Silver Mines Limited
ABN 45 107 452 942
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www.silvermines.com.au
2021
ANNUAL REPORT
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
CONTENTS
CORPORATE DIRECTORY ............................................................................................................................................. 3
REVIEW OF OPERATIONS ............................................................................................................................................. 4
INFORMATION ON BOARD ........................................................................................................................................... 18
REMUNERATION REPORT ........................................................................................................................................... 19
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 ........................................................................................................................................ 58
INDEPENDENT AUDITOR’S REPORT .......................................................................................................................... 59
ADDITIONAL SECURITIES EXCHANGE INFORMATION AS AT 22 SEPTEMBER 2021 ........................................... 64
CORPORATE GOVERNANCE STATEMENT ................................................................................................................ 66
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2021 Annual Report
CORPORATE DIRECTORY
Directors
Keith Perrett – Non-Executive Chairman
Anthony McClure – Managing 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
Automic Pty Ltd
Level 5, 126 Phillip Street
Sydney NSW 2000
Australia
Tel: +61 2 8072 1400
E-mail: hello@automic.com.au
Auditors
Crowe Sydney
Level 15
1 O’Connell Street
Sydney NSW 2000
Tel: +61 2 9262 2155
Fax: +61 2 9262 2190
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SILVER MINES LIMITED and its controlled entities
2021 Annual Report
REVIEW OF OPERATIONS
During the 2021 Financial Year, Silver Mines Limited (‘Silver Mines’, the ‘Company’ or the ‘Group’) submitted its Mining
Lease Application and other documentation to the New South Wales Department of Planning, Industry and Environment for
the development of the Bowdens Silver Project. The Company also continued with exploration, primarily at the Bowdens Silver
Project.
COVID-19 RESPONSE
During the 2021 Financial Year, the Company continued to carry out measures in response to the impact of the COVID-19
pandemic. The Company’s priorities are to protect the health and safety of staff, contractors and local communities while
maintaining the integrity of the business.
The Company adheres to the directives from Federal and State Government and has put in place comprehensive COVID-19
Policies and Procedures. This has allowed our current operations to continue safely and with minimal interruption.
PROJECTS
During the 2021 Financial 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/silver); and
Tuena Project (gold/silver).
During the 2021 Financial Year, the Webbs and Conrad Projects (silver/polymetallic) located in New South Wales were
divested (see ASX announcement 31st March 2021).
Figure 1. Group Project Locations.
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Bowdens Silver Project
Introduction
During the 2021 Financial Year, the Company focussed on the continued pre-development works and mineral exploration at
the Bowdens Silver Project located near Mudgee in the Central Tablelands Region of New South Wales, Australia. The
Company submitted its Mining Lease Application and other documentation to the New South Wales Department of Planning,
Industry and Environment for the development of the Bowdens Silver Project.
The Project comprises 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. The area also hosts the Company’s
Barabolar Project.
The Group holds 100% of Exploration Licence EL5920 which contains the Bowdens Silver Deposit. In addition, the Company
holds exploration licences EL6354, EL8159, EL8160, EL8168, EL8268, EL8403, EL8405, EL8480 and EL8682. Furthermore,
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 the Mudgee district.
Bowdens Silver Project
Description
The Bowdens Silver Project is the largest known undeveloped silver mineral resource in Australia.
The tenement portfolio is situated on the eastern margin of the Lachlan Orocline/Macquarie Arc. The Project comprises 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). Several intrusions cross-cut Ordovician, Silurian and Permian units.
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SILVER MINES LIMITED and its controlled entities
2021 Annual Report
Figure 3: Silver Mines Limited prospect locations in the Mudgee district.
In March 2021, the Company submitted its Mining Lease Application and other documentation to the New South Wales
Department of Planning, Industry and Environment for the development of the Bowdens Silver Project. The proposed
development comprises an open-cut mine feeding a new processing plant with a conventional milling circuit and differential
flotation to produce two concentrates that will be sold for smelting off site. Plant capacity is designed for 2.0 million tonnes per
annum with a mine life of 16.5 years. Life of mine production is planned to be approximately 66 million ounces of silver,
130,000 tonnes of zinc and 95,000 tonnes of lead.
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 and are
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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2021 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 30th 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)
76
29
23
128
(g/t)
72
59
60
67
Silver
(g/t)
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 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.
4.
5. Variability of summation may occur due to rounding.
The model is a non-linear recoverable-type model incorporating proportional tonnages and grades above cut-off grade 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 ‘Measured’ Mineral Resources after consideration of all mining, metallurgical,
social, environmental, statutory and financial aspects of the Project. The Probable Ore Reserve estimate is based on
‘Indicated’ Mineral Resources after consideration of all mining, metallurgical, social, environmental, statutory and financial
aspects of the Project.
Development and Mining Lease Applications and Environmental Impact Statement
In May 2020, the Company completed and submitted the Bowdens Silver Development Application and associated
Environmental Impact Statement (EIS) to the New South Wales Department of Planning, Industry and Environment (see ASX
announcement 25th May 2020).
In March 2021, the Company announced the submission of its Mining Lease Application (“MLA 601”) (see ASX announcement
24th March 2021).
Summary points of the EIS include:
• Considerable local economic benefits with substantial local job creation;
• Minimal impacts on surface water and groundwater during and after operations;
•
An arrangement to source surplus water from nearby coalfields via a dedicated water pipeline;
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SILVER MINES LIMITED and its controlled entities
2021 Annual Report
• No physical human health risk issues of concern identified;
•
• No significant impacts upon migratory or threatened species and a significant area of land to be conserved in
A progressive rehabilitation plan committed to with rehabilitation occurring throughout the life of the mine;
perpetuity as part of the Project’s biodiversity offset program;
• Relocation of a local road around the mine site resulting in the majority of traffic avoiding the local township of Lue;
•
Aboriginal Cultural Heritage assessment concluded in conjunction with the local Aboriginal communities, with
agreement for ongoing management; and
The potential for amenity-related impacts managed over the life of the mine through a range of management
commitments, monitoring and reporting.
•
The EIS had an eight-week public exhibition which concluded during the September 2020 quarter. At the end of the 2021
Financial Year, the Company submitted its Submissions Report to the New South Wales Department of Planning, Industry
and Environment.
From the exhibition process, the Company received no objections to the Project from any of the Government agencies and
received resounding public support with 79% of all public organisation and general public submissions in favour of the Project.
The full Bowdens Silver EIS can be accessed at the New South Wales Department of Planning, Industry and Environment
website.
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Figure 4: Bowdens Silver Mine Site Layout.
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2021 Annual Report
Bowdens Silver Exploration
Exploration at the Bowdens Silver Project during the 2021 Financial Year focussed on the commencement of a substantial
30,000 metre drilling program to target deeps zones of high-grade silver mineralisation and massive and semi-massive
sulphide zones.
During the 2021 Financial Year, the Company announced ongoing success in its exploration activities that yielded exceptional
high grade silver intercepts (see ASX announcements 27th July 2021, 18th May 2021, 14th May 2021, 19th February 2021, 28th
January 2021, 8th October 2020 & 28th July 2020). Diamond drilling continued to test the potential for underground mining
scenarios at the Bowdens Silver Deposit with a focus on the Northwest High-Grade Zone, the Aegean Zone and the Bundarra
Zone. The Aegean Zone is a high-grade vein system located beneath the bulk-tonnage Ore Reserve in the Main Zone area
of the Bowdens Deposit (refer to Figure 5).
Drilling conducted during the 2021 Financial Year significantly added to the understanding of the context of the Bowdens
Silver Deposit being located at the periphery of a large Caldera and highlighted the potential for analogue deposits as well as
the potential for multiple higher-grade silver zones within and proximal to the Bowdens Silver Project. It is expected that the
drilling program will continue until at least the end of the 2021 calendar year.
Figure 5: Drilling into high-grade silver targets at the Bowdens Silver Project.
The Bowdens Silver mineral system is located within a series of stacked, west-dipping faults which acted as conduits for
mineralising fluids. The faults include the Gully Fault and Eastern Fault. These faults also controlled mineralisation in the
basement Ordovician rocks where the Company recently reported broad zones of base-metal mineralisation.
A number of other recently identified faults that sit close to the interpreted Caldera edge are situated under the post-mineral
Sydney Basin sediments and these will be tested during the current diamond drilling campaign.
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With continued insight from textural analysis, detailed gravity surveying and VTEM reprocessing, the ongoing drilling at the
Northwest High-Grade and Aegean Zones will continue in tandem with targeted diamond drilling of steep feeder veins. This
includes testing eastern extensions to the Northwest Zone that would link to the Aegean Zone. In particular, the Northwest
High-Grade Zone is still considered to represent a feeder conduit for the Bowdens Silver system.
The results of this program are expected to provide the basis for a resource assessment of potential underground mineable
resources.
Subsequent to the end of the 2021 Financial Year, the Company announced it had commissioned a Scoping Study and
associated Mineral Resources assessment for potential underground mining scenarios (see ASX announcement 5th August
2021).
The Scoping Study will consider potential underground mining scenarios beneath the planned open-pit development which is
in the final processes for mine approvals. The Resource Assessment and Scoping Study will not have any effects on the
ongoing approval process for the Bowdens Silver open-pit development currently before the New South Wales Department of
Planning, Industry and Environment.
Barabolar Project
The Barabolar Project is a high-quality exploration project located within the highly prospective Macquarie Arc that hosts world-
class mineral systems such as the Cadia-Ridgeway porphyry copper-gold deposit. Barabolar consists of a nine kilometre long
corridor of copper, silver, lead and zinc soil anomalies with some association with gold in rock chip samples. The rocks of the
project area are Ordovician age (the same as the Cadia-Ridgeway Gold and Copper Mine) and include sedimentary and
volcanic rocks, an extensive skarn (highly-altered limestone) and several porphyritic intrusions. The presence of pyrophyllite
alteration, along with areas of intense silicification and argillic alteration is indicative of high-sulphidation epithermal systems
consistent with signatures for copper-gold porphyry targets at depth. After the discovery and initial definition of the Barabolar
Project, exploration work has expanded the target area.
Figure 6: Prospect locations within the Barabolar Project area.
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SILVER MINES LIMITED and its controlled entities
2021 Annual Report
Due to the COVID-19 pandemic drilling planned at the Barabolar Project has been put on-hold. However, the Barabolar Project
remains a compelling target area with a considerable hydrothermal footprint. The Company is continuing with desktop studies
and the application of its internal R&D technologies in this area as it plans for the recommencement of activities in the 2022
Financial Year.
Tuena Project
The Tuena Gold Project is located 80 kilometres south of the city of Orange in New South Wales (refer to Figure 7).
