE HOLDINGS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
PERTH SELECT SEAFOODS PTY LTD
MR CHRISTOPHER JAMES RANSOM & MR CRAIG LEHMANN
FARROW
L11 CAPITAL PTY LTD
NATIONAL NOMINEES LIMITED
LGL TRUSTEES LIMITED
MR GRANT PALMER
TASMAN BRIDGE FINANCE PTY LTD
MR ERLE EDWINSON
Total Securities of Top 20 Holdings
Shares
%
45,000,000
7.108%
Holding
45,000,000
44,451,292
19,268,336
16,336,848
10,859,375
9,484,242
8,666,667
7,500,000
7,444,005
7,140,625
7,000,000
6,405,115
6,000,000
%
7.108%
7.021%
3.044%
2.581%
1.715%
1.498%
1.369%
1.185%
1.176%
1.128%
1.106%
1.012%
0.948%
5,000,000
5,000,000
4,673,667
4,666,667
4,346,157
3,983,638
3,847,212
0.790%
0.790%
0.738%
0.737%
0.687%
0.629%
0.608%
227,073,846 35.868%
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Distribution of holders and holdings at 27th September 2018
Fully paid ordinary shares:
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
Totals
Holders
183
316
382
1,483
761
3,125
Total Units
41,452
1,155,666
3,063,863
62,522,473
566,300,949
633,084,403
%
0.007
0.183
0.484
9.876
89.451
100.000
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CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement of Silver Mines Limited (the ‘Group’) has been prepared in accordance with the
3rd Edition of the Australian Securities Exchange’s (‘ASX’) Corporate Governance Principles and Recommendations of
the ASX Corporate Governance Council (‘ASX Principles and Recommendations’). The Group is required to disclose
the extent to which it has followed the recommendations during the financial year, including reasons where the Group
has not followed a recommendation and any related alternative governance practice adopted.
Both this Corporate Governance Statement and the ASX Appendix 4G have been lodged with the ASX. This statement
has been approved by the Group’s Board of Directors (‘Board’) and is current as at 27th September 2018.
The following governance related documents can be found on the Group’s website at http://www.silvermines.com.au,
under the section marked ‘About Us’, ‘Corporate Governance’.
Charters:
Board
Audit Committee
Nomination Committee
Remuneration Committee
Policies and Procedures:
Code of Conduct
Continuous Disclosure
Selection and Appointment of New Directors
Trading in Company Securities
Assessing the Independence of Directors
Independent Professional Advice
Selection, Appointment and Rotation of External Auditor
Performance Evaluation of the Board, Board Committees, Individual Directors and Key Executives
Compliance Strategy (summary)
Shareholder Communication Strategy
Risk Management Policy
The ASX Principles and Recommendations and the Group’s response as to how and whether it follows those
recommendations are set out below.
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1 - A listed entity should disclose:
(a) the respective roles and responsibilities of its board and management; and
(b) those matters expressly reserved to the board and those delegated to management.
The Group has established the functions reserved to the Board, and those delegated to senior executives and has set
out these functions in its Board Charter, which is disclosed on the Group website.
The Board is collectively responsible for promoting the success of the Group through its key functions of overseeing the
management of the Group, providing overall corporate governance of the Group, monitoring the financial performance
of the Group, engaging appropriate management commensurate with the Group’s structure and objectives, involvement
in the development of corporate strategy and performance objectives, involvement in the development of corporate
strategy and performance objectives, and reviewing, ratifying and monitoring systems of risk management and internal
control, codes of conduct and legal compliance. Senior executives are responsible for supporting the managing director
and assisting the managing director in implementing the running of the general operations and financial business of the
Group in accordance with the delegated authority of the Board. Senior executives are responsible for reporting all
matters which fall within the Group’s materiality thresholds at first instance to the managing director, or, if the matter
concerns the managing director, directly to the chairman or the lead independent director, as appropriate.
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Recommendation 1.2 - A listed entity should:
(a) undertake appropriate checks before appointing a person, or putting forward to security holders a
candidate for election, as a director; and
(b) provide security holders with all material information in its possession relevant to a decision on whether
or not to elect or re-elect a director.
Before appointing a director, or putting forward to shareholders a director for appointment, the Group undertakes
comprehensive reference checks that cover elements such as the person’s character, experience, employment history
and qualifications. Directors are required to declare each year that they have not been disqualified from holding the
office of director by the Australian Securities and Investments Commission (‘ASIC’).
An election of directors is held each year. A director that has been appointed during the year must stand for election at
the next Annual General Meeting (‘AGM’). Retiring directors are not automatically re-appointed.
