2019
Annual Report
For personal use only
Theta Gold Mines Limited
Content
Corporate Directory
Chairman’s Letter
Review of Operations
Ore Reserve and Mineral Resource Statement
Mining Rights and Applications for Mining Rights
Corporate Governance Statement
Directors’ Report
Remuneration Report
Directors’ Declaration
Auditor Independence Declaration
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Auditor’s Report
Shareholders Information
2
3
4
15
18
19
24
34
40
41
42
43
44
46
47
83
89
1For personal use only
Theta Gold Mines Limited
Corporate Directory
Non-Executive Chairman
DIRECTORS
Charles William Guy
Robert Peter Thomson Managing Director
Bill Richie Yang
Finn Stuart Behnken
Yang (Simon) Liu
Guyang (Brett) Tang
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
COMPANY SECRETARY
Chin Haw Lim
AUDITOR
Ernst & Young
200 George Street
Sydney NSW 2000
Australia
PRINCIPAL OFFICE
Level 32, 101 Miller Street
North Sydney NSW 2060
Australia
Tel: + 61 2 8912 2126
Email: info@thetagoldmines.com
SHARE REGISTRY
Boardroom Pty Limited
Grosvenor Place
Level 12, 225 George Street
Sydney NSW 2000
Australia
Tel: 1300 737 760 (within Australia)
+61 2 9290 9600 (outside Australia)
Fax: +61 2 9290 9655
STOCK EXCHANGE LISTING
ASX: TGM, TGMO
WEBSITE
www.thetagoldmines.com
AUSTRALIAN BUSINESS NUMBER
30 131 758 177
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Theta Gold Mines Limited
Chairman’s Letter
Dear Fellow Shareholders
On behalf of the Board of Directors, I am pleased to present the 2019 Annual Report for Theta Gold Mines
Limited (ASX: TGM) (the Company). During the last twelve months, the Company has concluded a large scale
drill program resulting in our global resource base increasing to over 6Moz gold. Furthermore, a positive
scoping study and Feasibility Study at the Theta Project was delivered in May 2019 and this is a historical
achievement for the Company, the feasibility study also resulted in a maiden mining reserve statement being
issued.
The market capitalisation of the Company increased to over $65M during the year, reflecting the strong project
economics of the starter Theta Project Feasibility Study. It also reflects a steady re-positioning and transition of
the Company from an explorer into a gold producer.
Dedicated, disciplined and systematic approach coupled with modern exploration techniques of this large
goldfield (620km2) has resulted in a growing resource base and the potential to establish a profitable gold
miner. This approach has furthermore allowed our exploration team to add Indicated gold ounces to our
resource statement at a cost of about US$12 per ounce, and when measured against a global backdrop of ever
increasing discovery costs this is a formidable achievement (the world average cost per ounce, based on a 3
year rolling average, of gold found is estimated to be US$45 in 2017)1. The growth of the Company’s Indicated
resource base have predominantly come from the shallow open cut starter Theta Project, where the average
depth of the drill holes on all the pits is approximately 46m.
The starter Theta Project Feasibility Study was designed for two reasons : firstly a proof of concept showing
that shallow open-cut mining was economically viable in this goldfield and secondly, it showed the market and
investors how the Company might quickly develop into a producer by leveraging off existing infrastructure
(roads, permitted tailing dams capacity (2.5 Mt), water, electricity, buildings and permitted gold plant area).
More importantly, the starter Theta Project Feasibility Study lays the foundation for further investment and
development to grow to scale up operations in order to unlock the value for shareholders of the whole 6 Moz
gold resource. A very conservative gold price of US$1,257/oz was used in the starter feasibility study model
compared to the current increasing gold price trend. The starter feasibility demonstrates that the Theta Project
should produce gold in the bottom quartile of the South African cost curve (AISC of US$764/oz), that the
Project provides a good profit margin of 39% and that the Project delivers large amounts of free cash flow
(EBITDA of US$100M). The Board now has the confidence to optimise the Theta Project as it moves through
the development and permitting stages towards production.
With the Company having delivered on and increased resource base, the Theta Project Feasibility Study and
the accompanying market capitalisation increase, the board is now focused on the financing and push towards
development of the Theta Project which will include the permitting, financing, further exploration of the Theta
Hills south extension and Iota and finally ensuring scalability of the Theta Project towards a production target of
100 Kozpa.
We appreciate the continued support from our shareholders over the last twelve months, and we welcome new
shareholders to the share register. The Company looks forward to continuing to deliver good news and positive
updates for shareholders in the new year.
Thank you for your continued support.
Charles Guy
Chairman
27 September 2019
1 Source: MinEx Consulting - Presentation to 11th Fennoscandian Exploration and Mining Conference
31 October 2017, Levi, Finland
3For personal use only
Theta Gold Mines Limited
Review of Operations
OVERVIEW
Theta Gold Mines Limited (“Company”) is an ASX-listed gold exploration and development company, with a
vision of being a low-cost South African gold producer in the near term. The Company has a large tenement
holding of 62,000 hectares (620km2) in the historic Sabie-Pilgrim’s Rest gold mining region in Mpumalanga
Province, South Africa.
The Company’s core project (the Theta Project) is located next to the historic gold mining town of Pilgrim’s
Rest, in Mpumalanga Province, some 370 km northeast of Johannesburg or 95km north of Nelspruit (Capital
City of Mpumalanga Province).
The Company has completed a detailed feasibility study on the Theta Project and is in the process of amending
the approved Environmental Authorisation to include open pit mining on the existing mining licences held. The
Company aims to build a solid production platform to over 100Kozpa based primarily around shallow, open-cut
or adit-entry hard rock mining sources. Theta Gold Mines has access to over 43 historical mines and prospect
areas that can be accessed and explored, with over 6.7Moz of historical production recorded.
The Company conducted extensive drilling during the year and has added to its JORC 2012 mineral resource
inventory which now stands at over 6Moz gold.
Project Highlights
Positive feasibility study for open-cut Theta Project
JORC Resource of over 6.0Moz Au (44.8Mt @ 4.18g/t Au)
Open-cut resources of 1.3Moz (13.08Mt @ 3.12g/t Au)
Maiden ore reserve declared
Corporate Highlights
Change of name to Theta Gold Mines Limited
Consolidation of share capital (10:1 ratio)
Appointment of Mr Charles Guy as Company Chairman
Appointment of South Africa-based director, Mr Finn Behnken
STARTER THETA PROJECT
During the second half of calendar 2018, the Company conducted a scoping study into an open-cut
development at the Theta Hill and Columbia Hill mine areas (together the “Theta Project”), targeting a low-
capital and low operating cost project. The study results, released in October 2018, confirm the potential for an
open-cut operation at the Theta Project.
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Theta Gold Mines Limited
Figure 1: Location of Theta Project
Based on the positive findings of the scoping study released on 15 October 2018, the Company proceeded with
a feasibility study which was completed and the results released in May 2019. The study confirmed the
technical feasibility and economic viability of the Theta Project that will make use of modern bulk open pit gold
mining methods which will be deployed for the first time in this historic goldfield. The feasibility study assumed
that a new CIL Plant will be constructed that will process approximately 500,000 tonnes of ore per annum (the
throughput being restricted by the existing Tailings Storage Facility capacity of 2.5 Mt), the project is estimated
to produce 200,905oz of gold (inclusive of 13,109oz from Inferred resources) over a 5 year period at a low All-
In-Sustaining-Cost of US$764/oz. The project is forecast to generate free cashflow of US$65.7 million after
development cost estimated at US$34.3 million (Peak funding requirement of US$29.2 million). Furthermore it
became evident that the Theta Project is likely to be a smaller starter project for increased mining activities in
the area, and management and the directors believe that further extension drilling at Iota and on Theta Hill
South will result in significant expansion potential for mining and production activities.
The economics for the starter Theta Project benefits from the open-cut mining potential of the geology, near
surface shallow flat laying horizontal reef systems, high grade oxide ore, host rock sediments and close
proximity of the operations to the existing approved metallurgical process plant. The reef systems, which
consists of up to 4 opencut mineable reefs, are flat dipping between 2-7 degrees horizontal and the high grade
gold reefs are oxidised which leads to high recoveries. In addition, the host sediments are generally extremely
fractured leading to reduced rock strength and reduced mining costs.
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Theta Gold Mines Limited
Figure 2: Theta Project- Oxides drill core extremely fractured
Borehole
ID
Sample
No.
From
(m)
To
(m)
Width
(m)
DDBH21
S0792
33.10
34.04
DDBH21
S0795
34.72
35.15
0.94
0.43
Estimated
Core
Recovery
37%
Au
g/t
134.00
79%
9.15
Significantly, the feasibility study will act as a proof of concept that modern open cut mining is viable in a region
that has historically been operated as an underground goldfield. Success at the Theta Project can potentially
be replicated across the entire goldfield.
The table below summarises the key findings of the feasibility study.
Table 1 – Starter Theta Project Feasibility Study Results
Key Results
Gold recovered (Life of Mine)
Total Capital
Peak Funding Requirement
Payback Period
Post-Tax NPV5%
Post Tax IRR
Life of Mine (LoM)
Construction Period
Unit
oz
USD Millions
USD Millions
Years
USD Millions
%
Years
Months
200,905
34.3
29.2
1.2
49.6
65.1
5
9
Processing Rate (design rate)
Tons per year
500,000
Strip ratio
EBITDA over LoM
Project Free Cashflow
All In Sustaining Costs
waste (t) : ore (t)
USD Millions
USD Millions
USD per oz
13.4
99.6
65.7
764
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Theta Gold Mines Limited
Figure 3: Theta Project Feasibility Study – Cashflow
Theta Project open-cut upside
Considerable potential exists to extend the Theta Project mine life.
The Theta Project (open cut) Mineral Resource inventory is 880 Koz (10.1 Mt @ 2.7g/t Au). Theta’s open-cut
resource included in the feasibility mine plan to date represents only 57% of Theta’s current open-cut Indicated
Resources
The Ore Reserve estimated for the Theta Project occur in the Iota section of Columbia Hill and an estimated
35% portion of the Theta Hill and Browns Hill deposits within an area bounded by Mining Right 83 (“MR83”).
The remainder of the Theta Hill and Browns Hill deposits extend to the south and into Mining Right 341
(“MR341”) (Figure 4).
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Theta Gold Mines Limited
Figure 4: Current Drill Hole Location Plan
Optimised gold plant layout
The Company has also completed internal engineering studies to maximize use of the existing permitted plant
footprint. The new metallurgical plant layout position will create the flexibility to materially increase the
Company’s gold production profile above that which was defined in the feasibility study. This study was
undertaken in terms of the Company’s strategy of achieving a production target of 100,000 ounces per annum.
The study was based on a three-phase expansion as follows –
Phase 1: 500,000 tpa Open Cut Oxide CIL Plant (Theta Project Feasibility Study Design May 2019)
Phase 2: Permitted plant space to expand Open Cut Oxide CIL Plant to 1 Mtpa
Phase 3: Permitted Plant space available for Underground Ore process circuit
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Theta Gold Mines Limited
Figure 5: Plant Layout Showing Expansion Opportunities
Yellow/Orange: Phase 1 (Feasibility Study) – 500,000 tpa
Green: Phase 2 Expansion to 1,000,000 tpa+
Red: Phase 3 Expansion to ~1,500,000 tpa or more
The study explored potential future plant expansion possibilities that –
a) makes use of TGME’s large footprint of permitted plant area to include areas not utilised in the Feasibility
Study of May 2019;
b)
the plant’s design and spatial layout for Phase 1 is flexible enough to allow for the installation of additional
process circuits to expand the plant to Phase 2 and Phase 3.
The proposed new plant will be built with minor design alterations that allow for scaling up to these potential
production profiles. This approach will allow the Company to more than double the production profile in future
with minimal disturbance to gold production at the Theta Project.
RESOURCES AND RESERVES
An updated mineral resource estimate was released in May 2019. This follows extensive drilling campaigns on
the Theta Project area, culminating in the Theta Project open-cut resource of 10.1Mt @ 2.7g/t Au for 880K oz
gold. The Company’s total mineral resource is now estimated at over 6Moz gold (44.8Mt @ 4.18g/t Au) across
several locations and projects.
A maiden ore reserve for the Theta Project, albeit small, was also released for the first time. The ore reserve is
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Theta Gold Mines Limited
estimated at 2.31 Mt @ 2.76 g/t Au at a 0.4 g/t Au cut‐off for 205,010 oz gold.
An Ore Reserve and Mineral Resource Statement is set out on pages 15 and 16.
RIETFONTEIN AND BETA
Theta Gold Mines has access to over 43 historical mines and prospect areas that can be accessed and
explored. These mines have historically been developed as underground operations, producing high-grade
ore. The Company has completed a scoping study on two potential underground mines, namely Rietfontein
and Beta.
The Rietfontein mine is located in the town of Sabie while the Beta mine is located immediately adjacent to the
approved processing plant and next to the town of Pilgrim’s Rest. Because of management’s focus on the
Theta Project, no substantive work was carried out on these two historical mines during the reporting period.
The Company however continues to naturally decant the water from the lower workings of the Rietfontein mine
with the intention of opening access on four level of the mine in order to commence with further investigative
work on the resource. This work includes sampling of the old faces as well as taking samples for metallurgical
test work.
As the Company is able to dewater the mine to a point where it can access the workings above four level, it will
investigate the options of completing further exploration activities to test for various extensions, including the
possibility of underground resource definition drilling.
Besides the natural decanting of the mine, all other planned works are funding dependant and will be carefully
considered by the Board before progressing.
ENVIRONMENTAL AND LICENSING
The Company continues to keep all the Mining Rights in good standing by ensuring that the various licence
conditions continue to be met. Regulatory permitting is divided into two main areas of Environmental and
Regulatory.
The Company continues to do the various environmental monitoring and reporting required for the rights and
receives regular visits from the various government departments to ensure that what is being reported is
observed in the field. Over the years the Company has built up a good rapport with the various departments
and the relationships remain sound.
From a regulatory perspective the Company’s reporting remains up to date.
A consolidation and conversion of the Company’s various prospecting rights into two new mining right
applications commenced in December 2016. The Company met all of its statutory and other timelines for these
applications however, the Mpumalanga branch of the Department of Mineral Resources and Energy was
closed for a period of time due to internal administrative issues and the finalisation of several applications have
been delayed.
During the closure period the DMRE placed additional resources in the branch to deal with the large backlog of
applications and this included the Company’s two mining right applications. The Company is working closely
with the DMRE to finalise these applications which includes ensuring that all of the farm portions are consistent
from application through to final documents for execution. The timing of the finalisation of this review process is
unknown however the Company expects to have it resolved by the fourth quarter of 2019.
The two mining right applications include a consolidation and conversion of three prospecting rights in the
Pilgrim’s Rest and Sabie areas and the applications have been kept separate to provide a geographical
separation. Upon finalisation of this process the whole geographical area of the Company’s rights will be
covered by several mining rights.
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Theta Gold Mines Limited
The Company has also commenced with an environmental authorisation amendment process to its executed
Mining Right MR83. The purpose of this amendment application is expanding the approved underground
mining to now include mining by way of open cut. The Company has completed the first phase of its Public
Participation Process, all the required specialist studies, and is currently drafting the Environmental Impact
Report for the next phase of public participation in the fourth quarter of 2019.
COMMUNITY RELATIONS
The Company is committed to community upliftment and regional growth through effective partnerships with all
local stakeholders in the regions where it has mining operations. With the recent ratification of Mining Charter
2018 into law, the Company has commenced with planning to comply with the various requirements under the
charter and to do so ahead of the timelines laid out in the charter.
As part of the Company’s commitment to its Corporate Social Responsibility, the Company currently runs the
following projects for the benefit of the local community:
1. Employment of teachers at the primary and high schools in Pilgrim’s Rest
The Company currently employs three full time teachers and an assistant who have been seconded to the
schools and in addition continues to fund printing activities at the two schools. This initiative has been
running for several years now.
Figure 6: Local High School Children
2. Provision of water to community
The Company provides water to a local community near the TGME plant and has laid in new infrastructure
to ensure a more continuous supply is made available.
3. Heating and Cooking Fuel provision to community
The Company has engaged two local community members to remove invasive alien black wattle trees
from the site and cut the timber into appropriate lengths for heating and cooking fuel. The Company
provides all the tools and equipment for this project as well as additional staff to help load and transport the
wood to the local community.
4. School Feeding Scheme
The Company has taken up financial support for a feeding scheme to young schoolchildren in the Sabie
area. A local church initiated the scheme where local junior school children were given sandwiches in the
morning before school commences. Given the poverty in the area, it is likely that this may be the only
meal or at least one of the two meals that the children will receive for the day. The Company commenced
with support for this project when local Sabie businesses were financially unable to continue to support the
programme. The programme has been expanded with the inclusion of fruit and dairy in the meal.
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Theta Gold Mines Limited
5. Small, Medium and Micro-sized Enterprises (SMMEs) Development
Figure 7: Local Primary School Children
The Company has commenced with a pilot programme to develop SMME’s in the Pilgrim’s Rest area. The
Company is currently working with a local building contractor to develop them into an independent SMME.
This involves providing practical business development support and advice. In addition the Company is
making use of this SMME to complete various minor construction activities at the mine site.
A second SMME that is cutting and selling invasive timber is also under this pilot programme. The
Company has provided financial support to this enterprise and continues to monitor progress.
This pilot programme will continue with a view to eventually integrating into the business as part of the
Company’s overall Corporate Social Responsibility initiatives.
The communities in which the Company operates is supportive of mining in general, and the associated
employment and flow-on economic benefits that are likely to flow to local and regional businesses and the
general uplifting of the area. It is a priority of the Company to effectively engage with the community and
manage expectations and relations with respect to all activities the Company is, or will be, engaged in including
construction, development, transport, potential environmental impacts (noise, dust etc) and other factors
associated with mining operations.
Pilgrim’s Rest is considered to be a living museum and had been owned by the government since the
1970’s. As a result, all the properties and buildings are not available for sale and are leased to individuals by
the government. The Company has also submitted proposals to lease some of the current infrastructure owned
by the government with a view to preserving it and boosting the local tourism industry.
The Company has also used the opportunity presented in the stakeholder engagement process for the
Environmental Authorisation Amendment to revive the community networks and strengthen relationships with
the various stakeholders in the Pilgrim’s Rest and Sabie communities and will continue to build these
relationships.
