Annual Report
2021/22
Corporate Information
Solicitor
Piper Alderman
Level 16, 70 Franklin Street
Adelaide SA 5000
GPO Box 65, Adelaide SA 5001
T +61 8 8205 3333
F +61 8 8205 3300
Auditor
Grant Thornton Audit Pty Ltd.
Level 1, 67 Greenhill Road
Wayville SA 5034
T +61 (0)8 8 372 6666
F +61 (0)8 8 83726677
Share Registry
Automic Pty Ltd
Level 2, 267 Georges Terrace
Perth WA 6000
T 1300 288 664 (within Australia)
T +61 (0) 2 9698 5414 (International)
automicgroup.com.au
Southern Gold Ltd.
ACN 107 424 519
ABN 30 107 424 519
Directors
Greg Boulton AM
Non-Executive Chairman
Robert Smillie
Managing Director
Peter Bamford
Non-Executive Director
Douglas Kirwin
Non-Executive Director
Michael McNeilly
Non-Executive Director
Beejay Kim
Non-Executive Director
Company Secretary
Ray Ridge
Corporate Governance Statement
Southern Gold’s Corporate Governance
Statement can be found at the Company’s
website:
southerngold.com.au/corporate-governance
Registered and Principal Address
10 George Street
Stepney, SA 5069
PO Box 255
Kent Town SA 5071
T +61 (0)8 8368 8888
Contents
The Chairmans Letter to Shareholders ...................................................................................... 3
Tenement Schedule ....................................................................................................................... 5
Directors’ Report ............................................................................................................................ 6
Remuneration Report (audited) ................................................................................................. 14
Auditors Independence Declaration .......................................................................................... 22
Statement of Profit or Loss and Other Comprehensive Income ........................................... 23
Statement of Financial Position ................................................................................................. 24
Statement of Changes in Equity ................................................................................................ 25
Statement of Cash Flows ............................................................................................................ 26
Notes to the Financial Statements for the Financial Year Ended 30 June 2022 ............... 28
Directors’ Declaration .................................................................................................................. 55
Independent Audit Report to the Members .............................................................................. 56
Shareholders Information ........................................................................................................... 60
Southern Gold Limited – Consolidated Entity // Annual Report 2022
2
The Chairmans Letter to Shareholders
Dear Fellow Southern Gold Shareholders
It has been a challenging year for Southern Gold, and while like many other companies we haven’t escaped the global
impact of COVID 19 or the turbulent global share market conditions, I am pleased report to you that as a result of the
exploration investment and activity over these last 12 months, that the Company is well positioned to achieving
exploration success in South Korea.
MANAGING DIRECTOR APPOINTMENT
We have undergone a leadership change, and with that a sharpened focus on executing our revised exploration
strategy. Key to this has been the recent appointment of Robert Smillie as our new CEO in May, following his shift
from New Zealand to South Korea in October initially in the Exploration Manager role. As Exploration Manager, Rob
demonstrated outstanding leadership of the South Korea team, and together with his extensive exploration and
geoscience experience spanning more than 30 years, brought fresh insights and energy into our exploration program.
The Board considered this made him the natural choice as our new CEO after doing an Australian wide Executive
search.
Having our CEO based in-country provides significant strategic and management leverage for the Company, allowing
the Company to consider more deeply the pathway to exploration success based on assessing on-the-ground realities,
developing relationships with key stakeholders, and pursuing less obvious opportunities. This has involved pausing
exploration on current projects, relinquishing those that didn’t make the grade, and investing more time and
resources in developing a wider exploration portfolio. Doing so will provide us with a stronger foundation of drill
targets to develop and test over a sustainable period. We strongly believe in success through the drill bit, and we
want to ensure that when we drill that we test the most promising projects to maximise the opportunity for
exploration success. We appreciate the patience of our loyal shareholders while we execute this new strategy. Drilling
is planned to commence in Q3 of FY 2023.
SOUTH KOREA EXPLORATION
Key to execution has been bringing additional world-class ex-patriate exploration expertise to complement our South
Korean Team. Our Chief Geologist, Scott Randall, joined us in February 2022 on FIFO from New Zealand, having played
key roles in recent discoveries there with OceanaGold and Santana Minerals. Together with highly experienced field
geology consultant Nick Tate, our team has gained fresh insights into where economic gold deposits may lie. Under
the overall technical oversight of NED Doug Kirwin, and with on-going targeting and field support from ex-Ivanhoe
geologist Craig Panther, I am proud to say that Southern Gold now has one of the best exploration teams anywhere.
In evaluating more than 150 new targets across southern South Korea during the year, our team spent more than 720
man-days in the field, travelled more than 40,000 kilometres, and took more than 1,400 samples, resulting in 71 new
licence applications, bringing our licence holding to 138, covering 387 square kilometres as of the end of the June
2022. This exploration has resulted in encouraging new brownfields and greenfields projects, several containing or
adjacent to historical gold mines. We were fortunate to have world-expert epithermal gold geologist Jeff Hedenquist
visit several of these new projects in May, and his observations reaffirmed our confidence in the direction of our
program and the prospectivity of our projects.
Moving into FY2023, we will continue progressing with project generation exploration of new targets in new regions
and begin “work up” selected projects thorough more detailed field programs. Towards the end of Q2 of FY 2023 the
team will assess and rank all our projects against key criteria and prepare the best for drill testing, currently planned
for after the winter period in Q3 of FY 2023.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
3
BMV INVESTMENT
The Board was very pleased that the sale of our Joint Venture interests in the Gubong and Kochang Projects to former
JV partner Bluebird Merchant Ventures Ltd (BMV) was successfully finalised in December 2021, through the receipt of
200 million shares in BMV.
Under the terms of the Completion Agreement with BMV, SAU sold 50 million shares for $0.9 million in April 2022,
with the remaining 150 million valued at $5.2 million to be held in a trading lock until April 2023. We were also
pleased to see that BMV provided announcements to the London Stock Exchange on 12 and 19 April 2022 (refer
Southern Gold ASX announcement 19 April 2022), in relation to accessing a funding agreement towards the
commencement of mining in South Korea.
FUNDING
Your Company has $4.0m in the bank to pursue our goals and monetisation of our 150M BMV shares after release
from escrow will improve funding in the future.
AUSTRALIAN OPPORTUNITIES
Southern Gold Ltd did desk top research to identify junior Companies in the Gold and Copper sector in Australia for
Joint Venture or Investment opportunities during 2022.While discussions took place with various parties, no suitable
prospect was identified. We will continue to look for opportunistic deals.
BOARD CHANGES
Beejay Kim retired as an Executive Director but will continue as a Non-Executive Director and your Board support his
re-election at the AGM.
Dan Hill retired as Company Secretary during 2022 and the Board would like to thank him for his diligent and
professional performance over 9 years and thank our Financial Controller Ray Ridge for taking over Company
Secretary.
I will retire as Chairman at the conclusion of the AGM and not seek re-election as a director.
It has been a pleasure and honour to be Chairman of Southern Gold. I look forward to remaining a shareholder and
watching from afar the progress of our Company under the leadership of Robert Smillie.
Peter Bamford will take on the role of Chairman after the AGM and I wish him well in the future.
The Board has resolved not to appoint a replacement Director due to the strong skill and experience base of current
Directors and to keep our cost structure at efficient levels.
THANK YOU
I would like to thank Robert Smillie for his energy and enthusiasm following his appointment as Exploration Manager
and then as CEO in May this year.
Our team of Korean based geologists and support staff backed up by Expat Contractors with extensive exploration
skills and experience must be thanked for their performance in difficult COVID times.
I would also like to thank my fellow Directors Peter Bamford, Michael McNeilly, Doug Kirwin, Beejay Kim and Robert
Smillie who contributed to a clear direction for the Company to maximise the chance of finding a major discovery that
will add share value to our Shareholders.
Yours sincerely
Greg Boulton AM
Chairman
Southern Gold Limited – Consolidated Entity // Annual Report 2022
4
Tenement Schedule
The following tenements are held by a 100% owned South Korean subsidiary, Southern Gold Korea Ltd, as at 15
September 2022.
Project Name
Hampyeong
Aphae
Deokon
Dokcheon
Janghwal
Tenement Info
Register Info
Korean
English
Block ID
No.
Type
Date of Granting
나나
나 나
나 나
나 나
나 나
나 나
나 나
Naju
Muan
Jeonju
Jeonju
Jeonju
Yeongam
Haenam
136
200970
Exploration
11/01/2018
99
70
80
60
116
139
201136
Exploration
201041
201040
201218
Exploration
Exploration
Exploration
26/03/2019
31/07/2018
31/07/2018
17/12/2019
201143
Exploration
12/04/2019
201302
Exploration
20/08/2021
Southern Gold Limited – Consolidated Entity // Annual Report 2022
5
Directors’ Report
The directors present their report of Southern Gold Limited (the Company) and its controlled entities (Consolidated
Group or Group) for the financial year ended 30 June 2022.
Principal Activities
The principal continuing activity of the group in the year was the exploration for gold, silver, and other economic
mineral deposits.
Financial Results
The net result of operations for the group for the year was a loss after income tax of ($11,517,522) (2021: profit of
$4,344,043).
Dividends
No dividends were declared in relation to the current financial year ended 30 June 2022, and the directors do not
recommend the payment of dividends in respect of the financial year.
Review of Operations
Southern Gold Limited (“Southern Gold” or the “Company”) is an exploration company focussed on the country of
South Korea. Southern Gold’s 100% owned projects include a portfolio of epithermal gold-silver projects that are at an
earlier stage of definition. Several have demonstrated high grade gold and silver mineralisation from surface sampling.
South Korea – 100% Southern Gold Exploration Projects
Deokon Gold-Silver Project: In July, the company completed diamond drilling at the Golden Surprise Trend, targeted
on high grade surface results from outcrop and a co-incident a Au-Ag-As soil anomaly. Three holes for a total of 462
metres were drilled. Maximum Au and Ag values returned were 0.22g/t Au and 2.7g/t Ag, with a peak intersection of
8.89m @ 0.16g/t Au in the third hole DKDD0013. A lack of significant results was attributed to a lack of vein
development. Despite these disappointing results, the majority of the Deokon Project remains untested by drilling,
and further geological evaluation of the wider Deokon system is required to advance this project. In June 2022, the
Mining Registry Office approved a 3-year extension of duration for the granted Deokon licences that include the
historical Deokon and Shin mine workings.
Project Generation: In August 2021, the company elected to pause exploration on current projects and to shift focus
for the year towards generating new projects to add to the exploration portfolio. This would provide a stronger
foundation for future drill targeting, allowing the highest-ranked targets from a wider portfolio to be drill-tested.
Over the period September-December company staff and geology consultant Craig Panther undertook major data
compilation and targeting study to generate new targets for regional field assessment. Targeting was initially centred
on the Cretaceous-age Haenam Basin which hosts several SAU projects and the only currently operating epithermal
gold-silver mine in South Korea at Gasado Island. Preliminary targeting of areas within the Gyeongyang and Jinan
Basins was also completed.
This targeting study was the most comprehensive undertaken by the company, and was conducted over the winter
period, with the aim of conducting fieldwork over the period February-June when outcrops are well exposed following
post-winter die off of vegetation cover. Digital and paper-based data was obtained from a wide variety of sources and
added these to the existing company database. Data included regional and prospect-scale geological maps, regional
geochemical and geophysical surveys, mineral occurrences, abandoned mine locations, drill hole data, open file
reports and high-resolution topographic data and images.
Sources of these data included the Korea Institute of Geoscience and Mineral Resources (KIGAM), Korea Mine
Rehabilitation and Mineral Resources Corporation (KOMIR), unpublished University theses, and peer-reviewed
research publications. All data was compiled into the company Arc GIS Database which is now highly valuable asset for
targeting and planning future fieldwork and will be constantly added to as new data are generated from field
Southern Gold Limited – Consolidated Entity // Annual Report 2022
6
activities.
By late January more than 150 targets had been generated for initial field assessment. In order to cover as much new
ground as possible with multiple field teams, new expatriate geology staff Scott Randall and Tosi Santosa joined the
Southern Gold team on a full-time basis on FIFO roster. Field geology consultant Nick Tate joined the team for the
period February-June, the optimal time to conduct fieldwork post-winter with “burn-off” of vegetation.
Southern Gold’s exploration team spent over 720 days in the field and sampled 1,474 rocks for analysis, which is the
most comprehensive field program conducted to date by the Company in South Korea. SAU lodged 71 new licence
applications (as at 31 July 2022) increasing its total exploration licences under application and granted to 153,
covering an area of 429sq km.
Promising Brownfields and Greenfields projects have been added to the exploration portfolio, including several close
to, or containing historic gold mines and artisanal workings, including the new Angsan Project adjacent to the historic
Geoje copper-gold mine on Geoje Island. License applications were also lodged on Gasado Island, 4 kilometres north
of the currently operating Gasado gold mine. Limited exploration was also conducted around existing company
projects including Daeam, Dokcheon and Deokon to identify extensions to known mineralised trends and to expand
project footprint across favourable host rocks.
The identification of targets, the process for ranking them for new licence applications and for detailed follow-up
exploration is being driven primarily by the Company’s expanding “on the ground” geologic understanding. This
understanding includes the following important observations:
•
•
•
The highest prospectivity targets are those with large alteration systems and mineralisation in associated
structures or breccias;
It is becoming more apparent that there is a very close association between epithermal systems and rhyolite
and dacite flow dome complexes;
The best intermediate and high sulphidation systems have large volumes of alunite alteration close to
mineralised structures, often present as abandoned mines; and
• We are seeing a clear link between quartz feldspar porphyries and epithermal systems, one of which
•
(Dokcheon West) has intense phyllic alteration and the other (Geoje Island Angsan) has quartz-magnetite
stockworks and molybdenite mineralisation.
The close association between large clay-alunite alteration zones and epithermal mineralisation systems
suggests that hyperspectral satellite image analysis will be a very effective targeting tool to locate areas of
alteration that have not yet been mined.
Starting in Q2 FY23 after the summer wet season ends, our staff will begin to carry out more detailed follow-up work
within selected projects, including programs of geologic mapping, geochemical sampling and/or geophysical survey to
generate targets for drilling, currently scheduled for Q3 2023.
The team will also continue increasing the “search space” and adding to the project pipeline through additional data
compilation, targeting, and follow-up reconnaissance exploration over the autumn period. This will include acquisition
of ASTER (Advanced Spaceborne Thermal Emission and Radiometry) data for targeting areas of clay alteration.