The Group has provided in the Director’s Report (in the Annual Report) information about each candidate standing for
election or re-election as a director that the Board considers necessary for shareholders to make a fully informed
decision. Such information includes the person’s biography, which includes experience and qualifications, details of
other directorships, and any material information which may affect the person’s ability to act independently on matters
before the Board, and whether the Board supports the appointment or re-election.
Recommendation 1.3 - A listed entity should have a written agreement with each director and senior executive
setting out the terms of their appointment.
The terms of the appointment of a non-executive director are set out in writing and cover matters such as the term of
appointment, required committee work, notice requirements and other special duties and remuneration entitlements.
Executive directors and senior executives are issued with service contracts which detail the above matters as well as
the circumstances in which their service may be terminated (with or without notice) and any entitlements upon
termination.
Recommendation 1.4 - The company secretary of a listed entity should be accountable directly to the Board,
through the chair, on all matters to do with the proper functioning of the Board.
The Company Secretary reports directly to the Board through the Chairman and is accessible to all Directors. The
Company Secretary’s role, in respect of matters relating to the proper functioning of the Board, includes:
(a) advising the Board and its committees on governance matters;
(b) monitoring compliance of the Board and associated committees with policies and procedures;
(c) coordinating all Board business;
(d) retaining independent professional advisors;
(e) ensuring that the business at Board and committee meetings is accurately minuted; and
(f) assisting with the induction and development of directors.
Recommendation 1.5 - A listed entity should:
(a) have a diversity policy which includes requirements for the board or a relevant committee of the board
to set measurable objectives for achieving gender diversity and to assess annually both the objectives
and the entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and
(c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity
set by the board or a relevant committee of the board in accordance with the entity’s diversity policy
and its progress towards achieving them, and either:
(i) the respective proportions of men and women on the board, in senior executive positions and
across the whole organisation (including how the entity has defined “senior executive” for these
purposes); or
(ii) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most
recent “Gender Equality Indicators”, as defined in and published under that Act.
The Board does not intend to set measurable objectives for achieving gender diversity. It is the Board’s policy that
gender discrimination has no position in the workplace and that men and women must be treated equally and without
any discrimination. It is the Board’s belief that employment should be on a merit-based system and that a diversity policy
may hinder this system due to the size of the organisation.
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The respective proportion of women employees in the whole organisation, women in senior executive positions and
women on the Board as at the date of this statement are set out in the following table:
On the Board
In senior executive positions
Proportion of women
0 out of 4 (0%)
1 out of 2 (50%)
Across the whole organisation
7 out of 20 (35%)
Recommendation 1.6 - A listed entity should:
(a) have and disclose a process for periodically evaluating the performance of the board, its committees
and individual directors; and
(b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the
reporting period in accordance with that process.
The Chairman is responsible for evaluation of the Board and individual directors. The Board has not established any
independent committees.
The Chairman evaluates the performance of the Board and individual directors by way of ongoing review with reference
to the compositions of the Board and its suitability to carry out the Group’s objectives.
During the 2018 Financial Year an evaluation of the Board and the individual directors did not take place as the Company
conducted an in-depth evaluation of the current Board, prior to and upon its appointment at the end of the previous
financial year. The Board intends to carry out a performance evaluation during the coming period. The Group’s process
for performance evaluation is disclosed on the Group’s website.
Recommendation 1.7 - A listed entity should:
(a) have and disclose a process for periodically evaluating the performance of its senior executives; and
(b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the
reporting period in accordance with that process.
The Chairman in consultation with the Board reviews the performance of the senior executives. The current size and
structure of the Group allows the managing director to conduct informal evaluation of the senior executives regularly.
Open and regular communication with senior executives allows the Chairman to ensure that senior executives meet
their responsibilities as outlined in their contracts with the Group, and to provide feedback and guidance, particularly
where any performance issues are evident. Annually, individual performance may be more formally assessed in
conjunction with a remuneration review.
During the 2018 Financial Year, the Group conducted an evaluation of certain senior executives within the Group who
were employed throughout the period. Other senior executives will be evaluated in the coming period upon the
anniversary of their engagement with the Group. The Group’s Process for Performance Evaluation is disclosed on the
Group’s website.
Principle 2: Structure the board to add value.
Recommendation 2.1 - The board of a listed entity should:
(a) have a nomination committee which:
(i).
(ii).
has at least three members, a majority of whom are independent directors; and
is chaired by an independent director,
(b) and disclose:
(i).
