2020
ANNUAL REPORT
Contents
Chairman’s Letter
...................................................................................................
Environment, Social and Governance
.................................................................
Community
.............................................................................................................
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
.....................................................................
Financial Statements
..............................................................................................
Independent Auditor’s Report
..............................................................................
Shareholders Information
.....................................................................................
3
4
8
12
24
28
31
39
49
56
58
60
100
106
Directory
.................................................................................................................
110
Chairman’s Letter
Dear Fellow Shareholders
On behalf of the Board of Directors, I am pleased to present
the 2020 Annual Report for Theta Gold Mines Limited
(ASX: TGM, TGMO / OTCQB: TGMGF). In the last twelve
months the company has delivered a path to gold production,
a new optimised mine schedule for the Theta Starter Open
Pit Project, listing on OTC Markets in the United States and
increases in share value and market capitalisation.
The company has 6Moz of gold under management and
a near term production asset being the Theta Open Pit
Project. The new multiple-mines strategy delineated by the
board set a production goal of 160 kozpa within a five year
period, offering a clear growth profile in production and
share value.
On the ground, the operation team has delivered:-
A 2.4MW ball mill delivered to site;
Environmental studies have been completed for the
stage 1 Theta Starter Open Pit Project;
Preferred Mining contractor appointed and draft mining
contract completed;
New optimised mine schedule completed to take
advantage of a strong gold price;
Engineering and metallurgical studies completed.
Gold plant construction tender and construction
financing in progress.
The market capitalisation of the company exceeded A$100
million during the year, reflecting the strong project
economics of the starter Theta Project Feasibility Study.
There was a steady re-positioning of the company from
exploration to development as the company looks towards
the next major transition to gold producer.
The company has a five-year plan which targets four mine
developments, Theta Starter Open Pit Project (MR83),
Theta Open-pit Extension (MR341) and the Rietfontein
and Beta underground mines. This four-mine plan provides
the company with a clear growth strategy of a combined
open pits and underground resource of over 2.75Moz with
only the Theta starter-pit portion of this resource included
in the Optimised Study. All ore is planned to be processed
within the permitted TGME plant footprint area with the
new 600,000tpa CIL plant designed to be readily expandable
to cater for 1.2Mtpa of oxide ore with modest capital
expenditure.
The new Optimised Mine Schedule enhanced the project
metrics on the May 2019 Feasibility Study and added
further value to shareholders. The key projects metrics at
US$1,600/oz gold price shows an increase in production to
234,000 ounces of gold, extends the mine life to 6.5 years
for stage 1, low cost with AISC US$822 per ounce, Internal
Rate of Return (IRR) of over 157%, and the life of mine
EBITDA increased to over US$181 million. These numbers
demonstrate profitable mining is likely to be achievable
on other project areas across the whole 620km2 goldfield
currently under management.
Theta has significant advantages over its junior peers with
an ability to discover in-situ low-cost gold ounces (at less
than US$12 per Indicated Resource ounce discovery cost),
control of its own goldfield and a pipeline of projects which
can take Theta to a sustainable mid-tier producer. We
expect an exciting 2021 as we work towards bringing the
stage 1 Theta Starter Open Pit Project online. In parallel, the
company has begun preliminary work on the underground
mines as it looks at all opportunities to add value for the
shareholders.
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.
Charles
(Bill) Guy
Chairman
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Annual Report 2020
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3
Theta Gold Mines LimitedAnual Report 2020
1
ENVIRONMENT,
SOCIAL & GOVERNANCE
A sustainable gold
miner in the making
ENVIRONMENT
Theta Gold is fully committed to creating a sustainable mining business underpinned by a green mining strategy.
Theta Gold through its controlled operating entities are creating regional Environmental Development Trusts within the
group’s existing local company equity structure. Funds are to be budgeted towards certain environmental offsets, alien
invasive plants removals, establishment of nature reserves and targeted environmental study programs.
The Company continues to conduct environmental monitoring and reporting as well as external audits required by its
mining right conditions and environmental authorisations. The Company has built functional working relationships in an
effort to support its environmental licencing strategy as the Company grows its proposed mining footprint.
In light of the prevalence of alien invasive plants, fire is a key hazard and is well managed by Theta Gold in collaboration
with neighbouring forestry stakeholders and the local fire protection agency.
Environmental Team Water Sampling
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Annual Report 2020
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Invasive Alien Plants
Fire Protection
HEALTH AND SAFETY
TRANSFORMATION
GOVERNANCE
A sustainable value-based health and safety culture is core to Theta Gold. We recognise the importance of maintaining both
a strategic operational and tactical focus on health and safety to ensure that we do not harm our people and the community
in which we work. Operational health and safety leadership is recognised as an integral component to embedding our
desired culture. We are committed to continual improvement in relation to the management of our health and safety and its
performance. Theta Gold has developed and implemented a mandatory code of practice for the prevention, mitigation and
management of COVID-19 outbreak in accordance with regulatory guidelines and had zero positive cases on the minesite.
COVID-19
The Company’s onsite team in South Africa continued to operate notwithstanding lockdown measures due to COVID-19.
Under section 213 of the Labour Relations Act. 1995, mining operations in South Africa are deemed an essential service.
However, the Company has encountered delays in its dealings with government departments, in particular in connection
with the permitting amendment to MR83.
COVID-19 staff training
industry and achieving
Theta Gold is committed to transformation in the South
African mining
targets
contemplated in the Mining Charter 2018, with regards
to historically disadvantaged ownership participation,
employment equity, preferential procurement,
skills
development, and local economic development.
the
Theta Gold has ensured that 26% of project ownership
is held by its local labour force, host communities and
strategic black entrepreneur partners, and its structure has
been designed for broad based economic participation,
with benefits intended to flow to poverty alleviation, small
local businesses and environmental enhancement projects.
Theta Gold further believes that this structure achieves the
regional impact contemplated in the spirit of the regulation
in terms of local development projects, employment, mining
participation and shareholder participation.
The management organisational design is currently under
review to ensure that we have the appropriate structure to
deliver on the Company’ strategic objectives. The objectives
of the optimised structure will be to align roles with levels of
work and ensure that we have the right people, in the right
roles, doing the right work, at the right time.
The Company seeks to maintain and improve its senior
management
female and historically disadvantaged
participation in line with Mining Charter 2018 requirements.
Conducting ethical business is core to the Theta Gold culture.
Beginning with the Board, significant effort is invested into
instilling a culture of high ethical standards throughout the
organisation. The Board adopted an updated Corporate
Governance Charter on 23 September 2020, including
its Ethics Policy, Diversity Policy, Continuous Disclosure
Policy, Anti-Bribery and Anti-Corruption Policy and
Whistleblower Policy. The Board has established processes
to review all corporate board charter documents annually.
Managing Risk
The Company, through its normal business management
and the development of its strategy, is exposed to different
types of risks that could adversely affect the Company’s
financial position, prospects or reputation.
Theta Gold is setting up a risk register which ranks all
risks across the business on likelihood and severity of
consequences across several categories including Financial,
People, Sustainability, Compliance and Reputation. For
each risk the relevant controls are documented and an
assessment of the controls to mitigate the risk is undertaken.
As part of the risk management system, the risk register,
controls, and effectiveness of the controls will be evaluated
annually.
The highest ranked residual business risks are continually
monitored by the Audit and Risk Committee. The Board
is also kept up-to-date on emerging risks and common
risks impacting the resources industry, such as the recently
declared COVID-19 pandemic.
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Theta Gold Mines Limited
Annual Report 2020
7
COMMUNITY2
The communities in which the Company operates are supportive of mining in general; 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.
Similarly, the Company is committed to community upliftment and regional growth through effective partnerships with all
local stakeholders in the regions where it operates.
In connection with the Company’s recent stakeholders engagement in the environmental authorisation amendment process
for Mining Right 83 (“MR83”), over 5,000 local residents signed a petition in support of Theta Gold re-establishing mining
operation (open pit and underground).
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
Provision of water to the local community
Heating and cooking fuel provision to the
community
School Feeding Scheme
Small, Medium and Micro-sized Enterprises (SMMEs)
development
local
2.
3.
4.
5.
Snapshot of section of a >5000 signature local
petition letter in support of Theta Gold’s mining
right amendment application.
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 including construction, development, transport, potential environmental
impacts (noise, dust etc) and other factors associated with mining operations.
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Theta Gold Mines Limited
Annual Report 2020
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Theta greatly values the youth of South Africa and supports
two local schools sponsoring three teachers, feeding
programs, photo copiers, school supplies and building
maintenance. The staff interacts with the schools and
support the local education.
Company Staff at the local school
The Company has recognised that given the high
unemployment rate in the area that there were members
of the community that were finding it particularly difficult
to make ends meet. Through its community liaison officer
and the local councillor, the Company identified numerous
members of the community that were particularly in need
and provided them with food packs for the Christmas 2019
season.
During the year, Theta Gold also assisted the Mpumalanga
Department of Public Works, Road and Transport by
donating various gardening tools used to prepare the local
townships for the busy Christmas tourist season.
During COVID-19 the company flew 10,000
medical grade masks to site for distribution to
staff and local residents. Masks also donated to
local hospital and medical centres.
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Theta Gold Mines Limited
Annual Report 2020
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Local Newspaper covering Theta’s community
involvements before Christmas 2019
3
REVIEW OF OPERATIONS
OVERVIEW
Theta Gold Mines Limited (“Company” or “Theta Gold”)
is a gold exploration and development company, that holds
a range of prospective gold assets in a world-renowned
South African gold mining region. The Company’s shares
are dual-listed on the Australian Securities Exchange (ASX:
TGM, TGMO) and the OTC Markets in the United States
(OTCQB: TGMGF) with DTC Eligibility.
The Company’s initial open-pit project, the Theta Starter
Open Pit Project (“Stage One Theta Project”), is located
next to the historical gold mining town of Pilgrim’s
Rest, in Mpumalanga Province, some 370km northeast
of Johannesburg by road or 95km north of Nelspruit
(Provincial capital city). The Company
is currently
focussing on the construction of a new gold processing
plant within its approved footprint at the TGME plant
(Figure 1), for processing of the open-pit oxide gold ore,
initially from the Theta Starter Open Pit Project. Nearby
surface and underground mines and prospects are expected
to be evaluated with a view to building a solid production
platform to over 160,000oz per annum primarily from
open-pits or shallow adit-entry underground resources.
South Africa is the home of gold having produce more
than 40+% of worlds gold. The company believes that our
tenement pack, has one the best regional geological settings
for gold mineralisation given that the prospects are located
on the eastern side of Bushveld complex, one of the world’s
largest and metal rich complexes on earth (Figure 2).
While the prospects are not located in the geology of the
Bushveld Complex it is strongly believed that the igneous
nature of this complex is the direct source of the Company’s
mineralised assets.
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Theta Gold Mines Limited
Annual Report 2020
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Figure 1: Existing TGME Permitted Gold Plant Footprint
HIGHLIGHTS
THETA STARTER
OPEN PIT PROJECT
Optimised Study
The Company completed an optimised study for the Stage
One Theta Project during the year. The study incorporates
a new optimised mine schedule that include the mining
of several old mine waste rock dumps and allows for an
increase in the production rate from 500ktpa to 600ktpa.
The 2.5MW ball mill acquired in October 2019, which has
a capacity of up to 1.2Mtpa, was also incorporated into the
study. This ball mill will provide the flexibility for future
project expansion.
The result of the study indicates the potential to improve the
May 2019 Feasibility Study, by potentially adding 40,000oz
of gold to the life of mine plan and extending the mine
life to 6.5 years. The table below sets out the results of the
Optimised Study at various gold price scenarios. This life
of mine plan includes 65 000oz contained within Inferred
resources.
Project
Stage One Theta Project feasibility study optimised, with
significantly improved economics of 234,063oz gold
production over 6.5 years mine life
2.5MW used ball mill acquired in preparation for
Theta Project development, capable of processing up to
1.2Mtpa and caters for future expansion
Amended Permitting for open-pit mining pending approval
Preferred mining contractor selected
Strong community support of Theta Gold’s mining
operations
Exploration
Regional geological study completed with CSA
Global, define a new Mineral Systems Model.
