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TITAN MINERALS LIMITED
(ACN 117 790 897)
Annual Report
for the year ended 31 December 2020
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 0 20
Corporate Directory
Directors
Michael Hardy
Laurence Marsland
Matthew Carr
Nicholas Rowley
Company Secretary
Zane Lewis
Registered Office
Principal Place of Business
Suite 6, 295 Rokeby Road
SUBIACO WA 6008
Telephone: +61 8 6555 2950
Facsimile: +61 8 6166 0261
Level 1, 50 Ord Street
WEST PERTH WA 6005
Share Registry
Auditors
Automic Share Registry
Level 2
267 St Georges Terrace
Perth WA 6000
ASX Code
TTM
Stantons International Audit and Consulting Pty
Ltd
Level 2, 1 Walker Avenue
West Perth
Western Australia 6005
Australian Company Number
ACN 117 790 897
Australian Business Number
ABN 97 117 790 897
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 0 20
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 Statement of Cash Flows
Notes to the Consolidated Financial Statements
Independent Audit Report
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Directors’ Report
1. Directors’ Information
The directors and company secretary of Titan Minerals Limited (the “Company” or “Titan”) and its controlled
entities (together the “Group” or “Consolidated Entity”) during the financial year end until the date of this report
were as follows:
2. Directors and Company Secretary
Michael Hardy – appointed as director on 15 July 2019, current,
Laurence Marsland – appointed as director on 15 July 2019, current,
Matthew Carr – appointed as director on 3 February 2017, current,
Nicholas Rowley – appointed as a director on 9 August 2016, current,
Zane Lewis – appointed as company secretary on 11 August 2016, current.
3. Directors’ Meetings
Seven meetings of the directors of the Company have been held during the financial year ended 31 December
2020.
4. Principal Activities
The Group’s principal activities during the course of the financial year were minerals exploration in Ecuador
and gold toll processing in Peru. Gold production in Ecuador ceased in early April 2020. The gold toll
processing segment of the business in Peru was sold in late December 2020.
5. 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 loss of the Consolidated Entity for the year ended 31 December 2020 amounted to US$33,124 thousand
(31 December 2019 Core Gold Inc Group: US$3,909 thousand loss).
A formal takeover bid for Core Gold Inc. was made on 1 October 2019 and received overwhelming support
from Core Gold shareholders, with greater than 50% of the shareholders accepting the Titan offer by 30
January 2020 and 92% by early February 2020. Full 100% ownership and control of Core Gold Inc. was
finalised on 26 May 2020. This was a great achievement by the company - for a junior mining company to
succeed in such a difficult transaction required the support of shareholders and advisors. Our corporate
advisors, Bacchus Capital and Canaccord, did an outstanding job supporting the company through the
transaction.
The takeover is accounted for as a reverse acquisition, refer Notes 2(d) and Note 29, to the financial
statements, with the functional currency and reporting currency of Titan Minerals Limited and Core Gold Inc
being United States dollars (USD) or (US$). This report is therefore prepared in USD.
On 15 April 2020, the Group announced the indefinite suspension of all Core Gold’s production operations in
Ecuador due to force majeure resulting from the COVID-19 virus pandemic. As a result, all related labour and
contractor relationships were terminated.
The Titan Consolidated Entity is no longer operating as a gold producer and is now focused on the exploration
and evaluation of its three main concession or tenement groups in Ecuador, namely the Dynasty Gold project,
the Copper Duke project and the Linderos Gold project.
COVID-19
Titan is committed to advancing planned drilling and other exploration activities while minimising the risks of
infectious disease and providing a safe environment for employees, local communities, and other key
stakeholders across all the Company’s assets. In Ecuador, exploration and mining activities have been defined
as essential activities and are allowed subject to each operation’s development and implementation of COVID-
19 related safety policies, which are finalised and lodged at Federal, Provincial, and Municipal levels of
government as required and full time field activities are permitted under current restrictions in Ecuador.
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Discontinued Operations
As announced on 24 August 2020 and completed on 9 October 2020, the Group divested its non-core assets
in Peru representing the Coriorcco and Las Antes properties for consideration of US$1.5 million in cash, 4.25
million in Oro X ordinary shares worth approx. US$2.3 million as at 31 December 2020 and a royalty over the
Coriorcco property of 1% NSR plus staged level of payments based on the release of a Canadian NI 43-101
achieving certain ranges of gold equivalent ounces. Refer Note 7 to the financial statements for further detail.
On 24 December 2020, the Group sold 100% of its shares in wholly owned subsidiary Vista Gold S.A.C.
representing the Gold toll processing operation in Peru, for consideration of US$2.97 million. With US$0.3
million previously received as a deposit, US$0.5 million received (in transit) on 31 December 2020 and US$0.5
million received on 5 January 2021. A further US$1.67 million is receivable in approximately quarterly
instalments through to July 2022.
Corporate
Capital
In early January 2020, the Company raised A$3.5M before costs by the placement of 21,875,000 shares at
AUD 16 cents per share.
In the period 17 January 2020 to 26 May 2020 the Company issued 488,947,378 shares as part of the takeover
of Core Gold Inc. to obtain 100% ownership of Core.
On 4 June 2020, the company issued 185,376,923 shares at AUD 6.5 cents per share in a placement to raise
A$12 million before costs.
