A N N UAL REPOR T
FOR THE YEAR ENDED
30 JUNE 2015
ABN: 38 1 08 7 79 782
YEAR IN REVIEW
2015
KEY FINANCIAL POINTS
» Revenue of $186.0m (FY14: $309.7m)
» Net loss after tax of $94.0m (FY14: loss of $170.4m)
» EBITDA excluding significant items of $38.0m (FY14: $26.3m)*
» Net operating cash flows of $29.5m (FY14: $24.5m)
» Cash, bullion and investments of $36.5m (FY14: $41.9m)
KEY OPERATIONAL POINTS
»
FY15 mine production from Daisy Complex, Cock-eyed Bob underground,
Wombola Dam open pit and stockpiles
» Gold sales for the period 124,209 oz (2014: 217,348 oz)
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Focussed production from lower risk, high tenor Mount Monger ore sources
Introduced a prudent gold hedging policy
» Completed care and maintenance obligations at the Murchison Operation
» Commenced crystallising value from non-core assets:
» Lakewood mill sale
» Murchison mill lease
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» Divestment process underway for Murchison Operation & Great Southern Project
June 2015 JORC resource totals 5.0 million ounces gold, 133,600 tonnes copper and
10.5 million ounces silver
June 2015 JORC reserve totals 0.8 million ounces gold, 74,700 tonnes copper
and 8.5 million ounces silver
*See page 33 for explanation of EBITDA before significant items
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
3
ANNUAL REPORT CORPORATE DIRECTORY
Directors
David Quinlivan
Non-executive Chairman
Luke Tonkin
Managing Director
Les Davis
Non-executive Director
David Griffiths
Non-executive Director
Brian Kennedy
Non-executive Director
Company Secretaries
Peter Armstrong
David Berg
Principal Office
Suite 4, Level 3, South Shore Centre
85 South Perth Esplanade
South Perth WA 6151
Tel:
Fax:
Email:
+61 8 6313 3800
+61 8 6313 3888
contact@silverlakeresources.com.au
Registered Office
Suite 4, Level 3, South Shore Centre
85 South Perth Esplanade
South Perth WA 6151
Share Register
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross WA 6153
Auditors
KPMG
235 St George’s Terrace
Perth WA 6000
Internet Address
www.silverlakeresources.com.au
ABN: 38 108 779 782
ASX Code: SLR
Cover artwork derived from photos by Rob Lavinsky, iRocks.com – CC-BY-SA-3.0
4
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
ANNUAL REPORT TABLE OF CONTENTS
Chairman & Managing Director’s Report
Project Report
Exploration Report
Resources & Reserves Report
Directors’ Report
Directors’ Declaration
Auditor’s Independence Declaration
Independent Audit Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
ASX Additional Information
PAGE
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19
26
47
48
49
51
52
53
54
55
84
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
5
ANNUAL REPORT DEAR FELLOW SHAREHOLDER,
Silver Lake (SLR) has undergone
a significant transformation over
the last 12 months.
In the first half of the financial year the Company placed
the Murchison Operation on care and maintenance and
leased the Tuckabianna processing facility to a private
consortium. In the second half of the year the Company
consolidated its processing capability in the Goldfields
by divesting the Lakewood facility and directing all feed
sources to SLR’s Randalls plant. These transactions
were an integral part of the Company’s strategic plan
to focus all resources on the Mount Monger Operation,
an area SLR knows well and that has delivered strong
results over the last 7 years.
I am pleased to announce that the steps taken and the revised strategy
the Company has adopted now places SLR in a stronger position,
more capable of capitalising on organic growth opportunities.
A key objective of SLR is now to improve shareholder returns through
a coherent value accretive strategy that invests in our core assets and
crystallises the inherent value from the Company’s non-core assets.
To do this SLR is focussing operational and financial resources on the
Mount Monger area where it has been possible to generate a superior
financial return from substantially less gold production.
SLR has conducted a strategic review of its exploration assets and
following positive results, has launched a significant, internally
funded, exploration campaign that will test targets in close proximity
to existing mines and infrastructure in the region. The Company’s
goal is to test “Daisy Complex repeat” targets which, if converted,
may materially enhance the Group’s operating margins and
underpin SLR’s long term future.
The Balance Sheet has been strengthened through prudent cost
and cash flow management, the introduction of a sensible gold
hedging policy and the impairment of certain assets to values we
consider appropriately reflect their market worth.
SLR’s short to medium term production plan generates sufficient
cash to invest in planned exploration activities and future mine
development and, given the prevailing gold price, establishes a
sound platform for earnings growth. It is this strategy that, coupled
with a stronger Australian dollar gold price outlook, should provide
upward momentum in SLR’s market capitalisation.
Returning to the Company’s performance for the last year, we
would like to highlight the following:
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Gold refined and sold for the year totalled 124,209 oz
Average realised gold price of A$1,497/oz against an all
in sustaining cost of A$1,331/oz
The Lakewood Mill and associated infrastructure (including
rehabilitation liability) was divested in March 2015
All care and maintenance payments and site contract
restructuring expenses relating to the Murchison
Operation were concluded within time and budget
The Company entered into a dry hire lease arrangement
with a private consortium for the Tuckabianna processing
facility. A total of $1.4 million was received during the year in
relation to this lease, which fully covered associated care and
maintenance costs over the same period of $0.2 million
A formal sales campaign commenced to divest non-core
assets including the Great Southern Project and the
Murchison Operation
The Company had promising infill and extensional
resource definition drilling results at the Imperial/
Majestic, Lucky Bay, Santa Area, Rumbles and Maxwells
deposits. This allowed for the commencement of mine
operations of the Lucky Bay and Santa Area open
pit deposits in July 2015. These open pits generate
approximately 50,000 oz of gold over 14 months
The Company completed a strategic exploration review
and identified a number of highly prospective exploration
targets. A revised exploration strategy has been adopted
with the Company increasing its FY16 exploration budget
by 60% to $15.5 million. Exploration will focus on highly
prospective gold targets at Mount Monger, proximal to
existing mine and processing infrastructure
Through prudent cost and cashflow management the
Company’s Balance Sheet has strengthened. Year-end
cash, bullion and investments totalled $36.1 million, while
trade payables reduced by $20m over the period.
6
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
CHAIRMAN & MANAGING DIRECTOR’S REPORT Over the past year SLR also announced key changes to its Board,
with the departure of founding directors Paul Chapman, Chris
Banasik and Peter Johnston. In addition Les Davis, SLR’s founding
Managing Director, stepped down from his executive role and
joined the Board in a Non-executive capacity. I would like to extend
the Board’s appreciation at this time to Paul, Les, Chris and Peter
for the significant contribution they made in the formation and
development of the Company and wish them every success in their
future endeavours. The Board now comprises one executive and
four non-executive directors with the reduction in numbers more
aligned with the restructured business.
The focus of the Company is now on maximising value from our
core assets and capitalising on the embedded value from our non-
core assets. Accordingly, SLR has set the following key objectives
for the next twelve months:
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Achieve gold production of 125,000 to 135,000 oz Au
from the Mount Monger Operation;
Build operating consistency focusing on delivering
improved margins;
Invest in new deposits with low capital
expenditure requirements;
Launch a new and significant exploration strategy at
Mount Monger to recapture a lower cost base;
Increase exploration expenditure with a systematic, gated
approach driving phased, risk-weighted spending.
This will include:
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Targeting Daisy analogues (“repeats”) at shallower
levels than current mining with similar ounces per
vertical metre;
Resource conversion continuing to drive short-term
production and cashflow baseline;
Divestment of non-core assets;
Continue the balance sheet rebuild
On behalf of the Board, we would like to thank the Company’s
employees for their efforts and achievements during the year and
we appreciate the support of our suppliers and contractors.
We would also like to acknowledge the continued support of our
shareholders. The Board has made some difficult decisions over
the last two years which has left the Company better placed to take
advantage of more favourable future conditions.
David Quinlivan
Luke Tonkin
Non-Executive Chairman
Managing Director
Commencement of Lucky Bay Open Pit
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
7
CHAIRMAN & MANAGING DIRECTOR’S REPORT
OVERVIEW OF ASSETS
Mount Monger Operation
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FY15 gold sales of 122koz at A$1,331/oz AISC
Multiple underground (5.0-7.0g/t Au) and open pit (2.0-2.5g/t Au) mines
Ore processed through central 1.2Mtpa Randalls mill
Resources of 3Moz1 Au and reserves of 0.38Moz1 Au
Murchison Operation
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On care & maintenance from July 2014; sale process underway
Resources of 1Moz1 Au
Resources of 39kt copper and 495koz silver1
Great Southern Project
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Sale process underway
Resources of 1Moz gold, 10Moz silver and 95kt copper1
Listed Investments
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Total current market value (30 June 2015) = A$7.6M
Primary listed investment is 13.6% stake in Paringa Resources (ASX-PNL)
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1 Refer to Resources and Reserves Report.
MOUNT MONGER OPERATION
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Located 50 km southeast of Kalgoorlie, Western Australia
Flagship Daisy Complex mine has produced 511k oz since its purchase by Silver Lake in 2007
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Average ounces per vertical metre of 1,658 from the 500m RL to the 700m RL
The Daisy Complex provides stable baseload feed (65-70k oz pa recovered gold)
In FY16 mining operations will include the Daisy Complex and Cock-eyed Bob underground mines and a number of open pit
mines including Lucky Bay and Santa Area
Further supplementary open pit mines are planned for FY17 and beyond
The focus for the Company is on head grade and margin optimisation
Operating under a single mill strategy – the 1.2Mtpa Randalls Processing Facility
High gold recoveries from free milling ores (93-95%)
Figure 1: Plan View of the Mount Monger Operation
8
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
PROJECT REPORT
Graph 1: Historical Mount Monger recovered gold production
Graph 2: Mount Monger mined tonnage and grade
Daisy Complex
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Located 14 kilometres north west of the Randalls processing facility (refer to Figure 1)
Consists of multiple ore lodes and historic mines accessed from the same underground infrastructure (refer to Figure 2)
Ore sources currently in production include Daisy Milano, Haoma, Haoma West and Lower Prospect
In FY16, 22,000m of underground diamond drilling is planned for seven target areas within or adjacent to the Daisy Complex
Resource development drilling is designed to upgrade Inferred Resources to an Indicated category and to identify direct
extensions to the known zones of Inferred Resources
In addition approximately 6,000m of exploration diamond drilling is planned for FY16 targeting new gold zones or confirming
significant strike extensions to known zones that could be accessed from the existing Daisy Complex mine. This should provide
near to medium-term mining opportunities for the Company
2015 JORC Resource of 1,291,300 tonnes at 20.8 g/t Au for 861,500 oz (refer to Table 2)
2015 JORC Reserve of 297,300 tonnes at 8.6 g/t Au for 81,800 oz (refer to Table 7)
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
9
PROJECT REPORT
Figure 2: Schematic view of Daisy Complex
Cock-eyed Bob
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Located 14 kilometres east of the Randalls processing facility (refer to Figure 1)
Currently developed and mined on 3 levels down to approximately 100m below the base of the remnant open pit
Limited drilling below the 345 mining level
Gold is hosted by BIF units with two parallel lodes (hanging-wall and foot-wall) dipping 70° - 80° to the east - higher gold grades
occur where quartz veins obliquely cross cut the BIF
FY16 exploration at Cock-eyed Bob includes 3,600m of surface RC and diamond drilling to target the next three mining levels
below the current development
This drilling continues to provide invaluable geological information that can be applied to other BIF hosted gold units in the region
2015 JORC Resource of 2,507,500 tonnes at 2.7 g/t Au for 217,800 oz (refer to Table 2)
Figure 3: Cock-eyed Bob drilling target area below 345 mining level
10
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
PROJECT REPORT
Lucky Bay
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Located 5 kilometres south of the Randalls processing facility (refer to Figure 1)
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Commenced mining activities in July 2015
2015 JORC Resource of 125,600 tonnes at 5.4 g/t Au for 21,600 oz (refer to Table 2)
2015 JORC Reserve of 79,700 tonnes at 4.2 g/t Au for 10,800 oz (refer to Table 7)
Santa Area (includes Rumbles)
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Located 16 kilometres north east of the Randalls processing facility (refer to Figure 1)
Updated resource and reserve estimate reflects the application of appropriate geological constraints to gold distribution
assumptions in the geological model (refer to Figure 5)
Commenced mining activities in August 2015
2015 JORC Resource of 7,443,700 tonnes at 2.2 g/t Au for 514,800 oz (refer to Table 2)
2015 JORC Reserve of 744,000 tonnes at 1.8 g/t Au for 42,800 oz (refer to Table 7)
Figure 4: Santa Area plan view showing the open pit, gold zones and current drilling collar locations
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
11
PROJECT REPORT
Majestic/Imperial
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Located 24 kilometres north west of the Randalls processing facility (refer to Figure 1)
Purchase of the remaining 15% of the project from Newcrest completed (now 100% owned by Silver Lake)
Mining options and optimisation studies continue and capital works are expected to commence in Q3 FY16 with associated open
pit mining commencing in Q4 FY16 for a period of 2 years
2015 JORC Resource of 2.8 million tonnes at 2.8 g/t Au for 250,300 oz (refer to Table 2)
2015 JORC Reserve of 1.2 million tonnes at 3.1 g/t Au for 115,900 oz (refer to Table 7)
Maxwells
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Located 16 kilometres east of the Randalls processing facility (refer to Figure 1)
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Mining at the Maxwells open pit was completed in June 2014 delivering 945kt at 2.7g/t for 81k oz (>1,000 ounces per vertical metre)
Strong recent and historical drilling results indicate a potential underground mine (refer to Figure 5)
Extensional testing of known mineralisation below historic open pit is currently in progress
Initial program to drill on 30m x 30m spacing from pit floor
Existing infrastructure and ready access from the pit deliver potential for mine plan inclusion within six months of resource definition
BIF hosted mineralisation provides clear marker for effective exploration to test for long term underground potential
Subject to ongoing exploration success at Maxwells, production from Maxwells Underground is capable of being introduced to
the production plan in FY17
2015 JORC Resource of 752,100 tonnes at 3.2 g/t Au for 78,300 oz (refer to Table 2)
Figure 5: Maxwells Cross Section
12
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
PROJECT REPORT
MURCHISON OPERATION
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Located 20 kilometres east of the town of Cue, 600 km north east of Perth
Silver Lake constructed the Murchison Operation during 2012 - 2013 having consolidated the project from various entities
between 2007 and 2011
This led to the definition of resources and reserves associated with a potential 14 open pits and 4 underground mines distributed
throughout the Tuckabianna, Comet and Moyagee mining centres
The 1.2Mtpa CIL processing plant was constructed at the historic Tuckabianna mill site and was designed to allow for a flotation
circuit to be “bolted on” under suitable circumstances, in order to process existing and potential base metal resources
Open pit mining operations commenced at Genesis and Caustons North in October 2012, with first gold pour occuring in
February 2013 and commercial production declared in June 2013
Underground development commenced at Caustons in early 2013 but was deferred before accessing ore due to the steeply
declining gold price in July 2013
A strategic review of operations in January 2014 concluded that continued production from the Murchison was unsustainable
at prevailing gold prices and in February 2014 the Company announced that it would be placing the operation on care and
maintenance in the June 2014 quarter
In October 2014 Silver Lake entered into a binding agreement with a private consortium for a dry hire lease over the Murchison
mill and associated infrastructure. The Company has received $1.4 million during the year, which fully covered associated care
and maintenance costs
Notwithstanding this lease, the Company continues to assess a number of strategic alternatives to further enhance the value of
the gold and base metal assets in the Murchison including the divestment of the asset
2015 JORC Resource of 14.4 million tonnes at 2.2 g/t Au for 1.0 million oz (refer to Table 2), 495,300 oz of silver and
38,800 tonnes of copper (refer to Table 5)
2015 JORC Reserve of 150,900 oz of silver and 14,700 tonnes of copper (refer to Table 8)
GREAT SOUTHERN PROJECT
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Located in the Ravensthorpe region of Western Australia, ~200km west of the Port of Esperance
The Great Southern Project comprises a package of tenements with gold and base metal Mineral Resources and Ore Reserves,
accompanying data and related infrastructure
The Project covers approximately 1,800km2 of the Archaean Ravensthorpe Greenstone Belt, the host to the Kundip Mining Centre,
and part of the Proterozoic Mt Barren Group, the host to the poly-metallic Trilogy deposit
The Project was acquired in early 2012 due to the following key Project attributes:
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Dominant ground position in a highly prospective, under-explored region;
Sound economic indicators including access to infrastructure, workforce and suppliers;
Near-term production ability with existing JORC (2004) Mineral Resources and Ore Reserves;
Quality concentrate potential; and
Lack of previous systematic exploration, particularly at depth, with multiple exploration targets demonstrating favourable
widths/grades with potentially low discovery costs
Silver Lake has not advanced the Project to the extent it would have liked due to the subsequent merger with Integra Resources
Ltd and the commencement of the development of the Murchison Operation, both in late 2012, which consumed considerable
management and financial resources over an extended period. As a result, Silver Lake is seeking either a divestment of the Project
or a project level investor to advance the project
2015 JORC Resource of 16.0 million tonnes at 2.0 g/t Au for 1.0 million oz (refer to Table 2), 10.0 million oz of silver and
94,800 tonnes of copper (refer to Table 5)
2015 JORC Reserve of 7.4 million tonnes at 1.8 g/t Au for 442,100 oz (refer to Table 7), 8.3 million oz of silver and 60,000 tonnes of
copper (refer to Table 8)
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
13
PROJECT REPORT EXPLORATION STRATEGY FY16
Background
Silver Lake’s FY15 exploration strategy was to advance development projects with near-term open pit and underground mining potential.
This resulted in positive exploration results from the infill and extensional resource definition drilling at Daisy Complex, Imperial/Majestic,
Lucky Bay, Santa, Rumbles and Maxwells deposits. The Lucky Bay open pit operation is the first of these development projects to be
brought into production, with infrastructure and capital works largely completed and pre-stripping having already commenced in Q4 FY15.
Lucky Bay and the Santa Area pits will produce approximately 50koz Au over the next 14 months whilst Imperial/Majestic is scheduled to
produce approximately 110koz Au over a 2 year period commencing in Q4 FY16.
Exploration Strategy
The Silver Lake exploration team has completed a detailed compilation of the geology and prospectivity of the Mount Monger district, and
reviewed the historical exploration results from the area. This review identified a number of highly prospective exploration targets. A revised
exploration strategy has been adopted and the Company has increased its FY16 exploration budget by 60% to $15,500,000. Exploration will
focus on the highest ranked gold targets within the Mount Monger Operation, proximal to existing mine and processing infrastructure
(Figures 6 and 7).
The two core components of the FY16 exploration strategy comprise:
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Definition of new, high value resource ounces from near-mine drilling
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Targeting shallow, high tenor “Daisy repeats” with similar ounces per vertical metre from highly prospective and untested horizons
These structures provide for cost effective exploration and low capital intensity of development
Sharpen focus on BIF hosted targets in the Randalls Area
Target zones are hosted by extensions to existing mineralised structures and within preferential stratigraphic units,
supported by broad spaced drilling results, surface geochemical anomalies and magnetic trends
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Resource development drilling – extending and converting ounces into the Mount Monger mine plan to replace depletion
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Upgrade from Inferred to Indicated Resources and conversion to Reserves
Leveraging above and below ground infrastructure via extensional ounces with short development timeframes
An experienced exploration team is in place and surface drilling contractors are ready to mobilise to commence the planned exploration
programme in Q1 FY16.