Investing in our Korean staff’s career development and learning continues to be a high priority for the company, with
programs of on-the-job training and mentoring conducted by our expatriate staff. In-house workshops and seminars
were also conducted throughout the year, including a site visit in May by epithermal expert Jeff Hedenquist.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
7
Database Geologist Tosi Santosa working with ARC GIS database
Shares held in BMV
Southern Gold Ltd, through its wholly owned Singaporean subsidiary, International Gold Private Limited (“IGPL”), held
a 50% equity interest in two incorporated joint ventures, Gubong Project Chusik Hoesa and Kochang Project Chusik
Hoesa, in the Republic of Korea. The other 50% being held by London Stock Exchange (“LSE”) listed Bluebird Merchant
Ventures Ltd (BMV).
In mid-2020, BMV elected to acquire the 50% interests held by IGPL when IGPL did not support BMV’s proposed
decision to mine for each project. Pursuant to each of the Joint Venture Agreements, an independent expert set a
value of US$9.945 million for IGP’s interest in the two joint ventures. On 28 June 2021, Southern Gold and BMV
executed a definitive agreement to settle the matter in return for 200 million BMV shares.
50 million BMV shares were received on 28 June 2021, with IGPL receiving the final 150 million BMV shares, during the
year ended 30 June 2022. Subsequently, IGPL agreed to sell 50 million BMV shares to a third party, at a discounted
price of £0.01 per share, to assist in BMV’s negotiation of a funding package to accelerate its move to gold production
in the former joint venture projects. BMV ability to fund the development of its Southern Korean projects is
considered critical to the future value of the Group’s remaining 150 million BMV shares. For further information, refer
to Southern Gold’s ASX announcement 19 April 2022, and BMV’s LSE announcements on 12 and 19 April 2022. The
total consideration of £500,000 (approximately $875,000) was transacted in two equal tranches. Southern Gold
transferred the first tranche of 25 million BMV Shares for £250,000 prior to 30 June 2022, with the second tranche of
25 million BMV Shares for £250,000 completed on 23 September 2022.
The remaining 150 million BMV shares held by IGPL have a mark to market value of £3,150,000 (or $5,370,844), based
on the closing price of BMV shares of 2.1 pence on the London Stock Exchange on 21 September 2022, being the last
practicable date prior to finalising the Annual Financial Report.
COVID19 Impacts
The global COVID 19 pandemic caused some business disruption for the company, during the year with daily case
numbers in South Korea reaching a peak of over 620,000 in mid-March. The main impacts were international travel
and border restrictions, with FIFO expatriate staff and consultants requiring to spend time in quarantine on occasion.
However, his inconvenience was successfully mitigated through the adoption of extended work periods in South Korea
by expatriate staff, and by the Exploration Manager being relocated to South Korea in October.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
8
The health and safety of our staff during the pandemic was the company’s top priority, with standard procedures in
place to minimise the risk of contracting COVID 19, including vaccination of staff, the use of face masks, social
distancing, and ensuring the availability of sanitiser in the office and in vehicles. Travel to major population centres
was restricted, with field work in the more remote and rural areas of the country was able to be conducted safely.
Notwithstanding these measures, given the highly contagious Delta Variant that emerged during the year, most of our
staff contracted the virus. Fortunately, symptoms were negligible, and all staff have fully recovered.
Competent Person’s Statements
The information in this report that relates to Exploration Results has been compiled under the supervision of Mr.
Robert Smillie (AusIMM). Mr Smillie who is an employee of Southern Gold Limited and a member of the Australian
Institute of Geoscientists has sufficient experience which is relevant to the style of mineralisation and type of deposit
under consideration and to the activity he has undertaken to qualify as a Competent Person as defined in the 2012
Edition of the Australasian Code for the Reporting of Mineral Resources and Ore Reserves. Mr Smillie consents to the
inclusion in this report of the matters based on the information in the form and context in which it appears.
Forward-looking statements
Some statements in this release regarding estimates or future events are forward looking statements. These may
include, without limitation:
•
•
•
Estimates of future cash flows, the sensitivity of cash flows to metal prices and foreign exchange rate
movements;
Estimates of future metal production; and
Estimates of the resource base and statements regarding future exploration results.
Such forward looking statements are based on a number of estimates and assumptions made by the Company and its
consultants in light of experience, current conditions and expectations of future developments which the Company
believes are appropriate in the current circumstances. Such statements are expressed in good faith and believed to
have a reasonable basis. However, the estimates are subject to known and unknown risks and uncertainties that
could cause actual results to differ materially from estimated results.
All reasonable efforts have been made to provide accurate information, but the Company does not undertake any
obligation to release publicly any revisions to any “forward-looking statement” to reflect events or circumstances after
the date of this presentation or ASX release, except as may be required under applicable laws. Recipients should
make their own enquiries in relation to any investment decisions from a licensed investment advisor.
Corporate
Finance
During the year ended 30 June 2022, The Company did not raise capital through placing or rights issue.
As at 30 June 2022, the Company has an ending cash balance of $4,560,622, together with the £250,000
(approximately $440,000) due for the sale of the second tranche of 25 million BMV shares (subsequently completed
on 23 September 2022).
The remaining holding of 150 million BMV shares have a mark to market valuation at 30 June 2022 of £3,150,000, or
$5,554,576, based on the closing price of BMV shares of 2.1 pence on the London Stock Exchange on that date.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
9
Changes in State of Affairs
During the financial year there was no significant change in the state of affairs of the Group other than that referred
to in the Review of Operations, or in the financial statements or notes thereto.
Events Subsequent to Reporting Date
The sale of the second tranche of 25 million BMV shares was completed on 23 September 2022 for consideration of
£250,000.
Other than the above, there has not arisen any other matters or circumstances, since the end of the financial year
which significantly affected or could affect the operations of the Group, the results of those operations, or the state of
the Group in future years.
Likely Developments
In August 2021, the Company elected to pause exploration on current projects and shifted focus for the year towards
generating new projects. This new initiative is expected to provide a stronger foundation for future drill targeting in
South Korea on a country wide basis, allowing the highest-ranked targets from a wider portfolio to be drill-tested. The
Company plans to recommence drilling activity in the third quarter of FY22/23.
Environmental Regulation and Performance Statement
Southern Gold’s wholly owned subsidiary in South Korea, Korea Metal Resources (previously Southern Gold Korea),
carries out exploration activities. Exploration activity is principally regulated at the national level by the Ministry of
Trade, Industry and Energy (MOTIE) which in turn manages mining and exploration affairs through the Mine
Registration Office and the Mine Safety Office.
There have been no known environmental breaches attributed to the Group’s exploration activities to date.
Options
At the date of this report, the unissued ordinary shares of Southern Gold Limited under option are as follows:
Issue Date
Date of Expiry
19/10/2020
19/10/2020
19/10/2020
9/09/2021
29/10/2021
27/01/2022
18/10/2022
18/10/2022
18/10/2022
16/09/2025
31/10/2025
10/02/2026
Fair Value at
Grant Date
$
-
$0.04627
$0.05013
$0.02845
$0.03259
$0.02580
Exercise
Price
$
$0.180
$0.180
$0.160
$0.100
$0.120
$0.100
Number
under
Option
42,500,000
2,000,000
1,584,100
1,760,000
3,700,000
400,000
51,944,100
Option holders do not have any rights to participate in any issues of shares or other interests in the Company or any
other entity.
For details of options issued to Directors and Executives as remuneration, refer to the Remuneration Report.
Performance Rights
Ausino Drilling Services Pty Ltd (ADS) holds 10 million performance rights at US$0.11 per right for US$1.1 million. The
performance rights will vest if, and when, ADS provide drilling services, with 25% of the invoices for drilling services to
be paid in Southern Gold shares.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
10
Directors
The following Directors of the Company at any time during the financial year are as set out below:
Greg Boulton AM (Non-Executive Chairman)
Robert Smillie (Managing Director) (Appointed 9 May 2022)
Peter Bamford (Non-Executive Director)
Beejay Kim (Non-Executive Director)
Douglas Kirwin (Non-Executive Director)
Michael McNeilly (Non-Executive Director)
Simon Mitchell (Resigned as Managing Director 29 October 2021)
Details of Directors’ qualifications, experience and special responsibilities of the existing Directors are as follows:
Greg Boulton AM (Non-Executive Chairman) (Member of Audit Committee)
B.A (Accounting), FCA, FCPA, FAICD
Mr Boulton has extensive commercial experience spanning over 30 years as CEO and Non-Executive Director for many
Private and Public companies. He has broad experience in capital raisings, acquisitions and commercial negotiations
and is a Fellow of the Chartered Accountants Australia & New Zealand, CPA Australia and the Australian Institute of
Company Directors.
Mr Boulton is currently on the board of Super SA (Chairman) and other South Australian private companies. Mr
Boulton was previously a Non-Executive Director and Chairman of ASX listed Kogi Iron Limited (retired 15 December
2020) and ASX listed Kangaroo Island Plantation Timbers Ltd (September 2022).
Mr Boulton currently holds 3,778,256 shares and 900,000 options in Southern Gold Limited.
Robert Smillie (Managing Director) (Appointed 9 May 2022)
MBA, MSc, FSEG, MAusIMM
Robert Smillie was appointed Managing Director, effective from 9 May 2022. Mr Smillie has been Southern Gold’s
Exploration Manager in South Korea since 6 September 2021 and has demonstrated outstanding leadership in
administration and team building of our Korean team while being based in South Korea.
Mr Smillie is an experienced management and exploration professional, with 32 years of experience, including
significant epithermal gold exploration and is particularly familiar with Asia and South Korea. Mr Smillie holds a Master
of Business Administration from Victoria University, New Zealand, and a Master of Science from Otago University
majoring in Geology. Mr Smillie’s previous senior roles include exploration and Country Management for companies
such as Ok Tedi Mining in Papua New Guinea, the National Petroleum and Mining Authority in Timor-Leste and Calibre
Mining in Papua New Guinea, the Solomon Islands and Vanuatu and Oceana Gold Ltd at projects in New Zealand and
the Philippines.
Mr Smillie currently holds 500,000 shares and 750,000 options in Southern Gold Limited.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
11
Peter Bamford (Non-Executive Director) (Chair of Audit Committee)
BSc (Eng) Mining, ARSM, MAICD, FAusIMM
Mr Bamford has 40 years’ experience as mining engineer and corporate executive in the mining industry more
recently specialising in gold. Following twelve years of operational roles at Mine Isa Mines and Metana/GMA his
experience includes executive management roles covering merger and acquisitions, feasibility studies, fund raising
and operations and has served as an executive and non-executive director on various ASX-listed companies. His
responsibilities have included development, project oversight and operations for three new successful gold mines in
Australia within the last twenty years. He also served for nine years on the WA Chamber of Minerals and Energy
Executive Council as well as Chair of the Mines Security Service Committee overseeing security within the WA gold
industry.
Mr Bamford currently holds 406,667 shares and 600,000 options in Southern Gold Limited.
Beejay Kim (Non-Executive Director)
BA (Business Administration), MBA
Beejay Kim resigned his Executive role on 30 April 2022 and remains as a Non-Executive Director.
Bong Joo (Beejay) Kim is a professional project manager who has had a long career with Samsung C&T Corporation
and Hyundai Engineering and Construction Company over 30 years. As a senior executive for Samsung C&T, Mr Kim
led projects in several countries and regions including the Middle East, Australia and South East Asia. This includes
more recent positions of Vice President and Regional Representative of Saudi Arabia LLC and Head of MENA Regional
Headquarters in the UAE for Samsung C&T. Mr Kim’s work has been in leading construction of infrastructure in various
countries, including 2 years in Australia where he set up Samsung C&T’s Australian office and was heavily involved in
several project tenders including the successful winning of a major iron ore infrastructure project in Western
Australia. Mr Kim has formal qualifications in Business Administration, including leadership program’s at UC Berkley
and Cornell University. He completed an MBA through Hyundai’s Engineering and Construction company business
school.
Mr Kim currently holds 300,000 shares and 1,000,000 options in Southern Gold Limited.
Douglas Kirwin (Non-Executive Director)
MSc, FSEG, FAIG, FAusIMM
Doug Kirwin is an Australian geologist with over 45 years of international experience. His exploration teams have been
responsible for several well-known mineral discoveries which are now being mined, the most notable being the Hugo
Dummett ore body at the giant Oyu Tolgoi gold copper deposit in Mongolia developed by Rio Tinto. He was executive
vice president of Ivanhoe Mines from 1995 to 2012 during which time Mr Kirwin’s team was responsible for the
epithermal gold-silver discoveries in South Korea (Eunsan, Moisan and Gasado Island, all of which became mines)
among others. Mr Kirwin has been keen to more actively explore South Korea ever since.
Besides Hugo Dummett and the South Korean discoveries, Mr Kirwin’s exploration group was responsible for the
discovery of the Merlin Mo-Re deposit in Australia, the Ulugtau Au project in Kyrgyz Republic and several gold
discoveries such as Hill 217 in China and Kerta, Jelai and Seruyung in Indonesia.
Mr Kirwin is currently an independent consulting geologist. He has an MSc in mineral exploration from James Cook
University where he is an adjunct professor of geology and was President of the Society of Economic Geologists in
2019.
Mr Kirwin currently holds 333,334 shares and 600,000 options in Southern Gold Limited.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
12
Michael McNeilly (Non-Executive Director)
BA (Internal Economics)
Michael McNeilly is CEO, and Director of AIM/ASX dual listed natural resources investing company Metal Tiger Plc. Mr
McNeilly has extensive experience in listed companies and is currently Non-Executive Director of ASX-listed Cobre
Limited. He sits on several private company boards within the Metal Tiger group.
Past board appointments include MOD Resources Ltd (up to acquisition by Sandfire in November 2019), Metal Capital
Ltd (until November 2018), Greatland Gold Plc (until October 2017), Arkle Resources Plc (until November 2019). Mr
McNeilly also has a deep understanding of the equity capital markets having worked at broking house Arden Partners
Plc and Allenby Capital Ltd where he was part of their corporate finance teams during 2011-2015.
Mr McNeilly studied Biology at Imperial College London and has a BA in International Economics at the American
University of Paris. He is fluent in French.
Mr McNeilly currently holds 600,000 options in Southern Gold Limited.
Company Secretary
The following person held the position of Company Secretary during the financial year:
Ray Ridge
BA (Acc), CA, GIA (cert)
Ray Ridge was appointed Company Secretary, effective from 19 May 2022.
With over 20 years accounting experience, Mr Ridge has held senior management positions in finance, compliance
and commerce across a range of industries, including previous appointments as General Manager Commercial &
Operations with the Utilities, Government and Power Business Group of Parsons Brinckerhoff, CFO of the
Merchandise Division of Elders Ltd and Senior Audit Manager at Arthur Andersen. Mr Ridge has recently held, or
currently holds, Company Secretary roles at four other ASX listed companies.
Mr Ridge currently holds 100,000 options in Southern Gold Limited.
Daniel Hill (Resigned as Company Secretary 19 May 2022)
Southern Gold Limited – Consolidated Entity // Annual Report 2022
13
Remuneration Report (audited)
The remuneration policy is designed to align Key Management Personnel objectives with shareholder and business
objectives by providing a fixed remuneration package to Non-executive Directors and time-based remuneration to
Executive Directors. The Board of Southern Gold believes the policy to be appropriate and effective in attracting and
retaining the best Directors and Executives to manage and direct the Group, as well as create goal congruence
between Directors, Executives and shareholders.