On 5 August 2020, the Company issued 30,769,231 shares under a shareholder purchase plan at AUD 6.5
cents per share to raise A$2.0 million.
On 24 August 2020, following obtaining shareholder approval, the Company issued 7,692,696 shares to
directors at AUD 6.5 cents per share to raise A$0.5 million.
In addition, the Company has issued 108,224,925 shares, since 24 August 2020 up to years end, to lenders
and suppliers in lieu of cash payments.
Debt Facility
On 21 December 2020, the Group entered into a secured debt facility with a group of sophisticated and
professional investors. This was utilised to replace and pay out in full the previous secured debt facility of US$3
million held by Titan from a separate group of sophisticated and professional investors. The previous facility
was originally provided on 25 March 2019 to assist in funding the acquisition of the Core Gold group.
The material terms of the current debt facility are:
• Amount: A$4,155,280
• Term: 30 June 2021
•
• Facility establishment fee: 6%
• Security: Pledges over all the shares which Titan Minerals Limited holds in each of its subsidiaries
Interest: 15% per annum payable at repayment date
which form part of any of the following projects located in Ecuador:
(A) known as the Dynasty Gold Project
(B) known as the Copper Duke Project
(C) known as the Linderos Gold Project
• At repayment, an option by the lenders to receive up to the equivalent of A$1,150,000 in principal
repayments through the issue of ordinary shares in Titan Minerals Limited.
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Operations Report
Titan’s Operations for the 2020 financial year were comprised of mineral exploration activities and gold-silver
production in Peru and Ecuador across the first four months of the year. At the start of the year, the Company
operated early-stage exploration programmes and a toll treatment facility in Southern Peru, and added
Ecuador processing and mineral exploration operations to its portfolio by acquiring a 91% interest in Core Gold
Inc. in Q1 of the reporting period (refer to ASX release dated 13 February 2020).
Gold and silver processing operations in both Peru and Ecuador continued into the second quarter of the year,
however all commercial operations in Ecuador were suspended on 15 April 2020 (refer to ASX release dated
16 April 2020) due to force majeure resulting from a State of Emergency declared in Ecuador in response to
the COVID-19 virus pandemic. Similarly, Peru also declared a state of National Emergency in March 2020,
and the Vista Gold Plant shifted to minimal operational staff (refer to ASX release dated 30 April 2020)
processing stockpiles at the plant site and significantly reduced processing into the second quarter before
ceasing commercial operations.
Exploration activity was focused predominantly on the Dynasty, Copper Duke and Linderos projects in Ecudaor
during the reporting period. Other projects in the portfolio have either received a non-material amount of
exploration activity to meet minimum work requirements to keep the mining concessions in good standing,
and/or are included in a process for divestment, reviewed in more detail in the Corporate section of this report.
DYNASTY GOLD PROJECT
The Dynasty Gold Project located in southern Ecuador is Titan’s flagship project and the focus of an exploration
programme including an ongoing 12,000m diamond drill programme, airborne geophysics survey, and a re-
logging and assaying campaign of over 33,000m of archived diamond core from previous drill programmes.
The exploration programme was ongoing at the end of the reporting year, with 4,550m from 20 diamond holes
drilled (assays pending), airborne geophysical survey acquisition and processing completed (interpretive work
progressing), and re-logging campaign approximately 40% completed. Better results from re-logging campaign
received in the reporting period (refer to Figure 2 and ASX releases dated 14 July and 16 December 2020),
including several intercepts located external to the existing foreign resource estimate received to date are:
o 14.5m @ 6.43g/t gold from 119m
o 23.6m @ 4.01g/t gold from 107.9m
o 16.6m @ 3.49g/t gold from 171.4m
o 15.2m @ 3.04g/t gold from 133.8m
o 5.00m @ 6.00g/t gold from 68.1m
o 4.25m @ 6.37g/t gold from 56.85m
o 10.8m @ 2.06g/t gold from 89.5m
Comprised of five concessions totalling 139km2 the Dynasty Gold Project is located in the Loja Province in
southern Ecuador (refer to Figure 1), the three northernmost concessions have received an Environmental
Authorization and are fully permitted for exploration and small-scale mining operations (up to 1,000tpd per
concession open-pit).
The Dynasty Gold Project boasts a 9km long mineralised vein corridor (refer to Figure 1) with only a limited
portion of the strike extent drilled to date and hosting a foreign mineral resource estimate (refer to Table 1,
reported in compliance with Canadian NI 43-101).
Previous small scale mining from 2017 though early 2020 focussed on the Cerro Verde Prospect and extended
along approximately 500m on the southwest extent of the larger >9km long Dynasty Gold Project vein swarm
corridor. Small scale mining production averaged 3.4g/t gold from numerous veins ranging from 1.5m to 15m
in width. The initial small-scale mining of the foreign resource estimate has identified numerous veins not
included in the current foreign mineral resource estimate for the Dynasty Gold Project.
The additional mineralisation discovered in open pits yields a 40% increase in gold content versus the current
foreign mineral resource estimate for the areas mined. This additional gold is realised from a 69% increase in
mineralised material at a 2g/t gold cut-off grade mined through 31 December 2018.
