ANNUAL
REPORT
FOR THE YEAR ENDED 30 JUNE 2018
CORPORATE DIRECTORY
DIRECTORS
David Quinlivan
Non-executive Chairman
Luke Tonkin
Managing Director
Les Davis
Non-executive Director
Kelvin Flynn
Non-executive Director
Brian Kennedy
Non-executive Director
COMPANY SECRETARY
David Berg
PRINCIPAL OFFICE
Suite 4, Level 3, South Shore Centre
85 South Perth Esplanade
South Perth WA 6151
Tel:
Fax:
+61 8 6313 3800
+61 8 6313 3888
Email:
contact@silverlakeresources.com.au
REGISTERED OFFICE
Suite 4, Level 3, South Shore Centre
85 South Perth Esplanade
South Perth WA 6151
SHARE REGISTER
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Telephone 1300 850 505 (inside Australia)
(03) 9415 4000 (outside Australia)
AUDITORS
KPMG
235 St Georges Terrace
Perth WA 6000
INTERNET ADDRESS
www.silverlakeresources.com.au
ABN
38 108 779 782
ASX CODE
SLR
2 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
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
4
5
9
14
20
38
39
40
45
46
47
48
49
75
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 3
DEAR FELLOW SHAREHOLDER,
It is pleasing that we can write to you this year having
successfully progressed the strategy of transitioning
the Mount Monger Gold Camp towards longer life ore
sources with higher operating margins.
In FY2018 we achieved gold sales of 151,250 ounces, a 10%
increase on FY2017 at an AISC of A$1,289/oz, a 5% reduction
on FY2017. In addition, the Company established the Mount
Belches Mining Centre and commenced the development of our
third Mining Centre, Aldiss. Investment in exploration has again
produced excellent results with a 13% increase in Ore Reserves
to 526,000 ounces (~50% increase when accounting for FY17
mining depletion) and encouragingly advanced a number of key
exploration targets that reside outside of the Mineral Resource
estimate across our three Mining Centres. These targets provide
significant opportunities for Resource and Reserve additions
which will benefit from Mount Monger’s established mine and
services infrastructure.
The significant investment in exploration over the last 3 years
has delivered significant value to the Mount Monger Gold Camp
and unlocked the value of our established mine and processing
infrastructure. Core to this is the increased diversity of high-grade
ore sources at Mount Monger, with the establishment of the
Maxwells and Cock-eyed Bob underground mines at the Mount
Belches Mining Centre to complement the baseload feed from
the Daisy Complex. The Company now has increased production
visibility with a robust four year Reserve and Measured and
Indicated Resource backed life of mine.
Operating and financial highlights for FY2018 include:
» Gold production of 157,936 ounces (+16%) with sales of
»
»
151,250 ounces (+10%)
5% reduction in AISC to A$1,289/oz
26% increase in EBITDA (excluding significant items) to A$87.9
million and Net Profit After Tax up 697% to A$16.2 million
the Company had no bank debt, held A$105.7 million in cash and
bullion and had liquid investments in ASX listed entities with a
market value of A$8.1 million.
In FY2018 the Company’s exploration program delivered a 13%
increase in Ore Reserves to 526,000 ounces and 13% increase
in Mineral Resources to 3.72 million ounces at Mount Monger,
despite mining depletion of 171,616 ounces during the year.
The “Discovery” exploration program returned a number of
highly encouraging results proximal to the Company’s extensive
underground and surface infrastructure. Easter Hollows and Daisy
North have the potential to introduce new mining fronts at the
Daisy Complex, which are higher in the mine elevation. Santa has
the potential to become a third shallow, high-grade underground
mine at the Mount Belches Mining Centre and the ~20km regional
sheer zone at Aldiss provides a number of prospective drill targets.
Further testing of these target is underway and we look forward to
providing updates throughout the course of FY2019.
FY2019 sales guidance is 140,000-150,000 ounces with the AISC
expected to average A$1,350-A$1,390/oz for the full year. The
Company will continue to invest in exploration at Mount Monger
with A$12 million budgeted to target both Resource definition for
Reserve conversion and discovery.
Our strong balance sheet and cash flow generation positions the
Company to rapidly progress the pipeline of advanced exploration
targets and generate a pipeline of opportunities to compete for
capital both at Mount Monger and beyond as we continue to
build on the success and momentum generated in FY2018.
» Cash, bullion and listed investments of A$113.8 million and no
debt at 30 June ($81.4m 30 June 2017)
»
»
»
129,000 oz of forward gold sales at an average price of
A$1,726/oz at 30 June
A$11.4 million investment in exploration
Release of maiden JORC 2012 Ore Reserve at Karonie of
1.4mt @ 2.0g/t for 87,000 ounces
On behalf of the Board we would like to thank the Company’s
employees for their hard work and commitment over the past 12
On behalf of the Board we would like to thank the Company’s employees for their hard work and commitment
months, and without whom, the achievements of the past year
over the past 12 months, and without whom, the achievements of the past year would not have been possible.
would not have been possible.
We would also like to acknowledge our suppliers, contractors and shareholders who continue to support our
On behalf of the Board we would like to thank the Company’s employees for their hard work and commitment
strategy of delivering today, developing for tomorrow and discovering for the future.
over the past 12 months, and without whom, the achievements of the past year would not have been possible.
We would also like to acknowledge our suppliers, contractors and
shareholders who continue to support our strategy of delivering
today, developing for tomorrow and discovering for the future.
We would also like to acknowledge our suppliers, contractors and shareholders who continue to support our
strategy of delivering today, developing for tomorrow and discovering for the future.
The strong operating results at Mount Monger underpinned a 26%
increase in operating cash flows of A$80.8 million for FY2018.
The continued cash flow generation has allowed the Company to
internally fund exploration and growth capital, whilst continuing
to strengthen the Company’s Balance Sheet. At 30 June 2018,
4 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
David Quinlivan
David Quinlivan
David Quinlivan
Non-Executive Chairman
Non-executive Chairman
Non-Executive Chairman
Luke Tonkin
Managing Director
Luke Tonkin
Luke Tonkin
Managing Director
Managing Director
CHAIRMAN & MANAGING DIRECTOR’S REPORT
MOUNT MONGER GOLD CAMP
Figure 1: Mount Monger Gold Camp
»
Located 50km southeast of Kalgoorlie, Western Australia
» Mount Monger is a highly endowed gold camp with multiple mines and a history of Reserve replacement and discovery
»
Silver Lake has produced >1.1 million ounces from Mount Monger since FY08 whilst never having more than a 3 - 4 year Reserve
backed Life of Mine
»
Silver Lake has invested to establish larger, longer life Mining Centres with increased production transparency and multiple high-grade
ore sources. Three independent Mining Centres now feed the central 1.3Mtpa Randall's mill
»
»
FY18 gold sales 151koz
FY19 guidance 140 -150koz
»
Four distinct geological districts host our mines
»
Interpretation of geological data and mine planning that honours the geology across the varying Mining Centres has delivered
demonstrable exploration success
Installed infrastructure provides significant leverage from exploration success
Silver Lake will continue to invest in exploration at Mount Monger to target higher margin ounces and increase production visibility
with the FY19 exploration budget of ≈$12 million
»
»
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 5
PROJECT REPORT 1. Daisy Complex Mining Centre
Figure 2: Schematic view of Daisy Complex
»
»
»
»
Located 19km from the Randalls mill
Base load asset of the Mount Monger Camp with a progressive infill and extensional drilling program to complement the mine
development schedule
1,500 ounces per vertical metre mined since FY09
Proven mine planning and exploration methodology
» Nature of the geology will limit “JORC” Reserves
»
Replace Reserves year on year
» Drilling continues to intersect high grade mineralisation in multiple directions, providing upside opportunities for the future
»
LOM extensions supported by continuity of high grade mineralisation confirmed ≈300m down plunge of current mining areas and
≈150m down plunge of the current Mineral Resource
» Multiple new lode discoveries proximal to established infrastructure at shallower elevations to current mining fronts
6 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
PROJECT REPORT 2. Mount Belches Mining Centre
Figure 3: Mount Belches Mining Centre
»
The Mount Belches Mining Centre is a fully serviced, independent Mining Centre located 18km from the
Randalls mill and currently comprises the shallow, high-grade Maxwells and Cock-eyed Bob underground mines
» Maxwells, building output and bottom line contribution
»
Established as a consistent high-grade production source
» Down plunge and strike extensions to multiple lodes identified and being progressively tested
» Cock-eyed Bob, delivering our strategy to maximise cashflow
»
First development ore was accessed in Q2 FY18 with FY18 ore sourced predominantly from development
» Drilling has intersected mineralisation below the current mine plan presenting the opportunity to extend the Life of Mine
»
Targeting three underground mines producing >70,000 ounces per annum
»
Successful exploration program at Santa completed in FY18 advancing the underground potential (refer Exploration Report)
3. Majestic/Imperial Mining Centre
Located 33km north north-west of the Randalls mill
»
» Mining from the Majestic and Imperial open pits was completed during FY18
»
Exploration to target future underground mines
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 7
PROJECT REPORT 4. Aldiss Mining Centre
Figure 4: Overburden and stripping at Aldiss
»
The Aldiss camp is host to ≈201koz in Reserves and is Silver Lake’s third Mining Centre at Mount Monger
» Dedicated haul road to the mill, 80 person camp and mobile equipment workshop
»
»
»
Low pre-production capital works of A$7.3m
Reserves: 2.9mt @ 2.2 g/t/ for 201koz
Resources: 9.4mt @ 2.0 g/t for 593koz
» Owner operator, conventional drill, blast, load and haul open pit mining operation
Three proximal open pits provide base case 200koz production over FY19-21 (Harry’s Hill, French Kiss, Karonie South)
Spice, Tank, Atriedes remain largely untested and have potential to add Mineral Resources through exploration which will benefit from
established infrastructure
Broad, high-grade gold lodes at Karonie interpreted to continue down plunge, highly encouraging for future underground potential
»
»
»
8 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
PROJECT REPORT EXPLORATION
Mount Monger Camp – FY18 Highlights
The FY18 exploration work programs completed by Silver Lake successfully extended and upgraded the gold Reserves at the current
mining operations, advanced development projects with near-term open pit and underground mining potential, and confirmed the strong
potential for new resource growth along the mineralised trends in the Daisy, Mount Belches and Aldiss Mining Centres. Key exploration
highlights (previously reported) included:
»
Significant extensions and upgrades to existing gold lodes in the Daisy Complex underground mine
» Multiple high-grade intersections at the newly discovered Easter Hollows lode structure to the west of Haoma
» New lodes identified north of the North Fault at the Daisy Complex, demonstrating the discovery potential of this large, inadequately
tested area proximal to existing underground development
» Drilling at Santa supported the potential for a new underground mine at Mount Belches
»
Release of maiden JORC 2012 Ore Reserve at Karonie of 1.4mt @ 2.0g/t for 87koz
Drilling in the shadow of Daisy
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 9
EXPLORATION REPORT EXPLORATION REPORT
Daisy Complex
Daisy North – A potential new, near term, shallow mining front1
Diamond drilling was completed during FY18 to assess the continuity of mineralisation at the Daisy North target. Encouragingly coarse
visible gold and significant intersections were returned which validate the new geological model and increased the understanding of
mineralisation controls.
The results confirmed the continuity of high grade mineralisation to the Caledonia target, extending ≈300m along strike to the north of
existing underground development.
Figure 5: Daisy North, shallow and proximal to existing infrastructure and highlights of FY18 drilling
The FY18 results which intersected mineralisation at depths of less than 250m below surface has increased the confidence in the
potential for the development of a new shallow mining front proximal to established underground infrastructure. Mine design work has
commenced and will be a key focus of for FY19.
1. This information is extracted from the ASX release entitled “Exploration Update” released to the ASX on 23 March 2018 and available to view on
www.silverlakeresources.com.au
10 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
EXPLORATION REPORT EXPLORATION REPORT
Easter Hollows – A significant high-grade lateral step out discovery2
Lateral step out drilling to the west of Haoma West has confirmed a new area of high grade mineralisation with multiple new lodes
extending over 450m from existing mining fronts.
These new lodes are parallel to the most productive areas of the mine. Host rocks and mineralisation are consistent with the highest
grade lodes in the Daisy Complex including quartz veining, galena and visible gold.
Figure 6: Easter Hollows target relative to major Daisy structures
2. This information is extracted from the ASX release entitled “Exploration Update” released to the ASX on 23 March 2018
and available to view on www.silverlakeresources.com.au
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 11
EXPLORATION REPORT Santa – Drilling highlights the potential for a third high grade, shallow, underground mine at
Mount Belches3
A nine hole drilling program for 1,565m was completed targeting the largely untested and prospective Western BIF unit below the Santa
North open pit. Drilling by previous owners focused on the Eastern BIF unit below the Santa open pit, which currently has a JORC 2012
compliant 425koz Mineral Resource.
