TITAN MINERALS LIMITED
(ACN 117 790 897)
Annual Report
for the year ended 31 December 2017
T I T A N M I N E R A LS L I M I T E D – Y E A R E N D E D 3 1 D E CE M B E R 2 01 7
Corporate Directory
Directors
Matthew Carr
Nicholas Rowley
Robert Sckalor
Cameron Henry
Company Secretary
Zane Lewis
Registered Office & Principal Place of Business
Auditors
Suite 6, 295 Rokeby Road
SUBIACO WA 6008
Telephone: +61 8 6555 2950
Facsimile: +61 8 6166 0261
Stantons International Audit and Consulting Pty
Ltd
Level 2, 1 Walker Avenue
West Perth
Western Australia 6005
Share Registry
Australian Company Number
Security Transfer Registrars Pty Limited
770 Canning Highway
Applecross
Western Australia 6151
Telephone +61 8 9315 2333
ACN 117 790 897
ASX Code
TTM
Australian Business Number
ABN 97 117 790 897
T I T A N M I N E R A LS L I M I T E D – Y E A R E N D E D 3 1 D E CE M B E R 2 01 7
Contents
Directors’ Report
Auditor’s Independence Declaration
Directors’ Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Consolidated Financial Statements
Independent Audit Report
Page
1
9
10
11
12
13
14
15
50
T I T A N M I N E R A LS L I M I TE D – Y E A R E N D E D 3 1 D E C E M B E R 2 01 7
Directors’ Report
1. Directors’ Information
The directors and company secretary of Titan Minerals Limited and its subsidiaries (together the ‘Group’)
during the financial year end until the date of this report were as follows:
2. Directors and Company Secretary
Matthew Carr – appointed as director on 3 February 2017, current. On 17 August 2017 Mr Carr was appointed
as Executive Director.
Nicholas Rowley – appointed as a director on 9 August 2016, current.
Robert Sckalor – appointed as director on 7 August 2017, current.
Cameron Henry – appointed as director on 8 August 2017, current.
Tim Morrison – appointed as a director on 10 August 2016, resigned 4 August 2017.
Zane Lewis – appointed as company secretary on 11 August 2016, current.
3. Directors’ Meetings
One meeting of the directors of the Company have been held since the administrators effectuated the Deed
of Company Arrangement on the 4th October 2017 to balance date.
4. Corporate Governance
On 25 August 2015 Martin Jones and Darren Weaver were appointed as voluntary administrators as the
directors formed the view that the Company could not meet its obligations as they fell due. On 4 October 2017
the Deed of Company Arrangement (DOCA) was effectuated, and the Directors resumed operation of the
Company. On 13 October 2017 the Company established the Corporate Governance Statement for operations
post the DOCA.
5. Principal Activities
The Group’s principal activities during the course of the financial year were exploration of copper and gold
exploration concessions and development and production of a portfolio of medium sized gold projects in South
America, with a primary focus on Peru. In addition Titan was the owner and operator of a gold and copper toll
processing plant in Peru (San Santiago).
6. Significant changes in the state of affairs and review of operations
The following significant changes in the state of affairs of the Consolidated Entity occurred during the financial
year:
The profit of the Group for the year ended 31 December 2017 amounted to $12,433,000 (31 December 2016:
loss $947,000).
Company Restructure / Recapitalisation
On the 4 October 2017 the Deed of Company Arrangement was effectuated. This then allowed the Company
to seek reinstatement to official quotation on the ASX which occurred on 17 October 2017. The prospectus
dated 18 August 2017 outlined the various offers that were made being the following:
Public Offer - the Company issued 600,000,000 shares at 1 cent per share raising $6,000,000 before costs;
Employee Offer - the Company issued 70,000,000 shares at 1 cent per share to certain employees, contractors
and consultants of the Company and its subsidiaries as an offset or to satisfy employee entitlements;
Broker Offer - the Company issued 316,032,382 shares at 1 cent per share to the brokers appointed to manage
the Public Offer in consideration for their facilitation of the Public Offer;
SilverStream Offer - the Company issued 350,000,000 shares at 1 cent per share broken down as follows:
1. 45,000,000 Shares in full and final satisfaction of the debt owed by the Company to SilverStream
under the MIZ Loan Facility;
2. 30,000,000 Shares in full and final satisfaction of the debt owed by the Company under the Existing
Silver Stream Agreement and Existing Gold Stream Agreement; and
3. 275,000,000 Shares as promoter equity.
1
T I T A N M I N E R A LS L I M I TE D – Y E A R E N D E D 3 1 D E C E M B E R 2 01 7
Unsecured Creditor Offer - the Company issued 53,967,618 shares at 1 cent per share to the Deed
Administrators (as trustees of the Creditors' Trust) on behalf of the Unsecured Creditors in full and final
satisfaction and complete discharge of their Claims; and
Andina Offer - the Company issued 235,000,000 shares at 1 cent per share to Andina Resources Limited (or
its nominee/s) in full and final satisfaction of amounts owed by the Company to Andina and in consideration
for Mantle's involvement with the Torrecillas Project, including Mantle granting the Company right to earn a
70% interest in the Torrecillas Earn-in Concessions.
7. Share Options
As at the date of this report there are no options on issue.
8.
Indemnification and Insurance of Officers
During or since the end of the financial year the Company has given an indemnity or entered into an agreement
to indemnify, or paid or agreed to pay insurance premiums as follows:
The Company has entered into agreements to indemnify all directors and provide access to documents,
against any liability arising from a claim brought by a third party against the Company. The agreement provides
for the Company to pay all damages and costs which may be awarded against the directors.
The Company has paid premiums to insure each of the directors against liabilities for costs and expenses
incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of
director of the company, other than conduct involving a willful breach of duty in relation to the Company. The
amount of the premium was $21,387 which was paid during the financial year. No indemnity has been sought
for or paid to auditors.
9. Events Subsequent to Reporting Date
There has not been any matter or circumstance that have arisen since the end of the financial year, that has
significantly affected or may significantly affect, the operations of the Group, the results of the operations, or the
state of the affairs of the Group in the future financial years, other than:
On the 8 February 2018, 209,357 unlisted options expired.
On the 26 March 2018 Titan Minerals Limited entered into a bid implementation agreement (BIA) with Andina
Resources Limited, by which Titan will acquire all of the issued share capital in Andina via an off-market
takeover bid. Andina is a Peru focussed unlisted public company incorporated in Australia. Under the bid,
Andina shareholders will receive 1 fully paid ordinary share in the capital of Titan for every 1.18 Andina shares
held (for a total of 561,656,385 Titan shares to be issued should 100% of Andina shareholders accept the bid).
10. Dividends
No dividends have been paid or declared since the start of the financial year by the Company.
The directors have recommended that no dividend be paid by the Company in respect of the year ended 31
December 2017.
11. Likely developments
The Company will continue to pursue its principal activity of minerals exploration and gold and copper toll
processing in Peru, particularly in respect to the projects, as outlined under the heading ‘Significant changes in
the state of affairs and Review of operations’ of this Report. The Company will also continue to evaluate new
business opportunities in Peru.
12. Environmental Issues
The Company's operations comply with all relevant environmental laws and regulations, and have not been
subject to any actions by environmental regulators.
2
T I T A N M I N E R A LS L I M I TE D – Y E A R E N D E D 3 1 D E C E M B E R 2 01 7
13. Proceedings on behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of those proceedings. The Company was not a party to any such proceedings during the
year.
14. Information on Directors and Company Secretary
Matthew Carr
Director (Executive Director)
Qualifications and Experience:
Mr Carr is a successful and experienced company director having founded Urban Capital Group. Urban Capital
Group is a private equity company with a strong focus on property backed investment and security. Matthew
is also the Non-Executive Chairman of Andina Resources Limited.
Directorships of other listed companies in the
3 years prior to the end of the Financial Year:
Interest in shares and options of the
Company:
Directors meetings attended:
Appointed:
N/A
5,000,000 Ordinary Shares
7,000,000 Class A Performance Rights
7,750,000 Class B Performance Rights
8,250,000 Class C Performance Rights
1 of 1 held during term of directorship in financial
year
3 February 2017
Nicholas Rowley
Director (Non-Executive Chairman)
Qualifications and Experience:
Mr Rowley is an experienced corporate executive with a strong financial background having previously worked
in the financial services industry for over 10 years where he gained widespread experience in corporate
advisory, M&A transactions and equities markets, advising domestic and international Institutional sales and
high net worth individuals. He also advised on the equity financings of numerous ASX and TSX listed
companies predominantly in the mining and resources sector. Mr Rowley currently serves as Director of
Corporate Development for Galaxy Resources Ltd (ASX:GXY).
Directorships of other listed companies in the
3 years prior to the end of the Financial Year:
Interest in shares and options of the
Company:
Directors meetings attended:
Appointed:
Non Executive Director of Cobalt One Ltd
(ASX:CO1) until 4 December 2017.
5,000,000 Ordinary Shares
7,000,000 Class A Performance Rights
7,750,000 Class B Performance Rights
8,250,000 Class C Performance Rights
1 of 1 held during term of directorship in financial
year
9 August 2016
3
T I T A N M I N E R A LS L I M I TE D – Y E A R E N D E D 3 1 D E C E M B E R 2 01 7
Robert Sckalor
Director (Non-Executive Director)
Qualifications and Experience:
Mr Sckalor has 30 years of experience working in the legal and financial markets worldwide and has worked on
capital market and financial transactions on five continents. Currently he is Co-Founder and President of Capital
Instincts, a Private Equity and Venture related investment company he founded 14 years ago while in London.
Prior to founding Capital Instincts, Mr Sckalor was a director and General Counsel for Liquid Capital Markets
(LCM), LTD, a London Investment and Financial company. Mr Sckalor assisted with the expansion of the firm
from its single office in London to offices in Seoul and Sydney. Previously, Mr Sckalor worked as General
Counsel, IDEAglobal Ltd in New York, Singapore and London. At the time, IDEAglobal was the world’s largest
independent economic research company specializing in fixed income, equity, capital market and currency
analysis. Mr Sckalor started his career practicing law, and has been a partner at The Simons Firm and Simons,
Cuddy and Friedman. Mr Sckalor obtained his BA from Grinnell College and JD from Washington University, JD.
Directorships of other listed companies in the 3
years prior to the end of the Financial Year:
Interest in shares and options of the Company:
Directors meetings attended:
Appointed:
N/A
3,500,000 Class A Performance Rights
3,875,000 Class B Performance Rights
4,125,000 Class C Performance Rights
0 of 1 held during term of directorship in financial
year
7 August 2017
Cameron Henry
Director (Non-Executive Director)
Qualifications and Experience:
Mr Henry comes from a project development and operational background specialising in minerals processing
and oil and gas projects across the globe. Mr Henry is from a technical background with tertiary qualifications in
engineering and project management and has advised for several ASX listed companies on development,
acquisitions, and execution strategies at a number of levels. Mr Henry is currently Managing Director of Primero
Group, a private engineering and construction company that specialises in minerals processing and has been a
member of the Australian Institute of Company Directors (AICD) for over 5 years.
Directorships of other listed companies in the 3
years prior to the end of the Financial Year:
Interest in shares and options of the Company:
Directors meetings attended:
Appointed:
Tim Morrison
Director (Non-Executive Director)
N/A
3,500,000 Class A Performance Rights
3,875,000 Class B Performance Rights
4,125,000 Class C Performance Rights
1 of 1 held during term of directorship in financial
year
8 August 2017
Directorships of other listed companies in the 3
years prior to the end of the Financial Year:
Interest in shares and options of the Company:
Directors meetings attended:
Appointed:
Resigned:
N/A
Nil
0 of 1 held during term of directorship in financial
year
10 August 2016
4 August 2017
Zane Lewis
Company Secretary
Qualifications and Experience:
Mr Lewis has over 20 of years corporate advisory experience with various ASX and AIM listed companies. Mr
Lewis is a fellow of Chartered Secretaries Australia and is a Non-Executive Director and Company Secretary for
a number of ASX Listed companies.
Appointed as company secretary on 11 August 2016.
4
T I T A N M I N E R A LS L I M I TE D – Y E A R E N D E D 3 1 D E C E M B E R 2 01 7
15. Remuneration Report (Audited)
The Directors present the remuneration report for the Company and the Consolidated Entity for the year ended
31 December 2017. This remuneration report forms part of the Directors’ Report and has been audited in
accordance with section 300A of the Corporations Act 2001 and details the remuneration arrangements for the
key management personnel.
Key management personnel are those persons who, directly or indirectly, have authority and responsibility for
planning, directing and controlling the major activities of the Company and the Consolidated Entity.