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Figure 1: Dynasty Project location map with recently reported and historical drill collar locations on
diagrammatic regional geology
Resource Estimate Update – Dynasty Project
The information in this announcement relating to Mineral Resource Estimates for the Dynasty Gold Project is
a foreign estimate and is not reported in accordance with the JORC Code. A competent person has not done
sufficient work to classify this foreign estimate as a mineral resource in accordance with the JORC Code and
it is uncertain that following further exploration work that this foreign estimate will be able to be reported as a
mineral resource in accordance with the JORC Code.
Table 1: Foreign Mineral Resource Estimation reported in compliance with Canadian NI 43-101
Category
Indicated
Inferred
Total
Tonnes
(Thousands)
6,622
7,824
14,446
Au
(g/t)
4.65
4.42
4.53
Ag
(g/t)
36
36
36
Contained Au
(1,000 ozs)
Contained Ag
(1,000 ozs)
991
1,113
2,103
7,673
9,151
16,800
The information in this document relating to Mineral Resource Estimates for the Dynasty Gold Project have
been extracted from the ASX announcement dated 30 April 2020 (Initial Dynasty Announcement). Titan
confirms that it is not in possession of any new information or data that materially impacts on the reliability of
the Mineral Resource Estimates for the Dynasty Gold Project and included in the Initial Dynasty
Announcement. Titan confirms that the supporting information provided in the Initial Dynasty Announcement
continues to apply and has not materially changed.
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Refer to the Notes to Mineral Resource section of the Additional Information provided in this report below for
additional information regarding status of JORC compliant mineral resource estimation and information
required for compliance with ASX listing rule 5.14.1.
Diamond Drilling Campaign – Dynasty Project
Diamond drilling activity completed over the Iguana prospect area totaled 4,550m from 20 diamond holes
completed in Q4, with assays reported subsequent to the reporting period (refer to ASX release dated 3
February 2021). All reported drillholes intersected veining in the Iguana corridor, with 19 holes reporting
significant intercepts across multiple quartz vein filled structures. Better intercepts reported include:
o 4.94m @ 6.28 g/t gold and 16 g/t silver from 82.22m – IGD007
o 2.28m @ 6.82g/t gold and 88g/t silver from 24.52m – IGD010
o 2.69m @ 7.54 g/t gold and 38 g/t silver from 125.76m – IGD013
o 3.80m @ 6.92 g/t gold and 30 g/t silver from 117.20m – IGD015
o 8.46m @ 2.23g/t gold and 11g/t silver from 83.60m – IGD016
The Dynasty drill program is focused on complementing historical drilling by generating the first oriented core
at the Dynasty Gold Project to underpin geologic modelling in support of developing a JORC compliant mineral
resource estimation. Overall, recent drilling has returned results similar in tenor and extent to historical drill
results. Additional detailed structural analysis from the oriented core is anticipated to increase confidence in
linking recent drilling results to historical results.
Figure 2: Drill collar locations within the Cerro Verde Prospect area showing the current interpretation of
geology and traces of quartz veins at surface confirmed from systematic trenching and drilling
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Diamond Core Relogging Programmes
As reported 13 January 2021, evaluation of diamond drill core from previous drilling programmes that includes
archived core material drilled from 2004 through 2008 and in-fill, production related diamond core drilling from
2019 was nearing completion at the end of the reporting period and integration of those datasets into geological
modelling had already commenced.
The 27,700m re-logging campaign and extension sampling of non-vein drill core from the 201 original diamond
drill holes was over 50% complete and the 4,600m of relogging and sampling of 42 diamond drill holes
completed during production drilling in 2019-2020 was 100% complete. All samples re-logged to date have
been submitted for analysis with results from the 2019-20 drilling reported 17 February 2021.
Airborne Geophysical Survey – Dynasty Project
Titan mobilised a geophysical crew in the December quarter to complete a helicopter borne, high resolution
magnetic and radiometric survey on 100m line spacing across both the Dynasty and Copper Duke Project
areas (refer to Figure 3 and ASX release dated 21 October 2020). The aerial geophysical survey, has delivered
high resolution magnetic and radiometric data sets for both the Dynasty and Copper Duke project areas
covering an aggregate 195km2 area.
Terra Resources of Perth, Western Australia was engaged for quality control during the surveys, and follow-
up studies with re-processed datasets and interpretive work. Terra Resources is a group specialising in survey
design, processing/modelling. Integration of new data acquired by Titan with all existing geo-scientific data.
geophysical interpretation maps and reporting on targeting recommendations for the Dynasty Gold project was
in progress at the end of the reporting period.
Figure 3: Geophysical Survey outlines with total magnetic intensity (TMI) results for the Dynasty and
Copper Duke project areas
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COPPER DUKE PROJECT
Copper Duke is an early stage exploration project located in the Loja province of southern Ecuador,
approximately 18km east of the Company’s flagship Dynasty gold project. Copper Duke consists of thirteen
concessions totalling 130km2 situated approximately 5kilomtre south of both the Pan American Highway and
the city of Catacocha, which is less than 1 hour’s drive west of the regional airport for Loja, the provincial
capital city.