The Company has also strengthened its community engagement by building up its community liaison capacity
through redirection of one of its local community bursary beneficiaries into a community liaison role. In addition,
the Company has engaged a senior community engagement specialist to strengthen community engagement
and to provide support and mentorship to the Company’s community liaison officer.
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Theta Gold Mines Limited
Figure 8: Community Liaison Officer (Tertiary education sponsored by TGME)
FINANCIAL
Results
The Consolidated Entity made a loss after tax of $5,172,000. Contributing to the loss was indirect exploration
costs written-off of $1,070,000, finance costs of $646,000 and corporate and administration costs carried by the
Consolidated Entity in support of its exploration and pre-development activities. Further exploration
expenditure was incurred on drilling and associated activities and on the Theta Project scoping and feasibility
studies. This further exploration expenditure, totaling $2,854,000, has been capitalized and disclosed in the
balance sheet.
The Consolidated Entity also recognized an impairment charge of $995,000 on certain mining assets, being
largely the net book value of the existing TGME gold processing plant, following a re-assessment that a new
processing plant was likely to be constructed as envisioned in the feasibility study.
Cashflow
The Consolidated Entity relies largely on the equity markets for funding to support its business development
activities, debt repayment and working capital.
During the year, the company raised a total of $6,795,000 from share placements to sophisticated investors.
The funds were applied towards completing the Theta Project scoping and feasibility studies, exploration
drilling, debt repayment and general administration and corporate costs.
The Consolidated Entity continues to proactively manage its cash flow requirements to ensure that funds are
available, including from capital raisings, as and when required to meet its debts and commitments as they fall
due.
Subsequent to balance date, the Company entered into subscription agreements with specialist global resource
investors for the placement of 53,333,334 shares (voluntarily escrowed until 31 December 2020) at an issue
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Theta Gold Mines Limited
price of A$0.15 per share to raise a total of A$8,000,000. The shares are to be issued in three tranches, with
the first and second tranches issued on 25 July 2019 and 29 August 2019 respectively and the third tranche of
A$4,000,000 due at the end of September 2019.
Debt reduction
Borrowings and trade payables at 30 June 2019 was $7,130,000, a reduction of $2,620,000 from the level at
the end of the previous financial year.
During the year, the company repaid –
(a)
(b)
(c)
a convertible note and accrued interest (total $1,623,000) in shares following the election to convert by
the holder, Tasman Funds Management Pty Ltd;
the balance of a convertible security with The Australian Special Opportunity Fund, LP;
outstanding director fees and salaries (total $529,000) in shares.
Of the outstanding borrowings and trade payables at 30 June 2019, $5,040,000 relates to an unsecured loan
controlled by a director of the company. The Company has an unwritten agreement with the controller of the
loan that total principal and interest would accrue up to a limit of A$5,000,000 (USD3,506,000) and repayment
would be made within 7 business days of the Company receiving the Arbitral award from Shandong Qixing Iron
Tower Co., Ltd (now known as Northcom Group Limited) (refer Note 19(a)) as follows:
a)
b)
A$3,330,000 in cash; and
A$1,670,000 in Theta Gold Mines shares issued at a discount of 5 percent to the prevailing market price
Given that the agreement is unwritten, the loan has been classified as a current liability.
CORPORATE
Change of name and new constitution
At the 2018 Annual General Meeting (“AGM”) on 30 November 2018, shareholders approved the change of
company name from Stonewall Resources Limited to Theta Gold Mines Limited and adopted a new
constitution.
Consolidation of share capital
At the 2018 AGM, shareholders also approved a 10:1 consolidation of share capital. This was subsequently
completed on 6 December 2018.
OUTLOOK
The Company’s priority is to develop the open-cut Theta Project. Subject to the relevant mining permit
amendments being granted and funding being secured, it is the Company’s intention to develop the Theta
Project as the group’s starter mining operation.
The Company will also look to build the up the mining reserves through optimising the Feasibility Study and
further resource development. The current plant engineering design work will ensure the metallurgical gold
plant can expand its production profile as the project develops.
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Theta Gold Mines Limited
Ore Reserve and Mineral Resource Statement
Table 1: Combined Mineral Resources as at 1 May 2019
Mineral
Resource
Classification
Type of Operation
Measured
Underground
Total Measured
Underground
Open Pit
Tailings
Underground
Open Pit
Tailings
Rock Dump
Indicated
Total Indicated
Inferred
Total Inferred
Grand Total
Notes:
Tonnage
Gold
Grade
Gold Content
Mt
0.091
0.091
4.774
7.161
5.244
17.179
21.452
5.922
0.023
0.121
27.518
44.788
g/t
5.37
5.37
6.21
2.11
0.83
2.86
5.22
4.35
0.57
1.64
5.01
4.18
Kg
489
489
29,661
15,091
4,373
49,126
111,880
25,730
13
199
137,823
187,438
koz
15.7
15.7
953.7
485.2
140.6
1,579.4
3,597.0
827.3
0.40
6.40
4,431.0
6,026.2
1. Columns may not add up due to rounding.
2. Gold price used for the cut-off calculations is USD1,500/oz.
3. UG Mineral Resources are reported at a cut-off of 160 cm.g/t, open pit at 0.5 g/t and 0.35 g/t, tailings and rock
dumps at 0.35 g/t.
4. Fault losses of 5% for Measured and Indicated, 10% for Inferred Mineral Resources.
5. Mineral Resources are stated as inclusive of Ore Reserves.
6. Mineral Resources are reported as total Mineral Resources and are not attributed.
Table 2: Theta Project Ore Reserves for MR83 Only, 1 May 2019
Mineral Resource
Category in LoM Plan
Pit
Probable
Probable
Probable
Total
Notes:
Browns Hill
Iota (Columbia
Hill)
Theta Hill
Grade
g/t
3.24
2.54
2.76
2.76
Reef Tonnes
kt
564
1,253
493
2,310
Au Content
kg
1,826
3,189
1,362
6,377
oz
58,699
102,513
43,798
205,010
1. Totals in the Ore Reserve may not add-up due to rounding.
2. Mineral Resources are for MR83 only and excludes MR341.
3. No Inferred Mineral Resources are included in the Ore Reserve.
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Theta Gold Mines Limited
Table 3: Total Theta Project - Mineral Resources, 1 May 2019
Mineral
Resource
Classification
Open Pit Mine
Reef
Reef
Grade
g/t
Reef
Width
cm
Content
cm.g/t
Reef
Tonnes
Mt
Shale
1.02
200
204
0.439
Au Content
Kg
402
koz
12.9
Theta Hill &
Browns Hill
Theta Hill &
Browns Hill
Theta Hill &
Browns Hill
Theta Hill &
Browns Hill
Theta Hill &
Browns Hill
Columbia Hill
Columbia Hill
Columbia Hill
Columbia Hill
Theta Hill &
Browns Hill
Theta Hill &
Browns Hill
Theta Hill &
Browns Hill
Theta Hill &
Browns Hill
Theta Hill &
Browns Hill
Columbia Hill
Indicated
Total Indicated
Mineral
Resource
Classification
Inferred
Total Inferred
Mineral
Resource
Classification
Bevetts
1.10
221
244
0.891
886
28.5
Upper Theta
2.41
100
241
0.724
1,568
50.4
Lower Theta
3.70
100
370
0.888
2,956
95.0
Beta
Bevetts
Upper Rho
Lower Rho
Upper Theta
2.49
2.89
2.43
2.51
1.08
2.14
100
114
393
550
114
246
249
0.383
859
27.6
330
956
1381
123
526
0.105
0.808
0.815
0.158
5.211
303
1,965
2,047
171
11,157
9.7
63.2
65.8
5.5
358.7
Open Pit Mine
Reef
Reef
Grade
g/t
Reef
Width
cm
Content
cm.g/t
Reef
Tonnes
Mt
Shale
1.11
216
240
0.703
Au Content
Kg
666
koz
21.4
Bevetts
1.07
213
227
0.648
589
19.0
Upper Theta
1.86
100
186
1.071
1,692
54.4
Lower Theta
8.11
100
811
1.643
11,329
364.3
Beta
Upper Rho
2.23
5.13
3.30
100
106
132
223
544
434
0.748
1,417
45.6
0.099
4.912
507
16,202
16.3
520.9
Open Pit Mine
Reef
Indicated
Total Theta
Project
Total Theta
Project
Total Indicated and Inferred
Inferred
All
All
Reef
Grade
Reef
Width
g/t
2.14
3.30
2.70
cm
246
132
190
Content
cm.g/t
526
435
514
Reef
Tonnes
Au Content
Mt
5.2
Kg
koz
11,157
358.7
4.9
16,202
520.9
10.1
27,359
879.6
Notes:
1. Theta Project (Theta Hill, Browns Hill and Iota) cut-off is 0.35 g/t;
2. The gold price used for the cut-off calculations is USD 1,500 / oz;
3. Geological losses applied are 10% for inferred and 5% for Indicated and Measured;
4. Theta Hill and Browns Hill - Upper Theta Reef, Lower Theta Reef and Beta Reef are diluted grades over 100cm;
5. Historical mine voids have been depleted from the Mineral Resource;
6. The inferred Mineral Resources have a high degree of uncertainty and it should not be assumed that all or a
portion thereof will be converted to Ore Reserves;
7. Mineral Resources fall within the mining rights MR83 and MR341.
8. Totals may not add-up due to rounding.
16For personal use only
Theta Gold Mines Limited
Competent Persons Statement
Mineral Resources
The information in this report relating to Mineral Resources is based on, and fairly reflects, the information and
supporting documentation compiled by Mr Uwe Engelmann (BSc (Zoo. & Bot.), BSc Hons (Geol.), Pr.Sci.Nat.
No. 400058/08, MGSSA), a director of Minxcon (Pty) Ltd and a member of the South African Council for Natural
Scientific Professions.
Mr Engelmann has sufficient experience that is relevant to the style of mineralisation under consideration and to
the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore
Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves. Mr Engelmann consents to the inclusion in the report of the matters based on his information in
the form and context in which it appears.
Ore Reserves
The information in this report relating to Ore Reserves is based on, and fairly reflects, the information and
supporting documentation compiled by Mr Daniel van Heerden (B Eng (Min.), MCom (Bus. Admin.), MMC,
Pr.Eng. No. 20050318, FSAIMM, AMMSA), a director of Minxcon (Pty) Ltd and a member of the Engineering
Council of South Africa.
Mr Van Heerden has sufficient experience that is relevant to the style of mineralisation under consideration and
to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore
Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves. Mr Van Heerden consents to the inclusion in the report of the matters based on his information
in the form and context in which it appears.
17For personal use only
Theta Gold Mines Limited
Mining Rights and Applications for Mining Rights
MR No Description
Farms
Commencement
Date
Expiry Date
Remarks
MR 358
Rietfontein
Spitskop 195 JT, Waterval
168 JT and Maliveld Vallei
192 JT.
05-Jun-13
04-Jun-28
S102 application
pending on Farm
Rietfontein 193 JT
MR 340
Hermansburg
Hermansburg 495 KT
10-Jul-13
09-Jun-23
Granted
MR 83
Greater
TGME
MR198
Elandsdrift
Heap Leach
Frankfort 509KT,
Krugershoop 527 KT,
Morgenzon 525 KT, Peach
Tree 544 KT, Ponieskrans
543 KT and Van der Merwes
Reef 526 KT
Elandsdrift 220 JT
16-Oct-13
15-Oct-23
18-Mar-08
17-Mar-09
Amendment
application to
include open cut
mining in process
Renewal
submitted
MR 330
Beta Re-
Development
& Grootfontein
Cluster
Peach Tree 544 KT,
Ponieskrans 543 KT,
Grootfonteinberg 561 KT and
Grootfontein 562 KT
Refer Note 1
Refer Note 1
Granted
MR 433
Glynn's
Lydenburg
Grootfontein 196 JT and
Olifantsgeraamte 198 JT
12-Nov-13
11-Nov-23
Granted
MR 341
PTD’s
Grootfontein 562KT
Refer Note 1
Refer Note 1
Granted
MR 10161
Sabie
MR 10167
TGME
Spitzkop 195JT, Ptns of the
RE and Ptn 1 of Hendriksdal
216JT, Grootfontein 196JT,
Waterval 168JT, Sheba
219JT, Vertroosting 218JT,
Olifants Geraamte 198JT,
Rietfontein 193JT
Desire 563KT, RE and Ptn 1,
2, 3, 12, 14, 15, 17, 18, 19,
20, 22 and 23 of Doornhoek
545KT, RE and Ptn 1, 2 and
3 Rotunda Greek 510KT,
Vaalhoek 474KT,
Buffelsfontein 452KT, RE
and Ptn 1 of Willemsoord
476KT, Sacramento 492KT,
Granite Hill 477KT, Blackhill
528KT, Manx 475KT,
Klondyke 493KT,
Hermansburg 495KT
Refer Note 1
Refer Note 1
Refer Note 1
Refer Note 1
Consolidation of
Prospecting Rights
10005PR, 660PR,
10252PR
Approval Pending
Consolidation of
Prospecting Rights
10255PR,
10404PR,
10254PR
Approval Pending
Note:
1. The period of grant of the mining right will be determined upon execution thereof. In the South African
context, mining rights may be granted for up to 30 years and are renewable thereafter.
18For personal use only
Theta Gold Mines Limited
Corporate Governance Statement
The Board of Directors support good corporate governance practices. Unless disclosed otherwise, the best
practice recommendations of the ASX Corporate Governance Council have been applied for the financial
year ended 30 June 2019.
This Corporate Governance Statement was approved by the Board on 25 September 2019.
The Board has adopted a Corporate Governance Charter which encompasses a Board Charter, Code of
Conduct, Continuous Disclosure Policy and Diversity Policy. Separately, the Board has also adopted a
Securities Trading Policy, Audit and Risk Management Committee Charter and a Nomination and
Remuneration Committee Charter. The Company’s constitution, the Charters and the Securities Trading
Policy are available on the Company’s website (www.thetagoldmines.com).
References to Company in this statement shall, where applicable, include the Consolidated Entity.
Principle 1: Lay solid foundations for management and oversight
The roles of the Board and the Managing Director are separate.
The Board is responsible for the following:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
ensuring compliance with the Corporations Act, ASX Listing Rules and all other relevant laws;
appointment of appropriate staff, consultants and experts to assist in the Company's operations,
including the selection and monitoring of a chief executive officer;
approving annual budgets and monitoring financial and other reporting;
monitoring and ensuring appropriate accountability
remuneration;
for directors' and senior managers’
oversight of the Company including its framework of control and accountability systems to enable risk
to be assessed and managed;
input into and final approval of management's development of corporate strategy and performance
objectives;
monitoring management's performance and implementation of strategy and ensuring appropriate
resources are available;
approving and monitoring the progress of major capital expenditure, capital management and
acquisitions and divestitures.
The Managing Director is responsible for conducting the affairs of the Company under delegated authority from
the Board and implementing the policies and strategies set by the Board. In carrying out his responsibilities,
the Managing Director must report to the Board in a timely manner and ensure all reports to the Board present
a true and fair view of the Company's financial position and operating results.
There was Board renewal since the end of the last financial year, with one director retiring and two new
directors appointed to the Board. Whilst no formal performance review was undertaken on the Managing
Director and the Chief Financial Officer, the executives receive informal feedbacks on their performance from
time to time. No performance evaluations have been conducted on, or by, the directors during the reporting
period.
The Company Secretary is directly accountable to the Board on all Board matters. He also acts as secretary of
all Board committees.
All directors and senior executive appointments are made in writing.
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Theta Gold Mines Limited
Diversity policy
Diversity is about the commitment to equality and treating all individuals with respect irrespective of religion,
race, ethnicity, language, gender, sexual orientation, disability, age or any other area of potential difference.
The Board recognizes that a diverse and inclusive workforce is not only good for our employees but also good
for our business. It helps the Company attract and retain talented people, create more innovative solutions,
and be more flexible and responsive. Across the Company, there is increasing momentum on diversity with a
particular focus on gender and age, as well as greater work and career flexibility.
As the Company grows, the Directors are also committed to increasing the representation of females at all
levels of the organisation including senior management and at Board level. However, measurable objectives
for achieving gender diversity have not been set given the stage of the Company’s development.
Principle 2: Structure the board to add value
The Board is comprised of the following directors, all of whom are Non-Executive Directors, save for the
Managing Director. The skills, experience and expertise of each director in office at the date of this report,
their attendances at meetings and their term of office are detailed in the Directors’ Report.
Charles William Guy
Bill Richie Yang
Yang (Simon) Liu
Finn Stuart Behnken
Robert Peter Thomson
Guyang (Brett) Tang
Non Executive Chairman
Non Executive Director
Non Executive Director
Non Executive Director
Managing Director
Non Executive Director
Independent
Independent
Independent
Independent
Not independent
Not Independent
The Chairman of the Board is an independent director and the majority of the Board is made up of
independent directors. Mr Thomson is the Managing Director and is not considered independent while Mr
Tang is associated with a substantial shareholder of the Company.
In assessing the independence of directors, the Company will generally regard an Independent Director as a
non-executive director (that is, not a member of management) who:
is not a substantial shareholder of the Company or an officer of, or otherwise associated directly
with, a substantial shareholder of the Company;
within the last three years has not been employed in an executive capacity by the Company or
another group member, or been a director after ceasing to hold any such employment;
within the last three years has not been a principal of a material professional advisor or a
material consultant to the Company or another group member, or an employee materially associated
with the service provider;
is not a material supplier or customer of the Company or other group member, or an officer of or
otherwise associated directly or indirectly with a material supplier or customer; and
has no material contractual relationship with the Company or another group member other than as a
director of the Company.
Independent directors have the right to seek independent professional advice in the furtherance of their
duties as directors at the Company’s expense. Written approval must be obtained from the chair prior to
incurring any expense on behalf of the Company.
The Company does not conduct induction or professional development programs, however directors are
encouraged to attend external programs and courses.
20For personal use only
Theta Gold Mines Limited
Nomination and Remuneration Committee
The members of the committee are –
Charles William Guy (Chairman) (appointed 4 September 2018)
Bill Richie Yang
Simon Liu
Brett Tang (appointed 4 September 2018)
The Nomination and Remuneration Committee Charter sets out the process for nomination and election of
directors.
The attendance of each committee member at committee meetings is set out in the Directors’ Report.
Principle 3: Act ethically and responsibly
The Board acknowledges and emphasises the importance of all directors and employees maintaining the
highest standards of corporate governance practice and ethical conduct.