Remuneration is based on fees approved by the Board of Directors.
There is no relationship between the performance or the impact on shareholder wealth of the Company for the
current financial year or the previous financial years and either the remuneration of directors and executives or
the issue of shares and options to directors. Remuneration is set at levels to reflect market conditions and
encourage the continued services of directors and executives.
The names and positions of key management personnel of the Company and of the Consolidated Entity who
have held office during the financial year are:
Nicholas Rowley
Robert Sckalor
Cameron Henry
Matthew Carr
Service Agreements
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Executive Director
Remuneration and other terms of employment for the Executive Directors are formalised in a service
agreement. For Non-Executive Directors these terms are set out in a Letter of Appointment. The major
provisions of the agreements relating to remuneration per year are set out below.
Name
Base Salary
Consulting
fees
Term of
Agreement
Notice Period
Nicholas
Rowley
Matthew Carr
Robert
Sckalor
Cameron
Henry
-
-
-
-
$72,000 No fixed term
N/A
$120,000 No fixed term
12/6 months*
$72,000 No fixed term
N/A
$72,000 No fixed term
N/A
* Termination benefits: In the case of termination without cause by the Company Mr Carr is entitled to
receive 12 months’ salary on top of the entitles mentioned below. In the case of termination without cause by
Mr Carr then he is entitled to receive 6 months’ salary on top of the entitlements outlined below. Matthew
Carr is entitled to an additional 1 months’ salary on top of the notice period for each year of continuous
service to the company (pro-rata up to the date of leaving the entity).
5
Details of Remuneration
T I T A N M I N E R A LS L I M I TE D – Y E A R E N D E D 3 1 D E C E M B E R 2 01 7
Compensation 12 months to 31 December 2017
Short Term
Benefits2
$
Super-
annuation
$
Share
based
payments
$
Total
$
Percentage of
remuneration
that is equity
based
Compensation of Directors based on fees
approved by the Board of directors.
Nicholas Rowley
Matthew Carr
Robert Sckalor
Cameron Henry
Tim Morrison
TOTAL COMPENSATION – FOR KEY
MANAGEMENT PERSONNEL
18,000
30,000
18,000
18,000
-
84,000
-
-
-
-
-
-
1,293
1,293
647
647
-
19,293
31,293
18,647
18,647
-
3,880
87,880
7%
4%
3%
3%
-
-
Compensation 12 months to 31 December 2016
Short Term
Benefits2
$
Super-
annuation
$
Share
based
payments
$
Total
$
Percentage of
remuneration
that is equity
based
Compensation of Directors based on fees
approved by the Board of directors.
Nicholas Rowley
Matthew Carr
Robert Sckalor
Cameron Henry
Tim Morrison
TOTAL COMPENSATION – FOR KEY
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
MANAGEMENT PERSONNEL
-
* The Company was under External administration from 25 August 2015, consequently the
Company did not have sufficient information to allow the level of disclosure required for the
year ended 31 December 2016.
-
-
-
-
-
-
-
-
-
Shares and options held by Key Management Personnel
Shareholdings
Nicholas Rowley
Matthew Carr
Robert Sckalor
Cameron Henry
Tim Morrison
1 January 2017 or
Appointment
Issued as
Compensation
Net Change
Other
31 December 2017
or Resignation
Number of Ordinary Shares
5,000,000
5,000,000
-
-
-
5,000,000
5,000,000
-
-
-
10,000,000
10,000,000
-
-
-
-
-
-
-
-
-
-
-
-
6
T I T A N M I N E R A LS L I M I TE D – Y E A R E N D E D 3 1 D E C E M B E R 2 01 7
Performance Rights
1 January 2017 or
Appointment
Issued as
Incentive
Net Change
Other
31 December 2017
or Resignation
Number of Ordinary Shares
Nicholas Rowley
Matthew Carr
Robert Sckalor
Cameron Henry
Tim Morrison
-
-
-
-
-
-
23,000,000
23,000,000
11,500,000
11,500,000
-
69,000,000
-
-
-
-
-
-
23,000,000
23,000,000
11,500,000
11,500,000
-
69,000,000
There were no options held by the directors during the year.
Other Information
There were no loans made to any Key Management Personnel during the year or outstanding at year end.
Refer to Note 24 and 25 for further transactions with Key Management Personnel during the year.
During the year the Company did not engage remuneration consultants to review its remuneration policies.
End of Remuneration Report (Audited)
16. Business Risks and Uncertainties
There are a number of risks that may have a material and adverse impact on the future operating and financial
performance of the Company. These include the risks discussed in Note 26 of the consolidated financial
statements, along with risks that are widespread and associated with any form of business and specific risks
associated with the Company’s business and its involvement in the exploration and mining industry generally
and in Peru in particular. While most risk factors are largely beyond the control of the Company, the Company
will seek to mitigate the risks where possible.
17. Incomplete Records
The Company was under External administration from 25 August 2015 to 4 October 2017, the financial
information relating to the period 1 January 2016 to 31 December 2016 and 1 January 2017 to 4 October 2017
was not subject to the same accounting and internal control processes, which include the implementation and
maintenance of internal controls that are relevant to the preparation and fair presentation of the financial report.
Due to there being incomplete records, there may be actions that were taken by the previous directors and
officers of the Company and its subsidiaries that the existing board is not aware of. Whilst the Directors are
confident the Deed of Company Arrangement process deals with any outstanding liabilities at the parent entity
level (as it was the only entity subject to the Deed of Company Arrangement), there is a risk that previous
unknown actions may adversely affect the Company’s operations and financial position, including those of its
retained subsidiaries.
18. Rounding
The Company is of a kind referred to in ASIC Instrument 2016/191 dated 24 March 2016 and in accordance
with that Class Order, amounts in the financial report and the Directors’ Report have been rounded off to the
nearest thousand dollars, unless otherwise stated.
7
T I T A N M I N E R A LS L I M I TE D – Y E A R E N D E D 3 1 D E C E M B E R 2 01 7
19. Lead Auditor’s Independence Declaration
In accordance with the Corporations Act 2001 section 307C the auditors of the Company have provided a
signed Auditor’s Independence Declaration to the directors in relation to the year ended 31 December 2017.
A copy of this declaration appears at the end of this report.
Signed in accordance with a resolution of the directors.
________________________________
Matthew Carr
Executive Director
29th day of March 2018
Perth, Western Australia
8
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
29 March 2018
Board of Directors
Titan Minerals Limited
Suite 6, 295 Rokeby Road
SUBIACO WA 6008
Dear Sirs
RE:
TITAN MINERALS LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Titan Minerals Limited.
As Audit Director for the audit of the financial statements of Titan Minerals Limited for the year ended
31 December 2017, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
(ii)
any applicable code of professional conduct in relation to the audit.
Yours sincerely
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Martin Michalik
Director
T I T A N M I N E R A L S L I M I T E D – Y E A R E N D E D 31 D E C E M BE R 2 0 1 7
Directors’ Declaration
In accordance with a resolution of the directors of Titan Minerals Limited A.C.N. 117 790 897
(“Company”), I state that:
A. In the opinion of the directors
1) As set out in Note 2(b), although the Directors have prepared the financial statements and notes
thereto, to the best of their knowledge and based on the information made available to them, they
are of the opinion that it is not possible to state that the full year financial statements and notes
thereto:
a) give a true and fair view of the consolidated entity’s financial position as at 31 December 2017
and of the performance for the year ended 31 December 2017; and
b) complying with Australian Accounting Standards and the Corporations Act 2001;
2)
the financial statements and notes also comply with the International Financial Reporting
Standards as disclosed in Note 2; and
3)
there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
B. this declaration has been made after receiving the declarations required to be made to the directors
in accordance with section 295A of the Corporations Act 2001 for the financial year ended 31
December 2017.
On behalf of the Board of Directors.
________________________________
Matthew Carr
Executive Director
29th day of March 2018
Perth, Western Australia
10
T I T A N M I N E R A L S L I M I T E D – Y E A R E N D E D 3 1 D E C E M B E R 2 01 7
Consolidated Statement of Profit and Loss and Other Comprehensive Income
For the year ended 31 December 2017
Consolidated
Year ended
31-Dec-17
31-Dec-16
Note
$’000s
$’000s
CONTINUING OPERATIONS
Revenue
Cost of sales
Gross loss
Other revenue
Occupancy expenses
Employee benefits expense
Depreciation and amortisation charges
Administration expenses
Foreign Exchange
Finance costs
Provision expense
Reversal of provision of impairment of property, plant & equipment
Loan forgiveness
DOCA expenses
Share based payments expense
Other expenses
PROFIT/ (LOSS) BEFORE INCOME TAX EXPENSE
Income tax expense / (benefit)
PROFIT/ (LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS
ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Discontinued operations
Loss for the year from discontinued operations
Profit/ (Loss) for the year
OTHER COMPREHENSIVE INCOME
Items that may not be reclassified subsequently to profit or loss
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME
TAX
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
EARNINGS PER SHARE
Basic earnings per share
From continuing operations
Diluted earnings per share
From continuing operations
Basic earnings per share
From discontinued operations
Diluted earnings per share
From discontinued operations
5a
5b
5b
5b
5b
6
18
18
18
18
639
(808)
(169)
3
-
-
(213)
(1,455)
(16)
-
(22)
1,000
17,754
(2,350)
(4)
(259)
14,269
-
14,269
(1,836)
12,433
1,652
1,652
14,085
3.588
3.588
-0.462
-0.462
1,365
(1,009)
356
-
-
-
(109)
(623)
247
(6)
-
-
-
-
-
(150)
(285)
-
(285)
(662)
(947)
1,341
1,341
394
(9.1)
(9.1)
-
-
Notes to the consolidated financial statements are included on pages 15 to 49.
11
T I T A N M I N E R A LS L I M I T E D – Y E A R E N D E D 3 1 D E C E M B E R 20 1 7
Consolidated Statement of Financial Position
As at 31 December 2017
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Property, plant and equipment
Mine assets
Deferred exploration and evaluation expenditure
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Provisions
Other liability
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS/ (LIABILITIES)
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY/ (DEFICIENCY)
Note
22(a)
7
8
9
10
11
12
13
14
15
12
16
17
Consolidated
31-Dec-17
$’000s
31-Dec-16
$’000s
2,932
290
-
3,222
99
1,000
173
-
1,272
4,494
1,065
175
-
-
1,240
2,205
2,205
3,445
1,049
91,051
2,574
(92,576)
1,049
58
-
-
58
-
-
500
-
500
558
8,504
9,581
1,997
5,948
26,030
-
26,030
(25,472)
78,619
918
(105,009)
(25,472)
Notes to the consolidated financial statements are included on pages 15 to 49.
12
TI T AN M I N E R A LS L I M I T E D – Y E A R E N DE D 3 1 D E CE M B E R 20 1 7
Consolidated Statement of Changes in Equity
For the year ended 31 December 2017
Issued
Capital
Share Based
Payment
Reserve
$’000s
$’000s
Foreign
Currency
Translation
Reserve
$’000s
Accumulated
Losses
Total
Equity
$’000s
$’000s
Balance as at 31 December 2015
78,619
2,822
(3,245)
(104,062)
(25,866)
Loss for the year
Other comprehensive income for the year, net of income tax
Total comprehensive Loss for the year
Issue of shares
-
-
-
-
-
-
-
-
-
1,341
1,341
-
(947)
-
(947)
-
(947)
1,341
394
-
Balance as at 31 December 2016
78,619
2,822
(1,904)
(105,009)
(25,472)
Loss for the year
Other comprehensive income for the year, net of income tax
Total comprehensive income for the year
Issue of shares under the public offer
Issue of shares under the employee offer
Issue of shares under the broker offer
Issue of shares under the SilverStream offer
Issue of shares under the unsecured creditor offer
Issue of shares under the Andina offer
Issue of Performance Rights
Capital Raising costs
Balance at 31 December 2017
-
-
-
6,000
700
3,160
3,500
540
2,350
(3,818)
91,051
-
-
-
-
-
-
-
-
-
4
-
12,433
1,652
1,652
-
12,433
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,826
(252)
(92,576)
12,433
1,652
14,085
6,000
700
3,160
3,500
540
2,350
4
(3,818)
1,049
Notes to the consolidated financial statements are included on pages 15 to 49.