The Tuena area was the scene of a historic gold rush, with gold extracted from several narrow high-grade gold reefs over a
regional trend with greater than five kilometres of strike length. The Company has completed reconnaissance mapping, rock
sampling and soil geochemistry as well as flown a detailed magnetic survey.
During the 2021 Financial Year, the Company completed a 20 hole 4,000 metre drill program designed to test beneath several
of the historic hard-rock gold workings and associated geochemistry anomalies along an extensive 5.4 kilometre by 1.5-
kilometre shear complex within EL8526. In addition, two targets were identified with both gold and base-metal pathfinder
signatures. Both prospects adjoin historic workings at Lucky Hit and Markham’s Hill respectively and are clearly defined by
soil chemistry with anomalism of silver, bismuth, lead, tellurium and gold. These targets are being tested for bulk-tonnage gold
mineral systems and have a comparable signature and scale to the McPhillamy’s Gold Project located north of the Tuena
Gold Project.
Drilling encountered multiple mineralised structures beneath historic workings comprising quartz and carbonate veining with
or without pyrite (iron sulphide). The Company is planning follow-up drilling.
Regionally, the Company has an expanded tenement footprint surrounding Tuena and has undertaken targeting along the
Godolphin-Copperhania-Lake George fault corridor and intends to conduct further on-ground regional reconnaissance. To the
south of Tuena, for example, there is a cluster of high-grade gold occurrences reported in the Binda area (EL8975, Figure 7)
hosted by Devonian age granites which have had minimal exploration using modern techniques.
.
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SILVER MINES LIMITED and its controlled entities
2021 Annual Report
Figure 7: Map showing the Tuena Gold Project.
Research and Development
At the end of 2021 Financial Year, the Company completed the first stage of its research and development (“R&D”) program
to better map and understand the Permian Volcanics and basement Palaeozoic (Ordovician and Silurian) rocks of the
Company’s exploration licences. These technologies are now being rolled out to the Company’s wider projects and to enable
better targeting for regional exploration as well as on a local scale within the Bowdens Deposit. R&D programs have, over the
past three years, involved collaboration between Silver Mines’ researchers and researchers from the University of Technology
Sydney, the University of New South Wales and Macquarie University. Several industry consultants and data collection
contractors have also assisted in analysing and providing base datasets for the R&D program.
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SILVER MINES LIMITED and its controlled entities
2021 Annual Report
The R&D program involved developing innovative new technology and processes, which have been applied to geological
studies on the Bowdens Silver Deposit, particularly the basement rocks and the search for a porphyry source or feeder
structure. In addition, research has been applied to the Barabolar Project area and elsewhere in the Company’s portfolio
including Tuena. The Company developed new technologies for multivariate geochemical analysis, automated mapping of
geology from geochemistry data and predictive geochemistry modelling using machine learning techniques. These R&D
programs have developed further hypotheses for mineralisation in areas such as basement rocks beneath the main volcanic
host at the Bowdens Silver Deposit, Bowdens northern and north-westerly extensions and several targets in the Barabolar
Corridor including the Cringle prospect area. Much of the Company’s exploration drilling is considered a test of hypotheses
and targets developed under these R&D programs.
During the 2021 Financial Year, the development and testing of the machine learning predictive geochemistry technology and
integration with recently acquired gravity data continued. This work produced an integrated geology, geochemical and
geophysical model of the Bowdens Project. This model is being used for detailed targeting of potential feeder zones and/or
magmatic sources to the Bowdens Silver epithermal mineralisation. The current drill programs at Bowdens are on targets
generated from this work and based on the integration of technologies and data.
The Company is now developing the frames of reference and design for stage two R&D programs to migrate technologies
developed in the past years to the 3D environment.
Webbs and Conrad Silver/Polymetallic Projects
The Webbs Project (EL5674) and Conrad Project (EPL1050, EL5977, ML6040, ML6041 and ML5992) are located in the New
England region of northern New South Wales. Both projects were divested during the 2021 Financial Year (see ASX
announcement 31st March 2021).
Tenement Information as at 30th June 2021
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 8973
EL 8974
EL 8975
Bowdens Silver
NSW
Bowdens Silver
NSW
Bowdens Silver
NSW
Bowdens Silver
NSW
Bowdens Silver
NSW
Bowdens Silver
NSW
Bowdens Silver
NSW
Bowdens Silver
NSW
Bowdens Silver
NSW
Bowdens Silver
NSW
Bowdens Silver
NSW
Tuena
Tuena
Tuena
Tuena
NSW
NSW
NSW
NSW
Silver Mines
Ownership
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
100%
100%
100%
100%
100%
1. Under Joint Venture with Thomson Resources Limited. Silver Mines Limited earning 80%.
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SILVER MINES LIMITED and its controlled entities
2021 Annual Report
CORPORATE
RESULTS AND DIVIDENDS
The profit of the Group for the Financial Year after providing for income tax amounted to $5,359,259 compared to a loss of
$3,748,251 for the previous year.
The Group incurred exploration and development expenditure of $8,402,610 during the year (2020: $5,456,667). The total net
assets of the Group stands at $119,741,453 (2020: $83,623,476) of which investment in exploration expenditure accounts for
$58,363,389 (2020: $56,788,308).
The Group is a mineral exploration and development 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
CAPITAL RAISING
February 2021 Placement
On 15th February 2021, Silver Mines announced that it had successfully completed a capital raising of $30 million (before
costs) to institutional, professional and sophisticated investors (“Placement”). Demand for the Placement was well in
excess of funds raised by the Company.
The Placement was conducted at an issue price of $0.22 per share being a 13.6% discount to the five (5) day volume
weighted average price for fully paid ordinary shares in the Company. The Placement resulted in the issue of 136,363,637
fully paid ordinary shares.
The funds raised in connection with the Placement will be primarily utilised towards the progression of and pre-development
expenses associated with the Company’s flagship Bowdens Silver Project. Funding is also to be made available for the
Company’s activities over the coming 12 months as well as for corporate and general working capital purposes as required.
BOARD CHANGE
On 25th May 2021, Non-Executive Director, Mr Peter Langworthy, resigned from the board. The Company acknowledges
the outstanding contribution that Mr Langworthy has provided to the Company.
SALE OF WEBBS AND CONRAD PROJECTS
On 31st March 2021, Silver Mines completed the sale of the Webbs and Conrad Projects (Sale) to Thomson Resources
Limited (ASX:TMZ) (“Thomson Resources”).
The consideration for the Sale comprised the following:
(a)
(b)
(c)
non-refundable payment of A$800,000 to be paid to Silver Mines comprising $50,000 on the signing of the initial
term sheet and $750,000 on signing of further amended binding agreements;
a payment equivalent to the cash rehabilitation bonds totaling A$269,000;
share consideration of 70,000,000 fully paid ordinary shares and 50 million options in Thomson Resources of
which:
(i)
(ii)
35,000,000 shares have been issued to Silver Mines (Tranche 1);
35,000,000 shares have been issued to Silver Mines which are subject to 6-month voluntary escrow
(Tranche 2);
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SILVER MINES LIMITED and its controlled entities
2021 Annual Report
(iii)
50,000,000 options have been issued to Silver Mines with a vesting date of 6 months from the date of
issue, an exercise price of $0.124 per option and an expiry date of 3 years from the date of issue (TMZ
Options).
Each of Tranche 1, Tranche 2 and TMZ Options were subject to Thomson Resources shareholder approval which was
achieved on 29th March 2021.
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.
COVID-19 RESPONSE
During the 2021 Financial Year, the Company continued to carry out measures in response to the impact of the COVID-19
pandemic. The Company’s priorities are to protect the health and safety of staff, contractors and local communities while
maintaining the integrity of the business.
The Company adheres to the directives from Federal and State Government and has put in place comprehensive COVID-19
Policies and Procedures. This has allowed our current operations to continue safely and with minimal interruption.
WAIVER
On 27th November 2020, shareholders approved at the Annual General Meeting of the Company (Approval) a waiver
granted by ASX Listing Compliance on 28th October 2020 (Waiver). The Waiver relates to the issue of 10,000,000 fully
paid ordinary shares (Deferred Consideration Shares) in the Company to be issued to a Director of the Company in
accordance with the provisions of the share sale and purchase deed dated 3rd May 2016 (Deed), which effectuated the
purchase of the Bowdens Silver Project. In accordance with the Deed the Deferred Consideration Shares are to be issued
upon:
• achievement of the mining lease granted by the NSW Department of Planning, Industry and Environment pursuant to
the Mining Act 1992 (NSW) in connection with the Bowdens Silver Project; or
• a change of control milestone such as a takeover bid pursuant to section 9 of the Corporations Act 2001 (Cth),
(collectively, Milestones)
The Company confirms the Deferred Consideration Shares have not been issued in the 2021 Financial Year. The Deferred
Consideration Shares may only be issued if either of the Milestones are achieved and occur in the period that is 24 months
from the date that Approval is obtained.
The Group has not had any other significant changes in the state of the affairs of the Group during the year.
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
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SILVER MINES LIMITED and its controlled entities
2021 Annual Report
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 from Bowdens Silver and extensions, the Barabolar Project
and the Tuena Gold Project is based on information compiled or reviewed by Dr Darren Holden who is an advisor to the
company. Dr 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). Dr Holden consents to the inclusion in this report of the matters based on the
information in the form and context in which it appears.
17
SILVER MINES LIMITED and its controlled entities
2021 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
Jonathan Battershill
Peter Langworthy
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director (resigned 25 May 2021)
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 is Chairman
of Acumentis Group Limited (ASX:ACU) (director since February 2018).
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 Strickland Metals Limited (since April 2021). He is also a past director of
Bolnisi Gold NL, Nickel Mines Limited, Santana Minerals Limited and European Gas Limited.
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 Peter Langworthy, Non-Executive Director (resigned 25 May 2021)
Mr Langworthy graduated with a Bachelor of Science (Geology) degree from Macquarie University in 1986. His career spands
approximately 35 years in mineral exploration, project development and management both in Australia and internationally. Mr
Langworthy’s industry experience includes senior management roles with Jubilee Mines NL where he led the exploration team
that was responsible for numerous discoveries, PacMin Mining Limited and WMC Resources Limited.
Mr Langworthy was formerly the Executive Chairman and a director of Gateway Mining Limited (resigned 25 May 2021) and
the Non-Executive Chairman and a director of Discovex Resources Limited (resigned 11 March 2021). Mr Langworthy
previously held executive and non-executive directorships with Capricorn Metals Limited, Northern Star Resources Limited,
Talisman Mining Limited, Falcon Minerals Limited and Pioneer Resources Limited.