(ii).
(iii).
the charter of the committee;
the members of the committee; and
as at the end of each reporting period, the number of times the committee met throughout the
period and the individual attendances of the members at those meetings; or
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(c) if it does not have a nomination committee, disclose that fact and the processes it employs to address
board succession issues and to ensure that the board has the appropriate balance of skills, knowledge,
experience, independence and diversity to enable it to discharge its duties and responsibilities
effectively.
The Board has not established a separate nomination committee. Given the current size and composition of the Board,
the Board believes that there would be no efficiencies gained by establishing a separate nomination committee.
Accordingly, the Board performs the role of the nomination committee.
Items that are usually required to be discussed by a nomination committee are marked as separate agenda items at
Board meetings when required. When the Board convenes as the nomination committee it carries out those functions
which are delegated to it by the Group’s Nomination Committee Charter, which is available on the Group’s website.
The Board deals with any conflicts of interest that may occur when convening as the nomination committee by ensuring
that the Director with the conflicting interests is not party to the relevant discussions.
Recommendation 2.2 - A listed entity should have and disclose a board skills matrix setting out the mix of skills
and diversity that the board currently has or is looking to achieve in its membership.
The Board’s skills matrix which it is looking to achieve in its membership includes technical experience, public company
experience and financial experience. The Board considers that this composition is appropriate for the effective execution
of the Board’s responsibilities and the size and operations of the Group.
Recommendation 2.3 - A listed entity should disclose:
(a) the names of the directors considered by the Board to be independent directors;
(b) if a director has an interest, position, association or relationship of the type described in Box 2.3 of the
ASX Corporate Governance Principles, but the board is of the opinion that it does not compromise the
independence of the director, the nature of the interest, position, association or relationship in question
and an explanation of why the board is of that opinion; and
(c) the length of service of each director.
The Board considers that Peter Langworthy, Keith Perrett and Jonathan Battershill are independent directors. These
directors are independent as they are non-executive directors who are not members of management and who were free
of any business or other relationship that could materially interfere with or could be reasonably perceived to interfere
with, the independent exercise of their judgment.
When considering the independence of a director, the Board considers whether the director:
(a) is a substantial shareholder of the Group or an officer of, or otherwise;
(b) associated directly with, a substantial shareholder of the Group;
(c) is employed, or has previously been employed in an executive capacity by the Group or another group member,
and there has not been a period of at least three years between ceasing such employment and serving on the
Board;
(d) has within the last three years been a principal of a material professional adviser or a material consultant to the
Group or another group member, or an employee materially associated with the service provided;
(e) is a material supplier or customer of the Group or other group member, or an officer of or otherwise associated
directly or indirectly with a material supplier or customer; or
(f) has a material contractual relationship with the Group or another group member other than as a director.
Family ties and cross-directorships may be relevant in considering interests and relationships which may affect
independence, and should be disclosed to the Board.
Details of the Board of directors, their appointment dated, length of service as independence status is as follows:
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Director’s name
Appointment date
Anthony McClure
Keith Perrett
20th June 2016
20th June 2016
Length of service at 28
September (approx.)
2 years 3 months
2 years 3 months
Peter Langworthy
20th June 2016
2 years 3 months
Jonathan Battershill
16th June 2017
1 year 3 months
Independence status
Executive
Independent
Non-Executive
Independent
Non-Executive
Independent
Non-Executive
Where it is determined that a non-executive director should no longer be considered independent, the Group shall make
an announcement to the market.
Recommendation 2.4 - A majority of the board of a listed entity should be independent directors.
As at 30 June 2018, three quarters of the Board is considered independent. The Board considers that the current size
and composition of the Board is appropriate for the execution of the Board’s responsibilities. To assist directors with
independent judgement, it is the Board’s policy (set out on the Group’s website) that if a director considers it necessary
to obtain independent professional advice to properly discharge the responsibility of their office as a director then,
provided the director first obtains approval from the Chairman for incurring such expense, the Group will pay the
reasonable expenses with obtaining such advice.
Recommendation 2.5 - The chair of the board of a listed entity should be an independent director and, in
particular, should not be the same person as the CEO/ managing director of the entity.
Keith Perrett is the Chairman of the Board and is considered an independent director.
Recommendation 2.6 - A listed entity should have a program for inducting new directors and provide
appropriate professional development opportunities for directors to develop and maintain the skills and
knowledge needed to perform their role as directors effectively.
The Board in its capacity as nomination committee has a responsibility to ensure all new directors are provided with an
induction into the Group and that directors have access to ongoing education relevant to their position in the Group.