Highly encouraging results were returned from the program with numerous +50 gram-metre intervals over a 250m strike length from the
base of the Santa North open pit to a depth of 250 vertical metres and mineralisation remains open down-plunge.
Further drilling is planned for FY19 to target plunge and strike extensions. A potential underground development at Santa will have the
ability to benefit from installed above ground services and infrastructure at Mount Belches.
Figure 7: Santa West Lode long section showing recent assay results highlights and historical drilling intersections >5.0 g/t Au
3. This information is extracted from the ASX release “Santa drilling highlights growth potential at Mount Belches” released to the ASX on 7 June 2018 and available to
view on www.silverlakeresources.com.au
Aldiss - installed above ground services and infrastructure at Mount Belches4
A maiden JORC 2012 Ore Reserve of 1.4mt at 2 g/t for 87koz was declared in June 2018 at Karonie.
Historical open pit mining at Aldiss in the 1990’s was focused on the “Karonie Main Zone” deposit located in the northern part of the
Karonie area which produced 1.6Mt at 3.6g/t Au. Silver Lake’s reinterpretation of the geology led to a revised geological model and
a subsequent exploration program which successfully confirmed the high-grade gold lodes remain open down plunge to the south,
extending from below the floor of the historical open pit area and the strongly mineralised shear zones along strike to the south of the
historical mine area.
The Karonie Ore Reserve has been estimated to a maximum open pit depth of 145m. Gold lodes are interpreted to remain open down
plunge and future drilling will be planned at the appropriate time to test the potential for underground mining at Karonie.
4. This information is extracted from the ASX release “75% increase in Aldiss Mining Centre Ore Reserves” released to the ASX on 27 June 2018 and available to view on
www.silverlakeresources.com.au
12 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
EXPLORATION REPORT Figure 8: Karonie long section highlighting current drilling intersections and potential down plunge extension of mineralised lode
The success of the Karonie exploration program has led the Silver Lake exploration team to develop a FY19 exploration work program to
the south of Karonie and Harry’s Hill along strike of the strongly mineralised Aldiss trend.
Following the expected ramp up to steady state mining rates at Aldiss during 1H FY19, Silver Lake will focus on the ~10km regional shear
zone which has several well-defined gold prospects, to target the discovery of additional Mineral Resources
to benefit from established infrastructure.
Figure 9: Aldiss “SAT” trend
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 13
EXPLORATION REPORT COMPANY SUMMARY AS AT 30 JUNE 2018
Total Mineral Resources are estimated at:
31.1 Mt @ 3.7 g/t Au for 3.72 Moz of contained gold
Total Ore Reserves are estimated at:
5.3 Mt @ 3.1 g/t Au for 0.53 Moz of contained gold
MINERAL RESOURCE STATEMENT AS AT 30 JUNE 2018
The Company’s total MMO Measured, Indicated and Inferred Mineral Resources at 30 June 2018 are 31.1 million tonnes (Mt) @ 3.7
grams per tonne of gold (g/t Au) containing 3.72 Moz of gold (refer Tables 1 and 2). The previous publicly reported estimate of MMO
Mineral Resources was 28.1 Mt @ 3.6 g/t Au containing 3.29 Moz of gold as at 30 June 2017, announced on 4 August 2017. The Mineral
Resources as at 30 June 2018 are estimated after allowing for mining depletion from MMO during FY2018.
June 2017
June 2018
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Measured Mineral Resources
Indicated Mineral Resources
Total Mineral Resources
1,398
12,832
28,124
4.8
3.4
3.6
215
2,200
1,420
17,488
3,292
31,067
5.3
3.3
3.7
377
1,860
3,721
Table 1: Total MMO Mineral Resources as at 30 June 2018
14 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
RESOURCES & RESERVES REPORT
Measured Mineral
Resources
Indicated Mineral
Resources
Inferred Mineral
Resources
Total Mineral
Resources
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au
‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au
‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au
‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au
‘000s)
June 2018
Daisy Mining Centre
19.0
449
1,273
13.4
549
2,132
17.0
1,166
2.3
4.0
3.5
3.6
4.0
3.0
2.4
6.1
2.3
2.0
2.2
5.6
3.1
4.8
2.2
1.7
3.8
1.5
2.4
1.7
1.3
1.5
-
77
14
1,174
111
72
1,327
77
1,719
3
12
27
67
297
350
2.3
4.0
2.7
3.0
3.3
2.8
2.4
88
14
116
165
7
27
27
831
7,177
7.0
1,611
58
2,463
14
720
72
3,183
171
2,341
117
4,953
90
1,497
59
1,202
2
276
2.5
2.5
2.5
5.7
2.6
5.4
2.2
1.8
200
58
258
429
419
261
83
16
439
10,269
3.7
1,209
30
4,215
34
2,303
45
1,454
3
142
29
840
-
409
1.8
2.5
2.1
1.9
1.5
1.4
243
183
100
9
39
19
Daisy Complex
122
42.7
168
Fingals
Costello
Lorna Doone
-
-
-
-
-
-
-
-
-
Mirror/Magic
507
2.6
43
Wombola Pit
Wombola Dam
Hammer & Tap
-
13
-
-
3.2
-
-
1
-
737
131
-
686
549
47
164
-
2.7
-
2.0
2.5
3.1
2.6
-
11
1,043
-
44
45
5
14
111
641
663
20
120
-
350
Sub Total
642
10.3
212
2,313
7.6
568
4,221
Imperial/Majestic Mining Centre
Majestic
Imperial
Sub Total
-
-
-
-
-
-
-
-
-
1,673
504
2,177
Mount Belches Mining Centre
Maxwells
Santa
291
6.2
58
1,103
-
-
-
3,788
Cock-eyed Bob
347
6.3
70
-
-
-
-
-
-
563
351
232
638
6.2
128
6,037
Rumbles
Anomaly A
Sub Total
Aldiss Mining Centre
Karonie
Harrys Hill
French Kiss
Spice
Tank/Atriedes
Italia/Argonaut
Sub Total
Randalls Mining Centre
Lucky Bay
Randalls Dam
Sub Total
-
-
-
-
-
-
-
13
-
13
Stockpile Total
907
Total Mount Monger
2,200
Table 2: MMO Gold Mineral Resources at 30 June 2018
-
-
-
-
-
-
3,595
1,855
646
78
236
409
-
6,819
2
-
2
35
34
107
141
-
-
-
-
-
-
-
-
4.6
-
4.6
1.2
5.3
142
790
44
216
186
1,006
200
947
302
1,165
101
24
14
587
851
44
641
3,594
213
620
149
448
55
6
11
19
808
64
604
-
2.6
2.7
2.7
5.6
2.5
5.6
2.2
1.9
3.3
1.8
2.5
2.7
2.4
1.4
1.4
2.1
4.8
2.1
2.8
-
452
2,544
1.7
141
9,363
2.0
593
5
7
13
-
8
6
14
-
7.2
1.2
4.6
-
2
0
2
-
55
113
168
907
5.1
2.1
3.0
1.2
9
7
16
35
377
17,488
3.3
1,860
11,379
4.1
1,485
31,067
3.7
3,721
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 15
RESOURCES & RESERVES REPORT
ORE RESERVE STATEMENT AS AT 30 JUNE 2018
The total MMO Proved and Probable Gold Ore Reserves at 30 June 2018 are 5.26 million tonnes (Mt) @ 3.1 grams per tonne of gold (g/t
Au) containing 0.53 Moz of gold (refer Tables 3 and 4). The previous publicly reported estimate of MMO Gold Ore Reserves was 4.15
Mt @ 3.5 g/t Au containing 0.47 Moz of gold as at 30 June 2017, announced on 4 August 2017. The Ore Reserves at 30 June 2018 are
estimated after allowing for mining depletion from MMO over FY2018. All Ore Reserves were estimated using a gold price of A$ 1,600
/ oz, apart from the Daisy Milano Ore Reserve using A$1,550 / oz, Majestic Ore Reserve A$1,650 / oz, and Harry’s Hill and Karonie Ore
Reserves using A$1,700 / oz.
June 2017
June 2018
Tonnes
('000s)
Grade
(g/t Au)
Ounces
(Au '000s)
Tonnes
('000s)
Grade
(g/t Au)
Ounces
(Au '000s)
518
3,629
4,147
2.3
3.7
3.5
38
429
466
1,319
3,937
5,256
2.9
3.2
3.1
124
402
526
Proved Ore Reserves
Probable Ore Reserves
Total Ore Reserves
Table 3: Total MMO Ore Reserves at 30 June 2018
Proved Ore Reserves
Probable Ore Reserves
Total Ore Reserves
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
Tonnes
(‘000s)
Grade
(g/t Au)
Ounces
(Au ‘000s)
June 2018
Daisy Mining Centre
Daisy Complex
Mirror/Magic
Sub Total
144
-
144
Imperial/Majestic Mining Centre
Imperial
Majestic
Sub Total
-
-
-
Mount Belches Mining Centre
Cock-eyed Bob
Maxwells
Sub Total
Aldiss Mining Centre
French Kiss
Karonie
Harrys Hill
Sub Total
139
130
269
-
-
-
-
Stockpile Total
907
Total Mount Monger
1,319
Table 4: MMO Ore Reserves at 30 June 2018
7.7
-
7.7
-
-
-
6.6
5.8
6.2
-
-
-
-
1.2
2.9
36
-
36
-
-
-
30
24
54
-
-
-
-
250
-
250
-
169
169
264
389
653
177
1,382
1,305
2,864
35
-
124
3,937
6.8
-
6.8
-
3.8
3.8
5.8
6.0
5.9
3.6
2.0
2.2
2.2
-
3.2
55
-
55
-
21
21
49
75
125
21
87
93
394
-
394
-
169
169
403
519
922
177
1,382
1,305
201
2,864
-
907
402
5,256
7.2
-
7.2
-
3.8
3.8
6.1
6.0
6.0
3.6
2.0
2.2
2.2
1.2
3.1
91
-
91
-
21
21
79
100
179
21
87
93
201
35
526
16 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
RESOURCES & RESERVES REPORT Notes to Tables 2 and 4:
1. Mineral Resources are reported inclusive of Ore Reserves.
2. Data is rounded to thousands of tonnes and thousands of ounces. Discrepancies in totals may occur due to rounding.
3.
4.
The “Daisy Complex” comprises the following zones: Daisy Milano, Haoma, Haoma West, Lower Prospect, Daisy North, Dinnie
Reggio and Christmas Flats.
The following Mineral Resource and Ore Reserve estimates are produced in accordance with the 2012 Edition of the Australian
Code for Reporting of Mineral Resources and Ore Reserves (the 2012 JORC Code): Daisy Complex, Lorna Doone, Wombola Dam,
Majestic, Imperial, Maxwells, Santa, Cock-eyed Bob/Anomaly A, Lucky Bay, Mirror/Magic, Rumbles, Karonie, Harry’s Hill, French Kiss,
Spice, Tank/Artredies. The remaining Mineral Resource and Ore Reserve 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.
MINERAL RESOURCE AND ORE RESERVE GOVERNANCE AND
INTERNAL CONTROLS
Silver Lake ensures that the Mineral Resource and Ore Reserve estimates quoted are subject to governance arrangements and internal
controls activated at a site level and at the corporate level. Internal reviews of Mineral Resource and Ore Reserve estimation procedures
and results are carried out through a technical review team which is comprised of highly competent and qualified professionals. These
reviews have not identified any material issues. The Company has finalised its governance framework in relation to the Mineral Resource
and Ore Reserve estimates in line with the conduct of its business.
Silver Lake reports its Mineral Resources and Ore Reserves on an annual basis in accordance with the ‘Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves’ (the JORC Code) 2012 Edition. Mineral Resources are quoted inclusive of Ore
Reserves. Competent Persons named by Silver Lake are Members or Fellows of the Australasian Institute of Mining and Metallurgy and/
or the Australian Institute of Geoscientists and qualify as Competent Persons as defined in the JORC Code. The Mineral Resources and
Ore Reserves statements are based upon, and fairly represent, information and supporting documentation prepared by the Competent
Persons named below. The Mineral Resources and Ore Reserves statements as a whole, as presented in this Annual Report, have been
approved by Antony Shepherd a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy.
COMPETENT PERSON’S STATEMENT
The information in the Annual Report to which this statement is attached that relates to the Mineral Resources for the Daisy Complex,
Majestic, Imperial, Anomaly A, Santa, Mirror/Magic, and Karonie deposits is based upon information compiled by Aslam Awan, a
Competent Person who is a member of The Australasian Institute of Mining and Metallurgy. Mr Awan is a full-time employee of the
Company. Mr Awan 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 Awan consents to the inclusion in the report of matters based on his
information in the form and context in which it appears.