The Mineral Systems Model will be used to define
future drilling targets, potentially adding more ounces to
the existing JORC Resource of over 6.0Moz Au (44.8Mt
@ 4.18g/t Au) including open-pit resources of 1.3Moz
(13.08Mt @ 3.12g/t Au)
Corporate
Theta Gold dual listed on Unites States OTC Markets
(OTCQB: TGMGF), with eligibility for electronic
trading (DTC Eligible)
US$6.1 million capital raised
Real Discount Rate
NPV @ 5%
Internal Rate of Return (IRR)
Total ounces in Mine plan
Total Oz Recovered
Average Payback Period (From Start of Production)
Total Capital Requirement
All In Sustaining Cost (AISC)
Return on investment
EBITDA over LOM
Gold Price
Exchange Rate
Unit
USDm
%
oz
oz
Month
USDm
USD/oz
USDm
USDm
USD/oz
ZAR/USD
US$1369/oz
Case
US$1500/oz
Case
US$1600/oz
Case
61
92.7%
259 607
234 063
9
31.4
911
206%
108.5
1 369
14.64
85
123.0%
259 607
234 063
8
31.4
855
350%
150.2
1 500
16.00
104
157.2%
259 607
234 063
6
31.4
822
476%
181.4
1 600
17.00
Table 1: Optimised Feasibility Study April 2020
Figure 2: Location of Theta Project
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Theta Gold Mines Limited
Annual Report 2020
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The economics for the Theta Starter Open Pit Project
benefits from the open-pit 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.
Ball Mill
Shortly after the completion of the May 2019 Feasibility
Study on the Stage One Theta Project, the ball mill was
identified as a long lead item that could potentially delay
the project delivery. The Company has managed to secure
a secondhand mill in excellent condition, and with an
inventory of vital spare parts. The purchase also provides
certainty of grinding capability for the mine and, being
larger than initially planned for in the feasibility study,
allows for future throughput increases.
Figure 3: 2.5MW Ball Mill
The ball mill was last operated by Glencore at its Rustenburg
operation. The Original Equipment
ferrochrome
Manufacturer (OEM) Thyssen Krupps was engaged to
complete the removal of the mill and associated equipment
and to transport it to the TGME site together with the
associated spares.
Upside Potential
The Stage One Theta Project open-pits resource included
in the feasibility mine plan to date represents only 57% of
the current Theta Open-pits Indicated Resources of 880Koz
(10.1Mt @ 2.7g/t Au). Considerable potential exists to
extend the project life.
Thyssen Krupps also completed a thorough inspection of
the mill, associated equipment and spares and confirmed
that everything was in excellent condition and any minor
refurbishment or repairs could be carried out on site. Some
workshop repairs are required to the gearboxes and motors
before installation with a total of three motors and two
gearboxes available for use. The girth gear and pinion for
the mill is still in good condition with minimal wear.
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Theta Gold Mines Limited
The Ore Reserve estimated for the Stage One 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: Theta Open-pits Resource Footprint
Amended Permitting for Open-pit Mining Pending
The Stage One Theta Project is situated on MR83, additional
resources are in the adjacent MR341 to the south. MR83
is an approved and executed mining right and has an
approved Environmental Authorisation for underground
mining activities, as well as approval for processing of ore
and deposition of residues onto an existing tailings dam.
To conduct open pit mining, the Company has applied for
an amendment to MR83 (“Amended Permitting”). The
application, which includes completing an environmental
authorisation amendment process, has now been submitted
to the Department of Mineral Resources and Energy
(“DMRE”). A decision by DMRE is pending.
niobium and coal projects across the African continent. The
group has completed over US$2 billion worth of civil and
mining works to-date in South Africa alone.
The selection of Digmin will allow the Company to rapidly
mobilise trial mining operations. These operations are
expected to commence once final permitting has been
achieved (environmental authorisation for open pit mining
on MR83).
Digmin have also agreed to partner with Theta Gold to
facilitate local employment and social upliftment programs
in the small Pilgrim’s Rest community
Preferred Mining Contractor
A key project development milestone for the Stage One
Theta Project has been achieved with the selection of an
experienced and respected mining contractor.
After a comprehensive tendering process, Digmin Group
(‘Digmin’) has been selected. The Digmin Group has a solid
track record providing contract mining services throughout
Africa and also provides bulk earthworks, roads and civils,
mine infrastructure development as well as surface and
underground drilling services. Digmin is a proven contract
miner currently engaged in a number of gold, copper,
Figure 5: TGME and Digmin Directors at
Barlows-Caterpillar Equipment Johannesburg
Annual Report 2020
17
RIETFONTEIN AND
BETA MINES
FIVE YEAR PLAN
EXPLORATION
The Rietfontein and Beta mines forms part of the
Company’s five year strategy and remain a primary focus
for the Company. Scoping studies were conducted in 2017
on the Rietfontein mine (standalone) and on the combined
Rietfontein/Beta mines, both confirming the potential
viability of development.
During the financial year, the Company began to evaluate
the potential development of these shallow high grade old
underground mines.
Over the next five years, the Company aims to build a solid
production platform to over 160,000ozpa based primarily
around shallow, open-pits or adit-entry hard rock mining
sources.
The Company has completed engineering studies to
maximise 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. In addition to the Theta Open-
pits, ore from the Rietfontein and Beta underground mines
is planned to be trucked to the processing plant.
The Company has a significant tenement holding of 62,000
hectares (620km2) covered by mining rights and applications
for mining rights at various stages of being granted, with
access to over 43 historical mines and prospect areas that
can be accessed and explored.
During the year, the Company commissioned CSA Global
(an ERM group company) (released to ASX on 03/02/2020)
to develop a Mineral Systems Model (ore genesis and
structural geology model) (Figure 6) to support the
Company’s exploration efforts. The CSA Global Mineral
Systems Model interpreted that east-west structures (faults
and joints) provided fluid pathways for mineralising fluids
from the Bushveld Complex to the Eastern Transvaal Gold
Fields. Based on these new interpretations, the Company
is assessing the regional exploration potential of the wider
Eastern Transvaal Basin.
The tenements are situated approximately 40km from the
Bushveld Complex (largest layered mafic igneous intrusive
complex on Earth) is interpreted as the key driver and source
of the gold mineralisation at the East Transvaal Goldfield.
This is reflected in the size of the East Transvaal Goldfield,
the extensive nature of the reefs system and the distribution
of gold deposits. Examples such as Vaalhoek (3.5 KM strike)
and Rietfontein (over 3km of known mineralization) reflect
the nature of the goldfield as indicated by elements of the
Mineral Systems Model.
During the year post the CSA work on Mineral Systems
Model and Regional structural Interpretation the Company
initiated a regional reconnaissance fieldwork in January and
February 2020, (released to ASX on 16/03/2020) this led to
encouraging results from a number of prospects. The company
also completed ASTER interpretation using different band
ratios to highlight zone mineral alteration assembles that
have gold mineralisation potential. The ASTER highlighted
4 zones of mineral alteration that require further field work
(See Figures 9 & 10).
Figure 6: Five Year Plan and Target Production profile
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Theta Gold Mines Limited
Figure 7: Mineral Systems Model
Annual Report 2020
19
An initial fieldwork included rock chip sampling highlights
in Table 2 with assay result of 83.97 g/t Au collected at
Vaalhoek is over 60 km from Rietfontein samples (41.87 g/t
Au, 22.85 g/t Au) (Table 2). Both Vaalhoek and Rietfontein
have over 3 km of underground workings; both have a
vertical component to the gold mineralization, which has
been interpreted as a result of the NNE trending dykes
forming structural traps and causing gold deposition via
the disruption of migrating mineralizing fluids. The setting
for mineralization in both mines conform with the Mineral
Systems Model announced as part of an ASX release dated
3 February 2020 (Structural Traps). The 43 historical mines
under management can now be compared to the Mineral
Systems Model to assist with evaluation, classification and
exploration
Location
Sample No.
Vaalhoek reef Neck Section
Vaalhoek reef Met Plant
Vaalhoek reef Neck Section
Vaalhoek Shaft Dump
Rietfontein Adit 3 rocks
Rietfontein Adit 3 rocks
Rietfontein Adit 13 Outcrop
Elansdrift Workings
Elansdrift Workings
VN002B
VN002C
VN003A
VN004A
R3D005
R3D006
R13002B
ELR001A
ELR001B
Au g/t
16.73
22.83
11.1
83.97
22.85
41.87
15.28
30.24
34.92
Comments
Flat reef Chysocolla
Met Plant Rock dump
Nothern rock dump
2 Shaft Rock Dump
Vein material #3 Adit
Vein material #3 Adit
Oxidised outcrop vein
Reef material at surface
Reef material at surface
Table 2: Rock chip Assay Highlights-
(Two kilogram samples were dispatched to SGS Laboratories in Barberton SA. Analysis by standard 50 g aliquot
mixed acid dissolution Fire assay with AAS finish. Samples located using sub 5 m hand-held GPS unit)
Figure 8: Aster Satellite - Image Band Combination A (Priority)
Figure 9: Aster Satellite -Image Band Combination B (Priority)
Figure 10: Sampling at the old Frankfort Mine, Bevetts Reef, Beverly Hills area.
Grades up to 3.2 g/t Au recorded.
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Theta Gold Mines Limited
Annual Report 2020
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FINANCIAL
CORPORATE
OUTLOOK
The Company has a large mineral resource base and aims
to be able to convert it to mining reserves through further
exploration over time. Total mineral resources is estimated
at over 6.0Moz gold (43.74Mt @ 4.29g/t Au) across several
locations and projects, including open-pit resources of
1.3Moz (13.08Mt @ 3.12g/t Au).
An Ore Reserve and Mineral Resource Statement is set out
on pages 25 and 26.
Results
The Consolidated Entity made a loss after tax of US$5,490,000
(2019: US$5,172,000). Contributing to the loss was indirect
exploration costs written-off of US$841,000, finance costs of
US$710,000 and corporate and administration costs carried
by the Consolidated Entity in support of its exploration and
pre-development activities. The corporate costs include
a provision of US$621,000 for a tax penalty assessed by
the South African Revenue Service in connection with a
subsidiary’s income tax return for 2016 to 2018 (refer Note
13 of the financial statements). Based on professional advice
from its tax adviser, the Company is strongly objecting to
the tax penalty.
Further exploration expenditure was incurred on permitting
and pre-development activities associated with the Theta
Project. This further exploration expenditure, totaling
US$1,426,000, has been capitalized and disclosed in the
balance sheet.
Cashflow
Funding for the Company’s business activities is sourced
largely from equity markets. During the year, the company
raised a total of US$6,115,000 from share placements to
sophisticated investors. The funds were applied towards
pre-development and permitting activities for the Theta
Project and general exploration, acquisition of the used
ball mill, 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 raised A$4,000,100
from a share placement of 16,667,084 fully paid ordinary
shares at an issue price of A$0.24 per share.
Dual Listing on OTC Markets
In November 2019, shares in the Company were admitted for
trading on the OTCQB market in the United States under the
code TGMGF. The Company’s primary listing remains on
the Australian Securities Exchange under the code TGM.
The Company is focussed on developing the stage one Theta
Starter-pit Project as the group’s starter mining operation,
subject to the MR83 amendment for open pit mining being
granted and funding being available.
The Company’s application for DTC eligibility with the
Depository Trust and Clearing Corporation (DTC), part
of the US Federal Reserve System, has also been approved.
DTC eligibility facilitates electronic trading of securities by
individual investors that use self-managed online broking
accounts (such as TD Ameritrade and E-Trade), as opposed
to restricted trading through market makers.
The Company is gearing up for the stage one Theta Project
development with the appointment of Mitford Mundell as
Chief Executive Officer for Africa and Jacques Du Triou as
Chief Operating Officer subsequent to the financial year-end.
The new appointees have extensive mining management and
operational experience and proven track record of project
execution, successful delivery and operational optimisation
in open pit as well as underground mining. Combined,
they have spent close to 30 years working for South Africa’s
largest gold producer Harmony Gold Mining Company
Limited (NYSE: HMY, JSE: HAR). The Company has a large
underground mineral resource and it is the intention to
exploit the underground potential in parallel with the Theta
Project development.
Figure 11: CEO George Jenkins presenting at
121 Mining Cape Town 2020
Figure 12: Chairman Bill Guy presenting at
Denver Gold Forum 2019
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Theta Gold Mines Limited
Annual Report 2020
23
4
ORE RESERVE AND
MINERAL RESOURCE
STATEMENT
Resource Classification
Type of Operation
Measured
Total Measured
Indicated
Total Indicated
Inferred
Total Inferred
Grand Total
Underground
Underground
Open Pit
Tailings
Underground
Open pit
Tailings
Rock Dump
Table 3: Combined Mineral Resources as at 1 May 2019
Tonnage
Gold Grade
Gold Content
Mt
0.091
0.091
4.774
6.828
5.244
16.847
21.452
5.200
0.023
0.121
26.796
43.734
g/t
5.37
5.37
6.21
2.21
0.83
2.92
5.22
4.95
0.57
1.64
5.14
4.29
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
Notes:
1.