Principle 3: Act ethically and responsibly
Recommendation 3.1 - A listed entity should:
(a) have a code of conduct for its directors, senior executives and employees; and
(b) disclose that code or a summary of it.
The Group has established a Code of Conduct as to the practices necessary to maintain confidence in the Group’s
integrity, the practices necessary to take into account its legal obligations and the reasonable expectations of its
stakeholders and the responsibility and accountability of individuals for reporting and investigating reports of unethical
practices.
The Code of Conduct is available on the Group’s website.
Principle 4: Safeguard integrity in corporate reporting
Recommendation 4.1 - The board of a listed entity should:
(a) have an audit committee which:
(i) has at least three members, all of whom are non-executive directors and a majority of whom are
independent directors; and
(ii) is chaired by an independent director, who is not the chair of the board,
(b) and disclose:
the charter of the committee;
(i)
(ii) the relevant qualifications and experience of the members of the committee; and
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(iii) in relation to each reporting period, the number of times the committee met throughout the period
and the individual attendances of the members at those meetings; or
(c) if it does not have an audit committee, disclose that fact and the processes it employs that
independently verify and safeguard the integrity of its corporate reporting, including the processes for
the appointment and removal of the external auditor and the rotation of the audit engagement partner.
The Board has not established a separate audit committee and therefore it is not structured in compliance with
recommendation 4.1. Given the current size and composition of the Board, the Board believes there would be no
efficiencies gained by establishing a separate audit committee. The Board performs the role of audit committee. Items
required to be discussed by an audit committee are marked as separate agenda items at Board meetings as required.
When the Board convenes as the audit committee it carries out those functions which are delegated to it in the Group’s
Audit Committee Charter, which is available on the Group’s website.
The Board deals with any conflicts of interest that may occur when convening in the capacity of the audit committee
ensuring that the director with conflicting interests is not party to the relevant discussions.
The Group has adopted an Audit Committee Charter which describes the role, compositions, functions and
responsibilities of the audit committee.
The qualifications of the Board and company secretary are set out on the Group’s website.
Recommendation 4.2 - The board of a listed entity should, before it approves the entity’s financial statements
for a financial period, receive from its CEO/managing director and CFO/company secretary a declaration that,
in their opinion, the financial records of the entity have been properly maintained and that the financial
statements comply with the appropriate accounting standards and give a true and fair view of the financial
position and performance of the entity and that the opinion has been formed on the basis of a sound system of
risk management and internal control which is operating effectively.
For the financial year ending on 30th June 2018, the Board received a statement from its Managing Director and
Company Secretary, who perform the functions of CEO and CFO respectively, declaring that in their opinion, the
financial records of the Group have been properly maintained and comply with the appropriate accounting standards.
Recommendation 4.3 - A listed entity that has an AGM should ensure that its external auditor attends its AGM
and is available to answer questions from security holders relevant to the audit.
The external auditor attends the Group’s AGM and is available to answer questions from security holders relevant to
the audit.
Principle 5: Make timely and balanced disclosure
Recommendation 5.1 - A listed entity should:
(a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules;
and
(b) disclose that policy or a summary of it.
The Group has established written policies and procedures designed to ensure compliance with ASX Listing Rule
disclosure requirements and accountability at a senior executive level for that compliance.
A summary of the Group’s Policy on Continuous Disclosure and Compliance Procedure is disclosed on the Group’s
website.
Principle 6: Respect the rights of security holders
Recommendation 6.1 - A listed entity should provide information about itself and its governance to investors
via its website.
The Group maintains information in relation to governance documents, directors and senior executives, Board and
committee charters, annual reports, ASX announcements and contact details on the Group’s website.
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Recommendations 6.2 and 6.3
A listed entity should design and implement an investor relations program to facilitate effective two-way
communication with investors (6.2).
A listed entity should disclose the policies and processes it has in place to facilitate and encourage
participation at meetings of security holders (6.3).
The Group has designed a communications policy for promoting effective communication with shareholders and
encouraging shareholder participation at general meetings. The policy is disclosed on the Group’s website.
Recommendation 6.4 - A listed entity should give security holders the option to receive communications from,
and send communications to, the entity and its security registry electronically.
The Group’s website allows security holders to receive communications from and send communications to the entity
electronically. Investors may elect to receive email alerts from the Group.