RC Drilling at the Mount Monger Operation
14
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
EXPLORATION REPORT Figure 6: Exploration Focus – Daisy Complex area
Figure 7: Exploration Focus – Randalls Area
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
15
EXPLORATION REPORT
Key Exploration Targets
Leslie Target Area (Figure 8)
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Four “Daisy Milano-style” mineralised trends extend along strike to the North West from the Dinnie Reggio and Christmas Flats
deposits and along the Bull/Leslie trend
Previous exploration diamond drilling in the Leslie area intersected 2m @ 36g/t Au and 2m @ 24.4g/t Au in a relatively shallow
position (≈80m depth)
The Leslie exploration campaign includes staged drilling programs comprising 5,000m AC reconnaissance drilling, 7,500m RC
and diamond follow up and infill drilling
Figure 8: Surface Exploration - Leslie Target Area
District Geologist Ned Summerhayes at Randalls Area
16
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
EXPLORATION REPORT
Daisy Repeat Target (Figure 9)
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The Company has identified a significant gap in drilling located immediately east of the Daisy Complex, between the Daisy lodes
and the Lorna Doone/Spinifex deposit
The untested target zone is ≈500m wide and plunges to the south following the same trends as Daisy/Haoma-style mineralisation
Currently no drilling tests the plunging target zones from either surface or underground
A total of 4,000m of diamond drilling is planned to directly intersect high grade south-plunging lodes within the target zone
Figure 9: Surface and Underground Exploration - Daisy Repeat Target
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
17
EXPLORATION REPORT
Randalls Banded Iron Formation Exploration Targets
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A key component of Silver Lake’s strategy is a focus on the Banded Iron Formation (BIF) deposits within the Mount Monger Operation
(Figures 7 and 10)
The BIF host rock within the Randalls area extends over 30 kilometres and the gold distribution along the BIF has the potential to
contain further gold deposits similar to the current Santa, Maxwells & Cock-eyed Bob deposits
The exploration focus is on high value BIF hosted targets associated with the Isoclinal fold hinge and limbs within the Maxwells
BIF, and the Western limb of Santa/Craze BIF to the south of Santa Area
The initial FY16 exploration program will identify shallower up-dip projections of high grade zones using regularly spaced sections
of aircore drilling along BIF horizons. Follow up RC and diamond drilling will target the down plunge extensions of these zones.
Figure 10: Flora Dora/West Limb target area
Randalls Gold Processing Facility
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SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
EXPLORATION REPORT
COMPANY SUMMARY AT 30 JUNE 2015
Total Mineral Resources are estimated at: 58.0 Mt @ 2.7 g/t Au for 5.03 Moz of contained gold, comprising:
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Mount Monger Operation:
27.7 Mt @ 3.36 g/t Au for 2.99 Moz of contained gold
Murchison Operation:
14.4 Mt @ 2.24 g/t Au for 1.04 Moz of contained gold
Great Southern Project:
16.0 Mt @ 1.95 g/t Au for 1.00 Moz of contained gold
Total Ore Reserves are estimated at: 11.6 Mt @ 2.2 g/t Au for 0.83 Moz of contained gold, comprising:
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Mount Monger Operation:
4.14 Mt @ 2.9 g/t Au for 0.39 Moz of contained gold
Great Southern Project:
7.44 Mt @ 1.85 g/t Au for 0.44 Moz of contained gold
MINERAL RESOURCE STATEMENT AS AT 30 JUNE 2015
The Company’s total Measured, Indicated and Inferred Mineral Resources as at 30 June 2015 are 58.0 million tonnes (Mt) @ 2.7 grams
per tonne of gold (g/t Au) containing 5.03 million ounces of gold (Moz) (refer Tables 1, 2, 3, 4). The previous publicly reported estimate of
Mineral Resources was 60.5 Mt @ 2.9 g/t Au containing 5.74 Moz of gold as at 30 June 2014, announced on 28th August 2014. The Mineral
Resources as at 30 June 2015 are estimated after allowing for mining depletion from the Mount Monger Operation over the 2015 financial
year period.
Measured Resources
Indicated Resources
Inferred Resources
Total Resources
June 2014
June 2015
Ore
tonnes
Grade
g/t
Total
Oz Au
Ore
tonnes
Grade
g/t
Total
Oz Au
1,902,000
4.1
250,000
939,000
31,765,000
2.6
2,689,000
31,276,000
4.8
2.4
146,000
2,387,000
26,184,000
3.3
2,763,000
25,140,000
3.0
2,464,000
60,540,000
2.9
5,736,000
58,044,000
2.7
5,031,000
Table 1: Total Silver Lake Gold Mineral Resource as of June 2015
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
19
RESOURCES & RESERVES REPORT
June 2015
Measured Resources
Indicated Resources
Inferred Resources
Total Resources
Deposit
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Daisy Milano Complex
48
51.5
80
98
40.4
127
1,145
17.8
655
1,291
20.8
861
Majestic
Imperial
Fingals
Costello
Lorna Doone
Magic/Mirror
Wombola Pit
Wombola Dam
Hammer & Tap
Total Mount Monger
-
-
-
-
-
-
-
13
-
61
-
-
-
-
-
-
-
3.2
-
-
-
-
-
-
-
-
1
-
1,930
2.2
139
563
188
10.0
61
132
131
2.7
11
1,043
-
686
762
47
164
-
-
2.0
3.0
3.1
2.6
-
-
111
44
641
75
1,150
5
14
20
120
-
350
1.5
5.5
2.3
4.0
3.5
4.9
4.0
3.0
2.4
28
2,493
23
77
14
320
1,174
111
72
1,327
182
1,912
3
12
27
67
297
350
2.1
8.1
2.3
4.0
2.7
4.2
3.3
2.8
2.4
167
84
88
14
116
257
7
27
27
41.1
81
4,006
3.7
475
5,275
6.4
1,092
9,342
5.5
1,648
Salt Creek Stockpile
308
1.2
12
-
Maxwells
Santa Area
Cock-eyed Bob
Lucky Bay
Rumbles
Anomaly A
Randalls Dam
-
-
116
83
-
-
-
-
-
3.4
5.4
-
-
-
-
-
13
15
-
-
-
257
3,717
601
35
482
158
107
-
3.9
2.2
2.3
4.7
1.9
2.7
2.1
-
-
32
495
267
1,696
44
1,790
5
8
29
1,549
14
7
73
6
-
2.9
2.5
2.8
7.2
1.7
1.7
1.2
-
308
46
752
1.2
3.2
12
78
136
5,413
2.3
403
161
2,508
2
126
83
2,031
4
0
231
113
2.7
5.3
1.7
2.4
2.1
218
22
112
18
7
Total Randalls
508
2.4
39
5,356
2.3
399
5,617
2.4
432
11,481
2.4
869
Main Zone
Harry’s Hill
French Kiss
Spice
Tank/Atriedes
Italia/Argonaut
Total Aldiss
Total Mount Monger
Operation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,888
1,780
1,906
-
622
409
2.4
2.3
1.9
-
1.9
1.4
145
134
116
26
18
39
-
104
37
19
60
-
2.1
1.9
2.1
4.0
1.9
-
2
1
3
1,914
1,798
2.4
2.3
147
135
1,945
1.9
118
14
104
4
-
682
409
4.0
1.9
1.4
14
41
19
-
6,605
2.1
451
247
2.9
23
6,852
2.2
474
569
6.5
120
15,967
2.6
1,325
11,140
4.3
1,546
27,675
3.4
2,991
Table 2: Mount Monger Operation Gold Mineral Resource as at 30 June 2015
20
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
RESOURCES & RESERVES REPORT June 2015
Measured Resources
Indicated Resources
Inferred Resources
Total Resources
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60
60
1.5
1.5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
3
-
-
-
-
-
-
886
1,216
299
-
-
-
-
2,400
1,205
-
1,130
2.2
1.9
2.5
-
-
-
-
2.1
4.9
-
1.7
63
1,765
76
1,487
24
-
-
-
-
316
175
96
527
1,201
162
5,567
192
252
-
65
62
1,090
2,335
3.4
254
1,407
433
2.0
28
839
-
-
-
433
473
-
-
-
-
2.0
1.4
-
473
1.4
-
-
-
42
278
336
28
1,495
21
-
21
45
171
216
2.2
1.8
2.5
2.6
3.1
2.1
1.8
2.0
4.2
1.2
1.7
2.1
1.8
6.0
2.5
1.9
2.1
1.1
2.2
1.9
123
2,651
2.2
186
85
2,703
1.9
161
25
15
9
35
615
175
96
527
2.5
2.6
3.1
2.1
69
1,201
1.8
49
15
9
35
69
361
7,967
2.0
524
34
1,458
4.8
226
3
65
60
2,280
96
3,802
49
1,273
8
22
21
42
278
336
99
1,928
2
12
13
518
171
689
1.2
1.7
2.9
1.9
6.0
2.5
1.9
2.0
1.3
2.2
1.5
3
124
353
76
8
22
21
127
22
12
34
60
1.5
3
5,642
2.6
464
8,685
2.0
570
14,387
2.2
1,038
Deposit
Caustons
Tuckabianna
TMC/Katies
Jasper Queen
Gilt Edge
Sherwood
Little John
Total Tuckabianna
Comet
Lunar/Solar
Pinnacles
Total Comet
Lena
Leviticus
Numbers
Break of Day
Total Moyagee
Hollandaire
Rapier South
Total Eelya
Total Murchison
Operation
Table 3: Murchison Operation Gold Mineral Resources as at 30 June 2015
June 2015
Measured Resources
Indicated Resources
Inferred Resources
Total Resources
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Deposit
Kundip
Trilogy
-
-
-
4,390
310
2.4
24
5,750
3.4
0.7
-
481
4,550
136
180
-
802
2.1
0.8
1.9
307
8,940
2.7
789
4
6,240
0.8
165
49
802
1.9
49
Queen Sheba
-
-
-
-
Total Great Southern
Project
310
2.4
24
10,140
1.9
618
5,532
2.0
361
15,982
2.0
1,002
Table 4: Great Southern Project Gold Mineral Resources as at 30 June 2015
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
21
RESOURCES & RESERVES REPORT
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22
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
RESOURCES & RESERVES REPORT
ORE RESERVES STATEMENT AS AT 30 JUNE 2015
The Company’s total Proved and Probable Gold Ore Reserve as at 30 June 2015 are 11.6 million tonnes (Mt) @ 2.2 grams per tonne of gold
(g/t Au) containing 0.8 million ounces of gold (Moz) (refer Tables 6 and 7). The previous publicly reported estimate of Gold Ore Reserves
was 13.6 Mt @ 2.4 g/t Au containing 1.1 Moz of gold as at 30 June 2014, announced on 28th August 2014. The Ore Reserves as at 30
June 2015 are estimated after allowing for mining depletion from the Mount Monger Operation over the 2015 financial year period. All Ore
Reserves were estimated using a gold price of AUD$ 1,500/oz.
Proved Reserve
Probable Reserve
Total Reserves
Ore
tonnes
1,327,000
12,314,000
13,641,000
June 2014
Grade
g/t
Total
Oz Au
Ore
tonnes
June 2015
Grade
g/t
2.0
2.5
2.4
86,000
775,000
981,000
10,807,000
1,068,000
11,581,000
2.6
2.2
2.2
Total
Oz Au
65,000
765,000
830,000
Table 6: Total Silver Lake Gold Ore Reserves as at 30 June 2015
June 2015
Proved Reserves
Probable Reserves
Total Reserves
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Ore
tonnes
‘000s
Grade
g/t
Total
Oz Au
‘000s
Daisy Milano Complex
77
8.2
20
220
Majestic
Imperial
Mirror/Magic
Wombola Pit
Wombola Dam
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
870
290
417
-
-
8.7
2.2
5.9
2.9
-
-
61
61
55
39
-
-
297
870
290
417
-
-
Mount Monger Total
77
8.2
20
1,797
3.7
216
1,874
Santa Area
Rumbles
Cock-eyed Bob
Lucky Bay
Salt Creek Stockpile
Randalls Total
Harry’s Hill
Aldiss Total
-
-
-
79
308
387
-
-
-
-
-
4.3
1.2
1.8
-
-
-
-
-
11
12
589
155
-
1
-
22
745
1,135
-
-
1.7
2.2
-
0.8
-
1.8
2.4
589
155
2.2
-
-
80
4.2
32
11
-
0
-
308
43
1,132
86
1,135
1,135
2.4
86
1,135
8.6
2.2
5.9
2.9
-
-
3.9
1.7
1.2
1.8
2.4
2.4
82
61
55
39
-
-
236
32
11
-
11
12
65
86
86
Total Mount Monger Operation
465
2.9
43
3,677
2.9
345
4,141
2.9
388
Kundip
Trilogy
Total Great Southern Project
Total Silver Lake
-
310
310
775
-
2.2
2.2
2.6
Table 7: Silver Lake Gold Ore Reserves as of 30 June 2015
-
2,810
22
4,320
3.4
0.8
113
4,630
307
2,810
3.4
307
0.9
1.8
135
442
22
7,130
1.8
420
7,440
65
10,807
2.2
765
11,581
2.2
830
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
23
RESOURCES & RESERVES REPORT
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SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
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RESOURCES & RESERVES REPORT
COMPETENT PERSON’S STATEMENT
The Mineral Resource and Ore Reserves estimates for the Daisy Complex (excluding Dinnie Reggio and Christmas Flats), Lorna Doone, Wombola
Dam, Maxwells, Santa Area, Cock-eyed Bob, Lucky Bay, Rumbles, Caustons, Tuckabianna, TMC/Katies, Pinnacles and Lena are produced in
accordance with the 2012 Edition of the Australian Code for Reporting of Mineral Resources and Ore Reserves (the 2012 JORC Code).
All other Mineral Resource and Ore Reserves estimates were first prepared and disclosed under the 2004 edition of the JORC Code and
have not been updated since to comply with the 2012 JORC Code on the basis that the information has not materially changed since it was
last reported.
The information in this report that relates to Mineral Resources and Ore Reserves has been extracted from the ASX Announcement entitled
“Mineral Resources and Ore reserves Update” dated 28 August 2015 which is available to view at www.silverlakeresources.com.au. The
Company confirms that it is not aware of any new information or data that materially affects the information included in the original ASX
announcements and that all material assumptions and technical parameters underpinning the estimates in the ASX announcement
continue to apply and have not materially changed.
The information in this report that relates to Exploration Results is based on information compiled by Mr Antony Shepherd, a Competent
Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Shepherd is a full time employee of Silver Lake
Resources Ltd 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’. Mr Shepherd consents to the inclusion in the presentation of the matters based
on his information in the form and context in which it appears.
FORWARD LOOKING STATEMENTS
This report may contain forward looking statements that are subject to risk factors associated with gold exploration, mining and production
businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of
variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited
to price fluctuations, actual demand, currency fluctuations, drilling and production results, Reserve estimations, loss of market, industry
competition, environmental risks, physical risks, legislative, fiscal and regulatory changes, economic and financial market conditions in
various countries and regions, political risks, project delay or advancement, approvals and cost estimates.
Forward-looking statements, including projections, forecasts and estimates, are provided as a general guide only and should not be relied
on as an indication or guarantee of future performance and involve known and unknown risks, uncertainties and other factors, many of
which are outside the control of Silver Lake. Past performance is not necessarily a guide to future performance and no representation or
warranty is made as to the likelihood of achievement or reasonableness of any forward looking statements or other forecast.
Jumbo operating at Daisy Complex
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
25
RESOURCES & RESERVES REPORT The Directors present their report on the consolidated entity consisting of Silver Lake Resources Limited (“Silver Lake” or “the Company”)
and the entities it controlled at the end of, or during the financial year ended 30 June 2015 (“the Group”).
DIRECTORS
The directors of the Company at any time during or since the end of the financial year are:
Paul Chapman
BComm, ACA, Grad Dip Tax, MAICD, AAusIMM
Non-executive Chairman
Appointed 20 April 2004
David Griffiths
BBus
Non-executive Director
Appointed 25 May 2007
Mr Chapman is a chartered accountant with over 20 years
experience in the resources sector gained in Australia and the
United States. Mr Chapman has experience across a range
of commodity businesses including gold, nickel, uranium,
manganese, bauxite/alumina and oil/gas.
Mr Chapman has held Managing Director and other senior
management roles in various public companies and is currently
Chairman of West Australian based copper explorer Encounter
Resources Ltd (since October 2005). Mr Chapman was previously
Chairman of Rex Minerals Ltd (until December 2013) and was also
a Director of Phillips River Mining Ltd (until March 2014).
Mr Chapman has held no other Directorships in public listed
companies in the last three years.
Mr Chapman will resign as Chairman on 30 September 2015 at
which time Mr Quinlivan will assume the role of Chairman.
Mr Griffiths has more than 30 years management and strategic
communications experience developing from an initial focus on
human resources and employee relations to broader, group-wide
strategic roles. Previously Mr Griffiths was employed by WMC
Resources Ltd and held the roles of Group Manager – Employee
Relations and more recently, General Manager Corporate Affairs
and Community Relations.
Mr Griffiths was previously a Director of Phillips River Mining Ltd
(until March 2014). Mr Griffiths is a director (since January 2014)
and past Chairman of Paringa Resources Limited (from September
2012 to January 2014).
Mr Griffiths has held no other Directorships in public listed
companies in the last three years.
Luke Tonkin
BEng, Min Eng, MAusImm
Managing Director
Appointed 14 October 2013
Mr Tonkin is a mining engineering graduate of the Western
Australian School of Mines and his extensive operations and
management career spans 28 years within the minerals and mining
industry. He is a past Chairman of the Western Australian School
of Mines Advisory Board. Mr Tonkin has held senior management
roles at WMC Resources Ltd, Sons of Gwalia Ltd and was Managing
Director of Mount Gibson Iron Ltd for 7 years. Most recently he was
Chief Executive Officer and Managing Director of Reed Resources
Ltd. Mr Tonkin is a past director of Mount Gibson Iron Ltd (resigned
December 2011) and Reed Resources Ltd (resigned September
2013).
Mr Tonkin joined the Company in October 2013 as Director of
Operations and was appointed as Managing Director on 20
November 2014.
Mr Tonkin has held no other Directorships in public listed
companies in the last three years.
Les Davis
MSc (Min Econs)
Non-executive Director
Appointed 25 May 2007
Mr Davis has over 35 years industry experience including 17
years hands-on experience in mine development and narrow vein
mining. Mr Davis’ career incorporates 13 years senior management
experience including roles as Mine Manager, Technical Services
Manager, Concentrator Manager, Resident Manager and General
Manager Expansion Projects with organisations including WMC
Resources Ltd, Reliance Mining Ltd and Consolidated Minerals
Ltd. Mr Davis was previously a Director of Phillips River Mining Ltd
(until March 2014) and a past Director of Paringa Resources Limited
(resigned September 2012).
Mr Davis has held no other Directorships in public listed companies
in the last three years. Mr Davis ceased as Managing Director on
20 November 2014 and was subsequently appointed as a Non-
executive Director.
Brian Kennedy
Cert Gen Eng
Non-executive Director
Appointed 20 April 2004
Mr Kennedy has operated a successful resource consultancy for
over 30 years and has worked in the coal, iron ore, nickel, gold
and fertiliser industries. During this time Mr Kennedy managed
large-scale mining operations such as Kambalda and Mount Keith
on behalf of WMC Resources Ltd. More recently Mr Kennedy was
Senior Vice President at Anglo Gold Ashanti Limited.