The Company’s policy for determining the nature and amounts of emoluments of board members and other Key
Management Personnel of the Company is detailed below.
The Company’s constitution specifies that the total amount of remuneration of Non-Executive Directors shall be fixed
from time to time by a general meeting. The current maximum aggregate cash remuneration of Non-executive
Directors has been set at $300,000 per annum. Directors may apportion any amount up to this maximum amount
amongst the Non-executive Directors as they determine. Directors are also entitled to be paid reasonable travelling,
accommodation and other expenses incurred in performing their duties as Directors. The remuneration of the
Managing Director is determined by the Non-executive Directors and approved by the Board as part of the terms and
conditions of employment which are subject to review from time to time. The remuneration of other executive
officers and employees is determined by the Managing Director subject to the approval of the Board.
Non-executive Director remuneration is by way of fees and statutory superannuation contributions. Directors do not
participate in schemes designed for remuneration of executives and are not provided with retirement benefits.
The Company’s remuneration structure is based on a number of factors including the particular experience and
performance of the individual in meeting key objectives of the Company. The Board is responsible for assessing
relevant employment market conditions and achieving the overall, long term objective of maximising shareholder
value, through the retention of high quality personnel.
The Company has an Employee Share Option Plan approved by shareholders that enables the Board to offer eligible
employees options to acquire ordinary fully paid shares in the Company. Under the terms of the Plan, options to
acquire ordinary fully paid shares may be offered to the Company’s eligible employees at no cost unless otherwise
determined by the Board in accordance with the terms and conditions of the Plan. The objective of the Plan is to align
the interests of employees and shareholders by providing employees of the Company with the opportunity to
participate in the equity of the Company as an incentive to achieve greater success and profitability for the Company
and to maximise the long-term performance of the Company.
The employment conditions of the Managing Director are formalised in a contract of employment. The base salary as
set out in the employment contract is reviewed annually. The Managing Director’s contract may be terminated at any
time by mutual agreement. The Company may terminate the contract without notice in instances of serious
misconduct.
Mr Ridge is not employed by the Company. His services are provided in his capacity as a consultant to act as Company
Secretary of, and provide accounting services to, Southern Gold.
During the financial year there were no remuneration consultants engaged by the Company.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
14
Performance-based Remuneration
The Group currently has no performance-based remuneration component built into Non-executive Director packages.
Mr Smillie was appointed Managing Director on 9 May 2022 with an annual salary of $320,000, inclusive of
superannuation. The Company provides accommodation in South Korea for the Managing Director, together with
health insurance and two return flights to New Zealand per annum. There is no formal relationship between the board
policy for remuneration of Key Management Personnel and the Company’s performance for the last four years.
The Group has one Executive Director, and five Non-executive Directors. Prior to 1 May 2022, there were two
Executive Director positions, and four Non-executive Directors. Executive Directors are paid a salary, while Non-
executive Directors are paid directors’ fees. The Non-executive Directors do not currently participate in any incentive
scheme.
Remuneration packages contain a base salary/fees, together with post employment benefits (superannuation) where
applicable.
Shares issued on exercise of remuneration options
No shares were issued to Directors or other Key Management Personnel as a result of the exercise of remuneration
options during the financial year.
Directors’ and other Key Management Personnel interests in shares and options
Directors’ and other Key Management Personnel relevant interests in shares and options of the Company are
disclosed in section (d) of the Remuneration Report and in Note 4 of the Financial Report.
Shares and Options granted as remuneration
No remuneration shares were issued in the year ended 30 June 2022.
Options were granted to Directors & Key Management Personnel during the year. Options granted and held by
Directors & Key Management Personnel are disclosed in section (c).
All options granted have vested and no options were exercised by Directors & Key Management Personnel in the
financial year.
Remuneration of Directors and Key Management Personnel
This report details the nature and amount of remuneration for each Key Management Person of Southern Gold
Limited.
(a) Directors and Key Management Personnel
The names and positions held by Directors and Key Management Personnel of the Group during or since the end of
the financial year are:
Directors
G C Boulton AM
R Smillie
S Mitchell
P Bamford
D Kirwin
M McNeilly
B Kim
Position
Chairman – Non-Executive
Managing Director – Executive (Appointed 9 May 2022)
Managing Director – Executive (Resigned 29 October 2021)
Director – Non-Executive
Director – Non-Executive
Director – Non-Executive
Director – Non-Executive*
* Previously Executive Director prior to 1 May 2022.
Key Management Personnel
Position
R Ridge
D L Hill
Company Secretary (Appointed 19 May 2022)
Company Secretary (Resigned 19 May 2022)
Southern Gold Limited – Consolidated Entity // Annual Report 2022
15
(b) Remuneration Directors and Key Management Personnel
2022
Short Term Benefits
Primary
Benefits
Directors’
Fees
Salary and
Leave
Cash
Bonus1
Consulting
fees
Share Based
Payments
(options)
Post
Employment
Super
Contribution
Total
Remuneration
as share based
Directors
G C Boulton6
S Mitchell1
R Smillie2,7
P Bamford6
D Kirwin6
M McNeilly6
B Kim3,6
Other KMP
R Ridge4
D L Hill5,8
$
-
$
-
197,796
20,000
$
96,000
-
-
43,636
48,000
48,000
239,138
-
-
-
8,000
227,618
-
-
-
-
-
-
-
-
-
-
-
$
$
23,300
29,331
$
-
$
148,631
-
-
16,800
-
-
-
15,351
7,318
-
11,200
228,996
21,338
19,554
19,554
19,554
32,590
-
2,845
2,634
4,364
-
-
263,110
84,354
67,554
67,554
2,632
270,840
-
-
15,351
10,163
243,636
664,552
20,000
62,769
144,766
20,830
1,156,553
%
20%
0%
8%
23%
29%
29%
12%
0%
28%
13%
1 Resigned 29 October 2021. Short term benefits for the period include a salary of $92,000 for four months of service, $13,796 of annual leave
paid upon cessation of employment, an agreed termination payment of $92,000 and a $20,000 cash bonus. The bonus was the final amount
paid in relation to the 2021 annual bonus which was determined by the Board in July 2021.
2 Appointed as Exploration Manager on 6 September 2021 and appointed Managing Director on 9 May 2022. Remuneration in the above
table for Mr R Smillie includes the period as Exploration Manager and Managing Director, as both are considered KMP roles.
3 Resigned as an Executive on 30 April and remains as a Non-executive Director. Short term benefits for Mr Kim include his Executive salary of
$167,575 through to 30 April 2022, unused annual leave paid of $15,978 and $44,064 severance pay as required by South Korean legislation.
4 Appointed 19 May 2022.
5 Resigned 19 May 2022.
6 Following shareholder approval on 29 October 2021, 3,700,000 unlisted Options were granted to the Directors as follows: 900,000 to Mr
Boulton, 1,000,000 to Mr Kim, and 600,000 each to Messrs Bamford, Kirwin, and McNeilly. The options have an exercise price of $0.12, and
expire on 31 October 2025. These options were valued at $0.03259 per option using the Black-Scholes method.
7 750,000 unlisted options were granted to Mr Smillie on 17 September 2021 under the Company’s Employee Share Option Plan, following his
appointment as Exploration Manager. The options vest immediately, have an exercise price of $0.10, and expire on 16 September 2025. These
options were valued at $0.02845 per option using the Black-Scholes method.
8 100,000 unlisted options were granted under the Company’s Employee Share Option Plan on 17 September 2021 to Mr Hill. The options
vest immediately, have an exercise price of $0.10, and expire on 16 September 2025. These options were valued at $0.02845 per option using
the Black-Scholes method.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
16
2021
Short Term Benefits
Primary
Benefits
Directors’
Fees
Salary and
Leave
Cash
Bonus1
Consulting
fees
Share Based
Payments
(options)
Post
Employment
Super
Contribution
Total
Remuneration
as share based
Directors
G C Boulton
S Mitchell1
D J Turvey2
P Bamford
D Kirwin
M McNeilly
B Kim
Other KMP
D L Hill
$
93,000
$
-
$
-
-
276,000
35,000
17,123
42,466
48,000
46,500
-
-
-
-
-
-
212,364
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
12,535
247,089
488,364
35,000
12,535
$
-
-
-
-
-
-
-
-
-
$
-
$
93,000
29,545
340,545
1,627
4,034
-
-
18,750
46,500
48,000
46,500
3,202
215,566
-
12,535
38,408
821,396
%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1 The annual bonus is dependent on a number of objectives, and is partly paid during the applicable year to the extent any objectives are
clearly met before 30 June, with the remainder determined subsequent to 30 June. The bonus amount included as remuneration for the year
ended 30 June 2021 comprises: 1) a final payment of $15,000, related to the 2020 annual bonus, which was determined by the Board in
August 2020; and 2) an amount of $20,000 paid in November 2020 as the first payment related to the 2021 annual bonus year. Subsequent to
the year ended 30 June 2021, the Board determined a final amount of $20,000 to be paid in relation to the 2021 annual bonus which will be
included as remuneration for the year ended 30 June 2022. The two amounts relating to the 2021 annual bonus, taken together, represent
80% of the maximum 2021 bonus of $50,000.
2 Retired 26 November 2020.
(c) Ordinary Shares and Options Held by Directors and Key Management Personnel
The number of ordinary shares held by Directors and Key Management Personnel in Southern Gold Limited during
the financial year is as follows:
30 June
2022
G C Boulton AM
R Smillie1
S Mitchell2
P Bamford
D Kirwin
M McNeilly
B Kim
R Ridge3
D L Hill4
Balance at
beginning of
year
3,578,256
-
1,000,000
406,667
333,334
-
300,000
-
492,810
6,111,067
Acquired/
(disposed) on
market
200,000
500,000
-
-
-
-
-
-
-
700,000
Participation in
Placement
Balance at
end of year
-
-
-
-
-
-
-
-
-
-
3,778,256
500,000
1,000,000
406,667
333,334
-
300,000
-
492,810
6,811,067
1 Appointed Exploration Manager 6 September 2021 and Managing Director on 9 May 2022. 2 Balance at the date of retirement, 29 October
2021. 3 Appointed 19 May 2022, opening balance as at the date of appointment. 4 Balance as at the date of retirement, 19 May 2022.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
17
The number of unlisted options over ordinary shares held by Directors and Key Management Personnel in Southern
Gold Limited during the year is as follows:
30 June
2022
G C Boulton AM
R Smillie1
S Mitchell2
P Bamford
D Kirwin
D McNeilly
B Kim
R Ridge3
D L Hill4
Balance at
beginning of
year
886,148
-
1,585,001
433,334
566,667
-
700,000
100,000
100,000
Options
granted
Lapsed or
Cancelled
Balance at end
of year
Vested and
exercisable
900,000
750,000
-
600,000
600,000
600,000
(886,148)
-
-
(433,334)
(566,667)
-
900,000
750,000
900,000
750,000
1,585,001
1,585,001
600,000
600,000
600,000
600,000
600,000
600,000
1,000,000
(700,000)
1,000,000
1,000,000
-
-
100,000
(100,000)
100,000
100,000
100,000
100,000
1 Appointed Exploration Manager 6 September 2021 and Managing Director on 9 May 2022. 2 Balance at the date of retirement, 29 October
2021. 3 Appointed 19 May 2022, opening balance as at the date of appointment. 4 Balance as at the date of retirement, 19 May 2022.
4,371,150
4,550,000
(2,686,149)
6,235,001
6,235,001
The above balances of ordinary shares and options as at 30 June 2022, may differ from the holdings disclosed in the
Directors Report, as the Directors Report provides each Directors’ shareholdings as at the date of the Directors report.
(d) Service agreements
Remuneration and other items of employment for the Managing Director, Mr Robert Smillie, are formalised in a
service agreement approved by the Board. The major provisions are as follows:
• Mr Smillie was appointed as Managing Director effective from 9 May 2022 with an annual salary of $320,000,
inclusive of any superannuation. Prior to 9 May 2022, Mr Smillie was employed by the Company as
Exploration Manager.
•
•
•
The Board are currently considering a long term incentive plan for the Managing Director.
Termination without notice in the event that Mr Smillie
is guilty of serious or wilful misconduct; or
fails to remedy a breach of the Agreement within 14 days of receipt of notice to do so.
Termination without cause by either party with the provision of maximum three calendar months’ notice or
by agreement in writing by the parties.
Mr Kim resigned as an Executive effective 31 May 2022. Prior to this, Mr Kim was being paid an Executive Director
annual salary of KRW 180,000,000, and statutory superannuation of KRW 2,713,800. Mr Kim continues as a Non-
executive Director, receiving $4,000 per month.
During the year ended 30 June 2022, the Company agreed with Mr Boulton to additional provide services as acting
CEO, at an hourly rate of $200, whilst the Company was in the process of recruiting a new CEO.
During the year ended 30 June 2022, the Company agreed with Mr Bamford to provide services, over and above
his duties as a Non-executive Director, at an hourly rate of $200.
The Company entered into a service agreement with an entity associated with Mr Ridge on 19 February 2015 to
provide financial services. On 19 May 2022 Mr Ridge was appointed as Company Secretary. The contract is subject
to a one-month termination without cause.
The Company entered into a service agreement with an entity associated with Mr Hill on 30 May 2013 to provide
financial and company secretarial services. The contract is subject to a four-week termination without cause. Mr
Hill resigned on 19 May 2022.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
18
(e) Post-employment/retirement and termination benefits
There were no post-employment retirement and termination benefits paid or payable to Directors or Key
Management Personnel, other than as disclosed elsewhere in the Remuneration Report.
(f) Voting at 2021 AGM
Southern Gold Limited received 88.71% of ‘yes’ votes on its remuneration report for the 2021 financial year. The
Company did not receive any specific feedback at the AGM on its remuneration report.
End of Remuneration Report
Southern Gold Limited – Consolidated Entity // Annual Report 2022
19
Meetings of Directors
The Company held 8 meetings of Directors (including committees of Directors) during the financial year. Attendances
by each Director during the year were as follows:
Director Meetings
Audit Committee Meetings
Number of
Meetings Eligible
to Attend
Number of
Meetings
Attended
Number of
Meetings Eligible
to Attend
Number of
Meetings
Attended
G C Boulton AM
R Smillie1
S Mitchell2
P Bamford
B Kim
D Kirwin
M McNeilly
8
1
4
8
8
8
8
1 Appointed 9 May 2022. 2 Retired 29 October 2021.
8
1
4
8
8
5
7
2
-
-
2
-
-
-
2
-
-
2
-
-
-
Non-audit services
The Board of Directors is satisfied that the provision of the non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of
non-audit services, as set out below, did not compromise the audit independence requirement of the Corporations
Act 2001.