The information in the Annual Report to which this statement is attached that relates to the Mineral Resources for the Maxwells and
Cock-eyed Bob deposits is based upon information compiled by Matthew Karl, a Competent Person who is a member of The Australasian
Institute of Mining and Metallurgy. Mr Karl is an employee of Mining Plus Pty Ltd. Mr Karl 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 Karl
consents to the inclusion in the report of matters based on his information in the form and context in which it appears.
The information in the Annual Report to which this statement is attached that relates to underground Ore Reserves at the Daisy Milano
Complex is based upon information compiled by Gavin Ward, a Competent Person who is a member of The Australasian Institute of
Mining and Metallurgy. Mr Ward is a full-time employee of the Company. Mr Ward 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 Ward consents
to the inclusion in the report of matters based on his information in the form and context in which it appears.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 17
RESOURCES & RESERVES REPORT The information in the Annual Report to which this statement is attached that relates to underground Ore Reserves at Cock-eyed Bob
deposit is based upon information compiled by Tim Davidson, a Competent Person who is a member of The Australasian Institute of
Mining and Metallurgy. Mr Davidson is a full-time employee of the Company. Mr Davidson 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
Davidson consents to the inclusion in the report of matters based on his information in the form and context in which it appears.
All other information in the Annual Report to which this statement is attached relating to Ore Reserves is based upon information
compiled by Sam Larritt, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy. Mr Larritt is a full-
time employee of the Company. Mr Larritt 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 Larritt consents to the inclusion in the report of
matters based on his information in the form and context in which it appears.
All other information in the Annual Report to which this statement is attached relating to Exploration Results and Mineral Resources is
based on information compiled by 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 the Company. Mr Shepherd 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 report of 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.
18 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
RESOURCES & RESERVES REPORT SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 19
RESOURCES & RESERVES REPORT The directors submit their report, together with the
consolidated financial statements of the Group comprising
Silver Lake Resources Limited (the Company or Silver Lake)
and its subsidiaries for the year ended 30 June 2018.
DIRECTORS
The directors of the Company at any time during or since the end
of the financial year are:
David Quinlivan
BApp Sci, Min Eng, Grad Dip Fin Serv, FAusImm, FFINSA, MMICA
Non-executive Chairman
Appointed Non-executive Director on 25 June 2015 and
Chairman on 30 September 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.
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 over 30 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 and Chief Executive Officer and
Managing Director of Reed Resources Ltd.
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 ceased as Managing Director on 20 November 2014 and
was subsequently appointed as Non-executive Director.
Mr Davis is a Non-executive Director of Black Cat Syndicate
Limited. Mr Davis has held no other Directorships in public listed
companies in the last three years.
Kelvin Flynn
B.Com, CA
Non-executive Director
Appointed 24 February 2016
Mr Flynn is a qualified Chartered Accountant with over 27
years’ experience in investment banking and corporate advisory
roles including private equity and special situations investments in
the mining and resources sector. He has held various leadership
positions in Australia and Asia, having previously held the position
of Executive Director/Vice President with Goldman Sachs and
Managing Director of Alvarez & Marsal in Asia. He has worked
in complex financial workouts, turnaround advisory and interim
management. He is the Managing Director of the specialist
alternative funds manager Harvis, which focuses on investments
in the real estate and real assets sectors.
Mr Flynn is currently a Director of privately held Global Advanced
Metals Pty Ltd and a Non-Executive Director of Mineral Resources
Limited. Mr Flynn was also a Non-Executive Director of Mutiny
Gold Ltd from 31 March 2014 to 31 January 2015 until its
successful merger with Doray Minerals Ltd.
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 has held no other Directorships in public listed
companies in the last three years.
COMPANY SECRETARY
David Berg
LLB BComm (General Management), FGIS, FCIS
Appointed 4 September 2014
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 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.
20 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
DIRECTORS’ REPORT COMMITTEE MEMBERSHIP
As at the date of this report, the Board has an Audit Committee and a Nomination & Remuneration Committee. Those members acting on
the committees of the Board during the year were:
Audit
Kelvin Flynn (Chairman)
Les Davis
David Quinlivan
Term
Full Year
Full Year
Full Year
Nomination & Remuneration
Term
Les Davis (Chairman)
Full Year
Brian Kennedy
David Quinlivan
Kelvin Flynn
Resigned 20 February 2018
Full Year
Appointed 20 February 2018
DIRECTORS’ MEETINGS
The number of Directors’ meetings (including committee meetings) held during the year and the number of meetings attended by each
Director are as follows:
Directors’ Meetings
Audit Committee
Nomination &
Remuneration Committee
A
12
12
12
9
11
B
12
12
12
12
12
A
2
-
2
2
-
B
2
-
2
2
-
A
2
-
2
-
2
B
2
-
2
-
2
David Quinlivan
Luke Tonkin
Les Davis
Kelvin Flynn
Brian Kennedy
A – Number of meetings attended
B – Number of meetings held during the time the Director held office or was a member of the committee during the year
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
David Quinlivan
Luke Tonkin
Les Davis
Kelvin Flynn
Brian Kennedy
Fully Paid Ordinary Shares
Unlisted Performance Rights
-
270,000
1,000,000
-
4,790,746
-
4,027,627
-
-
-
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 21
DIRECTORS’ REPORT PRINCIPAL ACTIVITIES
The principal activities of the Group during the course of the financial year were gold mining and processing from the Mount Monger
Camp, gold 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 and silver.
Group Financial Overview
The Group recorded a net profit after tax for the year of $16.2 million (2017: $2.0 million) and a EBITDA (before significant items) of $87.9
million a 26% increase on FY2017. This resulted in an EBITDA Margin for the year of 34% (2017: 31%).
A reconciliation between the statutory profit after tax and the Group’s underlying operating results is tabled on page 25. 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.
Revenue for the year totalled $255.6 million from the sale of 151,250 ounces of gold at an average realised gold sale price of A$1,684/oz
compared with revenue of $227.5 million from 137,000 ounces (@ A$1,654/oz) in FY2017. The increase in revenue reflects the strong
production result during the year as new high-grade ore sources were introduced to the Randalls Mill to supplement baseload mine
production from the Daisy Complex.
Cost of sales increased to $225.9 million in the period (2017: $216.4 million) reflecting the ramp up of production from the Imperial/
Majestic open pits and the Cock-eyed Bob and Maxwells underground mines including the increase in amortisation and depreciation
costs associated with these mines. The All-in Sustaining Cost (AISC) for the period of A$1,289/oz (2017: A$1,359/oz) is consistent with the
Company’s forecast and reflects an increase in high grade ore production from all three underground mines and higher grade ore from
the lower benches of the Imperial open pit.
Operating cash flow for the period was $80.8 million, a 26% increase on FY2017, resulting in a 30 June 2018 cash and bullion balance of
$105.7 million. The cash and bullion balance is after $18.3 million of capital expenditure on new mines in the Mount Belches area and at
Aldiss, and $11.4 million of exploration expenditure.
Overview of the Mount Monger Camp
Figure 10: Location of Mount Monger Camp Mining Centres and the centralised Randalls Mill. Refer to ASX announcement “Mineral Resource and Ore Reserve
Statement – MMO” dated 4 August 2017 for further information relating to Resources and Reserves.
22 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
DIRECTORS’ REPORT Mining
Ore mined from the Mount Monger Operation totalled 1,269,722 tonnes at a grade of 4.2 g/t Au for 171,616 contained ounces (2017:
1,306,508 tonnes at a grade of 3.5 g/t Au for 148,244 contained ounces). FY2018 production was sourced from the Daisy Complex,
Cock-eyed Bob and Maxwells underground mines and the Majestic/Imperial open pit mines. The recommencement of the Cock-eyed
Bob mine in July 2017 and the development of the Imperial/Majestic and Maxwells mines last financial year are key components of the
Company’s operating strategy of enhancing margins by introducing lower cost ore sources into the production plan that are proximal to
existing mines and mine infrastructure.
During the year the Daisy Complex produced 328,941 tonnes at 6.4 g/t Au for 68,033 contained ounces, continuing its strong track
record of consistent baseload supply to the Randalls mill. Mining at the Daisy Complex in FY2019 will focus on the Lower Prospect and
Haoma West lodes.
At Cock-eyed Bob key capital infrastructure projects to service the mine’s medium-term mine plan were completed during the year. This
included the commissioning of a new power station and completion of a 140-metre exhaust ventilation raise bore down to the 1298 level.
The mine’s decline has advanced 800 metres since July 2017 and long hole stope production commenced in Q3 FY2018. Encouragingly,
Cock-eyed Bob has demonstrated a significant overcall on grade to date and an updated model is being prepared to incorporate data
generated from mining to date.
Production from Maxwells underground increased to 204,671 tonnes at 4.8 g/t Au for 31,856 contained ounces reflecting the investment
in underground development at the mine over the past year and consistent targeted output levels. FY2018 development of 4,898 metres
exceeded plan providing multiple ore development horizons and stoping blocks for future production.
The establishment of the Mount Belches Underground Mining Centre (comprising Cock-eyed Bob and Maxwells) is an important
milestone for Silver Lake, as it broadens the developed underground ore sources and increases LOM visibility at Mount Monger. The two
mines at Mount Belches provide access to shallow, high grade underground ore sources in addition to the established and consistent
baseload feed from the Daisy Complex. Following the successful re-entry into Cock-eyed Bob, focus has returned to Mount Belches
exploration and a drilling program is underway at Santa targeting Maxwells and Cock-eyed Bob style mineralisation below the floor of the
Santa open pit.
Mine production from the open pits for the year totalled 670,605 tonnes at 2.7 g/t Au for 58,787 contained ounces (2017: 893,772 tonnes
at 2.2 g/t Au for 64,110 contained ounces). Mining operations were focused on completion of the Majestic open pit in H1 FY2018 and
completion of the Imperial pit in the second half of the financial year. Mining activities were accelerated during the year to bring forward
the completion of open pit mining, reducing fixed costs and building ore stockpiles which will be consumed during the development of
the Aldiss Mining Centre.
Development of the Aldiss Mining Centre commenced in the last quarter of FY2018. The centre will comprise multiple open pit mines,
providing feed to the Randalls mill in FY2019, FY2020 and FY2021 recovering between 180,000 – 200,000 ounces of gold. Infrastructure
works including construction of a 36km haul road, administration offices, 80-man camp, power and communications infrastructure are
well advanced and on track for first ore delivery to the mill in 2Q FY2019, which dovetails with the drawdown of stockpiles following
completion of the Imperial open pit.
Processing
Gold ore from the Mount Monger Operation is transported to the Randalls Gold Processing Facility, located 65 km south east of
Kalgoorlie. Mill feed during the period was sourced from the Daisy Complex, Cock-eyed Bob and Maxwells underground mines, the
Imperial/Majestic open pits and open pit stockpiles. Ore milled for the period totalled 1,256,120 tonnes at a blended grade of 4.2 g/t Au for
157,936 recovered ounces.
The 16% increase on FY2017 production reflects a 22% increase in feed grade, largely driven by increased production from the
underground mines and high grades realised from the Imperial pit.
Mining and production statistics for the Mount Monger Operation for the year are detailed in Table 1 and Table 2.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 23
DIRECTORS’ REPORT Gold Mining and Production Statistics
Mount Monger - Mining
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
Mount Monger - Processing
Ore Milled
Head grade
Contained gold in ore
Recovery
Gold produced
Gold sold
Table 2
Units
Tonnes
g/t Au
Oz
Tonnes
g/t Au
Oz
Tonnes
g/t Au
Oz
Units
Tonnes
g/t Au
Oz
%
Oz
Oz
FY 2018
FY 2017
599,117
5.9
112,829
670,605
2.7
58,787
1,269,722
4.2
171,616
FY 2018
1,256,120
4.2
171,355
92
157,936
151,250
412,736
6.3
84,134
893,772
2.2
64,110
1,306,508
3.5
148,244
FY 2017
1,300,152
3.5
145,661
93
135,837
137,000
Exploration
The exploration focus in FY2018 targeted near-term resource definition and project development opportunities across the two key
mining centres in the Mount Monger Operation area (Daisy and Mount Belches) and regional exploration proximal to existing mine and
processing infrastructure. Exploration expenditure during the year totaled $11.4 million and included:
» Underground resource definition diamond drilling at the Daisy Complex
» Underground exploration drilling targeting the new Easter Hollows lode
»
»
Surface exploration drilling at the Aldiss, Majestic/Imperial, Mount Belches and Daisy Mining Centres, including Cock-eyed Bob, Santa
and Leslie West areas.
Exploration drilling at the Aldiss Mining Centre, including resource definition drilling at the Karonie South open pit deposit.
A maiden JORC 2012 Ore Reserve of 1.4mt at 2 g/t for 87,000 ounces was declared during FY2018 at Karonie. Historical open pit mining
at Aldiss in the 1990’s was focused on the “Karonie Main Zone” deposit which produced 1.6Mt at 3.6g/t Au. Silver Lake’s reinterpretation
of the geology led to a revised geological model and a subsequent exploration program which successfully confirmed the high grade
gold lodes remain open down plunge to the south and future drilling will be planned at the appropriate time to test the potential for
underground mining at Karonie.