Mr Kennedy was a founding shareholder and Director of Reliance
Mining Ltd, before its takeover by Consolidated Minerals Ltd. Mr
Kennedy was previously a Director of Phillips River Mining Ltd (until
March 2014).
Mr Kennedy has held no other Directorships in public listed
companies in the last three years.
David Quinlivan
BApp Sci, Min Eng, Grad Dip Fin Serv, FAusImm, FFINSA,
MMICA
Non-executive Director
Appointed 25 June 2015
Mr. Quinlivan is a Mining Engineer with significant mining and
executive leadership experience having 11 years of service at
WMC Resources Ltd, followed by a number of high-profile mining
development positions. Since 1989, Mr Quinlivan has served as
Principal of Borden Mining Services, a mining consulting services
firm, where he has worked on a number of mining projects in
various capacities. He has served as Chief Executive Officer of Sons
of Gwalia Ltd (post appointment of administrators), Chief Operating
Officer of Mount Gibson Iron Ltd, President and Chief Executive
Officer of Alacer Gold Corporation and Chairman of Churchill
Mining PLC.
Mr Quinlivan has held no other Directorships in public listed
companies in the last three years.
26
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT DIRECTORS (CONT.)
Chris Banasik
BApp Sc (Physics), MSc (Econ Geol), Grad Dip Ed, MAusIMM
Executive Director – Exploration & Geology
Appointed 25 May 2007
Mr Banasik has over 25 years experience in the resource industry
which includes 10 years hands-on experience in mine geology
resource and reserve calculation and a history of successful
exploration in the Kambalda region of Western Australia.
Mr Banasik has extensive experience in leading geology and
exploration teams and managing drilling programmes, surveying,
mine planning and other technical services through 11 years in
management roles with WMC Resources Ltd, Reliance Mining
Ltd and Consolidated Minerals Ltd. Mr Banasik was previously a
Director of Phillips River Mining Ltd (until March 2014).
Mr Banasik resigned as Executive Director on 14 November 2014.
Peter Johnston
BA, FAICD, FAusIMM
Non-executive Director
Appointed 22 May 2007
Mr Johnston is a Director of Tronox Limited and was previously
a Director of Phillips River Mining Ltd (until March 2014). Mr
Johnston is a Director and past Chairman of the Nickel Institute,
past Chairman of the Minerals Council of Australia, past President of
the Chamber of Minerals and Energy and past Vice President of the
Australian Mines & Metals Association.
Mr Johnston resigned as Non-executive Director on 30 April 2015.
COMPANY SECRETARIES
Peter Armstrong
ACIS, B Bus(Acct)
Appointed 16 January 2009
Mr Armstrong has over 30 years of accounting experience,
including the last 25 years in the resources sector. He has
extensive experience in senior commercial management roles
with Normandy Mining, WMC Resources Ltd and Newcrest. This
experience involved working across a wide range of commodity
businesses including gold, nickel, copper, coal and iron ore.
David Berg
LLB BComm (General Management)
Appointed 4 September 2014
Mr Johnston’s extensive management career spans 30 years. During
that time Mr Johnston held senior management roles at WMC
Resources Ltd, Alcoa of Australia Limited and Lion Nathan Limited.
As Executive General Manager at WMC Resources Ltd for over 8
years, Mr Johnston was at various times responsible for nickel and
gold operations, Olympic Dam operations, Queensland Fertilisers Ltd
and human resources. Mr Johnston was appointed Head of Global
Nickel Assets for Glencore in May 2013 and was previously Chief
Executive Officer/Director of Minara Resources Pty Ltd.
Mr Berg has worked both in the resources industry and as a lawyer
in private practice, advising on corporate governance, M&A,
capital raisings, commercial contracts and litigation. Mr Berg has
previously held company secretarial and senior legal positions
with Mount Gibson Iron Limited and Ascot Resources Limited and
legal roles with Atlas Iron Limited and the Griffin Group. Prior to this
Mr Berg worked in the corporate and resources groups of Herbert
Smith Freehills and King & Wood Mallesons.
Randalls Gold Processing Facility
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
27
DIRECTORS’ REPORT COMMITTEE MEMBERSHIP
As at the date of this report, the Board has an Audit Committee and a combined Nomination & Remuneration Committee. The Nomination
Committee and the Remuneration Committee were combined to form a joint committee on 23 January 2015.
Those members acting on the committees of the Board during the year were:
Audit
David Griffiths (c)
Paul Chapman
David Quinlivan***
Peter Johnston *
Remuneration
Les Davis** (c)
David Griffiths
Brian Kennedy
Peter Johnston*
Nomination
Les Davis** (c)
David Griffiths
Brian Kennedy
Peter Johnston*
(c)
*
**
***
Designates the Chairman of the committee
Peter Johnston resigned 30 April 2015
Les Davis was appointed Chairman of the Nomination & Remuneration Committee on 23 January 2015
David Quinlivan was appointed to the Audit Committee on 21 July 2015
DIRECTORS’ MEETINGS
The number of meetings of Directors (including committee meetings) held during the year and the number of meetings attended by each
Director are as follows:
Directors’ Meetings
Audit
Remuneration
Nomination
Meetings of Committees
Number of meetings held:
Number of meetings attended:
Paul Chapman
Luke Tonkin
Les Davis**
David Griffiths
Brian Kennedy
David Quinlivan***
Chris Banasik****
Peter Johnston*****
13
13
13
13
11
11
0
4
8
Not a member of this committee during the year
Ceased as Managing Director 20 November 2014
Appointed as Non-executive Director 25 June 2015
Resigned as Executive Director 14 November 2014
*
**
***
****
***** Resigned as Non-executive Director 30 April 2015
3
3
*
*
2
*
*
*
2
5
*
*
0
5
5
*
*
5
0
*
*
0
0
0
*
*
0
28
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT
DIRECTORS’ INTERESTS
The relevant interest of each Director in the share capital as notified by the Directors to the Australian Securities Exchange in accordance
with s205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Name of Director
Paul Chapman
Luke Tonkin
Les Davis
David Griffiths
Brian Kennedy
David Quinlivan
Chris Banasik
Peter Johnston
* Resigned during the year
PRINCIPAL ACTIVITIES
Fully Paid Ordinary Shares
Unlisted Options
Unlisted Performance Rights
5,334,294
-
4,525,294
4,393,671
4,790,746
-
*
*
-
2,000,000
-
-
-
-
-
-
-
870,603
-
-
-
-
-
-
The principal activities of the Group during the course of the financial year were gold mining and processing from the Mount Monger
Operation, gold and base metals exploration and evaluation of projects.
CORPORATE STRUCTURE
Silver Lake is a company limited by shares and is domiciled and registered in Australia.
OPERATING OVERVIEW
Silver Lake is an all-Australian, ASX listed gold producing and exploration company operating in the Eastern Goldfields district of Western Australia.
Silver Lake’s land position in Western Australia covers highly prospective, under explored tenements containing gold, silver and copper.
Group Financial Overview
The Group recorded a net loss after tax for the period of $94,024,000 (2014: loss of $170,438,000). Operating cash flow for the period was
$29,489,000 (2014: $24,468,000).
A reconciliation between the statutory loss after tax and the Group’s underlying operating results is tabled on page 33. This reconciliation
is an unaudited non-IFRS measure that, in the opinion of the Board, provides useful information to assess the operating performance of the
Group. As noted in the table, the Group’s EBITDA (before significant items) was $38,004,000 for the period (2014: $26,343,000).
The increase in EBITDA (before significant items) compared to the previous corresponding period is primarily due to the strategic decision to place
the Murchison Operation on care and maintenance and focus resources on the Company’s core Mount Monger Operation. Processing costs were
also reduced with the divestment of the Lakewood mill with all feed sources now processed through the Randalls mill.
Gold sold for the period totalled 124,209 oz (2014: 217,348 oz) at an average price of A$1,497/oz (2014: A$1,421/oz). Sales were lower
primarily as a result of placing the Murchison Operation on care and maintenance in the June 2014 quarter and completion of the Maxwells
open pit mine in June 2014.
The FY15 All in Sustaining Cost for the Mount Monger Operation was A$1,331/oz (2014: A$1,224/oz). The increase in the cost profile per
ounce was due to the completion of the lower cost Maxwells open pit mine in June 2014 as well as additional exploration and capital
development expenditure undertaken in FY15 primarily at the Daisy Underground Complex.
Mining and production statistics for the Group for the year ended 30 June 2015 are detailed in Table 1 and Table 2.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
29
DIRECTORS’ REPORT Overview of Operations
Mount Monger Operation
During the year Silver Lake’s Mount Monger Operation comprised the Daisy Complex and Cock-eyed Bob underground mines and the
Wombola Dam open pit mine. The Mount Monger Operation also processed significant ore stockpiles from the Salt Creek mine.
Gold ore from the Mount Monger Operation is transported to the Randalls processing facility, located 60 km south east of Kalgoorlie. The
Randalls processing facility has capacity of 1.2 million tonnes per annum.
Mount Monger has additional multi-mine potential underpinned by work programmes to advance the following deposits towards production:
»
»
»
»
»
»
Upper areas to the east and west of Daisy Milano;
Lucky Bay open pit (commenced Q4 FY15);
Santa Area open pit (commencing FY15);
Rumbles open pit (commencing FY15);
Majestic & Imperial open pits; and
Maxwells underground mine.
Mining and production statistics for the Mount Monger Operation for the year ended 30 June 2015 are detailed in Table 3 and Table 4.
Murchison Gold Operation
During the financial year, all care and maintenance payments and site contract restructuring expenses relating to the Murchison Gold
Operation were concluded.
On 6 October 2014, the Company entered into a dry hire lease arrangement with a private consortium for the Murchison processing facility.
The term of the lease is 10 months (“Term”) and commenced 19 January 2015 (“Commencement”). Consideration under the lease is
$7,894,000 payable in equal monthly payments from Commencement. If elected, the Term can be extended by the lessee in two stages:
»
»
Stage 1: at the end of the Term, the Term can be extended for a further 9 months (“Extended Term”) for consideration of
$7,105,000 payable in equal monthly payments; and
Stage 2: at the end of the Extended Term, the Term can be extended for a further 12 months for consideration of $9,474,000
payable in equal monthly payments.
Of the $4,278,000 of lease income recorded by the Company in FY15, $3,158,000 remains unpaid. The lessee has advised the Company
that due to financial difficulties it has temporarily suspended operations and can only resume lease payments once it has secured a new
source of funding. It is understood that the lessee is currently in advanced negotiations with a financier to fund the recommencement of
operations and resume lease payments to Silver Lake. Due to the uncertainty in recovering this balance, the Company has recorded a
provision for doubtful debt at year end for the full amount outstanding.
Notwithstanding this, the Company continues to assess a number of strategic alternatives to further enhance the value of the gold and base
metal assets in the Murchison including the divestment of the asset.
Mining and production statistics for the Murchison Gold Operation for the year ended 30 June 2015 are detailed in Table 5 and Table 6.
Sale Process for the Murchison Operation and Great Southern Project
Silver Lake has commenced a sale process for the Murchison Operation and Great Southern Gold & Base Metals Project (“Great Southern”).
Silver Lake has been assessing a number of strategic alternatives to further enhance the option value of the gold and base metal resources
in the Murchison. As a result of this review, non-core tenure within the Murchison has been offered as a package for divestment, with the
intention of retaining the processing facility, associated infrastructure and other core tenure. However offers to acquire the entire Murchison,
including the processing plant and all tenure, will also be considered by the Company.
The sale process for the Great Southern, located in the Ravensthorpe region of Western Australia, will accommodate offers for either joint
venture (JV) or outright sale. Since announcing at the 2014 AGM that the Company was assessing JV options for the Great Southern, a
number of expressions of interest have been received, sufficient for the Company to commence a formal process for either JV or sale.
The sale processes are consistent with Silver Lake’s strategy of focusing its capital on the project pipeline for the Mount Monger Operation
which is the Company’s core asset.
Safety
There were eight lost time injuries during the financial year and the 12 month moving average Lost Time Injury Frequency Rate (“LTIFR”)
was 9.6 (2014: 3.2), against the gold industry average of 2.6. These injuries resulted primarily from lifting or moving objects in restricted areas
and all but one were low severity.
30
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT Gold Mining and Production Statistics
Group Operations - Mining
Units
FY 2015
FY 2014
Underground
Ore mined
Mined grade
Contained gold in ore
Open Pit
Ore mined
Mined grade
Contained gold in ore
Total ore mined
Mined grade
Contained gold in ore
Table 1
Group Operations - Processing
Ore Milled
Head grade
Contained gold in ore
Recovery
Gold produced
Gold refined and sold
Table 2
Tonnes
g/t Au
Oz
Tonnes
g/t Au
Oz
Tonnes
g/t Au
Oz
Units
Tonnes
g/t Au
Oz
%
Oz
Oz
431,670
6.2
86,093
256,415
2.4
19,384
688,085
4.8
105,477
FY 2015
1,215,308
3.3
127,773
95
121,780
124,209
400,779
6.2
79,774
1,556,312
2.0
101,088
1,957,091
2.9
180,862
FY 2014
3,013,886
2.4
229,939
93
214,866
217,348
Mount Monger - Mining
Units
FY 2015
FY 2014
Underground
Ore mined
Mined grade
Contained gold in ore
Open Pit
Ore mined
Mined grade
Contained gold in ore
Total ore mined
Mined grade
Contained gold in ore
Table 3
Tonnes
g/t Au
Oz
Tonnes
g/t Au
Oz
Tonnes
g/t Au
Oz
431,670
6.2
86,093
256,415
2.4
19,384
688,085
4.8
105,477
400,779
6.2
79,774
627,547
2.8
55,986
1,028,326
4.1
135,760
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
31
DIRECTORS’ REPORT
Mount Monger - Processing
Ore Milled
Head grade
Contained gold in ore
Recovery
Gold produced
Table 4
Murchison - Mining
Open Pit
Ore mined
Mined grade
Contained gold in ore
Table 5
Murchison - Processing
Ore Milled
Head grade
Contained gold in ore
Recovery
Gold produced
Table 6
Exploration
Units
Tonnes
g/t Au
Oz
%
Oz
FY 2015
1,215,308
3.3
127,773
95
121,780
FY 2014
1,931,486
2.9
180,417
95
170,800
Units
FY 2015
FY 2014
Tonnes
g/t Au
Oz
Units
Tonnes
g/t Au
Oz
%
Oz
-
-
-
FY 2015
-
-
-
-
-
928,765
1.5
45,102
FY 2014
1,082,400
1.4
49,523
89
44,066
Silver Lake’s FY15 exploration strategy was to advance development projects with near-term open pit and underground mining potential.
This resulted in positive results from infill and extensional resource definition drilling at Imperial Majestic, Lucky Bay, Santa Area, Rumbles and
Maxwells deposits.
In the last quarter of FY15 the Board approved mining of the Rumbles, Lucky Bay and Santa Area open pit deposits. Production of these open
pits commenced in Q1 FY16 and are expected to have a combined mine life of 14 months, producing approximately 50,000 oz of gold.
Following a strategic exploration review, the Group has identified a number of highly prospective exploration targets. A revised exploration
strategy has been adopted and the Company has increased its FY16 exploration budget by 60% to $15,500,000. Exploration will focus on
highly prospective gold targets at Mount Monger, proximate to existing mine and processing infrastructure.
STRATEGY
The Group’s short to medium term strategy is to maximise cash flow and maintain a strong balance sheet that allows for future growth. This
will be achieved by:
»
»
»
»
»
focussing on maximising cashflow from the Mount Monger Operation;
commencing production from the Lucky Bay, Rumbles and Santa Area open pit mines;
continue generating lease income from the Murchison processing facility or alternatively divesting the asset;
executing the updated exploration strategy by directing expenditure to highly prospective priority targets identified during the
exploration review; and
divestment of the Murchison Operation and Great Southern Project.
32
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT
The Randalls processing facility has capacity of 1.2mtpa and in FY16 will be fed with underground ore from the Daisy Complex and Cock-
eyed Bob underground mines, the Lucky Bay, Rumbles and Santa Area open pit mines and surface stockpiles.
Mining options and optimisation studies continue for a number of near term mine sites in the Mount Monger Region, including the Majestic
and Imperial deposits and the Maxwells Underground deposit. Silver Lake is planning to commence capital works for the Majestic and
Imperial ore sources in Q3 FY16 with associated open pit mining commencing in Q4 FY16 for approximately two years. Subject to ongoing
exploration success at Maxwells, production from Maxwells Underground is capable of being introduced to the production plan in Q3 2017.
Following a strategic exploration review, the Group has identified a number of highly prospective exploration targets. A revised exploration
strategy has been adopted and the Company will increase its FY16 exploration budget by 60% to $15,500,000. Exploration will focus on
highly prospective gold targets at Mount Monger, proximate to existing mine and processing infrastructure. The two core components of
the FY16 exploration strategy comprise:
1)
2)
Resource development drilling at Daisy Complex and Cock-eyed Bob to upgrade Inferred Resources to Indicated category, and
to define new Inferred Resources with extensions to the current lodes; and
Exploration drilling in the Daisy Complex area and Randalls mining centre, focussing on discovery of new gold deposits and
growth of the known resource zones.
Key risks in being able to deliver on the Group’s strategy include:
»
»
»
»
Gold price - It is difficult to accurately predict future demand and gold price movements and such movements may adversely
impact on the Group’s profit margins, future development and planned future production
Exchange rates – The Group is exposed to the Australian dollar currency risk on gold sales, which are denominated in US dollars.
Revenue will therefore be affected by movements in the US dollar gold price or movement in the Australian Dollar exchange rate
(against the US dollar)
Reserves and Resources - The Mineral Resources and Ore Reserves for the Group’s assets are estimates only and no assurance
can be given that they will be realised
Operations - The Group’s gold mining operations are subject to operating risks that could result in decreased production,
increased costs & reduced revenues. Operational difficulties may impact the amount of gold produced, delay deliveries or
increase the cost of mining for varying lengths of time.
»
Exploration success – no assurance can be given that exploration spend will result in future profitable operating mines.
REVIEW OF FINANCIAL CONDITION
The Group recorded an after tax loss for the financial period of $94,024,000 (2014: loss of $170,438,000). This loss includes a number of
significant items, such as the impairment of non-current assets, that in the opinion of the directors need adjustment to enable shareholders
to obtain an understanding of the results from operations. The Group’s earnings before interest, tax, depreciation and amortisation (EBITDA)
excluding these significant items are outlined in the table below:
Reconciliation of Statutory Loss after Tax to EBITDA
(excluding significant items) - unaudited
Statutory loss after tax for the year:
30 June 2015
$’000
30 June 2014
$’000
(94,024)
(170,438)
Adjustments for:
Income tax
Depreciation and amortisation
Impairment of inventories
Non-current asset impairments
Other
EBITDA (excluding significant items) *
* Non-IFRS measure
-
38,409
-
86,994
6,625
38,004
53,142
47,855
1,576
89,624
4,584
26,343
At the end of the financial year the Group had $22,538,000 in cash (2014: $23,937,000), $6,387,000 in gold bullion (2014: $8,216,000) and bonds
receivable of $146,000 (2014: $1,883,000). In addition the Group had $7,561,000 in ASX listed investments at year end (2014: $9,770,000).
Expenditure was principally directed to mining and exploration for gold in Western Australia.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
33
DIRECTORS’ REPORT
CAPITAL STRUCTURE
As at the report date the Company had 503,233,971 fully paid ordinary shares on issue.