The first modern exploration within what is now the Copper Duke Project was part of a United Nations survey
initiated in 1968, completing a broader stream sediment geochemistry survey targeting Cu-Mo systems in
southern Ecuador and followed by more focused geophysical surveys on identified anomalies. The program
culminated in 1978 with drilling of 2 diamond drill holes totalling 440m within the Copper Duke Project area
(refer to ASX release dated 25 May 2020), with assays from drilling returning:
• 33.1m @ 2.5g/t gold, 154ppm copper and 2.4ppm Mo from 9m depth
o
Including 8.4m @ 1.9g/t gold, 294ppm copper and 3.9ppm Mo from 45.3m depth, SON-01
• 45.4m @ 1.9g/t gold, 168ppm copper and 3.0ppm Mo from surface
o
Including 10.9m @ 1.7g/t gold, 857ppm copper, and 2.0ppm Mo from 51.85m depth, SON-02
No subsequent drilling within the project area has been completed, but a series of mapping and surface
geochemical campaigns have identified outcropping porphyries and an extensive footprint of high tenor Au-Cu
anomalism related to porphyry style mineralisation.
Airborne Geophysical Survey
Titan mobilised a geophysical crew in the December quarter to complete a helicopter borne, high resolution
magnetic and radiometric survey on 100m line spacing at the Copper Duke Project completed through October
and November 2020 (refer to ASX release dated 21 October 2020).
The aerial geophysical survey, has delivered high resolution magnetic and radiometric data sets for both the
Dynasty and Copper Duke project areas covering an aggregate 195km2 area. Terra Geophysics, based in
Perth, Western Australia, who completed quality control reviews of the data sets during acquisition, has been
engaged to complete additional data processing and assist in generating initial geology interpretations for
targeting and exploration program planning across both projects.
Geophysical survey results define an extensive corridor hosting porphyry related features similar to many
major porphyry districts in the world. Multiple clusters of intrusive centres interpreted from high magnetic
response features (refer to Figure 5) form a 9km long by up to 2 km wide arcuate trend that is coincident with
localised outcropping porphyry style mineralisation confirmed at surface. Existing high tenor gold and copper
surface mineralisation from trench and channel sample activity.
Initial interpretation data sets have been delivered and field check work to underpin an iterative process of field
checking the physical property of targeted anomalies for mapping and sampling targets, has commenced, and
additional data along with the refined geological interpretation will be used to rate and rank targets for maiden
drill testing at Copper Duke in 2021 (refer to ASX releases dated 13 January, 21 January, and 2 March 2021).
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Figure 4: Copper Duke Prospect locations over Geophysical product with an Analytical Signal filter
Surface Geochemical Results – Copper Duke
A regional mapping and geochemistry campaign commenced in 2020 is ongoing at the time of reporting ahead
of anticipated maiden drilling planned for Copper Duke in late 2021. Assay results including work completed
during the reporting period were announced 21 January 2021.
Better assay results from recent sampling and reported assay (refer to ASX release dated 21 January 2021)
include:
o 11.2m @ 0.98% copper and 4.05m @ 16.4g/t gold and on newly identified structural zone
o 26m @ 1.13g/t gold and 0.21% copper – from channel sampling northwest El Huato prospect
o 15.3m @ 1.32g/t gold located 1.2km southeast of mineralised UN drillholes (El Huato)
o 13m @ 0.46% Copper located 820m southeast of UN drillholes
o 0.8m @ 8.18g/t gold and 16g/t silver in quartz veining – over 1km northeast of El Huato Prospect
o 1m @ 13.7 and 0.6m @ 16.6g/t gold in veining – additional vein sets within El Palton Prospect
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Figure 5: Locations with coppergold assay results for both surface chip-channel and rock chip sampling
locations for the Copper Duke Project, defining multiple porphyry and high tenor epithermal vein target
areas across concession in geology interpreted from geophysical datasets
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LINDEROS PROJECT
The Linderos Project is an exploration property located in the Loja province of southern Ecuador comprised of
4 contigous concession totalling 143km2 land position. The project area is located proximal to the Peruvian
border, approximately 20km southwest of the flagship Dynasty Gold Project (refer to Figure 8).
The Linderos project boasts significant copper anomalism at surface associated with gold-copper porphyry
system style mineralization, and also hosts a recent discovery of high grade epithermal style gold minerlisation
at surface that merits further exploration. Titan is currently reviewing datasets to refine an exploration strategy
to cost effectively advance a discovery at the project. A high resolution drone platform magnetic survey is
planned for the project, and is anticipated to be a catalyst to drive further follow-up exploration activities.
Figure 6: Linderos Project Drill Location Map on diagrammatic regional scale geology interpretation
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JERUSALEM GOLD PROJECT
The Jerusalem Gold Project is a single concession named the Jerusalén concession (code 353) located in
south eastern Ecuador, 400km south east of the capital city of Quito close to the border with Peru in the
province on Zamora-Chinchipe (refer to Figure 8). The concession covers 2.25km2 hectares in a readily
assessable region of southern Ecuador within 70km of the nearest regional airport located near the city of Loja
(refer to Figure 7).
The Jerusalem gold project is located on the margins of the Zamora batholith, a middle to late Jurassic age
intrusion up to 100km wide and exposed for 200km extent in the prolific Zamora copper-gold metallogenic belt,
which hosts several epithermal gold deposits including the Condor project and the 13.9Moz Fruta del Norte
mine, and multiple copper to gold enriched copper porphyry systems including Mirador and Santa Barbara
projects.