COMPANY SECRETARY
Mr Trent Franklin, Company Secretary
Mr Franklin holds qualifications in Finance, Financial Planning and Insurance Broking. He has a Bachelor of Science (Geology/
Geophysics) from the University of Sydney, and he is a Graduate of the Australia Institute of Company Directors.
He is currently the Managing Director of Enrizen Financial Group, Chairman of Gateway Mining Limited (since February 2013)
and Director of Strickland Metals Limited (since April 2021). Mr Franklin is formerly a director of the Australian Olympic
Committee Inc and Australian Water Polo Inc. He is also a Fellow of the Australian Institute of Company Directors.
18
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
Meetings of Directors
A McClure
K Perrett
P Langworthy (resigned 25 May
2021)
J Battershill
Meetings eligible to attend
4
4
4
Meetings attended
4
4
4
4
4
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.
19
SILVER MINES LIMITED and its controlled entities
2021 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.
This was 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. In
particular, the Company notes at the commencement of the reporting period the share price at close on 1 July 2020 was
$0.11 and the share price at close on 30 June 2021 was $0.25. 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.
Employee Incentive Plan
Options were issued to executives under the Employee Incentive Plan as outlined in the Company’s Notice of 2018 Annual
General Meeting published to the ASX on 31 October 2018. The options were a new class of options with an exercise price
of $0.10 and an expiry date of 1 August 2021. The options vested on 1 August 2020 and expired 1 August 2021. Each of
the Company’s directors exercised their full suite of options granted under the Employee Incentive Plan immediately after
the reporting period on 1 August 2021 (being the last day to exercise their options).
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 three months in the event of
termination.
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 $10,000 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 2020 Annual General Meeting (AGM).
At the 2020 AGM, 78.92% of the votes received supported the adoption of the remuneration report for the year ended 30 June
2020. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
20
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
Details of remuneration:
Short-term benefits
Cash
salary
and
fees
$
80,000
55,000
60,000
410,959
120,000
725,959
2021
Non-Executive
Directors:
K Perrett
(Chairman)
P Langworthy
J Battershill
Executive
Directors:
A McClure
Other Key
Management
Personnel:
T Franklin1
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
55,000
60,000
- 450,000
- 120,000
- 765,000
1. Fees payable to Mr Franklin are paid to Enrizen Accounting Pty Ltd and encompass Company Secretarial
as well as accounting services to the Group.
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
Cash
salary
and
fees
$
80,000
60,000
60,000
308,219
102,000
610,219
2020
Non-
Executive
Directors:
K Perrett
(Chairman)
P
Langworthy
J Battershill
Executive
Directors:
A McClure
Other Key
Management
Personnel:
T Franklin 2
$
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29,281
-
29,281
-
-
-
-
-
-
-
-
-
-
-
-
37,784
117,784
37,784
37,784
97,784
97,784
-
337,500
22,670
136,022
124,670
775,522
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.
21
SILVER MINES LIMITED and its controlled entities
2021 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 2020
Net change
Net change due to
directors resignation
Balance
30 June 2021
Directors
A McClure
K Perrett
P Langworthy
J Battershill
Specified executives
T Franklin
32,010,417
10,000,000
2,743,410
316,364
875,000
625,000
-
-
-
-
(875,000)
42,010,417
3,059,774
-
625,000
4,974,317
(2,522,498)
2,451,819
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 related parties, is set out below:
Balance
30 June 2020
Net change
Net change due to
directors resignation
Balance
30 June 2021
7,067,711
1,187,500
1,625,000
6,062,500
-
-
-
-
-
7,067,711
(1,187,500)
-
-
-
-
1,625,000
6,062,500
600,000
Specified executives
T Franklin
1,350,000
(750,000)
Other transactions with key management personnel and their related parties
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 $80,000 (2020: $40,000) in relation to corporate advisory,
capital raising and underwriting services; Enrizen Pty Ltd received $635 (2020: $2,250) in relation to insurance services;
Enrizen Lawyers Pty Ltd received $143,242 (2020: $42,407) in relation to legal services; Enrizen Accounting Pty Ltd received
$120,000 (2020:$102,000) in relation to accounting services, and the Company withdrew $400,000 investment in
Redeemable Preference Shares in Enable Investments Pty Ltd, remaining balance receiving a 3% p.a. rate of return. During
the period, the Company earned $69,961 distribution income which was reinvested.
Further to these transactions the Company also employed a family member of a key management person with a total
remuneration package of $136,875 (2020: $120,000).
This concludes the remuneration report, which has been audited.
22
Option holding
Options
Directors
A McClure
P Langworthy
K Perrett
J Battershill
SILVER MINES LIMITED and its controlled entities
2021 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.
Shares under option
Unissued ordinary shares of Silver Mines Limited under option at the date of this report as follows:
Grant date
Expiry date
Exercise price
Number under option
28 November 2017
Total
3 years from milestone
achievement1
$0.20
5,000,000
5,000,000
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.
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
company or of any other body corporate.
23
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
Shares issued on the exercise of options
The following ordinary shares of Silver Mines Limited were issued during the year ended 30 June 2021 on the exercise of
options granted:
Date of shares issued
Exercise price
Number of shares issued
Jul-20
Aug-20
Sep-20
Sep-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Mar-21
Apr-21
May-21
May-21
Jun-21
Jun-21
Total
$0.06
$0.06
$0.06
$0.10
$0.06
$0.06
$0.06
$0.06
$0.06
$0.10
$0.06
$0.06
$0.10
$0.06
$0.10
787,000
10,461,263
2,042,550
3,850,000
64,848
1,240,640
3,681,875
6,093,420
2,820,749
100,000
926,238
2,079,933
525,000
5,392,232
425,000
40,490,748
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the company
or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility
on behalf of the company for all or part of those proceedings.
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.
24
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
EVENTS SUBSEQUENT TO REPORTING DATE
Securities
Subsequent to the reporting date, the following new shares were issued following the exercise of options with an exercise
price of $0.06 per share (SVLOB Options):
•
•
•
•
•
6,807,715 shares issued on 2 July 2021
2,984,604 shares issued on 30 July 2021
3,997,902 shares issued on 11 August 2021
6,856,910 shares issued on 24 August 2021
70,347,830 shares issued on 13 September 2021 (with the balance of SVLOB Options expiring on 6 September 2021).
On 30 July 2021, 3,600,000 new shares were issued following the exercise of options issued under the Employee Incentive
Plan as outlined in the Company’s Notice of 2018 Annual General Meeting published to the ASX on 31 October 2018, with
an exercise price of $0.10 per share.
COVID-19 RESPONSE
Following the Financial Year, the Company continues to carry out measures implemented in response to the impact of the
COVID-19 pandemic.
The Company’s priorities are to protect the health and safety of staff, contractors and local communities while maintaining
the integrity of our business.
The Company continues to adhere to directives from Federal and State Government and has put in place comprehensive
COVID-19 Policies and Procedures. This has allowed our current operations to continue safely and with minimal
interruption.
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.
This report is made in accordance with a resolution of the Directors.
Keith Perrett
Chairman
24 September 2021
Anthony McClure
Managing Director
25
Crowe Sydney
ABN 97 895 683 573
Level 15 1 O’Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Fax +61 2 9262 2190
www.crowe.com.au
24 September 2021
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 year ended 30
June 2021, 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 Sydney
Suwarti Asmono
Partner
Liability limited by a scheme approved under Professional Standards Legislation.
The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of persons who hold an
equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership
is external audit, conducted via the Crowe Australasia external audit division and Unison SMSF Audit. All other professional services offered by
Findex Group Limited are conducted by a privately owned organisation and/or its subsidiaries.
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a
separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe
Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or
partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Sydney, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a
scheme approved under Professional Standards Legislation.
© 2021 Findex (Aust) Pty Ltd
26
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2021
Notes
2021
$
2020
$
3
Revenue
Cost of sales
Gross profit from continuing operations
Other income
Share registry and exchange fees
Auditors remuneration
Marketing expenses
Office expenses
IT and communication expenses
Depreciation expenses
Accounting services fees
Professional and technical advisors expenses
Employee benefits expenses
Travel and accommodation expenses
Share based payment
Farm operations
Fair value for contingent consideration expenses
Other expenses
Profit / (Loss) from continuing operations before
interest and income tax
Interest income
Finance costs
Profit / (Loss) from continuing operations before
income tax
Income tax
Profit / (Loss) from continuing operations after
income tax
Other comprehensive income
199,482
(32,277)
167,205
7,624,799
(205,186)
(58,593)
(131,537)
(43,321)
(15,392)
(273,034)
(120,000)
(462,201)
(846,394)
(10,909)
-
(89,229)
-
(144,138)
115,946
(42,685)
73,261
184,440
(161,030)
(53,529)
(133,596)
(51,877)
(15,863)
(223,805)
(102,000)
(430,381)
(427,245)
(24,407)
(321,164)
(81,291)
(1,899,900)
(117,753)
5,392,070
(3,786,140)
101,821
(134,632)
89,755
(51,866)
5,359,259
(3,748,251)
-
-
5,359,259
(3,748,251)
Total comprehensive income / (loss) (attributable
to owners of the company)
5,359,259
(3,748,251)
Earnings per share (cents per share)
Basic earnings per share
Diluted earnings per share
23
0.49
23
0.45
(0.44)
(0.44)
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the
notes to the financial statements.
27
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Notes
2021
$
2020
$
Current assets
Cash and cash equivalent
Trade and other receivables
Inventory – livestock
Financial assets
Other assets
Total current assets
Non-current assets
Prepayment
Financial assets
Deferred exploration and development expenditures
Intangible assets
Land and buildings
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits provisions
Loans and borrowings
Lease liability
Total current liabilities
Non-Current liabilities
Lease liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
5
6
7
8
8
9
10
11
12
13
14
15
16
16
17
17
31,420,960
248,078
371,041
11,936,593
7,928
43,984,600
220,711
207,867
58,363,389
853,947
17,582,192
4,076,276
81,304,382
12,124,402
291,731
229,683
-
11,037
12,656,853
-
303,367
56,788,308
56,603
15,846,413
4,050,774
77,045,465
125,288,982
89,702,318
1,392,754
306,186
-
59,731
1,758,671
962,753
204,467
1,009,237
53,796
2,230,253
3,788,858
3,788,858
3,848,589
3,848,589
5,547,529
6,078,842
119,741,453
83,623,476
142,477,202
2,418,070
(25,153,819)
109,987,534
4,149,020
(30,513,078)
119,741,453
83,623,476
The consolidated statement of financial position is to be read in conjunction with the notes to the financial
statements.