CASH FROM OPERATIONS
Details of the Cash from Operations are outlined in Note 15 to the financial statements.
DIVIDENDS
No dividend has been paid or declared by the Company up to the date of this report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There have been no material events that have occurred between the reporting date and the date of signing this report.
LIKELY DEVELOPMENTS
The Company will continue to pursue maximising free cashflow from its core Mount Monger Operation. This will include directing
exploration expenditure to high impact, cash generating projects, a number of which are currently under review.
ENVIRONMENTAL REGULATIONS AND PERFORMANCE
The Company’s operations hold licences issued by the relevant regulatory authorities. These licences specify limits and regulate the
management associated with the operations of the Company. At the date of this report the Company is not aware of any breach of those
environmental requirements.
PERFORMANCE RIGHTS
During the financial year 870,603 performance rights were granted to Luke Tonkin, Managing Director (refer to Remuneration Report for
further details).
No ordinary shares were issued on the exercise of options or performance rights during the financial year.
EMPLOYEES
The consolidated entity had 144 employees as at 30 June 2015 (2014: 169). In addition, Silver Lake also engages contractors and
consultants as required.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has agreed to indemnify the current Directors and Officers against any liability that may arise from their position as Directors
and Officers of the Company except where the liability arises out of conduct involving a lack of good faith.
During the financial year the Company has paid Directors’ & Officers’ insurance premiums in respect of liability of any current and future
Officers, and senior executives of the Company. The amount paid cannot be disclosed due to confidentiality requirements.
Silver Lake has not provided any insurance or indemnity to the auditor of the Company.
PROCEEDINGS ON BEHALF OF THE COMPANY
At the date of this report there are no leave applications or proceedings brought on behalf of the Group under section 237 of the
Corporations Act 2001.
CORPORATE GOVERNANCE
In recognising the need for appropriate standards of corporate behavior and accountability, the Directors of Silver Lake have adhered to the
principles of good corporate governance. The Company’s corporate governance policies are located on the Company’s website.
AUDITOR’S INDEPENDENCE
Section 307C of the Corporations Act 2001 requires Silver Lake’s auditors, KPMG, to provide the Directors of Silver Lake with an
Independence Declaration in relation to the audit of the financial report for the year ended 30 June 2015. This Independence Declaration is
attached to the Directors’ Report and forms a part of the Directors’ Report.
34
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT NON-AUDIT SERVICES
During the year KPMG, the Group’s auditor, has performed certain other services in addition to the audit and review of the financial statements.
The Board is satisfied that the provision of non-audit services is compatible with, and did not compromise the general standard of
independence for auditors imposed by the Corporations Act 2001 for the following reasons:
»
»
all non-audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed by
the Audit Committee to ensure they do not impact the integrity and objectivity of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants, as they do not involve reviewing or auditing the auditor’s own work, acting in a
management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risk and rewards.
Details of the amounts paid to the auditor of the Group, KPMG, and its network firms for audit and non-audit services provided during the
year are set out below:
Taxation services
Audit and review of financial statements
Total paid
SUBSEQUENT EVENTS
2015
$
119,755
225,190
344,945
2014
$
159,030
227,220
386,250
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a
material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the
results of those operations, or the state of affairs of the Group, in future financial years.
ROUNDING OFF
The Group is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in the
consolidated financial statements and Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated.
Drill Rig at Mount Monger Operation
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
35
DIRECTORS’ REPORT
REMUNERATION REPORT - AUDITED
This report outlines the remuneration arrangements in place for both Executives and Non-executive Directors of Silver Lake Resources Limited.
Contents:
1.
2.
3.
4.
5.
6.
Basis of preparation
Key management personnel (KMP)
Remuneration snapshot
Remuneration governance
FY15 Executive remuneration
FY15 Non-executive director (NED) remuneration
Basis of preparation
1.
This remuneration report has been prepared and audited in accordance with the requirements of the Corporations Act 2001 and the
applicable accounting standards. All references to dollars in this remuneration report are to Australian Dollars unless otherwise specified.
Key Management Personnel
2.
Key management personnel (KMP) comprise those persons with authority and responsibility for planning, directing and controlling the
activities of the Company. This includes the Executives and Non-executive directors (NEDs) of the Company. In this report, ‘Executives’
refers to individuals identified as KMP, excluding NEDs and the Chairman.
A list of all NEDS and Executives for FY15 is set out below:
Name
Position
Term as KMP
Paul Chapman
Non-executive Chairman
Luke Tonkin
Les Davis
Director of Operations (until 20 November 2014)
Managing Director (from 20 November 2014)
Managing Director (until 20 November 2014)
Non-executive Director (from 20 November 2014)
David Griffiths
Non-executive Director
Brian Kennedy
Non-executive Director
David Quinlivan
Non-executive Director
Chris Banasik
Director – Exploration & Geology
Peter Johnston
Non-executive Director
Full year
Full year
Full year
Full year
Full year
Appointed 25 June 2015
Resigned 14 November 2014
Resigned 30 April 2015
Peter Armstrong
Chief Financial Officer & Joint Company Secretary
Full year
David Berg
General Counsel & Joint Company Secretary
Appointed 4 August 2014
Antony Shepherd
Exploration & Geology Manager
Appointed 8 September 2014
There have been no changes to KMP since the end of the reporting period up to the date on which the financial report was authorised for issue.
3.
a.
Remuneration snapshot
FY15 Remuneration in review
During the period the Company restructured its business by placing the Murchison Operation on care and maintenance and divesting
the Lakewood processing facility. The Company’s short to medium term strategy is to maximise its cash flow by focusing its activities and
resources on its core Mount Monger Operation.
In November 2014, following the Company’s Annual General Meeting, Luke Tonkin (previously Director of Operations) succeeded Les Davis as
Managing Director of the Company. In addition Chris Banasik ceased as Director of Exploration & Geology in November 2014. The positions of
Director of Operations and Director of Exploration & Geology were not replaced.
36
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT REMUNERATION REPORT - AUDITED
A number of executive appointments were also made during the year, including appointments to the newly established positions of General
Counsel & Joint Company Secretary and Exploration & Geology Manager.
The Board believes that the Company’s remuneration framework is aligned with market practice and that Executive remuneration in FY15
was reasonable, having regard to the performance of the Company, the platform established for ongoing performance improvement and
the experience of the Executives.
The following changes to the remuneration structure were made during the period:
Remuneration element
Details
Fixed remuneration
Effective 1 February 2015, Non-executive Director fees decreased by 9.3% whilst the Non-executive
Chairman’s fee decreased by 10%.
Fixed remuneration for Executives remained broadly in line with FY14 on an aggregate basis, although as
noted above, there were a number of changes to the roles and personnel comprising the Executive team.
Short-term incentive (STI)
STI payments were made to Executives during the period in line with their performance against set targets.
Detailed information on STI payments is included in Section 5(c) of this report.
Long-term incentive (LTI)
870,603 performance rights were granted to Mr Luke Tonkin on the terms approved by shareholders at
the 2014 AGM and described further in this report. No other LTI grants were made in respect of FY15
remuneration.
b.
Key changes to remuneration for FY16
No changes are anticipated to the Executive remuneration framework for FY16.
4.
a.
Remuneration governance
Board and Nomination & Remuneration Committee responsibility
The Nomination & Remuneration Committee is a subcommittee of the Board. It assists the Board to ensure that the Company develops and
implements remuneration policies and practices that are appropriate for a company of the nature, size and standing of the Company.
The Nomination & Remuneration Committee is responsible for making recommendations to the Board on:
a)
b)
c)
the remuneration arrangements (including base pay, performance targets, bonuses, equity awards, superannuation, retirement
rights, termination payments) for senior Executives;
the remuneration of Non-executive Directors; and
the establishment of employee incentive and equity-based plans and the number and terms of any incentives proposed to be
issued to Executives pursuant to those plans, including any vesting criteria.
b.
Remuneration principles
The Company’s remuneration strategy and structure is reviewed by the Board and the Nomination & Remuneration Committee for business
appropriateness and market suitability on an ongoing basis.
KMP are remunerated and rewarded in accordance with the Company’s remuneration policies (outlined in further detail below).
c.
Engagement of remuneration consultants
During the period, the Company did not engage remuneration consultants to provide a “remuneration recommendation” (as that term
is defined in the Corporations Act 2001), however PricewaterhouseCoopers was engaged to provide advice in respect of remuneration
reporting and general advice in respect of market practice for long term incentive plans. In addition, the Nomination & Remuneration
Committee benchmarked KMP salaries using external independent industry reports and data to ensure that remuneration levels are
competitive and meet the objectives of the Company.
d.
2014 AGM voting outcome and comments
The Company received more than 93% “yes” votes on its Remuneration Report for the 2014 financial year.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
37
DIRECTORS’ REPORT REMUNERATION REPORT - AUDITED
FY15 Executive remuneration
5.
a.
Executive remuneration strategy and policy
In determining Executive remuneration, the Board aims to ensure that remuneration practices are:
»
»
»
»
competitive and reasonable, enabling the Company to attract and retain high calibre talent;
aligned to the Company’s strategic and business objectives and the creation of shareholder value;
transparent and easily understood; and
acceptable to shareholders.
The Company’s approach to remuneration ensures that remuneration is competitive, performance-focused, clearly links appropriate reward
with desired business performance, and is simple to administer and understand by Executives and shareholders.
In line with the remuneration policy, remuneration levels and arrangements are reviewed annually to ensure alignment to the market and
the Company’s stated objectives.
The Company’s reward structure provides for a combination of fixed and variable pay with the following components:
»
»
»
fixed remuneration in the form of base salary, superannuation and benefits;
short-term incentives (STI); and
long-term incentives (LTI).
In accordance with the Company’s objective to ensure that executive remuneration is aligned to Company performance, a portion of
Executives’ remuneration is placed “at risk”. The relative proportion of target FY15 total remuneration packages split between the fixed and
variable remuneration is shown below:
Target remuneration mix
Executive
Managing Director
Other Executives
b.
Fixed remuneration
Fixed
remuneration
Target STI
Target LTI
45%
62%
22%
19%
33%
19%
Fixed remuneration is set at a level that is aligned to market benchmarks and reflective of Executives’ skills, experience,
responsibilities and performance.
When positioning base pay, the Company presently aims to position aggregate fixed remuneration at the 50th percentile of the market. This is to
ensure that the Company’s remuneration arrangements remain competitive against peer companies to assist with the retention and attraction of
key talent.
Executive remuneration is benchmarked annually to ASX-listed companies of similar size (by market capitalisation), revenue base, employee
numbers and complexity. Specific reference is also made to peer companies within the mining and exploration sectors.
There is no guaranteed base pay increases included in any Executives’ contracts.
c.
Short-term incentive (STI) arrangements
The purpose of the STI plan is to link the achievement of key Company targets with the remuneration received by those Executives charged
with meeting those targets.
The STI plan provides eligible employees with the opportunity to earn a cash bonus if certain financial hurdles and agreed key performance
indicators (KPIs) are achieved. The Board has determined that the Company must be cash-flow positive, from normal operating and
sustaining capital activities (excluding enhancement activities) for the applicable performance period, for any STI to be paid.
All Executives are eligible to participate in the STI plan with awards capped at 100% of the target opportunity as summarised below:
FY15 Target STI opportunity
Role level
Managing Director
Other Executives
38
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
Target STI opportunity
50% of base salary
30% of base salary
DIRECTORS’ REPORT REMUNERATION REPORT - AUDITED
Each year the Nomination & Remuneration Committee, in conjunction with the Board, sets KPI targets for Executives. Ordinarily, the KPIs
would include measures relating to the Group and the individual (60/40 weighting), and include financial, production, people, safety and
risk measures.
For FY15 the KPIs chosen aligned remuneration with performance and the overall objectives of the Company and included:
»
»
»
»
achievement of the FY15 budget with particular emphasis on safety, cost management, production and cashflow;
undertaking a comprehensive review of the Company’s exploration portfolio and development of a strategic exploration plan with
prioritised targets and milestones;
development of base case and contingency business plans under different assumptions; and
implementation and execution of specified commercial strategies, including divestment of the Lakewood processing facility and
the lease of the Murchison processing facility.
Not all of the above KPIs were assigned to all Executives.
FY15 STI outcomes
Executive
Target STI opportunity
Les Davis (Managing Director until
20 November 2014)
$96,288 (50% of Total Fixed Remuneration.
For period 1 July 2014 to 20 November 2014)
Luke Tonkin (Managing Director from
20 November 2014)
$152,740 (50% of Total Fixed Remuneration.
For period 20 November 2014 to 30 June 2015)
Peter Armstrong (Chief Financial Officer
& Joint Company Secretary)
$93,569 (30% of Total Fixed Remuneration)
David Berg (General Counsel
& Joint company Secretary)
Antony Shepherd
(Exploration Manager)
$75,000 (30% of Total Fixed Remuneration)
$72,000 (30% of Total Fixed Remuneration)
% STI
paid
% STI
forfeited
64
64
34
84
84
36
36
66
16
16
Chris Banasik
(Director – Exploration & Geology)
$39,017 (30% of Total Fixed Remuneration.
For period 1 July 2014 to 14 November 2014)
Resigned
14 November 2014
d.
Long-term incentive (LTI) arrangements
The Company implemented an LTI plan in 2012 to assist in the attraction and retention of experienced, qualified staff. The LTI plan
allows the Company to issue rights to acquire shares (to be granted in the form of Performance Rights) to employees of the Company,
including Executives, as determined by the Board from time to time. No dividends or voting rights are attached to Performance Rights. If the
performance conditions are met at the end of the performance period, the relevant portion of Performance Rights automatically vest and the
holder receives a share for each vested Performance Right. The plan was approved by shareholders at the 2012 AGM.
FY15 LTI outcomes
Executive
Target LTI opportunity
Luke Tonkin (Managing Director
from 20 November 2014)
$350,000 (75% of Total
Fixed Remuneration)
Number of Performance
Rights granted
Fair value per
Performance Right
870,603
$0.125*
* Value determined based on the share price at the date the rights were approved by shareholders, with a 50% reduction applied in
consideration of the likelihood of market based performance conditions being achieved
At the 2014 AGM, the Company sought and obtained shareholder approval to issue 870,603 Performance Rights to Mr Tonkin in respect of
the LTI component of his remuneration for FY15. These Performance Rights were subsequently issued in July 2015.
The Performance Rights will not vest (and the underlying shares will not be issued) unless a hurdle based on relative total shareholder return (TSR)
has been satisfied. TSR measures the growth for a financial year in the price of shares plus cash distributions notionally reinvested in shares.
Relative TSR will be measured by comparing the Company’s TSR with that of a comparator group of companies over the period from 1 July 2014
(i.e. the start of the 2015 financial year) to 30 June 2017 (i.e. the financial year that is 3 years later, being the “Vesting Date”).
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
39
DIRECTORS’ REPORT REMUNERATION REPORT - AUDITED
The Company and comparator TSR performances are measured using the 20 day VWAP calculation up to and including the last business day of
the financial period immediately preceding the period that the performance rights relate to, and in determining the closing TSR performances at
the end of the three year period. Relative TSR performance is calculated at a single point in time and is not subject to re-testing.
The Performance Rights will vest based on the Company’s relative TSR ranking as follows:
Relative TSR Performance
Less than 50th percentile
At the 50th percentile
Performance Vesting Outcome
0% vesting
50% vesting
Between the 50th percentile and 75th percentile
Pro rata / progressive vesting from 50% to 100%
At or above the 75th percentile
100% vesting
The comparator group of companies for the Performance Rights are as follows:
Evolution Mining Ltd; Medusa Mining Ltd; OceanaGold Corporation; Doray Minerals Ltd; Northern Star Resources Ltd; Ramelius Resources
Ltd; Kingsgate Consolidated Ltd; Gold Road Resources Ltd; Regis Resources Ltd; Independence Group NL; St Barbara Ltd; Saracen Mineral
Holdings Ltd and Tanami Gold NL.
At the discretion of the Board, the composition of the comparator group may change from time to time.
No other Performance Rights were granted in respect of Executive Remuneration for FY15. Performance Rights were however granted to
Executives (other than the Managing Director) in July 2015 in respect of FY16. Shareholder approval for the grant of performance rights
to the Managing Director will be sought at the 2015 AGM. Details of these rights will be included in the 2015 Notice of Annual General
Meeting and the FY16 Remuneration Report.
e.
Other payments
During the period, the Company paid a one-off discretionary bonus of $200,000 to Mr Luke Tonkin in respect of the achievement of targets
set by the Board relating to placing the Murchison Operation on care and maintenance. In his previous role as Director of Operations, Mr
Tonkin oversaw the timely closure of the Murchison Operation on time and ahead of budget.
f.
Service agreements
A summary of the key terms of service agreements for Executives in FY15 is set out below.
All Executives are entitled to participate in the Company’s STI and LTI plans.
There is no fixed term for Executive service agreements. The Company may terminate service agreements immediately for cause, in which
case the Executive is not entitled to any payment other than the value of fixed remuneration and accrued leave entitlements up to the
termination date.
40
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT REMUNERATION REPORT - AUDITED
Summary of the key terms of Executive service agreements
Executive
Total
remuneration
package
Luke Tonkin
(Managing Director)
$500,000 plus 12%
superannuation
STI equivalent to 50%
of base salary
LTI equivalent to 75%
of base salary
$311,898 plus 12%
superannuation
STI equivalent to 30%
of base salary
LTI equivalent to 30%
of base salary
$250,000 plus 9.5%
superannuation
STI equivalent to 30%
of base salary
LTI equivalent to 30%
of base salary
Peter Armstrong
(Chief Financial
Officer & Joint
Company Secretary)
David Berg (General
Counsel & Joint
Company Secretary)
Antony Shepherd
(Exploration Manager)
$240,000 plus 9.5%
superannuation
STI equivalent to 30%
of base salary
LTI equivalent to 30%
of base salary
Termination of service agreement
» Either the Executive or the Company may terminate the Executive’s employment for any
reason upon providing six months’ notice to the other party in writing. In this case, the
Executive is not entitled to any termination payment. The Company retains the right to
terminate the Executive’s employment immediately, by making a payment equal to six
months’ pay in lieu of the notice period.
» When the Executive’s position is made redundant and his employment is terminated as
a result of that redundancy, the Company will pay the Executive a severance payment
equal to 12 months of the Executive’s total remuneration package.
» The Company may summarily dismiss the Executive for serious misconduct. In this case,
the Company does not need to provide notice to the Executive and the Executive is
only entitled to be paid for the time worked up to the time of dismissal. In this case, the
Executive is not entitled to any termination payment.
» Either the Executive or the Company may terminate the Executive’s employment for any
reason upon providing six months’ notice (or any shorter period as the Company may
agree) to the other party in writing.
» The Company retains the right to terminate the Officer’s employment immediately, by
making a payment equal to six months’ pay in lieu of the notice period.
» When the Executive’s position is made redundant and his employment is terminated as
a result of that redundancy, the Company will pay the Executive a severance payment
equal to 6 months of the Executive’s total remuneration package.
» Either the Executive or the Company may terminate the Executive’s employment for any
reason upon providing six months’ notice (or any shorter period as the Company may
agree) to the other party in writing.
» The Company retains the right to terminate the Officer’s employment immediately, by
making a payment equal to six months’ pay in lieu of the notice period.
» When the Executive’s position is made redundant and his employment is terminated as
a result of that redundancy, the Company will pay the Executive a severance payment
equal to 6 months of the Executive’s total remuneration package.