13
T I T A N M I NE R A L S L I M I T E D – Y E A R E N D E D 31 D E C E M B E R 2 0 1 7
Consolidated Cash Flow Statement
For the year ended 31 December 2017
Consolidated
Year ended
Note
31-Dec-17
$’000s
31-Dec-16
$’000s
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from operating activities
Administration expenses
Finance costs
NET CASH USED IN OPERATING ACTIVITIES
22 b)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant & equipment
Payments of exploration and evaluation costs
Payment for mine assets
Loans provided to third party
Interest received
NET CASH PROVIDED BY / (USED IN) INVESTING
ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares (net of costs)
Proceeds from borrowings
Repayment of borrowings
Finance costs
Return of escrow on San Santiago investment
NET CASH PROVIDED BY FINANCING ACTIVITIES
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on the balance of cash held in
foreign currencies
CASH AND CASH EQUIVALENTS AT THE END OF
THE YEAR
22 a)
713
(3,797)
(1)
(3,085)
-
-
-
(191)
-
(191)
5,343
810
-
-
-
6,153
2,877
58
(3)
2,932
Notes to the consolidated financial statements are included on pages 15 to 49.
1,365
(2,472)
(8)
(1,115)
-
-
-
-
-
-
-
-
-
-
-
(1,115)
52
1,121
58
14
Notes to the Consolidated Financial Statements
1. GENERAL INFORMATION
Corporate Information
The consolidated financial statements of Titan Minerals Limited (“Parent Entity” or “Company”) and its
controlled entities (collectively as “Consolidated Entity” or “the Group”) for the year ended 31 December
2017 were authorised for issue in accordance with a resolution of the directors on 29 March 2018. The
Parent Entity is a for-profit company limited by shares incorporated in Australia whose shares are publicly
traded on the Australian Stock Exchange.
The Group’s principal activities during the course of the financial year were exploration of copper and gold
exploration concessions and development and production of a portfolio of medium sized gold projects in
South America, with a primary focus on Peru. In addition the Company was the owner and operator of a
gold and copper toll processing plant in Peru (San Santiago).
Further information on nature of the operations and principal activities of the Group is provided in the
directors’ report. Information on the Group’s structure and other related party relationships are provided in
notes 18 and 25.
The Group’s registered office is in Suite 7, 295 Rokeby Road, Subiaco, WA 6008 Australia.
2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
a) Statement of compliance
The financial report is a general purpose financial report that has been prepared in accordance with
Australian Accounting Standards, Australian Accounting
Interpretations, other authoritative
pronouncements of the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001,
to the maximum extent possible given the points raised below in 2b). Australian Accounting Standards set
out accounting policies that the AASB has concluded would result in a financial report containing relevant
and reliable information about transactions, events and conditions to which they apply. The financial
statements and notes also comply with International Financial Reporting Standards as issued by the
International Accounting Standard Board (IASB) to the maximum extent possible given the points raised
below in 2b). Material accounting policies adopted in the preparation of this financial report are presented
below. They have been consistently applied unless otherwise stated.
The financial statements were authorised for issue by the Directors’ on 29 March 2018.
b)
Incomplete Records
a) The financial report for the year ended 31 December 2017 has been prepared by Directors who received
custodianship of the operations of the Group upon effectuation of the Deed of Company Arrangement and
resignation of the Administrator on or after 4 October 2017. As such, the Directors did not have control of
the company until control was transferred to them on the effectuation of the deed of company arrangement
on 4 October 2017.
b) Prior to 4 October 2017, the current Directors did not have oversight or control over the Company’s
financial reporting systems including but not limited to being able to obtain access to complete accounting
records of the Company. To prepare the financial reports for the year ended 31 December 2017, the
Directors have reconstructed the financial records of the company for the period 1 January 2017 to 4
October 2017 using data extracted from the Company’s accounting system. However, there may have been
information that the current Directors were not able to obtain, the impact of which may or may not have
been material on the financial performance for the year ended 31 December 2017.
c) The current Directors have not been able to source books and records of the Company’s subsidiaries up
to 4 October 2017 when the ownership of the subsidiaries was transferred to the creditors’ trust.
Consequently, although the Directors have prepared this financial report for the year ended 31 December
2017 to the best of their knowledge based on the information made available to them, they were of the
opinion that it was not possible to state that these financial reports have been prepared in accordance with
Australian Accounting Standards including Australian interpretations, other authoritative pronouncements
of the Australian Accounting Standard Board and the Corporations Act 2001, nor was it possible to state
15
Notes to the Consolidated Financial Statements
these financial reports gave a true and fair view of the Group’s financial performance for the year ended 31
December 2017.
It should be noted that the matters referred to in items (a) to (c) above were also relevant for the year ended
31 December 2016 which are presented as comparative figures in this report.
c) Basis of preparation
The consolidated financial statements have been prepared on the basis of historical cost. Cost is based
on the fair values of the consideration given in exchange for assets. All amounts are presented in
Australian Dollars unless otherwise noted. The Company is a company of the kind referred to in ASIC
Instrument 2016/191 and in accordance with that Legislative Instrument, amounts are rounded off to the
nearest thousand dollars, unless otherwise indicated.
The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards.
d) Critical accounting judgements and key sources of estimation uncertainty
In the application of AIFRS management is required to make judgements, estimates and assumptions about
carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and various other factors that are believed to
be reasonable under the circumstance, the results of which form the basis of making the judgements.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that period
or in the period of the revision and future periods if the revision affects both current and future periods.
Refer to Note 3 for a discussion of critical judgements in applying the entity’s accounting policies and key
sources of estimation uncertainty.
e) New and Revised Standards that are effective for these Financial Statements
The AASB has issued a number of new and revised Accounting Standards and Interpretations are effective
for annual periods beginning or after 1 January 2017. These new and revised standards are:
Reference
Title
AASB 2016-1
AASB 2016-2
AASB 2017-2
Amendments to Australian Accounting Standards – Recognition of Deferred Tax
Assets for Unrealised Losses
Amendments
Amendments to AASB 107
to Australian Accounting Standards – Disclosure
Initiative:
Amendments to Australian Accounting Standards – Further Annual Improvements
2014-2016 Cycle
The Company has adopted each of the above new and amended standards. The application of these
standards did not have a material impact on the results of the Group for the reporting year. Refer to Note
2(i) (ix) which details the joint arrangements policy of the Group.
f) Standards issued but not yet effective and not early adopted by the Company
The AASB has issued a number of new and amended Accounting Standards and Interpretations that have
mandatory application dates for future reporting period, some of which are relevant to the Company. The
new and amended standards that are relevant to the Company are listed below:
Reference
Title
Summary
Application
date of
standard
AASB 9
Financial
Instruments
AASB 9 replaces AASB 139 Financial Instruments:
Recognition and Measurement.
1 January 2018
16
Notes to the Consolidated Financial Statements
Reference
Title
Summary
Application
date of
standard
Except for certain trade receivables, an 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 (FVTPL), transaction costs.
cost, or
Debt instruments are subsequently measured at FVTPL,
through other
fair
amortised
comprehensive income (FVOCI), on the basis of their
contractual cash flows and the business model under
which the debt instruments are held.
value
There is a fair value option (FVO) that allows financial
assets on initial recognition to be designated as FVTPL if
that eliminates or significantly reduces an accounting
mismatch.
Equity instruments are generally measured at FVTPL.
However, entities have an irrevocable option on an
instrument-by-instrument basis to present changes in the
in other
fair value of non-trading
comprehensive
(OCI) without subsequent
reclassification to profit or loss.
instruments
income
For financial liabilities designated as FVTPL using the
FVO, the amount of change in the fair value of such
financial liabilities that is attributable to changes in credit
risk must be presented in OCI. The remainder of the
change in fair value is presented in profit or loss, unless
presentation in OCI of the fair value change in respect of
the liability’s credit risk would create or enlarge an
accounting mismatch in profit or loss.
All other AASB 139 classification and measurement
requirements for financial liabilities have been carried
forward into AASB 9, including the embedded derivative
separation rules and the criteria for using the FVO.
The incurred credit loss model in AASB 139 has been
replaced with an expected credit loss model in AASB 9.
The requirements for hedge accounting have been
amended to more closely align hedge accounting with
risk management, establish a more principle-based
approach
address
inconsistencies in the hedge accounting model in AASB
139.
accounting
hedge
and
to
AASB 15
Revenue from
Contracts with
Customers
AASB 15 replaces all existing revenue requirements
in Australian Accounting Standards (AASB 111
Construction Contracts, AASB 118 Revenue, AASB
Interpretation 13 Customer Loyalty
Programmes, AASB Interpretation 15 Agreements for the
Construction of Real Estate, AASB Interpretation 18
Transfers of
1 January 2018
17
Notes to the Consolidated Financial Statements
Reference
Title
Summary
Application
date of
standard
Assets from Customers and AASB Interpretation 131
Revenue – Barter Transactions Involving Advertising
Services) and applies to all revenue arising from
contracts with customers, unless the contracts are in the
scope of other standards, such as AASB 117 Leases (or
AASB 16 Leases, once applied).
The core principle of AASB 15 is that an entity recognises
revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the
consideration to which an entity expects to be entitled in
exchange for those goods or services. An entity
recognises revenue in accordance with the core principle
by applying the following steps:
► Step 1: Identify the contract(s) with a customer
► Step 2: Identify the performance obligations in the
contract
► Step 3: Determine the transaction price
► Step 4: Allocate the transaction price to the
performance
obligations in the contract
► Step 5: Recognise revenue when (or as) the entity
satisfies a performance obligation.
This Standard amends AASB 2 Share-based Payment,
clarifying how to account for certain types of share-based
transactions. The amendments provide
payment
requirements on the accounting for:
► The effects of vesting and non-vesting conditions on
the measurement of cash-settled share-based payments
transactions with a net
► Share-based payment
settlement feature for withholding tax obligations
► A modification to the terms and conditions of a share-
based payment that changes the classification of the
transaction from cash-settled to equity-settled.
from AASB
The amendments clarify certain requirements in:
AASB 1 First-time Adoption of Australian Accounting
Standards – deletion of exemptions for first-time adopters
and
addition of an exemption arising
Interpretation 22
Foreign Currency
Consideration
► AASB 12 Disclosure of Interests in Other Entities –
clarification
of scope
► AASB 128 Investments in Associates and Joint
Ventures –
measuring an associate or joint venture at fair value
► AASB 140 Investment Property – change in use.
and Advance
Transactions
1 January 2018
1 January 2018
AASB 2016-
5
AASB 2017-
1
Amendments
to Australian
Accounting
Standards –
Classification
and
Measurement
Share-
of
based
Payment
Transactions
Amendments
to Australian
Accounting
Standards –
Transfers of
Investments
Property,
Annual
Improvements
2014-2016
Cycle
Other
Amendments
and
AASB
Interpretation
22
Foreign
Currency
Transactions
and
The Interpretation clarifies that in determining the spot
exchange rate to use on initial recognition of the related
asset, expense or income (or part of it) on the
derecognition of a non-monetary asset or non-monetary
1 January 2018
18
Notes to the Consolidated Financial Statements
Reference
Title
Summary
Advance
Consideration
liability relating to advance consideration, the date of the
transaction is the date on which an entity initially
recognises the non-monetary asset or non-monetary
liability arising from the advance consideration. If there
are multiple payments or receipts in advance, then the
entity must determine a date of the transaction for each
payment or receipt of advance consideration.
AASB 16
Leases
AASB 2017-
7
Amendments
to Australian
Accounting
Standards –
Long-term
Interests
Associates
and
Ventures
Joint
in
AASB 16 requires lessees to account for all leases
under a single balance sheet model in a similar way to
finance leases under AASB
117 Leases. The standard includes two recognition
exemptions for lessees – leases of ’low-value’ assets
(e.g., personal computers) and short-term leases (i.e.,
leases with a lease term of 12 months or less).
At the commencement date of a lease, a lessee will
recognise a liability to make lease payments (i.e., the
lease liability) and an asset representing the right to use
the underlying asset during the lease term (i.e., the right-
of-use asset).
Lessees will be required to separately recognise the
the
interest expense on
depreciation expense on the right-of-use asset.
Lessees will be required to remeasure the lease liability
upon the
occurrence of certain events (e.g., a change in the lease
term, a change in future lease payments resulting from a
change in an index or rate used to determine those
payments). The lessee will generally recognise the
amount of the remeasurement of the lease liability as an
adjustment to the right-of-use asset.