A code of conduct has been established requiring directors and employees to:
Act honestly and in good faith;
Exercise due care and diligence in fulfilling the functions of office;
Avoid conflicts and make full disclosure of any possible conflict of interest;
Comply with the law;
Encourage the reporting and investigation of unlawful and unethical behaviour; and
Comply with the share trading policy outlined in the Code of Conduct.
Directors are obliged to be independent in judgement and ensure all reasonable steps are taken to ensure
due care is taken by the Board in making sound decisions.
Principle 4: Safeguard integrity in corporate reporting
Audit Committee
The Company has an Audit and Risk Management Committee which operates under a charter that sets out its
role. The Committee’s primary function is to assist the Board in discharging its responsibility to
exercise due care, diligence and skill in relation to the Company, including appointment of external auditors,
business risk management, internal control systems, business policies and practices and monitoring
corporate conduct and business ethics.
Members of the Audit and Risk Management Committee, all independent directors, are –
Finn Stuart Behnken (Chairman) (appointed 29 January 2019)
Bill Richie Yang
Charles William Guy (appointed 4 September 2018)
The skills, experience and expertise of each committee member and their attendances at committee meetings
are set out in the Directors’ Report.
Financial reporting
The Managing Director, together with the Chief Financial Officer, are required to declare in writing to the
Board each financial period that the financial records have been properly maintained and that the financial
statements and notes for the financial period give a true and fair view of the financial position and
performance of the Consolidated Entity and comply with relevant accounting standards and that the
declaration, provided in accordance with section 295A of the Corporations Act, is founded on a sound
system of risk management and internal control and that the system is operating effectively in all material
respects in relation to financial reporting risks.
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Theta Gold Mines Limited
The Company’s external auditor attends each annual general meeting and is available to answer questions
pertaining to the audit of the Company’s financial statements.
Principle 5: Make timely and balanced disclosures
The Company’s Corporate Governance Charter incorporates the Company’s continuous disclosure policy
which sets out the Company’s processes in dealing with price-sensitive information to ensure that it complies
with its continuous disclosure obligations, the market is kept fully informed and no director, employee or third
party deals in the Company’s securities while in possession of inside information.
The system for releasing information to the ASX is as follows:
(a) When any member of the Reporting Group (being the Chairman, Managing Director or Company
Secretary) becomes aware of information which he or she believes may need to be disclosed, he or she
immediately contacts and gives full details to each of the other members of the Reporting Group.
(b) The Reporting Group will take the following steps in relation to information received by them:
assess whether disclosure is required;
consult legal and other advisers (including the ASX) as necessary;
prepare an announcement for release to the ASX; and
forward the release to the ASX.
In order to maintain control over disclosures, the following persons only will be authorised to speak on the
Company’s behalf to analysts, brokers and institutional investors, and to respond generally to shareholder
queries:
(a)
(b)
(c)
(d)
the Chairperson;
the Managing Director;
the Company Secretary; and
any other person who has been given express prior authority by the Chairperson.
All announcements lodged with ASX are posted on the Company’s website after they have been released by
ASX.
Principle 6: Respect the rights of security holders
The Company has a facility on its website for shareholders and interested parties to register for email alerts of
announcements posted on the website. Shareholders may also elect to receive notices of meetings by email.
Shareholders are entitled to vote on significant matters impacting on the business, which include the election
and remuneration of directors, changes to the constitution and receipt of annual financial statements.
Shareholders are strongly encouraged to attend and participate in the Annual General Meetings of the
Company and other shareholder meetings, to lodge questions to be responded by the Board, and if not able to
attend the meetings, are encouraged to appoint proxies.
Principle 7: Recognise and manage risks
The Board considers identification and management of key risks associated with the business as vital to
maximising shareholder wealth. As a gold exploration/development company operating in South Africa, the
Company faces material business risks (operational, financial, environmental and social sustainability), as well
as regulatory, political and reputational risks.
The Audit and Risk Management Committee reviews and oversees the management of the risks. Details of
the Audit and Risk Committee are set out above.
The Company does not have an internal audit function.
22For personal use only
Theta Gold Mines Limited
Risk review is an ongoing function. Risks are generally managed by strategies adopted such as –
i)
ii)
iii)
iv)
v)
annual budgets
monthly reports against budgets
financial authority limits
insurance programme
regular monitoring.
The Board monitors risks through –
a)
b)
c)
d)
monthly operations reports
monthly financial reports against budgets
briefings by senior executives
tour of operations.
Principle 8: Remunerate fairly and responsibly
The Board has a Nomination and Remuneration Committee. Details of the Nomination and Remuneration
Committee are set out above.
The Company’s remuneration policy is set out in the Remuneration Report. The remuneration policy is
designed to ensure that it is appropriate and effective in attracting and retaining the best key management
personnel (“KMP”), as well as create goal congruence between KMPs and shareholders. To that end,
remuneration is structured to comprise a fixed cash salary component and superannuation, supplemented by
incentive securities (performance rights and/or options) linked to share price performance or operational
performance hurdles.
The Board’s policy is to remunerate non-executive directors at market rates for time, commitment and
responsibilities. The Board determines payments to the non-executive directors, currently A$75,000 per
annum for the Chairman and A$50,000 per annum for each non-executive director. The maximum aggregate
amount of fees that can be paid to non-executive directors is subject to approval by shareholders in general
meeting. Fees for non-executive directors are not linked to the performance of the Consolidated Entity.
However, to align directors’ interests with those of shareholders, all directors are encouraged to hold shares in
the Company.
The Company has adopted an Employee Performance Rights and Option Plan (“Plan”). Grant of performance
rights and options under the Plan is at the discretion of the Board and is available to directors and employees
of the Company as well as those of its subsidiaries in South Africa.
The Company does not permit the hedging of incentive options and performance rights by directors and
employees.
23For personal use only
Theta Gold Mines Limited
Directors’ Report
Your Directors present their report, together with the financial statements of Theta Gold Mines Limited
(formerly Stonewall Resources Limited) (“Company”) and its controlled entities (“Consolidated Entity” or
“Group”) for the financial year ended 30 June 2019.
Directors
The Directors of the Company during or since the end of the financial year are:
Present Directors
Charles William Guy
Robert Peter Thomson
Bill Richie Yang
Yang (Simon) Liu
Guyang (Brett) Tang
Finn Stuart Behnken
Former Director
Trevor Alan Fourie
Information on Directors
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (appointed 3 July 2018)
Non-Executive Director (appointed 19 December 2018)
Non-Executive Chairman (resigned 30 August 2018)
Charles William Guy
Non-Executive Chairman
Period of Directorship:
Qualifications:
Experience:
Interest in Shares and
Options:
Special Responsibilities:
Other Listed Company
Directorships in Last 3
Years:
Since 7 March 2018, Appointed as Chairman on 4 September 2018
B. App. Sc.
Member, Australian Institute of Geoscientists
Mr Guy is a professional geologist with over 25 years’ experience in
exploration and resource development in Asia, Australia and Europe, most
recently as the Managing Director of Longford Resources Limited (ASX:
LFR). As MD of Longford Resources, he progressed the Keel zinc project
in Ireland to its first JORC Resource within just a few months of securing an
option over the project. He previously served as Exploration Manager of
Jupiter Mines Limited (ASX: JMS). At Jupiter Mines, he developed
exploration protocols that enabled the projects to progress from grass roots
to a viable resource.
Held directly
4,000,000 performance rights expiring 27 June 2024
Held by Mineral Rock Pty Ltd
- 795,590 Fully paid ordinary shares
- 418,232 Listed options exercisable at $0.30 per share on or before 31
October 2020
Chairman of Nomination and Remuneration Committee
Member of Audit and Risk Management Committee
Longford Resources Limited (resigned 8 December 2017)
24For personal use only
Theta Gold Mines Limited
Robert Peter Thomson
Managing Director
Period of Directorship:
Qualifications:
Experience:
Since 25 November 2016
BE (Mining) (University of Queensland)
MBA (University of Wollongong, NSW)
Fellow, Australasian Institute of Mining and Metallurgy
Mr. Thomson commenced his career in underground gold operations in
southern Africa and has since been involved in numerous successful gold (
as well as base metal) ventures which included transitioning companies
from exploration to production and the establishment of sustainable
operations. He was directly involved as GM/Project Director in delivering
and leading in-country the large and successful 100,000+ ozpa Chatree
(Thailand) and Sepon Stage 1 (Laos) gold mines and as the CEO of
Climax Mining, he was instrumental in the development of the Didipio
gold/copper mining operation in the Philippines, which merged into and
cornerstoned Oceana Gold Corporation.
Interest in Shares and
Options:
Held directly
‐ 5,500,000 performance rights expiring 27 June 2024
Held by Monterey Consolidated Services Pty Limited
‐ 1,267,875 fully paid ordinary shares
‐ 263,159 listed options exercisable at $0.30 each, on or before 31
October 2020
Nil
Golden Cross Resources Limited (resigned 28 November 2017)
Special Responsibilities:
Other Listed Company
Directorships in Last 3
Years:
Bill Richie Yang
Non-Executive Director
Period of Directorship:
Qualifications:
Experience:
Since 16 June 2015
BCom (Business Economics and Finance), University of New South Wales
Mr Yang is an experienced corporate financier, with more than 15 years
in the
focused on business development,
corporate structure, M&A and capital raisings.
junior resources sector
Interest in Shares and
Options:
Mr Yang has held numerous executive directorships and management
roles in junior mining development companies, including Executive Director
of ASX-listed Bligh Resources Limited between 2015 and 2017. He is also
Managing Director of Sydney/Hong Kong based Vs Capital Group, a
corporate finance advisory firm and Family Office investor.
Held directly
‐ 5,000,000 performance rights expiring 27 June 2024
Held by Bill Richie Yang
‐ 472,692 fully paid ordinary shares
‐ 1,000,000 unlisted options exercisable at $0.20 expiring 12 October
2019
‐ 500,000 unlisted options exercisable at $0.40 expiring 12 October 2019
‐ 1,000,000 unlisted performance options exercisable at $0.20 expiring
12 October 2019
25For personal use only
Theta Gold Mines Limited
Held by Vs Capital Investments Pty Ltd
‐ 1,043,476 fully paid ordinary shares
‐ 528,948 listed options exercisable at $0.30 per share on or before 31
October 2020
Special Responsibilities:
Other Listed Company
Directorships in Last 3
Years:
Member of Audit and Risk Management Committee
Member of Nomination and Remuneration Committee
Bligh Resources Limited (resigned 13 July 2017)
Yang (Simon) Liu
Non-Executive Director
Period of Directorship:
Qualifications:
Experience:
Interest in Shares and
Options:
Since 29 January 2013
Graduate, School of Journalism and Communication,
Renmin University, China
Mr Liu has over 20 years’ experience in the marketing and consulting
industry. In 2010 he co-founded Beijing-based Hanhong Private Equity
Fund which managed over USD1.5 billion. The fund's investments covered
entertainment, property development, oil/gas and gold mining projects.
Held directly
‐ 1,323,813 fully paid ordinary shares
‐ 979,474 listed options exercisable at $0.30 per share on or before 31
October 2020
‐ 500,000 unlisted options exercisable at $0.40 each expiring 12
October 2019
‐ 200,000 unlisted options exercisable at $0.35 each expiring 19 July
2022, vesting upon the 20 day VWAP exceeding $0.30
‐ 200,000 unlisted options exercisable at $0.40 each expiring 19 July
2022, vesting upon the 20 day VWAP exceeding $0.35
Held by Hanhong New Energy Holdings Ltd
‐ 4,527,105 fully paid ordinary shares
‐ 500,000 unlisted options exercisable at $0.30 each expiring 22 August
2019
Held by Smart Vision Investment Group Ltd
‐ 4,242,369 fully paid ordinary shares
‐ 500,000 unlisted options exercisable at $0.15 each expiring 12 October
2019
Special Responsibilities:
Other Listed Company
Directorships in Last 3
Years:
Member of Nomination and Remuneration Committee
Nil
26For personal use only
Theta Gold Mines Limited
Guyang (Brett) Tang
Non-Executive Director
Period of Directorship:
Qualifications:
Experience:
Interest in Shares and
Options:
Since 3 July 2018
Bachelor of Law (University of Soochow)
MBA (University of Nanjing)
Mr Tang is a qualified lawyer in China and is also registered as a Fund
Manager with the Asset Management Association of China (AMAC).
He is a professional investor and fund manager, experienced in and been
successful in mining and mining investments. From 2007-2013, he was
Executive Director at Yunnan Gold Mountain Ltd, a
joint venture
gold/copper mining company with a Chinese state-owned mining
enterprise. The company grew to a 20,000oz per annum gold producer
from horizontal adit-entry type mines. Between 2013 and 2015 he was a
Director of Ao-zhong Mining Pty Ltd, a Chinese specialised mining and
exploration corporation with a history of mining investments in Australian
listed resource companies. Mr Tang is a director at Tasman Funds
Management Ltd and a director and founding partner of China Nanjing
Venture Capital Ltd, a China-based VC Fund.
Held directly
‐ 94,339 fully paid ordinary shares
‐
2,500,000 performance rights expiring 27 June 2024
Held by Tasman Funds Management Ltd
‐ 32,730,995 fully paid ordinary shares
‐ 500,000 unlisted options exercisable at $0.15 each expiring 12 October
2019
Special Responsibilities:
Other Listed Company
Directorships in Last 3
Years:
Member of Nomination and Remuneration Committee
Nil
Finn Stuart Behnken
Non-Executive Director
Period of Directorship:
Qualifications:
Appointed 19 December 2018
B.Sc Eng (Mining)
Experience:
Mr Behnken is a mining engineer and has South African mining operational
experience as the CEO of Tshipi é Ntle Manganese Mining (Pty) Limited
(during the construction and initial production phase of the major Tshipi
Borwa Manganese Mine). Prior to this, he was an investment banker with
South African based Nedbank and has served as non-executive director of
various mining companies including, most recently, as a director of the then
AIM listed Gemfields plc. Mr Behnken is currently the South African
representative of Auramet International, a United States based precious
metals merchant and mine financier.
Interest in Shares and
Options:
Held directly
‐ 1,200,000 performance rights expiring 27 June 2024
Special Responsibilities:
Other Listed Company
Directorships in Last 3
Years:
Former Director
Chairman of Audit and Risk Management Committee
Gemfields Plc
27For personal use only
Theta Gold Mines Limited
Trevor Alan Fourie
Non-Executive Chairman
Period of Directorship:
Qualifications:
Experience:
Interest in Shares and
Options at 30 August 2018
(resignation date):
Special Responsibilities:
Other Listed Company
Directorships in Last 3
Years:
Company Secretary
Chin Haw Lim
B.Com, CA
Principal Activities
27 January 2012 - 30 August 2018
Advanced Executive Program, School of Business Leadership,
University of South Africa
Diploma in Management, Henley Business School
Advanced Management Program, Harvard
Mr Fourie has had 24 years’ experience in corporate and retail banking with
Barclays Bank and First National Bank. Mr Fourie has served as Executive
Directors of FBC Future Bank Corporation Limited and Marketing Director
for WesBank. After his relocation to Australia he was appointed as Chief
Executive Officer of RMB Australia’s leasing division and Executive Director
of RMB Australia Limited (Rand Merchant Bank Australia). As of 2008, he
has pursued his own ventures in the financial services and resources
sectors, and is formerly a non-executive director of Galaxy Gold.
Held by Trevor Fourie
‐ 2,925,127 fully paid ordinary shares
‐ 1,574,211 listed options exercisable at $0.30 each, on or before 31
October 2020
‐ 200,000 unlisted options exercisable at $0.35 each expiring 19 July
2022, vesting upon the 20 day VWAP exceeding $0.30
‐ 200,000 unlisted options exercisable at $0.40 each expiring 19 July
2022, vesting upon the 20 day VWAP exceeding $0.35
‐ 500,000 unlisted options exercisable at $0.25 each expiring 19 July
2022, vesting upon obtaining sufficient capital expenditure financing
(debt and/or equity) to enable the group's mines and facilities to be
upgraded to the point where they can profitably produce no less than
55,000 ounces of gold or gold equivalent on an annualised basis
Held by Jenala Investments Pty Ltd ATF TAF Superannuation Fund
‐ 1,150,000 fully paid ordinary shares
‐ 1,000,000 unlisted options exercisable at $0.20 expiring 12 October
2019
‐ 500,000 unlisted options exercisable at $0.40 expiring 12 October
2019
Chairman of Nomination and Remuneration Committee (ceased 30 August
2018)
Member of Audit and Risk Management Committee (ceased 30 August
2018)
Nil
Mr Lim is a Chartered Accountant, having worked with various ASX-listed
companies as CFO/Financial Controller and Company Secretary. He has
been involved in the resources industry for many years, including Finders
Resources Limited (Wetar Copper Project, Indonesia), Straits Resources
Limited (Girilambone Copper Mine, NSW, Nifty Copper Mine, WA and
Sebuku Coal Mine, Indonesia) and Triako Resources Limited (Mineral Hill
gold/copper mining operation, NSW).
28For personal use only
Theta Gold Mines Limited
The Consolidated Entity holds prospective gold assets in the Pilgrim’s Rest – Sabie goldfield, a historic
South African gold mining region. These assets include several surface and near-surface high-grade gold
projects. The principal activities during the year were exploration related activities, as follows –
(a) Completion of a feasibility study on the Theta Project open cut mining operation, following a scoping
study;
(b) Resource drilling and mine planning work on the Theta Project, leading to declaration of a maiden ore
reserve estimate;
(c) Continuing review of historical data from previous exploration and mining activities contained in
paper records to identify potential areas of high grade mineralisation with a view to bringing these
areas back into production in the future; and
(d) Data compilation work aimed at integrating the multitude of separate old mines, prospects and
exploration information into a combined computer geological database and 3D model.
Operating and Financial Review
The review of operations during the year is set out on pages 4 to 18.
Significant Changes in State of Affairs
The following significant changes in the state of affairs of the Consolidated Entity occurred during the financial
year:
(a) Issued capital increased by US$8,313,000, arising from the issue of shares to raise funds for the group’s
activities;
(b) Total liabilities reduced by US$2,227,000 largely from reduction in borrowings following scheduled loan
repayments and the conversion of the convertible note by Tasman (below);
(c) Election by Tasman Funds Management Pty Limited to convert a A$1,650,000 convertible note (“Note”)
into shares in the Company, and issue of 25,143,471 fully paid ordinary shares to Tasman at a price of
$0.09 per share in full settlement of the Note and accrued interest, totaling A$2,263,000.
Dividends
No dividend was paid, recommended or declared but not paid since the start of the financial year.