28
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Ordinary
Shares
$
Share
capital
reserve
$
Share based
payment
reserve
Accumulated
losses
$
Total
$
Balance at 1 July 2019
83,867,293
4,000,000
-
(26,764,827)
61,102,466
Transactions with
owners, in their
capacity as owners
Equity funds received,
issue of shares
Option Issued
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
Balance at 30 June
2020
27,813,957
(1,000,000)
-
-
(1,693,716)
-
-
1,149,020
-
26,120,241
(1,000,000)
1,149,020
-
-
-
-
26,813,957
1,149,020
(1,693,716)
26,269,261
-
-
-
-
-
-
(3,748,251)
(3,748,251)
(3,748,251)
(3,748,251)
109,987,534
3,000,000
1.149.020
(30,513,078)
83,623,476
Balance at 1 July 2020
109,987,534
3,000,000
1,149,020
(30,513,078)
83,623,476
Transactions with
owners, in their
capacity as owners
Equity funds received,
issue of shares
Fair value of options
exercised
Costs of funds raised
Total transactions with
owners, in their capacity
as owners
Comprehensive
income for period
Profit/(Loss) attributable
to owners of the
company
Total comprehensive
income for the period
Balance at 30 June
2021
33,628,226
(1,000,000)
-
730,950
(1,869,508)
-
-
(730,950)
-
32,489,668
(1,000,000)
(730,950)
-
-
-
-
32,628,226
-
(1,869,508)
30,758,718
-
-
-
-
-
-
5,359,259
5,359,259
5,359,259
5,359,259
142,477,202
2,000,000
418,070
(25,153,819) 119,741,453
The consolidated statement of changes in equity is to be read in conjunction with the notes to the financial
statements.
29
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers & employees
Interest received
Finance costs
Grant received
Notes
2021
$
2020
$
277,050
(2,297,259)
101,821
(26,642)
317,004
185,214
(1,783,157)
89,755
(32,468)
89,328
Net cash outflows from operating activities
21
(1,628,026)
(1,451,328)
Cash flows from investing activities
Payments for deferred exploration
R&D Tax Benefit
Payment to acquire intangible
Payment to acquire right of use asset
Payment for property, plant and equipment
Cash Consideration received for disposal of subsidiaries
Proceeds from sale of financial assets
Proceeds from sale of property, plant and equipment
(8,431,306)
-
(797,344)
-
(2,026,290)
969,000
1,128,158
-
(6,147,065)
663,423
(796,603)
(50,000)
(4,770,035)
-
-
19,091
Net cash outflows from investing activities
(9,157,782)
(11,081,189)
Cash flows from financing activities
Proceeds from issues of shares
Option conversion
Repayment of bank borrowing
Payments for capital raising costs
30,000,000
2,959,189
(1,009,237)
(1,867,586)
24,849,815
739,144
-
(1,565,860)
Net cash inflows from financing activities
30,082,366
24,023,099
Net (decrease)/increase in cash and cash equivalent
Cash and cash equivalent at the beginning of the financial year
19,296,558
12,124,402
11,490,582
633,820
Cash and cash equivalent at the end of the financial year
5
31,420,960
12,124,402
The consolidated statement of cash flows is to be read in conjunction with the notes to the financial
statements.
30
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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.
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.
During the year, the Group has successfully completed the capital raisings as disclosed in note 17.
c. Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Silver Mines
Limited as at 30 June 2021 and the results of its subsidiaries for the year 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.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in
ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference
between the consideration transferred and the book value of the share of the non-controlling interest acquired
is recognised directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit
or loss and other comprehensive income, statement of financial position and statement of changes in equity of
the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest
in full, even if that results in a deficit balance.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill,
liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences
recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair
value of any investment retained together with any gain or loss in profit or loss.
31
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (continued)
d. Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had,
or may have, on the Group based on known information. This consideration extends to the nature of the drilling
and exploration activities, corporate activities, staffing and geographic regions in which the Group operates.
Other than as addressed in specific notes, there does not currently appear to be either any significant impact
upon the financial statements or any significant uncertainties with respect to events or conditions which may
impact the Group unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-
19) pandemic.
e. New or amended Accounting Standards and Interpretations adopted.
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting
period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the
financial performance or position of the consolidated entity.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
Conceptual Framework for Financial Reporting (Conceptual Framework)
The consolidated entity has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual
Framework contains new definition and recognition criteria as well as new guidance on measurement that
affects several Accounting Standards, but it has not had a material impact on the consolidated entity’s financial
statements.
f. New Accounting Standards and Interpretations not yet mandatory or early adopted
Any new or amended Accounting Standards or interpretations that are not yet mandatory have not been early
adopted.
g. Operating segments
Operating segments are presented using the 'management approach', where the information presented is on
the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM
is responsible for the allocation of resources to operating segments and assessing their performance.
h. 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.
32
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
Share-based payments
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. The fair value is determined by using
either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the
instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based
payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting
period but may impact profit or loss and equity.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is
estimated to discount future lease payments to measure the present value of the lease liability at the lease
commencement date. Such a rate is based on what the consolidated entity estimates it would have to pay a
third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with
similar terms, security and economic environment.
33
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 2: OPERATING SEGMENTS
Identification of reportable operating segments
The consolidated entity is organised into 2 operating segments, being mining and exploration operations and
agricultural operations. These operating segments are based on the internal reports that are reviewed and used by the
Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance
and in determining the allocation of resources.
Operating segments have been aggregated where the segments have similar economic characteristics in respect of
the nature of the products and services, the product processes, the type or class of customers, the distribution methods
and, if applicable, the nature of the regulatory environment.
(a) Segment performance continuing operations
For the year ended 30 June 2021
Revenue
Government grants
Net gain on derecognition of financial assets at fair
value through profit and loss
Net gain on disposal of subsidiaries
Rental income
Total segment revenue and other income
Inter-segment elimination
Total group revenue and other income
EBITDA
Unallocated expense
Depreciation
Interest income
Finance costs
Profit before income tax
Income tax expense
Profit after income tax expense
Mining and
Exploration
Operations
Agricultural
Operations
Total
$
13,259
100,840
208,158
2,557,699
-
2,879,956
$
186,224
-
-
-
78,948
265,172
$
199,483
100,840
208,158
2,557,699
78,948
3,145,128
-
3,145,128
5,360,398
304,706
5,665,104
(273,034)
101,821
(134,632)
5,359,259
-
5,359,259
34
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 2: OPERATING SEGMENTS (continued)
For the year ended 30 June 2020
Revenue
Government grant
Rental income
Total segment revenue and other income
Inter-segment elimination
Total group revenue and other income
EBITDA
Unallocated expense
Depreciation
Interest income
Finance costs
Loss before income tax
Income tax expense
Loss after income tax expense
(b) Segment assets
As at 30 June 2021
Segment assets
Inter-segment eliminations
Unallocated assets
Cash and cash equivalent
Receivables
Other assets
Financial assets
Right of use assets
Intangible assets
Investment in listed shares
Investment in unlisted options
Land and buildings
Total assets
Mining and
Exploration
Operations
Agricultural
Operations
Total
$
$
$
-
99,160
72,053
171,213
115,946
-
-
115,946
115,946
99,160
72,053
287,159
-
287,159
(3,566,589)
4,254
(3,562,335)
(223,805)
89,755
(51,866)
(3,748,251)
-
(3,748,251)
Mining and
Exploration
Operations
Agricultural
Operations
Total
$
60,769,858
$
1,232,968
$
62,002,826
(2,699,989)
59,302,837
31,420,960
248,078
7,928
207,867
3,728,580
853,947
7,440,000
4,496,593
17,582,192
125,288,982
35
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 2: OPERATING SEGMENTS (continued)
As at 30 June 2020
Segment assets
Inter-segment eliminations
Unallocated assets
Cash and cash equivalent
Trade and other receivables
Other assets
Financial assets
Right of use assets
Intangible assets
Land and buildings
Total assets
(c) Segment liabilities
As at 30 June 2021
Segment liabilities
Inter-segment eliminations
Unallocated liabilities
Employee benefits provisions
Lease liability
Total liabilities
For the year ended 30 June 2020
Segment liabilities
Inter-segment eliminations
Unallocated liabilities
Employee benefits provisions
Lease liability
Total liabilities
Mining and
Exploration
Operations
Agricultural
Operations
Total
$
$
57,017,857
1,056,929
$
58,074,786
(891,046)
57,183,740
12,124,402
291,731
11,037
303,367
3,885,025
56,603
15,846,413
89,702,318
Mining and
Exploration
Operations
$
2,206,431
Agricultural
Operations
Total
$
1,886,312
$
4,092,743
(2,699,989)
1,392,754
Mining and
Exploration
Operations
$
Agricultural
Operations
$
1,585,251
1,277,785
306,186
3,848,589
5,547,529
Total
$
2,863,036
(891,046)
1,971,990
204,467
3,902,385
6,078,842
The information on segment assets and segment liabilities for the year ended 30 June 2020 have been updated
to align with the current year presentation.
36
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 3: OTHER INCOME
Government grants
Fair value movement of financial assets at fair value through profit and
loss
Net gain on derecognition of financial assets at fair value through profit
and loss
Net gain on disposal of subsidiaries (refer note 20)
Gain on sales of property, plant and equipment
Fair value measurement of livestock
Rental income
NOTE 4: INCOME TAX
(a) Reconciliation of income tax expense to prima facie tax payable
Operating loss before income tax
Prima facie income tax benefit/(expense) at 26% (2020: 27.5%) on
operating profit/(loss)
Add tax effect of:
Tax losses and temporary differences not recognised
Non temporary differences
2021
$
100,840
2020
$
99,160
4,506,237
-
208,158
2,557,699
11,877
161,040
78,948
7,624,799
-
-
943
12,284
72,053
184,440
2021
$
2020
$
5,359,259
(3,748,251)
(1,393,407)
(1,030,769)
1,393,407
-
1,030,769
-
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
6,875,367
(6,875,367)
-
6,103,505
(6,103,505)
-
Unused tax losses for which no tax loss has been booked as a deferred
tax asset adjusted for non temporary differences
41,477,184
34,273,921
Potential tax benefit at 26% (2020: 27.5%)
10,784,068
9,425,328
(d) Unrecognised temporary differences
Non-deductible amounts as temporary differences
Accelerated deductions for book compared to tax
Total
836,727
-
11,620,795
602,740
-
10,028,069
Potential effect on future tax expense
11,620,795
10,028,069
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.
37
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 5: CASH AND CASH EQUIVALENTS
Current
Cash and cash equivalent
2021
$
2020
$
31,420,960
12,124,402
Cash and cash equivalents include investment in redeemable preference shares of $1,240,093 (refer to Note
17(b)). This investment matures on 30 September 2021 and can be redeemed earlier in line with withdrawal
schedule.