Lessor accounting is substantially unchanged from
today’s accounting under AASB 117. Lessors will
continue
the same
classification principle as in AASB 117 and distinguish
between two types of leases: operating and finance
leases.
to classify all
leases using
liability and
lease
the
for
to account
in
This Standard amends AASB 128 Investments
Associates and Joint Ventures to clarify that an entity is
required
in an
Associate or joint venture, which in substance form part
of the net investment in the associate or joint venture but
to which the equity method is not applied, using AASB 9
Financial Instruments before applying the loss allocation
and impairment requirements in AASB 128.
long-term
interests
Application
date of
standard
1 January 2019
1 January 2019
yet
Not
issued by the
AASB
Annual
Improvements
to IFRS
Standards
2015–2017
Cycle
The amendments clarify certain requirements in:
► IFRS 3 Business Combinations and IFRS 11 Joint
Arrangements - previously held interest in a joint
operation
► IAS 12 Income Taxes - income tax consequences of
payments on financial instruments classified as equity
► IAS 23 Borrowing Costs - borrowing costs eligible for
capitalisation.
1 January 2019
19
Notes to the Consolidated Financial Statements
The Company has not elected to early adopt any new standards or amendments that are issued but not
yet effective. New standards and amendments will be adopted when they become effective.
When adopted, the above standards are not expected to have a material impact to the financial statements.
For AASB 9, it will have no impact on the Group’s results accounting for financial assets as it does not
have any available for sale assets. There will be no impact on the Group's accounting for financial liabilities,
as the new requirements only affect the accounting for financial liabilities that are designated at fair value
through profit or loss and the Group does not have any such liabilities. For the AASB 15, the Group has
made an initial assessment and does not expect to significantly impact the revenue recognition based on
the existing revenue sources
g) Going Concern
The financial statements have been prepared on a going concern basis, which contemplates the continuity
of normal business activity, realisation of assets and the settlement of liabilities in the normal course of
business. The Consolidated Entity incurred a net profit before income tax of $14,269,000 (2016: net loss
$947,000), paid a net operating cash outflow of $3,085,000 (2016: $1,115,000) and expended a net
investing cash outflow of $191,000 (2016: $Nil) for the year to 31 December 2017.
The Consolidated Entity is currently in a positive net current asset position, including cash of $2,932,000
(2016: $58,000). The Directors are confident that the Group has sufficient cash to fund its activities within
the next 12 months from the date the financial statements are approved and will be able to meet existing
commitments as they fall due. The Directors will also continue to carefully manage discretionary
expenditure in line with the Group’s cash flow.
h) Principles of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company and its subsidiaries. Control is achieved when the Company:
(cid:120) Has power over the investee;
(cid:120) Is exposed, or has rights, to variable returns from its involvement with the investee; and
(cid:120) Has the ability to use its power to affect those returns.
The Company 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.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases
when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated statement of profit or loss and
other comprehensive income from the date the Company gains control until the date when the Company
ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income of subsidiaries is attributed to the owners
of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is
attributed to the owners of the Company and to the non-controlling interests even if this results in the non-
controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
20
Notes to the Consolidated Financial Statements
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated
as the difference between (i) the aggregate of the fair value of the consideration received and the fair value
of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities
of the subsidiary and any non-controlling interests. All amounts previously recognised in other
comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed
of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another
category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in
the former subsidiary as the date when control is lost is regarded as the fair value on initial recognition for
subsequent accounting under AASB 139, when applicable, the cost on initial recognition of an investment
in an associate or joint venture.
i) Significant Accounting Policies
The following significant policies have been adopted in the preparation of the Financial Report:
i.Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefit will flow to the entity
and the revenue can be reliably measured. The following specific recognition criteria must also be met
before revenue is recognised.
Sale of goods
Revenue from sales of mineral production and toll treatment is recognised when there has been a
passing of the significant risks and rewards of ownership, which means the following:
(cid:120) The product is in a form suitable for delivery and no further processing is required by or on behalf of
the consolidated entity;
(cid:120) The quantity and quality (grade) of the product can be determined with reasonable accuracy;
(cid:120) The product has been despatched to the customer and is no longer under the physical control of
the consolidated entity;
(cid:120) The selling price can be measured reliably;
(cid:120) It is probable that the economic benefits associated with the transaction will flow to the consolidated
entity; and
(cid:120) The costs incurred, or expected to be incurred, in respect of the transaction can be measured
reliably.
ii.Interest revenue
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield
on the financial asset.
iii.Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash, which are subject to an insignificant
risk of changes in value and have a maturity of three months or less at the date of acquisition.
Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
iv.
Inventory
Inventories are valued at the lower of cost and net realisable value. Cost includes expenditure incurred
in acquiring and bringing the inventories to their existing condition and location but excludes overheads.
Cost is accounted for as follows:
(cid:120) Bullion - average fixed direct costs and variable direct costs.
(cid:120) Gold in circuit - average cost.
(cid:120) Stores - purchase cost on a first in first out cost method.
(cid:120) Ore stockpiles - cost of mining on an average cost method.
(cid:120) Work in progress - cost of mining and processing at an average cost method.
21
Notes to the Consolidated Financial Statements
v.Property, plant and equipment
Property, plant and equipment are stated at cost less depreciation and impairment. Cost includes
expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all
or part of the purchase consideration is deferred, cost is determined by discounting the amounts
payable in the future to their present value as at the date of acquisition.
Depreciation is provided on property, plant and equipment, including freehold buildings but excluding
land. Depreciation is calculated on a straight line basis so as to write off the net cost of each asset
over its expected useful life to its estimated residual value commencing from the date the asset is
available for use. The estimated useful lives, residual values and depreciation method are reviewed
at the end of each annual reporting period.
Depreciation on assets utilised in exploration, evaluation and mine development during the pre-
production phase is included in the carrying value of Deferred Exploration Expenditure and Mine
Assets reflected on the balance sheet. On commencement of production, depreciation is expensed to
the Income Statement.
The following estimated useful lives are used in the calculation of depreciation:
Plant and equipment – mine site
Plant and equipment – processing plant
Plant and equipment – other
life of mine
10 years
2-5 years
vi.Mine assets
Expenditure on mine properties in production or under development are accumulated and brought to
account at cost less accumulated amortisation in respect of each identifiable area of interest.
Amortisation of capitalised costs is provided on a production output basis, proportional to the depletion
of the mineral resource of each area of interest expected to be ultimately economically recoverable.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing
to carry forward costs in relation to that area of interest. Should the carrying value of expenditure not
yet amortised exceed its estimated recoverable amount in any period, the excess is written off to the
income statement.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for
an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value
less costs to sell and it does not generate cash inflows that are largely independent of those from other
assets or groups of assets, in which case, the recoverable amount is determined for the cash-
generating unit to which it belongs.
Pre-production revenue from gold sales derived from mine development ore is netted off against
capitalised mine development expenditure.
vii. Impairment of assets
At each reporting date, the Consolidated Entity reviews the carrying amounts of its tangible and
intangible assets to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows
that are independent from other assets, the Consolidated Entity estimates the recoverable amount of
the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised in profit or loss immediately.
22
Notes to the Consolidated Financial Statements
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating
unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the
increased carrying amount does not exceed the carrying amount that would have been determined
had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal
of an impairment loss is recognised in profit or loss immediately.
viii. Deferred exploration expenditure
Exploration and evaluation expenditure for each area of interest is carried forward as an asset provided
that one of the following conditions is met:
(cid:120)
Such costs are expected to be recouped through successful development and exploitation of the
area of interest or, alternatively, by its sale; or
Exploration activities in the area of interest 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 relation to the area are continuing.
(cid:120)
Exploration and evaluation expenditure, which fails to meet at least one of the conditions outlined
above, is written off.
Identifiable exploration assets acquired from another mining company are carried as assets at their
cost of acquisition. Exploration assets acquired are reassessed on a regular basis and these costs
are carried forward provided that at least one of the conditions outlined above are met. Exploration
and evaluation expenditure incurred subsequent to acquisition in respect of an exploration asset
acquired, is accounted for in accordance with the policy outlined above for exploration incurred by or
on behalf of the entity. Exploration and evaluation expenditure assets are assessed for impairment
when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset
may exceed its recoverable amount.
The recoverable amount of the exploration and evaluation asset is estimated to determine the extent
of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount
of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that
the increased carrying amount does not exceed the carrying amount that would have been determined
had no impairment loss been recognised for the asset in previous years. Where a decision is made to
proceed with development in respect of a particular area of interest, the relevant exploration and
evaluation asset is tested for impairment and the balance is then reclassified to mine assets.
ix. Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but is not control or
joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement
have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing
of control of an arrangement, which exists only when decisions about the relevant activities require
unanimous consent of the parties sharing control.
The results and assets and liabilities of associates or joint ventures are incorporated in these
consolidated financial statements using the equity method of accounting, except with the investment,
or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with
AASB 5. Under the equity method, an investment in an associate or joint venture is initially recognised
in the consolidated statements of financial position at cost and adjusted thereafter to recognise the
Group’s share of the profit or loss and other comprehensive income of the associate or joint venture.
When the Group share of losses of an associate or a joint venture exceeds the Group’s interest in that
associate or joint venture, the Group discontinue recognising its share of further losses. Additional
losses are recognised only to the extent that the Group has incurred legal or constructive obligations
or made payments on behalf of the associate or joint venture.
23
Notes to the Consolidated Financial Statements
An investment in an associate or a joint venture is accounted for using the equity method from the date
on which the investee becomes an associate or a joint venture. On acquisition of the investment in an
associate or a joint venture, any excess of the cost of the investment over the Group’s share of the net
fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is
included within the carrying amount of the investment. Any excess of the Group’s share of the net fair
value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is
recognised immediately in profit or loss in the period in which the investment is acquired.
The Group discontinues the use of the equity method from the date when the investment ceases to be
an associate or a joint venture, or when the investment is classified as held for sale.
When a group entity transacts with an associate or a joint venture of the Group, profits and losses
resulting from the transactions with the associate or joint venture are recognised in the Group’s
consolidated financial statements only to the extent of interest in the associate or joint venture that are
not related to the Group.
x.
Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration
transferred in a business combination is measured at fair value which is calculated as the sum of the
acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the
former owners of the acquire and the equity instruments issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at
their fair value, except that:
(cid:120) deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements
are recognised and measured in accordance with AASB 112 ‘Income Taxes’ and AASB 119
‘Employee Benefits’ respectively;
(cid:120)
liabilities or equity instruments related to share-based payment arrangements of the acquiree or
share-based payment arrangements of the Group entered into to replace share-based payment
arrangements of the acquiree are measured in accordance with AASB 2 ‘Share-based Payment’
at the acquisition date; and
(cid:120) assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Non-
current Assets Held for Sale and Discontinued Operations’ are measured in accordance with that
Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity
interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of
the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree and the fair value of the
acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit
or loss as a bargain purchase gain.
Where the consideration transferred by the Group in a business combination includes assets or
liabilities resulting from a contingent consideration arrangement, the contingent consideration is
measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration
that qualify as measurement period adjustments are adjusted retrospectively, with corresponding
adjustments against goodwill. Measurement period adjustments are adjustments that arise from
additional information obtained during the ‘measurement period’ (which cannot exceed one year from
the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of contingent consideration that do not qualify
as measurement period adjustments depends on how the contingent consideration is classified.
Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates
and its subsequent settlement is accounted for within equity. Contingent consideration that is classified
24
Notes to the Consolidated Financial Statements
as an asset or liability is remeasured at subsequent reporting dates in accordance with AASB 139
‘Financial Instruments: Recognition and Measurement; or AASB 137 ‘Provisions, Contingent Liabilities
and Contingent Assets’, as appropriate, with the corresponding gain or loss being recognised in profit
or loss.
Where a business combination is achieved in stages, the Group’s previously held equity interest in the
acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group attains control)
and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in
the acquiree prior to the acquisition date that have previously been recognised in other comprehensive
income are reclassified to profit or loss where such treatment would be appropriate if that interest were
disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in
which the combination occurs, the Group reports provisional amounts for the items for which the
accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see
above), or additional assets or liabilities are recognised, to reflect new information obtained about facts
and circumstances that existed as of the acquisition date that, if known, would have affected the
amounts recognised as of that date.
xi.
Royalties
Royalty expenditure is recognised on an accrual basis in accordance with the substance of the relevant
agreement (provided that it is probable that settlement will be required and the amount of expense can
be measured reliably). Royalty arrangements that are based on production, sales and other measures
are recognised by reference to the underlying arrangement.
xii.
Trade and other payables
Trade payables and other accounts payable are recognised when the Consolidated Entity becomes
obliged to make future payments resulting from the purchase of goods and services.
xiii.
Provisions
Provisions are recognised when the Consolidated Entity has a present obligation, the future sacrifice
of economic benefits is probable, and the amount of the provision can be measured reliably. The
amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at reporting date, taking into account the risks and uncertainties surrounding the
obligation. Where a provision is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash flows.