Likely Developments and Expected Results
Following completion of the positive feasibility study on the Theta Project open cut operation, subject to
being able to secure project finance, it is the Company’s intention to develop the Theta Project as the
group’s starter mining project. The group will also be aiming to re-commence drilling activities in and
around the Theta Project area with a view to adding more reserves to extend the project mine life. The
group has vast tenement holding, currently with a 6Moz resource, which is prospective for high grade
mineralization. Subject to funding, it would be the group’s plan to convert the large mineral resource
into ore reserves through further drilling and other exploration activities.
Environmental Regulations
The Consolidated Entity’s operations are subject to environmental regulation under both South African and
Australian legislation. There have been no known breaches of these regulations by the Consolidated Entity.
29For personal use only
Theta Gold Mines Limited
Significant Events after Balance Date
Share Placement
Subsequent to balance date, as announced on 23 July 2019, the Company entered into subscription
agreements with specialist global resource investors for the placement of 53,333,334 shares (voluntarily
escrowed until 31 December 2020) at an issue price of A$0.15 per share to raise a total of A$8,000,000. The
shares are to be issued in three tranches, with the first and second tranches issued on 25 July 2019
(A$2,620,000) and 4 September 2019 (A$1,380,000) respectively and the third tranche of A$4,000,000 due at
the end of September 2019.
Meetings of Directors
Attendances at Board and Committee meetings by directors during the year were as follows:
Board meetings
Charles William Guy
Robert Peter Thomson
Bill Richie Yang
Simon Liu
Brett Tang
Finn Stuart Behnken
Trevor Alan Fourie (resigned 30 Aug 2018)
Audit and Risk Committee meetings
Finn Stuart Behnken
Charles William Guy
Bill Richie Yang
Eligible to attend
Attended
12
12
12
12
12
6
3
12
12
12
4
7
6
3
Eligible to attend
Attended
1
2
2
1
2
2
Nomination and Remuneration Committee meeting
The Nomination and Remuneration Committee did not meet during the year. All nomination and
remuneration matters were dealt with at Board meetings.
Options
Issued during the year
The following options over unissued shares were issued during the year –
Name
Freedom Trader Pty Ltd
Cheng Peng
AET CT Pty Limited
SJ Capital Pty Ltd
Chad Fletcher Investments Pty Ltd
Listed
Options1
(ASX: TGMO)
-
-
-
-
-
Unlisted
Options1
Performance
Rights2
258,948
100,000
158,948
45,920
8,632
-
-
-
-
-
30For personal use only
Theta Gold Mines Limited
Name
Philip John Cawood
Valas Investments Pty Ltd
Mineral Rock Pty Ltd 3
Vs Capital Investments Pty Ltd 3
Charles William Guy3
Robert Peter Thomson3
Bill Richie Yang3
Simon Liu3
Brett Tang3
Finn Stuart Behnken3
Trevor Fourie 3
Eric Zhang3
Chin Haw Lim
George Tiernan Jenkins
Henning Johannes Fourie
Hanlie Grobler
Listed
Options1
(ASX: TGMO)
-
-
355,074
528,948
-
184,211
-
979,474
-
-
1,495,263
289,122
-
-
-
-
Unlisted
Options1
Performance
Rights2
8,425
23,340
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000,000
5,500,000
5,000,000
-
2,500,000
1,200,000
-
-
1,200,000
3,000,000
1,800,000
500,000
Total
3,832,092
604,213
24,700,000
1Share consolidation
On 30 November 2018, shareholders in general meeting approved a 10:1 consolidation of shares and options
on issue at that date. The options above were issued prior to the share consolidation but are reported on a
post 10:1 consolidation basis.
2Performance Rights
The performance rights were issued on 28 June 2019. Each performance right entitles the holder to a fully
paid ordinary share in the Company subject to meeting the performance hurdles and other terms and
conditions as set out below. The performance rights expire on 27 June 2024.
3Directors
Messrs Guy, Thomson, Yang, Liu, Tang and Behnken are directors of the Company. Messrs Fourie and
Zhang are former directors of the Company. The listed options were issued to the directors and their related
entities following approval of shareholders at a general meeting on 10 August 2018. The performance rights
were issued to the directors following approval of shareholders at a general meeting on 28 June 2019.
Issued since the end of the financial year
Since the end of the financial year, 500,000 performance rights expiring on 27 June 2024 were issued to
Natasha Thomas-Kasangana, an employee of the group. The performance rights are subject to the
performance hurdles described below.
31For personal use only
Theta Gold Mines Limited
Total unissued shares under option
The unissued ordinary shares under options and performance rights at the date of this report are –
Listed options exercisable at $0.30 each on or before 31 October 2020
(ASX: TGMO)
Unlisted options and performance rights (details below)
Number
31,429,663
36,482,183
Number
Unlisted Options
Performance Hurdle/Vesting Date
(if applicable)
Exercise
Price
Expiry Date
1,050,000
2,000,000
1,000,000
3,500,000
727,970
1,000,000
1,000,000
604,213
200,000
200,000
11,282,183
Company achieving a market capitalisation of greater
than $25,000,000 for a period of 10 consecutive
trading days
20 day VWAP above $0.030. This performance
hurdle must be achieved on or before the date that is
three years from the date of issue of the Options.
20 day VWAP above $0.035. This performance
hurdle must be achieved on or before the date that is
three years from the date of issue of the Options.
Total Options
Unlisted Performance Rights
50,000
4,670,000
5,370,000
7,630,000
7,480,000
25,200,000
All systems, licences, insurances, regulatory and
statutory compliance in place to meet South Africa
Mining regulations, laws, Mining Charter 111,
commercial contracts.
Delineating a total of 300,000 ounces of gold ore
reserves (in accordance with the JORC Code 20121)
at grade of at least 2.5g/t Au, amenable to open-cut
mining on Mining Right 83, Mining Right 341 and
Mining Right 10167 (under application).
Decision to Mine (Board approval to commence
development of a gold mining operation) with all
regulatory approvals secured.
This performance hurdle must be achieved on or
before the date that is 18 months from the date of
issue of the performance right.
Achieving annualised production of 50,000 ounces of
gold per annum over a consecutive period of 3
months.
This performance hurdle must be achieved on or
before the date that is 30 months from the date of
issue of the performance right.
Achieving annualised production of 100,000 ounces
of gold per annum over a consecutive period of 3
months.
This performance hurdle must be achieved on or
before the date that is 48 months from the date of
issue of the performance right.
Total Performance Rights
36,482,183
Total Options And Performance Rights
$0.15
$0.20
$0.20
$0.40
$0.19
$0.25
$0.30
$0.19
$0.35
12 Oct 2019
12 Oct 2019
12 Oct 2019
12 Oct 2019
15 Jan 2020
18 Jan 2020
18 Jan 2020
13 Aug 2020
19 July 2022
$0.40
19 July 2022
Nil
27 June 2024
Nil
27 June 2024
Nil
27 June 2024
Nil
27 June 2024
Nil
27 June 2024
32For personal use only
Theta Gold Mines Limited
The performance rights and option holders do not have any right to participate in any share issue of the
Company or any other body corporate.
Shares issued as a result of exercise of options
Since the end of the previous financial year, no shares were issued as a result of the exercise of options.
Indemnity and Insurance of Officers
The Company’s constitution states that “to the extent permitted by law, the Company may –
indemnify each relevant officer against a liability of that person and the legal costs of that person;
a)
b) make a payment (whether by way of advance, loan or otherwise) to a relevant officer in respect of legal
costs of that person;
c) enter into, or agree to enter into, or pay, or agree to pay a premium for a contract insuring a relevant
officer against a liability of that person and the legal costs of that person.”
During the financial year, the Consolidated Entity paid a premium for a Directors and Officers Liability
Insurance Policy for the benefit of the directors, secretaries, other officers and employees of the Company.
The contract of insurance prohibits disclosure of the terms of the policy and the amount of premium paid.
Indemnity and Insurance of Auditors
To the extent permitted by law, the Company has agreed to indemnify its auditor, Ernst & Young Australia,
as part of the terms of its audit engagement agreement against claims by third parties arising from the audit
(for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the
end of the financial year.
Non-Audit Services
During the financial year, the auditor, Ernst & Young, did not provide any non-audit services.
Full details of the auditor’s remuneration are set out in Note 5 to the financial statements.
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2019 is set out on page 41.
Rounding of Amounts to Nearest Thousand Dollars
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 and in accordance with that Instrument, amounts in the Directors’ Report and the
thousand dollars, unless otherwise stated.
the nearest
Financial Report have been rounded
to
33For personal use only
Theta Gold Mines Limited
Remuneration Report (Audited)
This report details the nature and amount of remuneration paid/payable to key management personnel of the
Consolidated Entity.
The key management personnel during the year were -
Directors
Non-Executive Chairman
- Charles William Guy
Managing Director
- Robert Peter Thomson
Non-Executive Directors
- Bill Richie Yang
- Yang (Simon) Liu
- Guyang (Brett) Tang (appointed 3 July 2018)
- Finn Stuart Behnken (appointed 19 December 2018)
Former Director
- Trevor Alan Fourie (resigned 30 August 2018)
Other Key Management Personnel
‐ Chin Haw Lim, Chief Financial Officer / Company Secretary
‐ George Tiernan Jenkins, Chief Executive Officer (South Africa)
Remuneration policy
The Board of Directors sets the remuneration policy to ensure that it is appropriate and effective in attracting
and retaining the best key management personnel (“KMP”) to manage the Consolidated Entity, as well as
create goal congruence between KMPs and shareholders. To that end, remuneration is structured to
comprise a fixed cash salary component and superannuation, supplemented by incentive securities
(performance rights and/or options) linked to share price performance or operational performance hurdles.
The Company has adopted an Employee Performance Rights and Option Plan (“Plan”). Grant of
performance rights and options under the Plan is at the discretion of the Board and is available to employees
of the Company as well as those of its subsidiaries in South Africa.
The Board’s policy is to remunerate non-executive directors at market rates for time, commitment and
responsibilities. The Board sets the director fees payable to non-executive directors, currently A$75,000 per
annum for the Chairman and A$50,000 per annum for each non-executive director. The maximum aggregate
amount of fees that can be paid to non-executive directors shall be an amount not exceeding in aggregate a
maximum sum that is from time to time approved by shareholders in general meeting. The current amount is
A$600,000 per annum. In addition, non-executive directors receive extra remuneration as determined by the
Board where they perform services at the request of the Board which, in the opinion of the Board are outside
the scope of the ordinary duties of a Director.
Fees for non-executive directors are not linked to the performance of the Consolidated Entity. However, to
align directors’ interests with those of shareholders, all directors are encouraged to hold shares in the
Company.
34For personal use only
Theta Gold Mines Limited
Relationship between Remuneration Policy and Consolidated Entity Performance
Long-term incentives
The Consolidated Entity’s remuneration policy in granting incentive securities to KMPs is targeted at
transforming the entity from a gold explorer to a gold producer.
During the year, the Board determined that the options and performance rights previously issued to Directors
and employees on 19 October 2016 and 20 July 2017 were no longer appropriate incentives given the new
Company strategy, focussing on the Theta Hill open-cut gold project. The Options and Performance Rights
previously issued primarily contained share price hurdles and performance hurdles based on the Company’s
previous underground mine development strategy.
To ensure that the whole team is focussed on the same objective of delivering the Theta Hill open-cut gold
project into production, the Board has determined that incentive securities issued to Directors and employees
should have the same operational performance hurdles instead of the varied performance hurdles in the
previous Options and Performance Rights. The Board believes that operational performance hurdles are more
appropriate incentives and align the interests of the Directors and employees with those of shareholders. To
that end, certain options and performance rights previously issued were cancelled and new performance rights
were issued in June 2019. A total of 24,700,000 new performance rights were issued in June 2019 with the
following operational performance hurdles –
Performance Hurdles
1 Delineating a total of 300,000 ounces of gold ore reserves (in accordance
with the JORC Code 20121) at grade of at least 2.5g/t Au, amenable to
open-cut mining on Mining Right 83, Mining Right 341 and Mining Right
10167 (under application, converting from existing Prospecting Rights).
No.
4,670,000
2 Decision to Mine (Board approval to commence development of a gold
5,070,000
mining operation) with all regulatory approvals secured. This performance
hurdle must be achieved on or before the date that is 18 months from the
date of issue of the performance right.
3 Achieving annualised production of 50,000 ounces of gold per annum over
a consecutive period of 3 months. This performance hurdle must be
achieved on or before the date that is 30 months from the date of issue of
the performance right.
7,530,000
4 Achieving annualised production of 100,000 ounces of gold per annum over
7,430,000
a consecutive period of 3 months. This performance hurdle must be
achieved on or before the date that is 48 months from the date of issue of
the performance right.
24,700,000
At 30 June 2019, there were also 2,750,000 unlisted incentive options held by KMPs. The options expire on
12 October 2019 and are exercisable at prices between $0.15 and $0.40 per share.
35For personal use only
Theta Gold Mines Limited
Short term incentives
No key management personnel received performance-based bonuses during the financial year.
The table below sets out summary information about the Consolidated Entity’s performance for the
last five financial years.
2019
2018
2017
2016
2015
Revenue
Net Loss Before Tax
Net Loss After Tax
Basic earnings per share
Diluted earnings per share
Share price at start of year1
Share price at end of year1
Market capitalisation
USD’000
USD’000
USD’000
US cents
US cents
AU cents
AU cents
AUD’000
-
5,172
5,172
(1.6)
(1.6)
11
16
-
4,129
4,129
(1.8)
(1.8)
26
11
-
7,346
7,346
(3.9)
(3.9)
10
26
-
4,991
5,250
(4.0)
(4.0)
10
10
-
10,154
10,154
(18.0)
(18.0)
200
10
61,325
28,177
54,515
17,366
6,400
1 On 30 November 2018, shareholders in general meeting approved a 10:1 consolidation of shares and options on issue at
that date. For comparative purposes, the basic and diluted earnings per share for the financial years ended 30 June 2015 -
2018 have been presented on a post consolidation basis as if the share consolidation had occurred in the prior financial
years.
Details of Remuneration
The following tables detail the components of remuneration for each key management personnel of the
Consolidated Entity.
Table of Benefits and Payments
2019
SHORT-TERM
BENEFITS
POST-
EMPLOYMENT
SHARE-BASED
Salary and Fees
Superannuation
Options / Rights
TOTAL
USD
USD
USD
USD
Directors
Charles William Guy
Robert Peter Thomson
Bill Richie Yang
Simon Liu
Brett Tang (appointed 3 Jul 2018)
Finn Stuart Behnken
(appointed 19 Dec 2019)
Trevor Alan Fourie
(resigned 30 Aug 2018)
Other Key Management Personnel
Chin Haw Lim
George Tiernan Jenkins
Total Key Management
Personnel
128,807
178,867
126,696
35,776
32,497
19,137
8,943
91,222
143,094
-
14,690
-
-
3,087
-
-
8,666
-
-
298,713
184,115
21,857
-
-
128,807
492,270
310,811
57,633
35,584
19,137
(20,070)
(11,127)
29,718
66,242
129,606
209,336
765,039
26,443
580,575
1,372,057
36For personal use only
Theta Gold Mines Limited
2018
SHORT-TERM
BENEFITS
POST-
EMPLOYMENT
SHARE-BASED
TOTAL
Salary and Fees
Superannuation
Options / Rights
USD
USD
USD
USD
Directors
Charles William Guy
(appointed 7 March 2018)
Trevor Alan Fourie
Robert Peter Thomson
Bill Richie Yang
Simon Liu
52,294
58,136
193,786
131,775
38,757
Eric Zhang (resigned 13 Jun 2018)
36,927
Other Key Management Personnel
Chin Haw Lim
George Tiernan Jenkins
Henning Johannes Fourie
Total Key
Management Personnel
93,017
155,029
112,584
872,305
Key management personnel equity holdings
-
-
15,541
-
-
-
8,837
-
-
-
21,278
299,034
202,651
21,278
-
24,890
75,121
-
52,294
79,414
508,361
334,426
60,035
36,927
126,744
230,150
112,584
24,378
644,252
1,540,935
The following tables set out the equity holdings in the Company of key management personnel of the
Consolidated Entity. On 30 November 2018, shareholders in general meeting approved a 10:1 consolidation
of shares and options on issue at that date. The figures below have been presented on a post consolidation
basis.
Fully Paid Ordinary Shares
2019
Balance
1 July 2018
Acquisitions
Disposals
Net other
change
Balance
30 June 2019
Balance
nominally held
No.
No.
No.
No.
No.
No.
Directors
Charles William Guy
63,158
732,432
Robert Peter Thomson
328,947
938,928
Bill Richie Yang
326,842
1,189,326
Simon Liu
Brett Tang
(appointed 3 Jul 2018)
13,019,472
979,476
-
94,339
Other Key Management Personnel
Chin Haw Lim
100,000
202,075
George Tiernan Jenkins
100,000
-
Total Key
Management Personnel
13,938,419
4,136,576
-
-
-
-
-
-
-
-
-
-
-
795,590
795,590
1,267,875
1,267,875
1,516,168
1,516,168
(4,000,000)
9,998,948
9,998,948
32,730,995
32,825,334
32,825,334
-
-
302,075
302,075
100,000
100,000
28,730,995
46,805,990
46,805,990
*Mr T Fourie ceased to be a director on 30 August 2018. Mr Fourie held 2,579,864 shares at 1 July 208 and
acquired 1,495,263 shares during the period to 30 August 2018, thereby holding 4,075,127 shares at the date
of his resignation.
37For personal use only
Theta Gold Mines Limited
Options and Performance Rights
2019
Balance
1 July 2018
No.
Directors
Acquisitions
Granted
Cancelled
Net other
change
Balance
30 June 2019
Vested and
exercisable
No.
No.
No.
No.
Charles William Guy
63,158
355,074
4,000,000
-
Robert Peter Thomson
10,578,947
184,212
5,500,000
(10,500,000)
Bill Richie Yang
8,700,000
528,947
5,000,000
(6,200,000)
1,900,000
979,474
-
-
-
-
-
4,418,232
418,232
5,763,159
263,159
8,028,947
3,028,948
2,879,474
2,479,474
-
-
2,500,000
1,200,000
800,000
3,300,000
-
1,200,000
-
-
-
Simon Liu
Brett Tang
(appointed 3 Jul 2018)
Finn Stuart Behnken
(appointed 19 Dec 2018)
Other Key Management Personnel
Chin Haw Lim
1,000,000
George Tiernan Jenkins
2,400,000
-
-
-
-
1,200,000
(1,000,000)
3,000,000
(2,150,000)
-
-
1,200,000
3,250,000
250,000
-
-
-
Total Key
Management Personnel
24,642,105
2,047,707
22,400,000
(19,850,000)
800,000
30,039,812
6,439,813
*Mr T Fourie ceased to be a director on 30 August 2018. Mr Fourie held 2,478,948 options at 1 July 208 and
acquired 1,495,263 options during the period to 30 August 2018, thereby holding 3,974,211 shares at the date
of his resignation.
