2020ANNUAL REPORT
2020
FOR THE YEAR ENDED
30 JUNE 2020
silverlakeR E S O U R C E S
DIRECTORS
DAVID QUINLIVAN
Non-executive Chairman
LUKE TONKIN
Managing Director
PETER ALEXANDER
Non-executive Director
KELVIN FLYNN
Non-executive Director
COMPANY SECRETARIES
David Berg
Liz Hough
PRINCIPAL OFFICE
Suite 4, Level 3, South Shore Centre
85 South Perth Esplanade
South Perth WA 6151
Tel:
Fax:
Email:
+61 8 6313 3800
+61 8 6313 3888
contact@slrltd.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
Tel: (03) 9415 4000
AUDITORS
KPMG
235 St Georges Terrace
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INTERNET ADDRESS
www.slrltd.com.au
ABN
38 108 779 782
ASX CODE
SLR
CONTENTS
Chairman & Managing Director’s 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 Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
ASX Additional Information
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69
CHAIRMAN & MANAGING
DIRECTOR'S REPORT
DEAR FELLOW SHAREHOLDER,
It is with great satisfaction that we present the 2020 Annual Report, with multiple
records across key financial and operating performance metrics, which has allowed
Silver Lake to consolidate its position as a leading mid-tier gold mining company.
Silver Lake’s gold production increased 64% to 273,071 gold
equivalent ounces with gold equivalent sales up 54% to
263,362 ounces at an AISC of A$1,295 per ounce. The step
change in production and sales reflects the successful
integration of Deflector, with a full year’s contribution
following completion of the acquisition of Doray Minerals
Limited in April 2019. Sales guidance was twice upgraded in
FY20 and marks the sixth straight year in which Silver Lake
has met or exceeded guidance to the market, a credit to all
employees given the heightened challenges posed by the
onset of COVID-19.
For FY20 Silver Lake reported underlying NPAT of A$257
million (+3,852%), operating cash flow A$252 million (+250%)
and pleasingly after capital investment and exploration we
were able to continue to build on our enviable record of cash
generation with our year end cash and bullion increasing
A$139 million to A$269 million, whilst maintaining our debt free
balance sheet.
The combination of our investment in exploration and M&A
success continued to deliver results with Ore Reserves at 30
June 2020 of 1.2 million ounces, an increase of 38% or 124%
after accounting for FY20 mine depletion and the inclusion
of Ore Reserves at Rothsay for the first time. Importantly, Ore
Reserve growth has been accretive for our shareholders on a
Reserves per share basis and demonstrates our commitment
to delivering value driven, not volume driven growth for our
shareholders.
This momentum will continue into FY21 with sales guidance
of 240,000 to 250,000 ounces at an average AISC of
A$1,400-A$1,500 per ounce. The company will continue to
invest in exploration with $21 million budgeted across the
group which will focus on growth and extension opportunities
proximal to established mine, services and processing
infrastructure, within proven mineralised corridors.
combination of exploration and M&A success, will receive an
upgrade of the processing facility with the addition of a CIP
circuit to the existing gravity and float circuits. The Deflector
plant upgrade will both increase gold recovery and broaden
the potential sources of mill feed, including the new Rothsay
mine, development of which has commenced just seven
months post completion of its acquisition.
Investment in FY21 will position Silver Lake for growth in FY22
and beyond as the Deflector operation establishes a new
production base and Mount Monger realises the benefits of
the significant investment in exploration over the past three
years, which is now delivering opportunities to enhance
margins and deliver a step change in baseload mill feed
visibility.
FY20 sales guidance is 215,000 to 230,000 ounces with the AISC expected to average A$1,375-A$1,450 per ounce
for the full year. The company will continue to invest in exploration with $18 million budgeted across the group
and will focus on advancing high priority targets at Mount Monger through to an investment decision and
defining Resource extensions and additional near mine Resources at Deflector.
Silver Lake now occupies an enviable position in the gold
FY20 sales guidance is 215,000 to 230,000 ounces with the AISC expected to average A$1,375-A$1,450 per ounce
industry with two cash generative assets in Western Australia
for the full year. The company will continue to invest in exploration with $18 million budgeted across the group
and a pipeline of projects that provide a platform for growth
and will focus on advancing high priority targets at Mount Monger through to an investment decision and
and increased life of our operations. Our strong balance
defining Resource extensions and additional near mine Resources at Deflector.
sheet and cash flow generation positions Silver Lake to
rapidly progress both the pipeline of advanced organic
Our strong balance sheet and cash flow generation positions the Company to rapidly progress the pipeline of
development and exploration projects whilst continuing to
advanced exploration targets and continue to refresh the pipeline of opportunities to compete for capital at
refresh the pipeline of opportunities to compete for capital,
both organically and externally, as we continue to build on the
Mount Monger, Deflector and externally as we continue to build on the success and momentum generated in
success and momentum generated over the previous 5 years.
FY19.
Our strong balance sheet and cash flow generation positions the Company to rapidly progress the pipeline of
advanced exploration targets and continue to refresh the pipeline of opportunities to compete for capital at
Mount Monger, Deflector and externally as we continue to build on the success and momentum generated in
FY19.
On behalf of the Board we would like to thank the Company’s
On behalf of the Board we would like to thank the Company’s employees for their hard work and commitment
employees for their dedicated service and commitment over
over the past 12 months, and without whom, the achievements of the past year would not have been possible.
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.
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.
Silver Lake will undertake several capital projects in FY21 which
will increase the fundamental value of the business through a
combination of growth, increased margins and risk mitigation.
The primary example is at Deflector, which following a
David Quinlivan
David Quinlivan
Non-Executive Chairman
Non-Executive Chairman
David Quinlivan
Non-Executive Chairman
Luke Tonkin
Luke Tonkin
Managing Director
Managing Director
Luke Tonkin
Managing Director
2 Silver Lake Resources Limited Annual Report 2020
RESOURCES & RESERVES REPORT
MINERAL RESOURCE STATEMENT AS AT 30 JUNE 2020
The Company’s total Measured, Indicated and Inferred Mineral Resources at 30 June 2020 are 41.7 million tonnes at 4.5 g/t
gold containing 6.09 million ounces of gold, including 3.0 million tonnes at 0.8% copper containing 23,100 tonnes of copper.
The Mineral Resources as at 30 June 2020 are estimated after allowing for depletion during FY2020. Gold Mineral Resources
have increased by 15% and Copper Mineral Resources have increased 63% on June 2019.
Measured Mineral
esources
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)
Sub Total
580
6.4
119
8,889
June 2020
Mount Monger
Daisy Mining Centre
Costello
Daisy Complex
Lorna Doone
Mirror/Magic
Sub Total
-
73
-
507
580
Mount Belches Mining Centre
Anomaly A
Cock-eyed Bob
Maxwells
Rumbles
Santa
-
278
302
-
-
-
32.4
-
2.6
6.4
-
6.6
6.2
-
-
-
-
-
-
-
-
-
-
13
-
13
1,652
1,652
2,825
-
-
-
-
-
-
-
-
4.6
-
4.6
1.3
1.3
3.4
Aldiss Mining Centre
French Kiss
Harrys Hill
Italia/Argonaut
Karonie
Spice
Tank/Atriedes
Aspen
Sub Total
Randalls Mining Centre
Lucky Bay
Randalls Dam
Sub Total
Mount Monger
Stockpile
Sub Total
Mount Monger Total
Deflector
Deflector
Stockpile
Sub Total
-
76
-
43
686
549
119
1,869
-
59
232
940
60
1,796
-
-
351
5,570
-
-
-
-
-
-
-
-
2
-
2
72
72
398
479
409
3,456
136
1,813
112
6,803
34
107
141
-
-
-
-
-
111
4.0
14
111
4.0
14
634
18.6
379
1,691
11.3
613
2,399
13.9
1,069
2.0
2.5
7.8
1.9
4.4
4.3
2.2
2.8
3.2
2.1
2.2
1.4
2.0
1.6
2.2
1.7
2.0
4.8
2.1
2.8
-
-
44
45
641
663
469
3,106
14
133
246
24
44
706
966
851
503
1,890
920
4,457
27
34
19
220
7
129
6
808
415
-
868
296
208
139
443
2,734
5
7
13
-
-
8
6
14
-
-
3.5
3.6
7.8
1.4
3.1
3.5
2.2
3.4
3.1
1.7
2.4
-
1.3
1.4
1.6
1.6
1.6
7.2
1.2
4.6
-
-
72
1,327
77
1,719
2.7
3.0
116
165
777
5,556
7.6
1,365
2
276
70
1,924
108
3,064
59
1,202
206
7,460
1.8
4.2
4.2
2.2
3.0
16
262
414
83
709
445
13,926
3.3
1,484
45
1,206
32
-
894
409
35
4,324
13
432
11
2,021
7
251
143
9,537
2
0
2
-
-
55
113
168
1,652
1,652
1.9
2.3
1.4
1.8
1.4
2.2
1.6
1.9
5.1
2.1
3.0
1.3
1.3
72
66
19
255
20
140
13
585
9
7
16
72
72
312
17,702
3.2
1,844
10,311
4.1
1,366
30,838
3.6
3,522
496
18.2
291
1,223
14.2
558
1,224
10.8
425
2,943
13.5
1,273
80
3.5
9
-
-
-
-
-
-
80
3.5
9
576
16.2
299
1,223
14.2
558
1,224
10.8
425
3,023
13.2
1,282
Deflector Total
576
16.2
299
1,223
14.2
558
1,224
10.8
425
3,023
13.2
1,282
3
RESOURCES & RESERVES REPORT
June 2020
Rothsay
Rothsay
Sub Total
Rothsay Total
Andy Well
Measured Mineral
esources
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)
-
-
-
-
-
-
-
-
-
888
888
888
Andy Well
127
13.7
56
1,063
Sub Total
Gnaweeda
Turnberry
Sub Total
127
13.7
56
1,063
-
-
-
-
-
-
2,043
2,043
Andy Well Total
127
13.7
56
3,106
9.3
9.3
9.3
9.2
9.2
2.2
2.2
4.6
267
267
267
315
315
929
929
929
628
628
146
2,196
146
2,196
461
2,824
8.0
8.0
8.0
6.6
6.6
1.8
1.8
2.8
240
1,817
240
1,817
240
1,817
134
1,818
134
1,818
124
4,239
124
4,239
258
6,057
8.7
8.7
8.7
8.6
8.6
2.0
2.0
4.0
507
507
507
505
505
271
271
776
Total Gold Mineral
Resources
June 2020
Deflector
Deflector
Stockpile
Sub Total
Total Copper
Mineral Resources
3,528
5.9
667
22,919
4.2
3,130
15,288
4.7
2,290
41,735
4.5
6,087
Measured Mineral
Resources
Indicated Mineral
Resources
Inferred Mineral
Resources
Total Mineral
Resources
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
496
80
1.6%
7,700
1,223
0.7%
9,000
1,224
0.5%
6,000
2,943
0.8%
22,700
0.5%
400
80
0.5%
400
576
1.4%
8,100
1,223
0.7%
9,000
1,224
0.5%
6,000
3,023
0.8% 23,100
576
1.4%
8,100
1,223
0.7%
9,000
1,224
0.5%
6,000
3,023
0.8% 23,100
ORE RESERVE STATEMENT AS AT 30 JUNE 2020
The total Proved and Probable Gold Ore Reserves at 30 June 2020 are 8.99 Mt at 4.0 g/t Au containing 1.2 million ounces gold,
including 2.2 Mt at 0.3 % containing 6,900 tonnes copper. Gold Ore Reserves have increased by 38% and Copper Ore Reserves
increase 25% on 30 June 2019.
The Ore Reserves at 30 June 2020 are estimated after allowing for depletion over FY2020. Ore Reserves were estimated using
a gold price of A$2,200/oz, apart from the Daisy Complex Ore Reserve and Karonie Ore Reserve using A$2,000/oz.
4 Silver Lake Resources Limited Annual Report 2020
RESOURCES & RESERVES REPORT
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)
-
-
-
81
81
95
124
-
219
1,652
1,952
-
516
80
596
-
-
-
-
-
9.0
9.0
5.3
4.4
-
4.8
1.3
2.1
-
7.1
3.5
6.6
-
-
-
-
-
24
24
16
17
-
34
72
1,449
693
2,142
323
323
391
430
635
1,457
-
129
3,921
-
140
118
1,489
9
-
127
1,629
-
-
895
895
1.6
2.8
2.0
7.9
7.9
4.5
4.7
2.9
3.9
-
3.2
3.1
6.4
-
6.1
6.1
6.1
4.3
76
62
1,449
693
139
2,142
82
82
56
65
60
404
404
486
554
635
182
1,676
-
1,652
402
5,873
14
140
306
2,005
-
80
320
2,225
176
176
898
895
895
8,993
1.6
2.8
2.0
8.1
8.1
4.7
4.6
2.9
4.0
1.3
2.8
3.1
6.6
3.5
6.2
6.1
6.1
4.0
76
62
139
105
105
73
83
60
215
72
531
14
423
9
446
176
176
1,153
June 2020
Mount Monger
Aldiss Mining Centre
Karonie
Tank
Total Aldiss Mining Centre
Daisy Mining Centre
Daisy Complex
Total Daisy Mining Centre
Mount Belches Mining Centre
Cock-eyed Bob
Maxwells
Santa
Total Mount Belches
Mount Monger Stockpiles
Total Mount Monger
Deflector
Deflector OP
Deflector UG
Stockpile
Total Deflector
Rothsay
Rothsay
Total Rothsay
Total Gold Ore Reserves
2,547
3.1
255
6,446
June 2020
Deflector
Deflector OP
Deflector UG
Stockpile
Total Deflector
Proved Ore Reserves
Probable Ore Reserves
Total Ore Reserves
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
Tonnes
(‘000s)
Grade
(% Cu)
Copper
(Tonnes)
-
516
80
596
0.0%
0.4%
0.5%
0.4%
-
140
1,900
1,489
400
-
2,300
1,629
0.3%
0.3%
0.0%
0.3%
400
140
4,200
2,005
-
80
4,700
2,225
0.3%
0.3%
0.5%
0.3%
400
6,100
400
6,900
NOTES TO MINERAL RESOURCE AND ORE RESERVE TABLES
1. Mineral Resources are reported inclusive of Ore Reserves.
2. Data is rounded to thousands of tonnes, thousands of ounces gold, and hundreds of tonnes copper. Discrepancies in totals
may occur due to rounding.
3. The “Daisy Complex” comprises the following zones: Daisy Milano, Haoma, Haoma West, Lower Prospect, Easter Hollows,
Daisy North, Dinnie Reggio and Christmas Flats.
4. 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): Deflector, Andy Well, Turnberry,
Daisy Complex, Lorna Doone, Maxwells, Santa, Cock-eyed Bob/Anomaly A, Lucky Bay, Mirror/Magic, Rumbles, Karonie, Harrys
Hill, French Kiss, Spice, Tank/Artredies, Aspen, and Rothsay. 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.