24 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
DIRECTORS’ REPORT STRATEGY
The Group’s short to medium term strategy is to maximise cash flow and increase operating margins from the Mount Monger Gold
Camp. This will be achieved by:
»
»
»
a strong focus on cost management and improved productivity;
the introduction of new, lower cost ore sources into the production schedule and subsequent ramp up of production from the Cock-
eyed Bob underground mine and the Aldiss open pits; and
executing the exploration strategy by directing expenditure to highly prospective priority targets in the Mount Monger area.
Key risks associated with delivering on the Group’s strategy include:
»
»
»
»
»
price and demand for gold - 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.
Therefore, revenue will 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 and reduced revenues. Operational difficulties may impact the amount of gold produced, delay deliveries or increase the cost of
mining for varying lengths of time; and
exploration success – no assurance can be given that exploration expenditure will result in future profitable operating mines.
REVIEW OF FINANCIAL CONDITION
The Group recorded an after-tax profit for the financial period of $16.2 million (2017: $2.0 million). This profit includes a number of
significant items 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 Profit after Tax to EBITDA
(excluding significant items) - unaudited
Statutory profit after tax:
Adjustments for:
Depreciation and amortisation
Non-current asset impairments
Net finance (income)/costs (includes change in value of listed investments)
Other
EBITDA (excluding significant items) *
* Non-IFRS measure
30 June 2018
$’000
30 June 2017
$’000
16,186
2,032
64,858
-
4,242
2,633
87,919
65,874
4,661
(6,076)
3,517
70,008
At the end of the financial year the Group had $98.0 million in cash (2017: $61.2 million), $7.6 million in gold bullion (2017: $7.8 million)
and bonds receivable of $146,000 (2017: $146,000). In addition, the Group had $8.1 million in ASX listed investments at year end (2017:
$12.4 million).
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 25
DIRECTORS’ REPORT 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 and increasing operating margins from its core Mount Monger Camp.
This will include directing exploration expenditure to high priority, cash generating projects.
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.
EMPLOYEES
The consolidated entity had 191 employees as at 30 June 2018 (2017: 152). 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 the improper use of position, or committing of any criminal,
dishonest, fraudulent or malicious act.
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 contract of insurance prohibits disclosure of the nature of the liability and the
amount of the premium.
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.
SUBSEQUENT EVENTS
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.
26 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
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. Basis of preparation
2. Key management personnel (KMP)
3. Remuneration snapshot
4. Remuneration governance
5. FY2018 Executive remuneration
6. FY2018 Non-executive director (NED) remuneration
7. KMP Shareholdings
1. Basis of preparation
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.
2. Key Management Personnel
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.
A list of all NEDS and Executives for FY2018 is set out below:
Name
David Quinlivan
Luke Tonkin
Les Davis
Kelvin Flynn
Brian Kennedy
David Berg
Diniz Cardoso
Matthew O’Hara
Antony Shepherd
Position
Non-executive Chairman
Managing Director
Non-executive Director
Non-executive Director
Non-executive Director
General Counsel & Company Secretary
Chief Financial Officer
General Manager Mount Monger Operations
Exploration & Geology Manager
Term as KMP
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
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.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 27
DIRECTORS’ REPORT 3. Remuneration snapshot
FY2018 Remuneration in review
a.
During the year the Company continued its focus on delivering new ore sources that sustain and enhance margins to drive shareholder
returns. Highlights for the year from this strategy included:
»
»
»
»
»
»
gold production of 157,936 ounces, a 16% increase on FY2017;
a 26% increase in cash from operations, lifting year end cash & bullion to $105.7 million;
recommencement of mining at the Cock-eyed Bob underground mine;
commenced development of the Aldiss Mining Centre;
successful completion of the Majestic/Imperial open pit mines; and
strong results from the FY2018 exploration campaign with the inclusion of the Karonie South project in the Life of Mine plan and
potential for a high grade underground mine at Santa
Further information on the link between company performance and KMP remuneration can be found in section 5 (f).
The Board believes that the Company’s remuneration framework is aligned with market practice and that Executive remuneration
in FY2018 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 year:
Remuneration element
Details
Fixed remuneration
No change to fixed remuneration structure.
Short-term incentive (STI)
STI payments were made to Executives during the period in line with their performance against set
targets. Further information on STI payments is included in Section 5(c) of this report.
Long-term incentive (LTI)
In FY2018, 923,845 performance rights were granted to the Managing Director and a further 703,259
performance rights were granted to other KMP’s on the terms approved by shareholders at the 2015
AGM and described further in this report.
b. Key changes to remuneration for FY2019
The NRC commenced a review of Executive Remuneration at the commencement of FY2019. The review will focus on the variable
components of total remuneration to ensure these remain competitive against peer companies to assist with the retention and attraction
of key talent. Details of any changes arising from this review will be disclosed in the FY2019 Remuneration Report.
4. Remuneration governance
a. 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:
»
»
»
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.
28 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
DIRECTORS’ REPORT 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).
Engagement of remuneration consultants
c.
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 independent advice was received when the current remuneration framework was
established. This advice was in respect of remuneration reporting and general advice in respect of market practice for long term incentive
plans. In addition, the Nomination & Remuneration Committee benchmark KMP salaries annually using external independent industry
reports and data to ensure that remuneration levels are competitive and meet the objectives of the Company.
2017 AGM voting outcome and comments
d.
The Company received more than 92% “yes” votes from its shareholders on its Remuneration Report for the 2017 financial year.
5. FY2018 Executive remuneration
Executive remuneration strategy and policy
a.
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 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;
Variable remuneration in the form of short-term incentives (STI) and long-term incentives (LTI).
The table below provides a summary of the structure of executive remuneration:
Fixed Remuneration
Variable Remuneration
»
»
Base Salary
Superannuation
» Other benefits
»
»
STI (Cash Bonuses)
LTI (Performance Rights)
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 29
DIRECTORS’ REPORT 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 FY2018 total remuneration packages split between the fixed
and variable remuneration is shown below:
Target remuneration mix
Managing Director
Other Executives
Target LTI
18%
Fixed
Remuneration
47%
Target STI
38%
Fixed
Remuneration
64%
Target LTI
32%
Target STI
21%
Fixed remuneration
b.
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 approximately the 50th percentile
of the industry benchmark AON McDonald Report (an independent, industry recognised report on the gold and mining industry). 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.
Individuals Executives’ base salaries for the 2018 financial year were:
Executive
Luke Tonkin
David Berg
Diniz Cardoso
Matthew O’Hara
Antony Shepherd
Base Salary
FY2018*
Base Salary
FY2017*
Movement
$640,000
$291,300
$304,500
$294,350
$253,750
$592,200
$287,000
$300,000
$290,000
$250,000
8%
1%
2%
2%
2%
* Base Salary as at 30 June of each respective year
Short-term incentive (STI) arrangements
c.
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. The target opportunity for
the Managing Director is 50% of base salary while for other Executive KMP it is 30% of base salary.
Each year the Nomination & Remuneration Committee, in conjunction with the Board, set KPI targets for Executives. Ordinarily, the
KPIs would include measures relating to the Group and the individual, and include environmental, health & safety, financial, production,
exploration, business development and company performance measures.
30 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
DIRECTORS’ REPORT FY2018 Performance against STI measures
A summary of the KPI targets set for FY2018 and their respective weightings is as follows.
KPI *
Weighting Measure
1. Safety/Environment
2. Production
3. Costs
4. Cash generation
11%
22%
22%
10%
»
»
»
Lagging EH&S indicators
Environmental management effectiveness
Safety management effectiveness
Production from each operating site versus FY2018 Stretch Target
Costs for each cost centre versus FY2018 Stretch Target
Free cash flow from operations versus FY2018 Stretch Target
5. Exploration & Resource Development
10%
Execution and success of FY2018 Exploration Strategy
6. Business Development
7. Company Performance
15%
10%
Execution and success of Business Development Strategy
TSR performance against comparator group
* Not all of the above KPIs were assigned to all Executives
In assessing KMP performance against the KPI targets during the year, the Committee considered the following achievements against
objectives set at the start of the year:
»
»
»
»
»
»
»
»
»
»
achieving OH&S objectives;
achieving environmental objectives;
exceeding upgraded FY2018 sales guidance;
26% increase in cash flow from operations;
exceeding the targeted end of year cash and bullion balance;
successful targeted and phased exploration strategy resulting in an extension to the life of mine of the Mount Monger Camp;
recommencement of the Cock-eyed Bob underground mine;
completion of the Imperial/Majestic open pits ahead of deadline and budget;
implementing and managing a transparent, effective hedging strategy to secure future revenue streams;
delivery of positive exploration results from infill and extensional resource definition drilling to allow further mines to enter production
in future periods;
» Company TSR performance against comparator group.
Based on the above assessment, STI payments for FY2018 to Executives were as follows:
Executive
Luke Tonkin
David Berg
Diniz Cardoso
Matthew O’Hara
Antony Shepherd
Maximum STI opportunity
% STI paid
50% of base salary
30% of base salary
30% of base salary
30% of base salary
30% of base salary
84.6%
84.6%
84.6%
74.6%
84.6%
STI paid
$270,700
$74,000
$77,300
$65,900
$64,500
Long-term incentive (LTI) arrangements
The Board has established the Employee Incentive Plan (Incentive Plan) as a means for motivating senior employees to pursue the long
term growth and success of the Company. The Incentive Plan provides the Company with the flexibility to issue incentives in the form of
either options or performance rights which may ultimately vest and be converted into shares on exercise, subject to satisfaction of any
relevant vesting conditions. The Incentive Plan was approved by shareholders at the 2015 AGM.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 31
DIRECTORS’ REPORT FY18 LTI outcomes
Executive
Luke Tonkin
David Berg
Maximum LTI
opportunity
75% of base salary
30% of base salary
Diniz Cardoso
30% of base salary
Matthew O’Hara
30% of base salary
Antony Shepherd
30% of base salary
* Independently valued using a hybrid share option pricing model
Number of Performance Rights
granted during FY18
Fair value per
Performance Right *
923,845
179,091
187,203
180,963
156,002
$0.257
$0.257
$0.257
$0.257
$0.257
During the year the Company issued 1,627,104 Performance Rights to KMP in respect of the LTI component of their FY2018 remuneration.
These Performance Rights were approved at the 2015 AGM and were issued in September 2017. The number of Performance Rights
awarded to each Executive was calculated by dividing each Executive’s maximum LTI opportunity by the 20 day VWAP of the Company
shares as traded on the ASX up to 30 June 2017.
The Performance Rights for all Executives 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 dividends paid.
Relative TSR will be measured by comparing the Company’s TSR with that of a comparator group of companies over the respective
3 year vesting period, which for the current award is the period 1 July 2017 to 30 June 2020. The TSR metric measures the share price
movement and dividends over this period for both the Company and the comparator group. The Performance Rights will vest based on
the Company’s relative TSR ranking on the vesting date (30 June 2020) as follows:
Relative TSR Performance
Less than 50th percentile
Vesting Outcome
0% vesting
Between the 50th percentile and 75th percentile
Pro rata straight line from 50% to 100%
At or above the 75th percentile
100% vesting
Relative TSR performance is calculated at a single point in time and is not subject to re-testing.
The comparator group of companies for Performance Rights on issue are listed in the table on page 33. At the discretion of the Board,
the composition of the comparator group may change from time to time.
Options
There were no options granted to KMP during FY2018. Options held by KMP lapsed in November 2017 as outlined below:
Key Management Personal
Balance at
1 July 2017
Granted
Exercised
Lapsed
Balance at
30 June 2018
Luke Tonkin
2,000,000
-
-
(2,000,000)
-
Details of the options are summarised in the following table:
Number of options
Exercise price
Issue date
Vesting date
Expiry date
Tranche A
400,000
$0.94
Tranche B
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
32 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
DIRECTORS’ REPORT Performance Rights
During the year the Company issued 2,058,855 Performance Rights to employees (including 1,627,104 Performance Rights to KMP) in
respect of the LTI component of their FY2018 remuneration.
Key Management
Person
Balance at
1 July 2017
Granted in
FY2018
Vested
Lapsed
Balance at
30 June 2018
Vested &
exercisable at
30 June 2018
Luke Tonkin
David Berg
Diniz Cardoso
Matthew O’Hara
Antony Shepherd
3,398,228
923,845
(2,243,883)
(294,446)
1,783,744
2,243,883
594,134
535,281
172,912
552,773
179,091
(373,980)
(49,075)
187,203
(311,152)
(40,830)
180,963
-
-
156,002
(359,021)
(47,112)
350,170
370,502
353,875
302,642
373,980
311,152
-
359,021
Total
5,253,328
1,627,104
(3,288,036)
(431,463)
3,160,933
3,288,036
The total expense recognised in the Statement of Profit or Loss for all Executives’ Performance Rights for the period ended 30 June 2018
was $356,967.