2.
3.
Columns may not add up due to rounding.
Gold price used for the cut-off calculations is USD1,500/oz.
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.
Fault losses of 5% for Measured and Indicated, 10% for Inferred Mineral Resources.
Mineral Resources are stated as inclusive of Ore Reserves.
Mineral Resources are reported as total Mineral Resources and are not attributed.
4.
5.
6.
Mineral Resource
Category in LoM Plan
Pit
Probable
Probable
Probable
Total
Browns Hill
Iota (Columbia Hill)
Theta Hill
Table 4: Theta Project Ore Reserves for MR83 Only, 1 May 2019
Grade
Reef Tonnes
Au Content
3.24
2.54
2.76
2.76
kt
564
1,253
493
2,310
kg
1,826
3,189
1,362
6,377
oz
58,699
102,513
43,798
205,010
Notes:
1.
2.
3.
Totals in the Ore Reserve may not add-up due to rounding.
Mineral Resources are for MR83 only and excludes MR341.
No Inferred Mineral Resources are included in the Ore Reserve.
24
Theta Gold Mines Limited
Annual Report 2020
25
Resource
Classification
Open Pit Mine
Reef
Theta & Browns Hill
Shale
Theta & Browns Hill
Bevett's
Theta & Browns Hill Upper Theta
Theta & Browns Hill Lower Theta
Indicated
Theta & Browns Hill
Beta
Iota
Iota
Iota
Iota
Bevett's
Upper Rho
Lower Rho
Upper Theta
Total Indicated
Resource
Classification
Inferred
Total Inferred
Resource
Classification
Theta & Browns Hill
Shale
Theta & Browns Hill
Bevett's
Theta & Browns Hill Upper Theta
Theta & Browns Hill Lower Theta
Theta & Browns Hill
Beta
Iota
Upper Rho
Open Pit Mine
Reef
Open Pit Mine
Reef
Reef
Grade
Reef
Width
Table 5: Total Theta Project - Mineral Resources, 1 May 2019
Reef
Grade
Reef
Width
g/t
1.02
1.10
2.41
3.70
2.49
2.89
2.43
2.51
1.08
2.29
cm
200
221
100
100
100
114
393
550
114
252
g/t
1.11
1.07
1.86
8.11
2.23
5.13
3.87
cm
216
213
100
100
100
106
131
Content
cmgt
204
244
241
370
249
330
956
1381
123
577
Content
cmgt
240
227
186
811
223
544
508
Reef
Tonnes
Au Content
Mt
0.395
0.802
0.652
0.799
0.345
0.105
0.808
0.815
0.158
Kg
402
886
1568
2956
859
303
1965
2047
171
koz
12.9
28.5
50.4
95.0
27.6
9.7
63.2
65.8
5.5
4.879
11 157
358.7
Reef
Tonnes
Mt
0.598
0.551
0.910
1.397
0.636
0.099
Au Content
Kg
666
589
1692
11329
1417
507
koz
21.4
19.0
54.4
364.3
45.6
16.3
4.190
16 202
520.9
Competent Persons Statement
Ore Reserve and Mineral Resource
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.
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 Van Heerden and Mr Engelmann have 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 Re-
sults, Mineral Resources and Ore Reserves. Mr Van Heerden and Mr Engelmann consent to the inclusion in the
report of the matters based on their information in the form and context in which it appears.
Exploration Results
The information in this report relating to exploration results is based on, and fairly reflects, the information and
supporting documentation compiled by Mr Phil Bentley (MSc (Geol), MSc (MinEx), Pr.Sci.Nat. No. 400208/05,
FGSSA), a consultant to the Company and a member of the South African Council for Natural Scientific
Professions.
The original report titled “Regional Exploration Strategy Highlights Potential Within Theta Gold Tenements”
was dated 16 March 2020 and was released to the Australian Securities Exchange (ASX) on that date.
Indicated
Inferred
Total Theta Project
Total Theta Project
All
All
Total Inferred
Reef
Grade
Reef
Width
Content
g/t
2.29
3.87
3.87
cm
252
131
131
cmgt
577
508
508
Reef
Tonnes
Mt
4.879
4.190
4.190
Au Content
Kg
11157
16202
16 202
koz
358.7
520.9
520.9
Notes:
1.
Theta Project (Theta Hill, Browns Hill and Iota) cut-off
is 0.35 g/t;
The gold price used for the cut-off calculations is USD 1,500/oz;
Geological losses applied are 10% for inferred and 5%
for Indicated and Measured;
Theta Hill and Browns Hill - Upper Theta Reef, Lower
Theta Reef and Beta Reef are diluted grades over 100cm;
2.
3.
4.
5.
6.
7.
8.
Historical mine voids have been depleted from the
Mineral Resource;
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;
Mineral Resources fall within the mining rights MR83
and MR341.
Totals may not add-up due to rounding.
26
Theta Gold Mines Limited
Annual Report 2020
27
5
MINING RIGHTS AND
APPLICATIONS FOR
MINING RIGHTS
MR No
Description
Farms
Effective Date Expiry Date
Remarks
NORTHERN TENEMENTS (MR83, MR330, MR340, MR341, MR10167)
MR 83
Greater TGME
Portions 1, 2, 3, 4, 5 and the Remaining
Extent of Frankfort 509KT, Krugers Hoop
527 KT, Portions 1, 2 and the Remaining
Extent of Morgenzon 525 KT, Peach Tree
544 KT, 18, 42, 43, 44 and Remaining
Extent of Ponieskrans 543 KT and Portion
1 and the Remaining Extent of Van der
Merwes Reef 526 KT
MR 330
Beta Re-
Development
& Grootfontein
Cluster
Portions 1, 2, 3 and the Remaining
Extent of Grootfonteinberg 561 KT and
Remaining Extent of Grootfontein 562
KT
MR 340
Hermansburg
MR 341
PTD’s
MR 10167
TGME
Portion of the Remaining Extent of
Hermansburg 495 KT
Portions 1 and 2 and a Portion of the
Remainder Extent of Grootfontein 562KT
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
16-Oct-13
15-Oct-23
Amendment
application to
include open cut
mining in process
Refer Note 1
Refer Note 1
Granted
10-Jul-13
09-Jun-23
Granted
25-Sep-19
16-Feb-22
Granted
Refer Note 1
Refer Note 1
SOUTHERN TENEMENTS (MR198, MR358, MR433, MR10161))
MR198
Elandsdrift Heap
Leach
Portions 1 and 2 of Elandsdrift 220 JT
18-Mar-08
17-Mar-09
MR 358
Rietfontein
MR 433
Glynn's
Lydenburg
MR 10161
Sabie
Portion of the Remaining Extent and
Portion 2 and 3 of the farm Spitskop 195
JT, Portion of Portion 16 of Waterval 168
JT and Portion of the Remaining Extent
of Maliveld Vallei 192 JT
Portion 5 of Grootfontein 196 JT and
Remaining Extent of Olifantsgeraamte
198 JT
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
05-Jun-13
04-Jun-28
12-Nov-13
11-Nov-23
Granted
Refer Note 1
Refer Note 1
Consolidation of
Prospecting Rights
10005PR, 660PR,
10252PR
Granted
Consolidation of
Prospecting
Rights 10255PR,
10404PR, 10254PR
Granted
Renewal
submitted
Amendment
application
pending to
incorporate
portions of
Portions 1, 4 and
6 of the farm
Rietfontein 193 JT
28
Theta Gold Mines Limited
Annual Report 2020
29
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.
CORPORATE GOVERNANCE
STATEMENT6
30
Theta Gold Mines Limited
Annual Report 2020
31
Figure 13: Tenement map
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 2020.
This Corporate Governance Statement was approved by the Board on 23 September 2020.
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)
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 for directors’ and senior managers’ remuneration;
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.
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
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 has been Board renewal in the last two financial years, with one director retiring and two new directors appointed
to the Board. Further, subsequent to balance date, the Managing Director stepped down from executive duties. Whilst
no formal performance review was undertaken on senior executives, 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.
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 Mr Robert Thomson
who was the Managing Director until 5 August 2020. 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
Non Executive Chairman
Not Independent
Bill Richie Yang
Yang (Simon) Liu
Finn Stuart Behnken
Robert Peter Thomson
Guyang (Brett) Tang
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Independent
Independent
Independent
Not independent
Not Independent
The Board is made up of three independent and three non-independent directors, being –
(a)
(b)
(c)
Mr Guy, Chairman of the Board, in view of his material consulting arrangement with the Company;
Mr Thomson who was the Managing Director of the Company until 5 August 2020; and
Mr Tang who 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
32
Theta Gold Mines Limited
Annual Report 2020
33
has no material contractual relationship with the Company or another group member other than as a director of
the Company.
The Board acknowledges that the Company is not in full compliance of the ASX Corporate Governance Principles and
Recommendations which requires the composition of the Board to be made up of a majority of independent directors
and the Chairman of the Board to be an independent director. Notwithstanding, the Directors believes that the present
composition of the Board is appropriate for the following reasons –
(a)
(b)
it provides a balance of skills and expertise that are required and appropriate at this stage of the Company’s
development;
each of the non-independent directors has a significant personal stake in the Company through shares and
performance rights and the Board believes that, on balance, this serves to align their interests with those of
shareholders and other stakeholders;
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.
An Anti-Bribery and Anti-Corruption Policy and a Whistleblower Policy were adopted on 23 September 2020.
and having regard to the composition of the Board, the directors are of the view that it is in the best interest of the Company
that Mr Guy serve as chairman of the Board.
The Anti-Bribery and Anti-Corruption Policy prohibits the accepting or giving of bribes.
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.
Board meetings are conducted in English. Mr Yang, a fluent Mandarin speaker, translates the proceedings of the meetings
when required and all resolutions made by the Board, for the benefit of Mandarin speaking directors.
Nomination and Remuneration Committee
The members of the committee are –
Bill Richie Yang (Chairman)
Charles William Guy
Simon Liu
Brett Tang
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.
The Chairman of the Committee up to 23 September 2020 was Mr Guy who is not an independent director. Mr Guy has
been replaced as chairman by Mr Yang who is an independent director.
The Whistleblower Policy encourages the reporting of suspected or actual wrongdoings or any breach of the Code of
Conduct and provides protection for anyone reporting any wrongdoings that they can do so without fear of retaliation.
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 are non-executive directors and a majority are independent
directors. The members are –
Finn Stuart Behnken (Chairman)
Bill Richie Yang
Charles William Guy
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
34
35
Theta Gold Mines LimitedAnual Report 2020 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.
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.
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.
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 system for releasing information to the ASX is as follows:
The Company does not have an internal audit function.
(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:
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.
assess whether disclosure is required;
consult legal and other advisers (including the ASX) as necessary;
prepare an announcement for release to the ASX;
obtain Board approval; and
lodge the announcement with 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.
The Board monitors risks through –
monthly operations reports
a)
monthly financial reports against budgets
b)
briefings by senior executives
c)
tour of operations.
d)
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
36
37
Theta Gold Mines LimitedAnual Report 2020
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 and directors may be granted performance rights.
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.
DIRECTORS’ REPORT7
38
Theta Gold Mines Limited
Annual Report 2020
39
Your Directors present their report, together with the financial statements of Theta Gold Mines Limited (“Company”) and
its controlled entities (“Consolidated Entity” or “Group”) for the financial year ended 30 June 2020.
Other Listed Company
Directorships in Last 3 Years:
Longford Resources Limited (resigned 8 December 2017)
Directors
The Directors of the Company during or since the end of the financial year are:
Charles William Guy
Robert Peter Thomson
Bill Richie Yang
Yang (Simon) Liu
Guyang (Brett) Tang
Finn Stuart Behnken
Information on Directors
Non-Executive Chairman
Non-Executive Director (Managing Director to 5 Aug 2020)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Charles William Guy
Non-Executive Chairman
Period of Directorship:
Appointed 7 March 2018
Qualifications:
Experience:
B. App. Sc.
Member, Australian Institute of Geoscientists
Bill Guy was appointed as a director of the company in March 2018 and is a professional
mining executive and geologist with over 30 years’ experience in exploration and resour-
ce development in Asia, Australia and Europe. In previous executive and geology roles
he was involved in all aspects of the mining industry inclusive of capital raisings, project
acquisitions, project development (Cockatoo Island Fe), project discovery (Mt Ida Fe),
and large scale JV (Newcrest JV Au), in both the corporate and technical roles.