Provision for restoration and rehabilitation
A provision for restoration and rehabilitation is recognised when there is a present obligation as a result
of exploration, development, production, transportation or storage activities undertaken, it is probable
that an outflow of economic benefits will be required to settle the obligation and the amount of the
provision can be measured reliably.
The provision for future restoration costs is the best estimate of the present value of the expenditure
required to settle the restoration obligation as at the reporting date. Future restoration costs are
reviewed annually and any change in the estimates are reflected in the present value of the restoration
provision at reporting date.
The initial estimate of the restoration and rehabilitation provision relating to exploration, development
and production facilities is capitalised into the cost of the related asset and amortised on the same
basis as the related asset, unless the present value arises from the production of inventory in the
period, in which case the amount is included in the cost of production for the period. Changes in the
estimate of the provision for restoration and rehabilitation are treated in the same manner, except that
the unwinding of the effect of discounting on the provision is recognised as a finance cost rather than
being capitalised into the cost of the related asset.
25
Notes to the Consolidated Financial Statements
xiv. Employee benefits
Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave
and long service leave when it is probable that settlement will be required and they are capable of
being measured reliably.
Provisions made in respect of employee benefits expected to be settled wholly within twelve months,
are measured at their nominal values using the remuneration rate expected to apply at the time of
settlement.
Provisions made in respect of employee benefits which are not expected to be settled within twelve
months are measured as the present value of the estimated future cash outflows to be made in respect
of services provided by employees up to the reporting date.
Defined contribution plans
Contributions to defined contribution superannuation plans are expensed when incurred.
xv.Financial assets
Other financial assets are classified into the following specified categories: financial assets ‘at fair
value through profit or loss’, ‘held-to-maturity investments’, ‘available-for-sale’ financial assets, and
‘loans and receivables’. The classification depends on the nature and purpose of the financial assets
and is determined at the time of initial recognition. The Group’s “other financial Assets” held during
the year comprise solely of assets classified as “loans and receivables”.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of
allocating interest income over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset, or, where
appropriate, a shorter period.
Income is recognised on an effective interest rate basis for debt instruments other than those financial
assets ‘at fair value through profit or loss’.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are
not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are
measured at amortised cost using the effective interest method less impairment. Interest is
recognised by applying the effective interest rate.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period.
Financial assets are considered to be impaired when there is objective evidence that, as a result of
one or more events that occurred after the initial recognition of the financial asset, the estimated future
cash flows of the investment have been affected.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be
impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence
of impairment for a portfolio of receivables could include the Group’s past experience of collecting
payments, an increase in the number of delayed payments in the portfolio past the average credit
period of 60 days, as well as observable changes in national or local economic conditions that correlate
with default on receivables. For financial assets carried at amortised cost, the amount of the
impairment loss recognised is the difference between the asset’s carrying amount and the present
value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
For financial assets carried at cost, the amount of the impairment loss is measured as the difference
between the asset’s carrying amount and the present value of the estimated future cash flows
26
Notes to the Consolidated Financial Statements
discounted at the current market rate of return for a similar financial asset. Such impairment loss will
not be reversed in subsequent periods.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial
assets with the exception of trade receivables, where the carrying amount is reduced through the use
of an allowance account. When a trade receivable is considered uncollectible, it is written off against
the allowance account. Subsequent recoveries of amounts previously written off are credited against
the allowance account. Changes in the carrying amount of the allowance account are recognised in
profit or loss.
For financial assets measured at amortised cost, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognised, the previously recognised impairment loss is reversed through profit or
loss to the extent that the carrying amount of the investment at the date the impairment is reversed
does not exceed what the amortised cost would have been had the impairment not been recognised.
xvi.Financial Liabilities
Borrowings and other financial liabilities (including trade payables but excluding derivative liabilities)
are recognised initially at fair value, net of transaction costs incurred and are subsequently stated at
amortised cost. Any difference between the amounts originally received for borrowings and other
financial liabilities (net of transaction costs) and the redemption value is recognised in the income
statement over the period to maturity using the effective interest method.
Fair value
Fair value is the amount at which a financial instrument could be exchanged in an arm’s length
transaction between informed and willing parties. Where relevant market prices are available, these
have been used to determine fair values. In other cases, fair values have been calculated using
quotations from independent financial institutions, or by using valuation techniques consistent with
general market practice applicable to the instrument.
(a) The fair values of cash, short-term borrowings and loans to joint ventures and associates
approximate to their carrying values, as a result of their short maturity or because they carry
floating rates of interest.
(b) The fair values of medium and long-term borrowings are calculated as the present value of
the estimated future cash flows using quoted prices in active markets or an appropriate market
based yield curve. The carrying value of the borrowings is amortised cost.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial liability and
of allocating interest expense over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash outflows through the expected life of the financial liability, or,
where appropriate, a shorter period.
An expense is recognised on an effective interest rate basis for debt instruments other than those
financial assets ‘at fair value through profit or loss’.
xvii.Issued Capital
Ordinary share capital is recognised at the fair value of the consideration received by the Company. Any
transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction
of the share proceeds received.
xviii.
Foreign currency
Foreign currency transactions
The individual financial statements of each group entity are presented in its functional currency being
the currency of the primary economic environment in which the entity operates. For the purpose of the
consolidated financial statements, the results and financial position of each entity are expressed in
27
Notes to the Consolidated Financial Statements
Australian dollars, which is the functional currency of Titan Minerals Limited and the presentation
currency for the consolidated financial statements.
All foreign currency transactions during the financial year are brought to account using the exchange
rate in effect at the date of the transaction. Foreign currency monetary items at reporting date are
translated at the exchange rate existing at reporting date. Non-monetary assets and liabilities carried
at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date
when the fair value was determined. Exchange differences are recognised in profit or loss in the year
in which they arise except that exchange differences on monetary items receivable from or payable to
a foreign operation for which settlement is neither planned or likely to occur, which form part of the net
investment in a foreign operation, are recognised in the foreign currency translation reserve in the
consolidated financial statements and recognised in consolidated profit or loss on disposal of the net
investment.
Foreign operations
On consolidation, the assets and liabilities of the Consolidated Entity’s overseas operations are
translated at exchange rates prevailing at the yearend closing rate. Income and expense items are
translated at the average exchange rates for the year unless exchange rates fluctuate significantly.
Exchange differences arising, if any, are recognised in the foreign currency translation reserve, and
recognised in profit or loss on disposal of the foreign operation.
xix. Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST),
except:
(i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised
as part of the cost of acquisition of an asset or as part of an item of expense; or
(ii)
for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables. Cash flows are included in the cash flow statement on a gross basis. The
GST component of cash flows arising from investing and financing activities which is recoverable from,
or payable to, the taxation authority is classified as operating cash flows.
xx.
Share-based payments
Equity-settled share-based payments with employees and others providing similar services are
measured at the fair value of the equity instrument at the grant date. The expected life used in the
model has been adjusted, based on management’s best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
The fair value determined at the grant date of the equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will
eventually vest.
Equity-settled share-based payment transactions with other parties are measured at the fair value of
the goods and services received, except where the fair value cannot be estimated reliably, in which
case they are measured at the fair value of the equity instruments granted, measured at the date the
entity obtains the goods or the counterparty renders the service.
For cash-settled share-based payments, a liability equal to the portion of the goods or services
received is recognised at the current fair value determined at each reporting date.
xxi.Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
Current tax currently payable is based on taxable profit for the year. Taxable profit differs from profit
as reported in the consolidated statement of comprehensive income because of items of income or
28
Notes to the Consolidated Financial Statements
expense that are taxable or deductible in other periods and items that are never taxable or deductible.
The company’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting year.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible temporary differences to the extent that
it is probable that taxable profits will be available against which those deductible temporary differences
can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference
arises from goodwill or from the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments
in subsidiaries and associates, and interests in joint ventures, except where the company is able to
control the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with such investments and interests are only recognised to the extent that it is probable
that there will be sufficient taxable profits against which to utilise the benefits of the temporary
differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period
in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax
liabilities and assets reflects the tax consequences that would follow from the manner in which the
company expects, at the end of the reporting period, to recover or settle the carrying amount of its
assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they relate to income taxes levied by the same
taxation authority and the company intends to settle its current tax assets and liabilities on a net
basis.
Current and deferred tax for the period
Current and deferred tax are recognised as an expense or income in profit or loss, except when they
relate to items that are recognised outside profit or loss (whether in other comprehensive income or
directly in equity), in which case the tax is also recognised outside profit or loss, or where they arise
from the initial accounting for a business combination. In the case of a business combination, the tax
effect is included in the accounting for the business combination.
xxii.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
The following are the key estimates that management has made in the process of applying the Group’s
accounting policies and that have the most significant effects on the amounts recognised in the
financial statements.
29
Notes to the Consolidated Financial Statements
(a) Determination of mineral resources and ore reserves
The Group estimates its mineral resources and ore reserves in accordance with the Australian
Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC
Code”). The information on mineral resources and ore reserves is prepared by or under the
supervision of Competent Persons as defined in the JORC Code. The amounts presented are
based on the mineral resources and ore reserves determined under the JORC Code.
There are numerous uncertainties inherent in estimating mineral resources and ore reserves and
assumptions that are valid at the time of estimation may change significantly when new information
becomes available.
Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates
may change the economic status of reserves and may, ultimately, result in the reserves being
restated. Such changes in reserves could impact on depreciation and amortisation rates, asset
carrying values and provisions for restoration and rehabilitation.
(b) Estimation for the provision for restoration and rehabilitation
Provision for rehabilitation and dismantling property, plant and equipment is estimated taking into
consideration facts and circumstances available at the balance sheet date. This estimate is based
on the expenditure required to undertake the rehabilitation and dismantling, taking into
consideration the time value of money.
(c) Impairment of property, plant and equipment
The Group reviews for impairment of property, plant and equipment, in accordance with its
accounting policy. The recoverable amount of these assets has been determined based on the
higher of the assets’ fair value less costs to sell and value in use. These calculations require the
use of estimates and judgements.
In estimating the fair value of an asset or a liability, the Group uses market-observable data to the
extent it is available. The Group may engage the assistance of third parties to establish the
appropriate valuation techniques and inputs to the valuation model.
(d) Impairment of capitalised mine assets and deferred exploration expenditure
The future expected recoverability of capitalised mine development expenditure is dependent on a
number of factors, including the level of proved, probable and inferred mineral resources, future
technological changes which could impact the cost of mining, future legal changes (including
changes to environment restoration obligations) and changes to commodity prices.
To the extent that capitalised mine development expenditure is determined not to be recoverable
in the future, this will reduce profits and net assets in the year in which this determination is made.
4. SEGMENT INFORMATION
Identification of Reportable Segments
The Company has identified its operating segments based on the internal reports that are reviewed and
used by the Board (the chief operating decision-maker) in assessing performance and in determining the
allocation of resources. The operating segments are identified by the Board based on reporting lines and
the nature of services provided. Discrete financial information about each of these operating segments is
reported to the Board on a monthly basis. The Company operates predominately in Peru. The reportable
segments are based on aggregated operating segments determined by the similarity of the services
provided and other factors.
30
Notes to the Consolidated Financial Statements
Segments
The Group has two reportable operating segments which are the same as its geographical segments, these
are Peru and the USA. The information is further analysed based on the mineral sold within the region.
Segment result represents the profit or loss earned by each segment without allocation of corporate
administration costs, investment revenue and finance costs or income tax expense. This is the measure
reported to the chief operating decision maker for the purposes of resource allocation and assessment of
segment performance.
Holding Company
Holding Company costs (or unallocated costs, assets and liabilities) are those costs which are managed
on a Group basis and not allocated to business segments. They include costs associated with executive
management, strategic planning and compliance costs.
Accounting Policies
The accounting policies of the reportable segments are the same as the Group’s accounting policies
described in Note 2. Segment profit represents the profit earned by each segment without allocation of
central administration costs and directors’ salaries, share of profits of associates, gain recognised on
disposal of interest in former associate, investment income, gains and losses, finance costs and income
tax expense. This is the measure reported to the chief operating decision maker for the purposes of
resource allocation and assessment of segment performance.
Intersegment Transfers
There have been no intersegment sales during the year.