Details of the performance rights currently on issue are summarised in the following table:
FY2016 Award
FY2017 Award
FY2018 Award
Number of performance rights
Exercise price
Grant date
Note 1
$0.00
1 July 2015
20 Nov 2015
1,877,143
$0.00
1 July 2016
2,009,558
$0.00
1 July 2017
Vesting period
1 July 2015 – 30 June 2018
1 July 2016 – 30 June 2019
1 July 2017 – 30 June 2020
ASX Comparator Group
DRM; EVN; GOR; IGO; KCN; MML; NST; OGC; RMS; RRL;
SAR; SBM; TAM
AQG; BDR; DRM; EVN; MML; MOY;
NCM; NST; OGC; PRU; RMS; RRL;
RSG; SAR; SBM; TRY; WGX
FY2016 Award
FY2017 Award
FY2018 Award
Valuation at grant date
Underlying 20 day VWAP
Volatility
Risk free rate
Expected dividends
$0.07 for 1 July 15 Grant
$0.11 for 20 Nov 15 Grant
$0.148
22%
2.14%
-
$0.247
$0.491
20%
1.52%
-
$0.257
$0.481
20%
1.94%
-
Note 1: On completion of the vesting period 88.4% of the FY2016 Performance Rights (3,971,480 rights) had vested in accordance with the relative TSR hurdle attached
to them. This resulted in the lapsing of the balance (521,150 rights).
The fair value of the performance rights was measured using a hybrid employee share option pricing model (correlation simulation and
Monte Carlo model) and was calculated by independent consultants.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 33
DIRECTORS’ REPORT d. Service agreements
A summary of the key terms of service agreements for Executives in FY2018 is set out below. There is no fixed term for Executive service
agreements and all Executives are entitled to participate in the Company’s STI and LTI plans. The Company may terminate 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.
Term of
Agreement
Total Fixed
Remuneration
Notice Period
by Executive
Notice Period
by Silver Lake
Name
Luke Tonkin
Diniz Cardoso
Open
Open
Antony Shepherd
Open
David Berg
Matthew O’Hara
Open
Open
$640,000 plus
12% superannuation
$304,500 plus
9.5% superannuation
$253,750 plus
9.5% superannuation
$291,300 plus
9.5% superannuation
$294,350 plus
9.5% superannuation
6 months
6 months
6 months
6 months
3 months
3 months
6 months
6 months
Termination Payment
12 months
Total Fixed Remuneration
6 months
Total Fixed Remuneration
6 months
Total Fixed Remuneration
6 months
Total Fixed Remuneration
2 months
2 months
As per Legislation
e.
Executive remuneration paid
Fixed Remuneration
Variable
Remuneration
Executive
Year
Salary &
Fees
(A) Other
Benefits
Superannuation
STI Cash
Payments
Options/
Rights
$
$
$
$
$
Performance
Related
Remuneration
%
Total
$
Luke Tonkin
2018
647,981
69,943
24,884
270,700
243,013
1,256,521
2017
607,895
Diniz Cardoso
2018
286,707
2017
300,000
Antony Shepherd
2018
255,143
2017
247,307
32,405
23,337
8,062
19,447
8,294
David Berg
2018
285,391
22,325
2017
289,284
3,660
35,282
241,359
176,929
1,093,870
24,247
77,300
39,811
451,402
28,500
73,361
23,774
433,697
24,010
23,494
24,392
24,065
64,500
35,455
398,555
61,134
22,091
362,320
74,000
39,863
445,971
70,182
24,521
411,712
Matthew O’Hara
2018
266,103
22,559
27,852
65,900
27,575
409,989
2017
288,115
10,157
27,371
47,468
14,236
387,347
Total
2018
1,741,325
157,611
125,385
552,400
385,717
2,962,438
2017
1,732,601
62,578
138,712
493,504
261,551
2,688,946
41
38
26
22
25
23
26
23
23
16
32
28
(A) Represents contractual entitlements (including termination and retirement benefits), annual leave and long service leave entitlements, measured on an accrual basis.
34 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
DIRECTORS’ REPORT Link between company performance, shareholder wealth generation and remuneration
f.
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 ($m)
Profit/(loss) after tax ($m)
Cash from operating activities ($m)
Closing share price at 30 June
2018
105.7
16.2
80.8
$0.60
2017
69.1
2.0
64.0
$0.47
2016
42.6
4.4
55.0
$0.52
2015
28.9
2014
32.2
(94.0)*
(170.4)*
29.5
$0.14
24.5
$0.51
* Includes impairments on inventories and other non-current assets
The Company’s remuneration practices reflect the achievement of certain of the Company’s and KMP’s performance objectives. The
Company’s overall objective has been to maximise cash flow, increase operating margins at its core Mount Monger Camp and crystalise
value from its non-core assets.
6. FY2018 Non-executive director (NED) remuneration
a. 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.
It is ensured that:
a)
fees paid to NEDs are within the aggregate amount approved by shareholders at the Company’s Annual General Meeting;
b) NEDs are remunerated by way of fees (in the form of cash and superannuation benefits);
c) NEDs are not provided with retirement benefits other than statutory superannuation entitlements; and
d) 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.
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.
FY2018 NED fees
NED
David Quinlivan
Les Davis
Kelvin Flynn
Brian Kennedy
* Fees excluding superannuation as at 30 June of each respective year
There were no changes to NED fees during the current financial year.
Fees FY2018*
Fees FY2017*
Movement
$173,750
$115,000
$115,000
$115,000
$173,750
$115,000
$115,000
$115,000
-
-
-
-
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 35
DIRECTORS’ REPORT c. NED fees paid
Details of the remuneration of each NED for the year ended 30 June 2018 is set out in the following table:
David Quinlivan
Les Davis
Kelvin Flynn
Brian Kennedy
Total
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Fees
$
173,750
160,586
115,000
96,522
115,000
96,522
115,000
96,522
518,750
450,152
Superannuation
$
16,506
15,256
10,925
9,170
10,925
9,170
10,925
9,170
49,281
42,766
Total
$
190,256
175,842
125,925
105,692
125,925
105,692
125,925
105,692
568,031
492,918
7. KMP Shareholdings
Key Management Person
David Quinlivan
Luke Tonkin
Les Davis
Kelvin Flynn
Brian Kennedy
David Berg
Diniz Cardoso
Matthew O’Hara
Antony Shepherd
Total
Key Management
Person
David Quinlivan
Luke Tonkin
Les Davis
Kelvin Flynn
Brian Kennedy
David Berg
Diniz Cardoso
Matthew O’Hara
Antony Shepherd
Total
Balance at
1 July 2017
-
-
1,000,000
-
4,790,746
10,416
Acquired
-
270,000
-
-
-
-
-
-
-
500,000
-
-
5,801,162
770,000
Conversion of
Performance Rights
Sold
Balance at
30 June 2018
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
270,000
1,000,000
-
4,790,746
10,416
500,000
-
-
6,571,162
Balance at
1 July 2016
Acquired
Conversion of
Performance Rights
Sold
Balance at
30 June 2017
-
-
4,525,294
-
4,790,746
10,416
-
-
-
9,326,456
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,525,294)
1,000,000
-
-
-
-
-
-
-
4,790,746
10,416
-
-
-
(3,525,294)
5,801,162
36 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE
Section 307C of the Corporations Act 2001 requires Silver Lake’s auditors, KPMG, to provide the Directors with an Independence
Declaration in relation to the audit of the financial report for the year ended 30 June 2018. This Independence Declaration is attached to
the Directors’ Report and forms a part of the 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 manage-
ment 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
2018
$
28,129
115,324
143,453
2017
$
20,744
167,708
188,452
On behalf of the Board we would like to thank the Company’s employees for their hard work and commitment
over the past 12 months, and without whom, the achievements of the past year would not have been possible.
ROUNDING OFF
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in
accordance with that Instrument, all financial information has been rounded off to the nearest thousand dollars, unless otherwise stated.
We would also like to acknowledge our suppliers, contractors and shareholders who continue to support our
strategy of delivering today, developing for tomorrow and discovering for the future.
The Directors’ Report is signed in accordance with a resolution of the Directors.
David Quinlivan
Non-Executive Chairman
Luke Tonkin
Luke Tonkin
Managing Director
Managing Director
21 August 2018
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 37
DIRECTORS’ REPORT
DIRECTORS’ DECLARATION
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 accor-
dance with the Corporations Act 2001 including:
i) Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance for the year then ended;
and
ii) Complying with Australian Accounting Standards and Corporations Regulations 2001;
b)
the financial statements also comply with International Financial Reporting Standards as disclosed in Note 1;
c)
d)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and pay-
able; and
there are reasonable grounds to believe that the Company and the Group entity identified in Note 34 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 Com-
pany and that Group entity pursuant to ASIC Corporations (wholly owned companies) Instruments 2016/785.
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 2018.
On behalf of the Board we would like to thank the Company’s employees for their hard work and commitment
over the past 12 months, and without whom, the achievements of the past year would not have been possible.
We would also like to acknowledge our suppliers, contractors and shareholders who continue to support our
strategy of delivering today, developing for tomorrow and discovering for the future.
The declaration is signed in accordance with a resolution of the Board of Directors.
David Quinlivan
Non-Executive Chairman
Luke Tonkin
Luke Tonkin
Managing Director
Managing Director
21 August 2018
38 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
AUDITOR’S INDEPENDENCE DECLARATION
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Silver Lake Resources Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Silver Lake Resources
Limited for the financial year ended 30 June 2018 there have been:
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
i.
ii.
KPMG
Derek Meates
Partner
Perth
21 August 2018
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 39
Independent Auditor’s Report
To the shareholders of Silver Lake Resources Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Silver Lake Resources Limited (the
Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance with
the Corporations Act 2001, including:
• giving a true and fair view of the Group's
financial position as at 30 June 2018 and of
its financial performance for the year ended
on that date; and
• complying with Australian Accounting
Standards and the Corporations Regulations
2001.
Basis for opinion
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2018
• Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of
cash flows for the year then ended
• Notes including a summary of significant accounting
policies
• Directors' Declaration.
The Group consists of the Silver Lake Resources
Limited (the Company) and the entities it controlled at
the year-end or from time to time during the financial
year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
have fulfilled our other ethical responsibilities in accordance with the Code.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
40 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
INDEPENDENT AUDIT REPORT
Key Audit Matters
The Key Audit Matters we identified are:
• Gold reserves and resources estimation;
and
• Restoration and rehabilitation provision.
Gold reserves and resources estimation
Refer to Note 14 to the Financial Report
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in
our audit of the Financial Report of the current period.
These matters were addressed in the context of our
audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
The key audit matter
How the matter was addressed in our audit
The estimation of gold reserves and
resources requires a number of significant
assumptions and interpretations of geological
models. It is conducted by the Group’s
internal expert, being a Competent Person as
defined in the 2012 edition of the Australasian
Code for the Reporting of Exploration Results,
Mineral Resources and Ore Reserves. In the
case of gold reserves, assessments of the
commercial and technical feasibility of
producing the reserves are made which
include assumptions such as:
•
quantities, grades, recovery rates,
production costs, future capital
requirements, short and long term
commodity prices, and foreign exchange
rates.
These estimates can have a significant impact
on the financial report, primarily in the
following areas:
• Capitalisation and classification of
expenditure as exploration and evaluation
assets or mine development assets;
Our procedures included:
• We assessed the scope, competence and objectivity
of the Group’s internal expert involved in the
estimation process;
• We evaluated the adequacy of the Group’s internal
expert’s work by:
• Understanding the Group’s gold reserves and
resources estimation process and controls by
inquiring with the internal expert and performing a
walkthrough of the process;
• Testing the key controls for the reserves and
resources estimation process including the review
and approval of the reserve and resource
statements by the Board of Directors; and
• Assessing the changes in reserves and resources,
both positive and negative revisions, with
consideration of other information we obtained
throughout the audit, such as:
o
reconciliations of production to budget
throughout the year; and
o minutes of Board meetings indicating
adjustments to reserves.
• Valuation of assets and impairment testing;
• We critically evaluated the gold reserve and resource
• Calculation of amortisation charges; and
assessment assumptions by:
• The Group’s determination of restoration
and rehabilitation provisions.
Given the significant and pervasive impact
the estimation of gold reserves and
resources have across multiple items in the
financial statements, we have considered it a
• Comparing the forecast gold prices and foreign
exchange rates applied by the Group to published
analyst and broker data about future gold prices
and foreign exchange rates;
• Using our knowledge of historical production
levels and the current business model to assess
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 41
INDEPENDENT AUDIT REPORT
key audit matter and focused our audit effort
accordingly.
the Group’s capacity to achieve future production
levels, including quantities, grades and recovery
rates;
• Comparing the forecasted operating and capital
cash flows to actual cash flows for the previous
year to inform our evaluation of the accuracy of
the Group’s forecast capital requirements and
production costs.