Prior to joining Theta and as MD of Longford Resources, he progressed the Keel zinc
project in Ireland to its first JORC Resource within just a few months. He previously
served as Exploration Manager of Jupiter Mines Limited (controlled by Posco/Pallin-
ghurst Group) reporting to Chairman Brian Gilbertson, the very first Chairman of BHP
Billiton. At Jupiter Mines, he developed exploration protocols and a team that grew re-
source inventories to significant levels being the Central Yilgarn Iron Project (including
Mt Ida Fe). Mt Ida was progressed from zero to an Inferred Resource of 530 million
tonnes at 31.94% Fe with a conceptual target of 1.85 billion tons. At its peak, Jupiter had
a market capitalization of over A$1 billion.
Interest in Shares and
Options:
Held directly
4,000,000 performance rights expiring 27 June 2024
Held by Mineral Rock Pty Ltd
- 1,043,923 fully paid ordinary shares
- 418,232 listed options exercisable at $0.30 per share on or before 31 October 2020
Special
Responsibilities:
Member of Nomination and Remuneration Committee
Member of Audit and Risk Management Committee
Robert Peter Thomson
Non-Executive Director
Period of Directorship:
Appointed 25 November 2016
Qualifications:
Experience:
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 and base metal ventures which
included transitioning companies from exploration to production, and the establish-
ment 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 (Thai-
land) and Sepon Stage 1 (Laos) gold mines and as the former-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 (ASX:
OGC).
Mr Thomson was Managing Director of the Company from 25 November 2016 to 5
August 2020.
Interest in Shares and
Options:
Held directly
1,500,000 performance rights expiring 27 June 2024
Held by Monterey Consolidated Services Pty Limited
-1,367,342 fully paid ordinary shares
-263,159 listed options exercisable at $0.30 each, on or before 31 October 2020
Special Responsibilities:
Nil
Other Listed Company
Directorships in Last 3 Years:
Malachite Resources Limited (appointed 3 September 2020)
Golden Cross Resources Limited (resigned 28 November 2017)
Bill Richie Yang
Non-Executive Director
Period of Directorship:
Appointed 16 June 2015
Qualifications:
Experience:
BCom (Business Economics and Finance), University of New South Wales
Mr Yang is a corporate financier and business executive, with more than 16 years in the
mining resources sector focused on business development, corporate strategies, M&A
and financing.
Mr Yang has held numerous executive directorships and management roles in junior
min-ing development companies, including Executive Director of ASX-listed Bligh Re-
sources 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.
40
41
Theta Gold Mines LimitedAnual Report 2020
Interest in Shares and
Options:
Held directly
5,000,000 performance rights expiring 27 June 2024
Interest in Shares and
Options:
Held directly
-3,444,998 fully paid ordinary shares
-979,474 listed options exercisable at $0.30 per share on or before 31 October 2020
Held by Bill Richie Yang
-472,692 fully paid ordinary shares
Held by Vs Capital Investments Pty Ltd
-1,138,476 fully paid ordinary shares
-528,948 listed options exercisable at $0.30 per share on or before 31 October 2020
Special Responsibilities:
Member of Audit and Risk Management Committee
Chairman of Nomination and Remuneration Committee
Other Listed Company
Directorships in Last 3 Years:
Nil
Finn Stuart Behnken
Non-Executive Director
Period of Directorship:
Appointed 19 December 2018
Qualifications:
Experience:
B.Sc Eng (Mining)
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 di-
rector 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:
Chairman of Audit and Risk Management Committee
Other Listed Company
Directorships in Last 3 Years:
Gemfields Plc (resigned 28 July 2017)
Yang (Simon) Liu
Non-Executive Director
Period of Directorship:
Appointed 29 January 2013
Held by Hanhong New Energy Holdings Ltd
- 4,527,105 fully paid ordinary shares
Special Responsibilities:
Member of Nomination and Remuneration Committee
Other Listed Company
Directorships in Last 3 Years:
Nil
Brett Tang
Non-Executive Director
Period of Directorship:
Appointed 3 July 2018
Qualifications:
Experience:
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 sta-
te-owned mining enterprise. The company grew to a 20,000oz per annum gold produ-
cer 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.
Interest in Shares and
Options:
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
Special Responsibilities:
Member of Nomination and Remuneration Committee
Other Listed Company
Directorships in Last 3 Years:
Nil
Graduate, School of Journalism and Communication,
Renmin University, China
Mr Liu has over 20 years experience in marketing and corporate consulting. 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.
Company Secretary
Chin Haw Lim
B.Com
Qualifications:
Experience:
42
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).
43
Theta Gold Mines LimitedAnual Report 2020 Principal Activities
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 consisted of continuing exploration with particular focus on optimising the feasibility study on the Theta
Open-Cut Project completed in the previous year, in parallel with securing permitting approval for open-cut mining.
Operating and Financial Review
The review of operations during the year is set out on pages 13 to 23.
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$5,720,000, arising from the issue of shares to raise funds for the group’s activities.
Dividends
No dividend was paid, recommended or declared but not paid since the start of the financial year.
Likely Developments and Expected Results
Subject to receipt of permitting approval for open-cut mining and securing project finance, it is the Company’s intention to
develop the Theta Open-Cut Project as the group’s starter mining project. The group will also be aiming to actively explore
the surrounding Theta Project area to increase the project mine life. Subject to funding, it would be the group’s plan to
convert the large mineral resource into ore reserves through further drilling and exploration.
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.
Significant Events after Balance Date
Share Placement
Subsequent to balance date, the Company raised A$4,000,100 from a share placement of 16,667,084 fully paid ordinary
shares at an issue price of A$0.24 per share.
Loan – Related Party
Note 14 refers to a loan from Australian Private Capital Investment Group (International) Ltd (“APCIG”), a company
associated with Mr Simon Liu, a director of the Company.
Subsequent to year end, on 23 September 2020 the Company has formalised an agreement with the controller of the APCIG
loan, Hanhong Private Equity Management Company Ltd (“Hanhong”) and its subsidiary, Asia Field Enterprises Limited
(“AFE”) (companies associated with Mr Simon Liu), under which the parties agreed:
(i)
(ii)
(iii)
(iv)
(v)
(iv)
That Hanhong and AFE agree to continue to procure the novation of the APCIG loan, replacing APCIG with AFE
or Hanhong’s nominee as lender;
That the amount owing under the APCIG loan is A$4,920,000 and upon novation of the APCIG loan;
The amount of $4,920,000 is to be paid in the following manner:
a. The sum of $3,280,000 by cash payments (Cash Payments) to AFE, Hanhong or Hanhong’s nominee; and
b. The sum of $1,640,000 by the issue of shares in the capital of the Company to AFE, Hanhong or Hanhong’s
nominee (Share Payment).
The Cash Payments will comprise four (4) equal instalments paid every six calendar months, commencing on the
last day of the sixth month following confirmation that Transvaal Gold Mining Estates Limited, a subsidiary of the
Company, has achieved gold production at an annualised rate of 40,000 ounces of gold over a consecutive period
of three (3) months;
The Share Payment will be made one month after novation of the APCIG loan to AFE or Hanhong’s nominee;
If the Company repays or is ordered to repay APCIG, AFE and Hanhong shall indemnify the Company for any
amount it pays to or is ordered to pay to APCIG in excess of $4,920,000.
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
Eligible to attend
Attended
6
6
6
6
6
6
6
6
6
2
6
6
44
45
Theta Gold Mines LimitedAnual Report 2020
Audit and Risk Committee meetings
Finn Stuart Behnken
Charles William Guy
Bill Richie Yang
Nomination and Remuneration Committee meeting
Eligible to attend
Attended
2
2
2
2
2
2
The Nomination and Remuneration Committee did not meet during the year. All nomination and remuneration matters
were dealt with at Board meetings.
Options
Performance rights and Options issued during the year
During the 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 (Hurdles 1, 3, 4
and 5).
The Company also issued 2,325,000 listed options (exercisable at $0.30 each on or before 31 October 2020 (ASX: TGMO)
and 2,325,000 unlisted options (exercisable at $0.40 each on or before 27 April 2022) as free attaching options to subscribers
under a share placement on the basis of 1 listed and 1 unlisted option for every 2 shares issued under the placement.
Other than the above, no options over unissued ordinary shares were granted during or since the end of the financial year.
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 (details below)
Unlisted performance rights (details below)
Number
33,754,663
2,325,000
21,200,000
57,279,663
Number
Unlisted Options
2,325,000
2,325,000
Performance Hurdle/Vesting Date
(if applicable)
Exercise Price
Expiry Date
Total Options
$0.40
27 Apr 2022
Unlisted Performance Rights
50,000
3,570,000
4,770,000
6,780,000
6,030,000
Hurdle 1. All systems, licences, insurances, regulatory
and statutory compliance in place to meet South Africa
Mining regulations, laws, Mining Charter 111, com-
mercial contacts. (Mine ready).
Hurdle 2. 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 mi-
ning on Mining Right 83, Mining Right 341 and Mining
Right 10167 (under application).
Hurdle 3. 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
27 Dec 2020, being 18 months from the date of issue of
the performance right.
Hurdle 4. 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
27 Dec 2021, being 30 months from the date of issue of
the performance right.
Hurdle 5. 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
27 Jun 2023, being 48 months from the date of issue of
the performance right.
Nil
Nil
Nil
27 Jun 2024
27 Jun 2024
27 Jun 2024
Nil
27 Jun 2024
Nil
27 Jun 2024
21,200,000
Total Performance Rights
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, 895,788 shares were issued as a result of the exercise of options.
46
47
Theta Gold Mines LimitedAnual Report 2020
(AUDITED)8
REMUNERATION REPORT
Indemnity and Insurance of Officers
The Company’s constitution states that “to the extent permitted by law, the Company may –
a)
b)
c)
indemnify each relevant officer against a liability of that person and the legal costs of that person;
make a payment (whether by way of advance, loan or otherwise) to a relevant officer in respect of legal costs of
that person;
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, South Africa, provided taxation services to a controlled entity, for
which it was paid US$17,087. The Directors have considered the level and nature of the non-audit services provided by the
auditor and, in accordance with advice received from the Audit Committee, is satisfied that the provision of the non-audit
services during the year is compatible with the general standard of independence for auditors imposed by the Corporations
Act 2001. The Directors are satisfied that the nature of the non-audit services provided by the auditor and the quantum of
fees they were paid did not compromise the auditor independence requirements of the Corporations Act 2001.
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 2020 is set out on page 59.
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.
48
Annual Report 2020
49
49
Theta Gold Mines LimitedAnual Report 2020 This report details the nature and amount of remuneration paid/payable to key management personnel of the Consolidated
Entity.
Relationship between Remuneration Policy and Consolidated Entity Performance
The key management personnel during the year were -
Directors
Charles William Guy, Non-Executive Chairman
Robert Peter Thomson, Managing Director (Non-Executive Director from 6 August 2020)
Bill Richie Yang, Non-Executive Director
Finn Stuart Behnken, Non-Executive Director
Guyang (Brett) Tang, Non-Executive Director
Yang (Simon) Liu, Non-Executive Director
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.
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.
To ensure that the whole team is focussed on the same objective of delivering the Theta Project (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 share price and performance hurdles in 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, the performance rights currently on
issue contain operational performance hurdles focussed on the development and operation of the Theta Project.
Grant Date
Number
Performance Hurdle/Vesting
Date (if applicable)
Exercise
Price
Value at
Grant
Vest-ing
Date
Expiry
Date
28 June
2019
28 June
2019
28 June
2019
28 June
2019
4,200,000 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).
Nil
A$0.16
27 Jun 2024
On or
before 27
Jun 2024
4,600,000 Decision to Mine (Board approval
Nil
A$0.16
to commence development of a
gold mining operation) with all
regulatory approvals secured.
6,850,000 Achieving annualised production
Nil
A$0.16
of 50,000 ounces of gold per
annum over a consecutive period
of 3 months.
6,750,000 Achieving annualised production
Nil
A$0.16
of 100,000 ounces of gold per
annum over a consecutive period
of 3 months.