» Either the Executive or the Company may terminate the Executive’s employment for any
reason upon providing three months’ notice (or any shorter period as the Company may
agree) to the other party in writing.
» The Company retains the right to terminate the Executive’s employment immediately, by
making a payment equal to three months’ pay in lieu of the notice period.
» When the Executive’s position is made redundant and his employment is terminated as
a result of that redundancy, the Company will pay the Executive a severance payment
equal to 6 months of the Executive’s total remuneration package.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
41
DIRECTORS’ REPORT 6
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42
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT
REMUNERATION REPORT - AUDITED
h.
Link between company performance, shareholder wealth generation and remuneration
The Nomination & Remuneration Committee considers a number of criteria to assess the performance of the Company. Criteria used in this
assessment include maximising of cash flows, managing risk, using a stronger balance sheet to undertake cash accretive investments in
core assets, execution of development projects, exploration success as well as the following indices in respect of the current and previous
financial years.
Cash and Bullion on Hand ($m)
2015
28.9
2014
32.2
2013
19.2
Profit/(Loss) after tax attributable to shareholders ($m)
(94.0)*
(170.4)*
(319.3)*
Cash from operating activities ($m)
Closing share price at 30 June
Dividend paid
29.5
$0.14
-
24.5
$0.51
-
53.9
$0.59
-
2012
72.1
31.2
62.9
$2.81
-
2011
21.0
15.8
33.3
$2.00
-
* Includes impairments on inventories and other non-current assets
The Company’s remuneration arrangements reflect the achievement of certain of the Company’s and KMP’s performance objectives.
The Company’s overall objective has been to strengthen the balance sheet by enhancing operational performance at the Mount Monger
Operation and to divest non-core assets.
In assessing KMP performance during the year, the Committee considered the following achievements:
»
»
»
»
»
»
»
closure of the Murchison Operation and securing a lease arrangement for the Tuckabianna Mill;
streamlining the Mount Monger processing function by divesting the Lakewood Mill and directing all production to the Randalls
processing facility;
commencement of a formal divestment process for the Murchison Operation and Great Southern Project;
implementation of a simple, effective hedging strategy to secure future revenue streams;
improved cash flow from the Mount Monger Operation;
completed a review of the exploration strategy identifying a number of highly prospective exploration targets; and
delivery of positive exploration results from infill and extensional resource definition drilling to allow further mines to enter
production in FY16.
As a result of the financial performance of the Group in 2013 (driven by the decrease in the gold price), the Directors voluntarily assumed a
10% reduction to their remuneration effective 1 July 2013. Furthermore, no STI’s or LTI’s were awarded in FY13 or FY14. During FY15, the
Directors again voluntarily agreed to a fee reduction of 9.3% (10% in respect of the Chairman) effective 1 February 2015.
6.
a.
FY15 Non-executive director (NED) remuneration
NED remuneration policy
The Company’s policy is to remunerate NEDs at market rates (for comparable ASX listed companies) for time, commitment and
responsibilities. Fees for NEDs are not linked to the performance of the Company. However, to align Directors’ interests with shareholders’
interests, Directors are encouraged to hold shares in the Company.
It is ensured that:
a)
b)
c)
d)
fees paid to NEDs are within the aggregate amount approved by shareholders at the Company’s Annual General Meeting;
NEDs are remunerated by way of fees (in the form of cash and/or superannuation benefits);
NEDs are not provided with retirement benefits other than statutory superannuation entitlements; and
NEDs are not entitled to participate in equity-based remuneration schemes designed for executives without due consideration
and appropriate disclosure to the Company’s shareholders.
Fees paid to NEDs cover all activities associated with their role on the Board and any sub-committees. No additional fees are paid to NEDs
for being a Chair or Member of a sub-committee. However, NEDs are entitled to fees or other amounts as the Board determines where
they perform special duties or otherwise perform extra services on behalf of the Company. They may also be reimbursed for out of pocket
expenses incurred as a result of their Directorships.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
43
DIRECTORS’ REPORT REMUNERATION REPORT - AUDITED
b.
NED fee pool and fees
The Company’s Constitution provides that the NEDs may collectively be paid, as remuneration for their services, a fixed sum not exceeding
the aggregate maximum from time to time determined by the Company in a general meeting. Directors’ fees payable in aggregate to the
NEDs of the Company is currently capped at $1,000,000 per annum.
FY15 NED fees
»
»
Chairman
$161,735 plus 9.5% superannuation
NED
$73,460 plus 9.5% superannuation
c.
NED fees paid
Details of the remuneration of each NED for the year ended 30 June 2015 is set out in the following table:
Short Term
Post-
employment
Other
Base
Emolument
$
STI Cash
Payment
$
Total
Benefits
$
Superannuation
benefits
$
Options
$
Total
$
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
172,624
177,500
45,555
-
77,955
78,499
77,955
78,499
-
-
66,371
78,499
440,460
412,997
-
-
-
-
-
-
-
-
-
-
-
-
-
-
172,624
177,500
45,555
-
77,955
78,499
77,955
78,499
-
-
66,371
78,499
440,460
412,997
16,399
16,649
4,328
-
7,406
7,492
7,406
7,492
-
-
6,305
7,492
41,844
39,125
-
-
-
-
-
-
-
-
-
-
-
-
-
-
189,023
194,149
49,883
-
85,361
85,991
85,361
85,991
-
-
72,676
85,991
482,304
452,122
Paul Chapman
Non-executive Chairman
Les Davis*
Non-executive Director
David Griffiths
Non-executive Director
Brian Kennedy
Non-executive Director
David Quinlivan**
Non-executive Director
Peter Johnston***
Non-executive Director
Total
Total
*
**
***
Mr Davis appointed a NED on 20 November 2014
Mr Quinlivan appointed a NED on 25 June 2015
Mr Johnston resigned as NED on 30 April 2015
Movement in Options
There were no options granted to KMP during FY15. The movement, during the reporting period, in the number of options over ordinary shares in
the Company held, directly, indirectly or beneficially by key management personal, including their related parties, is outlined below:
Key Management
Personal
Luke Tonkin (i)
Total
Held at
1 July 2014
2,000,000
2,000,000
Granted
Exercised
Held at
30 June 2015
Vested
During
The Year
Vested &
Exercisable at
30 June 2015
-
-
-
-
2,000,000
400,000
2,000,000
400,000
400,000
400,000
(i)
Employee options (equity-settled)
44
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT
REMUNERATION REPORT - AUDITED
On 14 October 2013 the Group granted Mr Luke Tonkin, (at the time Executive Director of Operations), a total of 2,000,000 employee
options as part of his employment agreement which were approved by shareholders at the Annual General Meeting on 15 November
2013. The total expense recognised in the Statement of Profit or Loss for these options for the period ended 30 June 2015 was $253,087
(included within the total $289,363 value reflected in the remuneration table in Section 5(g)). Details of the options are summarised in the
following table:
Number of options
Exercise price
Issue date
Vesting date
Expiry date
Tranche A
Tranche B
400,000
$0.94
600,000
$1.03
Tranche C
1,000,000
$1.14
18 November 2013
18 November 2013
18 November 2013
15 January 2015
15 January 2016
15 January 2017
18 November 2017
18 November 2017
18 November 2017
The inputs used in the measurement of the fair values at grant date were as follows:
Valuation at grant date
Share price at grant date
Volatility
Risk free rate
Expected dividends
Tranche A
Tranche B
Tranche C
$0.36
$0.67
80%
3.03%
-
$0.34
$ 0.67
80%
3.03%
-
$0.33
$0.67
80%
3.03%
-
The fair value of the options was measured using a binomial option pricing model. A Black Scholes option pricing model was used to validate
the valuation prices calculated by the binomial option pricing model. Whilst there are no performance conditions attached to the exercise of
these options, the exercise price of the options were set at a premium (between 40%-70%) to the prevailing share price at date of grant.
Movement in Performance Rights
On 21 July 2015 the Company issued Mr Tonkin a total of 870,603 Performance Rights as part of the LTI component of his FY15
remuneration which were approved by shareholders at the Annual General Meeting on 20 November 2014. The total expense recognised
in the Statement of Profit or Loss for these rights for the period ended 30 June 2015 was $36,275 (included within the total $289,363 value
reflected in the remuneration table in Section 5(g)).
This was the only movement in Performance Rights over ordinary shares in the Company held, directly, indirectly or beneficially by KMP
during the period.
Commencement of Lucky Bay Open Pit
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
45
DIRECTORS’ REPORT
REMUNERATION REPORT - AUDITED
Movement in Shares
The movement during the reporting period in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by each
key management person, including their related parties, is as follows:
Shares
Acquired
Shares
Exercised
Shares
Sold
Other **
Held at
30 June 2015
Key Management Person
Paul Chapman
Luke Tonkin
Les Davis
David Griffiths
Brian Kennedy
David Quinlivan*
Peter Armstrong
David Berg*
Antony Shepherd*
Chris Banasik
Peter Johnston
Total
Held at
1 July 2014
5,334,294
-
4,525,294
4,393,671
4,790,746
-
499,959
-
-
4,250,294
4,621,194
-
-
-
-
-
-
-
10,416
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,250,294)
(4,621,194)
5,334,294
-
4,525,294
4,393,671
4,790,746
-
499,959
10,416
-
-
-
(8,871,488)
19,554,380
28,415,452
10,416
*
**
Commenced employment during the current period
Balance reported is the shareholding on the date of resignation
Key Management Person
Held at
1 July 2013
Shares
Acquired
Shares
Exercised
Shares
Sold
Other
Held at
30 June 2014
Paul Chapman
Luke Tonkin
Les Davis
David Griffiths
Brian Kennedy
Peter Armstrong
Chris Banasik
Peter Johnston
Total
5,099,000
235,294
-
4,290,000
4,158,377
4,555,452
499,959
4,015,000
4,368,253
-
235,294
235,294
235,294
-
235,294
252,941
26,986,041
1,429,411
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,334,294
-
4,525,294
4,393,671
4,790,746
499,959
4,250,294
4,621,194
28,415,452
The Directors’ Report is signed in accordance with a resolution of the Directors.
Luke Tonkin
Managing Director
28 August 2015
46
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT
1.
In the opinion of the Directors:
a)
the consolidated financial statements and notes of the Group and the Remuneration Report in the Directors’ Report are in
accordance with the Corporations Act 2001 including:
i)
ii)
Giving a true and fair view of the Group’s financial position as at 30 June 2015 and of its performance for the year then
ended; and
Complying with Australian Accounting Standards (including Australian Accounting Interpretations) and Corporations
Regulations 2001;
b)
c)
d)
the financial statements also comply with International Financial Reporting Standards as disclosed in Note 2;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
There are reasonable grounds to believe that the Company and the Group entity identified in Note 38 will be able to meet
any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between
the Company and that Group entity pursuant to ASIC Class Order 98/1418.
2.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with s295A of
the Corporations Act 2001 from the Managing Director and Chief Financial Officer for the financial year ended 30 June 2015.
The declaration is signed in accordance with a resolution of the Board of Directors.
Luke Tonkin
Managing Director
28 August 2015
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
47
DIRECTORS’ DECLARATION 48
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
AUDITOR’S INDEPENDENCE DECLARATION SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
49
INDEPENDENT AUDIT REPORT 50
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
INDEPENDENT AUDIT REPORT For the year ended 30 June 2015
Revenue
Cost of sales
Gross profit/(loss)
Other income
Gain on dilution of investment
Business combination expense
Loss on sale of assets
Impairment losses
Administrative expenses
Results from operating activities
Finance income
Finance expenses
Net finance (costs)/income
Loss before income tax
Income tax expense
Loss for the year
Total comprehensive loss attributable to:
Owners of the Company
Loss per share
Basic loss per share
Diluted loss per share
30 June
2015
$’000
185,956
(176,994)
8,962
4,874
-
-
(4,549)
(86,994)
(11,282)
(88,989)
201
(5,236)
(5,035)
(94,024)
-
(94,024)
30 June
2014
$’000
309,661
(331,814)
(22,153)
202
1,847
(306)
-
(89,624)
(8,828)
(118,862)
5,110
(3,544)
1,566
(117,296)
(53,142)
(170,438)
(94,024)
(170,438)
Cents
Per Share
(18.68)
(18.68)
Cents
Per Share
(38.01)
(38.01)
Notes
7
8
21
9
11
12
13
13
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes
to these consolidated financial statements.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
51
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
As at 30 June 2015
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Total current assets
Non-current assets
Exploration, evaluation and development expenditure
Property, plant and equipment
Investments
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing liabilities
Rehabilitation and restoration provision
Employee benefits
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Rehabilitation and restoration provision
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
30 June
2015
$’000
30 June
2014
$’000
Notes
14
16
17
18
19
20
22
23
26
24
23
26
27
28
22,538
4,966
18,831
62
46,397
143,479
58,394
7,561
209,434
255,831
25,172
10,320
786
1,613
37,891
6,062
29,272
35,334
73,225
182,606
23,937
13,093
28,350
154
65,534
233,547
67,918
9,770
311,235
376,769
45,055
3,207
-
1,884
50,146
9,615
40,667
50,282
100,428
276,341
699,564
505
(517,463)
182,606
699,564
216
(423,439)
276,341
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes to these consolidated
financial statements.
52
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 30 June 2014
Notes
Balance at 1 July 2013
Total comprehensive loss for the year
Transactions with owners, recorded directly in equity
Issue of ordinary shares net of costs and tax
Equity settled share based payment
27
28
Total transactions with owners of the Company
Balance at 30 June 2014
For the year ended 30 June 2015
Share
Capital
$’000
613,662
-
85,902
-
85,902
699,564
Option
Reserve
$’000
Retained
Earnings
$’000
Total
Equity
$’000
-
-
-
216
216
216
(253,001)
360,661
(170,438)
(170,438)
-
-
-
(423,439)
85,902
216
86,118
276,341
Share
Capital
$’000
Option
Reserve
$’000
Retained
Earnings
$’000
Total
Equity
$’000
Notes
Balance at 1 July 2014
699,564
216
(423,439)
276,341
Total comprehensive loss for the year
Transactions with owners, recorded directly in equity
Equity settled share based payment
28
Total transactions with owners of the Company
-
-
-
Balance at 30 June 2015
699,564
-
(94,024)
(94,024)
289
289
505
-
-
289
289
(517,463)
182,606
The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes to these consolidated
financial statements.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
53
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2015
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Stamp duty paid
Net cash from operating activities
Cash flow from investing activities
Interest received
Acquisition of plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of investment
Exploration, evaluation and development expenditure
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of share capital
Refund of bonds
Proceeds from gold pre-pay arrangement
Repayment of interest bearing liabilities
Interest paid
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
30 June
2015
$’000
30 June
2014
$’000
Notes
189,249
301,470
(156,553)
(275,824)
(3,207)
29,489
201
(7,041)
1,500
-
(32,557)
(37,897)
-
1,996
10,000
(3,120)
(1,867)
7,009
(1,399)
23,937
22,538
15
27
14
(1,178)
24,468
349
(8,276)
15
135
(35,527)
(43,304)
85,902
-
-
(53,726)
(2,076)
30,100
11,264
12,673
23,937
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes to the consolidated
financial statements.
54
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
CONSOLIDATED STATEMENT OF CASH FLOWS
1.
REPORTING ENTITY
Silver Lake Resources Limited (“Silver Lake” or “the Company”) is a company domiciled in Australia. The consolidated financial statements
of the Company as at and for the year ended 30 June 2015 comprise the Company and its subsidiaries (together referred to as “the
Group” and individually as “Group Entities”) and the Group’s interests in associates. The Group is a for profit entity primarily involved in the
exploration and production of gold.
2. BASIS OF PREPARATION
(a) Statement of Accounting
The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian
Accounting Standards (“AASBs”) (including Australian Accounting interpretations) adopted by the Australian Accounting Standards Board
(“AASB”) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards
(“IFRSs”) and interpretations adopted by the International Accounting Standards Board (“IASB”).
The consolidated financial statements were approved by the Board of Directors on 28 August 2015.
(b) Basis of Measurement
The financial statements are presented on the historical cost basis except for the following items in the statement of financial position:
»
»
»
»
»
investments which have been measured at fair value.
equity settled share based payment arrangements have been measured at fair value.
inventories which have been measured at the lower of cost and net realisable value.
exploration, evaluation and development assets which have been measured at recoverable value.
assets and liabilities acquired as a result of a business acquisition which have been measured at fair value.
Functional and Presentation Currency
(c)
These consolidated financial statements are prepared in Australian dollars, which is the functional currency of the Company and its subsidiaries.
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, all financial
information has been rounded off to the nearest thousand dollars, unless otherwise stated.
(d) Use of Judgements and Estimates
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are
based on historical experience and various factors that are believed to be reasonable under the circumstances. The results of which forms
the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision
affects both current and future periods.
In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that
have the most significant effect on the amounts recognised in the financial statements, and have a significant risk of resulting in a material
adjustment within the next financial year, are described in the following notes:
»
»
»
»
»
»
Note 3 (c)(i)
Exploration and evaluation expenditure carried forward
Note 3 (c)(ii) Amortisation of development expenditure
Note 3 (c)(iii) Reserves and resources
Note 3 (g)
Impairment of assets
Note 3 (j)
Closure and rehabilitation
Note 3 (q)
Income Tax
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements,
and have been applied consistently by Group entities.
(a) Basis for Consolidation
(i)
Business Combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is
transferred to the Group. Control is where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
The Group measures goodwill at the acquisition date as:
»
»
The fair value of the consideration transferred; less
The net recognised amount (generally fair value) of the identifiable assets and liabilities assumed.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a
business combination are expensed as incurred.
Goodwill that arises on the acquisition of subsidiaries is included in intangible assets.
Goodwill is measured at cost less accumulated impairment losses. In respect of equity-accounted investees, the carrying amount of
goodwill is included in the carrying amount of the investment, and any impairment loss is allocated to the carrying amount of the equity-
accounted investee as a whole.
(ii)
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
(iii)
Investments in Associates and Joint Ventures (Equity-Accounted Investees)
Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating
policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity.
Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement, over the net assets
of the arrangement and requiring unanimous consent for strategic financial and operating decisions.
Investments in associates and joint ventures are accounted for using the equity method (equity-accounted investees) and are initially
recognised at cost. The cost of the investment includes transaction costs.
The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity-accounted
investees, after adjustment to align the accounting policies with those of the Group, from the date that significant influence or joint control
commences until the date that significant influence or joint control ceases.
When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the interest, including any
long-term investments that form part thereof, is reduced to zero, and the recognition of further losses is discounted except to the extent that
the Group has an obligation or has made payments on behalf of the investee.
(iv)
Joint Operation Arrangements
The Group has investments in joint operations but they are not separate legal entities. They are contractual arrangements between
participants for the sharing of costs and outputs and do not in themselves generate revenue and profit. The joint operations are of the
type where initially one party contributes tenements with the other party earning a specified percentage by funding exploration activities;
thereafter the parties often share exploration and development costs and output in proportion to their ownership of joint operation assets.
The joint operations do not hold any assets and accordingly the Group’s share of exploration evaluation and development expenditure is
accounted for in accordance with the policy set out in Note 3 (c).
(v)
Transactions Eliminated on Consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in
preparing the consolidated financial statements.
56
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Financial Instruments
(b)
The Group initially recognises loans and receivables on the date they originated. All other financial assets and financial liabilities are initially
recognised on the trade date.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the right to
receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are
transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the
transferred asset. Any interest in such derecognised financial assets that is created or retained by the Group is recognised as a separate
asset or liability.