5
RESOURCES & RESERVES REPORT
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 (except where
stated). 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 statement as a whole, as presented in this Annual Report, has been approved by Antony Shepherd a Competent
Person who is a member of The Australasian Institute of Mining and Metallurgy. The Ore Reserves statement as a whole,
as presented in this Annual Report, has been approved by Sam Larritt 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 Harrys
Hill, Santa, Maxwells, Cock-eyed Bob, Anomaly A, Mirror/Magic, Tank/Atreides, Spice, Karonie, Aspen, French Kiss, 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 Deflector,
Andy Well, Rothsay, and Turnberry deposits is based upon 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.
The information in the Annual Report to which this statement is attached that relates to the Mineral Resources for the
Daisy Complex, deposits is based upon information compiled by Darren Hurst, a Competent Person who is a member of
The Australasian Institute of Mining and Metallurgy. Mr Hurst is a full-time employee of the Company. Mr Hurst 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 Hurst 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 Ore Reserves for Deflector, Daisy,
Maxwells, Cock-eyed Bob, Santa, Karonie and Tank 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.
The information in the Annual Report to which this statement is attached that relates to Ore Reserves for Rothsay is based
upon information compiled by Chris 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.
6 Silver Lake Resources Limited Annual Report 2020
RESOURCES & RESERVES REPORT
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.
7
DIRECTORS' 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 2020.
PETER ALEXANDER
ASS APPL Geol
Non-executive Director
Appointed 5 April 2019
DIRECTORS
The directors of the Company at any time during or since the
end of the financial year were:
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
multiple mining projects in various capacities. He is currently
Managing Director of Ora Banda Mining Limited and
previously served as Chief Executive Officer of Sons of Gwalia
Ltd (post appointment of administrators), Chief Operating
Officer of Mount Gibson Iron Ltd and President and Chief
Executive Officer of Alacer Gold Corporation. 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.
Mr Alexander is a geologist and has over 30 years’ experience
in mineral exploration and mining in Australia and overseas.
Mr Alexander was Managing Director and Chief Executive
Officer of Dominion Mining Limited from 1997 until his
retirement in January 2008, at which time he continued as
a Non-executive Director until the takeover by Kingsgate
Consolidated in 2010. Mr Alexander managed the start-up
and operation of Dominion’s Challenger gold mine in South
Australia and, under Mr Alexander’s management, Dominion
won the Gold Mining Journal’s “Gold Miner of the Year” three
years in succession.
Mr Alexander was a Non-executive Director and former
Chairman of Doray Minerals Limited and was appointed to
the Silver Lake Board following the Company’s merger with
Doray Minerals Limited. He is currently a Non-executive
Director of Kingsgate Consolidated Limited and was
previously Non-executive Chairman of Caravel Minerals
Limited. Mr Alexander 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
29 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 and financing
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 has held no other
Directorships in public listed companies in the last three years.
8 Silver Lake Resources Limited Annual Report 2020
LES DAVIS
COMPANY SECRETARIES
MSc (Min Econs)
Non-executive Director
Appointed 25 May 2007; Resigned 22 November 2019
DAVID BERG
DIRECTORS' REPORT
LLB BComm (General Management), FGIS, FCIS
Appointed 4 September 2014
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.
LIZ HOUGH
LLB, BA (Politics and International Studies),
Grad Cert Chinese Law
Appointed 18 December 2019
Ms Hough is a corporate lawyer and was appointed as an
additional Company Secretary in December 2019. Prior to
joining the Company, Ms Hough held a legal role at Resolute
Mining Limited. Ms Hough has previously worked as a lawyer in
private practice specialising in energy and resources, mergers
and acquisitions, capital raisings and general corporate and
commercial matters.
Mr Davis has over 35 years’ industry experience including
17 years’ hands-on experience in mine development and
narrow vein mining. Mr Davis’ career incorporates 13 years’
senior management experience including roles as Mine
Manager, Technical Services Manager, Concentrator
Manager, Resident Manager and General Manager Expansion
Projects with organisations including WMC Resources Ltd,
Reliance Mining Ltd and Consolidated Minerals Ltd.
Mr Davis ceased as Managing Director of the Company on
20 November 2014 and was subsequently appointed as
Non-executive Director. Mr Davis is a Non-executive Director
of Black Cat Syndicate Limited and was previously a
Non-executive Director of Spectrum Metals Limited.
LEIGH JUNK
Dip Surv, Grad Dip Min Eng, MSc Min Econ
Non-executive Director
Appointed 5 April 2019; Resigned 12 July 2019
Mr Junk is a Mining Engineer with 25 years’ experience and
held senior positions in several Western Australian mining
companies including WMC Resources, Pilbara Manganese
and Mincor Operations. In 2000 Mr Junk started the private
mining company Donegal Resources Pty Ltd, which was
successful in purchasing and recommissioning several nickel
operations around Kambalda W.A. Donegal Resources was
later sold to Canadian company Brilliant Mining Corp during
the Nickel boom in late 2006. Over the next 10 years Mr Junk
was a Director of several public companies in the Mining and
Financial sectors in Australia and Canada.
Mr Junk was previously Managing Director of Doray Minerals
Limited and was appointed to the Silver Lake Board following
the Company’s merger with Doray Minerals Limited.
9
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 Committee
Term
Nomination & Remuneration Committee (NRC)
Kelvin Flynn (Chairman)
Full Year
Peter Alexander (Chairman)
Peter Alexander
David Quinlivan
Les Davis
Part Year
Kelvin Flynn
Full Year
David Quinlivan
Part Year
Les Davis
Term
Part Year
Full Year
Full Year
Part Year
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
Held
Attended
Held
Attended
Held
Attended
11
11
11
3
11
-
11
11
11
3
11
-
2
-
1
1
2
-
2
-
1
1
2
-
2
-
1
1
2
-
2
-
1
1
2
-
David Quinlivan
Luke Tonkin
Peter Alexander
Les Davis1
Kelvin Flynn
Leigh Junk2
1Resigned 22 November 2019
2Resigned 12 July 2019
DIRECTORS’ INTERESTS
The relevant interest of each Director in the share capital at the date of this report is as follows:
Name of Director
David Quinlivan
Luke Tonkin
Peter Alexander
Kelvin Flynn
Fully Paid Ordinary Shares
Unlisted Performance Rights
-
528,016
18,165
-
-
2,853,542
-
-
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were exploration, mine development, mine operations and the sale of gold
and gold/copper concentrate in Australia.
OPERATING OVERVIEW
Silver Lake is a multi-asset, mid-tier gold company operating in the Eastern Goldfields and Midwest regions of Western Australia.
The Group currently has 6 mines and 2 processing facilities in operation and 1 mine in development across its Deflector and
Mount Monger operations with significant potential for organic growth from its portfolio of highly endowed and prospective
tenement holdings.
10 Silver Lake Resources Limited Annual Report 2020
DIRECTORS' REPORT
The Group’s operations over the last 6 months have been disrupted by COVID-19, however the combined collaborative support
of Government, representative industry bodies, employees, contractors, suppliers and our host communities has allowed the
Company to adapt and mitigate, as far as practicable, the risks this infectious disease presents. Given the industry framework
in which Silver Lake operates and the Company’s strong debt free balance sheet, Silver Lake will continue to actively pursue
exploration, production and growth objectives, subject to the evolving and unforeseen impacts of COVID-19.
GROUP FINANCIAL OVERVIEW
The Group recorded a net profit after tax for the year of $256.9 million (FY19: $6.5 million) and an EBITDA (before significant items) of
$260.1 million (FY19: $80.2 million). This resulted in an EBITDA margin for the year of 46% (FY19: 27%). The Board considers that EBITDA
is an important metric in assessing the underlying operating performance of the Group. A reconciliation between the statutory profit
after tax and the Group’s EBITDA is tabled on page 11.
The increase in profit in FY20 is attributed to:
·
contribution from the Deflector Operation for a full 12 month period (FY19 included 3 months of contribution);
· a 7% increase in feed grade from underground sources at Mount Monger;
· a 49% increase in feed grade from open pit sources at Mount Monger, with both Harrys Hill and French Kiss open pits grading
higher than FY19 open pit sources;
· a 24 % increase in average realised gold price; and
· an income tax benefit of $123.7 million driven primarily by the recognition of carry forward tax losses that are available for offset
against future taxable profits of the Group.
Revenue for the year totalled $563.4 million from the sale of 263,362 ounces of gold equivalent1 at an average realised gold sale
price of A$2,132/oz and copper price of A$8,494/t compared with revenue of $301.5 million from 171,322 ounces (at A$1,754/oz) in
FY19. The increase in revenue reflects improved commodity prices and a full 12 months contribution from the Deflector Operation.
Cost of sales increased to $398.8 million in the year (FY19: $272.1 million) reflecting the inclusion of costs associated with the Deflector
Operation for a full year. The All-in Sustaining Cost (AISC) for the year of A$1,295/oz (FY19: A$1,367/oz) reflects the strong production
results during the period across both operations.
Operating cash flow for the period was $252.3 million resulting in a 30 June 2020 cash and bullion balance of $269.4 million. The
cash and bullion balance excludes $10.0 million of gold in circuit and concentrate on hand, and listed investments of $6.4 million.
Key cash flow movements for the year included:
·
net cash inflow from operations of $252.3 million
· acquisition of plant and equipment of $24.9 million
·
$82.7 million on mine development and exploration
EBITDA (EXCLUDING SIGNIFICANT ITEMS)
The reconciliation between the statutory profit after tax and the Group’s EBITDA (excluding significant items) is 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
Income tax benefit
Net finance costs (includes change in value of listed investments)
Business combination adjustments
Other
EBITDA (excluding significant items)2,3
30 June 2020
$’000
30 June 2019
$’000
256,875
6,500
122,891
(123,742)
12
4,108
(56)
260,088
60,653
-
2,084
10,169
788
80,194
1 All gold equivalency calculations assume a gold price of A$2,100/oz, copper price of A$8,400/t and a 10% payability reduction for treatment and
refining charges
2 Non-IFRS measure
3 Included in FY20 Statutory profit after tax is $13.4 million of depreciation and $1.5 million of interest costs that have been reclassified due to the adoption
of AASB 16 Leases. These costs would previously have been disclosed as mining costs and would result in a reduction in EBITDA.
11
DIRECTORS' REPORT
Directors’ Report
Overview of the Mount Monger Operation
OVERVIEW OF THE MOUNT MONGER OPERATION
Figure 1: Location of Mount Monger Mining Centres and the centralised Randalls Mill.
Figure 1: Location of Mount Monger Mining Centres and the centralised Randalls Mill.
The Mount Monger Operation is located approximately 50km southeast of Kalgoorlie and is a highly endowed gold camp with
an established track record of gold production. Through exploration and development Mount Monger has transitioned to larger,
The Mount Monger Operation is located approximately 50km southeast of Kalgoorlie and is a highly endowed
longer life Mining Centres which have delivered multiple high-grade ore sources and increased production transparency.
gold camp with an established track record of gold production. Through exploration and development Mount
The three independent and self-sufficient Mining Centres at Mount Monger are the Daisy Complex, Mount Belches and Aldiss
Monger has transitioned to larger, longer life Mining Centres which have delivered multiple high-grade ore
Mining Centres. These Mining Centres feed the centrally located 1.3Mtpa Randalls mill.
sources and increased production transparency. The three independent and self-sufficient Mining Centres
at Mount Monger are the Daisy Complex, Mount Belches and Aldiss Mining Centres. These Mining Centres
feed the centrally located 1.3Mtpa Randalls mill.
MINING
Mining
Ore mined from the three Mount Monger Mining Centres totalled 1,755,539 tonnes at a grade of 3.5 g/t Au for 197,150 contained
ounces (FY19: 1,419,100 tonnes at a grade of 3.5 g/t Au for 158,549 contained ounces).
Ore mined from the three Mount Monger Mining Centres totalled 1,755,539 tonnes at a grade of 3.5 g/t Au
for 197,150 contained ounces (FY19: 1,419,100 tonnes at a grade of 3.5 g/t Au for 158,549 contained
Underground Mining
ounces).
Mount Monger underground mine production for the year totalled 668,039 tonnes at 5.5 g/t for 118,790 contained ounces
Underground Mining
(FY19: 674,510 tonnes at a grade of 5.2 g/t Au for 111,876 contained ounces).
Mount Monger underground mine production for the year totalled 668,039 tonnes at 5.5 g/t for
The Daisy Complex produced 270,531 tonnes at 6.4 g/t for 55,353 contained ounces, with production sourced from the Haoma
118,790 contained ounces (FY19: 674,510 tonnes at a grade of 5.2 g/t Au for 111,876 contained ounces).
West, Lower Prospect and remnant mining areas. Development to access the Easter Hollows lodes located ~350 metres to the
west of existing underground development is underway with the target area reached in Q1 FY21. Once established, the Easter
The Daisy Complex produced 270,531 tonnes at 6.4 g/t for 55,353 contained ounces, with production sourced
Hollows zone will provide a shallower mining front at the Daisy Complex and provides a significant exploration opportunity,
from the Haoma West, Lower Prospect and remnant mining areas. Development to access the Easter Hollows
with 1,000 metres of known plunge extent and improved drill access to target infill and extensional opportunities.
lodes located ~350 metres to the west of existing underground development is underway with the target
The Mount Belches underground mines (Maxwells, Cock-eyed Bob and Santa) produced 397,508 tonnes at 5.0 g/t for 63,437
area reached in Q1 FY21. Once established, the Easter Hollows zone will provide a shallower mining front
contained ounces, representing 53% of the underground mine ounces at Mount Monger. The commencement of the Santa mine
at the Daisy Complex and provides a significant exploration opportunity, with 1,000 metres of known plunge
in the last quarter of the year has resulted in a third shallow underground ore source in the Mount Belches area with production
extent and improved drill access to target infill and extensional opportunities.
in FY21 expected to be ~23,000 ounces. Production from the Mount Belches Mining Centre is scheduled to increase to 80,000
– 90,000 ounces in FY21. Once underground access is established at Santa, ongoing RC and diamond drilling will focus on
The Mount Belches underground mines (Maxwells, Cock-eyed Bob and Santa) produced 397,508 tonnes at
infilling and further extending the identified high-grade zones immediately to the north, south and below the current mine
5.0 g/t for 63,437 contained ounces, representing 53% of the underground mine ounces at Mount Monger.
plan and outside the current Santa Ore Reserve.
The commencement of the Santa mine in the last quarter of the year has resulted in a third shallow
underground ore source in the Mount Belches area with production in FY21 expected to be ~23,000 ounces.
Open Pit Mining
Production from the Mount Belches Mining Centre is scheduled to increase to 80,000 – 90,000 ounces in FY21.