22,400,000
27 Jun 2024
27 Jun 2024
27 Jun 2024
On or
before 27
Dec 2020
On or
before 27
Dec 2021
On or
before 27
Jun 2023
On 5 August 2020, 4,000,000 performance rights held by Mr Robert Thomson lapsed following his resignation as Managing
Director.
Short-term incentives
No key management personnel received performance-based bonuses during the financial year.
50
51
Theta Gold Mines LimitedAnual Report 2020 The table below sets out summary information about the Consolidated Entity’s performance for the last five financial years.
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
2020
-
5,490
5,490
(1.3)
(1.3)
16
29
AUD million
128.1
2019
-
5,172
5,172
(1.6)
(1.6)
11
16
61.3
2018
-
4,129
4,129
(1.8)
(1.8)
26
11
28.2
2017
-
7,346
7,346
(3.9)
(3.9)
10
26
54.5
2016
-
4,991
5,250
(4.0)
(4.0)
10
10
17.4
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 2016
- 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
2020
Directors
Charles William Guy
Robert Peter Thomson
Bill Richie Yang
Simon Liu
Brett Tang
Finn Stuart Behnken
Other Key Management Personnel
Chin Haw Lim
George Tiernan Jenkins
Total Key Management Personnel
SHORT-TERM BENEFITS
Salary/
Director Fees
Consulting
fees
POST-
EMPLOYMENT
Superannuation
SHARE-
BASED
Options /
Rights
TOTAL
USD
USD
USD
USD
USD
50,369
175,421
33,580
33,579
30,909
33,580
104,634
148,180
610,252
100,738
-
107,451
-
-
-
-
-
208,189
-
14,105
-
-
2,671
-
9,570
-
26,346
78,434
18,142
97,736
-
48,868
23,176
14,513
58,642
229,541
207,668
238,767
33,579
82,448
56,756
128,717
206,822
339,511
1,184,298
2019
Directors
Charles William Guy
Robert Peter Thomson
Bill Richie Yang
Simon Liu
Brett Tang (appointed 3 Jul 2018)
Finn Stuart Behnken (appointed 19 Dec 2018)
Trevor Alan Fourie (resigned 30 Aug 2018)
Other Key Management Personnel
Chin Haw Lim
George Tiernan Jenkins
Total Key Management Personnel
Key management personnel equity holdings
SHORT-TERM
BENEFITS
POST-
EMPLOYMENT
Salary and Fees
Superannuation
SHARE-
BASED
Options /
Rights
TOTAL
USD
USD
USD
USD
128,807
178,867
126,696
35,776
32,497
19,137
8,943
91,222
143,094
765,039
-
14,690
-
-
3,087
-
-
8,666
-
26,443
-
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
580,575
1,372,057
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
2020
Balance
1 July 2019
Acquisitions Disposals
Net other
change
Balance 30
June 2020
Balance
nominally held
No.
No.
No.
No.
No.
No.
Directors
Charles William Guy
Robert Peter Thomson
Bill Richie Yang
Simon Liu
795,590
248,333
1,267,875
1,516,168
9,998,948
99,467
95,000
94,339
Brett Tang (appointed 3 Jul 2018)
32,825,334
Other Key Management Personnel
Chin Haw Lim
George Tiernan Jenkins
302,075
100,000
-
-
-
Total Key Management Personnel
46,805,990
537,139
-
-
-
-
-
-
-
-
-
-
-
1,043,923
1,367,342
1,611,168
(2,121,184)
7,972,103
1,043,923
1,367,342
1,611,168
7,972,103
-
-
-
32,825,334
32,825,334
302,075
100,000
302,075
100,000
(2,121,184) 45,221,945
45,221,945
52
53
Theta Gold Mines LimitedAnual Report 2020 Options and Performance Rights 1
2020
Balance
1 July 2019
Granted
Lapsed
Net other
change
Balance
30 June 2020
Vested and
exercisable
No.
No.
No.
No.
No.
Directors
Charles William Guy
Robert Peter Thomson2
Bill Richie Yang
Simon Liu
Brett Tang
(appointed 3 Jul 2018)
Finn Stuart Behnken
(appointed 19 Dec 2018)
Other Key Management Personnel
Chin Haw Lim
George Tiernan Jenkins
4,418,232
5,763,159
8,028,947
2,879,474
3,300,000
1,200,000
1,200,000
3,250,000
Total Key Management Personnel
30,039,812
-
-
-
-
-
-
-
-
-
-
-
(2,500,000)
(1,500,000)
(800,000)
-
-
(250,000)
(5,050,000)
-
-
-
-
-
-
-
-
-
4,418,232
5,763,159
5,528,947
1,379,474
2,500,000
1,200,000
1,200,000
3,000,000
418,232
263,159
528,948
979,474
-
-
-
-
24,989,812
2,189,813
1 Performance rights are subject to the performance hurdles set out in the table above under Long-term Incentives
2 Mr Thomson ceased to be Managing Director of the Company on 5 August 2020 and 4,000,000 performance rights held
by him lapsed on that date.
Details of performance rights held by directors and other key management personnel are set out in the table below. The
performance rights were granted on 28 June 2019 with a fair value of $0.16 each.
Performance Hurdle/Vesting
Condition
Vesting
Date
Charles
Guy
Robert
Thomson
Bill Richie
Yang
Brett
Tang
Finn
Behnken
Chin
Haw Lim
George
Jenkins
Total
Achieving annualised production
of 100,000 ounces of gold per
annum over a consecutive period
of 3 months.
On or
before 27
Jun 2023
1,350,000
1,450,000
1,500,000
750,000
400,000
400,000
900,000
6,750,000
Total
4,000,000
5,500,000
5,000,000
2,500,000
1,200,000
1,200,000
3,000,000
22,400,000
Service contracts
Name
Term
Base salary
Termination payment
Chin Haw Lim,
Chief Financial Officer and Company
Secretary
From 1 Mar 2017 until
terminated
A$150,000 per annum plus
statutory superannuation
1 month notice of termination or pay in lieu
George Tiernan Jenkins,
Chief Executive Officer (South Africa)
From 1 Mar 2017 until
terminated
A$210,000
per annum plus housing and
motor vehicle benefits
3 months’ notice of termination or pay in
lieu plus 3 months’ salary in the event of a
termination on the grounds of redundancy
Service contracts
Name
Term
Base fee
Consulting fees paid for the year ended 30
June 2020
Charles William Guy,
Chairman
Bill Richie Yang,
Non-Executive Director
Other transactions with KMPs
Month to month
A$1,200 per day
Month to month
A$10,000 per month
US$100,738
US$107,451
The Company rented office space from an entity owned by Mr Richie Yang, for which the Company paid US$Nil (2019:
US$12,978) 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.
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 mi-
ning on Mining Right 83, Mining
Right 341 and Mining Right
10167 (under application).
Decision to Mine (Board appro-
val to commence development of
a gold mining operation) with all
regulatory approvals secured.
Achieving annualised production
of 50,000 ounces of gold per
annum over a consecutive period
of 3 months.
On or
before 27
Jun 2024
On or
before 27
Dec 2020
On or
before 27
Dec 2021
54
800,000
1,100,000
1,000,000
500,000
200,000
-
600,000
4,200,000
For and on behalf of the Board
800,000
1,100,000
1,000,000
500,000
200,000
400,000
600,000
4,600,000
1,050,000
1,850,000
1,500,000
750,000
400,000
400,000
900,000
6,850,000
Charles William Guy
Chairman
Sydney
30 September 2020
55
Theta Gold Mines LimitedAnual Report 2020 DECLARATION9
DIRECTORS’
The directors of Theta Gold Mines Limited declare that:
1.
The financial statements and notes, as set out on page 60 to 99, 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 2020 and of its performance
for the year ended on that date;
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 as set out in Note 1(iii); and
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
2.
3.
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
30 September 2020
56
Theta Gold Mines Limited
Annual Report 2020
57
10
AUDITOR INDEPENDENCE
DECLARATION
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
Auditor’s Independence Declaration to the Directors of Theta Gold
Mines Limited
As lead auditor for the audit of the financial report of Theta Gold Mines Limited for the financial year
ended 30 June 2020, 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
30 September 2020
58
Theta Gold Mines Limited
Annual Report 2020
59
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
11
FINANCIAL STATEMENTS
Consolidated Statement of Profit or Loss
and Other Comprehensive Income for the Year Ended 30 June 2020
Notes
2020
USD’000
2019
USD’000
Continuing Operations
Revenue
Cost of sales
Gross loss
Other income
Finance costs
Exploration expenses
Operating 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
Total comprehensive income attributable to:
Equity holders of the parent
Loss per share
Basic (cents per share)
Diluted (cents per share)
-
-
-
231
(710)
(841)
(4,170)
(5,490)
-
-
-
-
314
(646)
(1,070)
(3,770)
(5,172)
-
(5,490)
(5,172)
(2,287)
(2,287)
(7,777)
(5,490)
(5,490)
(7,777)
(7,777)
(1.3)
(1.3)
7
7
(5,165)
(5,172)
(5,172)
(5,165)
(5,165)
(1.6)
(1.6)
3a
3b
3c
3c
25
6
6
The accompanying notes form part of these financial statements
60
Theta Gold Mines Limited
Annual Report 2020
61
Consolidated Statement of Financial Position as at 30 June 2020
Notes
2020
USD’000
2019
USD’000
Consolidated Statement of Changes in Equity
for the Year Ended 30 June 2020
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
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
TOTAL EQUITY
62
2020
Issued Capital
Equity
Reserve
Asset
Revaluation
Reserve
Option
Premium on
Convertible
Notes
Share based
payment
reserve
Foreign
Exchange
Reserve
Accumulated
Losses
Total
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
Balance 1 July 2019
75,629
7,552
30
198
3,214
(3,693)
(77,134)
5,796
Loss for the period
Other comprehensive
income net of income
tax
Total comprehensive
income
Reversal of reserve
Recognition of share
based payments
Issue of shares
Cost of shares issued
-
-
-
-
6,115
(395)
-
-
-
-
-
-
Balance 30 June 2020
81,349
7,552
-
-
-
(30)
-
-
-
-
-
-
-
-
-
-
-
-
-
389
-
-
-
(5,490)
(5,490)
(2,287)
-
(2,287)
(2,287)
(5,490)
(7,777)
-
-
-
-
-
-
(30)
389
6,115
(395)
198
3,603
(5,980)
(82,624)
4,098
The accompanying notes form part of these financial statements
7
8
7
9
10
11
12
13
14
13
14
15
17
147
172
319
-
319
34
1,235
916
11,379
13,564
13,883
1,498
828
5,775
8,101
1,578
106
1,684
9,785
4,098
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
81,349
5,373
(82,624)
4,098
75,629
7,301
(77,134)
5,796
The accompanying notes form part of these financial statements
63
Theta Gold Mines LimitedAnual Report 2020 Consolidated Statement of Changes in Equity
for the Year Ended 30 June 2020
Consolidated Statement of Cash Flows
for the Year Ended 30 June 2020
2019
Issue Capital
Equity Reserve
Asset
Revaluation
Reserve
Option
Premium on
Convertible
Notes
Share based
payment
reserve
Foreign
Exchange
Reserve
Accumulated
Losses
Total
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
USD’000
Balance 1 July 2018
67,316
7,552
30
198
2,576
(3,700)
(71,962)
2,010
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
-
-
-
-
-
8,714
(401)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
584
54
-
-
-
7
7
-
-
-
-
(5,172)
(5,172)
-
7
(5,172)
(5,165)
-
-
-
-
584
54
8,714
(401)
Balance 30 June 2019
75,629
7,552
30
198
3,214
(3,693)
(77,134)
5,796
The accompanying notes form part of these financial statements
Notes
2020
USD’000
2019
USD’000
Cash flows from operating activities
Payments to suppliers and employees
Payments for exploration expenditure
Interest received
Interest paid
Income tax paid
Net cash flow used in operating activities
21
Cash flows from investing activities
Payments for property, plant and equipment
Payments for exploration expenditure
Payments for loan
Proceeds from disposal of property, plant and equipment
(3,014)
(618)
27
(18)
(204)
(3,826)
(715)
(1,493)
(40)
59
(2,896)
(705)
44
(68)
-
(3,625)
(4)
(2,649)
-
208
Net cash flow used in investing activities
(2,189)
(2,445)
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
6,115
(384)
62
(120)
5,673
(342)
489
-
147
6,795
(194)
324
(562)
6,363
293
196
-
489
The accompanying notes form part of these financial statements
64
65
Theta Gold Mines LimitedAnual Report 2020 Notes to the Financial Statements
for the Year Ended 30 June 2020
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 23 September 2020.
ii.