All non-audit services have been reviewed by the Board to ensure they do not adversely affect the integrity and
objectivity of the auditor.
The nature of the services provided do not compromise the general principle relating to auditor independence as set
out in the APES 110 Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical
Standards Board.
Non-audit services paid and/or payable to the external auditors during the year ended 30 June 2022 were $2,800
(2021: $3,000).
Indemnification and insurance of officers
Indemnification
The Company is required to indemnify the Directors and other officers of the Group against any liabilities incurred by
the Directors and officers that may arise from their position as Directors and officers of the Group. No costs were
incurred during the year pursuant to this indemnity.
The Group has entered into deeds of indemnity with each Director whereby, to the extent permitted by the
Corporations Act 2001, the Group agreed to indemnify each Director against loss and liability as an officer of the
Group, including all liability in defending any relevant proceedings.
Insurance Premiums
Since the end of the previous year the Group has paid insurance premiums in respect of Directors’ and Officers’
liability and legal expenses’ insurance contracts.
The terms of the policies prohibit disclosure of details of the amount of insurance cover, the nature thereof and the
premium paid.
Proceedings on behalf of the Company
No person has applied to the Court for leave to bring proceedings on behalf of the Group or to intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all
or part of those proceedings. The Group was not a party to any such proceedings during the year.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
20
Auditor of the Company
The auditor of the Group for the financial year was Grant Thornton Audit Pty Ltd.
Auditor’s Independence Declaration
The auditor’s independence declaration as required by section 307C of the Corporations Act 2001 for the year ended
30 June 2022 is set out immediately following the end of the Directors’ report.
The report of Directors, incorporating the Remuneration Report is signed in accordance with a resolution of the Board
of Directors:
R Smillie
Managing Director
G C Boulton AM
Chairman
Dated at Adelaide, this 26th day of September 2022.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
21
Grant Thornton Audit Pty Ltd
Grant Thornton House
Level 3
170 Frome Street
Adelaide SA 5000
GPO Box 1270
Adelaide SA 5001
T +61 8 8372 6666
Auditor’s Independence Declaration
To the Directors of Southern Gold Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit
of Southern Gold Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief,
there have been:
a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B K Wundersitz
Partner – Audit & Assurance
Adelaide, 26 September 2022
www.grantthornton.com.au
ACN-130 913 594
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389.
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL).
GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member
firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one
another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127
556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards
Legislation.
#8224539v2w
Statement of Profit or Loss and Other Comprehensive Income
for the Year ended 30 June 2022
Interest income
Unrealised foreign exchange gain
Realised foreign exchange loss
Other income
Profit on divestment of joint ventures
Transaction costs (divestment of joint ventures)
Foreign exchange gain on BMV receivable
Loss on realisation of BMV shares received
Loss on sale of BMV shares
Loss on discount to fair value
Impairment expense
Exploration impairment
Exploration expenses
Salaries and wages
Directors fees
Interest expense
Shareholder relations
Other consulting expenses
Other administrative expenses
Depreciation
Share based payments
Profit/(Loss) before income tax
Income tax (expense)/benefit attributable to profit/(loss) from ordinary activities
Net Profit/(Loss) for the year
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translation
Items that may not be reclassified to profit or loss:
Fair value increment on financial assets - FVTOCI
Total comprehensive income
Earnings Per Share
Basic (cents per share) – Profit/(Loss)
Diluted (cents per share) – Profit/(Loss)
Consolidated
2022
$
2,155
2,781
(1,636)
4,524
2021
$
4,463
95,936
-
118,960
-
11,897,661
(2,028)
538,452
(2,992,222)
(815,656)
(481,864)
(2,301,504)
(155,955)
-
-
-
-
-
(1,700,460)
(5,116,975)
(1,695,460)
(800,804)
(245,818)
(3,504)
(176,365)
(168,036)
(379,387)
(116,016)
(184,674)
(464,172)
(858,966)
(268,425)
-
(380,805)
(86,749)
(303,048)
(137,882)
-
(11,517,522)
4,344,043
-
-
(11,517,522)
4,344,043
(111,893)
(130,887)
(1,498,833)
15,437
(13,128,248)
4,228,593
(5.40)
(5.40)
2.29
2.29
Note
2
8a
6
6
12
8
12
10
23
3
13
25
25
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
23
Statement of Financial Position
as at 30 June 2022
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
Held for sale assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Right of use asset
Exploration and evaluation expenditure
Plant and equipment
Investments accounted for using the equity method
Financial assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Lease liability
Liability directly associated with held for sale assets
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
Lease liability
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained losses
TOTAL EQUITY
Note
Consolidated
2022
$
2021
$
5
6
7
8
9
10
11
12
13
14
15
16
8
15
16
17
30
4,560,622
7,999,052
263,210
10,172,827
96,303
922,703
92,122
-
5,842,838
18,264,001
49,350
993,973
188,044
5,554,576
-
6,785,943
123,998
2,644,068
73,372
-
4,006,263
6,847,701
12,628,781
25,111,702
424,390
175,808
50,490
481,864
335,169
167,999
72,306
-
1,132,552
575,474
12,020
-
12,020
1,144,572
56,292
52,153
108,445
683,919
11,484,209
24,427,783
58,011,777
58,011,777
(1,334,411)
896,643
(45,193,157)
(34,480,637)
11,484,209
24,427,783
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
24
Statement of Changes in Equity
for the Year ended 30 June 2022
Issued
Capital
$
Retained
Losses
$
Balance at 30 June 2020
48,510,128
(39,135,943)
Profit or loss
Other comprehensive income
Total comprehensive income
-
-
-
Issue of share capital
10,200,000
Options lapsed/cancelled
Fair value of options issued
Costs associated with the issue of
shares
-
-
(698,351)
4,344,043
-
4,344,043
-
311,263
-
-
Total transactions with owners
9,501,649
311,263
Share-
Based
Payment
Reserve
$
Foreign
Currency
Translation
Reserve
$
Total
$
1,115,411
35,994
10,525,590
-
-
-
-
(311,263)
171,951
-
(139,312)
-
4,344,043
(130,887)
(115,450)
(130,887)
4,228,593
-
-
-
-
-
10,200,000
-
171,951
(698,351)
9,673,600
FVTOCI
Reserve
$
-
-
15,437
15,437
-
-
-
-
-
Balance at 30 June 2021
58,011,777
(34,480,637)
15,437
976,099
(94,893)
24,427,783
Profit or loss
Other comprehensive income
Total comprehensive income
Issue of share capital
Options lapsed/cancelled
Fair value of options issued
Costs associated with the issue of
shares
Total transactions with owners
-
-
-
-
-
-
-
-
(11,517,522)
-
-
(1,498,833)
(11,517,522)
(1,498,833)
-
805,002
-
-
805,002
-
-
-
-
-
-
-
-
(805,002)
184,674
-
(620,328)
-
(11,517,522)
(111,893)
(1,610,726)
(111,893)
(13,128,248)
-
-
-
-
-
-
-
184,674
-
184,674
Balance at 30 June 2022
58,011,777
(45,193,157)
(1,483,396)
355,771
(206,786)
11,484,209
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
25
Statement of Cash Flows
for the Year ended 30 June 2022
Cash flows relating to operating activities
Interest received
Other income
Payments to suppliers and employees
Interest paid
Net operating cash inflows/(outflows) (Note (a))
Cash flows relating to investing activities
Note
Consolidated
2022
$
2,155
4,524
2021
$
2,991
118,960
(3,426,194)
(2,373,357)
(3,504)
(7,342)
(3,423,019)
(2,258,748)
Payments for mining tenements, exploration and evaluation expenditure
(210,171)
(2,077,127)
Loans Provided to Gubong JV Company
Loans Provided to Kochang JV Company
Proceeds from sale of investments
Transaction costs relating to sale of JV
Payments for plant and equipment
Net investing cash inflows/(outflows)
Cash flows relating to financing activities
Proceeds from share issues
Payments for share issue costs
Repayment of borrowings
Repayment of lease liability
Net financing cash inflows/(outflows)
Net increase/(decrease) in cash
Net foreign exchange difference
Cash at beginning of financial year
Cash at end of financial year
-
-
434,394
-
(160,929)
(41,541)
(41,541)
-
(155,956)
(16,556)
63,294
(2,332,721)
-
-
-
(70,313)
(70,313)
(3,430,038)
(8,392)
7,999,052
4,560,622
10,200,000
(526,400)
(750,000)
(68,413)
8,855,187
4,263,718
(1,331)
3,736,665
7,999,052
9(iii)
5
5
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
26
Statement of Cash Flows (Continued)
for the Year ended 30 June 2022
Note (a): Reconciliation of net loss from ordinary activities to net
cash flow from operating activities
Consolidated
2022
$
2021
$
Profit/(Loss) from ordinary activities after income tax
(11,517,522)
4,344,043
Adjustments to reconcile profit before tax to net cash flows
Share based payments
Depreciation
Unrealised foreign exchange gain
Exploration written off
Loss on sale of plant & equipment
Transaction costs relating to sale of JV
Gain on divestment of joint ventures
Loss on sale of BMV shares
Loss on realisation of BMV shares received
Foreign exchange gain on BMV receivable
Realised foreign exchange loss on sale of BMV shares
Loss on discount to fair value
Impairment expense
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in other financial assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Net operating cash flows
184,674
116,016
(2,781)
-
137,882
(95,936)
1,700,460
5,116,975
-
2,028
894
155,955
-
(11,897,661)
815,656
2,992,222
(538,452)
1,636
481,864
2,301,504
-
-
-
-
-
-
(76,099)
(4,735)
150,525
(30,015)
(18,480)
(65,624)
33,519
29,685
(3,423,019)
(2,258,748)
Non-cash Investing and Financing Activities
Gain on divestment of joint ventures (refer Note 8a)
-
(11,897,661)
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
27
Notes to the Financial Statements for the
Financial Year Ended 30 June 2022
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
This financial report includes the consolidated financial statements and notes of Southern Gold Limited and controlled
entities (‘Consolidated Group’ or ‘Group’).
Basis of Preparation
The financial report is a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian
Accounting Standards Board (AASB) and the Corporations Act 2001.
The financial report has been prepared under the assumption that the Group operates on a going concern basis.
The financial report covers the consolidated group of Southern Gold Limited, a listed public company incorporated
and domiciled in Australia.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial
report containing relevant and reliable information about transactions, events and conditions to which they apply.
Compliance with Australian Accounting Standards ensures compliance with International Financial Reporting
Standards. Southern Gold Ltd is a for-profit entity for the purpose of preparing the financial statements.
The following is a summary of the material accounting policies adopted by the Consolidated Group in the preparation
of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
These financial statements have been prepared on an accruals basis and are based on the historical cost convention
where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial
liabilities.
The accounting policies set out below have been consistently applied to all years presented.
Two comparative periods are presented for the statement of financial position when the Group:
•
Applies an accounting policy retrospectively,
• Makes a retrospective restatement of items in its financial statements, or
•
Reclassifies items in the financial statements
The Group has determined that only one comparative period for the statement of financial position was required for
the current reporting period as the application of the new accounting standards have had no material impact on the
previously presented primary financial statements that were presented in the prior year financial statements.
Changes in accounting policies and accounting policies applied for the first time
The accounting policies adopted by the group are consistent with those of the previous financial year.
Adoption of New and Revised Accounting Standards (issued but not yet effective)
At the date of authorisation of the financial statements, the Group has not applied any new and revised Australian
Accounting Standards, Interpretations and amendments that have been issued but are not yet effective, as they will
not have a material impact on the financial statements of the Group.
a. Principles of Consolidation
The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June
2022. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with
the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries
have a reporting date of 30 June.
All transactions and balances between Group companies are eliminated on consolidation, including unrealised
gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales
are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
28
Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are
recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable
b.
Income Tax
The income tax expense / (benefit) for the year comprises current income tax expense / (income) and deferred
income tax expense / (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using
applicable income tax rates enacted at reporting date.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during
the year as well as unused tax losses.
Current and deferred income tax (expense)/benefit is charged or credited directly to equity instead of the profit
and loss when the tax relates to items that are credited or charged directly to equity.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No
deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business
combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or
liability is settled. Deferred tax is credited in the Statement of Profit or Loss and Other Comprehensive Income
except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted
directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available
against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption
that no adverse change will occur in income taxation legislation and the anticipation that the Consolidated Group
will derive sufficient future assessable income to enable the benefit to be realised and comply with the
conditions of deductibility imposed by the law.
Southern Gold Limited and its wholly owned Australian subsidiaries have formed an income tax consolidated
group under the tax consolidation regime. Each entity in the group recognises its own current and deferred tax
liabilities, except for any deferred tax liabilities resulting from unused tax losses and tax credits, which are
immediately assumed by the parent entity. The current tax liability of each group entity is then subsequently
assumed by the parent entity. The group notified the Australian Tax Office that it had formed an income tax
consolidated group to apply from 1 July 2006. The tax consolidated group has entered a tax sharing agreement
whereby each company in the group contributes to the income tax payable in proportion to their contribution to
the net profit before tax of the tax consolidated group.
c. Plant and Equipment
Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated
depreciation and impairment losses.
Plant and equipment
Plant and equipment are measured on a cost basis. The carrying amount of plant and equipment is reviewed
annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable
amount is assessed on the basis of the expected net cash flows that will be received from the asset’s
employment and subsequent disposal. The expected net cash flows have been discounted to their present values
in determining recoverable amounts.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
29
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the
Consolidated Group commencing from the time the asset is held ready for use. Leasehold improvements are
depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the
improvements.
The depreciation rates used for each class of depreciable assets are:
Plant and equipment 10–33%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at reporting date. An
asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and
losses are included in the Statement of Profit or Loss and Other Comprehensive Income.
d. Exploration and Evaluation Expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest.
These costs are only carried forward to the extent that they are expected to be recouped through the successful
development of the area or where activities in the area have not yet reached a stage that permits reasonable
assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the
decision to abandon the area is made.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest
Costs of site restoration are provided from when exploration commences and are included in the costs of that
stage.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and extent of the restoration due to community
expectations and future legislation. Accordingly, costs have been determined on the basis that the restoration
will be completed within one year of abandoning the site.
e. Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or
when the financial asset and substantially all the risks and rewards are transferred. A financial liability is
derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the
transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for
transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified into one of the
following categories:
•
•
•
amortised cost
fair value through profit or loss (FVTPL), or
fair value through other comprehensive income (FVOCI).