The following is an analysis of the Group’s revenue and results by reportable operating segment for the
year under review:
Revenue
Year ended
31-Dec-16
$’000s
Segment Result
Year ended
31-Dec-17
$’000s
31-Dec-16
$’000s
31-Dec-17
$’000s
Continuing operations
Segment result before income tax – Peru
Gold
Segment result before income tax – Peru
Copper
Segment result before income tax – USA
639
-
-
639
*
*
-
1,365
Other revenue
SilverStream gold streaming income
Central administration costs and director
salaries
Foreign exchange costs
Finance costs
Loan forgiveness
Reversal of provision of impairment of
property, plant & equipment
DOCA Expenses
Share Based Payments
Loss before income tax expense
Income tax expense
Profit/(Loss) for the year from continuing operations
3,054
-
47
3,101
3
-
(603)
(16)
-
13,139
1,000
(2,350)
(5)
14,269
-
14,269
*
*
*
1,365
-
-
(1,891)
247
(6)
-
-
-
-
(285)
-
(285)
The revenue reported above represents revenue generated from processed gold sales, toll treatment
revenues and concentrate sales to external customers.
31
Notes to the Consolidated Financial Statements
The following is an analysis of the Group’s assets by reportable operating segment:
Assets
Peru gold business
Peru copper business
United States of America
Unallocated assets
Consolidated total assets
31 Dec 2017
$’000s
31 Dec 2016
$’000s
1,272
-
-
3,222
4,494
*
*
*
*
558
The following is an analysis of the Group’s liabilities by reportable operating segment:
31 Dec 2017
$’000s
Liabilities
Peru gold business
Peru copper business
United States of America
Unallocated liabilities
Consolidated total liabilities
31 Dec 2016
$’000s
*
*
*
*
26,030
(3,347)
-
-
(98)
(3,445)
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
5. REVENUE AND EXPENSES
The following is an analysis of the Group’s revenue for the year from continuing operations:
Consolidated
31-Dec-17
$’000s
31-Dec-16
$’000s
Note
-
639
-
639
-
3
3
642
*
*
*
*
*
1,365
-
*
(213)
-
(213)
(109)
-
(109)
-
*
(a) Revenue
Revenue from the sale of gold
Revenue from toll processing
Revenue from selling concentrate
Revenue for continuing operations
Interest revenue – bank deposits
Other income
Other revenue
(b) Expenses
(i) Employee benefits expense:
Other employee benefits
(ii) Depreciation and amortisation:
Plant and equipment
Mine assets
(iii) Operating lease rental expenses included in occupancy costs:
Minimum lease payments
32
Notes to the Consolidated Financial Statements
(iv) Finance costs:
Interest on finance facilities
Interest on convertible notes
Bank fees
Finance costs
(v) Loan Forgiveness:
Cash settlements
Equity settlements
Book value of loans forgiven
Consolidated
31-Dec-
17
$’000s
31-Dec-
16
$’000s
Note
-
-
-
-
-
(1,379)
(4,740)
23,873
17,754
*
*
*
*
(6)
*
*
*
*
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
6.
INCOME TAXES
Income tax recognised in profit or loss
Tax expense comprises:
Deferred tax expense
Total tax expense
Consolidated
31-Dec-17
$’000s
31-Dec-16
$’000s
-
-
*
*
The prima facie income tax expense on pre-tax accounting loss from continuing operations reconciles to the
income tax expense in the financial statements as follows:
Profit / (Loss) from continuing operations
Income tax calculated at 27.5% (2016: 30%)
Expenses that are not deductible / (income that is exempt) in
determining taxable profit
Adjustments for deferred tax of prior year
Effect of different tax rates of subsidiaries operating in other
jurisdictions
Tax benefit not recognised as recovery not probable
14,269
3,924
(285)
(86)
-
-
-
(3,924)
-
The tax rate used in the above reconciliation is the tax rate of 27.5% (2016: 30%) payable by Australian
corporate entities on taxable profits under Australian tax law.
Deferred tax assets
Amounts recognised in profit and loss:
Tax losses – revenue
Share issue costs recognised in equity
Provisions & other
Deferred tax assets used to offset deferred tax liabilities
Deferred tax assets not recognised
33
(31,503)
*
*
*
31,503
-
-
-
-
86
-
*
*
*
*
*
-
Notes to the Consolidated Financial Statements
Deferred tax liabilities
Amounts recognised in profit and loss:
Mineral rights
Deferred tax assets used to offset deferred tax liabilities
Movements:
Opening balance at 1 January
Exchange differences
-
-
-
-
-
-
*
*
-
*
*
-
Tax consolidation
The parent entity is the only Australian entity in the Consolidated Entity, hence a tax consolidated group
has not been formed.
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
7. TRADE AND OTHER RECEIVABLES
Current
Tax receivable(1)
Other receivables(2)
31-Dec-17
$’000s
31-Dec-16
$’000s
99
191
290
-
-
-
At the reporting date $0 of the trade receivables were past due but not impaired.
(1) Local tax receivables relate to goods and services taxes refundable in the prior year.
(2) Other receivables include amounts receivable from sales prior to year-end and advances due for
repayment.
8.
INVENTORIES
Stores and spares
In process ore
Impairment
31-Dec-17
$’000s
-
-
-
-
31-Dec-16
$’000s
*
*
*
-
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
34
Notes to the Consolidated Financial Statements
9. PROPERTY, PLANT AND EQUIPMENT
Assets at Cost
Balance at 31 December 2015
Additions
Eliminated on disposal of assets
Impairment
Impact of foreign exchange
Balance at 31 December 2016
Additions
Eliminated on disposal of assets
Property, Plant & Equipment *
Impact of foreign exchange
Balance at 31 December 2017
Accumulated depreciation and impairment
Balance at 31 December 2015
Depreciation expense
Eliminated on disposal of assets
Impairment
Impact of foreign exchange
Balance at 31 December 2016
Eliminated on disposal of assets
Depreciation expense
Impact of foreign exchange
Balance at 31 December 2017
Net book value
As at 31 December 2016
As at 31 December 2017
Property, plant
and equipment
$’000s
-
-
-
-
-
-
-
-
1,000
-
1,000
-
-
-
-
-
-
-
-
-
-
-
1,000
* When the directors resumed custodianship of the Company it was noted that the San Santiago plant
has a provision for impairment that brought the book value to 0. The directors obtained a third-party
valuation report on the San Santiago plant from Primero Group Pty Ltd to ascertain what the fair value of
the plant should be now that the Company was out of administration. The valuator used an order of
magnitude valuation estimate and arrived at a fair value of US$1,302,500. The directors approved a
conservative approach to reverse the provision for impairment back to an ascribed fair value of
AU$1,000,000 for the San Santiago plant.
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
35
Notes to the Consolidated Financial Statements
10. MINE ASSETS
Mine assets at cost
Accumulated amortisation
Impairment
Net book value
Consolidated
31-Dec-17
31-Dec-16
$’000s
$’000s
173
-
-
173
500
-
-
500
Reconciliation of the carrying amounts of mine assets at the beginning and end of the current financial year:
Carrying amount at beginning of the year
- fair value adjustment on disposal
- mine development expenditure
- impact of foreign exchange
- amortisation expense
- impairment
500
(327)
-
-
-
-
173
500
-
*
*
*
-
500
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016.
11. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE
Consolidated
31-Dec-17
31-Dec-16
$’000s
$’000s
Deferred exploration expenditure
-
Reconciliation of the carrying amounts of mine assets at the beginning and end of the current financial year:
Carrying amount at beginning of the year
- acquisitions through business combination
combinations
- impact of foreign exchange
- impairment
-
-
-
-
-
-
-
-
*
-
-
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
36
Notes to the Consolidated Financial Statements
12. TRADE AND OTHER PAYABLES
Current Liabilities
Trade and other payables
Employee benefits
Tax liabilities
Other Liabilities
Creditors’ claims under administration*
Non- Current Liabilities*
Trade and other payables
Tax liabilities
Consolidated
31-Dec-17
$’000s
31-Dec-16
$’000s
341
724
-
-
-
1,065
1,802
403
2,205
1,800
-
475
4,309
1,920
8,504
-
-
-
* When the directors resumed custodianship of the Company it was noted that a large portion of the
payables in the subsidiaries related to debts owed from the period 2010-2016. Some of which pre-dated
the Company’s acquisition of the subsidiaries. It is directors expectation that the Company will not settle
these outstanding liabilities within the next 12 months as the validity of the liabilities cannot be confirmed,
and therefore have classified these liabilities as non-current.
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
13. BORROWINGS
CURRENT
Unsecured at amortised cost
Loans
Convertible notes
Secured at amortised cost
Loans
NON CURRENT
Unsecured at amortised cost
Loans
Secured at amortised cost
Convertible note
TOTAL BORROWINGS
Consolidated
31-Dec-17
$’000s
31-Dec-16
$’000s
175
-
-
175
-
-
-
175
2,832
6,532
217
9,581
-
-
-
9,581
37
Notes to the Consolidated Financial Statements
A. Loans
(a) Andina Resources Limited loan
As at 31 December 2017, the Group owed Andina Resources Limited (a director related entity with Mr
Matthew Carr) a total of $174,637. The terms of the loan are that the loan is payable on demand, is
unsecured and has a 0% interest rate.
As per the terms of the Deed of Company Arrangement (DOCA) all prior borrowings that were owed by the
Company were cleared upon effectuation of the DOCA.
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
14. PROVISIONS
(i)
Current
Annual leave
Provision for mine closure (1)
Total Current
Non-current
Provision for mine closure
Total Non –Current
TOTAL
Provision for mine closure
Opening balance
- decrease in the provision
- impact of foreign exchange
Closing balance
Consolidated
31-Dec-17
$’000s
31-Dec-16
$’000s
-
-
-
-
-
-
329
(329)
-
-
1,668
329
1,997
-
-
1,997
329
*
*
329
(1) The provision for mine closure is an environmental management instrument used to evaluate and
plan necessary measures before, during and after the closure of operations to eliminate, mitigate and
control adverse effects on the area used or disturbed by the mining activity, in order to be considered
as a compatible ecosystem with a healthy environment, appropriate for the biological development
and landscape preservation. This Environmental Impact Statement has been approved by the
Regional Government of Arequipa.
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
38
Notes to the Consolidated Financial Statements
15. OTHER LIABILITIES
Gold purchase agreement liability (1)
Silver purchase agreement liability (2)
Reduction in liability for ore sold under contract during the year
Reduction in liability for ore sold under contract during the year -
CN
Foreign exchange loss on liability revaluation
Fair value finance charge
Balance due to SilverStream SEZC under the GPA and SPA
Current
Gold purchase agreement liability
Silver purchase agreement liability
Non-current
Gold purchase agreement liability
Silver purchase agreement liability
Consolidated
31-Dec-17
$’000s
31-Dec-16
$’000s
-
-
-
-
-
-
-
-
-
-
-
-
-
-
*
*
5,948
*
*
*
5,948
*
*
5,948
-
-
-
As per the terms of the Deed of Company Arrangement Silverstream SEZC removed the Gold Purchase
Agreement (GPA) and the Silver Purchase Agreement (SPA) with the Group.
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
39
Notes to the Consolidated Financial Statements
16. ISSUED CAPITAL
(a)
Issued capital reconciliation
Issued capital
Ordinary shares fully paid
Movements in shares on issue
Balance at the beginning of the financial
year
Consolidation on a 350:1 basis
Shares issued 5 October 2017, at
$0.01, under the Public Offer
Shares issued 5 October 2017, at
$0.01, under the Employee Offer
Shares issued 5 October 2017, at
$0.01, under the Broker Offer
Shares issued 5 October 2017, at
$0.01, under the SilverStream Offer
Shares issued 5 October 2017, at
$0.01, under the Unsecured Creditor
Offer
Shares issued 5 October 2017, at
$0.01, under the Andina Offer
Capital Raising Costs
Balance at end of financial year
31 December 2017
Number
1,635,381,023
$’000s
91,051
31 December 2016
$’000s
Number
3,633,823,438
78,619
3,633,823,438
78,619
3,633,823,438
78,619
(3,623,442,415)
-
600,000,000
6,000
70,000,000
700
316,032,382
3,160
350,000,000
3,500
53,967,618
540
235,000,000
2,350
-
(3,818)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,635,381,023
91,051
3,633,823,438
78,619
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
Terms and conditions of contributed equity
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of
and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or
by proxy, at a meeting of the Company.
(b)
Shares under option - unlisted
Recipient
Number of shares
under option
Class of
shares
Exercise
price
Expiry
date
Vested
Anglo Pacific
209,357
Ordinary
$2.10
8 Feb 2018
100%
As at 31 December 2017, there are 209,357 unlisted share options issued to financial and corporate
advisors. These options expired post year end on 8 February 2018 and were not exercised.