NOTE 6: TRADE AND OTHER RECEIVABLES
Current
GST
Prepayment
Other receivables
NOTE 7: INVENTORY – LIVESTOCK
Current
Livestock
2021
$
2020
$
164,159
52,683
31,236
248,078
170,091
108,625
13,015
291,731
2021
$
2020
$
371,041
229,683
Livestock is measured at fair value less cost to sell, with any change recognised in the income statement. Costs
to sell include all costs that would be necessary to sell the assets, including freight and direct selling costs.
The fair value of livestock is based on its present location and condition. If an active or other effective market
exists for livestock in its present location and condition, the quoted price in that market is the appropriate basis
for determining the fair value of that asset. Where the Group has access to different markets, then the most
relevant market is used to determine fair value. The relevant market is defined as the market “that access is
available to the entity” to be used at the time the fair value is established.
If an active market does not exist, then one of the following is used in determining fair value in the following
order:
•
the most recent market transaction price, provided that there has not been a significant change in
economic circumstances between the date of that transaction and the end of the reporting period
• market prices, in markets accessible to us, for similar assets with adjustments to reflect differences
•
sector benchmarks
In the event that market determined prices or values are not available for livestock in its present condition, the
present value of the expected net cash flows from the asset discounted at a current market determined rate may
be used in determining fair value.
At the end of each reporting period, the Group measures livestock at fair value. The fair value is determined
through price movements, natural increase and natural death.
The net increments or decrements in the market value of livestock are recognised as either revenue or expense
in the income statement, determined as:
• The difference between the total fair value of livestock recognised at the beginning of the financial year
and the total fair value of livestock recognised as at the reporting date; less
• Costs expected to be incurred in realising the market value (including freight and selling costs).
38
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 8: FINANCIAL ASSETS
Current
Financial assets at fair value through profit or loss
Investment in Listed Shares
Investment in Unlisted Options
-
-
Total 11,936,593 -
7,440,000
4,496,593
2021
$
2020
$
Non-current
Performance guarantee bonds
207,867
303,367
Financial assets are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently
measured at either amortised cost or fair value depending on their classification. Classification is determined
based on both the business model within which such assets are held and the contractual cash flow characteristics
of the financial asset unless an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred
and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are
classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i)
held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a
profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements
are recognised in profit or loss.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss
allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether
the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and
supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month
expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses
that is attributable to a default event that is possible within the next 12 months. Where a financial asset has
become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is
based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured
on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument
discounted at the original effective interest rate.
NOTE 9: DEFERRED EXPLORATION AND DEVELOPMENT EXPENDITURES
Non-current
Exploration expenditures
Costs carried forward in respect of areas of interest in:
Exploration and evaluation phase
Opening balance
Government grants
Disposals through disposal of subsidiaries
Expenditure in the year
Closing balance
39
2021
$
2020
$
56,788,308
(200,000)
(6,627,529)
8,402,610
51,331,641
-
-
5,456,667
58,363,389
56,788,308
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 9: DEFERRED EXPLORATION AND DEVELOPMENT EXPENDITURES (continued)
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.
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.
As part of the purchase consideration of the Bowdens Silver project in 2016, there was a provision of 1% Gross
Revenue Royalty. This has been accounted for as contingent consideration at the acquisition date and had been
assessed at nil. On 29 January 2020, the Group acquired this Royalty for a period, which is the equivalent of
approximately four years of production at the Bowdens Silver Project or approximately 20 million ounces of silver,
with the estimated value of $1,900,000. This reflects the remeasurement of the fair value of the contingent
consideration and has been recognised in profit or loss during the year ended 30 June 2020.
NOTE 10: INTANGIBLE ASSETS
Non-current
Opening balance
Additions
Exercised
Closing balance
2021
$
2020
$
56,603
797,344
-
853,947
1,740,000
796,603
(2,480,000)
56,603
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 $797,344 (June 2020: $796,603) during
the year.
40
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 11: LAND AND BUILDINGS
Non-current
Properties at cost
Accumulated Depreciation
2021
$
18,341,437
(759,245)
17,582,192
2020
$
16,549,501
(703,089)
15,846,412
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 2019
Additions
Depreciation expense
Balance at 30 June 2020
Additions
Depreciation expense
Land
Buildings
$
$
Buildings
improvements
$
Total
$
8,330,121
6,851,193
-
15,181,344
1,791,936
-
217,586
409,100
(13,373)
613,313
-
(16,977)
133,338
-
(81,553)
8,681,045
7,260,293
(94,926)
51,785 15,846,412
1,791,936
(56,156)
-
(39,179)
Balance at 30 June 2021
16,973,250
596,336
12,606 17,582,192
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.
41
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 12: PROPERTY, PLANT AND EQUIPMENT
Plant and equipment - at cost
Less: accumulated depreciation
2021
$
5,075,806
(999,530)
4,076,276
2020
$
4,871,212
(820,438)
4,050,774
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 2019
Adoption of AASB 16
Lease
Additions
Disposals
Depreciation expense
Balance at 30 June
2020
Additions
Disposals
Depreciation expense
Balance at 30 June
2021
Plant &
Mining
Equipment
$
Office &
Camp
Equipment
$
Motor
Vehicles
$
Other
Assets -
Farming
$
Right of
use
Assets
$
Computer
Equipment
Total
$
$
57,643
33,205
166,809
2,882
-
1,065
261,604
-
-
(15,597)
-
-
(25,252)
38,296
(18,148)
(71,530)
3,911,098
-
-
(26,074)
1,445
-
(4,058)
3,911,098
39,741
-
(18,148)
-
(143,521)
(1,065)
42,046
126,200
-
(21,145)
7,953
-
-
(7,711)
115,427
108,994
(34,941)
(28,991)
324 3,885,024
-
-
(156,444)
36,142
-
(461)
- 4,050,774
277,321
(34,941)
(216,878)
5,985
-
(2,126)
147,101
242
160,489
36,005 3,728,580
3,859 4,076,276
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost,
which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or
before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except
where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing
the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are
subject to impairment or adjusted for any remeasurement of lease liabilities.
42
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 12: PROPERTY, PLANT AND EQUIPMENT (continued)
The Group has leasehold arrangement that commenced on 1 May 2020 for 25 years. At the reporting date, the
Group had commenced drilling activities and had ongoing rehabilitation activities carried out as required.
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.
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.
NOTE 13: TRADE AND OTHER PAYABLES
Current
Trade creditors and accruals
2021
$
1,392,754
2020
$
962,753
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 14: EMPLOYEE BENEFITS PROVISIONS
Current
Employee benefits provisions
2021
$
2020
$
306,186
204,467
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.
NOTE 15: LOANS AND BORROWINGS
Current
Bank loan
Assets pledged as security
2021
$
2020
$
-
1,009,237
As at 30 June 2020, the bank loan was secured by the mortgages over the consolidated entity's land with
variable interest rate at 4.06%. The loan was fully repaid during the year.
43
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 16: LEASE LIABILITY
Current
Lease liabilities
Non-current
Lease liabilities
Total
2021
$
2020
$
59,731
59,731
53,796
53,796
3,788,858
3,788,858
3,848,589
3,848,589
3,848,589
3,902,385
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental
borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease
payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees,
exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any
anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are
expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a
rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a
lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss
if the carrying amount of the right-of-use asset is fully written down.
The consolidated statement of profit or loss and other comprehensive income shows the following amounts
relating to leases:
Interest expenses
Depreciation expenses
2021
$
96,954
156,444
253,398
2020
$
16,287
26,074
42,361
The tables below analyse the Group’s lease liabilities into relevant maturity groupings based on their contractual
maturities
Lease liabilities
Less
than 1
year
$
155,273
Between
1 and 2
years
$
159,931
Between
2 and 5
years
$
Over 5
years
$
Total
contractual
cash flows
$
Carrying
amount
$
509,160 4,468,777
5,293,141 3,848,589
44
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 17: CAPITAL AND RESERVES
(a) Movements in ordinary share capital
Date
12-Jul-19
23-Jul-19
1-Aug-19
28-Aug-19
13-Sep19
13-Sep19
20-Dec-19
20-Jan-20
3-Apr-20
21-May-20
27-May-20
4-Jun-20
30-Jun-20
30-Jun-20
Aug-20
Sep-20
Sep-20
Sep-20
Nov-20
Dec-20
Dec-20
Dec-20
Dec-20
Dec-20
Dec-20
Jan-21
Jan-21
Feb-21
Feb-21
Feb-21
Mar-21
Mar-21
Mar-21
Apr-21
May-21
May-21
May-21
Jun-21
Jun-21
Jun-21
Jun-21
30-Jun-21
Details
Issued capital
Capital raising costs
Options conversion
Issued capital
Issued capital
Capital raising costs
Options conversion
Issued capital
Options conversion
Issued capital
Issued capital
Capital raising costs
Options conversion
Number of
shares
55,000,000
10,886,523
3,000,000
100,000,000
636,875
12,000,000
5,550
304,878
129,500,000
787,000
1,010,125,021
Issue
price
$
0.050
0.060
0.050
0.100
0.060
0.100
0.060
0.082
0.100
0.060
2,750,000
(179,349)
653,191
150,000
10,000,000
(704,551)
38,213
1,200,000
333
25,000
12,950,000
(809,816)
47,220
109,987,534
Options conversion
Options conversion
Options conversion
Capital Raising costs
Options conversion
Options conversion
Issued capital
Capital Raising costs
Issued capital
Options conversion
Realisation from share-based
payment reserve
Options conversion
Options conversion
Options conversion
Issued capital
Capital Raising costs
Options conversion
Capital Raising costs
Options conversion
Options conversion
Options conversion
Options conversion
Capital Raising costs
Options conversion
Options conversion
Capital Raising costs
Realisation from share-based
payment reserve
10,461,263
2,042,550
3,850,000
-
64,848
753,640
500,000
-
10,000,000
487,000
0.060
0.060
0.100
-
0.060
0.060
0.100
-
0.100
0.060
-
2,425,211
1,256,664
6,093,420
136,363,637
-
2,820,749
-
100,000
926,238
2,079,933
525,000
-
5,392,232
425,000
-
-
0.060
0.060
0.060
0.220
-
0.060
-
0.100
0.060
0.060
0.100
-
0.060
0.100
-
627,676
122,553
385,000
(3,487)
3,891
45,218
50,000
(9,387)
1,000,000
29,220
160,388
145,513
75,400
365,605
30,000,000
(1,850,868)
169,245
(1,922)
10,000
55,574
124,796
52,500
(1,922)
323,535
42,500
(1,922)
1,196,692,406
570,562
142,477,202
45
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 17: CAPITAL AND RESERVES (continued)
(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 2021 details of Listed and Unlisted Options are as follows:
Details
Number
Exercise
price
Expiry date
Listed options
Unlisted options
Unlisted options
Total
94,477,361
3,600,000
$0.06
$0.10
5,000,000
$0.20
6-Sep-2021
1-Aug-2021
3 years from
milestone
achievement1
103,077,361
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
2021
Number
2020
Number
143,568,109
-
(40,490,748)
-
103,597,057
-
(11,528,948)
51,500,000
103,077,361
143,568,109
46
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 17: 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.