The classification is determined by both:
•
the entity’s business model for managing the financial asset, and
Southern Gold Limited – Consolidated Entity // Annual Report 2022
30
•
the contractual cash flow characteristics of the financial asset. All revenue and expenses relating to financial
assets that are recognised in profit or loss are presented within finance costs, finance income or other
financial items, except for impairment of trade receivables which is presented within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVTPL):
•
•
they are held within a business model whose objective is to hold the financial assets and collect its
contractual cash flows, and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is
omitted where the effect of discounting is immaterial.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income (FVOCI) comprise:
•
•
Equity securities which are not held for trading, and which the group has irrevocably elected at initial
recognition to recognise in this category. These are strategic investments and the group considers this
classification to be more relevant.
Debt securities where the contractual cash flows are solely principal and interest and the objective of the
group’s business model is achieved both by collecting contractual cash flows and selling financial assets.
On disposal of these equity investments, any related balance within the FVOCI reserve is reclassified to retained
earnings.
f.
Impairment of Non-Financial Assets
At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been impaired. If such an indication exists, the
recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is
compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is
expensed to the Profit or Loss.
g.
Investments in Associates
Investments in associate companies are recognised in the financial statements by applying the equity method of
accounting. The equity method of accounting recognises the Group’s share of post-acquisition reserves of its
associates.
Where there has been a change recognised directly in an associate’s equity, the Group recognises its share of any
changes and discloses this in the statement of profit of loss and other comprehensive income. The reporting
dates and the associates accounting policies in the associated companies are amended as necessary to conform
with the Group.
h. Held for Sale Assets
Non-current assets classified as held for sale are presented separately and measured at the lower of their
carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell.
However, some held for sale assets such as financial assets or deferred tax assets, continue to be measured in
accordance with the Group’s relevant accounting policy for those assets. Once classified as held for sale, the
assets are not subject to depreciation or amortisation. Any profit or loss arising from the sale of a discontinued
operation or its remeasurement to fair value less costs to sell is presented as part of a single line item, profit or
loss from discontinued operations.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
31
i.
Employee Benefits
Provision is made for the company’s liability for employee benefits arising from services rendered by employees
to report date. Employee benefits that are expected to be settled within one year have been measured at the
amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later
than one year have been measured at the present value of the estimated future cash outflows to be made for
those benefits. The cash flows are discounted using market yields on national government bonds with terms to
maturity that match the expected timing of cash flows.
In determining the liability, consideration is given to employee wage increases and the probability that the
employee may satisfy vesting requirements. Those cash flows are discounted using market yields on high quality
corporate bonds with terms to maturity that match the expected timing of cash flows.
Share based payments
The Company has an Employee Share Option Plan where employees may be provided with options to acquire
shares in the Company. The fair value of the options are measured at grant date and recognised as an expense
over the vesting period with a corresponding increase in equity. The fair value of options is ascertained using the
Black-Scholes pricing model which incorporates all market vesting conditions.
j. Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Onerous provisions are recognised by the Group for its obligation to deliver goods and services under an existing
contract and measuring that obligation to reflect the cost of the goods or services it must deliver.
k. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts.
l.
Income
Interest income is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
m. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of
the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the
statement of financial position are shown inclusive of GST. The net amount of GST recoverable from, or payable
to, the Australian Taxation Office is included as a current asset or liability in the statement of financial position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
n. Trade and other payables
Trade and other payables represent the liability outstanding at the end of the reporting period for goods and
services received by the group during the period which remains unpaid. The balance is recognised as a current
liability with the amount being normally paid within 30 days of recognition of the liability.
o. Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
32
p. Critical Accounting Estimates and Judgements
The Directors evaluate estimates and judgments incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events
and are based on current trends and economic data, obtained both externally and within the Group.
Estimates and judgements – Impairment of Exploration and Evaluation Assets
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may
lead to impairment of exploration and evaluation assets. Where an impairment trigger exists, the recoverable
amount of the asset is determined.
The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be
recoverable or where the activities have not reached a stage which permits a reasonable assessment of the
existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the
Directors are of the continued belief that such expenditure should not be written off since feasibility studies in
such areas have not yet concluded.
Estimates and judgements – Valuation of unlisted options
A key area of judgement, for the year ended 30 June 2022, relates to the calculation of the market value of the
unlisted options issued to Directors and employees. The market value of each option series is assessed using the
Black-Scholes method, and a key assumption in this calculation is the Company’s future share price volatility.
Future volatility was based on the historic daily price movements of the Company’s ASX listed shares for the 48
months immediately prior to the relevant valuation date for each of the option series. For further information in
relation to the options issued, refer to Note 23.
Estimates and judgements – Investment in BMV
As at 30 June 2022, the Group holds an investment in BMV, being 150,000,000 BMV Shares with an initial
carrying value of $7,522,288. This holding represents 24% of the issued capital of BMV, and as such, the Group is
required to equity account for its interest in the financial result of BMV for the period through to 30 June 2022,
under Accounting Standard AASB128 Investments in Associates and Joint Ventures.
At reporting date, the Group assesses all non-financial assets for indicators of impairment. As the fair value of
the BMV Shares are readily observable (being quoted on the London Stock Exchange (LSE)), the Group has
recognised an impairment expense of $1,967,712 calculated by reference to the $5,554,576 fair value of the
150,000,000 BMV Shares at the LSE closing price on 30 June 2022 of £0.0210 and the GBP:AUD exchange rate of
0.5671 on that same date. For further information in relation to the investment in BMV, refer Note 12.
q. Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for bonus elements in ordinary shares during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect and other financing costs associated with dilutive potential ordinary shares
and the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
r. Parent Entity
The financial information of the parent entity, Southern Gold Limited, disclosed at note 27, has been prepared on
the same basis, using the same accounting policies as the consolidated financial statements, other than
investments in controlled entities which are carried at cost, less any provision for impairment.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
33
s. Foreign Currency Transactions and Balances
i) Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are presented in
Australian dollars, which is the parent entity’s functional currency.
ii) Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at
the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate.
Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of
the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date
when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except
where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other
comprehensive income to the extent that the underlying gain or loss is recognised in other comprehensive
income; otherwise, the exchange difference is recognised in profit or loss.
Group companies
The financial results and position of foreign operations, whose functional currency is different from the Group’s
presentation currency, are translated as follows:
•
•
•
assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian
dollars are recognised in other comprehensive income and included in the foreign currency translation reserve in
the statement of financial position. The cumulative amount of these differences is reclassified into profit or loss
in the period in which the operation is disposed of.
t.
Leases
The Company as Lessee
At inception of a contract, the Company assesses if the contract contains or is a lease. If there is a lease present,
a right-of-use asset and a corresponding lease liability are recognised by the Company where the Company is a
lessee. However, all contracts that are classified as short-term leases (ie a lease with a term of 12 months or less)
and leases of low-value assets are recognised as operating expenses on a straight-line basis over the term of the
lease.
Initially the lease liability is measured at the present value of the lease payments still to be paid at the
commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate
cannot be readily determined, the Company uses the incremental borrowing rate.
Lease payments included in the measurement of the lease liability are as follows:
•
•
•
•
•
fixed lease payments less any lease incentives;
variable lease payments that depend on an index or rate, initially measured using the index or rate at the
commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
the exercise price of purchase options, if the lessee is reasonably certain to exercise the options;
lease payments under extension options, if the lessee is reasonably certain to exercise the options; and
• payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to
terminate the lease.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
34
The right-of-use assets comprise the initial measurement of the corresponding lease liability, any lease
payments made at or before the commencement date and any initial direct costs. The subsequent
measurement of the right-of-use assets is at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the
shortest.
Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the
Company anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the
underlying asset.
The Company as Lessor
As the Company has no contracts as a lessor, the provisions of AASB 16 relating accounting for lease contracts
as a lessor are not applicable.
The financial report was authorised for issue on 26th September 2022 by the Board of Directors.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
35
2. OTHER INCOME
Profit/(Loss) from ordinary activities included the following items of Other
income:
Government grants
Other
3.
INCOME TAX EXPENSE
The components of tax benefit comprise:
Research and development tax concession
Tax (expense)/benefit
Income tax (expense)/benefit attributable to loss from ordinary activities
2022
$
2021
$
-
4,524
4,524
112,500
6,460
118,960
-
-
-
-
-
-
a)
The prima facie income tax benefit on pre-tax accounting loss reconciles to the
income tax attributable to operating loss as follows:
Income tax (expense)/benefit at 25% (2021: 26%) of operating loss
2,879,381
(1,129,451)
Tax effect of capital raising costs
Tax effect of Share-based payments expensed
Tax effect of non-assessable income
Tax effect of non-deductible expenses
Timing differences and tax losses not brought to account
Income tax (expense)/ benefit attributable to loss from ordinary activities
b)
Deferred tax assets not brought to account, the benefits of which will only be
realised if the conditions for deductibility set out in Note 1(b) occur
Operating Losses
c)
Income tax losses
Total deferred tax asset arising from carried forward tax losses not recognised as
meeting probable criteria
Gross income tax losses
Capital tax losses
Total tax losses
Tax Losses at 25% (2021: 26%)
-
136,864
46,169
-
-
2,011,418
(2,551,793)
(373,757)
(471,816)
(547,015)
-
-
-
-
24,404,146
22,926,590
11,404,135
11,404,135
35,808,281
34,330,725
8,952,070
8,925,989
A deferred tax asset is only recognised for the carry forward of unused tax losses to the extent that it is
considered probable that future taxable profit will be available against which the unused tax losses can be
utilised.
The taxation benefits of tax losses and timing differences not brought to account will only be obtained if:
•
assessable income is derived of a nature and amount sufficient to enable the benefit from the
deductions to be realised;
•
conditions for deductibility imposed by the law are complied with; and
• no changes in tax legislation adversely affect the realisation of the benefit from the deductions.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
36
4. KEY MANAGEMENT PERSONNEL REMUNERATION
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or
payable to each member of the group’s key management personnel for the year ended 30 June 2022. The totals
of remuneration paid to key management personnel during the year are as follows:
2022
$
2021
$
Short term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
5. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
6. TRADE AND OTHER RECEIVABLES
Trade and other receivables
BMV receivable
Office lease bond
898,957
20,830
92,000
144,766
782,988
38,408
-
-
1,156,553
821,396
4,560,622
7,999,052
4,560,622
7,999,052
31,456
29,773
-
9,976,058
231,754
166,996
263,210
10,172,827
30 June 2021 BMV Receivable
The BMV receivable at 30 June 2021 represented the obligation of Bluebird Merchant Ventures Ltd (BMV) to pay
the Group US$7,500,000 by 26 January 2022 through the issue of a further 150,000,000 BMV shares. The
receivable was part of the consideration for the Group’s divestment of its 50% interest in two joint venture
companies. The receivable was recognised in the Group’s financial statements at the lower of the value of the
US$7,500,000 cash receivable and the fair value of the 150,000,000 shares. Accordingly, the receivable at 30
June 2021 was recognised at AU$9,976,058 being the US$7,500,000 at the AUD:USD exchange rate at 30 June
2021 of $0.7518.
Receipt of BMV Receivable 22 December 2021
BMV chose to settle the liability with the issue of 150,000,000 BMV shares to the Group, received on the 22
December 2021 (refer ASX announcement 21 December 2021).
The market value of the 150,000,000 BMV shares received were recognised at $7,522,288, being the
150,000,000 BMV Shares valued at the closing price of £0.0270 ($0.05) for BMV Shares traded on the LSE on 22
December 2021. The resulting net loss of A$2,453,769 has been disclosed in the Statement of Profit or Loss and
Other Comprehensive Income as follows:
•
$538,452 Foreign exchange gain on BMV receivable being the difference between the AUD value of the
US$7,500,000 receivable of:
-
-
$9,976,058 at 30 June 2021, converted at the USD:AUD exchange rate of 0.7518 applicable at 30
June 2021; and
$10,514,510 at the date of settlement on 22 December 2021, converted at the USD:AUD exchange
rate of 0.7133 applicable at that date; and
•
($2,992,222) Loss on realisation of BMV shares receivable being the difference between:
-
-
$10,514,510 AUD value of the US$7,500,000 cash receivable at the date of settlement on 22
December 2021; and
$7,522,288 market value, at that same date, of the 150,000,000 BMV shares received in lieu of the
cash (refer Note 12 for further details).
Southern Gold Limited – Consolidated Entity // Annual Report 2022
37
Trade and other receivables impairment
Trade and other receivables considered past due and/or impaired is nil (2021: nil). There has been no provision
recognised in relation to the expected credit loss model, based on outstanding balances at balance date.
7. OTHER ASSETS
Current
Prepayments
8. HELD FOR SALE ASSETS
Shares held in BMV
Fair value of asset
Provision for discount to fair value
Contract value
Gubong Joint Venture
Opening balance
Shareholder funding advanced
Disposal
Closing balance
Kochang Joint Venture
Opening balance
Shareholder funding advanced
Disposal
Closing balance
Total closing balance
2022
$
2021
$
96,303
96,303
92,122
92,122
922,703
(481,864)
440,839
-
-
-
-
-
-
-
-
440,839
-
-
-
957,926
41,541
(999,467)
-
889,669
41,541
(931,210)
-
-
As at 30 June 2022
The Group agreed to sell 50,000,000 BMV shares to a third party, at a discounted price of £0.01 per share, to
assist in BMV’s negotiation of a funding package to accelerate its move to gold production in at the former joint
venture projects (as disclosed in Southern Gold’s ASX announcement 19 April 2022, and BMV’s LSE
announcements on 12 and 19 April 2022). The total consideration of £500,000 was transacted in two equal
tranches. The first tranche of 25,000,000 BMV Shares for £250,000 (A$434,394 net of transaction costs) was
completed prior to 30 June 2022, with the second tranche of 25,000,000 BMV Shares for £250,000 (A$440,839)
completed on 23 September 2022. This consideration of A$440,839 is presented above as $922,703 fair market
value of the second tranche of 25,000,000 BMV shares at $0.0368 per share (being based on the LSE closing price
of the BMV shares of £0.0210 on the day prior to execution of the sale agreement on 13 April 2022, at the
exchange rate on that date of 0.5707) less a provision for the contracted price, being a discount to fair value of
$481,864.
Subsequent to the reporting date of 30 June 2022, the sale of the second tranche of 25,000,000 BMV shares was
completed as expected on 23 September 2022 for consideration of £250,000 (refer Note 29).
As at 30 June 2021
Southern Gold Ltd, through its wholly owned Singaporean subsidiary, International Gold Private Limited (“IGPL”),
held a 50% equity interest in two incorporated joint ventures, Gubong Project Chusik Hoesa and Kochang Project
Chusik Hoesa, in the Republic of Korea. The other 50% being held by London Stock Exchange listed BMV. In the
financial year ended 30 June 2020, following a decision by the Southern Gold Board to focus the Company’s
Southern Gold Limited – Consolidated Entity // Annual Report 2022
38
resources on its 100% owned tenements in South Korea, the carrying value of its investments in its 50% owned
joint ventures were reclassified in the Statement of Financial Position from ‘Investments accounted for using the
equity method’ to ‘Held for sale assets’. Similarly, Southern Gold’s 50% share of funding each of the joint
ventures, provided as shareholder loans, were also reclassified in the Statement of Financial Position from
‘Financial Assets’ to ‘Held for sale assets’, as these loans are more in the nature of equity style risk. These joint
venture interests, with a carrying value of $1,930,677, were divested in the prior year ended 30 June 2021,
resulting in a profit on divestment of $11,897,661. Refer Note 8a below for further detail.