Unquoted share options granted carry no rights to dividends and no voting rights and details of the
movement in unissued shares or interests under option as at the date of this report are:
40
Notes to the Consolidated Financial Statements
Balance at 1 January 2016
Share options issued during the year
Share options lapsed
Total number of options outstanding as at 31 December
2016
Consolidation on a 350:1 basis
Share options lapsed
Total number of options outstanding as at 31 December
2017
Number of
Options
(Unlisted)(1)
104,775,000*
*
(22,500,000)*
82,275,000*
(82,039,929)
(25,714)
209,357
Number of
Options
MIZOA
(ASX listed)(3)
432,539,584
-
(432,539,584)*
-
-
-
-
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
No options were exercised during the year.
17. RESERVES
Equity settled employee benefits reserve (1)
Foreign currency translation reserve (2)
18. LOSS PER SHARE
Basic and diluted loss per share from continuing operations
Loss from Continuing Operations Attributable to Equity Holders of
Titan Minerals Ltd
Weighted average number of ordinary shares used in the
calculation of basic EPS
Potential ordinary shares not considered to be dilutive at year end
Basic and diluted loss per share from discontinued operations
Loss from Discontinued Operations Attributable to Equity Holders
of Titan Minerals Ltd
Weighted average number of ordinary shares used in the
calculation of basic EPS
Potential ordinary shares not considered to be dilutive at year end
Consolidated
31-Dec-17
31-Dec-16
$’000s
2,826
(252)
2,574
$’000s
2,822
(1,904)
918
Consolidated
31-Dec-17
Cents
3.59
$’000s
14,269
No.
397,709,790
-
31-Dec-16
Cents
(2.7)
$’000s
(285)
No.
10,382,352
-
Consolidated
31-Dec-17
Cents
(0.46)
$’000s
(1,836)
No.
397,709,790
-
31-Dec-16
Cents
(6.4)
$’000s
(662)
No.
10,382,352
-
As the Group made a loss for the year, diluted earnings per share is the same as basic earnings per share.
The impact of dilution would be to reduce the loss per share.
41
Notes to the Consolidated Financial Statements
19. SUBSIDIARIES
Name of entity
Mundo Minerals USA
Inc
Mundo Peru Gold SAC
Mundo Minerales SAC
Golden Empire SAC
Compania Minera
Cobrepampa
Empresa Miner
Cobrepampa
Grupo Cobrepampa
Korisumaq SAC
Derivados Y
Concentrados SAC
Country of
incorporation
Ownership
interest
2017
Ownership
interest
2016*
USA
Peru
Peru
Peru
Peru
Peru
Peru
Peru
Peru
100%
0%
0%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Principal Activity
Administrative holding company
Gold production and exploration
Gold production and exploration
Gold exploration
Copper exploration
Copper exploration
Copper exploration
Copper exploration
Processing plant operator
Hogans Heros S.A.C
Peru
100%
0%
Administrative holding company
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
20. DISCONTINUED OPERATIONS
On 4 October 2017 the shares in the entities that made up the MPG group of companies were transferred
to the Minera Gold Limited Creditors Trust.
(a) Financial performance and cash flow information
31 Dec 2017
$’000s
31 Dec 2016
$’000s
Loss for the year from discontinued operations
Revenue - rendering of services
Other income
Expenses
Loss for the year from discontinued operations until date of
disposal
Loss on disposal
Loss before income tax
Attributable income tax expense
Loss for the year from discontinued operations (attributable to owners
of the company)
(b)
Cash flows from discontinued operations
Net cash outflow from operating activities
Net cash inflow from investing activities
Net cash inflows from discontinued operations
3
-
3
(1,511)
(1,508)
(328)
(1,836)
-
(1,836)
(364)
-
(364)
-
-
-
(662)
(662)
-
(662)
-
(662)
42
Notes to the Consolidated Financial Statements
(b)
Details of the sale of the MPG Group
Consideration received or receivable:
Cash
Total disposal consideration
Carrying amount of net assets sold
Foreign Currency Translation reclassified from reserve to profit or loss on disposal
Loss on disposal
The carrying amounts of assets and liabilities as at the date of sale (4 October 2017) were:
Cash and cash equivalents
Other current assets
Property, plant and equipment
Other non-current assets
Total assets
Trade and other payables
Other non-current assets
Total liabilities
Net assets
4-Oct-17
$
-
-
4,742
(5,070)
(328)
4-Oct-17
$
-
488
630
10,199
11,317
(3,320)
(3,255)
(6,575)
4,742
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
21. CONTINGENCIES AND COMMITMENTS
The Group has no contingent liabilities as at 31 December 2017.
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
43
Notes to the Consolidated Financial Statements
22. NOTES TO THE CASH FLOW STATEMENT
(a) Reconciliation of cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in
banks and investments in money markets instruments. Cash and cash equivalents at the end of the
financial year as shown in the cash flow statement is reconciled to the related items in the balance sheet
as follows:
Cash at bank and deposits at call
Consolidated
31-Dec-17
$’000s
2,932
31-Dec-16
$’000s
58
(b) Reconciliation of loss for the year to net cash flows used in operating
Loss for the year
Adjustments for:
activities
12,433
Depreciation and amortisation of non-current assets
Equity-settled share based payments
Foreign exchange
Loan forgiveness
DOCA expenses
Provision expense
Non cash financing activities:
Reversal of provision of impairment of property, plant &
equipment
Changes in net assets and liabilities:
(Increase)/decrease in assets:
Trade and other receivables
Increase/(decrease) in liabilities:
Trade and other payables
Taxation liabilities
Provisions
Net cash used in operating activities
(c) Non-cash financing activities
213
4
16
(17,754)
2,350
22
-
(1,000)
289
342
-
-
(3,085)
The following non-cash financing activities occurred during the year:
Offer
Shares issued under the Employee Offer
Shares issued under the Broker Offer
Shares issued under the SilverStream Offer
Shares issued under the Unsecured Creditor
Offer
Shares issued under the Andina Offer
Total
Date issued
5 October 2017
5 October 2017
5 October 2017
5 October 2017
5 October 2017
No of shares
70,000,000
316,032,382
350,000,000
53,967,618
235,000,000
1,025,000,000
(947)
-
-
(247)
-
-
-
-
-
18
-
-
61
(1,115)
$ ‘000
700
3,160
3,500
540
2,350
10,250
All cash balance contained in the above table was available for use by the Group as at 31 December
2017.
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
44
Notes to the Consolidated Financial Statements
23. EVENTS AFTER THE REPORTING PERIOD
There has not been any matter or circumstance that have arisen since the end of the financial year,
that has significantly affected or may significantly affect, the operations of the Group, the results of the
operations, or the state of the affairs of the Group in the future financial years, other than:
On the 8 February 2018, 209,357 unlisted options expired.
On the 26 March 2018 Titan Minerals Limited entered into a bid implementation agreement (BIA) with
Andina Resources Limited, by which Titan will acquire all of the issued share capital in Andina via an
off-market takeover bid. Andina is a Peru focussed unlisted public company incorporated in Australia.
Under the bid, Andina shareholders will receive 1 fully paid ordinary share in the capital of Titan for
every 1.18 Andina shares held (for a total of 561,656,385 Titan shares to be issued should 100% of
Andina shareholders accept the bid).
24.
KEY MANAGEMENT PERSONNEL
Refer to the Remuneration Report on pages 5-7 of the Directors Report.
25. RELATED PARTY TRANSACTIONS
a) Subsidiaries
The ultimate parent entity of the group is Titan Minerals Limited. Details of the ownership of ordinary
shares held in subsidiaries are disclosed in Note 18 to the Financial Statements. Balances and
transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation and are not disclosed in the Note. Details of transactions
between the Group and other related parties, if any, are disclosed below.
Transactions and balances between the Company and its subsidiaries were eliminated in the
preparation of consolidated financial statements of the Group.
As at 31 December 2017 the Group had unsecured loans with Andina Resources Limited, a director
related entity with Mr Matthew Carr, of a payable position $174,637 and Vista Gold SAC (a subsidiary
of Andina Resources Limited, in a receivable position $98,340).
45
Notes to the Consolidated Financial Statements
b)
Parent entity
The ultimate parent entity of the Group is Titan Minerals Limited.
The Statement of Comprehensive Income and Financial position on the parent entity are summarised
below:
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Parent
31-Dec-17
$ ‘000
3,009
-
3,009
112
-
112
2,897
31-Dec-16
$ ‘000
1
21,771
21,772
19,255
-
19,255
2,517
Issued capital
Reserves
Accumulated losses
Shareholder Equity
91,051
2,826
(90,980)
2,897
78,619
2,821
(78,923)
2,517
Statement of Comprehensive Income
Loss after tax
Total comprehensive loss
31-Dec-17
$ ‘000
(12,057)
(12,057)
31-Dec-16
$ ‘000
22
22
c)
Expenditure commitments by the parent entity:
Not longer than 1 year
Longer than 1 year and not longer than 5 years
31-Dec-17
31-Dec-16
$ ‘000
-
-
-
$ ‘000
*
-
*
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
26. FINANCIAL INSTRUMENTS
The Group's overall risk management program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial performance of the Group. The Group
uses different methods to measure different types of risk to which it is exposed. These methods
include sensitivity analysis in the case of interest rate, price and foreign exchange risks and ageing
analysis for credit and liquidity risk.
Risk management is carried out by senior management under direction of the Board of Directors. The
Board provides principles for overall risk management, as well as policies covering specific areas.
The consolidated entity is not materially exposed to changes in interest rates in its activities.
The material financial instruments to which the Group has exposure include:
(i) Cash and short-term deposits;
(ii) Financial assets at fair value through profit and loss;
(iii) Receivables; and
(iv) Accounts payable.
46
Notes to the Consolidated Financial Statements
The carrying values of the Group’s financial instruments are as follows:
Financial Assets
Cash and Cash Equivalents
Trade and Other Receivables
Total Financial Assets
Financial Liabilities
Trade and other payables
Other liability
Borrowings
Provisions
Total Financial Liabilities
Net Exposure
(a) Market Risk
Foreign Exchange Risk
31-Dec-17
$ ‘000
31-Dec-16
$ ‘000
2,932
389
3,321
3,270
-
175
-
3,445
(124)
58
-
58
8,504
5,948
9,581
1,997
26,030
(25,972)
The Group operates internationally and is exposed to foreign exchange risk arising primarily from its
subsidiaries, primarily with respect to the US dollar.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency.
The carrying amounts of the Group’s foreign currency denominated assets and monetary liabilities at the
end of the reporting year are as follows:
US dollars
284
*
2,462
*
Assets
Liabilities
31-Dec-17
$’000
31-Dec-16
$’000
31-Dec-17
$’000
31-Dec-16
$’000
Interest Rate Risk
All the consolidated entity’s financial instruments that are exposed to interest rate risk are either non-
interest bearing, bear interest at commercial interest rates or at fixed rates. The weighted average interest
rate on cash and short-term deposits at 31 December 2017 was 0.5% (31 December 2016: -%). All
receivables, other financial assets and payables are non-interest bearing.
(b) Credit Risk
Financial instruments, which potentially subject the consolidated entity to credit risk, consist primarily of
cash and short-term deposits. Credit risk on cash, short term deposits and trade receivables is largely
minimised by dealing with companies with acceptable credit ratings.
The consolidated entity has no reason to believe credit losses will arise from any of the above financial
instruments. However, the maximum amount of loss, which may possibly be realised, is the carrying
amount of the financial instrument.
Cash in Australia is held with National Australia Bank Limited which is an appropriate financial institution
with an external credit rating of AA-. Cash in the US was held with First Republic Bank which is considered
to be an appropriate financial institution with an external credit rating of A.
47
Notes to the Consolidated Financial Statements
(c) Liquidity Risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or
otherwise meeting its obligations related to financial liabilities. Management monitors the rolling forecasts
of the Group’s cash and fair value assets based on expected cash flows. This is generally carried out at a
local level in the operating companies of the Group in accordance with the practise and limits set by the
Group.
(d) Capital Risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going
concern, so that they can continue to maintain a suitable capital structure and fulfil the objectives of the
Group.
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
27. SHARE-BASED PAYMENTS
Ordinary Shares
As part of the Prospectus dated 18 August 2017, Titan Minerals Limited issued the following shares as
part of the various offers noted in the disclosure document:
Offer
Shares issued under the Employee Offer
Shares issued under the Broker Offer
Shares issued under the SilverStream Offer
Shares issued under the Unsecured Creditor Offer
Shares issued under the Andina Offer
Total
Performance Rights
No of shares
70,000,000
316,032,382
350,000,000
53,967,618
235,000,000
1,025,000,000
$ ‘000
700
3,160
3,500
540
2,350
10,250
At the General Meeting held on 18 December 2016, shareholders approved to grant 80,500,000
performance rights as remuneration (Class A, B, C). The rights entitled the directors and company
secretary to shares in Titan Minerals Limited on achievement of market conditions. Under the plan, the
participant was granted performance rights which only vest if certain market conditions are met.