• We reconciled the gold reserves and resources to
the mine plans utilised, amounts disclosed in the
financial statements and to the underlying financial
information used by the Group in determining the:
• Classification of exploration and evaluation assets
and mine development assets;
• Valuation of assets and impairment trigger
assessment;
• Calculation of amortisation charges; and
• Timing of restoration and rehabilitation provisions.
Restoration and rehabilitation provision (A$16.45 million)
Refer to Note 22 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The restoration and rehabilitation provision is
considered to be a key audit matter. This is
due to the:
•
•
inherent complexity for the Group in
estimating future environmental
restoration and rehabilitation costs and
significant audit effort for us in gathering
sufficient audit evidence thereon,
particularly those costs to be incurred
several years in the future.
The estimate of the provision is influenced
by:
• The complexity in current environmental
and regulatory requirements, and the
impact to completeness of the provision;
• The expected environmental management
strategy of the Group and the nature of the
costs incorporated into the provision;
• Historical experience and whether this is a
reasonable predictor when evaluating
Our procedures included:
• Comparing the basis for recognition and
measurement of the provisions for consistency with
environmental and regulatory requirements and
criteria in the accounting standards;
• Obtaining the Group’s rehabilitation provision
calculation, and critically evaluated the provision by:
• Obtaining the Group’s latest third party expert
reports as well as internal and external underlying
documentation for their determination of future
required activities, their timing and associated
cost estimates;
• Assessing the planned timing of restoration and
rehabilitation activities through comparison to
mine plans and reserve and resource statements
for completion of mining activities and
commencement of restoration and rehabilitation
activities;
• Assessing the competence, scope and objectivity
of the Group’s internal and external experts used
in the determination of the provision estimate;
42 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
INDEPENDENT AUDIT REPORT
forecast costs; and
• The expected timing of expenditure which
is planned to occur several years into the
future, and the associated inflation and
discounting of costs in the present value
calculation of the provision.
The Group uses third party and internal
experts when assessing their obligations for
restoration and rehabilitation activities and
associated estimates of future costs.
• Testing the accuracy of historical restoration and
rehabilitation provisions by comparing to actual
expenditure incurred. We used this to challenge
the Group’s current cost estimations ;
• Comparing inflation rate and discount rate
assumptions in the Group’s provision
determination to current market data, including
economic forecasts;
• Evaluating the completeness of the provision
against the Group’s analysis of each operating
location to identify where disturbance requires
rehabilitation or restoration and comparing to our
understanding of the Group’s operations.
Other Information
Other Information is financial and non-financial information in Silver Lake Resources Limited’s annual
reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Director’s Report.
The Chairman and Managing Director’s Report, Project Report, Exploration Report, Reserves & Resources
Report and ASX Additional Information are expected to be made available to us after the date of the
Auditor's Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and
will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
• implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error
• assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate
the Group and Company or to cease operations, or have no realistic alternative but to do so.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 43
INDEPENDENT AUDIT REPORT
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
• to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
• to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report
of Silver Lake Resources Limited for the
year ended 30 June 2018, complies with
Section 300A of the Corporations Act
2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration Report
in accordance with Section 300A of the Corporations Act
2001.
Our responsibilities
We have audited the Remuneration Report included in the
Directors’ report for the year ended 30 June 2018.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Derek Meates
Partner
Perth
21 August 2018
44 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
INDEPENDENT AUDIT REPORT
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2018
Revenue
Cost of sales
Gross profit
Other income
Profit/(loss) on sale of assets
Exploration expenditure
Impairment losses
Administrative expenses
Results from operating activities
Finance income
Finance expenses
Net finance (costs)/income
Profit before income tax
Income tax expense
Profit for the year
Total comprehensive profit for the year
Basic profit per share
Diluted profit per share
30 June
2018
$’000
30 June
2017
$’000
255,573
227,491
(225,863)
(216,355)
29,710
11,136
186
30
(2,663)
-
(6,835)
20,428
580
(4,822)
(4,242)
16,186
-
16,186
-
(960)
(2,557)
(4,661)
(7,002)
(4,044)
6,550
(474)
6,076
2,032
-
2,032
16,186
2,032
Cents Per
Share
Cents Per
Share
3.21
3.16
0.40
0.40
Notes
3
4
14
17
5
7
8
9
9
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 2018 | 45
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2018
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets held for sale
Prepayments
Total current assets
Non-current assets
Inventories
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
Employee benefits
Total current liabilities
Non-current liabilities
Rehabilitation and restoration provision
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
Notes
30 June
2018
$’000
30 June
2017
$’000
10
12
13
17
13
14
15
16
18
19
20
22
23
24
97,959
2,067
27,740
-
150
127,916
1,868
79,588
37,366
8,140
126,962
254,878
61,196
9,531
18,937
1,500
112
91,276
1,868
99,062
38,251
12,386
151,567
242,843
30,033
32,956
-
2,013
32,046
16,450
16,450
48,496
2,125
1,874
36,955
16,122
16,122
53,077
206,382
189,766
699,564
699,564
1,650
(494,832)
206,382
1,220
(511,018)
189,766
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes to these consolidated
financial statements.
46 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2018
Balance at 1 July 2016
699,564
830
(513,050)
187,344
Share
Capital
$’000
Option
Reserve
$’000
Accumulated
Losses
$’000
Total
Equity
$’000
Notes
Total comprehensive profit for the year
Transactions with owners, recorded directly in equity
Equity settled share based payment
24
Balance at 30 June 2017
-
-
699,564
-
2,032
2,032
390
1,220
-
390
(511,018)
189,766
Share
Capital
$’000
Option
Reserve
$’000
Accumulated
Losses
$’000
Total
Equity
$’000
Balance at 1 July 2017
699,564
1,220
(511,018)
189,766
Total comprehensive profit for the year
Transactions with owners, recorded directly in equity
Equity settled share based payment
24
Balance at 30 June 2018
-
-
699,564
-
16,186
16,186
430
1,650
-
430
(494,832)
206,382
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 2018 | 47
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2018
Cash flows from operating activities
Receipts from sales
Payments to suppliers and employees
Net cash from operating activities
Cash flow from investing activities
Interest received
Acquisition of plant and equipment
Proceeds from sale of plant and equipment
Acquisition of investment
Proceeds from divestments
Exploration, evaluation and development expenditure
Net cash used in investing activities
Cash flows from financing activities
Stamp duty paid
Interest paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
Notes
30 June
2018
$’000
30 June
2017
$’000
262,950
(182,147)
80,803
580
(10,009)
30
(498)
1,500
(33,440)
(41,837)
(2,125)
(78)
(2,203)
36,763
61,196
97,959
220,319
(156,324)
63,995
662
(6,315)
-
-
11,928
(43,306)
(37,031)
(3,937)
(474)
(4,411)
22,553
38,643
61,196
11
7
15
17
10
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes to the consolidated financial
statements.
48 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
1. BASIS OF PREPARATION
Silver Lake Resources Limited (“Silver Lake” or “the Company”) is a for profit entity domiciled in Australia. The consolidated financial
statements of the Company as at and for the year ended 30 June 2018 comprise the Company and its subsidiaries (together referred to
as “the Group” and individually as “Group Entities”).
The consolidated financial statements were approved by the Board of Directors on 21 August 2018. The financial report is a general
purpose financial report which:
»
»
»
has 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;
complies with International Financial Reporting Standards (“IFRSs”) and interpretations adopted by the International Accounting Stan-
dards Board (“IASB”);
has been 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 where impairments have been
recognised.
There have been no material changes to accounting policies for the periods presented in these consolidated financial statements.
Significant accounting policies specific to one note are included in that note. Accounting policies determined non-significant are not
included in the financial statements.
The accounting policies have been applied consistently to all periods presented and by all Group entities. Certain comparative disclosures
have been reclassified to conform to the current year’s presentation.
(a) Functional and Presentation Currency
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 Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
and in accordance with that Instrument, all financial information has been rounded off to the nearest thousand dollars, unless otherwise
stated.
(b) 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.
Judgements and estimates which are material to the financial report are found in the following notes:
» Note 8 Income Tax – recognition of deferred tax assets
» Note 14 Exploration, evaluation and development expenditure carried forward – consideration of impairment triggers and recognition
of impairment losses
» Note 14 Amortisation of development expenditure – estimation of future mineable inventory and future development expenditure
when calculating units of production amortisation
» Note 14 Reserves and Resources – estimating reserves and resources
» Note 22 Closure and rehabilitation – measurement of provision based on key assumptions
(c) Basis for Consolidation
The consolidated financial statements comprise the financial statements of the Group. A list of controlled entities (subsidiaries) at year end
is disclosed in Note 29.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting
policies.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in
preparing the consolidated financial statements.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 (d) 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 Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which
the Group has access at that date. The fair value of a liability reflects its non-performance risk. 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.
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 of the reporting period during
which the change has occurred.
(e) Impairment of Non-Financial Assets
The carrying amounts of the Group’s non-financial assets, other than inventories 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 of disposal. 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 the Statement of Profit or 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.
Long term development and production phase assets that relate to unmined resources are 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 where an indicator of impairment exists 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.
2. 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. 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 Western Australia. The Board of Directors review internal management
reports on a monthly basis that are 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 used by the Board to make strategic decisions.
50 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 3. REVENUE
Gold sales
Silver sales
Total
30 June
2018
$’000
30 June
2017
$’000
254,662
911
255,573
226,568
923
227,491
Included in current year gold sales is 98,791 ounces of gold sold (at an average price of A$1,681/ounce) under various hedge programs. At
30 June 2018, the Company has a total of 129,000 ounces of gold left to be delivered under these programs.
Accounting Policies
Gold sales
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 and the amount of revenue can be measured reliably.
Gold forward contracts
The Group uses derivative financial instruments such as 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 Statement of Profit or Loss and no fair value adjustments are subsequently made to sales yet
to be delivered under the hedging program.
4. COST OF SALES
Mining and processing costs
Amortisation
Depreciation
Salaries and on-costs
Royalties
Accounting Policies
Notes
14
15
30 June
2018
$’000
30 June
2017
$’000
133,787
125,872
53,964
10,894
18,591
8,627
55,824
10,050
17,207
7,402
225,863
216,355
Mining and processing costs
This includes all costs related to mining, milling and site administration, net of costs capitalised to mine development and production
stripping. This category also includes movements in the cost of inventory and any net realisable value write downs.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 Amortisation
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 and changes to these estimates and assumptions may impact the amortisation charge
in the Statement of Profit or Loss and asset carrying values.
The Group uses ounces mined over mineable inventory as its basis for depletion of mine properties. In the absence of reserves, the Group
believes this is the best measure as evidenced by historical conversion of resources to reserves. The Group applies applicable factoring
rates when adopting the units of production method to reflect the risk of conversion from the inferred and indicated categories to
mineable inventory.
Depreciation
Depreciation 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 while
processing plants are depreciated on the life of the mine basis. Capital work in progress is not depreciated until it is ready for use.
Depreciation methods, useful lives and residual values are reassessed at each reporting date. 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
Capital work in progress is not depreciated until it is ready for use.
5. ADMINISTRATION EXPENSES
Period
10 Years
5 Years
3-10 Years
3-15 Years
3-5 Years
Salaries and on-costs
Consultants and contractors
Professional fees
Travel and accommodation
Rental expense
Other corporate costs
Total
30 June
2018
$’000
4,823
1,102
190
138
122
460
30 June
2017
$’000
4,675
665
189
109
653
711
6,835
7,002
52 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 6. PERSONNEL EXPENSES
Wages and salaries
Other associated personnel expenses
Superannuation contributions
Total
7. FINANCE INCOME AND EXPENSES
Interest income
Change in fair value of listed investment
Finance income
Change in fair value of listed investment (Note 16)
Interest expense on interest bearing liabilities
Finance costs
Net finance costs
30 June
2018
$’000
21,932
1,118
1,909
24,959
30 June
2017
$’000
20,705
1,315
1,935
23,955
30 June
2018
$’000
30 June
2017
$’000
580
-
580
(4,744)
(78)
(4,822)
(4,242)
662
5,888
6,550
-
(474)
(474)
6,076
Accounting Policies
Interest income comprises bank interest 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
the Statement of Profit or 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 qualifying asset.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 8. TAXES
(a) Income tax
Current tax expense
Current income tax loss
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
Profit before tax
Income tax using the corporation tax rate of 30%
Movement 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
Tax losses
30 June
2018
$’000
30 June
2017
$’000
(359)
(5,504)
(5,863)
5,863
-
(26,752)
(12)
(26,764)
26,764
-
30 June
2018
$’000
30 June
2017
$’000
16,186
4,856
(1,141)
(5,504)
1,789
-
2,032
610
(1,931)
(12)
1,333
-
30 June
2018
$’000
30 June
2017
$’000
2,017
(1,732)
6,521
4,735
481
5,077
6
129,156
146,261
2,017
(1,463)
13,046
1,897
475
4,952
255
123,293
144,472
Less deferred tax asset not recognised
Net deferred tax assets
(146,261)
(144,472)
-
-
54 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 Accounting Policies
Income tax
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 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.