8a. PROFIT ON DISPOSAL OF JOINT VENTURES
BMV elected to acquire the 50% interests held by IGPL when IGPL did not support BMV’s proposed decision to
mine for each project in mid-2020 and, under each Joint Venture Agreement, IGPL was deemed to have offered
its interest for sale to BMV at an agreed or expert determined price. The expert determination set a value of
US$9.945 million for IGP’s interest in the two joint ventures.
On 28 June 2021, Southern Gold and BMV executed a definitive agreement (“Completion Agreement”) to settle
the matter. During the prior year ended 30 June 2021, a $11,897,661 profit on the divestment of the Group’s
interest in the two joint venture companies was recognised, being the consideration of $13,870,947 (explained
further below) less the carrying value of the held for sale assets of $1,930,677 (refer Note 8), less the reversal of
$42,609 of the foreign currency translation reserve relating to the previous equity accounting of these
investments. In addition, legal costs of $2,028 (2021: $155,955) were incurred in relation to the negotiation and
execution of the Completion Agreement, and is separately disclosed in the Statement of Profit or Loss.
The consideration of US$10,000,000 (AU$13,870,947), comprised:
•
•
AU$3,990,826 being the value of 50,000,000 LSE quoted BMV Shares received by IGPL on 29 June 2021,
valued at the closing price of £0.0435 (AU$0.0798) for the BMV shares traded on the LSE on 29 June 2021.
AU$9,880,121 being BMV’s obligation to pay to IGPL US$7,500,000 through the issue of a further
150,000,000 BMV shares or BMV may elect to pay some or all of the US$7,500,000 in cash. The
US$7,500,000 proceeds was recognised at the AUD:USD exchange rate of 0.7591 applicable on the date of
executing the Completion Agreement on 28 June 2021.
BMV chose to settle the liability with the issue of 150,000,000 BMV shares to the Group, received on the 22
December 2021 (refer ASX announcement 21 December 2021). Refer Note 6.
9. RIGHT OF USE ASSET
The Group’s Right of use assets comprise the leased offices in Australia and Korea, a building to house
exploration equipment in Korea and accommodation for staff in Korea where this is provided as part of their
remuneration package.
Options to extend or terminate
One of the Company’s leases contains an option to extend. The extension option is only exercisable by the
Company. The extension option is included in the calculation of the lease liability and right to use asset only
to the extent management are reasonably certain to exercise that option.
Variable lease payments
The company does not have any variable lease payments.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
39
(i) AASB 16 related amounts recognised in the Statement of Financial
Position
Leased building
Less: accumulated depreciation
Right of Use Asset
Movements in Carrying Amount
Opening balance
New operating leases
Depreciation expense
FX on opening balance
2022
$
2021
$
145,986
(96,636)
49,350
123,998
-
(71,961)
(2,687)
49,350
150,096
(26,098)
123,998
43,705
147,274
(66,343)
(638)
123,998
(ii) AASB 16 related amounts recognised in the Statement of
Comprehensive Income/(Loss)
Depreciation charge related to right of use asset
Interest expense on lease liabilities
Short term lease expense (included in Other administration expenses)
(71,961)
(3,504)
(33,755)
(66,343)
(1,892)
(11,055)
(iii) Total Full Year cash out flows for leases
(70,313)
(68,413)
10.
EXPLORATION AND EVALUATION EXPENDITURE
Costs carried forward in respect of areas of interest:
Exploration and evaluation phase
993,973
2,644,068
The ultimate recoupment of costs carried forward for exploration and
evaluation phase is dependent on the successful development and
commercial exploitation or sale of respective areas.
(i) Reconciliation
A reconciliation of the carrying amount of exploration and evaluation
phase expenditure is set out below:
Costs brought forward
Net foreign exchange differences
Expenditure incurred during the year1
Impairment expense2
2,644,068
6,139,228
(96,341)
(157,268)
146,706
1,779,083
(1,700,460)
(5,116,975)
993,973
2,644,068
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest.
These costs are only carried forward to the extent that they are expected to be recouped through the
successful development of the area or where activities in the area have not yet reached a stage that permits
reasonable assessment of the existence of economically recoverable reserves.
1.
In the year ended 30 June 2022, the reduced exploration expenditure capitalised reflects a greater focus by
the Group on Project Generation work to identify new tenements and areas of interest that will form the
basis of a targeted pipeline of exploration targets for future exploration drilling.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
40
2. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to
carry forward costs in relation to that area of interest. Accumulated costs in relation to an abandoned
area are written off in full against profit in the period in which the decision to abandon the area is made. In
the year ended 30 June 2022, the Group has recognised an impairment expense of $1,700,460 related to
the Beopseongpo and Neungju tenements, which have been allowed to expire following a review of these
tenements compared to the new exploration priorities identified through the Project Generation work. In
the year ended 30 June 2021, Southern Gold recognised an impairment expense of $5,116,975 relating to
part of the carrying value of tenements in the Jeolla/Hampyeong districts based on the drilling results
during the year and also impaired the full value of the tenements in the Weolyu district that were
relinquished in that year.
11. PLANT AND EQUIPMENT
Plant and equipment at cost
Less: Accumulated depreciation
Opening written down value
Additions
Net foreign currency exchange differences
Disposals
Depreciation
Closing written down value
12.
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Investment in BMV
Total Value of Investment on Acquisition
Impairment of Investment
Expected Value of Investment in BMV
2022
$
2021
$
673,989
526,333
(485,945)
(452,961)
188,044
73,372
73,372
132,134
160,929
(2,202)
-
16,556
(2,885)
(894)
(44,055)
(71,539)
188,044
73,372
7,522,288
(1,967,712)
5,554,576
-
-
-
Equity Accounting
The initial holding of 200,000,000 BMV Shares at 22 December 2021, represented 32% of the issued capital of
BMV at that time. Following the commitment to sell 50,000,000 BMV Shares on 12 April 2022, the remaining
holding of 150,000,000 BMV Shares represents 24% of the issued capital of BMV. With this interest being in
excess of the 20% threshold for the application of equity accounting under Accounting Standard AASB128
Investments in Associates and Joint Ventures, the interest in BMV is disclosed as an investment in an
associate, subject to equity accounting from that date.
However, the Group only has the same access to BMV’s financial and operating information as all other
shareholders of BMV. As such, the Group does not have access to the financial information of BMV through
to 30 June 2022 which means the Group is unable to equity account for its interest in the financial result for
the period through to 30 June 2022, and is unable to disclose the summarised financial information of BMV as
at 30 June 2022, as required under Accounting Standard AASB128 Investments in Associates and Joint
Ventures.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
41
Receipt of 200,000,000 BMV Shares
The Group received 200,000,000 BMV Shares in consideration for the sale of its two joint venture interests to
BMV (refer Note 8a). Final payment of the BMV Shares was received on 22 December 2021. The initial
carrying value of the investment of $10,029,718 comprised:
•
•
$7,522,288 being the fair value of the 150,000,000 BMV shares received on 22 December 2021 valued at
the closing price of £0.0270 (AU$0.05) for BMV Shares traded on the London Stock Exchange on that
date (refer Note 6); and
$2,507,430 being the fair value of the original 50,000,000 BMV Shares, reclassified from Financial assets
on that date (refer Note 13).
Sale of 50,000,000 BMV Shares
The Group subsequently agreed to sell 50,000,000 BMV shares at a discounted rate of £0.01 per share, to
assist in BMV negotiating a funding package to accelerate its move to production. Total sale proceeds were
£500,000 or $876,118, using the exchange rate of 0.5707 at 12 April 2022, being the date prior to executing
the sale agreement. The sale was contracted to occur in two instalments of 25,000,000 BMV Shares, each for
£250,000. The second instalment of £250,000 remains outstanding at 30 June 2022 (refer Note 8). The total
sale proceeds of $876,118 result in a loss of $1,631,312 compared to the carrying value of the 50,000,000
BMV Shares of $2,507,430. The total loss of $1,631,312 is disclosed in the Statement of Profit or Loss as
follows:
-
-
-
$815,656 loss on sale of the first tranche of 25,000,000 shares settled prior to 30 June 2022, being the
difference between carrying value at the date of the agreement of $1,253,715 and sales proceeds of
£250,000 or $438,059 using the exchange rate of 0.5707 at 12 April 2022;
$333,792 impairment expense on revaluation of the remaining 25,000,000 shares to fair value at date of
executing the sale agreement on 13 April 2022, based on the previous day’s closing price of BMV shares
traded on the LSE of £0.0210 and a GBP:AUD exchange rate of 0.5707; and
$481,864 loss on discount to fair value relating to the second tranche of 25,000,000 BMV shares yet to be
completed at 30 June 2022, being the difference of the fair value of these shares at the date of the sale
agreement and the agreed price of £0.01 per share (refer Note 8).
As part of the transaction, the Group agreed to a twelve-month standstill clause on the remaining
150,000,000 shares, which ceases on 11 April 2023.
30 June 2022 value of the investment
An impairment expense of $1,967,712 was recognised against the $7,522,288 carrying value of the remaining
150,000,000 BMV shares. The impairment expense was calculated by reference to the $5,554,576 fair value
of these shares based on the LSE closing price on 30 June 2022 of £0.0210 and the GBP:AUD exchange rate of
0.5671 on that same date.
The total impairment expense of $2,301,504 comprises the $1,967,712 impairment expense on the remaining
150,000,000 BMV Shares held at 30 June 2022 and the $333,792 impairment expense recognised on the
25,000,000 BMV shares on the date of execution of the sale agreement.
Latest value of the investment
At the last practicable date prior to finalising the Annual Financial Report, the Group’s remaining 150,000,000
BMV shares have a mark to market value of £3,150,000 (or $5,370,844), based on the closing price of BMV
shares of £0.0210 on the London Stock Exchange on 21 September 2022. This is $183,732 lower than the
carrying value of $5,554,576, due to the different AUD:GBP exchange rate.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
42
13.
FINANCIAL ASSETS
Investment in BMV (50m shares)
2022
$
2021
$
-
-
4,006,263
4,006,263
The Financial asset balance at 30 June 2021 comprised 50,000,000 BMV Shares received on 29 June 2021 as
the first tranche of the consideration payable by BMV to acquire the Group’s 50% interest in two joint
venture companies. The fair value of the 50,000,000 BMV shares at 30 June 2021 was AU$4,006,263, being
valued at the closing price of BMV shares traded on the LSE at 30 June 2021 of £0.0435 (AU$0.08), translated
to AUD at the AUD:GBP exchange rate of 0.5429 applicable on 30 June 2021.
On the 22 December 2021, a further 150,000,000 BMV shares were issued to the Group, as full settlement of
the outstanding receivable for the Group’s divestment of its interest in its joint venture companies (refer ASX
announcement 21 December 2021 and Notes 6, 8 and 8a for further details). With the resulting balance of
200,000,000 BMV Ordinary Shares at that time representing 32% of the issued capital of BMV, the financial
asset was reclassified to an investment in an associate, subject to equity accounting, from 22 December 2021
(refer Note 12).
Fair value decrement on financial assets – FVTOCI $1,498,833
Immediately prior to reclassification to an equity accounted investment, the initial 50,000,000 BMV Shares
were revalued to a fair value of $2,507,430, being valued at the closing price of £0.0270 ($0.0501) for BMV
Shares traded on the LSE on 22 December 2021. The resulting revaluation decrement of $1,498,833 was
recognised through Other Comprehensive Income, as the Group made an irrevocable election at 30 June
2021 to recognise its initial holding of 50,000,000 BMV shares, as a financial asset fair valued through Other
Comprehensive Income (FVTOCI).
14.
TRADE AND OTHER PAYABLES
Trade payables
Sundry payables and accruals
Amount payable to Directors and Key Management related entities1
2022
$
2021
$
168,766
211,607
44,017
424,390
152,397
164,242
18,530
335,169
1 Payable to Greg Boulton and Associates Pty Ltd (an entity associated with G C Boulton) $9,226 (2021: $8,000).
Payable to Bayfront Nominees Pty Ltd (an entity associated with D L Hill) Nil (2021: $345).
Payable to Simon Mitchell Super Fund SMSF (an entity associated with Simon Mitchell) Nil (2021: $2,185)
Payable to Bamford Superannuation fund (an entity associated with Peter Bamford) $365 (2021: Nil)
Payable to Douglas Kirwin $4,000 (2021: $4,000)
Payable to Michael McNeilly $4,000 (2021: $4,000)
Payable to Beejay Kim $4,000 ($2021: Nil)
Payable to Ray Ridge $ $22,428 ($2021: Nil)
Southern Gold Limited – Consolidated Entity // Annual Report 2022
43
15.
PROVISIONS
The aggregate provisions recognised in and included in the financial
statements is as follows:
Current Employee entitlements provision
Non-Current Employee entitlements provision
Total Employee entitlement provisions
16.
LEASE LIABILITY
Current Lease liability
Non-Current Lease liability
17.
ISSUED CAPITAL
(a) Ordinary Shares
Issued share capital:
2022
$
2021
$
175,808
12,020
187,828
167,999
56,292
224,291
50,490
-
72,306
52,153
50,490
124,459
58,011,777
58,011,777
213,328,756 fully paid ordinary shares (2021: 213,328,756)
Movement in issued shares for the year:
No.
2022
$
No.
2021
$
Balance at beginning of 2020 financial year
213,328,756
58,011,777
128,328,756
48,510,128
Placement of shares (10 Sep 2020)
Placement of shares (18 Sep 2020)
Placement of shares (27 Oct 2020)
Placement of shares (3 Nov 2020)
Net costs associated with the issue of shares
-
-
-
-
-
-
-
-
-
-
27,834,794
3,340,175
3,833,230
459,988
38,762,976
4,651,557
14,569,000
1,748,280
-
(698,351)
Balance at end of financial year
213,328,756
58,011,777
213,328,756
58,011,777
There was no change in ordinary shares on issue in the year ended 30 June 2022.
Shares issued in the prior year ended 30 June 2021
On 3 September 2020, the Southern Gold announced that it had received binding commitments from
sophisticated and institutional investors in respect of a placement of 85,000,000 ordinary shares in the
Company at $0.12 per share to raise $10.2 million. The placement included a 2-year $0.18 option for every
two shares subscribed. The placement was oversubscribed with significant additional demand identified in
Asia. The placement was conducted in two tranches:
•
•
Tranche 1 being 31,668,024 shares, pursuant to available share placement capacity, comprising
27,834,794 issued on 11 September 2020 and 3,833,230 shares issued 18 September 2020; and
Tranche 2 being 53,331,976 shares issued following shareholder approval on 19 October 2020,
comprising 38,762,976 shares issued on 27 October 2020 and 14,569,000 shares issued on 3
November 2020.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
44
The net costs associated with the issue of shares in the year ended 30 June 2021 of $698,351 includes
$171,951 for the assessed fair value of 3,584,100 unlisted options issued on 27 October 2020 as part
consideration to brokers to the placement noted above. The options are exercisable at $0.18 at any time
through to the expiry date of 18 October 2022. The valuation was undertaken using the Black-Scholes
method (refer Note 23).