(i)
Non-Derivative Financial Instruments
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of
the other categories of financial assets. Available-for-sale financial assets are recognised initially at fair value plus any directly attributable
transaction costs.
Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses are recognised in other
comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the cumulative gain or loss
in equity is reclassified to profit or loss.
Available-for-sale financial assets comprise equity securities.
Financial assets at fair value through profit or loss
A financial asset is classified as at fair value through profit or loss if it is classified as held-for-trading or is designated at such on initial
recognition. Financial assets are designated at fair value through profit or loss if the Group manages such investments and makes purchase
and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy.
Attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at
fair value and changes therein are recognised in profit or loss.
Financial assets designated at fair value through profit or loss comprise investments in equity securities that otherwise would have been
classified as available-for-sale.
Other non-derivative financial instruments
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings and trade and
other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit and loss, any directly
attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured at amortised costs.
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date
that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term
commitments. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a
component of cash and cash equivalents for the purpose of the statement of cash flows.
All borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial
recognition, interest-bearing borrowings are subsequently measured at amortised cost using the effective interest method. Fees paid on the
establishment of loan facilities that are yield related are included as part of the carrying amount of the borrowings.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12
months after the reporting date.
(ii)
Derivative Financial Instruments
The Group occasionally uses derivative financial instruments such as gold options and gold forward contracts to manage the risks
associated with commodity price.
The sale of gold under such hedge instruments is accounted for using the ‘own use exemption’ under AASB 139 Financial Instruments
and as such all hedge revenue is recognised in the Profit and Loss and no fair value adjustments are subsequently made to sales yet to be
delivered under the hedging program.
The fair value of derivative financial instruments that are traded on an active market is based on quoted market prices at the statement of
financial position date. The fair value of financial instruments not traded on an active market is determined using appropriate valuation
techniques. A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial
assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers
the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Financial liabilities are
derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (c)
Exploration and Evaluation and Mining Assets
(i)
Exploration and Evaluation Expenditure
Exploration for and evaluation of mineral resources is the search for mineral resources after the entity has obtained legal rights to explore in a
specific area, as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource. Accordingly,
exploration and evaluation expenditures are those expenditures incurred by the Group in connection with the exploration for and evaluation
of minerals resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.
Accounting for exploration and evaluation expenditures is assessed separately for each ‘area of interest’. An ‘area of interest’ is an individual
geological area which is considered to constitute a favourable environment for the presence of a mineral deposit or has been proved to
contain such a deposit.
Expenditure incurred on activities that precede exploration and evaluation of mineral resources, including all expenditure incurred prior to
securing legal rights to explore an area, is expensed as incurred.
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are carried
forward only if they relate to an area of interest for which rights of tenure are current and in respect of which:
»
»
such costs are expected to be recouped through successful development and exploitation or from sale of the area; and
exploration and evaluation activities in the area have not, at balance date, reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable resources, and active and significant operations in, or
relating to, this area are continuing.
Accumulated costs in respect of areas of interest which are abandoned are written off in full against profit 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
the area of interest.
Exploration and evaluation assets include:
»
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»
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acquisition of rights to explore;
topographical, geological, geochemical and geophysical studies;
exploration drilling, trenching and sampling; and
activities in relation to evaluating the technical feasibility and commercial viability of extracting the mineral resource.
General and administrative costs are allocated to, and included in, the cost of exploration and evaluation assets only to the extent that those
costs can be related directly to the operational activities in the area of interest to which the exploration and evaluation assets relate. In all
other instances, these costs are expensed as incurred.
Exploration and evaluation assets are classified as intangible. As the assets are not yet ready for use, they are not depreciated. Assets that
are classified as tangible assets include:
»
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piping and pumps;
tanks; and
exploration vehicles and drilling equipment.
Assets that are classified as intangible assets include:
»
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drilling rights;
acquired rights to explore;
exploration drilling costs; and
trenching and sampling costs.
Exploration and evaluation assets are transferred to Development Assets once technical feasibility and commercial viability of an area of interest is
demonstrable. Exploration and evaluation assets are tested for impairment, and any impairment loss is recognised, prior to being reclassified.
58
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Impairment testing of exploration and evaluation assets
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility and commercial
viability or facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
Exploration and evaluation assets are tested for impairment when any of the following facts and circumstances exist:
»
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»
»
the term of exploration license in the specific area of interest has expired during the reporting period or will expire in the near
future, and is not expected to be renewed;
substantive expenditure on further exploration for and evaluation of mineral resources in the specific area are not budgeted or planned;
exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable
quantities of mineral resource and the decision was made to discontinue such activities in the specific area; or
sufficient data exists to indicate that, although a development in the specific area of interest is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.
When a potential impairment is indicated, an assessment is performed for each CGU which is no larger than the area of interest. The Group
performs impairment testing in accordance with accounting policy 3(g).
(ii)
Mine Properties and Mining Assets
Mine properties represents the acquisition cost and/or accumulated exploration, evaluation and development expenditure in respect of
areas of interest in which mining has commenced.
Mine development costs are deferred until commercial production commences. When commercial production is achieved mine
development is transferred to mine properties, at which time it is amortised on a unit of production basis based on ounces mined over the
total estimated resources related to this area of interest.
Significant factors considered in determining the technical feasibility and commercial viability of the project are the completion of a
feasibility study, the existence of sufficient resources to proceed with development and approval by the board of Directors to proceed with
development of the project.
Development expenditure is capitalised as either a tangible or intangible asset depending on the nature of the costs incurred.
Development expenditure includes the following:
»
»
»
»
reclassified exploration and evaluation assets;
direct costs of construction;
pre-production stripping costs; and
an appropriate allocation of overheads and borrowing costs incurred during the construction phase.
Open pit waste removal costs incurred in the development of a mine before production commences are capitalised as part of the mine
development costs, which are subsequently amortised over the life of the open pit resource, once transferred to mine properties.
Underground development expenditure incurred in respect of a mine development after the commencement of production is carried
forward as part of mine development only when substantial future economic benefits are expected. Otherwise, this expenditure is classified
as part of production and expensed as incurred.
The Group applies the units of production method for amortisation of its mine properties, which results in an amortisation charge
proportional to the depletion of the anticipated remaining life of mine production. These calculations require the use of estimates and
assumptions in relation to reserves and resources, metallurgy and the complexity of future capital development requirements. These
estimates and assumptions are reviewed annually; changes to these estimates and assumptions may impact the amortisation charge in the
income statement and asset carrying values which would be adjusted if appropriate on a prospective basis.
The Group uses ounces mined over JORC compliant resources as its basis for depletion of mine properties. In the absence of reserves the
Group believes resources is the best measure as evidenced by historical conversion of resources to reserves. The Group applies a discount
of 20% to ounces within the inferred resource category and 10% to ounces in the indicated resource category when adopting the units of
production method to reflect the risk of conversion from the inferred and indicated categories to reserves.
(iii)
Reserves and Resources
Resources are estimates of the amount of gold product that can be economically extracted from the Group’s mine properties. In order
to calculate resources, estimates and assumptions are required about a range of geological, technical and economic factors, including
quantities, grades, production techniques, recovery rates, production costs, future capital requirements, short and long term commodity
prices and exchange rates.
Estimating the quantity and/or grade of resources requires the size, shape and depth of ore bodies to be determined by analysing
geological data. This process may require complex and difficult geological judgments and calculations to interpret the data.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The Group determines and reports ore resources under the Australian Code of Reporting for Mineral Resource and Ore Reserves (2004
and 2012), known as the JORC Code. The JORC Code requires the use of reasonable assumptions to calculate resources. Due to the fact
that economic assumptions used to estimate resources change from period to period, and geological data is generated during the course
of operations, estimates of resources may change from period to period. Changes in reported resources may affect the Group’s financial
results and financial position in a number of ways, including:
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»
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asset carrying values may be impacted due to changes in estimates of future cash flows;
amortisation charged in the income statement may change where such charges are calculated using the units of production basis;
decommissioning, site restoration and environmental provisions may change due to changes in estimated resources after
expectations about the timing or costs of these activities change; and
recognition of deferred tax assets, including tax losses.
(d) Deferred Stripping Costs
Stripping costs incurred in the development of a mine before production commences are capitalised as part of the mine development costs
and amortised over the life of the mine on a unit of production basis.
The Group incurs waste removal costs (stripping costs) during the development and production phases of its surface mining operations.
During the production phase, stripping costs (production stripping costs) can be incurred both in relation to the production and the
inventory period, and the creation of improved access and mining flexibility in relation to ore to be mined in the future. The former are
included as part of the costs of inventory, while the latter are capitalised as a stripping activity asset, where certain criteria are met. Significant
judgement is required to distinguish between development stripping and production stripping and to distinguish between production
stripping which relates to the extraction of inventory and that which relates to the creation of a stripping activity asset.
Once the Group has identified its production stripping for each surface mining operation, it identifies the separate components for the ore bodies
in each of its mining operations. An identifiable component is a specific volume of the ore body that is made more accessible by the stripping
activity. Significant judgement is required to identify and define these components, and also to determine the expected volumes of waste to be
stripped and ore to be mined in each of these components. These assessments are undertaken for each individual mining operation based on the
information available in the mine plan. The mine plans, and therefore the identification of components, will vary between mines for a number of
reasons including the geological characteristics of the ore body, the geographical location and/or financial considerations.
Judgement is also required to identify a suitable measure to be used to allocate production stripping costs between inventory and any
stripping activity asset(s) for each component. The group considers that the ratio of the expected volume of waste to be stripped for an
expected volume of ore to be mined for a specific component of the ore body, to be the most suitable measure.
Furthermore, judgements and estimates are also used to apply the units of production method determining the depreciable lives of the
stripping activity asset(s).
(e) Plant and Equipment
Items of plant and equipment are stated at their cost less accumulated depreciation and impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost
of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the
costs of dismantling and removing the items and restoring the site on which they are located.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major
components) of property, plant and equipment.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that
the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-
day servicing of property, plant and equipment are recognised in profit or loss as incurred.
Depreciation is recognised in profit or loss and is calculated on either a reducing balance basis or on a straight-line basis over the estimated
useful life of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and
their useful life. Land is not depreciated. Depreciation of the processing plant is based on the life of the mine.
The estimated useful lives for the current and comparative period are as follows:
Buildings
Haul roads
Plant and equipment
Office furniture and equipment
Motor vehicles
Period
10 Years
10 Years
3-10 Years
3-15 Years
3-5 Years
Depreciation methods, useful lives and residual values are reassessed at each reporting date.
Capital work in progress is not depreciated until it is ready for use.
60
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Inventory
(f)
Inventories of broken ore, gold in circuit, gold bullion and work in progress are physically measured or estimated and valued at the lower of
cost and net realisable value.
The cost comprises direct materials, labour and transportation expenditure in bringing such inventories to their existing location and
condition, together with an appropriate portion of fixed and variable overhead expenditure based on weighted cost incurred during the
period in which such inventories were produced.
Net realisable value is the estimated selling price in the ordinary course of business less estimated cost of completion and the estimated
cost necessary to perform the sale. Inventories of consumable supplies and spare parts that are expected to be used in production are
valued at cost. Obsolete or damaged inventories of such items are valued at net realisable value.
Consumables and spare parts are valued at the lower of cost and net realisable value. Any provision for obsolescence is determined by
reference to specific stock items identified.
(g)
Impairment
(i)
Financial Assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset
is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash
flows of the asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount,
and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed
collectively in groups that share similar credit risk characteristics.
The impairment losses are recognised in profit and loss. An impairment loss is reversed if the reversal can relate objectively to an event occurring
after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in profit and loss.
(ii)
Non-Financial Assets
The carrying amounts of the Group’s non-financial assets, other than inventories, exploration and evaluation expenditure and deferred tax
assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the
asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing
value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”).
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment
losses are recognised in profit and loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the
carrying amount of any goodwill and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro-rata basis.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised. An impairment loss in respect of goodwill is not reversed.
(h) Employee Benefits
(i)
Defined Contribution Superannuation Funds
Obligations for contributions to defined contribution superannuation funds are recognised as an expense in profit or loss when they are incurred.
(ii)
Other Long-Term Employee Benefits
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return
for their service in the current and prior periods plus related on costs; that benefit is discounted to determine its present value, and the fair
value of any related assets is deducted. The discount rate is the yield at the reporting date on Australian corporate bonds that have maturity
dates approximating the terms of the Group’s obligations.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (iii)
Short-Term Benefits
Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present obligations resulting from employees’
services provided to reporting date and are calculated at undiscounted amounts based on remuneration wage and salary rates that the
Group expects to pay as at reporting date including related on-costs, such as workers compensation insurance and payroll tax. Non-
accumulating non-monetary benefits, such as medical care, housing, cars and free or subsidised goods and services, are expensed based
on the net marginal cost to the Group as the benefits are taken by the employees.
(iv)
Share-Based Payment Transactions
The grant date fair value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity,
over the period that the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted to
reflect the actual number of share options that vest, except for those that fail to vest due to market conditions not being met.
Provisions
(i)
A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are
determined by discounting the expected future cash flows at a discount rate that reflects current market assessments of the time value of
money and, when appropriate, the risks specific to the liability.
Closure and Rehabilitation
(j)
The mining, extraction and processing activities of the Group normally give rise to obligations for site closure or rehabilitation. Closure
and rehabilitation works can include facility decommissioning and dismantling; removal or treatment of waste materials; site and land
rehabilitation. The extent of work required and the associated costs are dependent on the requirements of relevant authorities and the
Group’s environmental policies.
Provisions for the cost of each closure and rehabilitation program are recognised when the Group has a present obligation and it is probable
that rehabilitation/restoration costs will be incurred at a future date, which generally arises at the time that environmental disturbance
occurs. When the extent of disturbance increases over the life of an operation, the provision is increased accordingly.
Costs included in the provision encompass all closure and rehabilitation activity expected to occur progressively over the life of the operation
and at the time of closure, in connection with disturbances, as at the reporting date. Routine operating costs that may impact the ultimate closure
and rehabilitation activities, such as waste material handling conducted as an integral part of a mining or production process, are not included in
the provision. Costs arising from unforeseen circumstances, such as the contamination caused by unplanned discharges, are recognised as an
expense and liability when the event gives rise to an obligation which is probable and capable of reliable estimation.
The timing of the actual closure and rehabilitation expenditure is dependent upon a number of factors such as the life and nature of the
asset, the operating licence conditions and the environment in which the mine operates. Expenditure may occur before and after closure
and can continue for an extended period of time dependent on closure and rehabilitation requirements. Closure and rehabilitation
provisions are measured at the expected value of future cash flows, discounted to their present value and determined according to the
probability of alternative estimates of cash flows occurring for each operation. Significant judgements and estimates are involved in forming
expectations of future activities and the amount and timing of the associated cash flows.
When provisions for closure and rehabilitation are initially recognised, to the extent that it is probable that future economic benefits
associated with the rehabilitation, decommissioning and restoration expenditure will flow in the entity, the corresponding cost is capitalised
as an asset. The capitalised cost of closure and rehabilitation activities is recognised in exploration evaluation and mine properties and
property, plant and equipment as appropriate and depreciated/amortised accordingly. The value of the provision is progressively increased
over time as the effect of discounting unwinds, creating an expense recognised in finance expenses.
Closure and rehabilitation provisions are also adjusted for changes in estimates. Those adjustments are accounted for as a change in the
corresponding capitalised cost, except where a reduction in the provision is greater than the undepreciated capitalised cost of the related
assets, where it is probable that future economic benefits will flow to the entity, in which case the capitalised cost is reduced to nil and
the remaining adjustment is recognised in the income statement. Adjustments to the estimated amount and timing of future closure and
rehabilitation cash flows are a normal occurrence in light of the significant judgements and estimates involved. Factors influencing those
changes include:
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»
»
»
revisions to estimated reserves, resources and lives of operations;
regulatory requirements and environmental management strategies;
changes in the estimated costs of anticipated activities, including the effects of inflation and movements in foreign exchange rates;
movements in interest rates affecting the discount rate applied; and
the timing of cash flows.
At each reporting date the rehabilitation and restoration provision is remeasured to reflect any of these changes.
62
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (k) Assets held for sale
Assets that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale.
Immediately before classification as held for sale, the assets, or components of a disposal group, are measured in accordance with the
Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and
fair value less cost to sell. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are
recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.
Revenue
(l)
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable. Revenue is recognised when the
significant risk and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of
revenue can be measured reliably.
(m) Lease Payments
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. On initial
recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease
payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
Other leases are operating leases and are not recognised in the Group’s statement of financial position.
Payments made under operating leases are recognised in profit and loss on a straight-line basis over the term of the lease. Lease incentives
received are recognised as an integral part of the total lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding
liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the
remaining balance of the liability.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the
contingency no longer exists and the lease adjustment is known.
Finance Income and Expenses
(n)
Interest income comprises interest income on funds invested and is recognised as it accrues, using the effective interest method.
Finance expenses comprise interest expense on borrowings and unwinding of the discount on provisions. All borrowing costs are
recognised in profit and loss using the effective interest method in the period in which they are incurred except borrowing costs that are
directly attributable to the acquisition, construction and production of a qualifying asset that necessarily takes a substantial period to get
ready for its intended use or sale. In this case, borrowing costs are capitalised as part of the cost of the qualifying asset.
Issued Capital
(o)
Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the
issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.
Earnings Per Share
(p)
The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated as profit/loss
attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares. Diluted EPS is
determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares
outstanding for the effects of all dilutive potential ordinary shares, including share options granted to employees.
Income Tax
(q)
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates
to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting
date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following
temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly
controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are
expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted
by the reporting date.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable
that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Tax Consolidation
The Company and its wholly-owned Australian resident entities are part of a tax-consolidated group. As a consequence, all members of the
tax-consolidated group are taxed as a single entity. The head entity within the tax-consolidation group is Silver Lake Resources Limited.
Current tax expense/benefit, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-
consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the ‘separate
taxpayer within the group’ approach by reference to the carrying amounts of assets and liabilities in the separate financial statements of
each entity and the tax values applying under tax consolidation.
Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the subsidiaries are assumed by the head
entity in the tax-consolidated group and are recognised by the Company as amounts payable (receivable) to/(from) other entities in the tax-
consolidated group. Any differences between these amounts are recognised by the Company as an equity contribution or distribution.
The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable
that the future taxable profits of the tax-consolidated group will be available against which the asset can be utilised.
Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of the
probability of recoverability is recognised by the head entity only.
(r) Goods and Services Tax (“GST”)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from
the Australian Tax Office (“ATO”). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an
item of the expense as applicable.
Receivables and payables in the statement of financial position are shown inclusive of GST. The net amount of GST recoverable from, or
payable to, the ATO is included as a current asset or liability in the statement of financial position.
Cash flows are included in the statement of cash flow on a gross basis. The GST components of cash flows arising from investing and
financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
(s) Segment Reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’
operating results are reviewed regularly by the Group’s Managing Director to make decisions about resources to be allocated to the
segment and to assess its performance, and for which discrete financial information is available.
Segment results that are reported to the Managing Director include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other
than goodwill, but including exploration evaluation and mining assets
(t) New Standards and interpretations not yet adopted
The standards and interpretations relevant to the Company that have not been early adopted are:
i.
AASB 9 Financial Instruments: applicable to annual reporting periods beginning on or after 1 July 2018.