In May 2016, the Company entered into a share sale and purchase deed (“Deed”) which effectuated the purchase
of the Bowdens Silver Project (“Project”) pursuant to which 40,000,000 fully paid ordinary shares in the Company
was to be issued as deferred consideration (“Deferred Consideration Shares”). The Company issued 20,000,000
of the Deferred Consideration Shares to non-related and related parties (following shareholder approval) of the
Company after Silver Mines lodged its Environmental Impact Statement and Development Application
(announced 25 May 2020).
A further 20,000,000 of the Deferred Consideration Shares (“Remaining Deferred Consideration”) will be issued
to non-related and related parties of the Company upon lodgment of a mining lease granted in respect of the
Project in accordance with a waiver granted by the ASX on 28 October 2020 and approved by shareholders of
Silver Mines at the Annual General Meeting of the Company on 27 November 2020. The Remaining Deferred
Consideration is valued at $2,000,000.
Movements in reserves
Balance at the beginning of the financial year
Share capital reserve movement
Share based payment reserve movement
Balance at the end of the financial year
(e) Capital risk management
2021
$
2020
$
4,149,020
(1,000,000)
(730,950)
4,000,000
(1,000,000)
1,149,020
2,418,070
4,149,020
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.
(f) Share based payments
A share option plan has been established by the Group and approved by shareholders at a general meeting,
whereby the consolidated entity may, at the discretion of the Board of Directors, grant options over ordinary shares
in the company to certain key management personnel of the Group. The options are issued for nil consideration
and are granted in accordance with performance guidelines established by the Board of Directors.
For the options granted during the year ended 30 June 2020, the valuation model inputs used to determine the
fair value at the grant date, are as follows:
Grant date
Expiry date
Number of
options
01 August 2019
01 August 2021
23 August 2019
6 September 2021
8,500,000
2,000,000
Share
price at
grant
date
$0.08
$0.10
47
Exercise
price
Expected
volatility
Risk-
free
interest
rate
111.14%
0.59%
Fair
value at
grant
date
$354,104
110.35%
0.59%
$127,856
$0.10
$0.06
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 17: CAPITAL AND RESERVES (continued)
The options valued at the market price at the grant date are as follows:
Grant date
Expiry date
Number of
options
29 January 2020
6 September 2021
12,000,000
Market
price of
options
$0.006
Fair value
at grant
date
$700,000
No options are granted during the year.
NOTE 18: RELATED PARTY TRANSACTIONS
(a) Key Management Personnel
The names and positions held of Group key personnel are:
Key Management Personnel
Keith Perrett
Anthony McClure
Peter Langworthy
Jonathan Battershill
Trent Franklin
Position
Non-Executive Chairman
Managing Director
Non-Executive Director (resigned 25 May 2021)
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
Share based payment
(b) Related party transactions
2021
$
2020
$
725,959
39,041
-
765,000
610,219
29,281
136,022
775,522
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 $80,000 (2020: $40,000) in relation to
corporate advisory, capital raising and underwriting services; Enrizen Pty Ltd received $635 (2020: $2,250) in
relation to insurance services; Enrizen Lawyers Pty Ltd received $107,102 (2020: $42,407) in relation to legal
services; Enrizen Accounting Pty Ltd received $120,000 (2020: $102,000) in relation to accounting services; and
the Company withdrew $400,000 (2020: $Nil) investment in Redeemable Preference Shares in Enable Investments
Pty Ltd. During the period, the Company earned distribution income of $69,960.90 (2020: $70,132.46) which was
reinvested, in relation to the investment in Redeemable Preference Shares.
Further to these transactions the Company also employed a family member of a key management personnel with
a total remuneration package of $136,875 (2020: $120,000).
48
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 18: RELATED PARTY TRANSACTIONS (continued)
(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
Tuena Resources Pty Ltd
Bowdens Agriculture Pty Ltd
Asia Metals Holdings 3 Pty Ltd
Webbs Resources Pty Ltd (until 31 March 2021)
Conrad Resources Pty Ltd (until 31 March 2021)
NOTE 19: 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
2021
$
5,954,147
5,954,147
2020
$
(3,148,634)
(3,148,634)
Parent
2021
$
42,824,274
124,889,113
688,212
688,212
2020
$
11,795,326
85,887,166
298,894
298,894
144,895,271 114,136,554
(28,548,281)
(20,694,370)
85,588,273
124,200,901
NOTE 20: DISPOSAL OF SUBSIDIARIES
In March 2021, the Group has disposal of 100% equity interests in Webbs Resources Pty Ltd and Conrad Resources
Pty Ltd to divest the Webbs and Conrad Projects (silver/polymetallic) located in New South Wales.
The consideration comprised the following:
a) non-refundable payment of A$800,000 paid to the Group comprising $50,000 on the signing of the initial term
sheet and $750,000 on the signing of binding agreements.
b) a payment equivalent to the cash rehabilitation bonds in place at completion and the replacement of any
non-cash rehabilitation bonds totaling $269,000.
c) share consideration of 70 million fully paid ordinary shares and 50 million options in Thomson Resources
Limited of which.
(i)
(ii)
(iii)
35 million shares have been issued to the Group (“Tranche 1”);
35 million shares have been issued to the Group with a 6-month voluntary escrow) (“Tranche
2”);
50 million options issued to the Group with a vesting date 6 months from the date of issue, an
exercise price of $0.124 per option and an expiry date of 3 years from the date of issue (“TMZ
Options”).
49
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 20: DISPOSAL OF SUBSIDIARIES (continued)
Carrying amounts of assets and liabilities disposed
Deferred exploration and development
Other non-current assets
Total assets
Net assets
Details of the disposal
Total sale consideration
Carrying amount of net assets disposed
Disposal costs
Net gain on disposal before income tax
Net gain on disposal after income tax
2021
$
6,627,529
109,681
6,737,210
6,737,210
2021
$
9,319,356
(6,737,210)
(24,447)
2,557,699
2,557,699
NOTE 21: RECONCILIATION OF OPERATING PROFIT/(LOSS) AFTER INCOME TAX TO NET CASH FLOWS
FROM OPERATING ACTIVITIES
Operating profit/(loss) after income tax
Depreciation
Employee provisions
Fair value for contingent consideration expenses
Fair value measurement of livestock
Borrowing cost amortisation
Interest expense on AASB 16 lease accounting
Gain on sales of non-current assets
Fair value movement of financial assets at fair value through profit and loss
Net gain on disposal of subsidiaries
Net gain on derecognition of financial assets at fair value through profit and
loss
Share based payment
Movements in working capital:
(Increase)/decrease in receivables and prepayments
(Increase)/decrease in inventory
Increase/(decrease) in payables and provision
2021
$
5,359,259
273,034
101,719
-
(161,040)
3,111
96,954
(11,877)
(4,506,237)
(2,557,699)
2020
$
(3,748,251)
223,805
(27,039)
1,899,900
12,284
11,037
-
-
-
-
(208,158)
-
(1,610,934)
-
321,164
(1,307,100)
(110,878)
19,682
74,104
(94,565)
(45,243)
(4,420)
Net cash outflows from operating activities
(1,628,026)
(1,451,328)
50
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 22: FINANCIAL INSTRUMENT DISCLOSURES
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 effects 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
Limited.
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 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.
The Group’s investment in listed shares and unlisted options that listed on the ASX are exposed to price risk. The
sensitivity analysis of the Group’s exposure to price risk is as follows:
Consolidated - 2021
Financial assets at fair value through
profit or loss
- Investment in listed shares
- Investment in unlisted options
Average price increase
Average price decrease
%
change
Effect on
profit
Effect on
net assets
%
change
Effect on
profit
Effect on net
assets
10%
10%
744,000
449,659
744,000
449,659
8%
8%
595,200
359,727
595,200
359,727
(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’s 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 the fund is re-invested at the best rate.
51
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 22: FINANCIAL INSTRUMENT DISCLOSURES (continued)
(iii) Cash flow and fair value interest rate risk (continued)
2021
FINANCIAL ASSETS
Cash assets
Performance guarantee bonds
Financial assets at fair value
through Profit and Loss
Other financial assets
FINANCIAL LIABILITIES
Payables (current)
Lease liabilities
NET FINANCIAL
ASSETS/(LIABILITIES)
2020
FINANCIAL ASSETS
Cash assets
Performance guarantee bonds
Other financial assets
FINANCIAL LIABILITIES
Payables (current)
Borrowings (current)
Lease liabilities
NET FINANCIAL
ASSETS/(LIABILITIES)
Floating
interest
rate
$
Fixed interest rate
maturing
Within
1 year
$
Over 1
year
$
Non-
interest
bearing
Total
$
$
31,420,960
-
-
-
31,420,960
-
-
-
-
-
-
-
-
-
-
-
207,867
31,420,960
207,867
11,936,593
248,078
11,936,593
248,078
12,392,538 43,813,498
-
-
-
(59,731)
(59,731)
-
(3,788,858)
(3,788,858)
(1,392,754)
-
(1,392,754)
(1,392,754)
(3,848,589)
(5,241,343)
31,420,960
(59,731)
(3,788,858)
10,999,784
38,572,155
Floating
interest
rate
Fixed interest rate
maturing
Non-
interest
bearing
Total
Within 1
year
$
Over 1
year
$
$
$
$
12,124,402
-
-
12,124,402
-
-
-
-
-
-
-
-
- 12,124,402
303,367
303,367
291,731
291,731
595,098 12,719,500
-
(1,009,237)
-
(1,009,237)
-
-
(53,796)
(53,796)
-
-
(3,848,589)
(3,848,589)
(962,753)
-
-
(962,753)
(962,753)
(1,009,237)
(3,902,385)
(5,874,375)
11,115,165
(53,796)
(3,848,589)
(367,655)
6,845,125
52
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 22: FINANCIAL INSTRUMENT DISCLOSURES (continued)
(b) 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, including cash and cash equivalents in note 4.
(c) 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.
(d) 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.
Except for the investment in listed shares, no other 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.
(e) 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.