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled
to one vote per share at shareholders’ meetings.
In the event of winding up of the Company, ordinary shareholders rank after all creditors and are fully
entitled to any proceeds of liquidation.
(b) Options on Issue
At 30 June 2022, there were 52,044,100 unlisted options outstanding (30 June 2021: 63,549,776).
The above options comprise:
•
•
•
7,544,100 options held by employees, directors and service providers. Refer Note 23 for further
detail;
42,500,000 options held by participants in the $10.2m placement completed in the year ended 30
June 2021, as noted above. These options were issued following shareholder approval, on the basis
of 1 option for every 2 shares subscribed and expire 18 October 2022; and
2,000,000 options held by participants in a placement completed 19 October 2019.
(c) Capital Management
The capital of the Group is managed by assessing the financial risks and adjusting the capital structure in
response to changes in these risks and in the market. The responses include the management of dividends
to shareholders and share issues. There have been no changes in the strategy adopted by management to
control the capital during the year.
The amounts managed as capital by the Group for the reporting periods under review are as follows:
Debt
Cash
Net cash (debt)
Equity
Net debt to equity ratio
18. REMUNERATION OF AUDITORS
The auditor of Southern Gold Limited is Grant Thornton Audit Pty Ltd.
Amounts received or due and receivable by Grant Thornton for:
An audit or review of the financial report of the entity and any other entity
of the group
Taxation and other services
2022
$
-
2021
$
-
4,560,622
7,999,052
4,560,622
7,999,052
13,451,920
24,427,783
0%
0%
2022
$
49,147
2,800
51,947
2021
$
44,361
3,000
47,361
Southern Gold Limited – Consolidated Entity // Annual Report 2022
45
19. RELATED PARTY AND KEY MANAGEMENT DISCLOSURES
The terms and conditions of the transactions between related parties are on normal commercial terms and
conditions no more favourable than those available to other parties unless otherwise stated.
a) Equity Interests
Equity Interests in controlled entities
Details of the percentage of ordinary shares held in controlled entities are disclosed in Note 26.
b) Transactions within wholly owned group
The wholly owned group includes:
The ultimate parent entity in the wholly-owned group; and
The wholly-owned controlled entities.
The ultimate parent entity in the wholly owned group is Southern Gold Limited.
During the financial year, Southern Gold Limited provided accounting and administrative services at no
cost to the controlled entities and the advancement of interest free loans.
c) Related party balances
Amounts receivable from and payable to Directors and Key Management Personnel and their related
entities at report date arising from these transactions were as follows:
Current payables
Amounts payable to Directors and Key Management Personnel related
entities
2022
$
44,017
44,017
2021
$
18,619
18,619
There were no amounts receivable from related parties.
d) Remuneration of Key Management Personnel (see summary in Note 4)
20.
JOINT OPERATIONS
The consolidated entity had interests in unincorporated joint operations at 30 June as follows:
Southern Gold (Asia) Joint Venture (SG Asia)
Interest
2022
15%
Interest
2021
15%
Under the terms of the sale of Southern Gold’s former subsidiary, SG Asia, Southern Gold retains a 15% free
carried interest in an unincorporated Joint venture with SG Asia based on selected tenements held by SG Asia
that were re-granted by the Cambodian authorities until the completion of a positive definitive feasibility
study, together with a 2% gross sales royalty on all products sold from the tenements until US$11 million is
received, then reverting to a 1% gross sales royalty.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
46
21.
COMMITMENTS FOR EXPENDITURE AND CONTINGENT LIABILITIES
(a) Exploration Expenditure Commitments
The South Korean tenements have minimum exploration activity requirements, rather than minimum
expenditure requirements, and includes metrics such as meters drilled and number of assays
undertaken.
(b) Service Agreements
Service agreements between the Group and Non-Executive Directors are disclosed in the Remuneration
Report of the Directors Report.
22.
FINANCIAL INSTRUMENTS
Financial Risk Management
The Group’s financial instruments consist mainly of deposits with banks, short-term investments, accounts
receivable and accounts payable.
The totals for each category of financial instruments, measured in accordance with AASB 9 as detailed in Note
1, are as follows:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Financial Liabilities
Trade and other payables
2022
$
2021
$
4,560,622
7,999,052
263,210
10,172,827
-
4,006,263
4,823,832
22,178,142
424,390
335,169
424,390
335,169
(i) Treasury Risk Management
The Board of the Consolidated Group meets on a regular basis. Matters considered at the Board meetings
include currency and interest rate exposure, and treasury management strategies in the context of the
most recent economic conditions and forecasts.
(ii) Financial Risks
The main risks that the Group is exposed to through its financial instruments are liquidity risk, credit risk,
share price risk, exchange rate risk and interest rate risk.
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or
otherwise meeting its obligations related to financial liabilities.
The Consolidated Group manages liquidity risk by monitoring forecast cash flows.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
47
As at 30 June 2022, the Group’s non-derivative financial liabilities have contractual maturities (including
interest payments where applicable) as summarised below:
30 June 2022
Current
Within 6 months 6 to 12 months
Non-current
1 to 5
years
Later than
5years
Borrowings
Trade and other payables
Total
-
424,390
424,390
-
-
-
-
-
-
-
-
-
This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting period
as follows:
30 June 2021
Borrowings
Trade and other payables
Total
Credit risk
Current
Within
6 months 6 to 12 months
-
335,169
335,169
-
-
-
Non-current
1 to 5
years
-
-
-
Later than 5
years
-
-
-
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at report date to
recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as
disclosed in the statement of financial position and notes to the financial statements.
Refer Note 6 for further detail.
No receivables are considered past due and/or impaired at report date.
BMV Share price risk
The Group holds 150,000,000 BMV Shares (refer Note 12). The value of this investment is impacted by
fluctuations in the price of BMV Shares traded on the London Stock Exchange. At 30 June 2022, the
150,000,000 BMV shares are carried at a value of AU$7,522,288.
At 30 June 2022, the 150,000,000 BMV shares had a mark to market value of $5,554,576, based on the closing
price of BMV shares of £0.021 pence on the London Stock Exchange and a GBP:AUD exchange rate of 0.5671 on
that date.
A 10% increase (decrease) in the BMV Share price from £0.021 would increase (decrease) the value of the BMV
Shares held by $555,456, at the 30 June 2022 AUD:GBP exchange rate.
Exchange rate risk - GBP
Further to the above, the 150,000,000 BMV Shares held at 30 June 2022 is also impacted by fluctuations in the
GBP:AUD exchange rate.
As noted above, the mark to market value of the BMV Shares is $5,554,576 as at 30 June 2022. A 10% increase
in the GBP:AUD exchange rate from 0.5671 would decrease the value of the BMV Shares held by $504,962, at a
BMV Share price of £0.021. Conversely, a 10% decrease in the GBP:AUD exchange rate would increase the
value of the BMV Shares held by $617,175.
Exchange rate risk - KRW
The Southern Gold Group incurs expenditure in Korean Won (KRW) in relation to its activities in the Republic of
South Korea, while it raises capital, and holds cash, predominantly in AUD to fund those activities. The KRW
denominated cash expenditure in the year ended 30 June 2022 was KRW 2,444,067,605 or AU$2,803,409
translated at the average KRW:AUD exchange for the year of 871.8. A 10% increase in the KRW:AUD exchange
rate from 871.8 would decrease the AUD required to fund that same KRW denominated expenditure by
Southern Gold Limited – Consolidated Entity // Annual Report 2022
48
$254,855. Conversely, a 10% decrease in the KRW:AUD exchange rate would increase the AUD required to
fund that same KRW denominated expenditure by $311,490.
SAU Share price risk
The Company has not performed a sensitivity analysis relating to its exposure to price risk at reporting date as a
change in share price by 10% is not considered to have a material impact on profit and equity.
Interest rate risk
The Group’s exposure to interest rate risk, being the risk that a financial instrument’s value will fluctuate as a
result of changes in market interest rates, is contained in the following table which details the exposure to
interest rate risk at the reporting date. All other financial assets and liabilities are non-interest bearing.
2022
Financial assets
Cash and deposits
Receivables
Less: Payables
Less: Borrowings
Interest
Bearing
Non-interest
Bearing
Total
Floating
interest rate
Fixed
interest rate
4,560,622
-
4,560,622
0.1%
-
-
-
263,210
263,210
(424,390)
(424,390)
-
-
-
-
-
-
-
-
-
Net financial assets
4,560,622
(161,180)
4,399,442
2021
Financial assets
Cash and deposits
Receivables
Less: Payables
Less: Borrowings
Interest
Bearing
Non-interest
Bearing
Total
Floating
interest rate
Fixed
interest rate
7,999,052
-
7,999,052
0.01%
-
-
-
10,172,827
10,172,827
(335,169)
(335,169)
-
-
-
-
-
-
-
-
-
Net financial assets
7,999,052
9,837,658
17,836,710
Interest rate risk is managed with a mixture of fixed and floating rate cash deposits. At 30 June 2022, none of
group cash deposits are fixed (2021: nil).
The Company has not performed a sensitivity analysis relating to its exposure to interest rate risk at reporting
date as a change in interest rates by 10% is not considered to have a material impact on profit and equity.
(iii) Net fair values
The carrying amount of financial assets and financial liabilities recorded in the financial statements represents
their respective net fair values, determined in accordance with the accounting policies disclosed in Note 1 to
the financial statements.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
49
23.
SHARE BASED PAYMENTS
Shares
No costs have been recognised as a share-based payments expense, relating to shares issued to directors,
employees or service providers, in the year ended 30 June 2022 (2021: Nil).
Options – Directors and Employees
The Group has an ownership-based compensation plan for employees. In accordance with the provisions of
the Employee Share Option Plan, as approved by shareholders at an Annual General Meeting, Directors may
issue options to purchase shares in the Company to employees at an issue price determined by the market
price of ordinary shares at the time the option is granted. No Directors participate in the Employee Share
Option Plan. Options to Directors are separately approved by shareholders prior to being issued.
In accordance with the terms of the Employee Share Option Plan, options vest at grant date and may be
exercised at any time from the date of their issue to the date of their expiry. Share options are not listed,
carry no rights to dividends and no voting rights.
A total of $184,674 was recognised as a share-based payments expense, relating to options issued to
directors and employees, in the year ended 30 June 2022 (2021: Nil). For further details refer to the table
below, footnotes 1, 2 and 3.
The following share-based payment arrangements were in existence at 30 June 2022:
Options – Series
Employee Share Option Plan
Sep-20211
Jan-20222
Director Options
Oct-20213
Brokers
Oct-20204
Oct-20204
No.
Grant Date
Expiry Date
Exercise Price
Fair value at
grant date
1,860,000
17/09/2021
16/09/2025
400,000
11/02/2022
10/02/2026
$0.10
$0.10
$0.0285
$0.0258
3,700,000
2/11/2021
31/10/2025
$0.12
$0.0326
2,000,000
27/10/2020
18/10/2022
1,584,100
27/10/2020
18/10/2022
$0.18
$0.16
$0.0463
$0.0501
1.
2.
3.
1,890,000 unlisted options were granted to employees on 17 September 2021, under the Company’s shareholder approved
Employee Share Option Plan. 750,000 of the options were granted to Mr Smillie as Exploration Manager (prior to his appointment
as Managing Director on 9 May 2022). All options vested immediately and are exercisable at $0.10 at any time through to the
expiry date of 16 September 2025. The $53,771 fair value of the options was calculated, using the Black Scholes valuation method,
using a volatility of 74% and an interest rate of 0.43% (the five-year Australian Government bond rate). 30,000 options lapsed due
to cessation of employment prior to 30 June 2021.
400,000 unlisted options were granted to an employee on 11 February 2022, under the Company’s shareholder approved
Employee Share Option Plan. The options vested immediately and are exercisable at $0.10 at any time through to the expiry date of
10 February 2026. The $10,320 fair value of the options was calculated, using the Black Scholes valuation method, using a volatility
of 74%, an interest rate of 1.470% (the five-year Australian Government bond rate) and an underlying share price the day prior to
Board approval of $0.059.
3,700,000 options were issued to the Directors on 2 November 2021, following shareholder approval on 29 October 2021. The
options vested immediately, and are exercisable at $0.12 at any time through to the expiry date of 31 October 2025. The $120,583
fair value of the options was calculated, using the Black Scholes valuation method, using a volatility of 74%, an interest rate of
1.26% (the five-year Australian Government bond rate) and an underlying share price the day prior to shareholder approval of
$0.074.
4.
3,584,100 unlisted options were granted to underwriters on 27 October 2020, as part of their fee for underwriting the share
placement. The options vested immediately. The $171,951 fair value of the options was calculated, using the Black Scholes
valuation method, using a volatility of 88% and an interest rate of 0.14% (the two-year Australian Government bond rate).
Historical volatility has been used as the basis for determining expected share price volatility as it is assumed
that this is indicative of future movements.
The life of the options is based on the historical exercise patterns, which may not eventuate in the future.
Other than the above, there were no other options granted to Key Management Personnel during the year.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
50
The following reconciles the outstanding share options granted as share based payments at the beginning
and end of the financial year:
Options granted as share based
payments
2022
2021
Number of options
Weighted average
exercise price
$
Balance at beginning of financial year
Granted during the financial year (i)
Exercised during the financial year
Lapsed/cancelled during the financial
year (ii)
Balance at end of the financial year (ii)
9,204,100
5,990,000
-
(5,650,000)
9,544,100
$0.213
$0.112
-
$0.239
$0.134
Number of
options
9,620,000
3,584,100
-
(4,000,000)
9,204,100
Weighted average
exercise price
$
$0.203
$0.171
-
$0.150
$0.213
(i) Options granted
5,990,000 options, relating to share-based payments, were granted in the year ended 30 June 2022
(2021: nil), comprising 2,290,000 issued to employees under the Employee Share Option Plan, and
3,700,000 issued to Directors following shareholder approval.
(ii) Options lapsed
Share based payments relating to 5,650,000 options lapsed during the year ended 30 June 2022.
(iii) Options outstanding at end of the financial year
9,544,100 options, relating to share-based payments, are outstanding at the end of the financial year
and had an average exercise price of $0.134 (2021: $0.213) and a weighted average remaining
contractual life of 798 days (2021: 708 days).