Tax consolidation
The Company and its wholly-owned entities are part of a tax-consolidated group. As a consequence, all members of the tax-consolidated
group are taxed as a single entity (Silver Lake Resources Limited is the head entity within the tax-consolidation group).
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.
Tax losses
At 30 June 2018 the Company has $430,521,000 (2017: $410,976,000 loss) of 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 2018 of $129,156,000 (2017: $123,293,000).
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.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 9. EARNINGS PER SHARE
Profit used in calculating basic and diluted EPS
30 June
2018
$’000
30 June
2017
$’000
16,186
2,032
Number
of Shares
Number
of shares
Weighted average number of ordinary shares used in calculating basic earnings per share
503,827,000
503,708,000
Effect of dilution
8,379,000
6,758,000
Weighted average number of ordinary shares used in calculating diluted earnings per share
512,206,000
510,466,000
Accounting Policies
Basic EPS is calculated as profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary
shares.
Diluted EPS is determined by adjusting the profit 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.
10. CASH AND CASH EQUIVALENTS
Cash at bank
30 June
2018
$’000
30 June
2017
$’000
97,959
61,196
Accounting Policies
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less. The Group ensures that as
far as possible it maintains excess cash and cash equivalents in short-term high interest bearing deposits.
The Group’s exposure to interest rate risk and a sensitivity analysis of financial assets and liabilities are disclosed in Note 25.
56 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 11. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Cash flow from operating activities
Profit after tax
Adjustments for:
Depreciation
Amortisation
Impairment of exploration and development expenditure
Share based payments
Net finance cost
(Profit)/loss from the sale of non-current assets
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 other liabilities
Total
12. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
GST receivable
Provision for doubtful debts (Note 25 (b)(ii))
Total
30 June
2018
$’000
30 June
2017
$’000
16,186
2,032
10,894
53,964
-
430
4,242
(30)
85,686
7,464
(8,803)
(38)
(2,922)
(584)
80,803
10,050
55,824
4,661
390
(5,888)
960
68,029
(7,401)
1,344
(22)
2,041
4
63,995
30 June
2018
$’000
30 June
2017
$’000
7,367
1,423
(6,723)
2,067
14,557
1,697
(6,723)
9,531
The Group’s exposure to interest rate risk and a sensitivity analysis of financial assets and liabilities are disclosed in Note 25.
Accounting Policies
Trade receivables are recognised initially at the value of the invoice sent to the counterparty and subsequently at the amounts considered
recoverable (amortised cost). Where there is evidence that the receivable is not recoverable, it is impaired with a corresponding change to
the profit or loss statement.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 13. INVENTORIES
Current
Materials and supplies
Ore stocks
Gold in circuit
Bullion on hand
Non-Current
Ore stocks
Total
30 June
2018
$’000
30 June
2017
$’000
5,780
9,214
5,114
7,632
4,882
9,814
3,535
706
27,740
18,937
1,868
29,608
1,868
20,805
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.
Accounting Policies
Inventory
Inventories of ore, gold in circuit and gold bullion 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.
Bullion on Hand
Bullion on hand comprises gold that has been delivered to the Perth Mint prior to period end but which has not yet been delivered into a
sale contract.
58 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 14. EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
During the year ended 30 June 2018 the Group incurred and capitalised the following on exploration, evaluation and development
expenditure:
Exploration and evaluation phase
Cost brought forward
Capitalised during the year
Impairment
Transferred to development phase
Transferred to asset held for sale
Expensed during period
Balance at 30 June
Development phase
Cost brought forward
Transfer from exploration and evaluation phase
Expenditure during the year
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
Rehabilitation provision adjustment
Amortisation expense
Balance at 30 June
Total
30 June
2018
$’000
30 June
2017
$’000
15,018
7,642
-
(2,734)
-
(2,663)
17,263
14,198
9,538
(4,661)
-
(1,500)
(2,557)
15,018
30 June
2018
$’000
30 June
2017
$’000
8,886
2,734
1,118
(2,734)
10,004
45,897
-
1,315
(38,326)
8,886
30 June
2018
$’000
30 June
2017
$’000
75,158
2,734
27,343
-
1,050
63,798
38,326
33,584
(4,726)
-
(53,964)
(55,824)
52,321
79,588
75,158
99,062
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 Accounting Policies
Exploration and evaluation expenditure
Exploration and evaluation expenditures are those expenditures incurred 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. 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. 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. 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.
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. If costs do not meet the criteria noted above, they are written off in full against the profit and loss statement.
Exploration and evaluation assets are transferred to Development Phase 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.
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:
»
»
»
»
the term of exploration licence 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.
Impairment testing of assets in the development or production phase
The carrying amounts of assets in the development or production phase 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 of disposal. 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 the Statement of Profit or 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.
60 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 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.
Exploration expenditure commitments
Exploration expenditure commitments represent tenement rentals and minimum spend requirements that are required to be met under
the relevant legislation should the Group wish to retain tenure on all its current tenements.
Mine properties and mining assets
Mine properties represent 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.
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
expensed as incurred.
Deferred Stripping Costs
Stripping is the process of removing overburden and waste materials from surface mining operations to access the ore. Stripping costs are
capitalised during the development of a mine and are subsequently amortised over the life of mine on a units of production basis, where
the unit of account is ounces of gold mined. Stripping costs capitalised at year end are included in the Production phase in Note 14.
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.
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:
»
»
»
»
asset carrying values may be impacted due to changes in estimates of future cash flows;
amortisation charged in the Statement of Profit or Loss 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 expecta-
tions about the timing or costs of these activities change; and
recognition of deferred tax assets, including tax losses.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 15. 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
Total
$’000
Cost
Balance 1 July 2016
13,102
193,789
3,561
2,350
2,192
407
215,401
Additions
Reclassified as held for sale
Transfers
Disposals
-
-
-
-
-
5,952
(366)
(11,421)
-
-
326
-
-
-
153
(234)
-
-
693
(5)
6,315
1,405
(7,124)
6,315
1,405
-
-
(12,026)
Balance 30 June 2017
12,736
188,320
3,887
2,269
2,880
1,003
211,094
Additions
Reclassification of assets
Transfers
Disposals
-
-
-
-
1,524
4,837
-
-
-
-
-
-
-
-
151
(154)
-
-
293
-
10,009
10,009
-
(6,805)
-
-
-
(154)
Balance 30 June 2018
14,260
193,157
3,887
2,266
3,173
4,207
220,949
Depreciation
Balance at 1 July 2016
10,914
147,323
2,492
2,050
Depreciation expense
Disposal
Balance 30 June 2017
Depreciation expense
Disposal
4
4
363
(53)
8,531
(1,675)
811
-
11,224
154,179
3,303
302
-
9,474
-
584
-
Balance 30 June 2018
11,526
163,653
3,887
Carrying Amount
At 30 June 2016
At 30 June 2017
At 30 June 2018
2,188
1,512
2,734
46,466
1,069
34,141
29,504
584
-
144
(203)
1,991
115
(155)
1,951
299
278
314
1,946
202
(1)
2,147
419
-
2,566
246
733
607
-
-
-
-
-
-
-
407
1,003
4,207
164,726
10,050
(1,932)
172,843
10,894
(155)
183,583
50,675
38,251
37,366
Accounting Policies
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.
62 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 16. INVESTMENTS
Investments in listed entities – at fair value
Movements as follows:
Balance at 1 July
Acquisitions
Disposals
Change in fair value
Balance at 30 June
Accounting Policies
30 June
2018
$’000
30 June
2017
$’000
8,140
12,386
12,386
498
-
(4,744)
8,140
4,806
2,300
(608)
5,888
12,386
Financial assets at fair value through profit or loss
Financial assets designated at fair value through profit or loss comprise investments in equity securities.
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 the profit or loss.
The fair values of investments in equity securities are determined with reference to their quoted ASX closing price at balance date.
17. DISPOSAL OF ASSETS
Assets held for sale at 30 June 2017 of $1,500,000 represented the sale of the Cue Project Joint Venture. Completion of this transaction
occurred in August 2017. An impairment of $4,661,000 was included in the FY2017 Statement of Profit or Loss as a result of the sale.
Accounting Policies
Non-current assets and associated liabilities are classified as held for sale when their carrying amount will be recovered principally through
a sale transaction rather than continuing use and a sale is highly probable. Assets designated as held for sale are held at the lower of
carrying amount at designation and fair value less costs to sell.
18. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Total
30 June
2018
$’000
30 June
2017
$’000
26,426
3,607
30,033
29,354
3,602
32,956
The Group’s exposure to liquidity risk and a sensitivity analysis of financial assets and liabilities are disclosed in Note 25.
Accounting Policies
Trade payables are recognised at the value of the invoice received from a supplier. They represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future
payments in respect of the purchase of these goods and services. The amounts are unsecured and generally paid between 30-45 days of
recognition.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 19. INTEREST BEARING LIABILITIES
Current liability
Stamp duty
30 June
2018
$’000
30 June
2017
$’000
-
-
2,125
2,125
The Group’s exposure to interest rate and liquidity risk arising from these interest-bearing liabilities is disclosed in Note 25.
Accounting Policies
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.
20. EMPLOYEE BENEFITS
Current
Liability for annual leave
Liability for long service leave
Total
Accounting Policies
30 June
2018
$’000
30 June
2017
$’000
1,540
473
2,013
1,484
390
1,874
a. 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.
b. 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. The benefit is discounted to determine its present value using
a discount rate that equals the yield at the reporting date on Australian corporate bonds that have maturity dates approximating the terms
of the Group’s obligations.
Short-Term Benefits
c.
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.
64 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 21. SHARE BASED PAYMENTS
Employee options (equity-settled)
The number of and weighted average exercise prices of share options are as follows:
Outstanding at 1 July
Lapsed during period
Granted during the period
Exercised during the period
Outstanding at 30 June
Exercisable at 30 June
Weighted
Average
Exercise Price
2018
Number of
Options
2018
Weighted
Average
Exercise Price
2017
Number of
Options
2017
$1.07
2,000,000
$1.07
2,000,000
-
-
-
-
-
(2,000,000)
-
-
-
-
-
-
-
$1.07
$0.99
-
-
-
2,000,000
1,000,000
All share options lapsed in November 2017. The total expense recognised in the Statement of Profit or Loss for these options for the year
ended 30 June 2018 was $Nil (2017: $54,729).
Performance rights (equity settled)
Performance rights have been issued to the Managing Director and other eligible employees in accordance with long term incentive plans
approved by shareholders. Movements in Performance Rights are summarised as follows:
Balance at
1 July 2017
Granted in
FY2018
Vested
Lapsed
Balance at
30 June 2018
Vested &
exercisable at
30 June 2018
Total
6,757,959
2,058,855
(4,211,348)
(718,766)
3,886,701
-
Details of the performance rights are summarised in the following table:
FY2016 Award
FY2017 Award
FY2018 Award
Performance rights balance
Exercise price
Grant date
Note 1
$0.00
1 July 2015
20 Nov 2015
1,877,143
$0.00
1 July 2016
2,009,558
$0.00
1 July 2017
Vesting period
1 July 2015 – 30 June 2018
1 July 2016 – 30 June 2019
1 July 2017 – 30 June 2020
ASX Comparator Group
DRM; EVN; GOR; IGO; KCN; MML; NST; OGC; RMS; RRL; SAR;
SBM; TAM
AQC; BDR; DRM; EVN; MML; MOY;
NCM; NST; OGC; PRU; RMS; RRL;
RSG; SAR; SBM; TRY; WGX
FY2016 Award
FY2017 Award
FY2018 Award
Valuation at grant date
Underlying 20 day VWAP
Volatility
Risk free rate
Expected dividends
$0.07 for 1 July 15 Grant
$0.11 for 20 Nov 15 Grant
$0.148
22%
2.14%
-
$0.247
$0.491
20%
1.52%
-
$0.257
$0.481
20%
1.94%
-
Note 1: On completion of the vesting period, an Independent Consultant confirmed that 88.4% of the FY2016 Performance Rights (3,971,480 rights) had vested in
accordance with the relative TSR hurdle attached to them. This resulted in the lapsing of the remaining portion (521,150 rights).
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 The fair value of the performance rights was measured using a hybrid employee share option pricing model (correlation simulation and
Monte Carlo model) and was calculated by independent consultants.
The total expense recognised in the Statement of Profit or Loss for all performance rights for the period ended 30 June 2018 was
$430,000 (2017: $390,000).