This standard includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of
the project to replace AASB 139 Financial Instruments: Recognition and Measurement. An assessment of the Group’s financial assets
and liabilities was performed to determine whether the change in standard would affect the classification and measurement of financial
instruments currently held. The new standard is not expected to impact the measurement of the Company’s financial assets and liabilities.
Additional disclosure requirements will be incorporated on adoption of the standard.
ii.
AASB15 Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers, which replaced IAS 11 Construction Contracts, IAS 18
Revenue and related interpretations. The AASB issued the Australian equivalent of IFRS 15, being AASB 15, in December 2014. Currently,
these standards are effective for annual reporting periods commencing on or after 1 January 2017. Early application is permitted however
the IASB and the AASB have proposed a one year deferral to IFRS 15/AASB 15, which if approved, would move the effective date to annual
reporting periods commencing on or after 1 July 2018. The core principle of IFRS 15 Revenue from Contracts with Customers is that an
entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core
principle by applying the following steps:
a)
b)
c)
d)
e)
identify the contract(s) with a customer
identify the performance obligations in the contract
determine the transaction price
allocate the transaction price to the performance obligations in the contract
recognise revenue when (or as) the entity satisfies a performance obligation
This new standard will not have an impact on the Group’s Financial Statements.
64
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS iii.
AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations:
applicable to annual reporting periods beginning on or after 1 July 2016.
AASB 2014-3 amends AASB 11 Joint Arrangements to provide guidance on the accounting for acquisitions of interests in joint operations in
which the activity constitutes a business. The amendments require:
»
the acquirer of an interest in a joint operation in which the activity constitutes a business, as defined in AASB 3 Business
Combinations, to apply all of the principles on business combinations accounting in AASB 3 and other Australian Accounting
Standards except for those principles that conflict with the guidance in AASB 11 Joint Arrangements; and;
»
the acquirer to disclose the information required by AASB 3 and other Australian Accounting Standards for business combinations.
Adoption of this amendment will not result in a material impact on the Group’s financial statements.
iv.
AASB 2014-4 Clarification of Acceptable Methods of Depreciation and Amortisation: applicable to annual reporting periods
beginning on or after 1 July 2016.
AASB 116 Property Plant and Equipment and AASB 138 Intangible Assets both establish the principle for the basis of depreciation and
amortisation as being the expected pattern of consumption of the future economic benefits of an asset. The IASB has clarified that the
use of revenue-based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that
includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The
amendment also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic
benefits embodied in an intangible asset.
Currently the Group does not have a revenue-based policy to calculate the depreciation of an asset and adoption of this standard is
therefore not expected to impact the financial statements of the Company.
(u) Comparative amounts
Certain comparative disclosures have been reclassified to conform to the current year’s presentation.
4. CHANGES IN ACCOUNTING POLICIES
There have been no material changes to the accounting policies set out in Note 3 for the periods presented in these consolidated
financial statements.
5. DETERMINATION OF FAIR VALUE
A number of the Group’s accounting policies and disclosures require the determination of fair value for both financial and non-financial assets
and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable,
further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised
into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
»
»
»
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value
measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire
measurement. The Group recognises transfers between levels of the fair value hierarchy at the end if the reporting period during which the
change has occurred.
Inventories
The fair value of inventories is determined based on its estimated selling price in the ordinary course of business less the estimated costs of
completion and sale.
Equity securities
The fair values of investments in equity securities are determined with reference to their quoted closing bid price at the measurement date.
Exploration assets
The fair value of exploration assets is determined based on recent comparable transactions within Australia converted to a value per ounce.
This is considered a level 3 valuation technique (refer Note 18).
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6.
SEGMENT REPORTING
Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make
strategic decisions. The Group does not have any operating segments with discrete financial information. The Group does not have any
customers, other than the Perth Mint and its bankers, and all the group assets and liabilities are located within Australia. The Board of
Directors review internal management reports on a monthly basis that is consistent with the information provided in the Statement of Profit
or Loss and Other Comprehensive Income, Statement of Financial Position and Statement of Cash Flows. As a result no reconciliation is
required because the information as presented is what is used by the Board to make strategic decisions.
7.
REVENUE
Gold sales
Silver sales
Other revenue
Total
30 June
2015
$’000
185,632
324
-
30 June
2014
$’000
308,943
645
73
185,956
309,661
Included in current year gold sales is 87,687 ounces of gold sold (at an average price of A$1,499/ounce) under various hedging programs.
At 30 June 2015, the Company has a total of 88,213 ounces of gold left to be delivered under these programs. The sale of gold under these
hedges is accounted for using the ‘own use exemption’ under AASB 139 Financial Instruments and as such all hedge revenue is recognised
in the Profit and Loss and no mark to market valuation is performed on undelivered ounces.
8.
COST OF SALES
Mining and processing costs
Impairment of carrying value of inventories
Amortisation
Depreciation
Salaries and on-costs
Royalties
Adjustment to rehabilitation provision
Total
9.
ADMINISTRATION EXPENSES
Salaries and on-costs
Consultants and contractors
Professional fees
Travel and accommodation
Business development expenditure
Rental expense
Provision for doubtful debts (Note 16)
Other corporate costs
Total
66
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
30 June
2015
$’000
122,918
-
28,063
10,346
12,846
5,703
(2,882)
176,994
30 June
2015
$’000
5,799
378
351
197
8
495
3,184
870
11,282
30 June
2014
$’000
251,591
1,576
31,941
15,914
21,300
9,492
-
331,814
30 June
2014
$’000
5,231
843
419
261
811
866
-
397
8,828
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. PERSONNEL EXPENSES
Wages and salaries
Other associated personnel expenses
Superannuation contributions
Total
Personnel expenses included in cost of sales total $12,846,000 (2014: $21,300,000).
11. FINANCE INCOME AND EXPENSES
Interest income
Change in fair value of listed investment
Finance income
Change in fair value of listed investment
Interest expense on interest bearing liabilities
Unwind of discount on provision
Finance costs
Net finance (costs)/income
30 June
2015
$’000
18,187
2,123
1,699
22,009
30 June
2015
$’000
201
-
201
(2,209)
(1,868)
(1,159)
(5,236)
(5,035)
30 June
2014
$’000
24,503
2,028
2,202
28,733
30 June
2014
$’000
349
4,761
5,110
(398)
(2,076)
(1,070)
(3,544)
1,566
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. TAXES
(a)
Income tax
Current tax expense
Current income tax
Adjustment for prior years
Deferred income tax expense
Origination and reversal of temporary differences
Income tax expense reported in profit or loss
Numerical reconciliation between tax expenses and pre-tax profit
Loss before tax
Income tax using the corporation tax rate of 30% (2013: 30%)
Increase/(decrease) in income tax expense due to non-deductible items
Adjustment for prior years
Changes in unrecognised temporary differences
Income tax expense reported in profit or loss
(b) Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Deferred tax assets/(liabilities)
Receivables
Inventories
Exploration, evaluation and mining assets
Property, plant and equipment
Accrued expenses
Provisions
Share issue costs
Interest bearing liabilities
Tax losses
Less deferred tax asset not recognised
Net deferred tax assets
68
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
30 June
2015
$’000
(7,611)
723
(6,888)
6,888
-
(94,024)
(28,207)
810
723
26,674
-
30 June
2014
$’000
(22,362)
(2,322)
(24,684)
77,826
53,142
(117,296)
(35,189)
(1,628)
(2,322)
92,281
53,142
30 June
2015
$’000
30 June
2014
$’000
990
(1,500)
23,516
24,914
503
9,171
1,700
2,030
83,964
145,288
(140)
(1,622)
1,586
26,104
203
12,765
2,642
-
77,076
118,614
(145,288)
(118,614)
-
-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Tax losses
(c)
At 30 June 2015 the Company has $282,286,000 (2014: $256,920,000 loss) tax losses that are available for offset against future taxable
profits of the Company. The Group has not recorded these carry forward tax losses that equate to an unrecognised deferred tax asset at 30
June 2015 of $84,686,000 (2014: $77,076,000).
The potential benefit of carried forward tax losses will only be obtained if taxable profits are derived of a nature and, of an amount sufficient
to enable the benefit from the deductions to be realised or the benefit can be utilised by the Group provided that:
i.
ii.
the provisions of deductibility imposed by law are complied with; and
no change in tax legislation adversely affects the realisation of the benefit from the deductions.
In accordance with the Group’s accounting policies for deferred taxes, a deferred tax asset is recognised for unused tax losses only if it is
probable that future taxable profits will be available to utilise those losses.
Determination of future taxable profits requires estimates and assumptions as to future events and circumstances, in particular, whether
successful development and commercial exploitation, or alternatively sale, of the respective areas of interest will be achieved. This
includes estimates and judgments about commodity prices, ore resources, exchange rates, future capital requirements, future operational
performance and the timing of estimated cash flows. Changes in these estimates and assumptions could impact on the amount and
probability of estimated taxable profits and accordingly the recoverability of deferred tax assets.
13. EARNINGS PER SHARE
Basic earnings per share
The earnings per share at 30 June 2015 was based on the loss attributable to ordinary shareholders of $94,024,000 (2014: loss of
$170,438,000) and the weighted average number of ordinary shares outstanding as at 30 June 2015 of 503,233,971 (2014: 448,415,209).
Weighted average number of ordinary shares
Issued ordinary shares at 1 July
Issue of shares pursuant to fund raising
Total
30 June
2015
’000
503,234
-
503,234
30 June
2014
’000
379,049
69,366
448,415
Diluted earnings per share
Potential ordinary shares were not considered to be dilutive as the Group made a loss for the year and the exercise of potential shares would
not increase this loss.
14. CASH AND CASH EQUIVALENTS
Cash at bank and on hand – unrestricted
Total
30 June
2015
$’000
22,538
22,538
30 June
2014
$’000
23,937
23,937
In addition to cash at bank at 30 June 2015, the Company also had bullion and bullion receivables of $6,387,000 and outstanding bonds of
$146,000, which are recognised within trade and other receivables (refer Note 16) and inventories (refer Note17). The Group’s exposure to
interest rate risk and a sensitivity analysis of financial assets and liabilities are disclosed in Note 30.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Cash flow from operating activities
Loss after tax
Adjustments for:
Depreciation
Amortisation
Gain on dilution of investment
Impairment of carrying value of inventories
Impairment of property, plant and equipment
Impairment of exploration and development expenditure
Share based payments
Net finance cost/(income)
Loss/(profit) from the sale of non-current assets
Income tax expense
Operating profit before changes in working capital and provisions
Change in trade and other receivables
Change in inventories
Change in prepayments
Change in trade and other payables
Change in provisions
Total
16. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
GST receivable
Other receivables
Provision for doubtful debts (Note 30 (b)(ii))
Total
30 June
2015
$’000
30 June
2014
$’000
(94,024)
(170,438)
10,346
28,063
-
-
-
86,994
289
3,369
4,549
-
39,586
7,197
9,519
93
(23,205)
(3,701)
29,489
30 June
2015
$’000
6,883
1,197
388
(3,502)
4,966
15,914
31,941
(1,847)
1,576
46,808
42,816
-
(3,293)
(150)
53,142
16,469
(9,651)
25,293
240
(7,132)
(751)
24,468
30 June
2014
$’000
8,216
2,492
2,385
-
13,093
The Group’s exposure to interest rate risk and a sensitivity analysis of financial assets and liabilities are disclosed in Note 30.
70
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17.
INVENTORIES
Materials and supplies – at cost
Ore stocks – at cost
Ore stocks – at net realisable value*
Gold in circuit and bullion on hand – at cost
Gold in circuit and bullion on hand – at net realisable value*
Total
30 June
2015
$’000
4,999
-
6,902
6,930
-
18,831
30 June
2014
$’000
5,406
4,373
12,863
1,302
4,406
28,350
* At the reporting date the Group carried out an impairment review of inventory and assessed that all inventory was carried at the lower of cost and
net realisable value and that no impairment was required (in 2014 a $1,576,000 impairment was recorded and included within cost of sales).
18. EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
During the year ended 30 June 2015 the Group incurred and capitalised the following on exploration, evaluation and development expenditure:
Exploration and evaluation phase
Cost brought forward
Capitalised during the year
Decrease in rehabilitation provision
Impairment
Transferred to development phase
Balance at 30 June
30 June
2015
$’000
63,067
13,276
(3,093)
(32,158)
(4,014)
37,078
30 June
2014
$’000
55,880
9,073
-
(1,886)
-
63,067
The ultimate recoupment of deferred exploration and evaluation expenditure carried forward is dependent upon the successful development and
exploitation, or alternatively, sale of the respective areas of interest at an amount greater than or equal to the carrying value.
A regular review is undertaken of each area of interest within exploration and evaluation to determine the appropriateness of continuing to
carry forward costs in relation to that area of interest. Exploration and evaluation assets are assessed for impairment if sufficient data exists
to determine the technical feasibility and commercial viability or facts and circumstances suggest that the carrying amount exceeds the
recoverable amount.
During the impairment review for the year ended 30 June 2015, the recoverable amount of certain assets was assessed as lower than
the carrying amount which resulted in an impairment charge of $32,158,000 on exploration and evaluation assets. This was due to the
reduction in the gold price outlook and an assessment of future exploration spend on the respective areas of interest.
The fair value of exploration assets is determined based on recent comparable transactions within Australia converted to a value per ounce.
This is considered a level 3 valuation technique.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Development phase
Cost brought forward
Transfer from exploration and evaluation phase
Expenditure during the year
Impairment
Transferred to production phase
Balance at 30 June
Production phase
Cost brought forward
Transfer from development phase
Expenditure during the year
Disposed during the year
Increase in rehabilitation provision
Amortisation expense
Impairment
Balance at 30 June
Total
See Note 21 for details of the impairment review of mine development and production assets.
30 June
2015
$’000
76,296
4,014
1,610
(33,975)
(6,100)
41,845
94,184
6,100
18,272
(5,116)
40
(28,063)
(20,861)
64,556
143,479
30 June
2014
$’000
81,296
-
-
(5,000)
-
76,296
131,958
-
29,991
-
106
(31,941)
(35,930)
94,184
233,547
72
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. PROPERTY, PLANT AND EQUIPMENT
Land &
Building
Plant &
Equipment
Haul
Roads
Motor
Vehicles
Note
$’000
$’000
$’000
$’000
Office
Furniture &
Equipment
$’000
Capital
Work In
Progress
$’000
Cost
Balance 1 July 2013
19,976
193,688
3,560
2,639
Additions
Acquisitions
Transfers
Disposals
-
18
-
(6,005)
4,578
6,141
(1,555)
-
1
-
-
-
Balance 30 June 2014
13,989
202,852
3,561
Additions
Transfers
Disposals
-
18
-
9,322
(99)
(20,532)
-
-
-
Balance 30 June 2015
13,908
191,642
3,561
Depreciation
Balance at 1 July 2013
Depreciation expense
Impairment loss
Disposal
Balance 30 June/1 July 2014
Depreciation expense
Disposal
8
8
3,323
1,426
5,264
-
91,900
12,599
41,546
-
356
712
-
-
10,013
146,045
1,068
487
(30)
8,098
(14,414)
712
-
Balance 30 June 2015
10,470
139,729
1,780
Carrying Amount
At 1 July 2013
At 30 June 2014
At 30 June 2015
16,653
104,160
3,976
3,438
56,807
51,913
3,204
2,493
1,781
78
20
-
(180)
2,557
-
-
(53)
2,504
956
662
-
(114)
1,502
603
(47)
2,058
1,683
1,055
446
1,831
113
1
-
-
1,945
-
38
-
1,983
731
515
-
-
1,246
447
-
1,693
375
699
290
Total
$’000
228,198
8,208
-
6,504
3,438
(6,180)
(874)
(2,429)
-
(6,185)
2,888
7,065
(9,376)
(51)
526
-
-
-
-
-
-
-
4,857
2,888
526
227,792
7,065
-
(20,735)
214,124
97,266
15,914
46,808
(114)
159,874
10,346
(14,490)
155,730
130,932
67,918
58,394
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20. INVESTMENTS
Investments in listed entities – at fair value
Movements as follows:
Balance at 1 July
Transfer of investment previously accounted for as an associate
Gain on dilution of investment
Change in fair value
Balance at 30 June
IMPAIRMENT TESTING FOR NON–CURRENT ASSETS
21.
Results of impairment testing
Mount Monger CGU
Murchison CGU
Property, plant and equipment
Long term development and mine assets
Exploration assets
Total impairment
30 June
2015
$’000
7,561
9,770
-
-
(2,209)
7,561
30 June
2015
$’000
32,445
-
-
22,391
32,158
86,994
30 June
2014
$’000
9,770
838
2,722
1,847
4,363
9,770
30 June
2014
$’000
21,529
39,888
12,020
14,301
1,886
89,624
Notes
21.2
21.2
21.1
18
21.1 LONG TERM DEVELOPMENT AND MINE ASSETS
Long term development and production phase assets that relate to unmined resources are constantly assessed in light of current economic
conditions. Assumptions on the economic returns on and timing of specific production options may impact on the timing of development
of these assets. The carrying values of these assets are assessed at balance date using a fair value less cost to sell technique. This is done
based on implied market values against their existing resource and reserve base and an assessment on the likelihood of recoverability from
the successful development or sale of the asset. The implied market values are calculated based on recent comparable transactions within
Australia converted to a value per ounce. This is considered to be a Level 3 valuation technique.
As a result of changes to operating and capital cost assumptions, long term development assets were impaired by $22,391,000 at 30
June 2015. This impairment charge is reflected as part of the total impairments in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income.
21.2 CASH GENERATING UNITS (CGU’s)
Management of the Group has identified two CGUs, the Mount Monger Operation and the Murchison Operation.
Mount Monger CGU
In assessing whether mine properties and mine development costs have been impaired, the carrying amount of the CGU is compared with
its recoverable amount. In accordance with the Group’s accounting policy, recoverable amount is assessed as the higher of fair value less
costs to sell and value in use. The Group has adopted value in use in its assessment, using a life of mine discounted cash flow model.
A number of factors represented indicators of impairment as at 30 June 2015, including a reduction in the gold price outlook, the
Company’s market capitalisation relative to its book value and a reduction in the Mount Monger CGU resource base. As a result the
Company assessed the recoverable amount of the Mount Monger CGU.
The key assumptions in addition to the life of mine plans used in the discounted cash flow valuation are the gold price, the Australian dollar
exchange rate against the US dollar and the discount rate.
74
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Gold price and AUD:USD exchange rate assumptions are estimated by management, with reference to external market forecasts, and
updated at least annually. For this review, the forecast gold price was estimated at US$1,183–US$1,250/oz and the forecast exchange rate
of US$0.74 to US$0.78 per A$1.00, based on a forward curve over the life of the mines. Significant changes to either the forecast gold price
or the forecast exchange rate may have an impact on the carrying value of the CGU in future periods.
A discount rate of 11% was applied to the post tax cash flows expressed in nominal terms. The discount rate was derived from the Group’s
post tax weighted average cost of capital (WACC), with appropriate adjustments made to reflect the risks specific to the CGU.
The impairment testing carried out at 30 June 2015 resulted in a total impairment charge to the CGU of $32,445,000. This impairment
charge is reflected as part of the total impairments in the Consolidated Statement of Profit or Loss and Other Comprehensive Income and is
summarised below.
Mine development assets
Mine production assets
Total Impairment for Mount Monger CGU
30 June
2015
$’000
11,585
20,860
32,445
30 June
2014
$’000
5,000
16,529
21,529
Murchison CGU
The Murchison CGU comprises mine properties, mine development assets and property, plant and equipment associated with the Murchison
Gold Operation which was placed on care and maintenance in the June 2014 quarter. As a result an impairment charge of $39,888,000 was
recorded against the Murchison CGU in the prior year. There was nil impairment recorded against this CGU in the current year.
22. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Total
30 June
2015
$’000
21,828
3,344
25,172
30 June
2014
$’000
31,924
13,131
45,055
The Group’s exposure to liquidity risk and a sensitivity analysis of financial assets and liabilities are disclosed in Note 30.
23. INTEREST BEARING LIABILITIES
Current liability
Gold prepay facility
Stamp duty
Non-current liability
Stamp duty
Total
30 June
2015
$’000
30 June
2014
$’000
6,767
3,553
10,320
6,062
16,382
-
3,207
3,207
9,615
12,822
The stamp duty liability is payable over three years and incurs interest at the rate of 10.7% per annum.
On 29 December 2014 the Company entered into a secured Gold Prepay Facility (“Facility”) with the Commonwealth Bank of Australia
(“CBA”), raising $10,000,000. Under the Facility, Silver Lake will deliver a total of 7,056 ounces of gold to CBA between January 2015 and
July 2016 (392 ounces per month) – refer to Note 7 for accounting treatment of hedge impact. The Facility is secured by way of mining
mortgages over the Daisy Milano and Randalls processing facility tenements and a general security interest over all assets of Silver Lake and
its wholly owned subsidiary Silver Lake (Integra) Pty Ltd.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Under the terms of the gold prepay facility, the Company’s financier requires that a minimum cash balance of $3,000,000 and a minimum cash &
bullion balance of $6,000,000 be held until the facility is fully repaid in June 2016. The Company continues to satisfy this capital requirement.
The Group’s exposure to interest rate and liquidity risk arising from these interest bearing liabilities is disclosed in Note 30.
24. EMPLOYEE BENEFITS
Current
Liability for annual leave
Liability for long service leave
Total
30 June
2015
$’000
1,101
512
1,613
30 June
2014
$’000
1,399
485
1,884
25. SHARE BASED PAYMENTS
Employee options (equity-settled)
On 14 October 2013 the Group granted Mr Luke Tonkin, (at the time Executive Director of Operations), a total of 2,000,000 employee
options as part of his employment agreement which were approved by shareholders at the 2013 AGM. The total expense recognised in the
Statement of Profit or Loss for these options for the period ended 30 June 2015 was $253,087 (2014: $216,000). Details of the options are
as follows:
Number of options
Exercise price
Issue date
Vesting date
Expiry date
Tranche A
Tranche B
400,000
$0.94
600,000
$1.03
Tranche C
1,000,000
$1.14
14 October 2013
14 October 2013
14 October 2013
15 January 2015
15 January 2016
15 January 2017
14 October 2017
14 October 2017
14 October 2017
The inputs used in the measurement of the fair values at grant date were as follows:
Valuation at grant date
Share price at grant date
Volatility
Risk free rate
Expected dividends
Tranche A
Tranche B
Tranche C
$0.36
$0.67
80%
3.03%
-
$0.34
$ 0.67
80%
3.03%
-
$0.33
$0.67
80%
3.03%
-
The fair value of the options was measured using a binomial option pricing model. A Black Scholes option pricing model was used to
validate the valuation prices calculated by the binomial option pricing model. Whilst there are no performance conditions attached to the
exercise of these options, the exercise price of the options have been set at a premium (between 40%-70%) to the prevailing share price at
date of grant.
76
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The number of and weighted average exercise prices of share options are as follows:
Weighted
Average
Exercise Price
2015
Number of
Options
2015
Weighted
Average
Exercise Price
2014
Number of
Options
2014
-
-
-
-
$1.07
2,000,000
-
-
$1.07
2,000,000
-
-
-
-
-
-
$1.07
$0.94
2,000,000
$1.07
2,000,000
400,000
-
-
Outstanding at 1 July
Forfeited during period
Granted during the period
Exercised during the period
Outstanding at 30 June
Exercisable at 30 June
Performance rights (equity settled)
On 20 November 2014 shareholders approved the granting of 870,603 performance rights to Mr Luke Tonkin as part of his employment
agreement. The total expense recognised in the Statement of Profit or Loss for these performance rights for the period ended 30 June
2015 was $36,275. This expense was calculated based on the share price at the date the rights were approved by shareholders, with a 50%
reduction applied in consideration of the likelihood of market based performance conditions being achieved.
26. PROVISIONS
Closure and rehabilitation
Opening balance at 1 July
Adjustment to provisions during the year
Disposal of asset
Unwind of discount
Rehabilitation spend
Closing balance at 30 June
Current provision
Non-current provision
Closing balance at 30 June
30 June
2015
$’000
30 June
2014
$’000
40,667
(5,936)
(5,285)
1,161
(549)
30,058
786
29,272
30,058
39,629
106
-
1,070
(138)
40,667
-
40,667
40,667
At 30 June 2015 a review of the Group’s closure and rehabilitation provision was undertaken using updated cost assumptions and life of
mine plans. As a result of this review the provision was reduced by $5,936,000.
27. SHARE CAPITAL
Movements in issued capital
Balance as at 1 July 2013
Shares issued from capital raising net of costs
Balance as at 30 June 2014
Movement in the current period
Balance as at 30 June 2015
Number
$’000
379,048,750
124,185,221
503,233,971
-
613,662
85,902
699,564
-
503,233,971
699,564
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
28. OPTION RESERVES
Movement in options reserve
Balance as at 1 July 2013
Options granted
Balance as at 30 June 2014
Balance at 1 July 2014
Options granted
Equity settled share based payment expense
Balance as at 30 June 2015
29. OPERATING LEASES
Number
$’000
-
2,000,000
2,000,000
2,000,000
-
-
2,000,000
-
216
216
216
-
289
505
The Company leases assets for operations including plant and office premises. The leases have an average life of 1 to 4 years. At 30 June 2015,
the future minimum lease payments under non-cancellable leases were payable as follows.
Less than one year
Between one and five years
2015
$’000
4,744
9,750
14,494
2014
$’000
5,005
14,494
19,499
30. FINANCIAL RISK MANAGEMENT
(a) Overview
This note presents information about the Group’s exposure to credit, liquidity and market risks, the objectives, policies and processes for
measuring and managing risk, and the management of capital.
The Group does not generally use any form of derivatives. The Board does however regularly review the use of derivatives and
opportunities for their use within the Group. Exposure limits are reviewed by management on a continuous basis. The Group does not enter
into or trade financial instruments, including derivative financial instruments, for speculative purposes.
The Board has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and
manages the financial risks relating to the operations of the Group through regular reviews of the risks.
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers.
Presently, the Group undertakes gold mining, exploration and evaluation activities exclusively in Australia. At the balance sheet date there
were no significant concentrations of credit risk.
(i)
Cash and cash equivalents
The Group limits its exposure to credit risk by only investing in liquid securities and only with major Australian financial institutions.
(ii)
Trade and other receivables
The Group’s trade and other receivables relate to gold sales, GST refunds and rental income.
At 30 June 2015, a provision for doubtful debts of $3,502,000 has been recorded against rental income receivable as a result of financial
difficulties being experienced by a debtor. This receivable is therefore not reflected in the trade and other receivables balance in Note 32(c).
The Group has determined that its credit risk exposure on all other trade receivables is low, as customers are considered to be reliable and
have short contractual payment terms. Management does not expect any of these counterparties to fail to meet its obligations.
78
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Exposure to credit risk
(c)
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk
at the reporting date was:
Trade and other receivables
Cash and cash equivalents
Total
Carrying Amount
2015
$’000
4,966
22,538
27,504
2014
$’000
13,093
23,937
37,030
Liquidity risk
(d)
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity
is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages liquidity risk by maintaining adequate
cash reserves from funds generated from operations and by continuously monitoring forecast and actual cash flows.
To mitigate large fluctuations in the USD:AUD exchange rate as well as the USD denominated gold price, the Company has entered into
hedging programmes whereby future bullion sales are hedged at a predetermined AUD gold price. At 30 June 2015, the Company has a
total of 88,213 ounces to be delivered under these hedges over the next 15 months at an average of A$1,570/oz. The sale of gold under
these hedges is accounted for using the ‘own use exemption’ under AASB 139 Financial Instruments and as such all hedge revenue is
recognised in the Profit and Loss and no mark to market valuation is performed on undelivered ounces.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of
netting agreements:
Carrying
Amount
$’000
Contractual
Cash Flows
$’000
6 Months
or Less
$’000
6-12
Months
$’000
30 June 2015
Trade and other payables
Stamp duty
Gold prepay facility
25,172
9,615
6,767*
25,172
10,946
-
25,172
2,189
-
Total
41,554**
36,118
27,361
30 June 2014
Trade and other payables
Stamp duty
Total
Carrying
Amount
$’000
Contractual
Cash Flows
$’000
6 Months
or Less
$’000
45,055
12,822
57,877**
45,055
15,324
60,379
45,055
2,189
47,244
* The gold prepay facility is settled through the physical delivery of bullion
** The carrying value at balance date approximates fair value
-
2,189
-
2,189
6-12
Months
$’000
-
2,189
2,189
1-2
Years
$’000
-
4,378
-
4,378
1-2
Years
$’000
-
4,378
4,378
2-5
Years
$’000
-
2,190
-
2,190
2-5
Years
$’000
-
6,568
6,568
More than
5 years
$’000
-
-
-
-
More than
5 years
$’000
-
-
-
(e) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, whilst optimising the return. The Group only has exposure to interest rate risk and equity price risk.
Interest rate risk
(f)
The Group is exposed to interest rate risk (primarily on its cash and cash equivalents and its interest bearing liabilities), which is the risk that
a financial instrument’s value will fluctuate as a result of changes in the market interest rates on interest-bearing financial instruments. The
Group does not use derivatives to mitigate these exposures. The Group ensures that as far as possible it maintains excess cash and cash
equivalents in short-term high interest bearing deposits.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(i)
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
Fixed rate instruments
Financial liabilities
Stamp duty liability
Gold prepay facility
Total
Variable rate instruments
Financial assets
Cash and cash equivalents
Carrying Amount
2015
$’000
2014
$’000
(9,615)
(6,767)
(16,382)
(12,822)
-
(12,822)
22,538
23,937
(ii)
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore a change in interest
rates at the reporting date would not affect profit or loss.
(iii)
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and profit or loss after tax by
$225,000 (2014: $168,000). This analysis assumes that all other variables remain constant.
Equity price risk
(g)
Equity investments are long-term investments that have been classified as financial assets at fair value through profit or loss. The Group is
exposed to insignificant equity price risk arising from its equity investments.
Fair values
(h)
The carrying amounts of financial assets are valued at year end at their quoted market price.
Capital management
(i)
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development of the business through future exploration and development of its projects.
At 30 June 2015, the Company had an outstanding gold prepay facility with its financier of $6,767,000 (2014: Nil).
There were no changes in the Group’s approach to capital management during the year. Risk management policies and procedures are
established with regular monitoring and reporting. Under the terms of the gold prepay facility, the Company’s financier requires that a
minimum cash balance of $3,000,000 and a minimum cash & bullion balance of $6,000,000 be held until the facility is fully repaid in June
2016. The Company continues to satisfy this capital requirement.
31. CAPITAL COMMITMENTS
The Group has no capital commitments in the next financial year relating to the acquisition of property plant and equipment (in 2014 the
Group had a $5,060,000 commitment).
The Group has commitments totaling $7,174,000 (2014: $9,200,000) relating to minimum exploration expenditure on its various tenements.
80
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
32. RELATED PARTIES
(a) Key Management Personnel Compensation
Short-term employee benefits
Post-employment benefits
Other long term benefits
Total
30 June
2015
$’000
3,194
177
103
3,474
30 June
2014
$’000
2,218
218
173
2,609
Individual directors and executives compensation disclosures
(b)
Information regarding individual Directors and Executive’s compensation and some equity instruments disclosures as permitted by
Corporations Regulations 2M.3.03 is provided in the Remuneration Report section of the Directors’ Report.
In FY14, 2,000,000 incentive options were issued to Mr Luke Tonkin as part of his employment agreement. See Note 25 for further details of
this related party transaction.
During the current period, 870,607 performance rights were awarded to Mr Luke Tonkin. See Note 25 for further details of this related
party transaction.
Transactions with key management personnel
(c)
In FY14, $2,904 was paid to Gryphon Management for consultancy services, a company controlled at the time by David Griffiths, a Non-
executive Director. There were no amounts paid to other related parties in FY15.
33. GROUP ENTITIES
The Company controlled the following subsidiaries:
Subsidiaries
Cue Minerals Pty Ltd
Silver Lake (Integra) Pty Ltd
Country of
Incorporation
Australia
Australia
34. JOINT OPERATIONS
The Group has the following interests in unincorporated joint operations:
Joint Operation
Principal Activities
Joint Operation Parties
Cowarna
Exploration
SLR/HBJ Minerals Pty Ltd
Bandalup Gossan
Exploration
SLR/Traka Resources Ltd
West Tuckabianna
Exploration
SLR/George Petersons
Glandore
Newcrest
Exploration
SLR/Avoca Minerals Pty Ltd
Exploration
SLR/Newcrest
Peter’s Dam
Exploration
SLR/Rubicon
Erayinia
Exploration
SLR/Image Resources
Queen Lapage
Exploration
SLR/Rubicon
* Terminated during the period
Ownership Interest
Group Interest
2015
100%
100%
2015
-*
80.0%
90.0%
20.0%
100.0%
69.2%
81.7%
58.0%
2014
100%
100%
2014
90.0%
-
90.0%
20.0%
85.0%
64.6%
81.7%
56.5%
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The joint operations are not separate legal entities. They are contractual arrangements between participants for the sharing of costs and
outputs and do not in themselves generate revenue and profit. The joint operations are of the type where initially one party contributes
tenements with the other party earning a specified percentage by funding exploration activities; thereafter the parties often share
exploration and development costs and output in proportion to their ownership of joint operation assets. The joint operations do not hold
any assets and accordingly the Company’s share of exploration evaluation and development expenditure is accounted for in accordance
with the policy set out in Note 3 (a) (iv).
35. AUDITOR’S REMUNERATION
KPMG:
Audit and review of the Company’s financial statements
Taxation services
Other Audit and Assurance Firms:
Other assurance related services
Total
36. SUBSEQUENT EVENTS
2015
$’000
225,190
119,755
15,769
360,714
2014
$’000
227,220
159,030
22,810
409,060
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a
material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the
results of those operations, or the state of affairs of the Group, in future financial years.
82
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
37. PARENT ENTITY
As at, and throughout the financial year ended 30 June 2015, the parent company of the Group was Silver Lake Resources Limited.
Results of the parent entity
Loss for the year
Total comprehensive loss for the year
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Share capital
Option reserve
Accumulated losses
Total equity
30 June
2015
$’000
(140,510)
(140,510)
28,669
241,666
42,507
65,785
699,564
505
(524,189)
175,881
30 June
2014
$’000
(105,528)
(105,528)
43,173
509,923
43,692
193,822
699,564
216
(383,679)
316,101
The parent entity has no capital commitments in the next financial year relating to the acquisition of property plant and equipment (in 2014
the Group had a $5,060,000 commitment). The parent entity has $7,174,000 (2014: $6,840,000) of commitments relating to minimum
exploration expenditure on its various tenements.
38. DEED OF CROSS GUARANTEE
During the year ended 30 June 2015, the Company and its wholly owned subsidiary Silver Lake (Integra) Pty Ltd entered into a Deed of
Cross Guarantee under which each company guarantees the debts of the other.
By entering into the Deed of Cross Guarantee, Silver Lake (Integra) Pty Ltd has been relieved from the Corporations Act 2001 requirement to
prepare, audit and lodge a financial report and Directors’ report under Class Order 98/1418 (as amended).
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2015 the Company had 503,233,971 fully paid ordinary shares and 2,000,000 outstanding options on issue.
DISTRIBUTION OF HOLDERS
1
1,001
5,001
10,001
100,001
Total Holders
-
-
-
-
-
1,000
5,000
10,000
100,000
and over
* Details of the options outstanding:
Number of options
Exercise price
Issue date
Vesting date
Expiry date
Fully Paid
Ordinary Shares
Options
Performance
Rights
1,705
5,496
2,563
4,405
655
14,824
-
-
-
-
1
1
-
-
-
-
-
-
Tranche A
Tranche B
400,000
$0.94
600,000
$1.03
Tranche C
1,000,000
$1.14
14 October 2013
14 October 2013
14 October 2013
15 January 2015
15 January 2016
15 January 2017
14 October 2017
14 October 2017
14 October 2017
VOTING RIGHTS OF SECURITIES
Subject to any rights or restrictions for the time being attached to any class or classes of Shares (at present there is only one class of
Shares), at meetings of Shareholders of Silver Lake:
a)
b)
c)
each Shareholder entitled to vote may vote in person or by proxy, attorney or representative;
on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote; and
on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of
each Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the Share,
but in respect of partly paid Shares, shall have such number of votes as bears the same proportion which the amount paid (not
credited) is of the total amounts paid and payable (excluding amounts credited).
Options and performance rights do not carry any voting rights.
84
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
ASX ADDITIONAL INFORMATION
SUBSTANTIAL SHAREHOLDERS
As at 30 September 2015 there were no substantial holders disclosed to the Company.
TOP 20 HOLDERS OF QUOTED SECURITIES (EXCLUDING DIRECTORS)
As at 30 September 2015, the top 20 holders of quoted securities (excluding Directors of the Company) were:
Holder Name
J P MORGAN NOMINEES AUSTRALIA
HSBC CUSTODY NOMINEES
CITICORP NOMINEES PTY LIMITED
IQ RENTAL & FINANCE PTY LTD
HOLT SUPER FUND A/C
JOHNSTON SUPER FUND A/C
MS NOLA VERONICA BANASIK
MR YONGHONG SUN
CJN BLOODSTOCK PTY LTD
GARY B BRANCH PTY LTD
ABN AMRO CLEARING SYDNEY
BELL POTTER NOMINEES LTD
1
2
3
4
5
6
7
8
9
10
11
12
13 MS EFFIE BINDEVIS
14 MR FRANK MARIO ZAMBONETTI & MRS VICTORIA JEANETTE ZAMBONETTI
15
16
17
JOHN SKELLY PTY LTD
NATIONAL NOMINEES LIMITED
COMSEC NOMINEES PTY LIMITED
18 MR JOHN PAUL TOMEK
19
DIFO PTY LTD
20
BRAMOR SUPERANNUATION PTY LTD
Number Held
Percentage
39,316,112
21,628,793
21,619,229
6,500,000
4,036,172
4,000,000
4,000,000
3,473,431
3,063,000
2,900,000
2,626,740
2,227,663
2,047,000
2,000,000
2,000,000
1,992,084
1,957,719
1,835,000
1,739,800
1,600,000
7.81%
4.30%
4.30%
1.29%
0.80%
0.79%
0.79%
0.69%
0.61%
0.58%
0.52%
0.44%
0.41%
0.40%
0.40%
0.40%
0.39%
0.36%
0.35%
0.32%
130,562,743
25.95%
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
85
ASX ADDITIONAL INFORMATION
86
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2015
NOTES SUITE 4, LEVEL 3, SOUTH SHORE CENTRE
85 SOUTH PERTH ESPLANADE
SOUTH PERTH WA 6151
PH: +61 8 6313 3800
FAX: +61 8 6313 3888
WWW.SILVERLAKERESOURCES.COM.AU