Performance Rights
Ausino Drilling Services Pty Ltd (ADS) holds 10 million performance rights at US$0.11 per right for US$1.1
million. The performance rights will vest if, and when, ADS provide drilling services, with 25% of the invoices
for drilling services to be paid in Southern Gold shares.
24. OPERATING SEGMENTS
Segment Information
Identification of reportable segments
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the
consolidated entity that are regularly reviewed by the chief operating decision maker in order to allocate
resources to the segment and to assess its performance. The Board has concluded that at this time, there are
no separately identifiable operating segments. The Group operates in one industry segment being the
exploration for precious metals and operates in one geographic segment being the Republic of Korea (South
Korea).
Southern Gold Limited – Consolidated Entity // Annual Report 2022
51
25.
EARNINGS PER SHARE
Basic (cents per share) – Profit/(Loss)
(5.40)
2.29
2022
Cents per share
2021
Cents per share
Basic and Dilutive Earnings per share
The earnings and weighted average number of ordinary shares used in the
calculation of basic and diluted earnings per share are as follows:
Net Profit / (Loss) for the year
Earnings used in the calculation of basic and diluted earnings per share agrees
directly to net profit/(loss) in the statement of financial performance.
Weighted average number of ordinary shares – for Basic EPS
Weighted average number of ordinary shares – for Diluted EPS
26.
CONTROLLED ENTITIES CONSOLIDATED
Name of Entity
Parent Entity
Southern Gold Limited
Controlled Entities
Challenger West Holdings Pty Ltd
CMH Resources Pty Ltd
Gawler Arc Holdings Pty Ltd
Southern Mining Pty Ltd
Inferus Resources Pty Ltd 1
New Southern Mining Pty Ltd
International Gold Private Limited
Korea Metal Resources Ltd.2
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
South Korea
$
$
(11,517,522)
4,344,043
No.
No.
213,328,756
189,330,806
213,328,756
189,330,806
Ownership Interest
2022
%
2021
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
1 All shares in Inferus Resources Pty Ltd are held by Southern Mining Pty Ltd.
2 All shares in Korea Metal Resources Ltd are held by International Gold Private Limited. Korea Metal Resources Ltd changed its name
during the year ended 30 June 2022, the previous name being Southern Gold Korea Ltd.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
52
27.
SOUTHERN GOLD LIMITED COMPANY INFORMATION
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Retained earnings
Foreign Currency Translation Reserve
Share based payments reserve
Financial Performance
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income
2022
$
2021
$
4,303,764
7,397,082
11,700,846
7,927,744
16,855,939
24,783,683
183,732
32,907
216,639
278,722
77,180
355,902
11,484,207
24,427,781
58,011,777
58,011,777
(46,883,341)
(34,560,095)
-
-
355,771
976,099
11,484,207
24,427,781
(13,128,248)
4,109,352
-
-
(13,128,248)
4,109,352
Guarantees in relation to the debts of subsidiaries
-
-
28. GOING CONCERN BASIS OF ACCOUNTING
The financial report has been prepared on the basis of a going concern.
The consolidated Group incurred a net loss after tax from continuing operations of $11,517,522 for the year
ended 30 June 2022, and a net cash outflow of $3,359,725 from operating and investing activities. As at 30
June 2022, the consolidated Group has a cash position of $4,560,622, together with $440,839 receivable on
the completion of the sale of the second tranche of 25,000,000 BMV shares (refer Note 8) and a mark to
market value at 30 June 2022 of the remaining 150,000,000 BMV shares held of $5,554,576 (refer Note 12).
The Group believes that it has sufficient liquidity to prepare the financial statements on a going concern
basis. Therefore, the financial statements do not include adjustments relating to the recoverability and
classification of recorded assets amounts, nor to the amounts and classification of liabilities that might be
necessary should the Group not continue as a going concern.
29.
EVENTS SUBSEQUENT TO REPORTING DATE
The sale of the second tranche of 25,000,000 BMV shares was completed on 23 September 2022 for
consideration of £250,000 (refer Note 8).
Other than the above, there has not arisen any other matters or circumstances, since the end of the financial
year which significantly affected or could affect the operations of the Group, the results of those operations,
or the state of the Group in future years.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
53
30. RESERVES
The share-based payments reserve records items recognised as expenses on valuation of options issued to
employees or other service providers.
The foreign currency translation reserve records exchange differences arising on translation of a foreign
controlled subsidiary.
The FVTOCI reserve records the cumulative change in the fair value of financial assets recognised through
Other Comprehensive Income. The financial asset comprised the 50,000,000 shares held in LSE listed BMV at
30 June 2021. The fair value of the investment in BMV was determined based on quoted market prices in an
active market (Level 1). Refer Note 13. At 30 June 2022 the now 150,000,000 BMV Shares held are classified
as an equity accounted investment.
31. REGISTERED OFFICE AND PRINCIPAL OFFICE
The registered and principal office of the Company and its controlled entities is:
10 George St, Stepney, South Australia, 5069
ABN 30 107 424 519
Southern Gold Limited – Consolidated Entity // Annual Report 2022
54
Directors’ Declaration
The Directors of Southern Gold Limited declare that:
a)
the financial statements and notes are in accordance with the Corporations Act 2001, and:
i.)
ii.)
iii.)
give a true and fair view of the financial position as at 30 June 2022 and of the performance for the year
ended on that date of the Consolidated Group; and
comply with Accounting Standards; and
Southern Gold Limited complies with International Financial Reporting Standards as described in Note 1;
and
b)
the Chief Executive Officer and Finance Manager have declared that:
i)
The financial records of the Company for the financial year have been properly maintained in accordance
with s286 of the Corporations Act 2001;
ii) The financial statements and notes for the financial year comply with the Accounting Standards; and
iii) The financial statements and notes for the financial year give a true and fair view;
c)
in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors
Dated at Adelaide this 26th day of September 2022.
R Smillie
Managing Director
G C Boulton AM
Chairman
Southern Gold Limited – Consolidated Entity // Annual Report 2022
55
Independent Auditor’s Report
To the Members of Southern Gold Limited
Report on the audit of the financial report
Qualified Opinion
Grant Thornton Audit Pty Ltd
Grant Thornton House
Level 3
170 Frome Street
Adelaide SA 5000
GPO Box 1270
Adelaide SA 5001
T +61 8 8372 6666
We have audited the financial report of Southern Gold Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2022, the
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, and notes to the
consolidated financial statements, including a summary of significant accounting policies, and the Directors’
declaration.
In our opinion, except for the effects of the matter described below in the Basis for Qualified Opinion section
of our report, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance for
the year ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Qualified opinion
The Group's investment in its associate, Bluebird Merchant Ventures Limited, is carried at $5,554,576 on the
consolidated statement of financial position as at 30 June 2022. The Directors did not gain access to the
books and records of Bluebird Merchant Ventures Limited and, as a result, we were unable to obtain
sufficient appropriate audit evidence to determine whether any adjustments were necessary in respect of the
Group's proportional share of Bluebird Merchant Venture Limited’s income and expenses for the year.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
qualified opinion.
www.grantthornton.com.au
ACN-130 913 594
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389.
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL).
GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member
firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one
another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127
556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards
Legislation.
#8419794v1w
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
Key audit matter
Disposal group - Note 8
The Group entered into a sale agreement on 13 April
2022 to sell 50 million of its shares in Bluebird
Merchant Ventures Limited to be transacted in two
equal tranches. As the second tranche had not
transferred to the buyer at 30 June 2022, the shares
have been classified as a held for sale asset at fair
value of $922,703 and a liability directly associated
with assets classified as held for sale of $481,864 has
been recognised in relation to an onerous contract
provision.
This area is a key audit matter due to the significance
of the transaction and the complexity of applying the
relevant accounting standards, AASB 5 Non-current
Assets Held for Sale and Discontinued Operations
and AASB 137 Provisions, Contingent Liabilities and
Contingent Assets.
Going concern basis of preparation of the
financial statements - Note 28
As described in Note 28 to the financial report, the
financial statements have been prepared on a going
concern basis.
Assessing the appropriateness of the Group’s basis of
preparation for the financial statements was a key
audit matter due to the importance to the financial
statements and the level of judgement required in the
assessing the Group’s forecast cashflows for a period
of at least 12 months from the audit report date.
How our audit addressed the key audit matter
Our procedures included, amongst others:
• obtaining an understanding of the terms of the
agreements relating to the sale of the 50 million shares
and agreeing this to the executed contract;
• evaluating the calculation accounting for each of the
tranches during the year, agreeing inputs to supporting
documentation and evaluating for compliance with
AASB 5 and AASB 137; and
• assessing the adequacy of the relevant financial
disclosure.
Our procedures included, amongst others:
• ensuring the period covered by the Group’s going
concern assessment is at least 12 months from the date
of our auditor’s report and all relevant information based
on our knowledge of the Group as a result of the audit
has been included in the assessment;
• enquiring of management and the Board of Directors as
to their knowledge of events or conditions that may cast
significant doubt on the Group’s ability to continue as a
going concern;
• assessing the forecast cashflow assumptions based on
historical results and cashflow expenditure initiatives
undertaken;
• obtaining written representation from management and
the Board of Directors regarding their plans for future
action and the feasibility of these plans; and
• assessing the adequacy of the Group’s going concern
basis of preparation disclosures for the financial
statements for consistency with Australian Accounting
Standards
#8419794v1
Grant Thornton Australia Limited 2
Key audit matter
How our audit addressed the key audit matter
Exploration and evaluation assets - Note 10
At 30 June 2022 the carrying value of exploration and
evaluation assets was $993,973.
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group is required
to assess at each reporting date if there are any triggers
for impairment which may suggest the carrying value is
in excess of the recoverable value.
The process undertaken by management to assess
whether there are any impairment triggers in each area
of interest involves an element of management
judgement.
This area is a key audit matter due to the significant
judgement involved in determining the existence of
impairment triggers.
Our procedures included, amongst others:
• obtaining an understanding of management’s
processes and internal controls to evaluate
impairment triggers in each area of interest;
• obtaining management’s reconciliation of capitalised
exploration and evaluation expenditure and agreeing
to the general ledger;
• evaluating management’s area of interest
considerations against AASB 6;
• evaluating management’s assessment of trigger
events prepared in accordance with AASB 6
including;
−
−
tracing projects to statutory registers, exploration
licenses and third party confirmations to
determine whether a right of tenure existed;
inquiries of management regarding their intentions
to carry out exploration and evaluation activity in
the relevant exploration area, including review of
management’s budgeted expenditure;
− understanding whether any data exists to suggest
that the carrying value of these exploration and
evaluation assets are unlikely to be recovered
through development or sale;
• assessing the accuracy of impairment recorded for
the year as it pertained to exploration interests;
• evaluating the competence, capabilities and
objectivity of management’s experts in the evaluation
of potential impairment triggers; and
• assessing the appropriateness of the related financial
statement disclosures.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and our
auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
#8419794v1
Grant Thornton Australia Limited 3
Responsibilities of the Directors’ for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the Directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
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_2020.pdf. This
description forms part of our auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in the Directors’ report for the year ended 30 June 2022.
In our opinion, the Remuneration Report of Southern Gold Limited, for the year ended 30 June 2022 complies
with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B K Wundersitz
Partner – Audit & Assurance
Adelaide, 26 September 2022
#8419794v1
Grant Thornton Australia Limited 4
Shareholders Information
Shareholder Information
The shareholder information set out below was applicable as at 29 August 2022.
1.
Substantial Equity Holders
There following individual shareholders have a relevant interest of 5% or more in the total ordinary shares on issues as
at 29 August 2022, as disclosed in the most recent substantial shareholder notices.
Name of Shareholders
METAL TIGER PLC
ILWELLA PTY LTD
PS SUPER NOM PL
2
Number of Shareholders
Date of
Notification
Notified Number
of Shares Held
Notified Percentage
of Shares on Issue
08/06/21
08/06/21
21/07/20
40,794,000
31,760,679
10,355,003
19.12
14.89
8.07
The number of Ordinary Shares on issue at 29 August 2022 is 213,328,756 held by 1,409 shareholders.
3.
Distribution of Equity Securities
Ordinary Shares
Distribution of holdings:
1,000
-
1
5,000
-
1,001
10,000
-
5,001
100,000
-
10,001
and over
-
100,001
Number of Holders
135
367
237
514
156
1,409
Number of holders of less than a marketable parcel of $500
823
Unlisted Options (various exercise prices and expiry dates)
Distribution of holdings:
1,000
-
1
5,000
-
1,001
10,000
-
5,001
100,000
-
10,001
and over
-
100,001
Number of Holders
-
-
-
23
49
72
Southern Gold Limited – Consolidated Entity // Annual Report 2022
60
4.
Twenty Largest Shareholders
The names of the twenty largest holders of fully paid ordinary shares comprise:
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
METAL TIGER PLC
PS SUPER NOMINEE PTY LTD
VALBONNE II
DR COLIN ROSE
POTEZNA GROMADKA LTD
SCINTILLA STRATEGIC INVESTMENTS LIMITED
BNP PARIBAS NOMS PTY LTD
G BOULTON PTY LTD
SUPER SECRET PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
PS SUPER NOMINEES PTY LTD
1
2
3
4
5
6
7
8
9
10
11
12
13 MR ERIC GUERLAIN
14
DR LEON EUGENE PRETORIUS
15
CAZNA AUSTRALIA PTY LTD
16 MR WILLIAM RICHARD BROWN
17
18 WEYBRIDGE PTY LTD
19 H & A EGGER PTY LTD
20 MRS LUYE LI
CITICORP NOMINEES PTY LIMITED
Number
Held
47,901,057
40,794,000
12,464,613
7,318,970
6,320,273
5,904,185
5,786,274
4,152,879
3,778,256
2,855,588
2,643,227
2,500,000
2,020,050
1,760,000
1,686,038
1,600,000
1,448,247
1,361,867
1,335,000
1,238,085
154,868,609
Percentage
of Issued
Shares
22.45
19.12
5.84
3.43
2.96
2.77
2.71
1.95
1.77
1.34
1.24
1.17
0.95
0.83
0.79
0.75
0.68
0.64
0.63
0.58
72.60
5.
Unquoted Equity Securities
Class:
Number on issue:
Number of holders:
Unlisted Options (various exercise prices and expiry dates)
51,944,100
72
There are no option holders with greater than 20% of options on issue.
Class:
Number on issue:
Number of holders:
Performance Rights
10,000,000
1
Ausino Drilling Services Pty Ltd (ADS) are contracted to provide drilling services into South Korea to the value of
US$4.4 million. ADS holds 10 million performance rights at US$0.11 per right for US$1.1 million. The performance
rights will vest as ADS provides the drilling services, with 25% of the invoices for drilling services provided to be paid in
Southern Gold shares.
Southern Gold Limited – Consolidated Entity // Annual Report 2022
61
southerngold.com.au
Southern Gold Ltd.
ACN 107 424 519