Accounting Policies
Share-Based Payment Transactions
The grant-date fair value of equity-settled share based payment awards granted to employees is generally recognised as an expense, with
a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect
the number of awards for which the related service and non-market performance conditions are expected to be met, such that the
amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions
at the vesting date. For share based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
22. PROVISIONS
Closure and rehabilitation
Opening balance at 1 July
Adjustment to provisions during the year
Disposal of asset
Rehabilitation spend
Closing balance at 30 June
Current provision
Non-current provision
Closing balance at 30 June
30 June
2018
$’000
30 June
2017
$’000
16,122
1,050
-
(722)
16,450
-
16,450
16,450
22,168
343
(5,873)
(516)
16,122
-
16,122
16,122
At year end 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 increased by $1,050,000 (2017: $343,000).
Accounting Policies
Provisions
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.
66 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018
Closure and Rehabilitation
The mining, extraction and processing activities of the Group normally give rise to obligations for site closure or 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.
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.
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 is 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 unamortised 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 Statement of Profit or Loss.
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:
»
»
»
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.
23. SHARE CAPITAL
Movements in issued capital
Balance as at 1 July 2016
Movement in the period
Balance as at 30 June 2017
Movement in the period *
Balance as at 30 June 2018
Number
$’000
503,707,646
699,564
-
-
503,707,646
699,564
239,868
-
503,947,514
699,564
* Movement relates to the vesting of performance rights issued for nil consideration.
Accounting Policy
Issued Capital
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.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 24. RESERVES
Movement in options reserve
Balance as at 1 July
Equity settled share based payment expense
Balance as at June
2018
$’000
2017
$’000
1,220
430
1,650
830
390
1,220
25. 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 Board regularly reviews 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 2018, a provision for doubtful debts of $6,723,000 (2017: $6,723,000) has been recorded against rental income receivable as
a result of a debtor being place in liquidation in a prior year. This receivable is therefore not reflected in the trade and other receivables
balance in Note 25(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 their obligations.
(c) Exposure to credit risk
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
68 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
Carrying Amount
2018
$’000
2017
$’000
2,067
97,959
100,026
9,546
61,196
70,742
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018
(d) Liquidity risk
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 2018, the Company has a
total of 129,000 ounces to be delivered under these hedges over the next 36 months at an average of A$1,726/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 Statement of Profit or 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:
30 June 2018
Trade and other payables
Total
30 June 2017
Trade and other payables
Stamp duty
Total
Carrying
Amount
$’000
Contractual
Cash Flows
$’000
30,033
30,033*
30,033
30,033
6 Months
or Less
$’000
30,033
30,033
Carrying
Amount
$’000
Contractual
Cash Flows
$’000
6 Months
or Less
$’000
32,956
2,125
35,081*
32,956
2,189
35,145
32,956
2,189
35,145
* The carrying value at balance date approximates fair value
(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 has exposure to foreign exchange risk on US
denominated sales, refer to Note 25 (d) for the Group’s strategy for managing this risk. In addition, the Group has exposure to interest rate
and equity price risks.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 Interest rate risk
(i)
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.
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
Variable rate instruments
Financial assets
Cash and cash equivalents
Carrying Amount
2018
$’000
2017
$’000
-
(2,125)
97,959
61,196
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.
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
$980,000 (2017: $612,000). This analysis assumes that all other variables remain constant.
(ii) Equity price risk
Equity investments are long-term investments that have been classified as financial assets at fair value through profit or loss.
(f) Fair values
The carrying value of cash and cash equivalents, trade and other receivable, trade and other payables and interest-bearing liabilities is
considered to be a fair approximation of their fair values.
The carrying amounts of equity investments are valued at year end at their quoted market price.
(g) Capital management
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. 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.
70 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 26. COMMITMENTS
The Group has $2,608,000 (2017: $4,048,000) of commitments relating to minimum exploration expenditure on its various tenements
and $3,665,000 (2017: Nil) of capital commitments at 30 June 2018.
27. OPERATING LEASES
The Company leases assets for operations including plant and office premises. The leases have an average life of 1 to 3 years. At 30 June
2018, the future minimum lease payments under non-cancellable leases were payable as follows.
Less than one year
Between one and five years
28. RELATED PARTIES
(a) Key Management Personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Total
2018
$’000
2017
$’000
8,570
6,500
15,070
3,527
1,634
5,161
30 June
2018
$
30 June
2017
$
2,970,086
2,738,835
174,665
385,718
181,478
261,551
3,530,469
3,181,864
(b) Individual directors and executives’ compensation disclosures
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.
During the current period 1,627,104 performance rights were awarded to key management personnel. See Note 21 and the Remuneration
Report for further details of these related party transactions.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018
29. GROUP ENTITIES
The Company controlled the following subsidiaries:
Subsidiaries
Silver Lake (Integra) Pty Ltd
Backlode Pty Ltd
Loded Pty Ltd
Paylode Pty Ltd
Cue Minerals Pty Ltd
Great Southern Minerals Pty Ltd
Accounting Policies
Country of
Incorporation
Ownership Interest
Australia
Australia
Australia
Australia
Australia
Australia
2018
100%
100%
100%
100%
100%
100%
2017
100%
100%
100%
100%
100%
100%
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.
30. JOINT OPERATIONS
As at 30 June, the Group has the following interests in unincorporated joint operations:
Joint Operation
Principal Activities
Joint Operation Parties
Group Interest
West Tuckabianna
Peter’s Dam
Exploration
SLR/George Petersons
Exploration
SLR/Rubicon
2018
-
71.3%
2017
90.0%
69.2%
Accounting Policies
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 14.
31. AUDITOR’S REMUNERATION
KPMG:
Audit and review of the Company’s financial statements
Taxation services
Total
72 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
30 June
2018
$
30 June
2017
$
115,324
28,129
143,453
167,708
20,744
188,452
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 32. SUBSEQUENT EVENTS
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.
33. PARENT ENTITY
As at, and throughout the financial year ended 30 June 2018, the parent company of the Group was Silver Lake Resources Limited.
Results of the parent entity
Profit/(loss) for the year
Total comprehensive profit/(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
Reserves
Accumulated losses
Total equity
30 June
2018
$’000
30 June
2017
$’000
(1,430)
(1,430)
100,721
214,214
31,921
35,957
844
844
72,770
219,504
36,793
40,247
699,564
699,564
1,650
1,220
(522,957)
(521,527)
178,257
179,257
The parent entity has $2,608,000 (2017: $4,048,000) of commitments relating to minimum exploration expenditure on its various
tenements and $3,665,000 (2017: Nil) of capital commitments at 30 June 2018.
34. DEED OF CROSS GUARANTEE
The Company and its wholly owned subsidiary Silver Lake (Integra) Pty Ltd have 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 ASIC Corporations (wholly owned companies) Instrument
2016/785.
The Consolidated Statement of Profit or Loss and Other Comprehensive Income and Consolidated Statement of Changes in Equity for
the year ended 30 June 2018 along with the Consolidated Statement of Financial Position at 30 June 2018 for the members of the Deed
of Cross Guarantee are the same as that of the Group.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 35. 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.
AASB 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment
and hedge accounting. The standard includes a single approach for the classification and measurement of financial assets, based on cash
flow characteristics and the business model used for the management of the financial instruments. It introduces the expected credit loss
model for impairment of financial assets which replaces the incurred loss model under AASB 139. Lastly, the standard amends the rules on
hedge accounting to align the accounting treatment with the risk management practices of the Company.
The Group’s assessment of the impacts of AASB 9 are set out below:
» Classification and measurement: The Group does not expect a material impact to its financial statements on applying the classifica-
tion and measurement requirements of AASB 9 based on the Group’s current financial assets and liabilities.
»
Impairment: AASB 9 requires the Group to use an expected credit loss model for its trade and other receivables measured at amor-
tised cost, either on a 12-month or lifetime basis. Given the short-term nature of the Group’s receivables, the Group does not expect
these changes to have a material impact.
» Hedge accounting: The Group is currently in the process of assessing the impact of this component of the new standard.
» Disclosure: The adoption of AASB 9 will require extensive new disclosure, in particular about credit risk and the Group’s plans to im-
plement controls necessary to capture required data.
The Group does not expect the implementation of this standard to have a material impact on the financial statements.
(ii) AASB15 Revenue from Contracts with Customers
AASB 15 Revenue from Contracts with Customers establishes a comprehensive framework for determining whether, how much, and
when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction contracts,
and IFRIC 13 Customer Loyalty Programmes. AASB 15 is effective for annual reporting periods beginning on or after 1 January 2018, with
early adoption permitted.
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)
identify the contract(s) with a customer
b)
identify the performance obligations in the contract
c) determine the transaction price
d) allocate the transaction price to the performance obligations in the contract
e) recognise revenue when (or as) the entity satisfies a performance obligation
The Group does not expect the implementation of this standard to have a material impact on the financial statements.
(iii) AASB 16 Leases
AASB 16 Leases removes the classification of leases as either operating or finance leases – for the lessee – effectively treating all leases as
finance leases. Short term leases (less than 12 months) and leases of low value assets are exempt from the lease accounting requirements.
Furthermore, there are changes in accounting over the life of the lease as a front-loaded pattern of expense will be recognised for most
leases, even when a constant annual rental is paid. Lessor accounting remains similar to current practice. AASB 16 is effective for annual
reporting periods beginning on or after 1 January 2019, with early adoption permitted.
The Group is currently in the process of assessing the impact of the new standard and this will continue to be assessed in light of the
contracts in place at the time the standard is implemented.
74 | SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2018 ASX ADDITIONAL INFORMATION
CORPORATE GOVERNANCE STATEMENT
The Company’s Corporate Governance Statement can be located on its website www.silverlakeresources.com.au.
SECURITIES
At 27 September 2018 the Company had 507,918,994 fully paid ordinary shares and 3,886,701 performance rights on issue.
DISTRIBUTION OF HOLDERS
1
1,001
5,001
10,001
100,001
-
-
-
-
-
1,000
5,000
10,000
100,000
and over
Total Holders
Fully Paid
Ordinary Shares
Options
Performance
Rights
1,481
3,912
1,768
3,071
399
10,631
-
-
-
-
-
-
-
-
-
1
10
11
1,168 holders held less than a marketable (<$500) of fully paid shares.
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) each Shareholder entitled to vote in person or by proxy, attorney or representative;
b) 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
c) on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder, in respect of each Share
held by him or in respect of which he is appointed a proxy, attorney or representative, has 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.
SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 75
ASX ADDITIONAL INFORMATION
SUBSTANTIAL SHAREHOLDERS
As at 27 September 2018 the substantial holders disclosed to the company were:
Registered Holder
Beneficial Owner
Number of
Shares
Percentage of
Issued Shares
Bank of New York Mellon as custodian for
Van Eck Vectors Junior Gold Miners ETF
Van Eck Vectors Junior Gold Miners ETF (GDXJ)
and Van Eck Vectors UCITS ETF (UCTGDXJ)
36,392,383
Bank of New York Mellon SA/NV
Ruffer LLP (on behalf of CF Ruffer Gold Fund)
35,716,805
7.62%
7.06%
TOP 20 HOLDERS OF QUOTED SECURITIES
As at 27 September 2018, the top 20 holders of quoted securities of the Company were:
Number Held
Percentage
116,798,084
77,820,501
45,654,479
5,298,115
4,813,747
4,715,294
4,300,000
4,000,000
3,045,954
2,953,959
2,523,339
2,250,846
2,049,458
2,028,000
1,952,720
1,745,500
1,500,000
1,391,950
1,273,885
1,250,000
23.00%
15.32%
8.99%
1.04%
0.95%
0.93%
0.85%
0.79%
0.60%
0.58%
0.50%
0.44%
0.40%
0.40%
0.38%
0.34%
0.30%
0.27%
0.25%
0.25%
287,365,831
56.58%
Holder Name
HSBC CUSTODY NOM AUST LTD
J P MORGAN NOM AUST LTD
CITICORP NOM PL
BNP PARIBAS NOMS PL
NATIONAL NOM LTD
BRIKEN NOM PL
STONE PONEYS NOM PL
HATHOR INV PL
HOLT CARL ERIC + LORRAINE
PORTLEY PL
HSBC CUSTODY NOM AUST LTD
BRISPOT NOM PL
BNP PARIBAS NOM PL
GARY B BRANCH PL
NEWECONOMY COM AU NOM PL
HSBC CUSTODY NOM AUST LTD-GSCO ECA
BANASIK NOLA VERONICA
UBS NOM PL
BELL POTTER NOM LTD
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SARANTZOUKLIS PETER
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SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 77
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SILVER LAKE RESOURCES LIMITED ANNUAL REPORT 2018 | 79
Suite 4, Level 3
South Shore Centre
85 South Perth Esplanade
South Perth WA 6151
www.silverlakeresources.com.au