Service contracts
Name
Term
Base salary
Termination payment
Robert Peter Thomson,
Managing Director
From 24 Nov 2016
until terminated
A$250,000
per annum, plus statutory
superannuation
Chin Haw Lim,
Chief Financial Officer and
Company Secretary
From 1 Mar 2017
until terminated
George Tiernan Jenkins,
Chief Executive Officer (South
Africa)
From 1 Mar 2017
until terminated
A$120,000
per annum to 31 March
2019, increased to
A$150,000 per annum
from 1 April 2019, plus
statutory superannuation
A$200,000
per annum plus housing
and motor vehicle
benefits
3 months’ notice of
termination or pay in lieu
plus 12 months’ salary in
the event of a termination
on the grounds of
redundancy
1 month notice of
termination or pay in lieu
3 months’ notice of
termination or pay in lieu
plus 3 months’ salary in
the event of a termination
on the grounds of
redundancy
38For personal use only
Consulting contracts
Theta Gold Mines Limited
Name
Term
Base fee
Fees paid for the year
ended 30 June 2019
Charles William Guy,
Chairman
Bill Richie Yang,
Non-Executive Director
Other transactions with KMPs
Month to month
A$1,200 per hour
USD 75,150
Month to month
A$10,000 per month
USD 85,860
The Company rented office space from an entity associated with Mr Richie Yang, for which the Company paid
USD12,978 (2018: USD23,254) during the year
This directors’ report, incorporating the remuneration report, has been signed in accordance with a resolution
of the directors made pursuant to s298 (2) of the Corporations Act 2001.
For and on behalf of the Board
Charles William Guy
Chairman
Sydney
27 September 2019
39For personal use only
Theta Gold Mines Limited
Directors’ Declaration
The directors of Theta Gold Mines Limited declare that:
1. The financial statements and notes, as set out on pages 42 to 82, are in accordance with the
Corporations Act 2001 and:
(a) comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the
financial statements, constitutes compliance with International Financial Reporting Standards
(IFRS); and
(b) give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2019 and of its
performance for the year ended on that date;
2.
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; and
3. The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to section 295(5) of the Corporations
Act 2001.
On behalf of the Board
Charles William Guy
Chairman
Sydney
27 September 2019
40For personal use only
Ernst & Young
200 George Street
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
Sydney NSW 2000 Australia
ey.com/au
GPO Box 2646 Sydney NSW 2001
Auditor’s Independence Declaration to the Directors of Theta Gold
Mines Limited
As lead auditor for the audit of Theta Gold Mines Limited for the financial year ended
30 June 2019, I declare 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.
This declaration is in respect of Theta Gold Mines Limited and the entities it controlled during the
financial year.
Ernst & Young
Scott Jarrett
Partner
Sydney
27 September 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
41For personal use only
Theta Gold Mines Limited
Consolidated Statement of Profit or Loss and Other
Comprehensive Income for the Year Ended 30 June 2019
Notes
2019
USD’000
2018
USD’000
Continuing Operations
Revenue
Cost of sales
Gross loss
Other income
Finance costs
Exploration expenses
Operating expenses
Other expenses
Loss before tax
Income tax expense
Loss for the year
Other comprehensive income, net of tax
Items that may be reclassified subsequently to profit or loss:
Exchange difference on translating foreign operations
Other comprehensive (loss) / income for the year, net of
income tax
Total comprehensive loss for the year
Loss attributable to:
Equity holders of the parent
Non-controlling interest
Total comprehensive income attributable to:
Equity holders of the parent
Non-controlling interest
3a
3b
3c
3c
3d
25
-
-
-
314
(646)
(1,070)
(2,793)
(977)
(5,172)
-
-
-
-
772
(769)
(1,147)
(2,830)
(155)
(4,129)
-
(5,172)
(4,129)
7
7
(358)
(358)
(5,165)
(4,487)
(5,172)
-
(5,172)
(5,165)
-
(5,165)
(4,129)
-
(4,129)
(4,487)
-
(4,487)
Loss per share
Basic (cents per share)
Diluted (cents per share)
6
6
(1.6)
(1.6)
(1.8)
(1.8)
The accompanying notes form part of these financial statements
42For personal use only
Theta Gold Mines Limited
Consolidated Statement of Financial Position
as at 30 June 2019
Notes
2019
USD’000
2018
USD’000
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Receivables
Non-current assets held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Receivables
Other receivable
Property, plant and equipment
Exploration expenditure
Rehabilitation investment fund
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions
Borrowings
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
Borrowings
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Non-controlling interest
TOTAL EQUITY
7
8
7
9
10
11
9
12
13
14
13
14
15
17
489
111
600
64
664
44
1,408
534
12,375
-
14,361
15,025
1,757
411
5,195
7,363
1,688
178
1,866
9,229
5,796
196
154
350
507
857
43
-
418
10,771
1,378
12,610
13,467
2,537
344
7,003
9,884
1,362
211
1,573
11,457
2,010
75,629
7,301
(77,134)
-
5,796
67,316
6,656
(71,962)
-
2,010
The accompanying notes form part of these financial statements
43For personal use only
Theta Gold Mines Limited
Consolidated Statement of Changes in Equity
for the Year Ended 30 June 2019
2019
Issued Capital
Equity Reserve
Asset
Revaluation
Reserve
USD’000
USD’000
USD’000
Option
Premium on
Convertible
Notes
USD’000
Share
based
payment
reserve
Foreign
Exchange
Reserve
Accumulated
Losses
Attributable
to Owners of
the Parent
Non-
controlling
Interest
Total
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
Balance 1 July
2018
Loss for the
period
Other
comprehensive
income net of
income tax
Total
comprehensive
income
Recognition of
share based
payments
Issue of options
Issue of shares
Cost of shares
issued
Balance 30
June 2019
67,316
7,552
-
-
-
-
-
-
8,714
(401)
-
-
-
-
-
-
30
-
-
-
-
-
-
-
198
2,576
(3,700)
(71,962)
2,010
-
-
-
(5,172)
(5,172)
-
-
-
-
-
-
-
-
584
54
-
-
7
7
-
-
-
-
-
7
(5,172)
(5,165)
-
-
-
-
584
54
8,714
(401)
75,629
7,552
30
198
3,214
(3,693)
(77,134)
5,796
The accompanying notes form part of these financial statements
-
-
-
-
-
-
-
-
-
2,010
(5,172)
7
(5,165)
584
54
8,714
(401)
5,796
44For personal use only
Theta Gold Mines Limited
2018
Issued Capital
Equity Reserve
Asset
Revaluation
Reserve
USD’000
USD’000
USD’000
Option
Premium on
Convertible
Notes
USD’000
Share
based
payment
reserve
Foreign
Exchange
Reserve
Accumulated
Losses
Attributable
to Owners of
the Parent
Non-
controlling
Interest
Total
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
Balance 1 July
2017 (restated)
Loss for the
period
Other
comprehensive
income net of
income tax
Total
comprehensive
income
Recognition of
share based
payments
Issue of options
Issue of shares
Cost of shares
issued
Balance 30
June 2018
61,997
7,552
-
-
-
-
-
-
5,715
(396)
-
-
-
-
-
-
30
-
-
-
-
-
-
-
198
1,878
(3,342)
(67,833)
480
-
-
-
(4,129)
(4,129)
-
-
-
-
-
-
-
-
698
-
-
-
(358)
-
(358)
(358)
(4,129)
(4,487)
-
-
-
-
-
-
-
-
697
-
5,715
(396)
67,316
7,552
30
198
2,576
(3,700)
(71,962)
2,010
-
-
-
-
-
-
-
-
-
480
(4,129)
(358)
(4,487)
697
-
5,715
(396)
2,010
45For personal use only
Theta Gold Mines Limited
Consolidated Statement of Cash Flows
for the Year Ended 30 June 2019
Notes
2019
USD’000
2018
USD’000
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Interest paid
Net cash flow used in operating activities
21
Cash flows from investing activities
Payments for property, plant and equipment
Payments for exploration expenditure
Proceeds from disposal of equity instruments
Proceeds from disposal of property, plant and equipment
Net cash flow used in investing activities
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
Payments for share issue costs
Proceeds from borrowings
Repayment of borrowings
Net cash flow from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Exchange rate adjustments
Cash and cash equivalents at end of the year
(2,896)
44
(68)
(2,920)
(4)
(3,354)
-
208
(3,150)
6,795
(194)
324
(562)
6,363
293
196
-
489
(2,393)
5
(122)
(2,510)
(50)
(2,217)
190
76
(2,001)
5,235
(470)
279
(1,391)
3,653
(858)
1,055
(1)
196
The accompanying notes form part of these financial statements
46For personal use only
Theta Gold Mines Limited
Notes to the Financial Statements
for the Year Ended 30 June 2019
Note 1: Basis of Preparation of Financial Report
i. Compliance Statement
These financial statements are general purpose financial statements which have been prepared in
accordance with the Corporations Act 2001, Australian Accounting Standards and Interpretations, and comply
with other requirements of the law. The financial statements comprise the consolidated financial statements
of Theta Gold Mines Limited and its controlled entities (“Consolidated Entity”). Compliance with Australian
Accounting Standards ensures that the financial statements and notes comply with International Financial
Reporting Standards (‘IFRS’).
The financial statements were authorized for issue in accordance with a resolution of the directors on 25
September 2019.
ii. Basis of Preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for certain
properties and financial instruments that are measured at revalued amounts or fair values at the end of each
reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair values of the consideration given in exchange for goods and
services. All amounts are presented in thousands of USD, unless otherwise noted.
iii. Going Concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of
normal business activities and the realization of assets and discharge of liabilities in the normal course of
business.
The Consolidated Entity made a loss of $5,172,000 for the year (2018: $4,129,000), with net cash outflows
from operating activities of $2,920,000 (2018: $2,510,000). At 30 June 2019, the Consolidated Entity had net
current liabilities of $6,699,000 (2018: $9,026,000).
The above matters indicate material uncertainty that may cast doubt on the Company’s and the Consolidated
Entity’s ability to continue as a going concern and whether the entity will realise its assets and extinguish its
liabilities in the normal course of business and at the amounts stated in the financial report.
The company has significantly reduced its net current liabilities during the year. Net current liabilities include
an unsecured loan from Australian Private Capital Investment Group (International) Ltd (“APCIG”), a company
associated with Mr Simon Liu, a director of the Company. At 30 June 2019, the loan and accrued interest
amounted to $5,040,000 (2018: $4,794,000).
Whilst the loan has been classified as a current liability, as explained in Note 14(e), the Company has an
arrangement (not formalised in writing (hence not reflected in the accounts)) with the controller of the loan,
Hanhong New Energy Holdings Ltd (a company associated with Mr Simon Liu), as follows:
47For personal use only
Theta Gold Mines Limited
(a)
(b)
Interest would accrue at the funding rate (10% per annum) but payment of interest would be suspended
and total principal and interest would accrue up to a limit of A$5,000,000 (compared to the book liability
of US$5,040,000);
repayment would be made within 7 business days of the Company receiving the Arbitral award from
Shandong Qixing Iron Tower Co., Ltd (now known as Northcom Group Limited) (refer Note 19(a)) as
follows:
(i)
(ii)
A$3,330,000 in cash; and
A$1,670,000 in Theta Gold Mines shares issued at a discount of 5 percent to the prevailing
market price.
The Company raised $6,795,000 excluding issue expenses during the year from share placements to
sophisticated investors and continues to be able to raise new funds to support its activities. As disclosed in
Note 26, subsequent to year end, the Company entered into Share Subscription Agreements for the issue of
53,333,334 fully paid ordinary shares at A$0.15 per share to raise a further A$8,000,000.
The Company continues to proactively manage its cash flow requirements to ensure that funds are available,
including from capital raisings, as and when required.
The ability of the Consolidated Entity to continue as a going concern and meet its debts and commitments as
they fall due is dependent upon the Company being successful in raising additional funds and receiving the
ongoing financial support of the related party lender. In the event the Consolidated Entity is unsuccessful in
achieving the above, there is material uncertainty that may cast significant doubt as to whether the
Consolidated Entity will continue as a going concern and, therefore, whether it will realise its assets and settle
its liabilities and commitments in the normal course of business and at the amounts stated in the financial
report.
The Directors believe that the Company will be successful in the above matters and, accordingly, have
prepared the financial report on a going concern basis. At this time, the Directors are of the opinion that no
asset is likely to be realised for an amount less than the amount at which it is recorded in the financial report at
30 June 2019. Accordingly, no adjustments have been made to the financial report relating to the
recoverability and classification of the asset carrying amounts or the amounts and classification of liabilities that
might be necessary should the Company not continue as a going concern.
iv. 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
Consolidated Entity.
Key Judgments and Estimates
Impairment
The carrying amounts of the Consolidated Entity’s assets, including capitalized exploration costs (refer Note
10) are reviewed at each reporting date to determine whether there is any indication of impairment. If there is
any indication that an asset may be impaired, its recoverable amount is estimated.
48For personal use only
Theta Gold Mines Limited
Fair value of derivatives and other financial instruments
As described in Note 2(h) and 23, management uses its judgment in selecting an appropriate valuation
technique for financial instruments that are not quoted in an active market. Valuation techniques commonly
used by market practitioners are applied. For derivative financial instruments, assumptions are made based on
quoted market rates adjusted for specific features of the instrument. Other financial instruments are valued
using a discounted cash flow analysis based on assumptions supported, where possible, by observable market
prices or rates.
The accounting for and the valuation of the convertible securities is complex due to significant judgement
involved in:
a) Determining the appropriate accounting treatment including assessment of debt versus equity and whether
b)
embedded derivatives exist; and
Inputs into the fair value calculations of the embedded derivatives, including the volatility of the underlying
share price.
Refer to Notes 2(h) and 23 for further details.
Share based payment
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (“vesting date”).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date
reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion
of the Directors of the Company, will ultimately vest.
This opinion is formed based on the best available information at balance date.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award that, in the opinion of the Directors of the Company will ultimately
vest, is recognised immediately.
Refer to Note 16 for further details.
Note 2: Summary of Significant Accounting Policies
a. Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Theta
Gold Mines Limited as at 30 June 2019 and the results of all subsidiaries for the year then ended. Theta
Gold Mines Limited and its subsidiaries together are referred to in these financial statements as the
'Consolidated Entity'.
Control is achieved when the Consolidated Entity:
c) has power over the investee;
d) is exposed, or has rights, to variable returns from its involvement with the investee; and
e) has the ability to use its power to affect its returns.
49For personal use only
Theta Gold Mines Limited
The Consolidated Entity reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control listed above.
Intercompany transactions, balances and unrealised gains on transactions between entities in the
Consolidated Entity are eliminated. Unrealised losses are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Consolidated Entity.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of
profit or loss and other comprehensive income, statement of financial position and statement of changes
in equity of the Consolidated Entity. Losses incurred by the Consolidated Entity are attributed to the non-
controlling interest in full, even if that results in a deficit balance.
Where the Consolidated Entity loses control over a subsidiary, it de-recognises the assets including
goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation
differences recognised in equity. The Consolidated Entity recognises the fair value of the consideration
received and the fair value of any investment retained together with any gain or loss in profit or loss.
b. Black Economic Empowerment (BEE) Transactions
Where equity instruments are issued to a BEE partner at less than fair value, these are accounted for as
share-based payments. The difference between the fair value of the equity instruments issued and the
consideration received is accounted for as an expense in profit or loss on the transaction date, with a
corresponding increase in equity. No service or other conditions exist for BEE partners. A restriction on
the BEE partner to transfer the equity instrument subsequent to its vesting is not treated as a vesting
condition, but is factored into the fair value determination of the instrument.
c. Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily
take a substantial period of time to prepare for their intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit and loss in the period in which they are incurred.
d. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-
term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank
overdrafts are reported within short-term borrowings in current liabilities in the statement of financial
position.
e. Earnings Per Share
Basic Earnings Per Share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the
Consolidated Entity, 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 issued during the year.
50For personal use only
Theta Gold Mines Limited
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 of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of shares assumed to have been issued for
no consideration in relation to dilutive potential ordinary shares.
f. Employee Benefit Liabilities
Provision is made for the Consolidated Entity’s liability for employee benefits arising from services
rendered by employees to the end of the reporting period. 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. 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. Those cash flows are discounted using
market yields on corporate bonds with terms to maturity that match the expected timing of cash flows.
g. Exploration and evaluation expenditure
Exploration and evaluation expenditure is carried forward in the accounts in respect to areas of interest for
which the rights of tenure are current and where –
(i) such costs are expected to be recouped through successful development and exploitation of the area
of interest, or alternatively, by its sale; or
(ii) exploration and/or evaluation activities in the area have not yet reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves and active
and significant operations in, or in relation to, the area are continuing.
Where the expenditure is expected to be recouped through development and economic exploitation of the
area of interest, the accumulated costs are transferred to mine properties and amortised over the life of the
mine in proportion to the depletion of the economically recoverable mineral reserves.
Costs carried forward in respect of an area of interest which no longer satisfy the above policy are written off
in the period in which that decision is made.
Indirect exploration expenditure is expensed in the period it is incurred.
h. Financial Instruments
Classification and measurement
i. Financial Assets
Except for certain trade receivables, under AASB 9, the Consolidated Entity initially measures a financial
asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss,
transaction costs.
Under AASB 9, debt financial instruments are subsequently measured at fair value through profit or loss
(FVPL), amortised cost, or fair value through other comprehensive income (FVOCI). The classification is
based on two criteria: the Consolidated Entity’s business model for managing the assets; and whether the
instruments’ contractual cash flows represent ‘solely payments of principal and interest’ on the principal
amount outstanding (the ‘SPPI criterion’).
51For personal use only
Theta Gold Mines Limited
The new classification and measurement of the Consolidated Entity’s financial assets are, as follows:
• Debt instruments at amortised cost for financial assets that are held within a business model with the
objective to hold the financial assets in order to collect contractual cash flows that meet the SPPI
criterion. This category includes the Consolidated Entity’s Trade and other receivables,
Other financial assets are classified and subsequently measured, as follows:
• Equity instruments at FVOCI, with no recycling of gains or losses to profit or loss on derecognition.