Table 2 | Summary of Foreign Mineral Resource Estimate dated 24 October 2014
Category
Measured
Indicated
Total Measure &
Indicated
Inferred
Total
Tonnes
(000's)
379
576
956
1775
2,731
Au
(g/t)
14.2
13.5
13.78
15.0
14.5
Ag
(g/t)
90
95
93
101
98
Contained
Au (ozs)
(000's)
Contained
Ag (ozs)
(000's)
173
249
422
856
1,278
1098
1760
2,857
5764
8,621
The information in this announcement relating to Mineral Resource Estimates for the Jerusalem Gold Project
is a foreign estimate extracted from the ASX announcement dated 21 September 2020 (Initial Jerusalem
Announcement) and is not reported in accordance with the JORC Code. A competent person has not done
sufficient work to classify this foreign estimate as a mineral resource in accordance with the JORC Code and
it is uncertain that following further exploration work that this foreign estimate will be able to be reported as a
mineral resource in accordance with the JORC Code.
Titan confirms that it is not in possession of any new information or data that materially impacts on the reliability
of the mineral resource estimates for the Jerusalem Gold Project and included in the Initial Jerusalem
Announcement. Titan confirms that the supporting information provided in the Initial Jerusalem Announcement
continues to apply and has not materially changed.
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The Jerusalem Gold project has been
the focus of a number of exploration
campaigns, reporting several mineral
resource estimations and host
to
artisanal mining activity since the early
1980’s. Several mineral
resource
estimations completed and two such
estimates reported under the Canadian
National Instrument 43-101, with the
most recent
titled
“Jerusalem Gold Project, Zamora
Chinchipe – Ecuador” dated 24
October, 2014 and released on the
SEDAR platform on 5 November 2014
(refer to Table 2).
technical report
The gold mineralization found on the
concession
is associated with an
extensive high grade polymetallic
epithermal vein system featuring over
twenty narrow high-grade gold veins.
Multiple vein extensions and additional
mineralisation identified in 2003 to
2007 exploration campaigns have not
received follow-up drill testing.
for
Significant
continued
increase
confidence of the previously drilled
resource.
The project hosts over 20 shoots of
high grade gold veining identified in
historical mining and previous drilling
(refer
to ASX Release dated 20
September 2020).
potential
growth
exists
and
Figure 7: Interpreted Regional Geology of southern Ecuador with major project
locations
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OTHER PROJECTS
Zaruma Project & Portovelo Plant, Ecuador
No exploration activity occurred on the Zaruma Project in the reporting period and post suspension of mining
operations at Dynasty on 15 April 2020 due to COVID-19, the Portovelo mill was placed on care and
maintenance. As announced on 16 December 2020 Titan commenced a formal process to sell the Zaruma
Project and Portovelo Plant.
Subseqeunt to the reporting period Titan has signed a binding term sheet for the sale of Zaruma Mine and
Portovelo Process Plant for US$15 million in staged cash payments plus a 2% net smelter return royalty on
future copper production from the Zaruma Mine concessions (Refer to ASX release dated 15 April 2020).
Copper Field Project, Ecuador
Copper Field Project is located in the Loja Province of southern Ecuador, the project is situated approximately
30km to the northeast of the flagship Dynasty Gold Project. The early stage exploration project is comprised
of 2 concessions totalling 65km2 hosting two prospective zones of geochemical anomalism with no previous
drill testing. Exploration activity on the Copper Field project was limited localised confirmatory surface
geochemistry sampling and field reconnaissance work that met minimum work requirements to maintain the
concessions in good standing for continue reconnaissance and target definition work.
Field mapping and sampling work is planned to continue over the coming months as part of a strategic review
of assets.
Figure 8: Titan Project locations in southern Ecuador
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6. Share Options and Performance Rights
As at the date of this report there are 38,500,000 unquoted options to Consultants and 37,120,000 incentive
options to Directors and employees on issue. Refer Note 27 to the financial statements for further details.
7.
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 wilful breach of duty in relation to the Company. The
amount of the premium was US $47,668 which was paid during the financial year. No indemnity has been
sought for or paid to auditors.
8. Events Subsequent to Reporting Date
As announced on 15 April 2021, Titan Minerals Limited has entered into a term sheet to divest its Zaruma
Mine and related concessions / tenements plus the Portovelo Process Plant for US $15 million.
The schedule of staged payments from the purchaser is:
1. US$2,000,000 Non-refundable cash deposit payable by Pelorus upon signing of the Term Sheet
2. US$3,000,000 Payable within 30 days on signing of the Share Sale Agreement
3. US$2,500,000 Payable on 1 August 2021
4. US$2,500,000 Payable on 1 December 2021
5. US$2,500,000 Payable on1 March 2022
6. US$2,500,000 Payable on 1 June 2022
Titan is also entitled to a 2% net smelter return royalty on the value of any recovered and realisable copper
produced from any of the Zaruma Mine concessions.
There has not been any other matters or circumstances 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.
9. 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 2020.
10. Likely developments
The Group will continue to pursue its principal activity of minerals exploration in Ecuador, particularly in respect
to its key projects being the Dynasty Gold project, Copper Duke project and the Linderos Gold project plus the
divestment of non-core assets. The Company will also continue to evaluate new business opportunities in South
America.
11. Environmental Issues
The Group's operations comply with all relevant environmental laws and regulations and have not been subject
to any action by environmental regulators.