The amount of rights that will vest depends on the achievement of three market-based conditions. The
three conditions are market-based condition related to achieving a 10-day volume weighted average price
of shares on the ASX of greater than $0.05, $0.06 and $0.07 respectively.
Performance rights convert to shares on the date of vesting with no exercise price or share issue price
being payable.
Set out below is the summary of rights granted and approved by shareholders. Management have
assessed the likelihood of the rights vesting and have estimated that Class A, B and C market conditions
are expected to be achieved prior to expiry.
(i) Fair value of performance rights granted
Set out below is the assessed fair value at grant date of performance rights granted during the year ended
31 December 2017.
48
Notes to the Consolidated Financial Statements
Performance rights:
Class A – market
Class B – market
Class C – market
Fair value at grant
date
$0.032
$0.032
$0.032
Expenses Arising from Share-based Payment Transactions
Total expenses arising from share-based payment transactions recognised during the year were as
follows:
Shares Issued under the Employee Offer
Shares Issued under the Broker Offer
Shares Issued under the SilverStream Offer
Shares Issued under the Unsecured Creditor Offer
Shares Issued under the Andina Offer
Performance Rights issued to directors and staff
Total share-based payments
28. REMUNERATION OF AUDITORS
31-Dec-17
$ ‘000
31-Dec-16
$ ‘000
(700)
(3,160)
(3,500)
(540)
(2,350)
(5)
(10,255)
-
-
-
-
-
-
Auditor of the parent entity
Audit or review of the financial report
Tax services
Other auditors – associate firms of the auditor of the parent entity in Brazil, USA
and Peru
Audit or review of the financial report
Consolidated
31-Dec-17
$ ‘000
31-Dec-16
$ ‘000
67
45
112
-
40
*
40
*
The auditor of Titan Minerals Limited for the financial year ended 31 December 2016 and 2017 was
Stantons International.
* The Company was under External administration from 25 August 2015 to 4 October 2017,
consequently the Company did not have sufficient information to allow the level of
disclosure required for the year ended 31 December 2016 and 31 December 2017.
49
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
TITAN MINERALS LIMITED
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
Report on the Audit of the Financial Report
Disclaimer of Opinion
We were engaged to audit the financial report of Titan Minerals Limited (formerly known as Minera Gold
Limited), the Company and its subsidiaries (“the Group”), which comprises the consolidated statement
of financial position as at 31 December 2017, the consolidated statement of comprehensive income,
the consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant accounting
policies, and the directors' declaration.
Because of the significance of the matters described in the Basis of Disclaimer of Opinion section of
our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for
an Audit Opinion on the financial report. Accordingly, we do not express an opinion on the financial
report for the year ended 31 December 2017.
Basis for Disclaimer of Opinion
During the period 1 January 2017 to 4 October 2017, the Company was subject to a Deed of Company
Arrangement (“DOCA”) and therefore under external administration. On 4 October 2017 the
recapitalisation of the Company was completed and the DOCA was fully effectuated. Accordingly, on 4
October 2017 the Company exited external administration and the control of the Company was passed
to the Company directors.
As disclosed in Note 2 to the financial statements, the directors of the Company did not have control of
the company until control was transferred to them on the effectuation of the DOCA on 4 October 2017.
Consequently, the financial information relating to the period from 1 January 2017 to 4 October 2017
was not subject to the same accounting and internal control processes, which includes the
implementation and maintenance of internal controls that are relevant to the preparation and fair
presentation of the financial report, Whilst the books and records of the Group have been reconstructed
to the maximum extent possible, we were unable to satisfy ourselves as to the completeness of the
general ledger and financial records as well as the relevant disclosures in the financial report.
Responsibilities of Management and Those Charged with Governance for the Financial Report
Management is responsible for the preparation and fair presentation of the financial report in
accordance with Australian Accounting Standards and for such internal control as management
determines is necessary to enable the preparation of the financial report that is free from material
misstatement, whether due to fraud or error. In preparing the financial report, management is
responsible for assessing the ability of the Group to continue as a going concern, disclosing, as
Liability limited by a scheme approved
under Professional Standards Legislation
applicable, matters related to going concern and using the going concern basis of accounting unless
management either intend to liquidate the Group or to cease operations, or has no realistic alternative
but to do so. Those charged with governance are responsible for overseeing the financial reporting
process of the Group.
Auditor's Responsibilities for the Audit of the Financial Report
Our responsibility is to conduct an audit of the financial report in accordance with Australian Auditing
Standards and to issue an auditor’s report. However, because of the matter described in the Basis for
Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit
evidence to provide a basis for an audit opinion on the financial report. We are independent of the
Group in accordance with the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
Report on the Remuneration Report
Disclaimer of Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 5 to 7 of the directors’ report for the year
ended 31 December 2017.
Because of the existence of the limitation on the scope of our work, as described in the Basis of
Disclaimer of Opinion, and the effects of such adjustments, if any, as might have been determined to
be necessary had the limitation not existed, we are unable to, and do not express, an opinion on the
remuneration report of Titan Minerals Limited for the year ended 31 December 2017 and whether it
complies with Section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Martin Michalik
Director
West Perth, Western Australia
29 March 2018
ADDITIONAL INFORMATION AS AT 28 MARCH 2018
ANALYSIS OF HOLDINGS OF LISTED SHARES AND OPTIONS IN THE COMPANY
1 — 1,000
1,001 — 5,000
5,001 — 10,000
10,001 — 100,000
100,001 — and over
Total number of holders
Holdings of less than a
marketable parcel
Ordinary
Shares
2,060
339
75
241
419
3,134
2,474
REGISTERED OFFICE OF THE COMPANY
SHARE REGISTRY
Suite 7, 295 Rokeby Road
Subiaco Western Australia 6005
Tel:
Fax:
+61 (8) 6555 2950
+61 (8) 6166 0261
STOCK EXCHANGE LISTING
Quotation has been granted for 1,635,381,023
ordinary shares and on the Australian Stock
Exchange Ltd. The State Office of the Australian
Stock Exchange Ltd in Perth, Western Australia
has been designated the Home Branch of Titan
Minerals Limited.
There are no current on-market buy-back
arrangements for the Company.
Voting Rights
For all ordinary shares, voting rights are one vote
per member on a show of hands and one vote per
share in a poll.
The registers of shares and options of the
Company are maintained by:-
Security Transfer Australia Pty Limited
770 Canning Hwy
Applecross WA 6153
Telephone (within Australia): 1300 992 916
Telephone (outside Australia): +61 3 9315 2333
COMPANY SECRETARY
The name of the Company Secretary is Zane
Lewis.
TAXATION STATUS
Titan Minerals Limited is taxed as a public
company.
52
ADDITIONAL INFORMATION AS AT 28 MARCH 2018
TWENTY LARGEST HOLDERS OF ORDINARY SHARES
Rank
Holder Name
Designation
Securities
%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
JP MORGAN NOM AUST LTD
TAZGA TWO PL
ROCKFORD INV FUND PL
SEZC SILVERSTREAM
J STIMPSON PL
BUSWELL REEGAN
ANDINA RES LTD
K-CRAFT NOM PL
WEXFORD RISE PL
UBS NOM PL
CITICORP NOM PL
BAFFIGO GIORGIO RAMON A
FISKE NOM LTD
VONROSS NOM PL
TEXBRIDGE HLDGS PL
RANGWELL BOYS PL
MATYSEK PAUL
CRANLEY CONS PL
ROVON INV PL
IONA RES LTD
ALL OTHER SHAREHOLDERS
TOTAL
CASH INCOME A/C
TAZGA TWO A/C
ROCKFORD INV A/C
HOEK A/C
HAS BEEN INV A/C
K-CRAFT INV A/C
WEXFORD RISE PENSI
VONROSS FAM A/C
M & B MCCARTHY FAM
RANGA FAM A/C
CRANLEY CONS A/C
127,896,378
84,500,000
80,000,000
75,036,834
75,000,000
75,000,000
65,000,000
63,532,382
60,000,000
54,198,459
51,428,681
40,500,000
40,000,000
30,000,000
27,950,000
25,000,000
23,800,000
22,300,000
20,900,000
20,000,000
573,338,289
1,635,381,023
7.82%
5.17%
4.89%
4.59%
4.59%
4.59%
3.97%
3.88%
3.67%
3.31%
3.14%
2.48%
2.45%
1.83%
1.71%
1.53%
1.46%
1.36%
1.28%
1.22%
35.06
100%
SUBSTANTIAL SHAREHOLDERS
Date
Announced
19/10/2017
Holder Name
Designation
TAZGA TWO PL
TAZGA TWO A/C
Securities
84,500,000
Consistency with business objectives - ASX Listing Rule 4.10.19
In accordance with Listing Rule 4.10.19, the Group states that it has used the cash and assets in a form
readily convertible to cash that it had at the time of admission in a way consistent with its business
objectives. The business objective is primarily exploration for natural resources and acquisition of resource
based projects. The Group believes it has used its cash in a consistent manner to which was disclosed
under the Prospectus dated 18 August 2017.
53
ADDITIONAL INFORMATION AS AT 28 MARCH 2018
TENEMENTS
Code
Concession name
Has.
Concession Holder
San Santiago De Acari
(Beneficiation Concession)
Virgen Del Carmen 2004 P
Don Ivan 31N-1
Don Tomasito De Acari
Camila VII
Virgen Del Carmen I 2004
Virgen Del Carmen 2004 A
Virgen Del Carmen 2004 H
Virgen Del Carmen 2004 L
Virgen Del Carmen 2004 M
Virgen Del Carmen 2004 N
Virgen Del Carmen 2004 S
Virgen Del Carmen 2004 T
Virgen Del Carmen 2006 A
Virgen Del Carmen 2004 J
Virgen Del Carmen 2004 R
Virgen Del Carmen 2004 Q
Virgen Del Carmen 2005a
Virgen Del Carmen 2005 B
P540000110
010226104
010227907
010485706
540002311
10102504
10139104
10164804
10164004
10163804
10163904
10277904
10277804
10199506
10164704
10278004
10164204
10087805
10142605
10000226y01 Acari Trigesimo
O10341005
O10138807
Virgen Del Carmen 2005 C
Virgen Del Carmen 2007 A
Derivados Y Concentrados S.A.C.
23.6207
Derivados Y Concentrados S.A.C.
99.7012
10.1777
Derivados Y Concentrados S.A.C.
891.4900 Derivados Y Concentrados S.A.C.
900.0000 Derivados Y Concentrados S.A.C.
Korisumaq S.A.C.
116.6853
Korisumaq S.A.C.
800.001
Korisumaq S.A.C.
0.8911
Korisumaq S.A.C.
9.9867
Korisumaq S.A.C.
6.0000
Korisumaq S.A.C.
9.4151
Korisumaq S.A.C.
9.9856
Korisumaq S.A.C.
43.863
Korisumaq S.A.C.
998.7285
Grupo Cobrepampa Sac
4.9936
Grupo Cobrepampa Sac
21.2957
Grupo Cobrepampa Sac
27.6826
Grupo Cobrepampa Sac
88.7535
75.9339
Grupo Cobrepampa Sac
579.2593 Grupo Cobrepampa Sac
399.4930 Compañía Minera Cobrepampa S.A.C.
251.0145 Compañía Minera Cobrepampa S.A.C.
CORPORATE GOVERNANCE STATEMENT
The directors of Titan Minerals support and adhere to the principles of corporate governance, recognising
the need for the highest standard of corporate behaviour and accountability. Please refer to the corporate
governance statement and the appendix 4G released to ASX and posted on the Company website at
www.titanminerals.com.au.
The directors are focused on fulfilling their responsibilities individually, and as a Board, for the benefit of all
the Company’s stakeholders. That involves recognition of, and a need to adopt, principles of good corporate
governance. The Board supports the guidelines on the “Principles of Good Corporate Governance and
Recommendations – 3rd Edition” established by the ASX Corporate Governance Council.
Given the size and structure of the Company, the nature of its business activities, the stage of its
development and the cost of strict and detailed compliance with all of the recommendations, it has adopted
a range of modified systems, procedures and practices which enables it to meet the principles of good
corporate governance.
The Company’s practices are mainly consistent with those of the guidelines and where they do not correlate
with the recommendations in the guidelines the Company considers that its adopted practices are
appropriate to it.
54