This category only includes equity instruments, which the Consolidated Entity intends to hold for the
foreseeable future and which the Consolidated Entity has irrevocably elected to so classify upon initial
recognition or transition.
• Financial assets at FVPL comprise derivative instruments, environmental investment fund and quoted
equity instruments which the Consolidated Entity had not irrevocably elected, at initial recognition or
transition, to classify at FVOCI. This category would also include debt instruments whose cash flow
characteristics fail the SPPI criterion or are not held within a business model whose objective is either
to collect contractual cash flows, or to both collect contractual cash flows and sell.
Impairment
The adoption of AASB 9 has fundamentally changed the Consolidated Entity’s accounting for impairment
losses for financial assets by replacing IAS 39’s incurred loss approach with a forward-looking expected
credit loss (ECL) approach.
AASB 9 requires the Consolidated Entity to record an allowance for ECLs for all loans and other debt
financial assets not held at FVPL.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract
and all the cash flows that the Consolidated Entity expects to receive. The shortfall is then discounted at
an approximation to the asset’s original effective interest rate.
For Contract assets and Trade and other receivables, the Consolidated Entity applies the standard’s
simplified approach and calculates ECLs based on lifetime expected credit losses.
For other debt financial assets (i.e., loans and debt securities at FVOCI), the ECL is based on the 12-
month ECL. The 12-month ECL is the portion of lifetime ECLs that results from default events on a
financial instrument that are possible within 12 months after the reporting date. However, when there has
been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL.
The Consolidated Entity considers a financial asset in default when contractual payment are 90 days
past due. However, in certain cases, the Consolidated Entity may also consider a financial asset to be in
default when internal or external information indicates that the Consolidated Entity is unlikely to receive
the outstanding contractual amounts in full before taking into account any credit enhancements held by
the Consolidated Entity.
ii. Financial Liabilities
Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or losses
arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or
loss incorporates any interest paid on the financial liability and is included in the ‘other gains and
losses' line item. Fair value is determined in the manner described in note 23.
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at
amortised cost.
52For personal use only
Theta Gold Mines Limited
iii. Compound instruments
The component parts of compound instruments (convertible bonds) issued by the Consolidated
Entity are classified separately as financial liabilities and equity in accordance with the substance of
the contractual arrangements and the definitions of a financial liability and an equity instrument.
Conversion options that will be settled by the exchange of a fixed amount of cash or another
financial asset for a fixed number of the Consolidated Entity’s own equity instruments is an equity
instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market
interest rate for similar non-convertible instruments. This amount is recognised as a liability on an
amortised cost basis using the effective interest method until extinguished upon conversion or at the
instrument’s maturity date.
The conversion option classified as equity is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. This is recognised and
included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the
conversion option classified as equity will remain in equity until the conversion option is exercised, in
which case, the balance recognised in equity will be transferred to issued capital. Where the
conversion option remains unexercised at the maturity date of the convertible note, the balance
recognised in equity will be transferred to retained profits/ accumulated losses. No gain or loss is
recognised in profit or loss upon conversion or expiration of the conversion option.
Transaction costs that relate to the issue of the convertible notes are allocated to the liability and
equity components in proportion to the allocation of the gross proceeds. Transaction costs relating
to the equity component are recognised directly in equity. Transaction costs relating to the liability
component are included in the carrying amount of the liability component and are amortised over the
lives of the convertible notes using the effective interest method.
Under AASB 9, embedded derivatives are no longer separated from a host financial asset. Instead,
financial assets are classified based on their contractual terms and the Consolidated Entity’s
business model.
iv. De-recognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the
asset is transferred to another party whereby the entity no longer has any significant continuing
involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised
where the related obligations are discharged, cancelled or expired. The difference between the
carrying value of the financial liability extinguished or transferred to another party and the fair value of
consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in
profit or loss.
Derivative financial instruments
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and
are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or
loss is recognised in profit or loss immediately unless the derivative is designated and effective as a
hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of
53For personal use only
the hedge relationship.
Theta Gold Mines Limited
Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they
meet the definition of a derivative, their risks and characteristics are not closely related to those of the
host contracts and the contracts are not measured at fair value through profit or loss.
j.
Foreign Currency Translation
i.
Functional and presentation currency
Items included in the financial statements of each of the Consolidated Entity’s subsidiaries are
measured using the currency of the primary economic environment in which the subsidiary operates.
The consolidated financial statements are presented in United States Dollars (USD); on the basis
that the US dollar is the most appropriate base given the Consolidated Entity operates in more than
one currency and has a large investor base which operates in a different functional currency to all
companies in the Consolidated Entity.
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when
they are attributable to part of the net investment in a foreign operation.
ii. Net investments in foreign operations
The results and financial position of foreign operations (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
a) Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
b)
c) All resulting exchange differences are recognised in other comprehensive income.
Income and expenses are translated at average exchange rates for the period, and
k. Goods and Services Tax (GST) and Value Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount of GST and VAT, except where the
amount of GST incurred is not recoverable from the Australian Tax Office (ATO) and South African
Revenue Service (SARS).
Receivables and payables are stated inclusive of the amount of GST and VAT receivables or payable. The
net amount of GST and VAT recoverable from, or payable to, the ATO and SARS is included with other
receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST and VAT components of cash flows arising from
investing and financing activities which are recoverable from, or payable to, the ATO and SARS are
presented as operating cash flows and included in receipts from customers or payments to suppliers.
54For personal use only
l.
Income Tax
Theta Gold Mines Limited
The income tax expense (benefit) for the year comprises current income tax expense (benefit) and
deferred tax expense (benefit).
Current income tax expense charged to the profit or loss is the tax payable on taxable income. Current
tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant
taxation authority.
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 outside profit or loss when the
tax relates to items that are recognised outside profit or loss.
Deferred tax assets and liabilities are calculated at the tax rate that are expected to apply to the period
when the assets is realised or the liability is settled and their measurement also reflects the manner in
which management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the
extent that it is probable that future taxable profit will be available against which the benefits of the
deferred tax asset can be utilised.
Deferred tax assets and liabilities are offset where (a) a legally enforceable right of set off exists, (b) the
deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either
the same taxable entity or different taxable entities where it is intended that net settlement or
simultaneous realisation and settlement of the respective asset and liability will occur in future periods in
which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
m.
Impairment of Assets
At the end of each reporting period, the Consolidated Entity assesses whether there is any indication that
an asset may be impaired. The assessment will include the consideration of external and internal
sources of information. If such an indication exists, an impairment test is carried out on the asset by
comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to
sell and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying amount over its
recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued
amount in accordance with another Standard (e.g. in accordance with the revaluation model in
AASB116). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance
with that other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Consolidated
Entity estimates the recoverable amount of the cash generating unit to which the asset belongs.
n.
Inventories
Inventories are valued at the lower of cost or estimated net realisable value. Net realisable value is the
estimated selling price in the ordinary course of business less the estimated costs necessary to make the
sale. Obsolete and slow moving consumable stock is identified and suitable write-downs in value are
made when necessary.
55For personal use only
o. Leases
Theta Gold Mines Limited
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee
substantially all the risks and benefits incidental to ownership of leased assets, and operating leases,
under which the lessor effectively retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability is established at the fair value of the leased
assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between
the principal component of the lease liability and the finance costs, so as to achieve a constant rate of
interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset’s useful life or over the
shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the Consolidated
Entity will obtain ownership at the end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on
a straight-line basis over the term of the lease.
p. Non-current assets held for sale
Non-currents assets and assets of disposal groups are classified as held for sale if their carrying amount
will be recovered principally through a sale transaction rather than through continuing use.
They are measured at the lower of their carrying value amount and fair value less costs to sell. For non-
current assets or assets of disposal groups to be classified as held for sale, they must be available for
immediate sale in their present condition and their sale must be highly probable.
An impairment loss is recognized for any initial or subsequent write down of the non-current assets and
assets of disposal groups to fair value less costs to sell. A gain is recognized for any subsequent
increases in fair value less costs to sell of a non-current assets and assets of disposal groups, but not in
excess of any cumulative impairment loss previously recognised.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest
and other expenses attributable to the liabilities of assets held for sale continue to be recognised.
Non-current assets and the assets of disposal groups classified as held for sale are presented separately
on the face of the statement of financial position, in current assets. The liabilities of disposal groups
classified as held for sale are presented separately on the face of the statement of financial position, in
current liabilities.
q. Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value as indicated less, where
applicable, any accumulated depreciation and impairment losses.
Depreciation
The depreciable amount of all fixed assets including capitalised lease assets, but excluding freehold land,
is depreciated on a straight-line basis over the asset’s useful life 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.
56For personal use only
Theta Gold Mines Limited
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Furniture and fittings
Plant and machinery
Computer equipment
Motor vehicles
Buildings
Depreciation Rate
16.66%
20%
33.33%
20%
5%
The assets’ carrying amounts and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period.
An asset’s carrying value is written down immediately to its recoverable amount if the asset’s carrying
value is greater than its estimated recoverable amount.
r. Provisions
Provisions are recognised when the Consolidated Entity has a present legal or constructive obligation as
a result of past events, for which it is probable that an outflow of economic benefits will be required to
settle the obligation, and a reliable estimate can be made of the amount of the obligation.
s. Rehabilitation Provision
long-term environmental provisions, comprising pollution control,
rehabilitation,
Estimated
decommissioning and mine closure, are independently calculated by third parties based on current
technological, environmental and regulatory requirements. The provision for rehabilitation is recognised
as and when the environmental liability arises.
The provision is based on the estimated cost before salvages, for the Consolidated Entity to rehabilitate
the mine sites. The present value of the provision for rehabilitation costs is updated using an average
inflation rate during periods when limited environment disturbance is caused.
t. Rounding of Amounts to Nearest Thousand Dollars
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 and in accordance with that Instrument, amounts in the Directors’ Report and the
Financial Report have been rounded to the nearest thousand dollars, unless otherwise stated.
u. New or Amended Accounting Standards and Interpretations adopted
The Consolidated Entity has adopted all new or amended Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board that are mandatory for the current period. The
adoption of these Accounting Standards and Interpretations did not have any significant impact on the
financial performance or position of the Consolidated Entity, the most relevant being AASB 9 as explained
below.
As the Consolidated Entity does not have any income that meets the definition of “Revenue from contracts
with customers”, the adoption of AASB 15 has resulted in no impact to the financial report.
57For personal use only
Theta Gold Mines Limited
AASB 9 Financial Instruments
The standard replaces all previous versions of AASB 9 and IAS 39 (Financial Instruments: Recognition
and Measurement). AASB 9 introduces new classification and measurement models for financial assets.
New hedge accounting requirements are intended to more closely align the accounting treatment with an
entity’s risk management activities, although hedge accounting is not applicable to the Consolidated
Entity.
AASB 9 has changed the assumptions for the Consolidated Entity’s accounting for impairment of financial
assets by replacing the incurred approach with a forward-looking expected credit loss (“ECL”) approach.
The Consolidated Entity initially recognizes a financial asset, including trade receivables, at fair value and
subsequently measures these at amortised costs, with the exception of derivative financial instruments
and the rehabilitation investment fund which are measured at fair value through profit or loss (FVPL). The
trade receivables are held to collect contractual cash flows and the cash flows represent solely payments
of principal and interest.
The Consolidated Entity assesses ECL for each category of receivables. The adoption of AASB 9 has no
material impact and no adjustments were required.
The accounting for the Consolidated Entity’s financial liabilities remains largely unchanged under AASB 9.
v. Accounting Standards and Interpretations issued but not yet effective
The table below sets out new Australian Accounting Standards and Interpretations that have been issued
(and considered applicable to the Company) but are not yet mandatory and which have not been
early adopted by the Company for the reporting period ended 30 June 2019.
Standard
Title
AASB 16
AASB
Interpretation 23
Leases
Uncertainty over Income Tax
Treatment
Application date
of standard
1 January 2019
Application
date for Group
1 July 2019
1 January 2019
1 July 2019
The application of AASB 16 and AASB Interpretation 23 are not expected to have any material impact
on the Company.
w. Comparative figures
On 30 November 2018, shareholders in general meeting approved a 10:1 consolidation of shares and
options on issue at that date. Comparative figures for the previous financial year, where applicable,
have been presented on a post consolidation basis as if the share and option consolidations had
occurred in that period.
58For personal use only
Theta Gold Mines Limited
Note 3: Profit /Loss from Operations
(a) Other income
Interest income
Fair value adjustment on convertible note
Other income
(b) Finance Costs
Loans and bank overdraft
Finance leases
Convertible notes
(c) Operating expenses
Administration expenses
Consultants expenses and professional costs
Employee and contractor expenses
Depreciation
Other operating expenses
Reclassified as Exploration expenses
(d) Other expenses
Impairment of assets(1)
Other expenses
2019
USD’000
2018
USD’000
94
174
46
314
625
-
21
646
462
310
2,036
54
1,001
3,863
(1,070)
2,793
996
(19)
977
106
562
104
772
670
1
98
769
467
351
2,032
183
944
3,977
(1,147)
2,830
108
47
155
(1) During the year, the Company recognized an impairment charge of $946,000 on certain exploration assets,
being largely the net book value of the existing TGME gold processing plant, following a re-assessment of its
future use. The Company completed a feasibility study on the Theta Project during the year which concluded
that new plant and equipment will be used in the proposed development of the Theta Project instead of
refurbishing the existing TGME gold processing plant.
Note 4: Key Management Personnel Compensation
Details of the remuneration paid or payable to each member of the Consolidated Entity’s key management
personnel (KMP) are set out in the Remuneration Report contained in the Directors’ Report on pages 34 to
39.
Total remuneration paid or payable to KMPs is as follows:
Short-term employee benefits
Post-employment benefits
Share-based payments
2019
USD
765,039
26,443
580,575
2018
USD
872,305
24,378
644,252
1,372,057
1,540,935
59For personal use only
Theta Gold Mines Limited
Note 5: Auditor’s Remuneration
Audit and review of financial report
- Ernst & Young, Australia
- Ernst & Young, South Africa
Note 6: Loss per Share
Basic loss per share
Diluted loss per share
2019
USD
68,456
41,497
109,953
cent
(1.6)
(1.6)
2018
USD
69,897
42,413
112,310
cent
(1.8)
(1.8)
USD’000
USD’000
Loss used to calculate basic and diluted loss per share
5,172
4,129
Weighted average number of ordinary shares used in calculating
basic and diluted loss per share
Number of
shares
Number of
shares
328,262,806
226,478,953
The Consolidated Entity has a number of options and performance rights on issue. These options and
performance rights could potentially dilute basic earnings per share in the future but have not been included in
the earnings per share calculation due to being non-dilutive for the year.
Note 7: Receivables
Current
Tax receivable
Other receivables
Non-current
Security deposits
2019
USD’000
2018
USD’000
64
47
111
102
52
154
44
43
The value of receivables considered by the directors to be past due or impaired is nil (2018: nil).
Note 8: Non-Current Assets Held for Sale
Land and buildings for sale
2019
USD’000
2018
USD’000
64
507
The Consolidated Entity owns residential properties in South Africa which are non-core assets and are being
held for sale. At 30 June 2019, the 2 remaining properties for sale have been sold under conditional contracts
and control of the properties is not deemed to have transferred by year end.
60For personal use only
Theta Gold Mines Limited
Note 9: Other Receivable / Rehabilitation Investment Fund
Rehabilitation investment fund
Other receivable
Movements - Rehabilitation investment fund:
Balance at beginning of year
Interest received
Fair value adjustment
Additions / (Withdrawals)
Transfer to Other Receivable
Exchange rate effect
Balance at end of year
2019
USD’000
2018
USD’000
-
1,408
1,378
-
1,378
1,356
36
8
26
(1,408)
(40)
-
55
(15)
57
-
(75)
1,378
The rehabilitation funds are pledged to a third party as security for the issue of rehabilitation guarantees
to the Department of Mineral Resources (South Africa) in support of the various mining licenses.
Management investments held by the Rehabilitation Investment Fund was measured at fair value in the
previous year. During the year, the managed investments were liquidated and the proceeds invested in a term
deposit account and are held at amortised cost.
Note 10: Property, Plant and Equipment
Land and buildings
Land and buildings - at cost
Less accumulated depreciation
Plant and machinery
Plant and machinery - at cost
Less accumulated depreciation
Other plant and equipment
Other plant and equipment - at cost
Less accumulated depreciation
Total Property, Plant and Equipment
2019
USD’000
2018
USD’000
559
(127)
432
1,014
(940)
74
170
(142)
28
534
261
(25)
236
1,338
(1,177)
161
190
(169)
21
418
61For personal use only
Theta Gold Mines Limited
2019
USD’000
2018
USD’000
Movements:
Land and buildings
Opening net book value
Disposals
Depreciation and impairment
Reclassified from/(to) assets held for sale
Exchange rate effect
Closing net book value
Plant and machinery
Opening net book value
Additions
Depreciation and impairment
Exchange rate effect
Closing net book value
Motor vehicles
Opening net book value
Additions
Disposals
Depreciation
Exchange rate effect
Closing net book value
Note 11: Exploration Expenditure
Exploration expenditure
Movements:
Opening net book value
Additions
Impairment (refer Note 3)
Exchange rate effect
Closing net book value
236
(60)
(13)
278
(9)
432
161
-
(82)
(5)
74
21
13
(1)
(4)
(1)
28
1,010
(87)
(145)
(507)
(35)
236
289
1
(122)
(7)
161
37
12
(2)
(25)
(1)
21
2019
USD’000
2018
USD’000
12,375
10,771
10,771
2,854
(946)
(304)
12,375
9,604
1,655
-
(488)
10,771
62For personal use only
Note 12: Trade and Other Payables
Theta Gold Mines Limited
Trade payables
Employee benefits
Accrued expenses
2019
USD’000
2018
USD’000
1,168
3
586
1,757
1,301
2
1,234
2,537
The average credit period on purchases of certain goods is 30 days. No interest is charged on the trade
payables for the first 30 days from the date of the invoice. Thereafter, interest is charged at variable rates
per annum on the outstanding balances from certain suppliers.