14
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 0 2 0
12. Proceedings on behalf of Company
No person has applied for leave of any court to bring proceedings on behalf of the ultimate parent 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.
The Company’s subsidiaries in Ecuador are parties to a number of legal proceedings in the ordinary course
of business, refer Note 20 to the financial statements.
13. Information on Directors and Company Secretary
Michael Hardy
Director (Non-Executive Chairman)
Qualifications and Experience:
Mr Hardy is a graduate of the University of Western Australia with degrees in Arts and Law. He has practised as
a barrister and solicitor for 40 years, having been a partner of Robinson Cox (subsequently Clayton Utz) from
1983 to 2002 before establishing the firm Hardy Bowen in 2002. Mr Hardy is a former Chairman and Director of
Fleetwood Corporation 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:
N/A
836,231 Ordinary Shares
5,000,000 options
6 of 7 held during the financial year
Appointed:
15 July 2019
Laurence Marsland
Director (Managing Director & Chief Executive Officer)
Qualifications and Experience:
Mr Marsland is a graduate of the Western Australia Institute of Technology where he completed a Bachelor of
Applied Science in Mechanical Engineering and is a graduate of the Stanford Sloan Fellows Program at the
Stanford University Graduate School of Business where he completed a Master of Science in Management
degree. Mr Marsland is a Fellow of the Institution of Engineers Australia, a Chartered Professional Engineer.
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
5,696,154 Ordinary Shares
10,000,000 options
7 of 7 held during the financial year
15 July 2019
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.
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
11,775,501 Ordinary Shares
7,000,000 options
7 of 7 held during the financial year
3 February 2017
15
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 0 2 0
Nicholas Rowley
Director (Non-Executive Director)
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.
Non-Executive Director of Cyprium Metals Limited
appoint 31 May 2018 (ASX: CYP).
Non-Executive Director of Oro X Mining Corp
(TSV:OROX) appoint 8 October 2020
5,157,460 Ordinary Shares
5,000,000 options
7 of 7 held during the financial year
9 August 2016
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.
14. Remuneration Report (Audited)
The Directors present the remuneration report for the Company and the Consolidated Entity for the year ended
31 December 2020. 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 excluding the remuneration of directors and executives or
the issue of 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:
Michael Hardy
Laurence Marsland
Matthew Carr
Nicholas Rowley
Travis Schwertfeger
David Sadgrove
Service Agreements
Non-Executive Chairman
Managing Director & Chief Executive Officer
Executive Director
Non-Executive Director
Chief Operations Manager (until 31 March 2020) / Chief Geologist (effective
1 April 2020)
Chief Financial Officer (appointed 3 August 2020)
Remuneration and other terms of employment for the Executive Directors and other officers 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.
16
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 0 2 0
Name
Michael Hardy
Laurence Marsland
Matthew Carr
Nicholas Rowley
Consulting fees / salary
(all denominated in AUD)
$108,000 plus superannuation (since
1 March 2020)
$60,000 (to 29 February 2020)
Term of
Agreement
Notice Period
No fixed term N/A
$240,000 4 years
2/12 months(1)
$180,000 (since 1 July 2020)
$240,000 (to 30 June 2020)
$72,000 (since 1 March 2020)
$96,000 (to 29 February 2020)
No fixed term 6/12 months(1)
No fixed term N/A
Travis Schwertfeger (Chief
Geologist)
$240,000 No fixed term 3 months(1)
David Sadgrove
$275,000 plus superannuation No fixed term 3 months(1)
(1) Termination benefits:
Mr Laurence Marsland:
In the case of termination without cause by the Company, the required notice period is 12 months. In the
case of termination without cause by Mr Marsland, the required notice period is 2 months.
Mr Matthew Carr:
In the case of termination without cause by the Company Mr Carr is entitled to receive 12 months’ salary. 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).
Mr David Sadgrove:
In the case of termination without cause by the Company, the required notice period is 3 months. In the case
of termination without cause by Mr Sadgrove, the required notice period is 3 months.
Details of Remuneration
Compensation 12 months to 31 December 2020
Short Term
Benefits
$ USD
Super-
annuation
$ USD
Share
based
payments
$ USD
Total
$ USD
Percentage of
remuneration
that is equity
based
69,060
165,744
145,026
48,342
164,708
79,143
5,905
-
-
-
-
7,182
251,750
503,499
352,449
251,750
176,084
76,228
326,715
669,243
497,475
300,092
340,792
162,553
672,023
13,087
1,611,760
2,296,870
77%
75%
71%
84%
52%
47%
70%
Compensation of key management based
on fees approved by the Board of directors.
Michael Hardy
Laurence Marsland
Matthew Carr
Nicholas Rowley
Travis Schwertfeger
David Sadgrove
TOTAL COMPENSATION – FOR KEY
MANAGEMENT PERSONNEL
17
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 0 2 0
Compensation 12 months to 31 December 2019
Short Term
Benefits
$ USD
Super-
annuation
$ USD
Share
based
payments
$ USD
Total
$ USD
Percentage of
remuneration
that is equity
based
Compensation of key management based
on fees approved by the Board of directors.