Open pit mining at Aldiss (Harrys Hill, French Kiss and Karonie) totalled 1,087,500 tonnes at 2.2 g/t for 78,360 contained ounces
(FY19: 744,590 tonnes at 2.0 g/t Au for 46,673 contained ounces). The increased production reflects the deeper higher grade
zones of the Harrys Hill pit and commencement of production at French Kiss in the period.
8 | P a g e
12 Silver Lake Resources Limited Annual Report 2020
DIRECTORS' REPORT
The Harrys Hill mine was completed in April 2020 with total material movement of 822,292 bcm for production of 703,649 tonnes
at 2.0 g/t and 45,130 contained ounces.
Mining at French Kiss was completed in May 2020 with total material movement of 1,210,798 bcm for 271,156 tonnes at 3.3 g/t
and 28,772 contained ounces.
Open pit mining activities transitioned to Karonie South in the last quarter of the year following completion of mining at Harrys
Hill and French Kiss.
Mining at Karonie South was focused on overburden removal and waste stripping with a total of 1,960,100 bcm mined in the year
for 112,695 tonnes at 1.2 g/t for 4,457 contained ounces. Ore tonnes and grades will progressively increase from Q2 FY21 as the
investment in waste stripping improves ore access.
PROCESSING
Gold ore from the Mount Monger Operation is treated at the centrally located Randalls Gold Processing Facility. Ore milled for
the period totalled 1,233,922 tonnes at a blended grade of 4.4 g/t Au for 160,214 recovered ounces. The high grade underground
mines provided ~53% of the mill feed with the balance sourced from the lower grade open pit mines.
Directors’ Report
Mining and production statistics for the Mount Monger Operation for the year ended 30 June 2020 are detailed in Table 1 and
Table 2.
Overview of the Deflector Operation
OVERVIEW OF THE DEFLECTOR OPERATION
Figure 2: Location of the Deflector Mining Operation.
Figure 2: Location of the Deflector Mining Operation.
The Deflector Operation is in the midwest region of Western Australia and is a shallow, narrow vein, high-grade gold and
The Deflector Operation is in the midwest region of Western Australia and is a shallow, narrow vein, high-
copper underground mine. Production at the mine commenced in May 2016 and became a Silver Lake operation following
the completion of the merger with Doray Minerals on 5 April 2019.
grade gold and copper underground mine. Production at the mine commenced in May 2016 and became a
Silver Lake operation following the completion of the merger with Doray Minerals on 5 April 2019.
Mining
Deflector mine production for the period totalled 707,899 tonnes at 5.4 g/t gold and 0.37% copper for
122,243 contained ounces. Production was sourced from the Link, Central and Western Lodes, with ~57% of
mined ore tonnes sourced from stoping. Mining rates during the period have benefited from the utilisation
of a third production drill rig which increased available production fronts, improving mine productivity.
13
Processing
Deflector mill throughput was 659,354 tonnes at an average gold grade of 5.5 g/t and copper grade of 0.4%.
Total gold recovery was 89.3% with copper recovery of 92.6%.
Concentrate produced totalled 13,060 tonnes with an average gold grade of 72 g/t gold and 18% copper.
Production for the year totalled 104,376 ounces gold and 2,356 tonnes copper.
10 | P a g e
DIRECTORS' REPORT
MINING
Deflector mine production for the period totalled 707,899 tonnes at 5.4 g/t gold and 0.37% copper for 122,243 contained ounces.
Production was sourced from the Link, Central and Western Lodes, with ~57% of mined ore tonnes sourced from stoping. Mining
rates during the period have benefited from the utilisation of a third production drill rig which increased available production
fronts, improving mine productivity.
PROCESSING
Deflector mill throughput was 659,354 tonnes at an average gold grade of 5.5 g/t and copper grade of 0.4%. Total gold recovery
was 89.3% with copper recovery of 92.6%.
Concentrate produced totalled 13,060 tonnes with an average gold grade of 72 g/t gold and 18% copper.
Production for the year totalled 104,376 ounces gold and 2,356 tonnes copper.
ROTHSAY
The Rothsay gold project became a Silver Lake asset following the takeover of Egan Street Resources Limited in the current year.
Since acquisition, significant progress has been made on the project including construction of the accommodation village,
erection of communication infrastructure, footings and block work for mine administration and workshops, box cut excavation
works and commencement of underground mine dewatering.
Mine development activity is scheduled to commence from surface in Q1 FY21. Underground development at Rothsay will be
progressively increased throughout H2 FY21 with target annualised ore production rates of 250,000 to 300,000 tonnes per
annum for approximately 45,000 to 50,000 ounces per annum over the life of mine. Rothsay high grade ore will be hauled to
Deflector for processing through Deflector’s upgraded CIP circuit from Q1 FY22.
GROUP MINING AND PRODUCTION STATISTICS
Mount Monger Mining
Underground
Ore mined
Mined grade
Contained gold
Open Pit
Ore mined
Mined grade
Contained gold
Deflector Mining
Underground
Ore mined
Mined grade
Contained gold
Copper grade
Contained copper
Group Mining
Total ore mined
Mined grade
Contained gold
Copper grade
Contained copper
Units
Tonnes
g/t Au
Oz
Tonnes
g/t Au
Oz
Tonnes
g/t Au
Oz
%
Tonnes
Tonnes
g/t Au
Oz
%
Tonnes
FY20
FY19
668,039
5.5
118,790
1,087,500
2.2
78,360
707,899
5.4
122,243
0.4%
2,596
674,510
5.2
111,876
744,590
2.0
46,673
175,647
5.7
31,902
0.5%
864
2,463,438
1,594,747
4.0
319,393
0.4%
2,596
3.7
190,451
0.5%
864
Table 1 - Deflector information reported in FY19 is from 5 April 2019, being the date on which Doray Minerals was acquired
14 Silver Lake Resources Limited Annual Report 2020
Mount Monger Processing
Ore milled
Head grade
Recovery
Gold produced
Gold sold
Deflector Processing
Ore milled
Gold grade
Copper grade
Gold recovery
Copper recovery
Gold produced
Gold sold
Copper recovered
Copper sold
Group Processing
Ore milled
Gold grade
Copper grade
Gold produced
Gold sold
Copper recovered
Copper sold
DIRECTORS' REPORT
FY20
1,233,922
4.4
92%
160,214
154,900
FY19
1,229,195
3.7
95%
136,767
141,006
659,354
158,467
5.5
0.4%
89.3%
92.6%
104,376
100,633
2,356
2,175
5.9
0.4%
91.3%
92.4%
27,514
27,837
575
590
1,893,276
1,387,662
4.8
0.4%
264,590
255,533
2,356
2,175
3.9
0.4%
164,281
168,843
575
590
Units
Tonnes
g/t Au
%
Oz
Oz
Tonnes
g/t Au
%
%
%
Oz
Oz
Tonnes
Tonnes
Tonnes
g/t Au
%
Oz
Oz
Tonnes
Tonnes
Table 2 - Deflector information reported in FY19 is from 5 April 2019, being the date on which Doray Minerals was acquired
EXPLORATION
Silver Lake invested $23.5 million in exploration activities during the year to advance high-grade projects within established and
proven mineralised corridors proximal to established infrastructure.
Daisy Mining Centre
Exploration at the Daisy Mining Centre focused on the Easter Hollows area to target a new, shallower mining area proximal to
established mine infrastructure. Following positive drilling results development to access the Easter Hollows area commenced in
H2 FY20, with the target zone reached in Q1 FY21.
Development into Easter Hollows serves a dual purpose by providing access to the Easter Hollows lodes currently in Mineral
Resources and a new production front in FY21, whilst also providing the necessary drill platforms for Resource definition and
extensional drilling to target the broader Easter Hollows system which has a plunge extent of 1,000 metres.
Mount Belches
Exploration success at Santa continued during the year and mine development commenced in H2 FY20. Mine development will
initially be focused on high-grade mineralisation beneath the Santa North Open Pit (West Limb) to provide a development path
accessing the large Santa Resource which is predominantly located on the eastern limb. Surface drilling in FY20 intersected
a new, high-grade zone on the eastern limb in several drill holes which were targeting the western limb. This discovery is
particularly encouraging given the majority of the Santa Resource resides on the eastern limb.
Aldiss
Silver Lake announced the discovery of the high-grade Tank South deposit in June 2019 with a maiden Inferred Mineral
Resource subsequently reported in August 2019. Infill drilling during FY20 confirmed the continuity and geometry of high-grade
mineralisation over the 120 metres strike length of the 2019 Mineral Resource.
15
DIRECTORS' REPORT
The historical Tank Open Pit Resource on the SAT trend was elevated in exploration priority following the discovery of the
Tank South deposit and subsequent delineation of the maiden Mineral Resource in August 2019. The pit’s proximity to existing
infrastructure presents an opportunity to mine ounces from the Tank Open Pit as part of an integrated open pit/underground
development strategy, with the Tank South portal to be located within the potential open pit.
Deflector
Since the acquisition of Doray Minerals in April 2019, Silver Lake has aggressively advanced exploration drilling, targeting
immediate strike extensions to the Deflector Mineral Resource within the broader Deflector corridor, which remains open in
multiple directions. Silver Lake elevated the exploration priority of the Deflector South West corridor adjacent to the 2019
Mineral Resource and existing underground mine development. Three surface and underground drilling programs targeting the
south west zone were completed and have successfully defined high-grade gold/copper mineralisation with “Deflector style”
quartz veining and massive sulphides to the south and south west over 500 metres of strike.
STRATEGY
The Group’s short to medium term strategy is to maximise returns to shareholders. This will be achieved by:
· maximising the value of our established asset base;
·
·
investing in exploration to target extensions to known resources and the discovery of new deposits proximal to existing
infrastructure; and
create new opportunities to compete for capital.
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 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
· exploration success – no assurance can be given that exploration expenditure will result in future profitable operating mines
·
unforeseen disruptions to mine and processing operations caused by COVID-19.
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
Other than as disclosed elsewhere in this report, 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 Mount Monger and
Deflector operations. This will include directing exploration expenditure to high priority, cash generative 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
significant breach of those environmental requirements.
16 Silver Lake Resources Limited Annual Report 2020
DIRECTORS' REPORT
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 behaviour 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
No events have arisen in the interval between the end of the financial year and the date of this report 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.
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. FY20 Executive remuneration
6. FY20 Non-executive director (NED) remuneration
7. KMP Shareholdings
BASIS OF PREPARATION
1.
This remuneration report has been prepared and audited in accordance with the requirements of the Corporations Act 2001
and the applicable accounting standards. All references to dollars in this remuneration report are to Australian Dollars unless
otherwise specified.
17
DIRECTORS' REPORT
KEY MANAGEMENT PERSONNEL
2.
Key management personnel (KMP) comprise those persons with authority and responsibility for planning, directing and
controlling the activities of the Company. This includes the Executives and Non-executive directors (NEDs) of the Company.
In this report, ‘Executives’ refers to individuals identified as KMP, excluding NEDs.
A list of all NEDS and Executives for FY20 is set out below:
Name
Position
David Quinlivan
Non-executive Chairman
Luke Tonkin
Managing Director
Peter Alexander
Non-executive Director
Kelvin Flynn
David Berg
Diniz Cardoso
Steven Harvey
Non-executive Director
General Counsel & Company Secretary
Chief Financial Officer
General Manager Mount Monger Operations
Antony Shepherd
Exploration & Geology Manager
David Vemer1
Les Davis2
Leigh Junk3
General Manager Deflector Operations
Non-executive Director
Non-executive Director
1 Classified as KMP from 1 July 2019
2 Resigned on 22 November 2019
3 Resigned on 12 July 2019
3.
REMUNERATION SNAPSHOT
FY20 REMUNERATION IN REVIEW
Term as KMP
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Part year
Part year
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:
· production of 273,071 ounces gold equivalent, a 64% increase on FY19;
·
·
·
cash & bullion increased 106% to $269.4 million at 30 June 2020 with no debt;
commenced production at Santa - the Group’s fifth underground operation;
completed the acquisition of Egan Street Resources Limited;
· announced a 54% increase in Mineral Resources at Deflector; and
·
strong results from the FY20 exploration campaign with near term targets that have the potential to enhance the future
production and margin profile of the Group.
Further information on the link between company performance and KMP remuneration can be found in section 5(g).
The Board believes that the Company’s remuneration framework is aligned with market practice and that Executive
remuneration in FY20 was reasonable, having regard to the performance of the Company, the platform established for ongoing
performance improvement and the experience of the Executives.
Key remuneration outcomes for FY20 are summarised in the table below:
Remuneration element
Details
Fixed remuneration
No change to fixed remuneration structure.
Short-term incentive (STI)
Long-term incentive (LTI)
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.
In FY20, 696,052 performance rights were granted to the Managing Director and
a further 1,546,240 performance rights were granted to other KMP’s on the terms
approved by shareholders at the 2018 AGM and described further in this report.
18 Silver Lake Resources Limited Annual Report 2020
DIRECTORS' REPORT
FY21 REMUNERATION CHANGES
The following changes will be made to the structure of executive remuneration in FY21:
·
·
the target remuneration mix will be split: 1/3 fixed remuneration, 1/3 Target STI and 1/3 Target LTI; and
the target STI opportunity will be increased from 50% to 100% of Total Fixed Remuneration (TFR).
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 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 Executives;
the remuneration of Non-executive Directors; and
the establishment of employee incentive and equity-based plans and the number and terms of any incentives proposed to
be issued to Executives pursuant to those plans, including any vesting criteria.
B. REMUNERATION PRINCIPLES
The Company’s remuneration strategy and structure is reviewed by the Board and the Nomination & Remuneration Committee
for business appropriateness and market suitability on an ongoing basis.
KMP are remunerated and rewarded in accordance with the Company’s remuneration policies (outlined in further detail below).
C. ENGAGEMENT OF REMUNERATION CONSULTANTS
During the period, the Company did not engage remuneration consultants to provide a “remuneration recommendation”
(as that term is defined in the Corporations Act 2001). However the Nomination & Remuneration Committee has benchmarked
KMP remuneration using external independent industry reports and data to ensure that remuneration levels are competitive
and meet the objectives of the Company.
D. 2019 AGM VOTING OUTCOME AND COMMENTS
The Company received more than 98% votes in favour of the adoption of its Remuneration Report for the 2019 financial year.
5.
FY20 EXECUTIVE REMUNERATION
A. EXECUTIVE REMUNERATION STRATEGY AND POLICY
In determining Executive remuneration, the Board aims to ensure that remuneration practices are:
·
competitive and reasonable, enabling the Company to attract and retain high calibre talent;
· aligned to the Company’s strategic and business objectives and the creation of shareholder value;
·
transparent and easily understood; and
· acceptable to shareholders.