Basis of Preparation
The consolidated financial statements have been prepared on the basis of historical cost.
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 US$5,490,000 for the year (2019: US$5,172,000), with net cash outflows from
operating activities of US$3,826,000 (2019: US$3,625,000). At 30 June 2020, the Consolidated Entity had net current
liabilities of US$7,782,000 (2019: US$6,699,000).
Net current liabilities include a 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 2020, the loan and accrued interest
amounted to US$5,609,000 (2019: US$5,040,000). Note 14(b) outlines the reasons why the loan has been classified as a
current liability. As explained in Notes 14(b) and 26(b), the Company has, subsequent to balance date on 23 September
2020, formalised an agreement with the controller of the loan, Hanhong Private Equity Management Company Ltd
(“Hanhong”) and its subsidiary, Asia Field Enterprises Limited (“AFE”) (companies associated with Mr Simon Liu), under
which the parties agreed:
(i)
That Hanhong and AFE agree to continue to procure the novation of the APCIG loan, replacing APCIG with AFE
or Hanhong’s nominee as lender;
(ii)
(iii)
That the amount owing under the APCIG loan is A$4,920,000 and upon novation of the APCIG loan;
The amount of $4,920,000 is to be paid in the following manner following the novation of the APCIG loan (also
refer Note 26(b) for further details):
a. The sum of $3,280,000 by cash payments (Cash Payments) to AFE, Hanhong or Hanhong’s nominee; and
b. The sum of $1,640,000 by the issue of shares in the capital of the Company to AFE, Hanhong or Hanhong’s
nominee (Share Payment).
(iv)
If the Company repays or is ordered to repay APCIG, AFE and Hanhong shall indemnify the Company for any
amount it pays to or is ordered to pay to APCIG in excess of $4,920,000.
The Company raised US$6,115,000 before 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 balance date, the
Company issued 16,667,084 fully paid ordinary shares at A$0.24 per share to raise a further A$4,000,100.
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 2020. 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.
i.
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 11) 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.
66
67
Theta Gold Mines LimitedAnual Report 2020 Following a review during the year and in consultation with an independent property appraiser, the carrying value of land
and buildings owned by a controlled entity was written down to its realizable value.
Rehabilitation provision
The provision for rehabilitation and restoration costs is based on significant estimates and assumptions as there are many
factors that will affect the ultimate cost payable to rehabilitate the project sites. The provision is based on current costs,
current legal requirements and current technology, all of which could change over time. Changes in life of mine plans is
another significant factor. The provision is adjusted for inflation each reporting period, however the actual rehabilitation
costs can only be determined with certainty when all such factors are known at the appropriate time.
Share based payment
The cost of equity-settled transactions with employees is measured by reference to the fair value of the equity instruments
at the date when they are granted. The fair value is determined by an external valuer.
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.
The Company recognises a share-based payment expense based on the fair value of the equity instruments. In determining
the expense, significant assumptions and estimates are made including the vesting period and probability of vesting.
c. Borrowing Costs
Note 2: Summary of Significant Accounting Policies
a. Principles of Consolidation
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.
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Theta Gold Mines
Limited as at 30 June 2020 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’.
d. Cash and Cash Equivalents
Control is achieved when the Consolidated Entity:
a) has power over the investee;
b) is exposed, or has rights, to variable returns from its involvement with the investee; and
c) has the ability to use its power to affect its returns.
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.
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.
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.
68
69
Theta Gold Mines LimitedAnual Report 2020 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 capitalised 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
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.
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’).
The 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 Consolidated Entity is required 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.
70
71
Theta Gold Mines LimitedAnual Report 2020 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.
Embedded derivatives are not 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 the hedge relationship.
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.
i. 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) Income and expenses are translated at average exchange rates for the period, and
c) All resulting exchange differences are recognised in other comprehensive income.
j. 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.
72
73
Theta Gold Mines LimitedAnual Report 2020 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.
k. Income Tax
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.
l. 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.
m. Leases
The Consolidated Entity assesses at contract inception whether a contract is, or contains, a lease, that is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Right-of-use assets
The Consolidated Entity recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation
and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognised, initial direct costs incurred and lease payments made at or before
the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line
basis over the shorter of the lease term and the estimated useful lives of the assets.
Lease liabilities
A lease liability is recognised at the commencement of the lease. The Consolidated Entity recognises lease liabilities
measured at the present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments
also include the exercise price of a purchase option reasonably certain to be exercised by the Consolidated Entity
and payments of penalties for terminating the lease, if the lease term reflects the Consolidated Entity exercising the
option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses
(unless they are incurred to produce inventories) in the period in which the event or condition that triggers the
payment occurs.
Short-term leases and leases of low-value assets
The Consolidated Entity applies the short-term lease recognition exemption to its short-term leases of machinery
and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do
not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office
equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets
are recognised as expense on a straight-line basis over the lease term.
n. 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.
74
75
Theta Gold Mines LimitedAnual Report 2020 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.
o. 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, 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.
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.
q. Rehabilitation Provision
Estimated long-term environmental provisions, comprising pollution control, rehabilitation, 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.
r. 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.
s. 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 16 Leases.
The Consolidated Entity adopted AASB 16 Leases from 1 July 2019, however there is no financial impact as leases
held by the Consolidated Entity are short-term and low value asset leases and the group applied the practical
expedients under the standard.
t. Accounting Standards and Interpretations issued but not yet effective
The Consolidated Entity has considered the 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 2020. The new standards that are not yet effective
are not expected to have any material impact on the Consolidated Entity in the current or future reporting periods.
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.
u. Comparative figures
p. 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.
Certain comparative figures for the previous financial year, where applicable, have been amended to conform with
the current year presentation.
76
77
Theta Gold Mines LimitedAnual Report 2020 Note 3: Profit /Loss from Operations
Note 4: Key Management Personnel Compensation
2020
USD’000
2019
USD’000
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 page 49 to 55.
(a) Other income
Interest income
Fair value adjustment on convertible note
Other income
(b) Finance Costs
Loans
Convertible notes
(c) Operating expenses
Administration expenses
Consultants expenses and professional costs
Employee and contractor expenses
Depreciation
Share-based payment
Impairment of assets(1)
Other operating expenses
Reclassified as Exploration expenses
122
-
109
231
710
-
710
455
694
1,726
31
389
204
1,512
5,011
(841)
4,170
94
174
46
314
625
21
646
462
310
1,452
54
585
996
981
4,840
(1,070)
3,770
(1) During the year, an impairment charge was recognised on land and buildings owned by a controlled entity based on
independent appraisal. During the previous year, the Company recognized an impairment charge 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.
Total remuneration paid or payable to KMPs is as follows:
Short-term employee benefits
Post-employment benefits
Share-based payments
Note 5: Auditor’s Remuneration
Audit services
2020
USD
818,441
26,346
339,511
2019
USD
765,039
26,443
580,575
1,184,298
1,372,057
2020
USD
2019
USD
Amounts paid/payable to Ernst & Young for audit or review of the
financial statements for the consolidated entity
103,210
109,953
Non-audit services
Amounts paid/payable to Ernst & Young for tax compliance
services performed for the consolidated entity
17,087
120,297
-
109,953
There were no other services provided by Ernst & Young other than as disclosed above.
Note 6: Loss per Share
Basic loss per share
Diluted loss per share
Loss used to calculate basic and diluted loss per share
cent
(1.3)
(1.3)
cent
(1.6)
(1.6)
USD’000
USD’000
5,490
5,172
Number of
shares
Number of
shares
Weighted average number of ordinary shares used in calculating
basic and diluted loss per share
428,178,692
328,262,806
78
79
Theta Gold Mines LimitedAnual Report 2020 Note 7: Receivables
Current
Tax receivable
Other receivables
Non-current
Security deposits
2020
USD’000
2019
USD’000
84
88
172
34
64
47
111
44
The value of receivables considered by the directors to be past due or impaired is nil (2019: nil).
Note 8: Non-Current Assets Held for Sale
Land and buildings for sale
2020
USD’000
-
2019
USD’000
64
The Consolidated Entity owned two residential properties in South Africa which were non-core assets and were held
for sale in the previous year. The properties were sold during the year.
Note 9: Other Receivable
Rehabilitation investment fund
2020
USD’000
1,235
2019
USD’000
1,408
The rehabilitation funds are pledged to a third party as security for the issue of rehabilitation guarantees to the
Department of Mineral Resources and Energy in South Africa in support of various mining licenses.
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
2020
USD’000
2019
USD’000
472
(248)
224
1,454
(785)
669
559
(127)
432
1,014
(940)
74
Other plant and equipment
Other plant and equipment - at cost
Less accumulated depreciation
Total Property, Plant and Equipment
Movements:
Land and buildings
Opening net book value
Disposals
Depreciation
Impairment
Reclassified from/(to) assets held for sale
Exchange rate effect
Closing net book value
Plant and machinery
Opening net book value
Additions
Depreciation
Impairment
Exchange rate effect
Closing net book value
Motor vehicles
Opening net book value
Additions
Disposals
Depreciation
Impairment
Exchange rate effect
Closing net book value
2020
USD’000
2019
USD’000
152
(129)
23
916
432
-
(6)
(155)
-
(47)
224
74
700
(14)
(5)
(86)
669
28
15
-
(10)
(4)
(6)
23
170
(142)
28
534
236
(60)
(11)
(2)
278
(9)
432
161
-
(34)
(48)
(5)
74
21
13
(1)
(4)
-
(1)
28
80
81
Theta Gold Mines LimitedAnual Report 2020 Note 11: Exploration Expenditure
Exploration expenditure
Movements:
Opening net book value
Additions
Impairment (refer Note 3)
Exchange rate effect
Closing net book value
Note 12: Trade and Other Payables
Trade payables
Accrued expenses
2020
USD’000
11,379
2019
USD’000
12,375
12,375
1,426
-
(2,422)
11,379
10,771
2,854
(946)
(304)
12,375
2020
USD’000
2019
USD’000
927
571
1,498
1,168
589
1,757
(a)
The provision for tax penalty relates to a penalty assessed by the South African Revenue Service (“SARS”) on a
subsidiary of the Company in respect to the financial years ended 30 June 2016, 2017 and 2018. The subsidiary
had lodged its income tax returns in those years, based on professional advice, on the basis that deductible
expenses were available as losses carried forward to be used against future assessable income. However, SARS has
determined that the expenditure should have been capitalised as the subsidiary was not in production in those
periods and claim the capitalised costs as amortisable costs against future assessable income. Notwithstanding the
subsidiary has not utilized any of the losses carried forward, SARS has assessed a penalty of 25% of the tax benefit
deemed to have been received by the subsidiary.
The subsidiary is strongly objecting against the penalty assessment, however has made the provision in accordance
with accounting standards.
(b)
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.
A third party has issued an environmental bond in the amount of ZAR25,539,327 (US$1,473,000) in favour of
the Department of Mineral Resources and Energy of South Africa as guarantee for the Consolidated Entity’s
rehabilitation obligations. The guarantee is secured by cash held in the Rehabilitation Investment Fund (Note 9).
The average credit period on purchases of 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.
Refer to Note 1 for further details.
Note 14: Borrowings
Note 13: Provisions
Current
Provision for employee benefits
Provision for audit fees
Provision for tax penalty
Provision for tax
Non-Current
Provision for rehabilitation
Movements:
Balance at beginning of year
Changes in estimate during year
Exchange rate effect
Balance at end of year
2020
USD’000
2019
USD’000
(a)
143
64
621
-
828
117
90
-
204
411
(b)
1,578
1,688
1,688
223
(333)
1,578
1,362
365
(39)
1,688
Current
Secured
Vendor finance
Unsecured
Loan – related party
Loan – unrelated party
Total
Non-Current
Secured
Vendor finance
2020
USD’000
2019
USD’000
(a)
(b)
62
62
5,610
103
5,713
5,775
(a)
106
106
32
32
5,057
106
5,163
5,195
178
178
82
83
Theta Gold Mines LimitedAnual Report 2020
(a)
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. The loan is repayable over 10 years from August 2014
and interest is payable at the South African prime rate plus 2%.
(b)
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 –
(i) Interest accrues at the rate of 10% per annum and 15% per annum on overdue principal and interest;
(ii) The loan is unsecured;
(iii) The loan matured on 31 January 2017, however APCIG was party to a standstill agreement with The
Australian Special Opportunity Fund, LP pursuant to which it agreed not to demand repayment of the note
during the term of the Convertible Security Funding Agreement which terminated on 15 April 2019.