Note 13: Provisions
Current
Provision for employee benefits
Provision for audit fees
Provision for tax (refer Note 19(b)(ii))
Non-Current
Provision for rehabilitation
Movements:
Balance at beginning of year
Changes in estimate during year
Exchange rate effect
Balance at end of year
2019
USD’000
2018
USD’000
117
90
204
411
80
70
194
344
1,688
1,362
1,362
365
(39)
1,688
1,194
244
(76)
1,362
The rehabilitation provision relates to the Consolidated Entity’s obligation to restore and rehabilitate areas within
its mining tenements where there have been exploration and mining activities in the past. The provision includes
costs relating to the decommissioning of the gold processing plant.
The provision is supported by cash held in a Rehabilitation Investment Fund (Note 9).
63For personal use only
Theta Gold Mines Limited
2019
USD’000
2018
USD’000
-
-
32
32
5,057
106
-
5,163
5,195
178
178
348
67
30
445
4,886
22
1,650
6,558
7,003
211
211
(a), (b)
(a), (c)
(a), (d)
(a), (e)
(a)
(a), (f)
(a), (d)
Note 14: Borrowings
Current
Secured
Convertible security
Bank overdraft
Vendor finance
Unsecured
Loan – related party
Loan – unrelated party
Convertible note
Total
Non-Current
Secured
Vendor finance
(a)
Details of loans
Note
2019
USD’000
2018
USD’000
Repayment terms
Interest rate
pa
Convertible security
14(b)
Bank overdraft
14(c)
-
-
348 Refer Note 14(b)
67 On demand
Vendor finance
14(d)
210
241 Repayable over 10 years
from August 2014
Loan – related party
Loan – related party
Loans – unrelated
parties
Loans – unrelated
party
Convertible note
14(e)
14(f)
5,040
17
106
-
-
4,794 Refer Note 14(e)
92 On demand
- On demand
22 On demand
24%
1,650 Converted into shares
12.0%
Total
5,373
7,214
(b)
Convertible security
The convertible security was repaid during the year.
In January 2017, the Company entered into a Convertible Security Funding Agreement with The
Australian Special Opportunity Fund, LP (“ASOF”), an entity managed by Lind Partners, LLC. In
South
African
prime rate
+1%
South
African
prime rate
+2%
10.0%
12.0%
-
64For personal use only
Theta Gold Mines Limited
consideration for loans from ASOF, the Company issued to ASOF a convertible security with a face
value of A$2,520,000 (“Convertible Security”).
In accordance with Australian Accounting Standards, the Company had recognised a financial liability for
the debt instrument and 3 separate instruments in respect of the various conversion options included in
the agreement. The financial liability had been designated as fair value through profit and loss. At 30
June 2018, the Company had recognised a liability of USD 348,000 representing the fair value of the
convertible security financial liability, and an equity instrument of USD 165,000 recognised in equity.
Refer to Note 23 for further information regarding fair value measurements.
(c)
Bank overdraft
The bank overdraft was repaid during the year. The overdraft facility was secured by a bond over
residential properties owned by a controlled entity.
(d)
Vendor finance
The loan is secured by registration of a first covering private bond in favour of the lender, over the
property purchased by a controlled entity from the lender in 2014.
(e)
Loan – related party
In 2013, the Company entered into a loan agreement with Australian Private Capital Investment Group
(International) Ltd (“APCIG”), a company associated with Mr Simon Liu, a director of the Company,
whereby APCIG lent the Company A$4,000,000 (USD 2,805,200). The key terms of the loan are –
Interest accrues at the rate of 10% per annum;
The loan is unsecured;
(i)
(ii)
(iii) The loan matured on 31 January 2017, however APCIG was party to a standstill agreement with
ASOF pursuant to which it agreed not to demand repayment of the note during the term of the
Convertible Security Funding Agreement (refer Note 14(b)) which terminated on 15 April 2019.
As previously disclosed, certain individuals purporting to represent the loan provider, APCIG, have
threatened the Company with various claims, including issuing statutory demands on the Company on
two occasions, the most recent in May 2017. On both occasions, the courts have issued orders that the
statutory demands be set aside.
The Company’s view was, and remains, that the claims were without foundation and were otherwise
considered frivolous and vexatious. The Company’s position was that the parties purporting to represent
APCIG establish their entitlement by commencing legal proceedings to establish the same. Failing that, if
the confusion continues, the Company will seek direction from a court of competent jurisdiction to reach a
determination as to who the Company should in fact repay and so direct the Company to do so.
The Company has agreed to an arrangement with the controller of the loan as follows:
(i) Under the loan agreement with APCIG, it undertook to provide a loan of A$5 million, however
APCIG failed to honour its undertaking and only advanced A$4 million. Consequently, the
Company and APCIG agreed that interest would accrue at the funding rate (10% per annum) but
payment of interest would be suspended and total principal and interest would accrue up to a limit
of A$5 million.
65For personal use only
Theta Gold Mines Limited
(ii) That repayment would be made within 7 business days of the Company receiving the Arbitral award
from Shandong Qixing Iron Tower Co., Ltd (now known as Northcom Group Limited) (refer Note
19(a)) as follows:
f) A$3,330,000 in cash; and
g) A$1,670,000 in Theta Gold Mines shares issued at a discount of 5 percent to the prevailing
market price.
The above arrangement is not formalised in writing. Pending its formalisation, the Company has not
reflected the agreement in the accounts and therefore interest continues to accrue and the full amount is
classified as a current liability.
(f) Convertible note
The convertible note and accrued interest was converted into shares in the Company during the year.
In 2015, the Company entered into a Convertible Note (as varied) (“Note”) for the amount of A$1.65 million
with Tasman Funds Management Pty Ltd, a company associated with directors of the Company, Mr Brett
Tang (appointed 3 July 2018) and Mr Eric Zhang (resigned 13 June 2018). The key terms of the
convertible note were –
Interest accrues at the rate of 12% per annum (varied to 10% per annum from 1 January 2018);
The Note is unsecured;
(i)
(ii)
(iii) The Note may be converted into shares in the Company at Tasman’s election, at a conversion price
of A$0.09 per share;
Note 15: Issued Capital
Issued and paid up shares
(a) Consolidation of share capital
2019
USD’000
2018
USD’000
75,629
67,316
On 30 November 2018, shareholders in general meeting approved a 10:1 consolidation of shares and
options on issue at that date. Comparative figures for the previous financial year have been presented
on a post consolidation basis as if the share and option consolidations had occurred in the previous
financial year.
(b) Movements
2019
01 Jul 2018
14 Aug 2018
14 Aug 2018
23 Aug 2018
23 Aug 2018
05 Sep 2018
19 Sep 2018
03 Oct 2018
23 Nov 2018
31 Jan 2019
Balance at beginning of year
Share placement
Shares in settlement of director fees
Share placement
Shares in settlement of director fees
Conversion of convertible note
Share placement
Share placement
Share placement
Share placement
Number of Shares
‘000
USD’000
256,155
454
3,543
10,000
289
25,143
5,556
15,556
17,222
22,778
67,316
36
236
734
40
1,623
363
1,003
1,123
1,492
66For personal use only
Theta Gold Mines Limited
Share placement
Shares placement
Share in settlement of debt
Collateral shares sold
Share placement
Less: Share issue expenses
Balance at end of year
5,556
18,868
272
-
1,887
383,279
352
1,395
20
158
140
(402)
75,629
Balance at beginning of year
Shares in settlement of director fees
Share placement
Share placement
Issue under Share Purchase Plan
Share placement
Shares in settlement of debt
Share placement
Share placement
Less: Share issue expenses
Balance at end of year
Number of Shares
‘000
USD’000
209,632
744
13,337
503
855
11,159
1,743
9,091
9,091
256,155
61,997
117
1,939
72
123
1,701
250
748
764
(396)
67,316
24 Apr 2019
09 May 2019
09 May 2019
11 Jun 2019
28 Jun 2019
30 Jun 2019
2018
01 Jul 2017
21 Jul 2017
06 Nov 2017
14 Nov 2017
13 Dec 2017
01 Feb 2018
20 Apr 2018
10 May 2018
05 Jun 2018
30 Jun 2018
Ordinary Shares
At a general meeting, on a show of hands, each shareholder present and each other person present as a
proxy, attorney or corporate representative of a shareholder and entitled to vote has one vote. On a poll,
each shareholder present and each other person present as a proxy, attorney or corporate representative of a
shareholder and entitled to vote:
(i)
(ii)
has one vote for each fully paid share held; and
has for each share which is not fully paid a fraction of a vote equivalent to the proportion which the
amount paid up, but not credited as paid up, on that share bears to the total of the amounts paid and
payable (excluding amounts credited) on that share.
Fully paid ordinary shares carry a right to dividends and upon the winding up of the Company.
Capital management
The Consolidated Entity’s funding requirements are largely sourced from equity raisings. Its objectives in
capital management are to ensure that it can meet its debts and commitments as and when they fall due and
to maintain an optimal capital structure to reduce the cost of capital.
67For personal use only
Note 16: Options and Performance Rights
Theta Gold Mines Limited
Listed options (ASX: TGMO)
Unlisted options
Unlisted performance rights
Note 16(b)
Note 16(c)
Note 16(d)
2019
Number
’000
31,430
13,893
24,700
70,023
2018
Number
’000
27,598
37,666
2,100
67,364
During the year, the Board determined that the options and performance rights previously issued to Directors
and employees on 19 October 2016 and 20 July 2017 were no longer appropriate incentives given the new
Company strategy, focussing on the Theta Hill open-cut gold project. The options and performance rights
previously issued primarily contained share price hurdles and performance hurdles based on the Company’s
previous underground mine development strategy. The Board believes that operational performance hurdles
are more appropriate incentives and all incentive securities issued to Directors and employees should have the
same operational performance hurdles. To that end, 17,750,000 options and 2,100,000 performance rights
previously issued were cancelled and 24,700,000 new performance rights were issued in June 2019.
a) Movements
Balance at beginning of year
Listed options issued
Unlisted options issued
Unlisted options cancelled
Unlisted options lapsed
Performance rights issued
Performance rights cancelled
Balance at end of year
b) Listed Options
2019
Number
’000
2018
Number
’000
67,364
3,832
604
(17,750)
(6,627)
24,700
(2,100)
70,023
17,588
27,598
20,678
-
(600)
2,100
-
67,364
2019
Number
‘000
2018
Number
‘000
Expiry
date
Exercise
price
Listed Options
31,430
27,598
31 Oct 2020
A$0.30
c) Unlisted Options
Grant date
04 Jan 2016
22 Mar 2016
02 Nov 2015
19 Oct 2016
19 Oct 2016
2019
Number
‘000
-
-
-
1,050
3,000
2018
Number
‘000
1,000
2,000
2,327
1,050
3,000
Expiry date
Exercise
price
03 Jan 2019
22 Mar 2019
21 Oct 2018
12 Oct 2019
12 Oct 2019
A$0.15
A$0.15
A$0.11
A$0.15
A$0.20
68For personal use only
19 Oct 2016
18 Jan 2017
18 Jan 2017
22 Feb 2017
22 Feb 2017
22 Feb 2017
20 Jul 2017
20 Jul 2017
20 Jul 2017
20 Jul 2017
20 Jul 2017
20 Jul 2017
20 Jul 2017
16 Jan 2018
14 Aug 2018
Theta Gold Mines Limited
3,500
1,000
1,000
222
615
274
500
1,000
-
-
-
200
200
728
604
13,893
4,000
1,000
1,000
222
615
274
500
1,000
3,500
5,500
4,450
2,750
2,750
728
-
37,666
12 Oct 2019
18 Jan 2020
18 Jan 2020
15 Aug 2019
21 Aug 2019
01 Sep 2019
19 Jul 2019
22 Aug 2019
30 Apr 2020
19 Jul 2022
19 Jul 2022
19 Jul 2022
19 Jul 2022
15 Jan 2020
13 Aug 2020
A$0.40
A$0.25
A$0.30
A$0.30
A$0.30
A$0.30
A$0.25
A$0.30
A$0.20
A$0.25
A$0.30
A$0.35
A$0.40
A$0.19
A$0.19
Weighted average
exercise price
A$0.28
A$0.26
During the year, the Company issued 604,211 unlisted options, each exercisable at A$0.19 on or before 13
August 2020, as part consideration for the fee payable in connection with a share placement.
d) Unlisted performance rights
Grant date
20 Jul 2017
28 Jun 2019
2019
Number
‘000
-
24,700
24,700
2018
Number
‘000
2,100
-
2,100
Expiry
date
Exercise
price
19 Jul 2022
27 Jun 2024
na
na
Fair value of performance rights granted
The fair value of performance rights granted during the year were estimated based on the following
assumptions –
Assumptions:
Valuation date
Market price of shares
Exercise price
28 June 2019
$0.16
Nil
Expiry date (5 years from time from issue)
27 June 2024
Indicative value per performance right
$0.16
69For personal use only
Theta Gold Mines Limited
Note 17: Reserves
Equity reserve
Asset revaluation reserve
Option premium reserve
Share-based payment reserve
Foreign currency translation reserve
2019
’000
7,552
30
198
3,214
(3,693)
7,301
2018
’000
7,552
30
198
2,576
(3,700)
6,656
(a)
(b)
(c)
(d)
(e)
The equity reserve recognises the value of share based payments made on the transfer of shares to
BEE entities and includes the equity portion of related party loan not extended on market related
terms.
The asset revaluation reserve is used to recognise the fair value of the entity’s residential property.
The option premium on convertible notes represents the equity component (conversion rights) of the
convertible notes issued.
The share-based payment reserve is used to recognise the value of options and performance rights
granted.
The foreign currency translation reserve records exchange differences arising on translation of
financial statements of foreign controlled entities.
Note 18: Capital Commitments
Exploration
The Consolidated Entity has certain obligations to perform work in accordance with work programmes, as
approved by the relevant statutory body, when the permits are granted. These work programmes may be
varied or renegotiated or reduced by farm-out, sale, reduction of tenement area and/or relinquishment.
Note 19: Contingent Asset and Liability
(a) Contingent Asset
As previously reported, on 1 September 2016, the Tribunal of the Hong Kong International Arbitration Centre
(HKIAC) delivered the Arbitral Award in favour of the Company in its damages claim against Shandong Qixing
Iron Tower Co. Ltd (now known as Northcom Group Limited) (“Northcom”), arising from the non-completion by
Northcom of an agreement to acquire the South African subsidiary of the Company.
The current value of the award, costs plus interest is US$ 19.6 million (2018: US$18.2 million). The Company
had entered into a funding agreement with a consortium which is entitled to 45% of the award plus
reimbursement of the costs they have funded.
The Company continues to work with its legal advisers on enforcing the award.
(b) Contingent Liability
(i) Dispute with the Association of Mineworkers and Construction Union
As reported in previous years, a subsidiary of the Company is in dispute with the Association of Mineworkers
and Construction Union (AMCU) in South Africa relating to an allegation of unfair dismissal. The employees
were claiming re-instatement with back pay to their date of dismissal or 12 months’ salary as compensation
for their alleged unfair dismissal. The matter was heard in the Labour Court of South Africa in March 2018
and the Court ruled in the Company’s favour. AMCU has been granted leave to appeal the decision.
70For personal use only
Theta Gold Mines Limited
Under the South African Labour Relations Act, the Consolidated Entity’s maximum potential liability is
estimated at $645,000 (2018: $599,000). The Directors believe the Consolidated Entity has a strong case
and have not provided for any potential liability.
(ii) Environmental Trust Fund
The Consolidated Entity had a potential liability resulting from an Environmental Trust having applied some of
its cash for a purpose other than rehabilitation, which constitutes a contravention of the income tax law in the
jurisdiction in which it operates. A provision for tax of US$204,000 (2018: US$194,000) had been made in
the accounts and the Trust had also submitted an application for voluntary disclosure relief under a voluntary
disclosure program pursuant to which, if successful, would relief the Trust of all penalty tax and interest
arising from the breach.
Subsequent to balance date, the application under the voluntary disclosure program was assessed in the
Trust’s favour and all penalty tax and interest waived (2018: potential liability US$349,000).
Note 20: Operating Segments
Segment Information
The Consolidated Entity’s operations are located in Australia where it has its corporate office and in South
Africa where it is involved in gold exploration.
The gold exploration activity is conducted through a subsidiary, Transvaal Gold Mining Estates Limited
(TGME). The entire gold project is centred around the TGME processing plant and accordingly it has only
one operating segment.
Segment performance
Continuing operations
Gold and mining revenue
Less: Cost of sales
Segment gross loss
Unallocated items:
Interest income
Fair value adjustment on convertible note
Other income
Reconciliation of segment result to group net loss before tax
Unallocated items:
Operating expenses
Exploration expenses
Finance costs
Other expenses
Net loss before tax
2019
TGME
USD’000
2019
Total
USD’000
2018
TGME
USD’000
2018
Total
USD’000
-
-
-
-
-
-
-
-
94
174
46
314
(2,793)
(1,070)
(646)
(977)
(5,486)
(5,172)
-
-
-
-
-
-
-
-
106
562
104
772
(2,830)
(1,147)
(769)
(155)
(4,901)
(4,129)
71For personal use only
Segment assets
2019
Segment assets
Unallocated assets
Total assets
2018
Segment assets
Unallocated assets
Total assets
Segment liabilities
2019
Segment liabilities
Unallocated liabilities
Total liabilities
2018
Segment liabilities
Unallocated liabilities
Total liabilities
Theta Gold Mines Limited
TGME
USD’000
Total
USD’000
14,519
14,519
506
15,025
TGME
USD’000
Total
USD’000
13,190
13,190
277
13,467
TGME
USD’000
Total
USD’000
3,151
3,151
6,078
9,229
TGME
USD’000
Total
USD’000
3,302
3,302
8,155
11,457
72For personal use only
Note 21: Cash Flow Information
Theta Gold Mines Limited
2019
USD’000
2018
USD’000
a. Reconciliation of Cash Flow used in Operating
Activities with Loss for the Year
Loss from ordinary activities after income tax
(5,172)
(4,129)
Non-cash items in loss from ordinary activities
Impairment and depreciation
Exploration expenditure
Finance costs
Interest income
Share-based payment
Loss on sale of assets
(Gain)/ Loss on financial instrument
Unrealised exchange (gain)/loss
Changes in assets and liabilities
(Increase) / Decrease in accounts receivable
(Decrease) / Increase in provisions
Decrease in trade creditors and accruals
1,050
699
532
(94)
584
-
(174)
-
291
1,147
612
(106)
576
32
(562)
(94)
(2,575)
(2,233)
42
393
(780)
(345)
198
22
(497)
(277)
Net cash flow used in operating activities
(2,920)
(2,510)
b. Non-Cash Financing Activities
Conversion of convertible note
Issue of shares in satisfaction of director fees/salaries
Issue of shares in satisfaction of outstanding debt
Note 22: Related Party Transactions
Parent entity
Theta Gold Mines Limited is the parent entity of the group.