The Company’s approach to remuneration ensures that remuneration is competitive, performance-focused, clearly links
appropriate reward with desired business performance, and is simple to administer and understand by Executives and
shareholders.
In line with the remuneration policy, remuneration levels are reviewed annually to ensure alignment to the market and the
Company’s stated objectives.
19
DIRECTORS' REPORT
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
· Base salary
·
Superannuation
· Other benefits
VARIABLE REMUNERATION
·
·
STI (Cash Bonuses)
LTI (Performance Rights)
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 FY20 total remuneration packages
split between the fixed and variable remuneration is shown below:
Target LTI
40%
Fixed
Remuneration
40%
Target STI
20%
Figure 3: FY20 Target remuneration mix
B.
FIXED REMUNERATION
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
62.5 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 gold mining sector.
Executives’ base salaries for the 2020 financial year were:
Base Salary
FY201
Base Salary
FY191
Movement
$695,000
$311,400
$326,700
$306,000
$268,250
$300,000
$665,600
$298,900
$317,200
$300,000
$260,400
Note 2
4%
4%
3%
2%
3%
Note 2
Executive
Luke Tonkin
David Berg
Diniz Cardoso
Steven Harvey
Antony Shepherd
David Vemer
1 Base salary as at 30 June of each respective year
2 David Vemer classified as a KMP from 1 July 2019
20 Silver Lake Resources Limited Annual Report 2020
DIRECTORS' REPORT
C. SHORT-TERM INCENTIVE (STI) ARRANGEMENTS
The purpose of the STI plan is to link the achievement of key Company targets with the remuneration received by those
Executives charged with meeting those targets.
The STI plan provides eligible employees with the opportunity to earn a cash bonus if certain financial hurdles and agreed key
performance indicators (KPIs) are achieved. The Board has determined that the Company must be cash-flow positive from
normal operating and sustaining capital activities (excluding enhancement activities) for the applicable performance period,
for any STI to be paid.
All Executives are eligible to participate in the STI plan with awards capped at 100% of the target opportunity. The target
opportunity for KMP is 50% of TFR.
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.
FY20 PERFORMANCE AGAINST STI MEASURES
A summary of the KPI targets set for FY20 and their respective weightings are as follows:
KPI*
Weighting
Measure
1. Safety/Environment
2. Production
3. Costs
4. Operating Strategy & Execution
5. Business Development & Growth
6. Company Performance
9%
45%
18%
9%
9%
10%
* Not all of the above KPIs were assigned to all Executives
·
·
·
Lagging EH&S indicators
Environmental management effectiveness
Safety management effectiveness
Production from each operating site versus FY20 Stretch Target
Costs for each cost centre versus FY20 Stretch Target
Execution and success of Operating Strategy
Execution and success of Business Development Strategy
TSR performance against comparator group
In assessing KMP performance the Committee considered KPI’s against budgeted stretch targets as well as the following
achievements against objectives set at the start of the year:
· achieving OH&S objectives;
· achieving environmental objectives;
· exceeded twice revised FY20 sales guidance;
· achieving FY20 AISC sales guidance;
· exceeding the targeted end of year cash and bullion balance;
·
·
·
successful completion of Egan Street Resources Limited transaction;
commencement of production at Santa - the Group’s fifth underground operation;
successful drilling campaigns at Deflector resulted in a 54% increase in Mineral Resources, increasing the mine life of
the operation;
· delivery of positive exploration results from infill and extensional resource definition drilling to allow further mines to
enter production in future periods; and
· Company TSR performance against the comparator group.
Based on the above assessment, STI payments for FY20 to Executives were as follows:
Executive
Luke Tonkin
David Berg
Diniz Cardoso
Steven Harvey
Antony Shepherd
David Vemer
Maximum STI
opportunity
50% of TFR
50% of TFR
50% of TFR
50% of TFR
50% of TFR
50% of TFR
% STI awarded
STI awarded
93.5%
93.5%
93.5%
94.8%
93.5%
89.9%
$364,000
$160,000
$168,000
$159,000
$138,000
$148,000
21
DIRECTORS' REPORT
D.
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
2018 AGM.
KEY FEATURES OF THE INCENTIVE PLAN
Under the terms of the Incentive Plan, the Board may determine which employees are eligible to participate. The number of
Performance Rights awarded is calculated by dividing an employees’ maximum LTI opportunity by the 20 day VWAP of the
Company shares as traded on the ASX up to 30 June of each respective year. Performance Rights which are granted will not vest
(and therefore will lapse) 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. The NRC believes that a single hurdle is appropriate as it is
transparent, simple to administer and directly links Executive remuneration to the Company’s share price relative to its peers.
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. 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
relevant vesting date 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 is listed in the table on page 23.
At the discretion of the Board, the composition of the comparator group may change from time to time.
Performance rights granted under the Incentive Plan will have no exercise price.
Unless the Board in its absolute discretion determines otherwise, all unvested performance rights will lapse 30 days following the
cessation of employment. The Board will take into account the circumstances surrounding the cessation of employment before
deciding whether to make any such determination.
FY20 LTI OUTCOMES
During the year the Company issued 2,242,292 Performance Rights to KMP in respect of the LTI component of their FY20
remuneration. The quantum of Performance Rights issued was determined by reference to the 20 day VWAP to 30 June 2019 of
$1.07 per share.
Executive
Luke Tonkin
David Berg
Diniz Cardoso
Steven Harvey
Antony Shepherd
David Vemer
Maximum LTI
opportunity
% LTI granted
Number of
Performance Rights
granted during
FY20
Fair value per
Performance Right *
100% of TFR
100% of TFR
100% of TFR
100% of TFR
100% of TFR
100% of TFR
100%
100%
100%
100%
100%
100%
696,052
318,378
334,021
312,857
274,261
306,723
$0.817
$0.817
$0.817
$0.817
$0.817
$0.817
* Independently valued using a hybrid share option pricing model
22 Silver Lake Resources Limited Annual Report 2020
DIRECTORS' REPORT
PERFORMANCE RIGHTS
During the year the Company issued 3,145,866 Performance Rights to employees (including 2,242,292 Performance Rights to
KMP) in respect of the LTI component of their FY20 remuneration.
Key
Management
Person
Luke Tonkin
David Berg
Diniz Cardoso
Steven Harvey
Antony Shepherd
David Vemer
Total
Balance at
1 July 2019
Granted in
FY20
Converted
Lapsed
Balance at
30 June 2020
Vested &
exercisable at
30 June 2020
3,017,389
899,138
944,346
88,574
780,846
190,471
696,052
318,378
334,021
312,857
274,261
306,723
(859,899)
(171,079)
(183,299)
-
(146,640)
(40,733)
5,920,764
2,242,292
(1,401,650)
-
-
-
-
-
-
-
2,853,542
1,046,437
1,095,068
401,431
908,467
456,461
923,845
179,091
187,203
-
156,002
67,081
6,761,406
1,513,222
The total expense recognised in the Statement of Profit or Loss for all Executives’ Performance Rights for the period ended
30 June 2020 was $1,503,000.
Details of the performance rights currently on issue are summarised in the following table:
Number of performance rights
Exercise price
Grant date
Vesting period
FY18 Award1
1,693,295
$0.00
1 July 2017
1 July 2017 –
30 June 2020
FY19 Award
3,820,978
$0.00
1 July 2018
1 July 2018 –
30 June 2021
FY20 Award
3,145,866
$0.00
1 July 2019
1 July 2019 –
30 June 2022
ASX Comparator Group
AQG; BDR; EVN; MML; MOY;
NCM; NST; OGC; PRU; RMS;
RRL; RSG; SAR; SBM; TRY; WGX
AQG; DCN; EVN; MML; MOY;
NCM; NST; OGC; PRU; RMS;
RRL; RSG; SAR; SBM; WGX
AQG; DCN; EVN; GOR; MML;
MOY; NCM; NST; OGC; PRU;
RMS; RRL; RSG; SAR; SBM; WGX
Valuation at grant date
Underlying 20 day VWAP
Volatility
Risk free rate
Expected dividends
FY18 Award
FY19 Award
FY20 Award
$0.257
$0.481
20%
1.94%
-
$0.439
$0.581
70%
2.07%
-
$0.817
$1.071
65%
0.98%
-
1 On completion of the vesting period 100% of the FY18 Performance Rights had vested in accordance with the relative TSR hurdle attached to them. This
included 1,513,222 rights awarded to KMP’s
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.
E. SERVICE AGREEMENTS
A summary of the key terms of service agreements for Executives in FY20 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.
23
DIRECTORS' REPORT
Name
Luke Tonkin
David Berg
Diniz Cardoso
Steven Harvey
Antony Shepherd
David Vemer
Term of Agreement
Notice Period by
Executive
Notice Period by
Silver Lake
Termination Payment
Open
Open
Open
Open
Open
Open
6 months
6 months
6 months
9 weeks
6 months
9 weeks
6 months
6 months
6 months
9 weeks
6 months
9 weeks
12 months TFR
6 months TFR
6 months TFR
as per Legislation
6 months TFR
as per Legislation
F.
EXECUTIVE REMUNERATION PAID
Fixed Renumeration
Variable Renumeration
Salary
& Fees
$
Other
Benefits1
$
Superannuation
$
STI Cash
Payments
$
Rights2
$
Total
$
Performance
Related
Renumeration
%
Executive
Luke Tonkin
Diniz Cardoso
Year
2020
2019
2020
2019
753,400
683,123
332,737
304,265
Antony Shepherd
2020
268,734
David Berg
David Vemer3
Steve Harvey
2019
2020
2019
2020
2019
2020
2019
245,789
315,983
284,354
303,500
-
310,070
297,774
80,990
72,908
25,131
24,155
20,635
19,903
23,954
23,042
23,077
-
23,538
23,077
25,000
25,000
25,000
25,000
24,580
25,000
25,000
25,000
25,000
-
25,000
28,500
364,000
449,224
1,672,614
300,000
330,464
1,411,495
168,000
190,975
139,772
115,101
138,000
158,032
114,748
95,415
160,000
182,379
133,210
109,760
148,000
95,626
-
159,000
71,613
-
98,163
12,961
741,842
608,293
610,400
500,435
707,316
575,366
595,203
-
615,771
433,925
Total
2020
2,284,423
197,324
150,000
1,137,000
1,174,399
4,943,146
2019
1,815,305
163,085
128,080
759,343
663,701
3,529,514
49
45
48
42
48
42
48
42
41
-
42
19
47
40
1 Represents contractual entitlements (including termination and retirement benefits), annual leave and long service leave entitlements, measured on an
accrual basis
2 These are valuations for accounting purposes and have not actually been paid during the year
3 Classified as KMP from 1 July 2019
G.
LINK BETWEEN COMPANY PERFORMANCE, SHAREHOLDER WEALTH GENERATION AND REMUNERATION
The Nomination & Remuneration Committee considers a number of criteria to assess the performance of the Company.
Criteria used in this assessment include maximising of cash flows, managing risk, using a stronger balance sheet to undertake
cash accretive investments in core assets, execution of development projects, exploration success as well as the following
metrics in respect of the current and previous financial years.
Cash and bullion ($m)
Profit after tax ($m)
Cash from operating activities ($m)
Closing share price at 30 June
2020
269.4
256.9
252.3
$2.13
2019
130.7
6.5
71.8
$1.26
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
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 and create new opportunities
that compete for capital.
24 Silver Lake Resources Limited Annual Report 2020
DIRECTORS' REPORT
6.
FY20 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:
·
fees paid to NEDs are within the aggregate amount approved by shareholders at the Company’s Annual General Meeting;
· NEDs are remunerated by way of fees (in the form of cash and superannuation benefits);
· NEDs are not provided with retirement benefits other than statutory superannuation entitlements; and
· NEDs are not entitled to participate in equity-based remuneration schemes designed for executives without due
consideration and appropriate disclosure to the Company’s shareholders.
Fees paid to NEDs cover all activities associated with their role on the Board and any sub-committees. No additional fees
are paid to NEDs for being a Chair or Member of a sub-committee. However, NEDs are entitled to fees or other amounts as
the Board determines where they perform special duties or otherwise perform extra services on behalf of the Company.
They may also be reimbursed for out of pocket expenses incurred as a result of their Directorships.
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.
FY20 NED FEES
NED
David Quinlivan
Peter Alexander
Les Davis
Kelvin Flynn
Leigh Junk
Fees FY201
Fees FY191
Movement
$200,000
$115,000
$48,654
$125,925
$4,423
$173,750
$26,538
$115,000
$125,925
$26,538
15%
Note 2
Note 3
-
Note 4
1 Fees excluding superannuation as at 30 June of each respective year
2 Mr Alexander was appointed to the Board on 5 April 2019 following the Company’s merger with Doray Minerals Limited
3 Mr Davis resigned from the Board on 22 November 2019
4 Mr Junk was appointed to the Board on 5 April 2019 following the Company’s merger with Doray Minerals Limited and resigned on 12 July 2019
25
DIRECTORS' REPORT
C. NED FEES PAID
Details of the remuneration of each NED for the year ended 30 June 2020 is set out in the following table:
Non-executive Director
David Quinlivan
Peter Alexander
Les Davis
Kelvin Flynn
Leigh Junk
Total
Short Term
Base Fee
$
Post-employment
Superannuation
benefits
$
200,000
173,750
115,000
26,538
48,654
115,000
125,925
125,925
4,423
26,538
494,002
467,751
19,000
16,506
10,925
2,521
4,622
10,925
-
-
420
2,521
34,967
32,473
Year
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
7.
KMP SHAREHOLDINGS
Key Management
Person
Balance at
1 July 2019
Acquired
Other
-
1,458,117
18,165
-
384,396
811,152
-
191,021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Conversion of
Performance
Rights
-
Sold
-
859,899
(1,790,000)
-
-
171,079
183,299
-
-
-
(350,000)
(811,152)
-
146,640
(191,021)
David Quinlivan
Luke Tonkin
Peter Alexander
Kelvin Flynn
David Berg
Diniz Cardoso
Steven Harvey
Antony Shepherd
David Vemer
Les Davis1
Leigh Junk2
Total
-
1,500
11,046
40,733
(21,779)
-
-
(1,000,000)
(3,792,320)
-
-
-
-
1,000,000
3,792,320
7,655,171
1,500
(4,781,274)
1,401,650
(3,163,952)
1,113,095
1 Mr Davis resigned from the Board on 22 November 2019. The balance disclosed as “Other” represents his final interest in the Company on this date
2 Mr Junk resigned from the Board on 12 July 2019. The balance disclosed as “Other” represents his final interest in the Company on this date
26 Silver Lake Resources Limited Annual Report 2020
Total
$
219,000
190,256
125,925
29,059
53,276
125,925
125,925
125,925
4,843
29,059
528,969
500,224
Balance at
30 June 2020
-
528,016
18,165
-
205,475
183,299
-
146,640
31,500
-
-
AUDITOR’S INDEPENDENCE
Section 307C of the Corporations Act 2001 requires Silver Lake’s auditors, KPMG, to provide the Directors with an Independence
Directors’ Report
Declaration in relation to the audit of the financial report for the year ended 30 June 2020. This Independence Declaration is
attached to the Directors’ Report and forms a part of the Directors’ Report.