(f) Fair value hierarchy
The following tables detail the group's assets and liabilities, measured or disclosed at fair value, using a three-level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly
• Level 3: Unobservable inputs for the asset or liability
53
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 22: FINANCIAL INSTRUMENT DISCLOSURES (continued)
Level 1
$
Level 2
$
Level 3
$
Total
$
Consolidated - 2021
Assets
Financial assets at fair value through profit or loss
- Investment in listed shares
- Investment in unlisted options
Performance guarantee bonds
Total assets
Consolidated - 2020
Assets
Financial assets at fair value through profit or loss
- Investment in listed shares
- Investment in unlisted options
Performance guarantee bonds
Total assets
-
-
-
-
-
-
-
-
7,440,000
4,496,593
207,867
12,144,460
-
-
303,367
303,367
7,440,000
-
- 4,496,593
-
7,647,867 4,496,593
207,867
-
-
303,367
303,367
-
-
-
-
54
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 23: EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
2021
Cents
2020
Cents
0.49
0.45
(0.44)
(0.44)
Number
Number
Basic 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 earnings per share
1,083,678,215 856,100,176
Diluted earnings per share
Weighted average number of shares used as the denominator
Weighted average number of shares used in calculating basic earnings per
share
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Contingent issuable shares
1,083,678,215
856,100,176
86,351,221
24,410,959
-
-
Weighted average number of ordinary shares used in calculating diluted
earnings per share
1,194,440,395
856,100,176
2021
$
2020
$
Reconciliation of earnings used in calculating basic and diluted
earnings per share
Earnings used in calculating basic and diluted earnings per share
5,359,259
(3,748,251)
NOTE 24: REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by Crowe Sydney,
the auditor of the company:
Audit services - Crowe Sydney
Audit or review of the financial statements
2021
$
2020
$
58,593
53,529
55
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 25: COMMITMENTS
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Intangible assets
Option Purchase
Land Purchase
2021
$
2020
$
12,460,000
1,917,000
6,927,500
-
Tenement minimum spend for a year
2,843,376
3,204,376
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 paid will be written off through the Profit and Loss statement.
Less than 1 year
Between 1
and 2 years
Between 2
and 5 years
Over
5
years
$
Total
contractual
cash flows
$
Carrying
amount
$
Capital Commitment
$
3,607,000
$
$
5,770,000
5,000,000
0
14,377,000 14,377,000
To maintain the right to a tenement the Group is committed to a minimum spend on the tenement in a 12-month
period
NOTE 26: EVENTS SUBSEQUENT TO REPORTING DATE
Securities
Subsequent to the reporting date, the following new shares were issued following the exercise of options with an exercise
price of $0.06 per share:
•
•
•
•
•
6,807,715 shares issued on 2 July 2021
2,984,604 shares issued on 30 July 2021
3,997,902 shares issued on 11 August 2021
6,856,910 shares issued on 24 August 2021
70,347,830 shares issued on 13 September 2021 (with the balance of SVLOB Options expiring on 6 September
2021)
On 30 July 2021, 3,600,000 new shares were issued following the exercise of options issued under the Employee
Incentive Plan as outlined in the Company’s Notice of 2018 Annual General Meeting published to the ASX on 31 October
2018, with an exercise price of $0.10 per share.
56
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 26: EVENTS SUBSEQUENT TO REPORTING DATE (continued)
COVID-19 Response
Following the Financial Year, the Company continues to carry out measures implemented in response to the impact
of the COVID-19 pandemic.
The Company’s priorities are to protect the health and safety of staff, contractors and local communities, while
maintaining the integrity of our business.
The Company continues to adhere to directives from Federal and State Government and has put in place
comprehensive COVID-19 Policies and Procedures. This has allowed our current operations to continue safely and
with minimal interruption.
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.
NOTE 26: 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
61 2 8316 3997
61 2 8316 3999
57
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
DIRECTORS’ DECLARATION
The directors declare that:
1
The financial statements and notes, as set out on pages 27 to 57 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 2021 and of the performance for the year
ended on that date of the Group; 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 Company 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
24 September 2021
Anthony McClure
Managing Director
58
Crowe Sydney
ABN 97 895 683 573
Level 15 1 O’Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Fax +61 2 9262 2190
www.crowe.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 2021, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
performance for the year then ended;
(b) and 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.
Liability limited by a scheme approved under Professional Standards Legislation.
The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of persons who hold an
equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership
is external audit, conducted via the Crowe Australasia external audit division and Unison SMSF Audit. All other professional services offered by
Findex Group Limited are conducted by a privately owned organisation and/or its subsidiaries.
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a
separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe
Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or
partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Sydney, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a
scheme approved under Professional Standards Legislation.
© 2021 Findex (Aust) Pty Ltd
59
Independent Auditor’s Report
Silver Mines Limited
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Key Audit Matter
How we addressed the Key Audit Matter
Recognition of Deferred Exploration and Development Expenditure – Note 9
The carrying amount of deferred exploration and
development expenditure was a significant
component of the Group’s total assets at $58,363,389
at 30 June 2021.
As outlined in Note 8 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:
•
• Relating the expenditure to an area of interest;
The assessment of areas of interest;
and
• Determining the extent to which expenditure is
expected to be recouped through successful
development of the area.
Our procedures included, amongst others:
• Assessed the Group’s accounting policy in
conjunction with the requirements of AASB 6 –
Exploration for and Evaluation of Mineral
Resources.
• Evaluated the Group’s processes and controls in
relation to the recognition and deferral of
exploration and development expenditure.
• Selected a sample of deferred exploration and
development expenditure, tested the allocation of
the expenditure to the project referenced, and
checked that the capitalisation (deferral) of
expenditure was in accordance with the Group’s
accounting policy.
• Checked the Group’s ownership interest of each
of the tenements to which the deferred
exploration and development expenditure relates.
Consideration of Impairment for Deferred Exploration and Development Expenditure - Note 9
Furthermore, exploration assets are required to be
tested for impairment when facts and circumstances
suggest that the carrying amount of deferred
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.
We challenged the directors’ assumptions that
supported the evaluation of impairment indicators
and:
• Obtained the Group’s budgets and drilling
programs and checked whether they covered the
committed expenditure before the expiry date.
• Checked that substantive deferred exploration
and development expenditure was planned and
budgeted for each tenement.
• Assessed the Group’s capacity to fund future
committed exploration expenditure.
• Checked the Group’s ownership interest for each
of the tenements to which the deferred
exploration expenditure relates.
© 2021 Findex (Aust) Pty Ltd
www.crowe.com.au
60
Independent Auditor’s Report
Silver Mines Limited
Key Audit Matter
How we addressed the Key Audit Matter
Disposal of 100% share ownerships in subsidiaries – Note 20
The divestment of 100% shares in two subsidiaries
that held the Webbs and Conrad projects was a
significant transaction that resulted in material
balances which included:
• Recognition of net gain on disposal of
$2,557,699;
• Recognition of financial assets of $8,350,350 at
the transaction price; and
Our procedures included, amongst others:
• Read the Share Sale and Purchase Agreements
and company announcements on the Australian
Securities Exchange by the buyer and the
Company to obtain an understanding of the terms
and conditions;
• Checked the date of completion of the
• Derecognition of deferred exploration and
transactions;
development expenditure assets of $6,627,529.
• Checked the directors’ carrying value calculation
of assets disposed of;
• Checked the receipt of cash proceeds to bank
statements and the receipt of shares and options
proceeds to share registry statements;
• Checked the directors’ fair value calculation of
the shares and options received and the
calculation of net gain on disposal.
The transactions required the directors’ careful
analysis and determination of the correct accounting
procedure for the various aspects of the transactions
which included:
•
The completion date of the transaction and the
date of loss of control of Webbs and Conrad;
The carrying amount of Webbs and Conrad at the
date of disposal;
The amount of the sale consideration
received/receivable;
The fair value at transaction date of the shares
and options received as part of the proceeds.
•
•
•
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 2021 but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
© 2021 Findex (Aust) Pty Ltd
www.crowe.com.au
61
Independent Auditor’s Report
Silver Mines Limited
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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional skepticism 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.
© 2021 Findex (Aust) Pty Ltd
www.crowe.com.au
62
Independent Auditor’s Report
Silver Mines Limited
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the remuneration report included in pages 19 to 25 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the remuneration report of Silver Mines Limited, for the year ended 30 June 2021,
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 Sydney
Suwarti Asmono
Partner
24 September 2021
Sydney
© 2021 Findex (Aust) Pty Ltd
www.crowe.com.au
63
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
ADDITIONAL SECURITIES EXCHANGE INFORMATION AS AT 22 SEPTEMBER 2021
At 22 September 2021 the issued capital in the Company was comprised of:
• 1,291,287,367 fully paid ordinary shares held by 11,890 holders;
• 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 22 September 2021, the Company has 2,744 shareholders whose holdings are less than a marketable parcel of
shares (total value of A$500, assuming a share price of $0.10).
Substantial shareholders at 22 September 2021
Silver Mines Limited has the following substantial shareholders:
Holder
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
Shares
%
164,333,070
12.73%
20 Largest Holders of Ordinary Shares and their holdings at 22 September 2021
Position Holder Name
1
2
3
4
5
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
MR ANTHONY MCCLURE
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
L11 CAPITAL PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MCCLURE FAMILY SUPER PTY LTD
NATIONAL NOMINEES LIMITED
ALDON FINANCE PTY LTD
MRS GEORGINA SUSAN KING
MR PHILLIP RICHARD PERRY
COOLHAND NOMINEES PTY LIMITED
MURANA PTY LTD
MR JINHUA GUAN
SQUIRRELLY PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HARDER DEVELOPMENTS PTY LTD
MR GREGORY DONALD RANSOM
Total
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Holding
%
164,333,070
36,039,786
26,445,313
25,738,771
24,588,894
12.73%
2.79%
2.05%
1.99%
1.90%
13,395,065
1.04%
12,000,000
0.93%
11,639,665
10,000,001
9,768,050
8,500,000
7,854,688
7,772,001
7,266,667
0.90%
0.77%
0.76%
0.66%
0.61%
0.60%
0.56%
6,993,201
0.54%
6,825,200
6,390,903
6,330,350
6,053,988
6,000,000
0.53%
0.49%
0.49%
0.47%
0.46%
380,105,375
31.13%
64
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
Distribution of holders and holdings at 22 September 2021
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
301
2,792
1,866
5,260
1,671
11,890
Total Units
60,093
8,974,057
15,287,371
202,200,162
1,064,749,606
1,291,271,289
%
0.00%
0.70%
1.18%
15.66%
82.46%
100.00%
Unquoted Equity Securities Holdings as at 22 September 2021
Position
1
Holder Name
JJB ADVISORY LIMITED
Class
Unlisted Options, exercise price $0.20
and expiry dates various
Holding
5,000,000
%
100%
65
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement of Silver Mines Limited (the ‘Group’) has been prepared in accordance with the
4th 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 24 September 2021.