Michael Hardy
Laurence Marsland
Matthew Carr
Nicholas Rowley
Travis Schwertfeger
Robert Sckalor
Cameron Henry
TOTAL COMPENSATION – FOR KEY
MANAGEMENT PERSONNEL
21,018
84,072
168,144
67,258
146,425
20,317
24,521
531,755
-
-
-
-
-
-
-
-
-
164,436
164,436
8,817
-
-
21,018
84,072
332,580
231,694
155,242
20,317
24,521
-
337,689
869,444
-
-
49%
71%
6%
-
-
39%
*The comparative compensation has been converted from $AUD to $USD using the foreign exchange rate as at
31 December 2019.
Shares and performance rights held by Key Management Personnel
Shareholdings
1 January 2020 or
Appointment
Issued as
Compensation
Net Change
Other
31 December 2020
Number of Ordinary Shares
Michael Hardy
Laurence Marsland
Matthew Carr
Nicholas Rowley
Travis Schwertfeger
David Sadgrove
67,000
-
7,314,493
2,618,999
11,000
-
-
-
-
-
-
-
769,231
5,696,154
2,000,000
2,538,461
-
-
836,231
5,696,154
9,314,493
5,157,460
11,000
-
10,011,492
-
11,003,846
21,015,338
Performance rights /
options
1 January 2020 or
Appointment
Issued as
Compensation
Net Change
Other
31 December 2020
Number of Performance Rights / Options
Michael Hardy
Laurence Marsland
Matthew Carr
Nicholas Rowley
Travis Schwertfeger
David Sadgrove
-
-
-
-
1,500,000
-
5,000,000
10,000,000
7,000,000
5,000,000
3,000,000
3,000,000
1,500,000
33,000,000
-
-
-
-
-
-
-
5,000,000
10,000,000
7,000,000
5,000,000
4,500,000
3,000,000
34,500,000
For further details on Performance rights and options please refer to Note 27 to the financial statements
“Share based payments”.
Other Information
There were no loans made to any Key Management Personnel during the year or outstanding at year end.
Refer to Notes 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)
18
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 0 2 0
15. 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.
16. Non-audit Services
The Board of Directors is satisfied that the provision of any non-audit services is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001. All non-audit services are
reviewed and approved by the Board prior to commencement to ensure they do not adversely affect the
integrity and objectivity of the auditor; and the nature of the services provided does not compromise the general
principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional
Accountants set by the Accounting Professional and Ethical Standards Board
17. 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 2020.
A copy of this declaration appears on page 20.
Signed in accordance with a resolution of the directors.
________________________________
Michael Hardy
Chairman
30th day of April 2021
Perth, Western Australia
19
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
30 April 2021
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 2020, 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
Samir Tirodkar
Director
Liability limited by a scheme approved under Professional Standards Legislation.
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 0 2 0
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, the Directors are of the opinion that the consolidated financial statements:
a) give a true and fair view of the consolidated entity’s financial position as at 31 December 2020
and of its performance for the year ended 31 December 2020; and
b) complying with Australian Accounting Standards and the Corporations Act 2001;
2) The consolidated 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 2020.
On behalf of the Board of Directors.
________________________________
Michael Hardy
Chairman
30th day of April 2021
Perth, Western Australia
21
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 0 2 0
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2020
Consolidated
Year ended
Note
31-Dec-20
31-Dec-19
US$000’s
US$000’s
CONTINUING OPERATIONS
Revenue
Cost of sales
Depreciation and amortisation
Gross profit
Care and maintenance
General and administration
Salary and wages
Professional fees
Share based payments – directors and employees
Loss from operations
Finance costs
Derivative liability gain – warrants
Impairment
Foreign exchange (loss) / gain
Fair value movements of financial assets
Other income
Loss on extinguishment of financial liabilities
Corporate transaction expense
Loss before income tax from continuing operations
Income tax expense
Loss after income tax from continuing operations
Discontinued operations
(Loss) for the year from discontinued operations
(Loss) for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
-
Exchange differences on translating foreign operations
Total comprehensive loss for the year
EARNINGS PER SHARE (cents)
Basic and diluted earnings per share
From continuing operations
Basic and diluted earnings per share
From discontinued operations
5(a)
5(b)
5(c)
5(d)
27
5(e)
5(f)
29
6
7
6,025
(3,378)
(998)
1,649
(2,204)
(2,795)
(1,920)
(1,196)
(3,607)
(10,073)
(936)
70
(2,625)
(50)
538
1,228
(3,599)
(17,677)
(33,124)
-
24,525
(16,853)
(1,753)
5,919
-
(5,754)
(1,255)
(3,390)
(154)
(4,634)
(1,525)
930
(1,164)
20
-
2,470
-
-
(3,903)
-
(33,124)
(3,903)
(2,511)
(35,635)
-
(3,903)
(414)
-
(36,049)
(3,903)
19
19
(2.984)
(2.41)
(0.226)
-
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the accompanying notes.