AUDITOR’S INDEPENDENCE
DIRECTORS' REPORT
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
NON-AUDIT SERVICES
2020. This Independence Declaration is attached to the Directors’ Report and forms a part of the Directors’
Report.
During the year KPMG, the Group’s auditor, has performed certain other services in addition to the audit and review of the
NON-AUDIT SERVICES
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:
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
· all non-audit services were subject to the corporate governance procedures adopted by the Group and have been
compatible with, and did not compromise the general standard of independence for auditors imposed by
the Corporations Act 2001 for the following reasons:
·
the non-audit services provided do not undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants, as they do not involve reviewing or auditing the auditor’s own work,
§
acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing
risk and rewards.
reviewed by the Audit Committee to ensure they do not impact the integrity and objectivity of the auditor; and
all non-audit services were subject to the corporate governance procedures adopted by the Group
and have been reviewed by the Audit Committee to ensure they do not impact the integrity and
objectivity of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants, as they do not
involve reviewing or auditing the auditor’s own work, acting in a management or decision making
capacity for the Group, acting as an advocate for the Group or jointly sharing risk and rewards.
Details of the amounts paid to the auditor of the Group, KPMG, for audit and non-audit services provided during the year are
set out below:
§
Details of the amounts paid to the auditor of the Group, KPMG, for audit and non-audit services provided
during the year are set out below:
Audit services
Audit and review of financial statements
Other audit services
Audit services
Non-audit services
Audit and review of financial statements
Other audit services
Taxation services
Non-audit services
Accounting advisory services
Taxation services
Total paid
Accounting advisory services
2020
$
246,370
-
52,430
-
2019
$
240,000
2,500
50,000
15,000
246,370
-
52,430
-
298,800
2020
$
2019
$
240,000
2,500
50,000
15,000
307,500
Total paid
298,800
307,500
ROUNDING OFF
ROUNDING OFF
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports)
in accordance with that Instrument, all financial information has been rounded off to the nearest thousand dollars, unless
Instrument 2016/191 and in accordance with that Instrument, all financial information has been rounded
otherwise stated.
off to the nearest thousand dollars, unless otherwise stated.
The Directors’ Report is signed in accordance with a resolution of the Directors.
The Directors’ Report is signed in accordance with a resolution of the Directors.
Luke Tonkin
Luke Tonkin
Managing Director
Managing Director
18 August 2020
18 August 2020
27 | P a g e
27
Directors’ Report
AUDITOR’S INDEPENDENCE
Report.
NON-AUDIT SERVICES
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
2020. This Independence Declaration is attached to the Directors’ Report and forms a part of the Directors’
During the year KPMG, the Group’s auditor, has performed certain other services in addition to the audit
and review of the financial statements. The Board is satisfied that the provision of non-audit services is
compatible with, and did not compromise the general standard of independence for auditors imposed by
the Corporations Act 2001 for the following reasons:
§
§
all non-audit services were subject to the corporate governance procedures adopted by the Group
and have been reviewed by the Audit Committee to ensure they do not impact the integrity and
objectivity of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants, as they do not
involve reviewing or auditing the auditor’s own work, acting in a management or decision making
capacity for the Group, acting as an advocate for the Group or jointly sharing risk and rewards.
DIRECTORS' DECLARATION
Details of the amounts paid to the auditor of the Group, KPMG, for audit and non-audit services provided
during the year are set out below:
1.
In the opinion of the Directors:
2020
$
2019
$
a. the consolidated financial statements and notes of the Group and the Remuneration Report in the Directors’ Report
Audit services
are in accordance with the Corporations Act 2001 including:
Audit and review of financial statements
i. Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the
246,370
240,000
year then ended; and
Other audit services
-
ii. Complying with Australian Accounting Standards and Corporations Regulations 2001;
2,500
b. the financial statements also comply with International Financial Reporting Standards as disclosed in Note 1;
c. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
Non-audit services
Taxation services
Accounting advisory services
due and payable; and
Total paid
52,430
-
50,000
15,000
298,800
307,500
d. there are reasonable grounds to believe that the Company and the Group entity identified in Note 36 will be able
to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross
Guarantee between the Company and that Group entity pursuant to ASIC Corporations (wholly owned companies)
Instruments 2016/785.
ROUNDING OFF
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports)
2. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with
Instrument 2016/191 and in accordance with that Instrument, all financial information has been rounded
s295A of the Corporations Act 2001 from the Managing Director and Chief Financial Officer for the financial year ended
off to the nearest thousand dollars, unless otherwise stated.
30 June 2020.
The declaration is signed in accordance with a resolution of the Board of Directors.
The Directors’ Report is signed in accordance with a resolution of the Directors.
Luke Tonkin
Luke Tonkin
Managing Director
Managing Director
18 August 2020
18 August 2020
27 | P a g e
28 Silver Lake Resources Limited Annual Report 2020
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 2020 there have been:
i.
ii.
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.
KPMG
Derek Meates
Partner
Perth
18 August 2020
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.
29
INDEPENDENT AUDIT REPORT
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 2020 and of
its financial performance for the year ended
on that date; and
The Financial Report comprises:
• Consolidated balance sheet as at 30 June 2020
• 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
• Complying with Australian Accounting
• Directors’ Declaration.
Standards and the Corporations Regulations
2001.
The Group consists of the Company and the entities
it controlled at the year-end or from time to time
during the financial year.
Basis for opinion
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 (including Independence Standards) (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.
Key Audit Matters
The Key Audit Matters we identified are:
• Recoverability of Deferred Tax Assets;
• Valuation of Goodwill; and
• Acquisition of Egan Street Resources
Limited.
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.
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.
30 Silver Lake Resources Limited Annual Report 2020
INDEPENDENT AUDIT REPORT
Recoverability of Deferred Tax Assets ($123.742 million)
Refer to Note 9 to the financial report
The key audit matter
How the matter was addressed in our audit
The Group recognised deferred tax assets of
$161.987 million during 30 June 2020 arising
from tax losses carried forward. $34.668 million
of these losses were utilized during the year to
reduce income taxes of the Group that would
have otherwise been payable. The closing losses
carried forward as at 30 June 2020 is $123.742
million.
Accounting standards state that Deferred tax
assets are only recognised if certain conditions
under Australian tax law are satisfied and if it is
probable that sufficient taxable profits will be
generated in order for the benefits of the
deferred tax assets to be realised. These
benefits are realised by reducing tax payable on
future taxable profits.
The recoverability of Deferred Tax Assets was a
key audit matter due to:
•
•
the significance of these assets recognised
by the Group;
the significant judgment required to assess
the probability that sufficient taxable profits
can be generated given the tax losses
recorded in the previous financial year.
• The risk of the Group applying the
requirements of the accounting standards
and Australian tax law to recognise deferred
tax assets for tax losses incorrectly, which
could result in a substantial effect on the
Group’s statement of profit or loss and other
comprehensive income.
We involved tax specialists to supplement our
senior team members in assessing this key audit
matter.
Working with our specialists, our procedures
included:
• We examined the documentation prepared by
the Group supporting the availability of tax
losses that were recognised in accordance with
Australian tax law.
• We assessed the factors that led to the Group
incurring tax losses in the previous years, and
challenged the Group’s assessment of future
taxable profits.
• We compared the forecasts included in the
Group’s estimate of future taxable profits used
in their deferred tax asset recoverability
assessment to those used in the Group’s
assessment of the value of goodwill. Our
approach to testing these forecasts was
consistent with the approach detailed below in
relation to the Valuation of Goodwill. We
challenged the differences between forecast
cash flows and taxable profits by evaluating the
adjustment of cash flows, for differences
between accounting profits, as presented in the
Group’s forecasts, to taxable profits.
• Understanding the timing of future taxable
profits and considering the consistency of the
timeframes of expected recovery to our
knowledge of the business and its plans and
Australian tax law requirements. We placed
increased skepticism where there was a longer
timeframe of expected recovery.
• We assessed the Group’s disclosures in the
financial report using the results from our testing
and against the requirements of the accounting
standards.
31
INDEPENDENT AUDIT REPORT
Valuation of Goodwill ($90.695 million)
Refer to Note 3 and Note 18 to the financial report
The key audit matter
How the matter was addressed in our audit
As disclosed in Note 3 to the financial
report, the Group made a significant
acquisition of Doray Minerals Limited
(Doray) during the prior year which
resulted in the recognition of $90.695
million of goodwill.
A key audit matter for us was the
Group’s impairment testing of
goodwill, given the size of the balance.
We focussed on the significant and
judgemental forward-looking
assumptions the Group applied in their
fair value less costs of disposal
models, including:
• Forecast sales, production output,
production costs and capital
expenditure
• Forecast gold prices
• Discount rate, and
• Life of mineral reserves and
resources.
These assumptions require
management to apply significant
estimates and judgments, which
contributes to our conclusion that the
valuation of goodwill is a key audit
matter
We involved valuation specialists to
supplement our senior audit team
members in assessing this key audit
matter.
Our procedures included:
• We considered the appropriateness of the Group’s use
of the fair value less costs of disposal methodology
against the requirements in the accounting standards.
• Using our valuation specialists, we assessed the
integrity of the fair value less costs of disposal model
used, including the accuracy of the underlying
calculation formulas.
• We evaluated the sensitivity of the valuation of
goodwill by considering reasonably possible changes
to the key assumptions, such as forecast gold prices,
forecast production costs and the discount rate. We
did this to identify those assumptions at higher risk of
bias or inconsistency in application and to focus our
further procedures.
• We assessed the accuracy of previous Group budgets
by comparing to actual results to determine the
reasonability of forecasts incorporated in the model.
We noted previous trends and evaluated their impact
on current forecasts including sensitivities.
• We compared the forecast cash flows contained in the
fair value less costs of disposal models to Board
approved forecasts.
• We assessed key assumptions underlying the
discounted cash flows in the fair value less costs of
disposal methodology (including forecast sales,
production output, production costs and capital
expenditure) using our knowledge of the Group, their
past performance, and our industry experience.
• We compared forecast commodity prices and forecast
exchange rates to published views of market
commentators on future trends.
• We assessed the scope, competence and objectivity
of the Group’s internal expert involved in the
estimation process of mineral reserves and resources.
• We compared the life of mineral reserves and
resources in the model to the reserves and resources
statement for consistency, in particular to application
across production assumptions.
• Working with our valuation specialists, we
independently developed a discount rate range
considered comparable, using publicly available market
data for comparable entities.
• We assessed the disclosures in the financial report and
against the requirements of the accounting standards.
32 Silver Lake Resources Limited Annual Report 2020
INDEPENDENT AUDIT REPORT
Acquisition of Egan Street Resources Limited ($52.883 million)
Refer to Note 3 to the financial report
The key audit matter
How the matter was addressed in our audit
The Group’s acquisition of Egan Street
Resources Limited (Egan Street) on 21
November 2019 (the date the Group
obtained control of Egan Street) for $52.883
million, representing 84.1% ownership, was
a significant transaction for the Group. As
disclosed in Note 3 to the financial report,
the Group subsequently acquired the
remaining non-controlling interest by 8
January 2020. This was a key audit matter
due to the:
• The significance of the acquisition;
• Level of judgement required in
•
determining the accounting approach as
either a business combination (in
accordance with AASB 3 Business
Combinations) or an asset acquisition.
The difference in the accounting for the
acquisition as a business or an asset is
significant and could impact the
recognition and measurement of
amounts reported in the consolidated
financial statements; and
Judgements made by the Group relating
to the purchase price allocation. The
Group engaged an external expert to
assist in performing a valuation
assessment, which included the
identification and measurement of
acquired assets and liabilities. The most
significant assumptions the Group
applied in their assessment of the
allocation of purchase consideration
was the fair value of mineral interests
acquired, which included:
– Life of mineral reserves and
resources estimates; and
– Reserve and resource multiples.
These conditions required significant audit
effort and greater involvement by senior
team members and our valuation specialists.
Our procedures included:
• We read the Bidders Statement related to the
acquisition to understand the structure, key terms
and conditions, and nature of purchase
consideration. Using this, we evaluated the
accounting treatment of the purchase consideration
and transaction costs against the criteria in the
accounting standards.
• We involved senior audit team members to assess
the accounting treatment for the transaction. We
analysed the conclusions reached by the Group to
accounting interpretations, industry practice and
accounting literature.
• We assessed the scope, competence and
objectivity of the Group’s external expert involved
in estimating the purchase price allocation.
• We read the external valuation report and worked
with our valuation specialists to assess and
challenge the key assumptions used in the
purchase price allocation. We challenged the
Group’s approach and methodology to valuing the
identified mineral interest in comparison with
accepted industry practice and the requirements of
the accounting standards.
• We assessed the scope, competence and
objectivity of the Group’s external expert involved
in the estimation process of mineral reserves and
resources.
• We assessed the reasonableness of reserve and
resource multiples applied by comparing them to
recent transactions and comparable companies.
• We assessed the Group’s disclosures of the
quantitative and qualitative considerations in
relation to the business combination, by comparing
these disclosures to our understanding of the
acquisition and the requirements of the accounting
standards.
33
INDEPENDENT AUDIT REPORT
Other Information
Other Information is financial and non-financial information in Silver Lake Resources Limited 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
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.
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.
34 Silver Lake Resources Limited Annual Report 2020
INDEPENDENT AUDIT 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 2020, 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
on pages 15 to 26 of the Directors’ report for the
17 to 26
year ended 30 June 2020.
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
18 August 2020
35
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Revenue
Cost of sales
Gross profit
Other income
Exploration expensed/impaired
Administration expenses
Results from operating activities
Finance income
Finance expenses
Net finance costs
Profit before income tax
Income tax benefit
Profit for the year
Total comprehensive income for the year
Basic earnings per share
Diluted earnings per share
30 June
2020
$’000
563,435
(398,764)
164,671
225
(10,306)
(21,445)
133,145
1,516
(1,528)
(12)
133,133
123,742
256,875
256,875
30 June
2019
$’000
301,514
(272,085)
29,429
153
(2,355)
(18,643)
8,584
1,221
(3,305)
(2,084)
6,500
-
6,500
6,500
Cents Per Share Cents Per Share
31.09
30.77
1.12
1.11
Notes
4
5
6
8
9
10
10
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.