The following governance related documents can be found on the Group’s website at http://www.silvermines.com.au,
under the section marked ‘About’, ‘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
Whistleblower 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 have and disclose a board charter setting out:
(a)
(b)
the respective roles and responsibilities of its board and management; and
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’s 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.
66
SILVER MINES LIMITED and its controlled entities
2021 Annual Report
Recommendation 1.2 - A listed entity should:
(a)
(b)
undertake appropriate checks before appointing a director or senior executive or putting someone
forward for election, as a director; and
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.
The Board at this stage has no intention of appointing a director in place of former director Mr Peter Langworthy who
resigned on 25 May 2021. Should the Board reconsider its decision the Board will employ and following the
recommendations above including its Nomination Committee Charter.
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)
(b)
(c)
(d)
(e)
(f)
advising the Board and its committees on governance matters;
monitoring compliance of the Board and associated committees with policies and procedures;
coordinating all Board business;
retaining independent professional advisors;
ensuring that the business at Board and committee meetings is accurately minuted; and
assisting with the induction and development of directors.
Recommendation 1.5 - A listed entity should:
(a)
(b)
(c)
have and disclose diversity policy;
through its board or a committee of the board set measurable objectives for achieving gender diversity
in the composition of its board, senior executives and workforce generally;
disclose in relation to each reporting period:
(i).
(ii).
(iii).
the measuring objectives set for that period to achieve gender diversity;
the entity's progress towards achieving those objectives; and
either:
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(A) the respective proportions of men and women on the board, in senior executive positions and across
the whole workforce (including how the entity has defined “senior executive” for these purposes); or
(B) 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.
If the entity was in the S&P/ASX 300 Index at the commencement of the reporting period, the
measurable objective for achieving gender diversity in the composition of its board should be to have
not less than 30% of its directors of each gender within a specified period.
Historically, the Board has not 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.
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:
Description
On the Board
In senior executive positions
Proportion of women
0 out of 3 (0%)
1 out of 2 (50%)
Across the whole organisation
6 out of 21 (28.57%)
On 22 March 2021, the Company was admitted to the S&P 300 Index. Silver Mines acknowledges the recommendation
that measurable objectives should be set to achieve gender diversity in the composition of a board if such an entity was
in the S&P/ASX 300, which should not be less than 30% of its directors. Silver Mines was not admitted to the S&PASX
300 Index at the commencement of the reporting period. Nonetheless, Silver Mines notes the recommendation and will
consider same in the context of the size and composition of the Board.
Recommendation 1.6 - A listed entity should:
(a)
(b)
have and disclose a process for periodically evaluating the performance of the board, its committees
and individual directors; and
disclose for each reporting period, whether a performance evaluation has been undertaken in
accordance with that process during or in respect of that period.
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.
Recommendation 1.7 - A listed entity should:
(a)
(b)
have and disclose a process for periodically evaluating the performance of its senior executives at least
once every reporting period; and
disclose for each reporting period, whether a performance evaluation has been undertaken in
accordance with that process during or in respect of that period.
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 evaluations 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.
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During the 2021 Financial Year, the Group, considered the composition of senior executives within the were employed
throughout the period in light of Mr Peter Langworthy’s resignation in May 2021. The Group’s Process for Performance
Evaluation is disclosed on the Group’s website.
Principle 2: Structure the board to be effective and add value.
Recommendation 2.1 - The board of a listed entity should:
(b)
have a nomination committee which:
(c)
(d)
(i).
(ii).
and disclose:
has at least three members, a majority of whom are independent directors; and
is chaired by an independent director,
(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
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 other than as set out in accordance with the charter
published on its website. 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
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.
During the 2021 Financial Year, the Group, considered the composition of the Board in light of Mr Peter Langworthy’s
resignation in May 2021. The Board determined that notwithstanding Mr Langworthy’s departure the relevant expertise
was met from a Board perspective and should further technical advice be required the Board would seek to appoint a
Board member with such experience.
Recommendation 2.3 - A listed entity should disclose:
(a)
(b)
(c)
the names of the directors considered by the Board to be independent directors;
if a director has an interest, position or relationship of the type described in Box 2.3 but the board is of
the opinion that it does not compromise the independence of the director, the nature of the interest,
position or relationship in question and an explanation of why the board is of that opinion; and
the length of service of each director.
The Board considers that 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:
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(a)
(b)
(c)
(d)
(e)
(f)
is a substantial shareholder of the Group or an officer of, or otherwise;
associated directly with, a substantial shareholder of the Group;
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;
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;
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
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:
Director’s name
Appointment date
Anthony McClure
Keith Perrett
20th June 2016
20th June 2016
Length of service at 28
September (approx.)
5 years 3 months
5 years 3 months
Jonathan Battershill
16th June 2017
4 year 3 months
Independence status
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 2021, two thirds of the Board are 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 for periodically
reviewing whether there is a need for existing directors to undertake professional development opportunities
to 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.
Given the current size and composition of the Board, the Board members are expected to advise the Group when further
professional development is required, however, the Board considers the current skill matrix of the Board is sufficient for
the Group’s purposes as at the date of this annual report.
Principle 3: Instil a culture of acting lawfully, ethically and responsibly
Recommendation 3.1 - A listed entity should articulate and disclose its values
The Group is committed to providing shareholders with exceptional returns via the acquisition, exploration and
development of silver and other metals.
The Group’s core values include:
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SILVER MINES LIMITED and its controlled entities
2021 Annual Report
•
Integrity and Accountability
• Excellence in Performance
• Safety
• Collaboration
• Community
The Group is committed to working by its core values.
Recommendation 3.2 - A listed entity should:
(a)
(b)
have and disclose a code of conduct for its directors, senior executives and employees; and
ensure that the board or a committee of the board disclose is informed of any material breaches to that
code.
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. It is a requirement under the Code of Conduct that the board
be informed of any material incident reported under that policy, as soon as practicable following such a report.
Recommendation 3.3 - A listed entity should:
(a)
(b)
have and disclose a whistleblower policy; and
ensure that the board or a committee is informed of any material incidents reported under that policy.
The Group has a whistleblower policy. The whistleblower policy is to ensure the Group is living up to its values and
meets legislated requirements. This policy is available on the Group’s website.
The Board is informed of any material incident reported under that policy, in accordance with the policy, as soon as
practicable following such a report.
Recommendation 3.4 - A listed entity should:
(a)
(b)
have and disclose an anti-bribery and corruption policy; and
ensure that the board or a committee of the board disclose is informed of any material breaches to that
policy.
The Group has established an anti-bribery and corruption policy as a part of its Code of Conduct. The Code of Conduct
is available on the Group’s website.
Principle 4: Safeguard the integrity in corporate reporting
Recommendation 4.1 - The board of a listed entity should:
(a)
(b)
(c)
(ii).
and disclose:
(i).
(ii).
(iii).
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
is chaired by an independent director, who is not the chair of the board,
the charter of the committee;
the relevant qualifications and experience of the members of the committee; and
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
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.
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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 and corporate reporting issues 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
(if applicable). Such matters are treated as a board minuted item and appropriately recorded and considered.
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 or set out on page 18 of
this report.
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 30 June 2021, 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 should disclose its process to verify the integrity of any periodic corporate
report it releases to the market that is not audited or reviewed by an external auditor.
The Group engages an external accounting firm to maintain its financial records and assist with the collation of periodic
cash flow reports which are released to the market. Such reports are provided by the Company’s accountants to the
Group for consideration prior to release and are finally reviewed and signed off by the Board. The completion of periodic
reports by external professionals assists the Group to ensure the integrity of its financial reporting.
The Group’s activity reports are prepared by employees of the Group in conjunction with external consultants and
professional advisers who provide assistance with respect to compliance with ASX Listing Rules and Joint Ore Reserve
Committee standards, thus assisting the Group to ensure the integrity of those reports.
Principle 5: Make timely and balanced disclosure
Recommendation 5.1 - A listed entity should have and disclose a written policy for complying with its
continuous disclosure obligations under listing rule 3.1
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.
Recommendation 5.2 - A listed entity should ensure that its board receives copies of all material market
announcements promptly after they have been made.
All ASX announcements are approved by the Managing Director of the Group or by resolution of the board prior to
release.
Recommendation 5.3 - A listed entity that gives a new and substantive investor or analyst presentation should
release a copy of the presentation materials on the ASX Market Announcements ahead of the Presentation
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2021 Annual Report
The Group ensures that investor or analyst presentation materials are released on the ASX Market Announcements
Platform prior to the presentation.
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.
Recommendations 6.2 and 6.3
A listed entity should have an investor relations program that facilitates effective two-way communication with
investors (6.2).
A listed entity should disclose how it facilitates and encourages 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 Shareholder Communication Policy is disclosed on the
Group’s website.
Recommendation 6.4 - A listed entity should ensure that all substantive resolutions at a meeting of security
holders are decided by a poll rather than by a show of hands.
In the Financial Year 2021, all resolutions put to a meeting of security holders in the Group were decided by poll rather
than by a show of hands in accordance with Guidance Note 35 Security Holder Resolutions. This is to support the
principle of “one share, one vote” and also supports the ASX stance on voting at general meetings of security holders.
Recommendation 6.5 - 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)
(b)
has at least three members, a majority of whom are independent directors; and
is chaired by an independent director,
have a committee or committees to oversee risk, each of which:
(i).
(ii).
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
(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 that the entity is operating with due regard to the risk
appetite set by the board; 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.
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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.
Recommendation 7.3 - A listed entity should disclose:
(a)
(b)
if it has an internal audit function, how the function is structured and what role it performs; or
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 governance, 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.
Recommendation 7.4 - A listed entity should disclose whether it has any material exposure to environmental
or social 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)
(b)
(c)
the Board has established authority limits for management, which, if proposed to be exceeded, requires prior
Board approval;
the Board has adopted a compliance procedure for the purpose of ensuring compliance with the Group’s
continuous disclosure obligations; and
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:
has at least three members, a majority of whom are independent directors; and
is chaired by an independent director,
have a remuneration committee which:
(i).
(ii).
and disclose:
(i).
(ii).
(iii).
(a)
(b)
(c)
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
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.
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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.
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.
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
disclose that policy or a summary of it.
(b)
All options issues under Group’s equity-based remuneration scheme announced as outlined in the Company’s Notice
of 2018 Annual General Meeting published to the ASX on 31 October 2018 expired on 1 August 2021. The Company’s
Remuneration Charter Committee sets out the Board’s approach and policy with respect to equity-based remuneration.
Specifically, such remuneration is only available where such schemes are made with sufficient disclosure to
shareholders and in accordance with the Listing Rules.
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Silver Mines Limited
ABN 45 107 452 942
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www.silvermines.com.au
2021
ANNUAL REPORT