Principle 7: Recognise and manage risk
Recommendations 7.1 and 7.2
The board of a listed entity should:
(a) have a committee or committees to oversee risk, each of which:
(i) has at least three members, a majority of whom are independent directors; and
(ii) is chaired by an independent director,
(b) and disclose:
(i) the charter of the committee;
(ii) the members of the committee; and
(iii) as at the end of each reporting period, the number of times the committee met throughout the
period and the individual attendances of the members at those meetings; or
(c) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the
processes it employs for overseeing the entity’s risk management framework (7.1).
The board or a committee of the board should: (a) review the entity’s risk management framework at least
annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period,
whether such a review has taken place (7.2).
The Board does not have a specific risk management committee. The Board’s audit committee as referred to in
recommendation 4 above assists with monitoring and reviewing the Group’s risk management processes and systems.
The Risk Management Policy, disclosed on the Group website, demonstrates the measures taken and policies
implemented to manage risks associated with the Group’s business.
The Board has recently received a report from management as to the effectiveness of the management of material
business risks.
Recommendation 7.3 - A listed entity should disclose:
(a) if it has an internal audit function, how the function is structured and what role it performs; or
(b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and
continually improving the effectiveness of its risk management and internal control processes.
Given the size and composition of the Group, the Board has not established an internal audit function, other than the
audit committee function which the Board serves as disclosed in recommendation 4 above and in the Audit Committee
Charter disclosed on the website. The Board may from time to time engage an external auditor to conduct additional
reviews of Group processes.
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Recommendation 7.4 - A listed entity should disclose whether it has any material exposure to economic,
environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.
The risk profile of the Group is as follows:
Market-related.
Financial reporting.
Operational.
Environmental.
Economic cycle/marketing.
Legal and compliance.
These risks are managed using the Risk Management Policy disclosed on the Group’s website. Under the policy, the
Board is responsible for updating the Group’s material business risks. In addition, the following risk management
measures have been adopted by the Board to manage the Group’s material business risks:
(a) the Board has established authority limits for management, which, if proposed to be exceeded, requires prior
Board approval;
(b) the Board has adopted a compliance procedure for the purpose of ensuring compliance with the Group’s
continuous disclosure obligations; and
(c) the Board has adopted a corporate governance manual which contains other policies to assist the Group to
establish and maintain its governance practices.
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1 - The board of a listed entity should:
(a) have a remuneration committee which:
(i) has at least three members, a majority of whom are independent directors; and
(ii) is chaired by an independent director,
(b) and disclose:
(i) the charter of the committee;
(ii) the members of the committee; and
(iii) as at the end of each reporting period, the number of times the committee met throughout the
period and the individual attendances of the members at those meetings; or
(c) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting
the level and composition of remuneration for directors and senior executives and ensuring that such
remuneration is appropriate and not excessive.
The Board has not established a separate remuneration committee and accordingly it is not structured in accordance
with recommendation 8.1. Given the current size and composition of the Board, the Board believes that there would be
no efficiencies gained by establishing a separate remuneration committee. Accordingly, the Board performs the role of
the remuneration committee.
Items usually required of a remuneration committee are marked as separate agenda items at Board meetings when
required. When the Board convenes as the remuneration committee, it carries out those functions which are delegated
to it by the Remuneration Committee Charter which is disclosed on the Group’s website. The Board deals with any
conflicts of interest that may occur when convening in the capacity of the remuneration committee by ensuring that the
director with conflicting interests is not party to the relevant discussions.
The full Board in its capacity as remuneration committee did not meet during the 2018 financial year however,
remuneration related discussions were held by the Board from time to time as required.
Recommendation 8.2 - A listed entity should separately disclose its policies and practices regarding the
remuneration of non-executive directors and the remuneration of executive directors and other senior
executives.
Details of remuneration are set out in the remuneration report which forms part of the directors report (in the Annual
Report) and is set out in the Remuneration Charter on the Group’s website. The policy on remuneration clearly
distinguishes the structure of non-executive director’s remuneration from that of executive directors. Executive directors
are offered a competitive level of base pay at market rates and are reviewed annually to ensure market competitiveness.
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There are no termination or retirement benefits for non-executive directors.
The Group’s Remuneration Committee Charter includes a statement of the Group’s policy on prohibiting transactions in
associated products which limits the risk of participating in unvested entitlements under any equity based remuneration
schemes.
Recommendation 8.3 - A listed entity which has an equity-based remuneration scheme should:
(a) have a policy on whether participants are permitted to enter into transactions (whether through the use
of derivatives or otherwise) which limit the economic risk of participating in the scheme; and
(b) disclose that policy or a summary of it.
Not applicable. The Group does not have an equity-based remuneration scheme.
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