36 Silver Lake Resources Limited Annual Report 2020
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2020
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Total current assets
Non-current assets
Inventories
Exploration evaluation and development expenditure
Property, plant and equipment
Investments
Deferred tax assets
Goodwill
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Employee benefits
Rehabilitation and restoration provision
Total current liabilities
Non-current liabilities
Lease liabilities
Rehabilitation and restoration provision
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
30 June
2020
$’000
30 June
2019
$’000
Notes
11
13
14
14
15
16
17
9
18
19
20
21
23
20
23
24
25
256,993
6,652
69,456
274
333,375
14,119
268,855
131,139
6,352
123,742
90,695
634,902
968,277
70,730
22,457
5,057
800
99,044
30,783
42,823
73,606
172,650
795,627
125,073
4,497
49,661
630
179,861
1,868
217,600
75,950
6,591
-
90,695
392,704
572,565
53,650
284
3,722
-
57,656
431
40,260
40,691
98,347
474,218
1,023,106
3,978
(231,457)
795,627
960,075
2,475
(488,332)
474,218
The Consolidated Balance Sheet should be read in conjunction with the accompanying notes to these consolidated
financial statements.
37
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Share
Capital
$’000
Option
Reserve
$’000
Accumulated
Losses
$’000
Non-
Controlling
interests
$’000
Balance at 1 July 2018
699,564
1,650
(494,832)
Total comprehensive profit for the period
-
Transactions with owners, recorded directly
in equity
Issue of securities (Note 24)
Equity settled share based payment
Balance at 30 June 2019
260,511
-
960,075
-
-
825
2,475
Balance at 1 July 2019
960,075
2,475
Total comprehensive income for the period
-
Transactions with owners, recorded directly
in equity
Issue of securities (Note 24)
Equity settled share based payment
Total contributions
Changes in ownership interests
Acquisition of subsidiary with NCI (Note 3)
Acquisition of non-controlling interest
Total transactions with owners of the Company
Balance at 30 June 2020
52,883
-
52,883
-
10,148
63,301
1,023,106
-
-
1,503
1,503
-
-
1,503
3,978
6,500
-
-
(488,332)
(488,332)
256,875
-
-
-
-
-
-
(231,457)
Total
Equity
$’000
206,382
6,500
260,511
825
474,218
474,218
256,875
52,883
1,503
54,386
-
-
-
-
-
-
-
-
-
-
10,308
10,308
(10,308)
-
-
(160)
64,534
795,627
The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes to these
consolidated financial statements.
38 Silver Lake Resources Limited Annual Report 2020
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
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
Cash from acquisition of subsidiary
Acquisition of investments
Proceeds from divestments
Payments for exploration, evaluation and development
Net cash used in investing activities
Cash flows from financing activities
Repayment of finance leases
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
12
3
17
11
30 June
2020
$’000
560,640
(308,333)
252,307
1,516
(24,877)
32
(503)
668
(82,748)
(105,912)
(12,998)
(1,477)
(14,475)
131,920
125,073
256,993
30 June
2019
$’000
302,148
(230,318)
71,830
1,221
(8,084)
13,333
(2,906)
1,361
(49,605)
(44,680)
-
(36)
(36)
27,114
97,959
125,073
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes to the consolidated
financial statements.
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
BASIS OF PREPARATION
1.
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 2020 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 18 August 2020. 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 Standards Board (“IASB”);
has been presented on the historical cost basis except for the following items in the balance sheet:
-
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
- assets and liabilities acquired as part of the acquisition of Egan Street Resources Limited, which have been measured
at fair value (refer Note 3).
Other than the adoption of new standards, 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.
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.
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.
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 3 Acquisition of Subsidiary – fair value of the consideration transferred, and fair value of the assets acquired and
liabilities assumed, measured on a provisional basis
· Note 9 Income Tax – recognition of deferred tax assets
· Note 15 Exploration, evaluation and development expenditure carried forward – consideration of impairment triggers and
recognition of impairment losses
· Note 15 Amortisation of development expenditure – estimation of future mineable inventory and future development
expenditure when calculating units of production amortisation
· Note 15 Reserves and Resources – estimating reserves and resources
· Note 18 Impairment testing of goodwill - key assumptions underlying recoverable amounts
· Note 23 Closure and rehabilitation – measurement of provision based on key assumptions
40 Silver Lake Resources Limited Annual Report 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 30.
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.
D. MEASUREMENT 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.
SIGNIFICANT ACCOUNTING POLICIES
2.
Any new, revised or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted and are not expected to have a significant impact on the Group.
A. AASB 16 LEASES
This note explains the impact of the adoption of AASB 16 Leases on the Group’s financial statements and discloses the new
accounting policies that have been applied from 1 July 2019.
AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a
contract, i.e. the customer (“lessee”) and the supplier (“lessor”). AASB 16 replaces the previous leases Standard, AASB 117 Leases,
and related Interpretations. AASB 16 has one model for lessees which will result in almost all leases being included on the
Balance Sheet.
The lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing
its obligation to make lease payments.
The Group has adopted AASB 16 using the modified retrospective approach from 1 July 2019 but has not restated comparatives
for the 2019 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and
the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 July 2019.
The Group leases assets including properties and equipment. As a lessee, the Group previously classified leases as operating or
financial leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership.
Under AASB 16, the Group recognises right of use assets and lease liabilities for some of these leases – i.e. they are on-Balance
Sheet.
The Group presents right of-use assets in ‘Property, plant and equipment’ together with assets that it owns. The Group presents
lease liabilities separately in the Balance Sheet.
41
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The accounting policy changes have been outlined below.
I.
DEFINITION OF A LEASE
In accordance with AASB 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified
asset for a period in exchange for consideration. On transition to AASB 16, the Group elected to apply the practical expedient
(where applicable) to grandfather the assessment of lease transactions and applied AASB 16 only to contracts entered or
changed on or after 1 July 2019.
At inception or on reassessment of a contract that contains a lease component, the Group has elected not to separate
non-lease components and will instead account for the lease and non-lease components as a single lease component.
II.
RIGHT-OF-USE ASSETS
The Group recognises right-of-use assets at the commencement date of the lease and is initially measured at cost, and
subsequently at cost less any accumulated depreciation and impairment losses and adjusted for any changes to lease
liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
and lease payments made at or before the commencement date.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to
profit or loss as incurred.
III.
LEASE LIABILITY
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that cannot be readily determined, the Group’s incremental
borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The lease liability is subsequently
increased by the interest cost on the lease liability and decreased by lease payments made. The carrying amount of lease
liabilities is remeasured if there is a modification to an index or rate, a change in the residual value guarantee, or changes in
the assessment of whether a purchase, extension or termination option will be exercised.
The lease payments include fixed monthly payments, variable lease payments and amounts expected to be paid under
residual value guarantees less any incentives received. Variable lease payments that do not depend on an index or rate are
recognised as an expense in the period it was incurred. The lease payment also includes the exercise price, or termination
price, of a purchase option in the event the lease is likely to be extended, or terminated, by the Group. The Group has applied
judgement to determine the lease term for some lease contracts in which it is a lessee that includes renewal options. The
assessment of these options will impact the lease term and therefore affects the amount of lease liabilities and right-of-use
assets recognised.
IV.
IMPACT ON FINANCIAL STATEMENTS
On transition to AASB 16, the Group recognised additional right-of-use assets of $30.2 million and lease liabilities of $30.2
million. When measuring lease liabilities for leases that were classified as operating leases, the Group discounted the lease
payments using its incremental borrowing rate at 1 July 2019. The weighted average rate applied was 4.2%. There was no
impact on opening retained earnings at 1 July 2019.
ON INITIAL APPLICATION
Operating lease commitments at 30 June 2019
Discounted on initial application using the incremental borrowing rate
Lease liability recognised at 1 July 2019
$’000
33,292
30,220
30,220
42 Silver Lake Resources Limited Annual Report 2020
For the year ended 30 june 2020 AT 30 JUNE 2020
Right of use assets
Finance lease liabilities
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
$’000
52,274
52,849
In addition, the Group has recognised depreciation and interest costs, instead of operating lease expenses. For the period
ended 30 June 2020, the Group recognised $12.8 million of lease liability repayments, $13.5 million of depreciation charges
and $1.5 million of interest costs in relation to these leases. Total cash outflows for leases recognised under AASB 16 totalled
$14.3 million for the year.
B.
IFRIC 23
IFRIC 23 became effective for the Group from 1 July 2019 and clarifies how the recognition and measurement requirements of
IAS 12 Income Taxes are applied where there is uncertainty over income tax treatments. The Group has reviewed the accounting
standard and has determined that there is no material impact.
ACQUISITION OF SUBSIDIARY (EGAN STREET RESOURCES LIMITED)
3.
On 21 November 2019 the Group obtained control of Egan Street Resources Limited (“EGA”) by acquiring 84.1% of the shares and
voting interests in that company. On 8 January 2020, the Group completed the compulsory acquisition process for EGA.
The acquisition of EGA allows Silver Lake to consolidate an additional JORC Resource of 454,000 ounces at the Rothsay Gold
Project and provide a near term development opportunity to introduce a new high-grade ore source to an upgraded Deflector
processing facility.
The Group incurred acquisition-related costs of $4.1 million including legal fees, estimated stamp duty and due diligence costs.
These costs have been included in the Statement of Profit and Loss under administration expenses.
The following summarises the consideration transferred, and the fair value of assets and liabilities on acquisition:
CONSIDERATION TRANSFERRED
Equity Instruments Issued (50,481,300 fully paid ordinary shares)
$’000
52,883
The fair value of the fully paid ordinary shares issued was based on the share price of the Company at 21 November 2019 of
$1.05 per share, being the date of acquisition.
IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED
Cash and cash equivalents
Trade and other receivables
Prepayments
Property plant and equipment
Exploration and evaluation expenditure
Trade and other payables
Employee provisions
Total net identifiable assets
$’000
32
205
19
201
64,527
(802)
(991)
63,191
The value of assets acquired, and liabilities assumed has been measured on a provisional basis. If new information is obtained
within one year of the date of acquisition about facts and circumstances that existed at the date of acquisition, then the
accounting for the acquisition will be revised.
43
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Total consideration on acquisition
Non-controlling interests, based on their proportionate interest in the recognised amounts of the assets
and liabilities of Egan Street
Fair value of identifiable net assets
ACQUISITION OF NON-CONTROLLING INTEREST
$’000
52,883
10,308
63,191
During the period from 21 November 2019 to 8 January 2020, the Group increased its interest in EGA from 84.1% ownership to
100%. This increase resulted in the issue of an additional $10.1 million of additional equity in Silver Lake.
ACQUISITION OF DORAY MINERALS IN FY19
On 5 April 2019 the Group obtained control of Doray Minerals Limited by acquiring 100 percent of the shares and voting interests
in that company.
The following summarises the consideration transferred, and the fair value of assets and liabilities acquired at the acquisition date:
CONSIDERATION TRANSFERRED
Equity Instruments Issued (310,209,934 fully paid ordinary shares)
$’000
260,615
The fair value of the fully paid ordinary shares issued was based on the share price of the Company at 5 April 2019 of $0.84 per
share, being the date of acquisition.
IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Property plant and equipment
Exploration, evaluation and development expenditure
Other assets
Trade and other payables
Employee provisions
Interest bearing liabilities
Rehabilitation provision
Total net identifiable assets
GOODWILL RECOGNISED
Total consideration transferred
Fair value of identifiable net assets
Goodwill
44 Silver Lake Resources Limited Annual Report 2020
Notes
16
15
23
$’000
13,333
2,677
763
15,629
42,205
136,359
357
(16,683)
(1,004)
(1,294)
(22,422)
169,920
$’000
260,615
(169,920)
90,695
For the year ended 30 june 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Accounting Policies
Business combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the Group.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired.
Any goodwill that arises is tested annually for impairment. Transaction costs are expensed as incurred, except if related to the
issue of debt or equity securities.
4.
REVENUE
Gold sales
Copper
Silver sales
Total
30 June
2020
$’000
543,995
18,087
1,353
563,435
30 June
2019
$’000
296,112
4,762
640
301,514
Included in current year gold sales is 107,782 ounces of gold sold (at an average price of A$1,807/ounce) under various hedge
programs. At 30 June 2020, the Company has a total of 155,568 ounces of gold left to be delivered under these programs over
the next 2 years at an average price of A$2,147/ounce.
Accounting Policies
Gold bullion sales
Under AASB 15, revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the
transfer of control requires judgement. With the sale of gold bullion, this occurs when physical bullion, from a contracted sale,
is transferred from the Company’s account into the account of the buyer.
Concentrate Sales
Under AASB 15, revenue is recognised upon receipt of the bill of lading when the concentrate is delivered for shipment.
Contract terms for concentrate sales allow for a final price adjustment after the date of sale, based on average market
prices and final assays in the period after the concentrate is sold. Average market prices are derived from independently
published data with material adjustments between the provisional and final price separately disclosed as other revenue.
This typically occurs between 60-80 days after the initial date of sale.
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 9 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.
5.
COST OF SALES
Mining and processing costs
Amortisation
Depreciation1
Salaries and on-costs
Royalties
Notes
15
16
30 June
2020
$’000
210,800
90,425
32,467
44,904
20,168
30 June
2019
$’000
169,590
48,996
11,657
31,169
10,673
398,764
272,085
1 Included in the FY20 balance is $13.5 million of depreciation from the adoption of AASB 16 Leases. This depreciation would previously have been
classified as mining and processing costs
45
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Accounting Policies
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.
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
6.
ADMINISTRATION EXPENSES
Salaries and on-costs
Consultants and contractors
Rental expense
Business combination expense (Note 3)
Share based payments
Other corporate costs
Total
7.
PERSONNEL EXPENSES
Wages and salaries
Other associated personnel expenses
Superannuation contributions
Total
46 Silver Lake Resources Limited Annual Report 2020
Period
7-10 Years
3-5 Years
3-10 Years
3-15 Years
3-5 Years
30 June
2020
$’000
10,562
1,409
546
4,108
1,503
3,317
30 June
2019
$’000
5,695
1,389
371
8,676
825
1,687
21,445
18,643
30 June
2020
$’000
47,127
1,785
4,125
53,037
30 June
2019
$’000
33,497
1,466
2,924
37,887
For the year ended 30 june 2020 8.
FINANCE INCOME AND EXPENSES
Interest income
Finance income
Change in fair value of listed investments (Note 17)
Interest expense on lease liabilities
Finance costs
Net finance costs
Accounting Policies
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30 June
30 June
2020
$’000
1,516
1,516
(52)
(1,476)
(1,528)
(12)
2019
$’000
1,221
1,221
(3,269)
(36)
(3,305)
(2,084)
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, unwinding of the discount on provisions and change in the value
of investments measured at fair value through the profit and loss. 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.
9.