Subsidiaries
Interests in subsidiaries are set out in Note 24.
Transactions with related parties
1,623
276
20
1,919
-
118
250
368
Transactions with related parties are on normal commercial terms and conditions, except for the loan from
Australian Private Capital Investment Group (International) Ltd (refer Note 14(e).
73For personal use only
Theta Gold Mines Limited
Director and director-related entities
(a) Fully paid ordinary shares
Following shareholders’ approval at a general meeting on 10 August 2018 and 28 June 2019, the
following shares were issued to directors –
Shares issued at $0.19 per share in settlement of outstanding director fees and salary:
Name
A$
Shares
Free attaching
listed options
(ASX: TGMO)
355,074
184,211
528,948
979,474
1,495,264
3,542,971
Charles William Guy
Robert Peter Thomson
Bill Richie Yang
Simon Liu
Trevor Alan Fourie
Total
67,464
35,000
100,500
186,100
284,100
673,164
Subscription of shares at A$0.106 per share:
Name
Charles William Guy
Robert Peter Thomson
Bill Richie Yang
Brett Tang
Total
355,074
184,211
528,948
979,474
1,495,264
3,542,971
Shares
377,358
754,716
660,377
94,339
A$
40,000
80,000
70,000
10,000
200,000
1,886,790
(b) Grant of performance rights
Following shareholders’ approval at a general meeting on 28 June 2019, the following performance
rights were issued to directors –
Name
Charles William Guy
Robert Peter Thomson
Bill Richie Yang
Brett Tang
Finn Stuart Behnken
Total
Performance Rights
4,000,000
5,500,000
5,000,000
2,500,000
1,200,000
18,200,000
Full details of the performance rights are set out in the Remuneration Report on pages 34 to 39.
(c) Cancellation of performance rights
The following options and performance rights held by directors were cancelled during the year -
Name
Robert Peter Thomson
Bill Richie Yang
Total
Options
9,500,000
5,250,000
Performance
Rights
1,000,000
950,000
Total
10,500,000
6,200,000
14,750,000
1,950,000
16,700,000
(d) The Company rented office space from an entity associated with Mr Richie Yang, for which the
Company paid USD12,978 (2018: USD23,254) during the year.
74For personal use only
Theta Gold Mines Limited
Key management personnel
Remuneration of key management personnel are disclosed in Note 4 and the Remuneration Report.
Note 23: Financial Instruments
a. Financial Risk Management Policies
The Consolidated Entity’s financial instruments consist mainly of deposits with banks, bank overdrafts,
short-term investments, accounts receivable and payable, loans to and from related parties and leases.
Certain derivatives were used by the Consolidated Entity during the financial year to raise funds for
Company operations.
(i) Treasury Risk Management
The Consolidated Entity’s overall risk management strategy seeks to assist the Consolidated Entity in
meeting its financial targets, whilst minimizing potential adverse effects on financial performance.
(ii) Financial Risk Exposures and Management
The entity does not have material exposures to credit risk, liquidity risk and market risk.
(iii) Capital management
The primary objective of the Consolidated Entity’s capital management is to ensure that it is able to
continue as a going concern and able to meet its debts as and when they become due and payable. It
aims to maintain an optimal capital structure to reduce the cost of capital.
(iv) Sensitivity Analysis
Interest Rate Risk and Foreign Currency Risk
The Consolidated Entity has performed sensitivity analysis relating to its exposure to interest rate risk
and foreign currency risk at the reporting date. This sensitivity analysis demonstrates the effect on the
current year results and equity which could result from a change in these risks.
Interest Rate Sensitivity Analysis
The Consolidated Entity’s exposure to change in interest rates relates primarily to interest bearing
borrowings. Borrowings issued at a variable rate expose the Consolidated Entity to interest rate risk.
The Consolidated Entity’s variable interest bearing financial liabilities outstanding at year-end totalled
USD 210,000 (2018: USD 308,000). An increase/decrease in interest rates of 2% would have an
adverse/favourable effect on loss before tax of USD 5,000 (2018: USD 10,000) per annum. The
percentage change is based on the potential volatility of interest rates.
75For personal use only
Foreign Currency Risk Sensitivity Analysis
Theta Gold Mines Limited
The Consolidated Entity undertakes transactions denominated in foreign currencies, hence exposures to
exchange rate fluctuations arise.
At year end the Consolidated Entity was exposed to currency fluctuations between the presentation
currency, being US Dollars (USD) and Australian Dollars (AUD) and South African Rand (ZAR).
Exchange rate exposures are managed within approved internal policy parameters.
The carrying amounts of the Consolidated Entity’s foreign currency denominated monetary assets and
monetary liabilities at the end of the reporting period are as follows –
Assets
Liabilities
2019
USD’000
2018
USD’000
2019
USD’000
2018
USD’000
South African Rand (US dollar equivalent)
Australian dollars (US dollar equivalent)
1,638
414
1,547
180
1,462
6,077
1,658
7,963
Based on the financial instruments held, the Consolidated Entity’s total equity would have been USD
367,000 higher / lower (2018: USD 523,000 higher / lower) with a 10% increase / decrease in the US
Dollar against the South African Rand or Australian Dollar .
76For personal use only
b. Financial Instruments
(i) Financial instrument composition and maturity analysis
Theta Gold Mines Limited
The tables below reflect the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity, as well as the settlement period
for all other financial instruments.
2019
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Other financial assets
Other receivable
Total
Financial liabilities
Trade and other
payables
Bank overdraft
Borrowings
Other financial liabilities
Finance leases
Loans from related
parties
Total
Weighted
average effective
interest rate
%
Variable
interest rate
USD’000
Less than
1 year
USD’000
1-5 years
Longer than
5 years
Non-interest
bearing
Total
USD’000
USD’000
USD’000
USD’000
-
-
-
7.55%
13.00%
12.13%
10.00%
-
-
-
-
-
453
-
-
-
-
-
453
-
-
-
1,408
1,408
-
-
32
-
-
5,057
5,089
-
-
-
-
-
-
-
178
-
-
178
-
-
-
-
-
-
-
-
-
-
-
-
489
155
-
-
644
1,304
-
106
-
-
-
1,410
489
155
-
1,408
2,052
1,757
-
316
-
-
5,057
7,130
77For personal use only
Theta Gold Mines Limited
Weighted
average effective
interest rate
%
Variable
interest rate
USD’000
Less than
1 year
USD’000
1-5 years
Longer than
5 years
Non-interest
bearing
Total
USD’000
USD’000
USD’000
USD’000
-
-
-
-
12.23%
10.50%
11.61%
10.04%
-
-
-
1,378
1,378
772
67
50
-
-
-
889
-
-
-
-
-
-
-
1,813
-
-
4,885
6,698
-
-
-
-
-
-
-
49
-
-
49
-
-
-
-
-
-
-
-
-
-
-
-
196
197
-
-
393
1,766
-
384
-
-
-
2,150
196
197
-
1,378
1,771
2,538
67
2,296
-
-
4,885
9,786
2018
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Other financial assets
Rehabilitation fund
Total
Financial liabilities
Trade and other
payables
Bank overdraft
Borrowings
Other financial liabilities
Finance leases
Loans from related
parties
Total
78For personal use only
Theta Gold Mines Limited
(ii) Fair value measurements
This note provides information about how the Consolidated Entity determines fair values of various
financial assets and financial liabilities.
Fair value of the Consolidated Entity's financial assets and financial liabilities that are measured at fair
value on a recurring basis
Some of the Consolidated Entity’s financial assets and financial liabilities are measured at fair value at
the end of each reporting period. The following table gives information about how the fair values of these
financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs
used).
Financial Liabilities
Fair value at
(USD’000)
Convertible security
financial liability
2019
-
2018
348
Financial Asset
Rehabilitation
investment fund*
Fair value at
(USD’000)
2019
-
2018
1,378
Fair value
hierarchy
Level 2
Fair value
hierarchy
Level 2
Valuation
technique(s) and
key input(s)
Discounted cash
flow, at a rate that
reflects the credit
risk of various
counterparties.
Valuation
technique(s) and
key input(s)
Market price of
securities and
cash value
* During the current year, the investments held by the fund were liquidated and the proceeds invested in a term
deposit account, held at amortised cost.
Fair value of financial assets and financial liabilities that are not measured at fair value
The directors consider that the carrying amounts of financial assets and financial liabilities recognised in
the consolidated financial statements approximate their fair values.
Note 24: Parent Entity Information
The accounting policies of the parent entity, which have been applied in determining the financial
information shown below, are the same as those applied in the consolidated financial statements except
as set out below. Refer to Note 2 for a summary of the significant accounting policies relating to the
Consolidated Entity.
79For personal use only
Theta Gold Mines Limited
Set out below is the supplementary information about the parent entity, Theta Gold Mines Limited.
Statement of profit or loss and other comprehensive income
Parent
2019
USD’000
2018
USD’000
Loss after income tax
(6,987)
(5,631)
Statement of financial position
Assets
Total current assets
Total non-current assets
Total assets
Liabilities
Total current liabilities
Total non-current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Parent
2019
USD’000
2018
USD’000
414
92
506
6,078
-
6,078
180
97
277
8,155
-
8,155
92,905
3,265
(101,741)
(5,571)
89,349
2,780
(100,007)
(7,878)
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2019 (2018: Nil).
Capital commitments
The parent entity had no capital commitments as at 30 June 2019 (2018: Nil).
Significant accounting policies
Investments in subsidiaries are recorded at cost, less any impairment adjustments. Except for
the foregoing, the accounting policies of the parent entity are consistent with those of the
Consolidated Entity, as disclosed in Note 2.
80For personal use only
Theta Gold Mines Limited
The consolidated financial statements incorporate the assets, liabilities and results of Theta Gold
Mines Limited and the following subsidiaries in accordance with the accounting policy described in
Note 2:
Name of entity
Stonewall Mining (Proprietary) Limited
and its subsidiaries -
‐ Transvaal Gold Mines Estates Limited*
‐ Sabie Mines (Proprietary) Limited*
‐ Vanaxe Share Block Pty Ltd
Warrinen Pty Ltd
Equity holding
Country of
incorporation
South Africa
South Africa
South Africa
South Africa
Australia
2019
%
100
74
74
74
100
2018
%
100
74
74
74
100
* Stonewall Mining Pty Ltd entered into a share sale agreement with TGME Empowerment Company
Proprietary Limited (TGME SPV) dated 11 June 2012 in terms of which it sold 330,234 shares in
TGME (26% of the shares) to the TGME SPV for a nominal amount. Thus one share was issued by
TGME to the TGME SPV on 30 October 2012. This is consolidated into TGME as TGME controls the
SPV.
Stonewall Mining Pty Ltd entered into a share sale agreement with African Sun Empowerment
Company Proprietary Limited (Sabie SPV) dated 11 June 2012 in terms of which it sold 40,299 shares
in Sabie (26% of the shares) to the Sabie SPV for a nominal amount. Thus one share was issued by
Sabie to the Sabie SPV on 30 October 2012. This is consolidated into Sabie as Sabie controls the
SPV.
The TGME SPV and Sabie SPV are not consolidated as the substance of the relationships between
the Consolidated Entity and the SPVs are such that the SPVs should not be consolidated by the
Consolidated Entity.
Warrinen Pty Ltd is a dormant entity with no operations, assets or liabilities.
Note 25: Income tax expense
Loss before income tax expense
Prima facie (tax benefit) / expense on loss from ordinary
activities before income tax at 27.5% (2018: 27.5%)
Effect of expenses that are not deductible in determining taxable
income
Effect of different tax rates of group entities operating in different
jurisdictions
Effect of temporary differences and / or tax losses not recognised
Income tax expense recognised in profit or loss
Unrecognised deferred tax balances
Unused tax losses for which no deferred tax asset has been
recognised
2019
USD’000
2018
USD’000
(5,172)
(4,129)
(1,422)
(1,135)
384
(33)
1,071
-
371
(29)
793
-
26,448
24,953
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Theta Gold Mines Limited
No deferred tax asset has been recognised as it is currently not probable that future taxable profits will
be available to realize the asset in the foreseeable future. Potential deferred tax assets on carry forward
losses are shown above.
Note 26: Events after Balance Date
Share Placement
Subsequent to balance date, as announced on 23 July 2019, the Company entered into subscription
agreements with specialist global resource investors for the placement of 53,333,334 shares (voluntarily
escrowed until 31 December 2020) at an issue price of A$0.15 per share to raise a total of A$8,000,000.
The shares are to be issued in three tranches, with the first and second tranches issued on 25 July 2019
and 29 August 2019 respectively and the third tranche of A$4,000,000 due at the end of September 2019.
Environmental Trust Fund
As referred to in Note 19(b)(ii), the Consolidated Entity had a potential liability resulting from an
Environmental Trust having applied some of its cash for a purpose other than rehabilitation, which
constitutes a contravention of the income tax law in the jurisdiction in which it operates. The Trust had
submitted an application for voluntary disclosure relief under a voluntary disclosure program pursuant to
which, if successful, would relief the Trust of all penalty tax and interest arising from the breach.
Subsequent to balance date, the application under the voluntary disclosure program was assessed in the
Trust’s favour and all penalty tax and interest waived (2018: potential liability US$349,000).
82For personal use only
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor's Report to the Members of Theta Gold Mines
Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Theta Gold Mines Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2019, the consolidated statement of comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2019
and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which describes the principal conditions that raise
doubts about the entity’s ability to continue as a going concern. These events or conditions indicate that a
material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
83For personal use only
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going
Concern section, we have determined the matters described below to be the key audit matter to be
communicated in our report. For each matter below, our description of how our audit addressed the
matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
Carrying value of capitalised exploration and evaluation expenditure
Why significant
How our audit addressed the key audit matter
Capitalised exploration and evaluation assets are
the Group’s most significant asset. The carrying
value of exploration and evaluation assets are
assessed for impairment by the Group when
facts and circumstances indicate that the
capitalised exploration and evaluation
expenditure may exceed its recoverable amount.
Our procedures to address the Group’s assessment
of the carrying value of exploration and evaluation
assets included:
• consideration of the Company’s right to explore in
the relevant exploration area which included
obtaining and assessing relevant documentation
such as license agreements;
The determination as to whether there are
indicators of impairment involves judgment,
including the assessment of exploration and
evaluation results and whether there is sufficient
information for a decision to be made that the
area of interest is not commercially viable.
During the year, the Group determined that
there had been no indicators of impairment, with
the exception of the $0.9m write off of the
existing plant which is no longer considered likely
to be used in any development.
Due to the value of the exploration and
evaluation asset and the subjectivity involved in
assessing indicators of impairment, this was a
key audit matter.
• consideration of the Group’s intention to carry
out significant exploration and evaluation activity
in the relevant exploration area;
•
assessment of recent exploration and evaluation
activity in the relevant license area and whether
there is sufficient information for a decision to be
made that an area of interest is not commercially
viable; and
• considered the adequacy of disclosures included
within Note 1 (iv), Note 2 (g) and Note 10 of the
financial report.
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Refer to Note 1 (iv), Critical Accounting
Estimates and Judgements, Note 2 (g)
Exploration and evaluation expenditure and Note
10 Exploration expenditure to the financial
statements for the amounts held on the balance
sheet by the Group as at 30 June 2019 and
related disclosure.
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 Company’s 2019 Annual Report, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating 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.
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As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
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Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 41 to 47 of the directors' report for the year
ended 30 June 2019.
In our opinion, the Remuneration Report of Theta Gold Mines Limited for the year ended 30 June 2019,
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.
Ernst & Young
Scott Jarrett
Partner
Sydney
27 September 2019
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Theta Gold Mines Limited
Shareholders Information
as at 20 September 2019
1.
Issued securities
Ordinary shares
(ASX: TGM)
Listed Options
(ASX: TGMO)
Unlisted
Options
Performance
rights
Number on issue
410,039,918
31,429,663
11,282,183
24,700,000
2. Distribution of Shareholders
Holdings Ranges
Holders
Total Units
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 +
Totals
3. Substantial Shareholders
115
126
95
239
101
676
74,922
435,703
766,761
9,463,362
399,299,170
410,039,918
%
0.018
0.106
0.187
2.308
97.381
100.00
The substantial shareholders in the Company based on substantial holding notices received by the
Company are -
Name
Date of notice
Number of shares
%
Fineway Creation Limited
Zenith (HK) Holding Limited
04 Jun 2018
67,070,707
31 May 2019
46,645,701
Tasman Funds Management Pty Ltd
21 Jun 2018
32,730,995
17.59
12.23
10.87
4. Non-Marketable Parcels
A non-marketable parcel is a shareholding with a market value of less than $500. There were 167
shareholders with non-marketable parcels.
5. On-Market Buy-back
There is no current on-market buy-back.
6. Voluntary Escrow
Class
Ordinary shares
Ordinary shares
Ordinary shares
Total
Number of shares
67,070,707
46,645,701
26,666,667
140,383,075
Expiry date
23 Nov 2019
31 Dec 2019
31 Dec 2020
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Theta Gold Mines Limited
Top 20 shareholders
Holder Name
Fineway Creation Limited
Zenith (HK) Holding Limited
Tasman Funds Management Pty Ltd
Golden Asia Investment Group Ltd
Qinglong Fan
Citicorp Nominees Pty Limited
High Gift Investments Ltd
JP Morgan Nominees Australia Limited
Best Wealth Winner Limited
BNP Paribas Nominees Pty Ltd
Monex Boom Securities (HK) Ltd
Blonde Mile International Limited
Goldenrock International (Hong Kong) Limited
Khan International Limited
Murray SA Investment Pty Ltd
China Tonghai Securities Ltd
Hanhong New Energy Holdings Ltd
Smart Vision Investment Group Ltd
BNP Paribas Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
Number of
Ordinary
Shares Held
Percentage
of Total
Issued
Shares
67,070,707
16.36%
46,645,701
11.38%
32,730,995
31,127,805
26,666,667
24,308,071
23,015,179
19,630,116
19,555,556
15,220,000
11,760,601
10,263,158
8,092,368
5,569,339
5,296,373
5,215,000
4,527,105
4,242,369
3,745,375
7.98%
7.59%
6.50%
5.93%
5.61%
4.79%
4.77%
3.71%
2.87%
2.50%
1.97%
1.36%
1.29%
1.27%
1.10%
1.03%
0.91%
2,721,175
0.66%
367,403,660
89.58%
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