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 sought to
establish their entitlement by commencing legal proceedings. 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.
As at 30 June 2020, the Company had an unwritten agreement with the controller of the loan, Hanhong Private
Equity Management Company Ltd (a company associated with Mr Simon Liu), with regard to the repayment
terms of the loan, including the total amount of principal and interest of which was agreed to be a maximum of
A$5,000,000.
(iii) That the amount of A$4,920,000 is to be repaid in the following manner following the novation of the
APCIG loan (refer Note 26(b) for further details):
a. The sum of $3,280,000 by cash payments to AFE, Hanhong or Hanhong’s nominee; and
b. The sum of $1,640,000 by the issue of shares in the capital of the Company to AFE, Hanhong or
Hanhong’s nominee.
(iv) If the Company repays or is ordered to repay APCIG, AFE and Hanhong shall indemnify the Company for
any amount it pays to or is ordered to pay to APCIG in excess of $4,920,000.
Note 15: Issued Capital
Issued and paid up shares
(a)
Consolidation of share capital
2020
USD’000
81,349
2019
USD’000
75,629
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
2020
01 Jul 2019
25 Jul 2019
25 Jul 2019
04 Sep 2019
30 Sep 2019
16 Jan 2020
29 Apr 2020
Balance at beginning of year
Share placement
Share placement
Share placement
Share placement
Exercise of options
Shares placement
Number of Shares
‘000
USD’000
383,279
17,467
94
9,200
26,667
300
4,650
441,657
75,629
1,825
7
936
2,699
39
608
(394)
81,349
As the above arrangement was not formalised in writing at balance date, it was not reflected in the accounts at
30 June 2020, and therefore interest continued to be accrued and the full amount is classified as a current liability.
30 Jun 2020
Balance at end of year
Less: Share issue expenses
Subsequent to balance date, the Company has formalised an agreement with the controller of the APCIG loan,
Hanhong Private Equity Management Company Ltd (“Hanhong”) and its subsidiary, Asia Field Enterprises
Limited (“AFE”) (companies associated with Mr Simon Liu), under which the parties agreed:
(i) That Hanhong and AFE agree to continue to procure the novation of the APCIG loan, replacing APCIG with
AFE or Hanhong’s nominee as lender;
(ii) That the amount owing under the APCIG loan is A$4,920,000;
84
85
Theta Gold Mines LimitedAnual Report 2020 Number of Shares
‘000
USD’000
256,155
67,316
Note 16: Options and Performance Rights
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
24 Apr 2019
09 May 2019
09 May 2019
11 Jun 2019
28 Jun 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
Share placement
Shares placement
Share in settlement of debt
Collateral shares sold
Share placement
Less: Share issue expenses
454
3,543
10,000
289
25,143
5,556
15,556
17,222
22,778
5,556
18,868
272
-
1,887
36
236
734
40
1,623
363
1,003
1,123
1,492
352
1,395
20
158
140
(402)
75,629
30 Jun 2019
Balance at end of year
383,279
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.
Listed options (ASX: TGMO)
Unlisted options
Unlisted performance rights
16(b)
16(c)
16(d)
a) Movements
Balance at beginning of year
Listed options issued
Unlisted options issued
Unlisted options exercised
Unlisted options cancelled
Unlisted options lapsed
Performance rights issued
Performance rights cancelled
Balance at end of year
b) Listed Options
2020
Number
’000
33,755
3,329
25,200
62,284
2020
Number
’000
70,023
2,325
2,325
(300)
-
(12,589)
500
-
62,284
2019
Number
’000
31,430
13,893
24,700
70,023
2019
Number
’000
67,364
3,832
604
-
(17,750)
(6,627)
24,700
(2,100)
70,023
2020
Number
‘000
2019
Number
‘000
Expiry
date
Exercise
price
Capital management
Listed Options
33,755
31,430
31 Oct 2020
A$0.30
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.
86
87
Theta Gold Mines LimitedAnual Report 2020 c) Unlisted Options
Grant date
19 Oct 2016
19 Oct 2016
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
29 Apr 2020
Weighted average
exercise price
2020
Number
‘000
2019
Number
‘000
-
-
-
-
-
-
-
-
-
-
-
-
-
200
200
-
604
2,325
3,329
A$0.36
1,050
3,000
3,500
1,000
1,000
222
615
274
500
1,000
-
-
-
200
200
728
604
-
13,893
A$0.28
Expiry date
12 Oct 2019
12 Oct 2019
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
27 Apr 2022
Exercise
price
A$0.15
A$0.20
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
A$0.40
During the year, the Company issued 2,325,000 listed options (ASX: TGMO) and 2,325,000 unlisted options exercisable
at A$0.40 on or before 27 April 2022, as free attaching options in connection with a share placement on the basis of 1
listed and 1 unlisted option for every 2 shares issued under the placement.
d) Unlisted Performance Rights
Grant date
28 Jun 2019
26 Sep 2019
88
2020
Number
‘000
24,700
500
25,200
2019
Number
‘000
24,700
-
24,700
Expiry
date
Exercise
price
27 Jun 2024
27 Jun 2024
na
na
Number
‘000
2020
2019
Performance Hurdle/Vesting
Date
(if applicable)
Exercise
Price
Value at
Grant
Vesting
Date
Expiry
Date
Grant
Date
26 Sep
2019
50
-
28 June
2019
4,670
4,670
28 June
2019
26 Sep
2019
28 June
2019
26 Sep
2019
28 June
2019
26 Sep
2019
5,070
5,070
300
-
7,530
7,530
100
7,430
-
7,430
50
-
25,200
24,700
All systems, licences, insur-
ances, regulatory and statutory
compliance in place to meet
South Africa Mining regula-
tions, laws, Mining Charter
111, commercial contacts.
(Mine ready).
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 de-
velopment of a gold mining
operation) with all regulatory
approvals secured.
Achieving annualised produc-
tion of 50,000 ounces of gold
per annum over a consecutive
period of 3 months.
Achieving annualised produc-
tion of 100,000 ounces of gold
per annum over a consecutive
period of 3 months.
Nil
A$0.155
On or
before 27
Jun 2024
27 Jun
2024
Nil
A$0.16
On or
before 27
Jun 2024
27 Jun
2024
Nil
A$0.16
On or
before 27
Dec 2020
27 Jun
2024
A$0.155
Nil
A$0.16
A$0.155
Nil
A$0.16
A$0.155
On or
before 27
Dec 2021
27 Jun
2024
On or
before 27
Jun 2023
27 Jun
2024
89
Theta Gold Mines LimitedAnual Report 2020 Fair value of performance rights granted
Note 19: Contingent Liability
The fair value of the 500,000 performance rights granted during the year were estimated based on the following
assumptions –
(i)
Dispute with the Association of Mineworkers and Construction Union
Valuation date
Market price per share
Exercise price
Expiry date
Indicative value per performance right
26 Sep 2019
$0.155
Nil
27 June 2024
$0.155
Note 17: Reserves
Equity reserve
Asset revaluation reserve
Option premium reserve
Share-based payment reserve
Foreign currency translation reserve
2020
USD’000
2019
USD’000
7,552
-
198
3,603
(5,980)
5,373
7,552
30
198
3,214
(3,693)
7,301
(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.
90
As reported in previous years, a subsidiary of the Company was 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 as compensation for their alleged unfair dismissal. The matter was settled
during the year.
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.
Note 21: Cash Flow Reconciliation
a. Reconciliation of Cash Flow used in Operating
Activities with Loss for the Year
Loss from ordinary activities after income tax
Non-cash items in loss from ordinary activities
Impairment and depreciation
Exploration expenditure
Finance costs
Interest income
Share-based payment
Tax paid
(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
Net cash flow used in operating activities
2020
USD’000
2019
USD’000
(5,490)
(5,172)
235
223
693
(95)
389
(204)
-
78
(4,171)
(52)
621
(224)
345
(3,826)
1,050
359
532
(94)
584
-
(174)
-
(2,915)
42
28
(780)
(710)
(3,625)
91
Theta Gold Mines LimitedAnual Report 2020 -
-
-
-
1,623
276
20
1,919
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
and loans from related parties.
(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) 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.
(iii) 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.
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(b).
Interest Rate Sensitivity Analysis
Director and director-related entities
(a)
(b)
Fully paid ordinary shares
Following shareholders’ approval at a general meeting on 28 June 2019, Mr Simon Liu subscribed for and was
issued 94,339 shares at A$0.106 per share for total subscription of A$10,000.
The Company rented office space from an entity associated with Mr Richie Yang, for which the Company paid
USD Nil (2019: USD12,978) during the year.
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, accounts receivable and payable
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 USD168,000
(2019: USD210,000). An increase/decrease in interest rates of 2% would have an adverse/favourable effect on loss
before tax of USD4,000 (2019: USD5,000) per annum. The percentage change is based on the potential volatility of
interest rates.
Foreign Currency Risk Sensitivity Analysis
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 set out below.
92
93
Theta Gold Mines LimitedAnual Report 2020 Assets
a. Financial Instruments
South African Rand (US dollar equivalent)
Cash
Receivables
Other receivable
Australian dollars (US dollar equivalent)
Cash
Receivables
Liabilities
South African Rand (US dollar equivalent)
Trade and other payables
Provisions
Borrowings
Australian dollars (US dollar equivalent)
Trade and other payables
Provisions
Borrowings
2020
USD’000
2019
USD’000
(i) Financial instrument composition and maturity analysis
49
104
1,235
1,388
97
102
199
129
101
1,408
1,638
360
54
414
2020
USD’000
2019
USD’000
698
2,299
168
3,165
907
106
5,712
6,725
944
1,997
210
3,151
813
102
5,163
6,078
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.
2020
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
Less than
1 year
1-5 years
Longer than
5 years
Total
USD’000
USD’000
USD’000
USD’000
147
206
-
353
1,498
-
165
-
-
5,610
7,273
-
-
-
-
-
-
-
106
-
-
-
106
-
-
-
1,235
1,235
-
-
-
-
-
-
147
206
-
1,235
1,588
1,498
-
271
-
-
5,610
7,379
Based on the financial instruments held, the Consolidated Entity’s total equity would have been USD 465,000 higher
/ lower (2019: USD 367,000 higher / lower) with a 10% increase / decrease in the US Dollar against the South African
Rand and Australian Dollar.
94
95
Theta Gold Mines LimitedAnual Report 2020 2019
Statement of financial position
Less than
1 year
1-5 years
Longer than
5 years
Total
USD’000
USD’000
USD’000
USD’000
489
155
-
1,408
2,052
1,757
-
138
-
-
5,057
6,952
-
-
-
-
-
-
-
178
-
-
178
-
-
-
-
-
-
-
-
-
-
-
-
489
155
-
1,408
2,052
1,757
-
316
-
-
5,057
7,130
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
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.
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
2020
USD’000
(6,905)
2019
USD’000
(6,987)
Loss after income tax
96
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
2020
USD’000
2019
USD’000
199
90
289
6,619
-
6,619
414
92
506
6,078
-
6,078
96,535
3,586
(106,451)
(6,330)
92,905
3,265
(101,741)
(5,571)
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 (2019: Nil).
Capital commitments
The parent entity had no capital commitments as at 30 June 2020 (2019: 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.
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:
97
Theta Gold Mines LimitedAnual Report 2020 Equity holding
Name of entity
Theta Gold SA (Pty) Ltd (formerly Stonewall Mining
(Proprietary) Limited)
and its subsidiaries -
-
Transvaal Gold Mines Estates Limited*
-
-
-
-
Sabie Mines (Proprietary) Limited*
Vanaxe Share Block Pty Ltd
TGME Exploration Company 1 (Pty) Ltd
TGME Exploration Company 2 (Pty) Ltd
Warrinen Pty Ltd
Country of
incorporation
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
Australia
2020
%
100
74
74
74
100
100
-
2019
%
100
74
74
74
-
-
100
* Theta Gold SA (Pty) Ltd (formerly Stonewall Mining (Proprietary) 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 Transvaal Gold Mines Estates Limited (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.
Theta Gold SA (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.