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
Recognition of previously unrecognised tax losses
Movement in temporary differences
Utilisation of tax losses
Income tax benefit 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
Recognition of tax effect of previously unrecognised tax losses
Changes in unrecognised temporary differences
Changes in recognised temporary differences
Income tax benefit reported in profit or loss
30 June
2020
$’000
30 June
2019
$’000
-
(248)
(248)
248
(161,987)
3,577
34,668
(123,742)
30 June
2020
$’000
133,133
39,940
1,882
(161,987)
-
(3,577)
(123,742)
-
(50)
(50)
50
-
-
-
-
30 June
2019
$’000
6,500
1,950
(4,271)
-
2,321
-
-
47
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are attributable to the following:
Receivables
Inventories
Exploration, evaluation and mining assets
Property, plant and equipment
Accrued expenses
Provisions
Share issue costs
Tax losses
Less deferred tax asset not recognised
Net deferred tax assets
Accounting Policies
30 June
2020
$’000
30 June
2019
$’000
2,017
(3,475)
(36,472)
19,703
1,299
13,349
2
127,319
123,742
-
123,742
2,017
(3,419)
(11,643)
4,819
975
12,291
3
162,235
167,278
(167,278)
-
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
The Group utilised $115,559,000 of tax losses during the current year by offsetting them against taxable income. At 30 June 2020
the Company has $424,399,000 (2019: $540,784,000 loss) of tax losses remaining for offset against future taxable profits.
As a result of a rising gold price environment, the acquisition of the Deflector and Rothsay projects and the continued success
of the Mount Monger Operation, management have considered it probable that future taxable profits would be available for
offset against these tax losses. As a result, the Company has recognised a deferred tax asset at 30 June 2020 of $123,742,000
(2019: $162,000,000 of unrecognised deferred tax asset).
48 Silver Lake Resources Limited Annual Report 2020
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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. the provisions of deductibility imposed by law are complied with; and
ii. 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 unrecognised
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.
10. EARNINGS PER SHARE
Profit used in calculating basic and diluted EPS
Weighted average number of ordinary shares used in calculating
basic earnings per share
Effect of dilution
Weighted average number of ordinary shares used in calculating
diluted earnings per share
Accounting Policies
30 June
2020
$’000
256,875
30 June
2019
$’000
6,500
Number of
Shares
Number of
shares
826,101,988
580,836,639
8,660,139
5,388,008
834,762,127
586,224,647
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 performance rights granted to employees.
11. CASH AND CASH EQUIVALENTS
Cash at bank
Accounting Policies
30 June
2020
$’000
256,993
30 June
2019
$’000
125,073
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 26.
49
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Cash flow from operating activities
Profit after tax
Adjustments for:
Depreciation
Amortisation
Exploration expensed
Share based payments
Write off of investment
Net finance costs
Profit 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 and other assets
Change in deferred tax assets
Change in trade and other payables
Change in other liabilities
Total
13. TRADE AND OTHER RECEIVABLES
Current
Trade and other receivables
GST receivable
Provision for doubtful debts
Total
30 June
2020
$’000
30 June
2019
$’000
256,875
6,500
32,467
90,425
10,306
1,503
52
(39)
(58)
391,531
(2,155)
(32,046)
356
(123,742)
19,613
(1,250)
252,307
11,657
48,996
2,355
825
38
2,084
(153)
72,302
247
(6,292)
284
-
5,078
211
71,830
30 June
2020
$’000
30 June
2019
$’000
9,368
4,007
(6,723)
6,652
9,122
2,098
(6,723)
4,497
The Group’s exposure to interest rate risk and a sensitivity analysis of financial assets and liabilities are disclosed in Note 26.
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.
50 Silver Lake Resources Limited Annual Report 2020
For the year ended 30 june 2020 14.
INVENTORIES
Current
Materials and supplies
Ore stocks
Gold in circuit
Concentrate on hand
Bullion on hand
Non-current
Ore stocks
Total
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30 June
2020
$’000
30 June
2019
$’000
12,492
34,546
6,764
3,256
12,398
69,456
14,119
83,575
11,398
28,115
3,192
1,302
5,654
49,661
1,868
51,529
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
Ore stockpiles, concentrate on hand, 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.
15. EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
During the year ended 30 June 2020 the Group incurred and capitalised the following on exploration, evaluation and
development expenditure:
Exploration and evaluation phase
Cost brought forward
Acquired in a business combination (Note 3)
Expenditure during the year
Transferred to development phase1
Expensed during period
Balance at 30 June
30 June
2020
$’000
49,597
64,527
16,238
(83,265)
(10,306)
36,791
30 June
2019
$’000
17,263
24,687
11,476
(1,474)
(2,355)
49,597
1 The transfer of costs to the development phase includes expenditure relating to the newly acquired Rothsay project which is currently in development
51
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Development phase
Cost brought forward
Transfer from exploration and evaluation phase
Rehabilitation provision adjustment
Transferred to production phase
Balance at 30 June
Production phase
Cost brought forward
Transfer from development phase
Acquired in a business combination (Note 3)
Expenditure during the year
Rehabilitation provision adjustment
Amortisation expense
Balance at 30 June
Total
Accounting Policies
30 June
2020
$’000
5,190
83,265
2,199
(23,928)
66,726
30 June
2020
$’000
162,813
23,928
-
67,414
1,608
(90,425)
165,338
268,855
30 June
2019
$’000
10,004
1,474
-
(6,288)
5,190
30 June
2019
$’000
52,321
6,288
111,672
40,863
665
(48,996)
162,813
217,600
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 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 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.
52 Silver Lake Resources Limited Annual Report 2020
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
When a potential impairment is indicated, an assessment is performed for each cash generating unit 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 (FVLCD). In assessing FVLCD, 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.
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 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 15.
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.
53
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group determines and reports ore resources under the Australian Code of Reporting for Mineral Resource and Ore Reserves
(2004 and 2012), known as the JORC Code. The JORC Code requires the use of reasonable assumptions to calculate resources.
Due to the fact that economic assumptions used to estimate resources change from period to period, and geological data
is generated during the course of operations, estimates of resources may change from period to period. Changes in reported
resources may affect the Group’s financial results and financial position in a number of ways, including:
· 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
expectations about the timing or costs of these activities change
·
recognition of deferred tax assets, including tax losses.
16. PROPERTY, PLANT AND EQUIPMENT
Note
3
5
16(a)
5
Balance 1 July 2018
Additions
Acquisition of subsidiary
Transfers
Depreciation expense
Disposals
Balance 30 June 2019
Balance 1 July 2019
Additions
Transfers
Right-of-use lease assets
Depreciation expense
Disposals
At 30 June 2020
A. RIGHT-OF-USE ASSETS
Land &
Buildings
$’000
Plant &
Equipment
$’000
Capital Work In
Progress
$’000
2,734
-
8,013
2,124
(1,255)
(23)
11,593
11,593
594
-
-
(2,587)
-
9,600
30,425
119
32,028
7,687
(10,402)
(25)
59,832
59,832
415
10,125
65,657
(29,880)
(806)
105,343
Total
$’000
37,366
8,084
42,205
-
(11,657)
(48)
75,950
75,950
22,805
-
65,657
(32,467)
(806)
4,207
7,965
2,164
(9,811)
-
-
4,525
4,525
21,796
(10,125)
-
-
-
16,196
131,139
The Group leases mining equipment for the purposes of production and exploration activities. These leases run for a period
of approximately 1-3 years, with an option to renew the lease after that date. Leases that contain extension options are
exercisable by the Group and not the lessor. Where practicable, the Group seeks to include extension options in new leases
to provide operational flexibility. The Group has estimated that exercising of the extension options would result in an increase
in lease liabilities and right-of-use assets of $2.6 million.
Some leases provide for additional rent payments that are based on changes in local price indices. These are factored into
the calculation of minimum lease payments in determining the value of the right-of-use assets only when these changes
become effective.
Information about leases for which the Group is a lessee is presented below:
Property, plant and equipment
Balance 1 July 2019
Additions to right-of-use assets
Depreciation charge for the year
Balance 30 June 2020
54 Silver Lake Resources Limited Annual Report 2020
Note
2
$’000
30,220
35,437
(13,383)
52,274
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
17.
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
2020
$’000
6,352
30 June
2019
$’000
6,591
6,591
503
(690)
(52)
6,352
8,140
2,906
(1,186)
(3,269)
6,591
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 at fair value through profit or loss if it is classified as held-for-trading or is designated as 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 are measured at
fair value and changes 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.
18. GOODWILL
Goodwill of $90.695 million was recorded following the Company’s merger with Doray Minerals Limited on 5 April 2019.
The goodwill was attributable to both financial synergies (as a result of the creation of a mid-tier gold company with two
complementary gold camps increasing market presence and liquidity) and operating synergies (expected to be achieved
from integrating Doray into the Group’s existing mining operations).
IMPAIRMENT TESTING
As goodwill does not generate cash flows independently of other assets, its carrying value was apportioned to the Group’s
two operating CGUs as part of the 30 June impairment testing review. The allocation was made based on the relative market
values of the Silver Lake and Doray entities at the date of the merger as follows:
· Mount Monger Operation
68% ($61.673 million)
· Deflector Operation
32% ($29.022 million)
55
For the year ended 30 june 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In assessing whether each CGU (including its share of goodwill) has been impaired, its carrying amount is compared with its
recoverable amount. In accordance with the Group’s accounting policy, recoverable amount is assessed as the higher of fair value
less costs of disposal (FVLCD) and value in use. The Group has adopted FVLCD in its assessment, using discounted cash flows.
The key assumptions in addition to the life of mine plans used in the discounted cash flow valuation are the gold price, the
Australian dollar exchange rate against the US dollar and the discount rate.
Gold price and AUD:USD exchange rate assumptions are estimated by management, with reference to external market
forecasts, and updated at least annually. For this review, the forecast gold price was estimated at US$1,700–US$1,800/oz.
and the forecast exchange rate of US$0.68 to US$0.72 per A$1.00, based on a forward curve over the life of the mines.
Significant changes to either the forecast gold price or the forecast exchange rate may have an impact on the carrying
value of the CGU in future periods.
A discount rate of 8% was applied to the post tax cash flows expressed in nominal terms. The discount rate was derived from
the Group’s post tax weighted average cost of capital (WACC), with appropriate adjustments made to reflect the risks specific
to the CGU.
The impairment testing carried out at 30 June 2020 using these assumptions resulted in a nil impairment charge.
Accounting Policies
Goodwill arising on acquisition of subsidiaries is measured at cost less accumulated impairment losses. At each reporting date,
the Group tests goodwill for impairment. Where the asset does not generate cash inflows independent from other assets and its
value in use cannot be estimated to be close to its fair value, the asset is tested for impairment as part of the cash generating
unit (CGU) to which it belongs.
The Group considers each of its two segments (Mount Monger and Deflector) to be a separate CGU. If the carrying amount
of an asset or CGU exceeds its recoverable amount, the carrying amount is reduced to the recoverable amount and an
impairment loss recognised in the Statement of Profit or Loss. The recoverable amount of an asset or CGU is determined as
the higher of its fair value less costs of disposal or value in use.
19. TRADE AND OTHER PAYABLES
Trade payables
Stamp duty and other accruals
Total
30 June
2020
$’000
48,846
21,884
70,730
30 June
2019
$’000
39,053
14,597
53,650
The Group’s exposure to liquidity risk and a sensitivity analysis of financial assets and liabilities are disclosed in Note 26.
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.
56 Silver Lake Resources Limited Annual Report 2020
For the year ended 30 june 2020 20. LEASE LIABILITIES
Current
Lease liabilities
Non-current
Lease liabilities
Total
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30 June
2020
$’000
30 June
2019
$’000
22,457
30,783
53,240
284
431
715
Payments made during the year under lease arrangements qualifying under AASB 16, but were variable by nature and therefore
not included in the minimum lease payments used to calculate lease liabilities, totalled $32.3 million. These include payments for
services, including labour charges, under those contracts that contained payments for the right-of-use of assets.
Accounting Policies
From 1 July 2019 the Group has applied the new AASB 16 Leases accounting standard. See Note 2 for details on the impacts of
this new standard which has significantly increased the value of right-of-use assets and lease liabilities of the Group.
Prior to 1 July 2019, leases of fixed assets where substantially all the risks and benefits incidental to ownership of the asset (but
not legal ownership) were classified as finance leases. Finance leases were capitalised by recording an asset and a liability at
the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments,
including any guaranteed residual values. Leased assets were depreciated on a straight-line basis over the shorter of their
estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risks and benefits
remain with the lessor, were charged as expenses in the periods in which they are incurred. Lease incentives under operating
leases were recognised as a liability and amortised on a straight-line basis over the life of the lease term.
21. EMPLOYEE BENEFITS
Current
Liability for annual leave
Liability for long service leave
Total
Accounting Policies
i. Defined Contribution Superannuation Funds
30 June
2020
$’000
30 June
2019
$’000
3,957
1,100
5,057
2,872
850
3,722
Obligations for contributions to defined contribution superannuation funds are recognised as an expense in profit or loss when
they are incurred.
ii. Other Long-Term Employee Benefits
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have
earned in return for their service in the current and prior periods plus related on costs. 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.
iii. Short-Term Benefits
Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present obligations resulting from
employees’ services provided to reporting date and are calculated at undiscounted amounts based on remuneration wage
and salary rates that the Group expects to pay as at reporting date including related on-costs.
57
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22. SHARE BASED PAYMENTS
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 2019
Granted in
FY20
Converted
Lapsed
Balance at
30 June
2020
Vested &
exercisable at
30 June 2020
Total
7,438,257
3,145,866
(1,627,856)
(296,128)
8,660,139
1,693,295
Details of the performance rights currently on issue are summarised in the following table:
Number of performance rights
Exercise price
Grant date
Vesting period
ASX Comparator Group
Valuation at grant date
Underlying 20 day VWAP
Volatility
Risk free rate
Expected dividends
FY18 Award1
FY19 Award
FY20 Award
1,693,295
$0.00
1 July 2017
1 July 2017 –
30 June 2020
3,820,978
$0.00
1 July 2018
1 July 2018 –
30 June 2021
3,145,866
$0.00
1 July 2019
1 July 2019 –
30 June 2022
AQG; BDR; EVN; MML;
MOY; NCM; NST; OGC;
PRU; RMS; RRL; RSG;
SAR; SBM; TRY; WGX
AQG; DCN; EVN; MML;
MOY; NCM; NST; OGC;
PRU; RMS; RRL; RSG;
SAR; SBM; WGX
AQG; DCN; EVN; GOR;
MML; MOY; NCM; NST;
OGC; PRU; RMS; RRL;
RSG; SAR; SBM; WGX
FY18 Award
FY19 Award
FY20 Award
$0.257
$0.481
20%
1.94%
-
$0.439
$0.581
70%
2.07%
-
$0.817
$1.071
65%
0.98%
-
1 On completion of the vesting period 100% of the FY18 Performance Rights had vested in accordance with the relative TSR hurdle attached to them. This
included 1,513,222 rights awarded to KMP’s
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 2020
was $1,503,000 (2019: $825,000).