Warrinen Pty Ltd was 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% (2019: 27.5%)
Effect of expenses that are not deductible in determining taxable income
Effect of different tax rates of group entities operating in different jurisdic-
tions
Effect of temporary differences and / or tax losses not recognised
Income tax expense recognised in profit or loss
2020
USD’000
(5,490)
2019
USD’000
(5,172)
(1,510)
(1,422)
1,991
(35)
(446)
-
384
(33)
1,071
-
Unrecognised deferred tax balances
Unused tax losses for which no deferred tax asset has been recognised
Unredeemed capex for which no deferred tax asset has been recognised
10,464
16,572
27,036
10,657
15,701
26,358
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
(a)
Share Placement
Subsequent to balance date, the Company raised A$4,000,100 from a share placement of 16,667,084 fully paid
ordinary shares at an issue price of A$0.24 per share.
(b)
Loan – related party
Note 14 refers to a loan from Australian Private Capital Investment Group (International) Ltd (“APCIG”), a
company associated with Mr Simon Liu, a director of the Company.
Subsequent to year end, on 23 September 2020 the Company has formalised an agreement with the controller of
the APCIG loan, Hanhong Private Equity Management Company Ltd (“Hanhong”) and its subsidiary, Asia Field
Enterprises Limited (“AFE”) (companies associated with Mr Simon Liu), under which the parties agreed:
(i) That Hanhong and AFE agree to continue to procure the novation of the APCIG loan, replacing APCIG with
AFE or Hanhong’s nominee as lender;
(ii) That the amount owing under the APCIG loan is A$4,920,000 and upon novation of the APCIG loan;
(iii) The amount of $4,920,000 is to be paid in the following manner:
a.The sum of $3,280,000 by cash payments (Cash Payments) to AFE, Hanhong or Hanhong’s nominee; and
b. The sum of $1,640,000 by the issue of shares in the capital of the Company to AFE, Hanhong or Hanhong’s
nominee (Share Payment).
(iv) The Cash Payments will comprise four (4) equal instalments paid every six calendar months, commencing
on the last day of the sixth month following confirmation that Transvaal Gold Mining Estates Limited, a
subsidiary of the Company, has achieved gold production at an annualised rate of 40,000 ounces of gold
over a consecutive period of three (3) months;
(v)The Share Payment will be made one month after novation of the APCIG loan to AFE or Hanhong’s nominee;
(vi) If the Company repays or is ordered to repay APCIG, AFE and Hanhong shall indemnify the Company for
any amount it pays to or is ordered to pay to APCIG in excess of $4,920,000.
98
99
Theta Gold Mines LimitedAnual Report 2020 REPORT12
INDEPENDENT AUDITOR’S
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
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
Report on the Audit of the Financial Report
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Opinion
Independent Auditor's Report to the Members of Theta Gold Mines
We have audited the financial report of Theta Gold Mines Limited (the Company) and its subsidiaries
Limited
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2020, 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,
Report on the Audit of the Financial Report
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
Opinion
2001, including:
We have audited the financial report of Theta Gold Mines Limited (the Company) and its subsidiaries
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020
a)
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
and of its consolidated financial performance for the year ended on that date; and
2020, 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,
complying with Australian Accounting Standards and the Corporations Regulations 2001.
b)
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
Basis for Opinion
2001, including:
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
and of its consolidated financial performance for the year ended on that date; and
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
b)
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Basis for Opinion
complying with Australian Accounting Standards and the Corporations Regulations 2001.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
our opinion.
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
Material Uncertainty Related to Going Concern
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are relevant to our audit of the financial report in
We draw attention to Note 1 in the financial report, which describes the principal conditions that raise
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
concern. Our opinion is not modified in respect of this matter.
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
100
Theta Gold Mines Limited
Annual Report 2020
101
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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
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
2
Independent Auditor's Report to the Members of Theta Gold Mines
3
Limited
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
Key Audit Matters
Opinion
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
We have audited the financial report of Theta Gold Mines Limited (the Company) and its subsidiaries
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going
2020, the consolidated statement of comprehensive income, consolidated statement of changes in equity
Concern section, we have determined the matters described below to be the key audit matter to be
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
communicated in our report. For each matter below, our description of how our audit addressed the
including a summary of significant accounting policies, and the directors' declaration.
matter is provided in that context.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
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.
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020
and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
a)
b)
Carrying value of Exploration and Evaluation Assets
Basis for Opinion
How our audit addressed the key audit matter
Our procedures to address the Group’s assessment
of the carrying value of exploration and evaluation
assets included:
Why significant
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
Capitalised exploration and evaluation assets are
Report section of our report. We are independent of the Group in accordance with the auditor
the Group’s most significant asset. The carrying
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
value of exploration and evaluation assets are
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
assessed for impairment by the Group when facts
• consideration of the Company’s right to explore
(including Independence Standards) (the Code) that are relevant to our audit of the financial report in
and circumstances indicate that the capitalised
in the relevant exploration area which included
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
exploration and evaluation expenditure may
obtaining and assessing relevant documentation
exceed its recoverable amount.
such as license agreements;
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
At each reporting date the Directors’ assess the
Group’s exploration assets for indicators of
impairment. The decision as to whether there are
Material Uncertainty Related to Going Concern
indicators that require the Group’s exploration
assessment of recent exploration and
assets to be assessed for impairment in
evaluation activity in the relevant license area
accordance with AASB 6 involved judgment,
We draw attention to Note 1 in the financial report, which describes the principal conditions that raise
and whether there is sufficient information for a
including whether; the rights to tenure for the
doubts about the entity’s ability to continue as a going concern. These events or conditions indicate that a
decision to be made that an area of interest is
areas of interest are current; the Group’s ability
material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going
not commercially viable; and
and intention to continue to evaluate and develop
concern. Our opinion is not modified in respect of this matter.
the area of interest and whether the results of the
Group’s exploration and evaluation work to date
are sufficiently progressed for a decision to be
made as to the commercial viability or otherwise
of the area of interest.
• considered the adequacy of disclosures included
within Note 1 (iv), Note 2 (g) and Note 11 of the
financial report.
• consideration of the Group’s intention to carry
out significant exploration and evaluation
activity in the relevant exploration area;
•
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
102
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Opinion
Refer to Note 1 (iv), Critical Accounting Estimates
and Judgements, Note 2 (g) Exploration and
evaluation expenditure and Note 11 Exploration
Expenditure to the financial statements for the
amounts held on the balance sheet by the Group
as at 30 June 2020 and related disclosure.
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
2020, 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.
Information Other than the Financial Report and Auditor’s Report Thereon
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
The directors are responsible for the other information. The other information comprises the information
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020
included in the Company’s 2020 Annual Report, but does not include the financial report and our
and of its consolidated financial performance for the year ended on that date; and
auditor’s report thereon.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
b)
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.
Basis for 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
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
our knowledge obtained in the audit or otherwise appears to be materially misstated.
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
If, based on the work we have performed, we conclude that there is a material misstatement of this other
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
information, we are required to report that fact. We have nothing to report in this regard.
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Responsibilities of the Directors for the Financial Report
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
The directors of the Company are responsible for the preparation of the financial report that gives a true
our opinion.
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.
Material Uncertainty Related to Going Concern
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
We draw attention to Note 1 in the financial report, which describes the principal conditions that raise
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
doubts about the entity’s ability to continue as a going concern. These events or conditions indicate that a
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going
operations, or have no realistic alternative but to do so.
concern. Our opinion is not modified in respect of this matter.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
103
Theta Gold Mines LimitedAnual Report 2020
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
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
4
Limited
Independent Auditor's Report to the Members of Theta Gold Mines
Limited
5
Report on the Audit of the Financial Report
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:
Opinion
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
We have audited the financial report of Theta Gold Mines Limited (the Company) and its subsidiaries
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
2020, the consolidated statement of comprehensive income, consolidated statement of changes in equity
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
including a summary of significant accounting policies, and the directors' declaration.
internal control.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
•
2001, including:
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.
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
and of its consolidated financial performance for the year ended on that date; and
estimates and related disclosures made by the directors.
a)
•
b)
•
Basis for Opinion
complying with Australian Accounting Standards and the Corporations Regulations 2001.
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
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
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
•
Evaluate the overall presentation, structure and content of the financial report, including the
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
disclosures, and whether the financial report represents the underlying transactions and events in a
(including Independence Standards) (the Code) that are relevant to our audit of the financial report in
manner that achieves fair presentation.
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
business activities within the Group to express an opinion on the financial report. We are
our opinion.
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
Material Uncertainty Related to Going Concern
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 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
We also provide the directors with a statement that we have complied with relevant ethical requirements
material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going
regarding independence, and to communicate with them all relationships and other matters that may
concern. Our opinion is not modified in respect of this matter.
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
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.
Report on the Audit of the Financial Report
Report on the Audit of the Remuneration Report
Opinion
Opinion on the Remuneration Report
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
2020, 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.
We have audited the Remuneration Report included in pages 49 to 55 of the directors' report for the year
ended 30 June 2020.
In our opinion, the Remuneration Report of Theta Gold Mines Limited for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
Responsibilities
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020
and of its consolidated financial performance for the year ended on that date; and
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
complying with Australian Accounting Standards and the Corporations Regulations 2001.
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
b)
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
(including Independence Standards) (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Ernst & Young
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
Scott Jarrett
Partner
Sydney
30 September 2020
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
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
104
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
105
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Theta Gold Mines LimitedAnual Report 2020
13
SHAREHOLDERS
INFORMATION
1.
Issued securities
As at 23 September 2020
Ordinary shares
(ASX: TGM)
Number on issue
458,919,457
Listed Options
(ASX: TGMO)
33,754,663
Unlisted Options
Performance rights
2,325,000
21,200,000
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
131
184
110
274
122
821
74,285
617,965
903,320
10,729,654
446,4594,233
458,919,457
%
0.02
0.13
0.20
2.34
97.31
100.00
3.
Substantial Shareholders
The substantial shareholders in the Company are -
Name
Number of shares
Fineway Creation Limited
Zenith (HK) Holding Limited
Xinzhou Li
Tasman Funds Management Pty Ltd
Golden Asia Investment Group Limited
67,070,707
46,645,701
44,133,334
32,730,995
31,127,805
%
15.36
10.68
9.62
7.13
6.78
4.
Non-Marketable Parcels
A non-marketable parcel is a shareholding with a market value of less than $500. There were 153 shareholders with
non-marketable parcels.
5.
On-Market Buy-back
There is no current on-market buy-back.
106
Theta Gold Mines Limited
Annual Report 2020
107
6.
Voluntary Escrow
7.
Top 20 shareholders
Class
Number of shares
Expiry date
Ordinary shares
53,333,334
31 Dec 2020
Holder Name
Number of shares
Expiry date
Fineway Creation Limited
Zenith (HK) Holding Limited
Mr Xinzhou Li
Tasman Funds Management Pty Ltd
Golden Asia Investment Group Ltd
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
Qinglong Fan
BNP Paribas Nominees Pty Ltd
Goldenroc International (Hong Kong) Limited
Khan International Limited
Murray SA Investment Pty Ltd
China Tonghai Securities Ltd
HSBC Custody Nominees (Australia) Limited
Hanhong New Energy Holdings Ltd
67,070,707
46,645,701
44,133,334
32,730,995
31,127,805
25,941,741
23,015,179
20,125,639
19,555,556
15,220,000
11,554,476
10,263,158
9,200,000
8,097,323
8,092,368
5,569,339
5,296,373
5,215,000
4,833,358
4,527,105
14.62%
10.16%
9.62%
7.13%
6.78%
5.65%
5.02%
4.39%
4.26%
3.32%
2.52%
2.24%
2.00%
1.76%
1.76%
1.21%
1.15%
1.14%
1.05%
0.99%
398,215,157
86.77%
108
Annual Report 2020
109
Theta Gold Mines Limited 14
CORPORATE DIRECTORY
DIRECTORS
Non-Executive Chairman
Charles William Guy
Non-Executive Directors
Robert Peter Thomson
Bill Richie Yang
Finn Stuart Behnken
Yang (Simon) Liu
Guyang (Brett) Tang
COMPANY SECRETARY
Chin Haw Lim
PRINCIPAL OFFICE
Suite 80 Level 35 (Servcorp)
International Tower One
100 Barangaroo Avenue
Sydney NSW 2000
Australia
Tel: + 61 2 8046 7584
Email: info@thetagoldmines.com
AUDITOR
Ernst & Young
200 George Street
Sydney NSW 2000
Australia
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 LISTINGS
ASX: TGM, TGMO
OTCQB: TGMGF
WEBSITE
www.thetagoldmines.com
AUSTRALIAN BUSINESS NUMBER
30 131 758 177
110
Theta Gold Mines Limited
Annual Report 2020
111
2020
ANNUAL REPORT
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