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.
58 Silver Lake Resources Limited Annual Report 2020
For the year ended 30 june 2020 23. PROVISIONS
Closure and rehabilitation
Opening balance at 1 July
Provision acquired on acquisition of subsidiary
Adjustment to provisions during the year
Rehabilitation spend
Closing balance at 30 June
Current provision
Non-current provision
Closing balance at 30 June
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30 June
30 June
2020
$’000
40,260
-
3,807
(444)
43,623
800
42,823
43,623
2019
$’000
16,450
22,422
1,388
-
40,260
-
40,260
40,260
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 $3,807,000 (2019: $1,388,000).
Accounting Policies
Provisions
A provision is recognised in the Balance Sheet when the Group has a present legal or constructive obligation as a result of
a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect
is material, provisions are determined by discounting the expected future cash flows at a discount rate that reflects current
market assessments of the time value of money and, when appropriate, the risks specific to the liability.
Closure and Rehabilitation
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.
59
For the year ended 30 june 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
24. SHARE CAPITAL
Movements in issued capital
Balance as at 1 July 2018
Movement in the period*
Issue of share capital (Note 3)
Costs associated with issue of shares
Balance as at 30 June 2019
Movement in the period*
Issue of share capital on acquisition of subsidiary (Note 3)
Issue of share capital to acquire non-controlling interest in subsidiary
Costs associated with issue of shares
Balance as at 30 June 2020
* Movement relates to the vesting of performance rights issued for nil consideration.
Accounting Policy
Number
$’000
503,947,514
4,014,708
310,209,934
-
818,172,156
1,627,856
50,481,300
9,562,797
-
699,564
-
260,615
(104)
960,075
-
52,883
10,308
(160)
879,844,109
1,023,106
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.
25. RESERVES
Movement in share based payment reserve
Balance as at 1 July
Equity settled share based payment expense
Balance as at 30 June
30 June
2020
$’000
2,475
1,503
3,978
30 June
2019
$’000
1,650
825
2,475
60 Silver Lake Resources Limited Annual Report 2020
For the year ended 30 june 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26. 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 and concentrate sales, GST refunds and rental income.
At 30 June 2020, a provision for doubtful debts of $6,723,000 (2019: $6,723,000) has been recorded against rental income
receivable as a result of a debtor being placed in liquidation in a prior year. This receivable is therefore not reflected in the
trade and other receivables balance in Note 26(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.
III.
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
C.
LIQUIDITY RISK
Carrying Amount
2020
$’000
6,652
256,993
263,645
2019
$’000
4,497
125,073
129,570
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.
61
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
To mitigate large fluctuations in the USD:AUD exchange rate as well as the USD denominated gold price, the Group has
entered into hedging programmes whereby future bullion sales are hedged at a predetermined AUD gold price. At 30 June
2020, the Group has a total of 155,568 ounces to be delivered under these hedges over the next 2 years at an average of
A$2,147/oz. The sale of gold under these hedges is accounted for using the ‘own use exemption’ under AASB 9 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 2020
Trade and other payables
Lease liabilities
Total
30 June 2019
Trade and other payables
Lease liabilities
Total
Carrying
Amount
$’000
Contractual
Cash Flows
$’000
12 Months
or Less
$’000
1-2 years
$’000
2-5 years
$’000
> 5 years
$’000
70,730
53,240
123,970
70,730
56,228
126,958
70,730
24,544
95,274
-
18,780
18,780
-
12,904
12,904
-
-
-
Carrying
Amount
$’000
Contractual
Cash Flows
$’000
6 Months
or Less
$’000
1-2 years
$’000
2-5 years
$’000
> 5 years
$’000
53,650
715
54,365
53,650
759
54,409
53,650
355
54,005
-
404
404
-
-
-
-
-
-
* The carrying value at balance date approximates fair value
D. MARKET RISK
Market risk is the risk that changes in market prices, such as commodity prices, 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.
I.
COMMODITY RISK
The Group’s exposure to commodity price risk arises largely from Australian dollar gold price fluctuations. The Group’s exposure
to movements in the gold price is managed through the use of Australian dollar gold forward contracts. The gold forward sale
contracts do not meet the criteria of financial instruments for accounting purposes on the basis that they meet the normal
purchase/sale exemption because physical gold will be delivered into the contract. Further information relating to these
forward sale contracts is included in Note 4. No sensitivity analysis is provided for these contracts as they are outside the
scope of AASB 9 Financial Instruments.
II.
INTEREST RATE RISK
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
Lease liabilities
Variable rate instruments
Cash and cash equivalents
62 Silver Lake Resources Limited Annual Report 2020
2020
$’000
2019
$’000
53,240
715
256,993
125,073
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 $2,570,000 (2019: $1,250,000). This analysis assumes that all other variables remain constant.
III.
EQUITY PRICE RISK
Equity investments are long-term investments that have been classified as financial assets at fair value through profit or loss.
E.
FAIR VALUES
The carrying value of cash and cash equivalents, trade and other receivables, 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.
F.
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.
27. COMMITMENTS
The Group has $5,545,000 (2019: $5,137,000) of commitments relating to minimum exploration expenditure on its various
tenements and $6,052,000 (2019: $5,440,000) of capital commitments at 30 June 2020.
28. OPERATING LEASES
The Company leases assets for operations including plant and office premises. As at 1 July 2019, with the adoption of AASB 16,
operating leases as previously defined under AASB 117 have, for the most part, been recognised and included as lease liabilities
with future commitments disclosed in Note 26(c). Any leases that did not meet the definition of finance leases were either
short-term in nature or did not meet the recognition requirements (these totalled $51,000). Expenses from operating leases
under AASB 117 for 30 June 2019 totalled $2 million. See Note 2 for further details of the impact of this change.
The disclosure of prior period operating commitments is retained in these financial statements as follows:
Less than one year
Between one and five years
30 June
2019
$’000
12,390
20,902
33,292
63
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29. RELATED PARTIES
A. KEY MANAGEMENT PERSONNEL COMPENSATION
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Total
30 June
2020
$
4,112,749
184,967
1,174,399
5,472,115
30 June
2019
$
3,233,039
175,134
663,701
4,071,874
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 2,242,292 performance rights were awarded to key management personnel. See Note 22 and the
Remuneration Report for further details of these related party transactions.
30. 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
Silver Lake (Doray) Pty Ltd
Doray Gold Operations Pty Ltd
Andy Well Mining Pty Ltd
Murchison Resources Pty Ltd
Meehan Minerals Pty Ltd
Silver Lake (Deflector) Pty Ltd
MYG Tenement Holdings SPV Pty Ltd
MYG Tenement Holdings Pty Ltd
Brandy Hill Iron SPV Pty Ltd
Brandy Hill Iron Pty Ltd
Central Infrastructure SPV Pty Ltd
Central Infrastructure Pty Ltd
Deflector Gold SPV Pty Ltd
Deflector Gold Pty Ltd
Gullewa Gold Project SPV Pty Ltd
Gullewa Gold Project Pty Ltd
Egan Street Resources Pty Ltd
Egan Street Rothsay Pty Ltd
Egan Street Victoria Bore Pty Ltd
64 Silver Lake Resources Limited Annual Report 2020
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership Interest
2020
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2019
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Accounting Policies
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.
JOINT OPERATIONS
31.
As at 30 June, the Group has the following interests in unincorporated joint operations:
Joint Operation
Peter’s Dam
Horse Well JV
Accounting Policies
Principal
Activities
Exploration
Exploration
Group Interest
Joint Operation Parties
2020
SLR/Rubicon
SLR/Alloy Resources
-
40.0%
2019
71.8%
49.0%
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 15.
32. AUDITOR’S REMUNERATION
Audit services
Audit and review of financial statements
Other audit services
Non-audit Services
Taxation services
Accounting advisory services
Total
30 June
2020
$
30 June
2019
$
246,370
-
52,430
-
298,800
240,000
2,500
50,000
15,000
307,500
33. SUBSEQUENT EVENTS
No events have arisen in the interval between the end of the financial year and the date of this report 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.
65
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
34. PARENT ENTITY
As at, and throughout the financial year ended 30 June 2020, the parent company of the Group was Silver Lake Resources Limited.
Results of the parent entity
Profit for the year
Total comprehensive profit for the year
Balance Sheet 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
2020
$’000
127,622
127,622
138,696
736,546
97,291
103,487
1,023,106
3,979
(394,026)
633,059
30 June
2019
$’000
1,309
1,309
101,347
486,975
40,900
46,073
960,075
2,475
(521,648)
440,902
The parent entity has $2,536,000 (2019: $2,569,000) of commitments relating to minimum exploration expenditure on its various
tenements and $1,464,000 (2019: $4,800,000) of capital commitments at financial year end.
35. SEGMENT REPORTING
The accounting policies used by the Company in reporting segments are in accordance with the measurement principles of the
Australian Accounting Standards. The Group has the following reportable segments:
i. Mount Monger Operation
ii. Deflector Operation (including the Rothsay Project)
The Group’s segments are both located in Western Australia, with the Mount Monger Operation producing gold bullion and
Deflector producing gold bullion and gold-copper concentrate.
Financial information for the reportable segments for the years ended 30 June 2020 and 30 June 2019 is as follows:
30 June 2020
Revenues
EBITDA (excluding significant items)1
Capital expenditure
30 June 2019
Revenues
EBITDA (excluding significant items)1
Capital expenditure
Mount Monger
$’000
Deflector
$’000
Unallocated2
$’000
322,069
144,479
74,841
241,366
133,445
33,646
-
(17,836)
-
Mount Monger
$’000
Deflector3
$’000
Unallocated2
$’000
246,929
67,968
54,687
54,585
22,013
5,736
-
(9,787)
-
Total
$’000
563,435
260,088
108,487
Total
$’000
301,514
80,194
60,423
1 A reconciliation between the statutory profit after tax and the Group’s EBITDA (excluding significant items) is tabled on page 7
2 Unallocated items primarily comprise corporate costs
3 Deflector information reported in FY19 is from 5 April 2019, being the date on which Doray Minerals was acquired
66 Silver Lake Resources Limited Annual Report 2020
For the year ended 30 june 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
36. 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 summarised Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2020
along with the Consolidated Balance Sheet at 30 June 2020 for the members of the Deed of Cross Guarantee are disclosed in
the tables below:
30 June
2020
$’000
30 June
2019
$’000
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Total current assets
Non-current assets
Inventories
Exploration evaluation and development expenditure
Property, plant and equipment
Investments
Intercompany receivables
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Employee benefits
Rehabilitation and restoration provision
Total current liabilities
Non-current liabilities
Lease liabilities
Rehabilitation and restoration provision
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
134,160
3,258
46,044
274
183,736
14,119
96,206
86,006
328,349
-
123,742
648,422
832,158
44,014
22,457
3,210
800
70,481
28,055
18,837
46,892
117,373
714,785
97,813
2,317
34,567
87
134,784
1,868
86,875
34,258
265,609
6,850
-
395,460
530,344
38,602
-
2,698
-
41,300
-
17,586
17,586
58,886
471,358
1,023,106
3,979
(312,300)
714,785
960,075
2,475
(491,192)
471,358
67
For the year ended 30 june 2020 30 June
2020
$’000
322,069
(233,977)
88,092
163
(8,893)
(23,867)
55,495
1,118
(1,463)
(345)
55,150
123,742
178,892
30 June
2019
$’000
246,929
(223,594)
23,335
153
(2,355)
(13,945)
7,188
1,168
(3,286)
(2,118)
5,070
-
5,070
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revenue
Cost of sales
Gross profit
Other income
Exploration expensed
Administration expenses
Results from operating activities
Finance income
Finance expenses
Net finance costs
Profit before income tax
Income tax benefit
Profit for the year
68 Silver Lake Resources Limited Annual Report 2020
For the year ended 30 june 2020 ASX ADDITIONAL INFORMATION
CORPORATE GOVERNANCE STATEMENT
The Company’s Corporate Governance Statement can be located on its website www.slrltd.com.au.
SECURITIES
At 2 October 2020 the Company had 881,209,021 fully paid ordinary shares and 7,295,227 performance rights on issue.
DISTRIBUTION OF HOLDERS
1
-
1,000
1,001
- 5,000
5,001
10,001
-
-
10,000
100,000
100,001 - and over
Total Holders
Fully Paid
Performance
Ordinary Shares
Options
Rights
3,745
5,815
2,183
3,051
333
15,127
-
-
-
-
-
-
-
-
-
7
5
12
694 holders held less than a marketable parcel (<$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.
69
ASX ADDITIONAL INFORMATION
SUBSTANTIAL SHAREHOLDERS
As at 2 October 2020 the substantial holders disclosed to the Company were:
Registered Holder
Beneficial Owner
Number of
Shares
Percentage of
Issued Shares
Bank of New York Mellon
VanEck Vectors Gold Miners ETF (GDX)
84,983,410
9.66%
Van Eck Vectors Junior Gold Miners ETF (GDXJ)
VanEck Vectors Global Mining UCITS ETF (UCTGDIG)
VanEck Vectors Gold Miners UCITS ETF (UCTGDX)
and
Van Eck Vectors Junior Gold Miners UCITS ETF
(UCTGDXJ)
Paradice Investment Management Pty Ltd
56,538,472
6.91%
Vanguard Group
45,057,319
5.12%
HSBC Nominees Aus Ltd;
Citicorp Nominees Ltd;
National Nominees Ltd;
JP Morgan Nominees Aust Ltd
Brown Brothers Harriman
BNY Mellon
JP Morgan Chase Bank,
N.A.
State Street Bank and Trust
Company
Various others
TOP 20 HOLDERS OF QUOTED SECURITIES
Holder Name
Number Held
Percentage
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
318,880,752
169,087,990
84,661,211
42,095,626
18,326,692
BNP PARIBAS NOMINEES PTY LTD
10,976,658
BNP PARIBAS NOMS PTY LTD
BRIKEN NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
HATHOR INVESTMENTS PTY LTD
QY LONG RIVER PTY LTD
AMP LIFE LIMITED
NETWEALTH INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
BELL POTTER NOMINEES LTD
6,730,838
4,000,000
3,402,153
2,452,523
2,299,052
1,842,379
1,563,390
1,500,000
1,500,000
1,458,023
1,436,463
1,388,897
1,273,885
1,269,910
676,146,442
76.73
36.19
19.19
9.61
4.78
2.08
1.25
0.76
0.45
0.39
0.28
0.26
0.21
0.18
0.17
0.17
0.17
0.16
0.16
0.14
0.14
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
VALBONNE II
70 Silver Lake Resources Limited Annual Report 2020
Suite 4, Level 3
South Shore Centre
85 South Perth Esplanade
South Perth WA 6151
www.slrltd.com.au