22
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 0 2 0
Consolidated Statement of Financial Position
As at 31 December 2020
CURRENT ASSETS
Cash and cash equivalents
Receivables and prepaid expenses
Inventories
Financial assets
Assets classified as held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Receivables and prepaid expenses
Property, plant and equipment
Exploration and evaluation expenditure
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Accounts payable and accrued liabilities
Debentures of Core Gold held by Titan Minerals
Loans payable
Lease liabilities
Current tax liability (discontinued operations)
Provisions for closure and restoration (held
for sale)
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Derivative warrant liability
Lease liabilities
Provisions for closure and restoration
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
22(a)
8
9
10
11
8
12
13
14
15
7
16
16
17
18
Consolidated
31-Dec-20
US$000’s
31-Dec-19
US$000’s
3,272
2,501
95
2,300
-
8,168
470
1,617
18,374
20,461
28,629
11,007
-
5,819
22
563
1,850
19,261
-
51
508
559
19,820
8,809
181
1,027
1,143
-
-
2,351
1,126
17,018
248
18,392
20,743
13,687
2,500
851
-
-
-
17,038
70
-
2,222
2,292
19,330
1,413
150,494
19,958
(161,643)
8,809
110,949
16,472
(126,008)
1,413
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying
notes.
23
Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
Issued Capital
US $000's
Foreign currency
translation reserve
US $000's
Share Based
Payment Reserve
US $000's
Convertible
Debenture
Reserve
US $000's
Accumulated
losses
US $000's
Total
Equity
US $000's
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 0 2 0
16,283
135
Balance at 1 January 2019
Net loss for the year
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners in their capacity as
owners
Proceeds received from private placement
Convertible debenture - shares issued
Shares for debt
Share based payments
As at 31 December 2019
Balance at 1 January 2020
Net loss for the year
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners in their capacity as
owners
Issue of shares - acquisition of Core Gold Inc.
Issue of shares
Capital raising costs
Share based payments
105,572
-
-
-
3,000
1,832
545
-
110,949
110,949
-
-
-
19,834
20,300
(589)
-
-
-
-
-
-
-
-
-
-
-
-
(414)
(414)
-
-
-
-
As at 31 December 2020
150,494
(414)
-
-
-
-
-
-
154
16,437
16,437
-
35
35
-
-
-
3,900
20,372
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
24
-
-
-
-
(100)
-
-
(122,105)
(3,903)
-
(3,903)
-
-
-
-
35
(126,008)
35
-
(35)
(35)
-
-
-
-
-
(126,008)
(35,635)
-
(35,635)
-
-
-
-
(161,643)
(115)
(3,903)
-
(3,903)
3,000
1,732
545
154
1,413
1,413
(35,635)
(414)
(36,049)
19,834
20,300
(589)
3,900
8,809
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 0 2 0
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest and other costs of finance paid
NET CASH (USED IN) IN OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant & equipment
Payments of exploration and evaluation costs
Proceeds from the sale of exploration assets
Proceeds from repayments of loans provided
Net cash inflow as a result of acquisition
Net cash outflow as a result of disposal of subsidiary
NET CASH PROVIDED BY INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares (net of capital raising costs)
Proceeds from borrowings
Repayment of borrowings
NET CASH PROVIDED BY FINANCING ACTIVITIES
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effects of exchange rate changes on the balance of cash held in
foreign currencies
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
Year ended
31-Dec-2020
$ 000’s
31-Dec-2019
$ 000’s
20,858
(29,162)
(222)
(8,526)
(36)
(4,053)
1,500
241
3,094
612
1,358
9,459
3,412
(2,813)
10,058
2,890
181
201
3,272
24,525
(25,164)
(732)
(1,371)
-
-
-
-
-
-
-
3,000
-
(1,580)
1,420
49
132
-
181
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying
notes.
25
Notes to the Consolidated Financial Statements
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 0 2 0
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
2020 were authorised for issue in accordance with a resolution of the directors on 30 April 2021. The Parent
Entity is a for-profit company limited by shares incorporated in Australia whose shares are publicly traded
on the Australian Securities Exchange.
The Group’s principal activities during the financial year and in particular post acquisition of the Core Gold
group on 30 January 2020 and 100% control gained on 26 May 2020, was minerals exploration and
evaluation in Ecuador. The combined Group produced gold in Ecuador prior to force majeure being called
on 15 April 2020 due to COVID-19 and also toll processed gold in Peru plus held mineral exploration
properties in Peru, all of which are considered non-core activities and have been sold or are in the process
of being sold and have been disclosed as held for sale assets and liabilities held for sale at 31 December
2020.
Further information on the 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 20 and 25.
The Group’s registered office is in Suite 6, 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
Interpretations, other authoritative
Australian Accounting Standards, Australian Accounting
pronouncements of the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001.
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 consolidated financial statements and notes also comply with International Financial
Reporting Standards as issued by the International Accounting Standard Board (IASB). Material accounting
policies adopted in the preparation of the financial statements are presented below. They have been
consistently applied unless otherwise stated.
The financial statements were authorised for issue by the Directors’ on 30 April 2021.
b) Basis of preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for certain
financial assets carried at fair value. Cost is based on the fair values of the consideration given in exchange
for assets. All amounts are presented in United States Dollars unless otherwise noted.
The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards.
c) Critical accounting judgements and key sources of estimation uncertainty
In the application of accounting standards 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.
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Refer to Note 3 for a discussion of critical judgements in applying the entity’s accounting policies and key
sources of estimation uncertainty.
d) Reverse acquisition
Titan Minerals Limited (“Titan”) is listed on the Australian Securities Exchange. Titan Minerals Limited
acquired control of greater than 50% of the common shares and voting rights of Core Gold Inc (“Core”) on
30 January 2020 and completed the legal acquisition of 100% of the common shares in Core on 26 May
2020.
Under the principles of AASB 3, with the previous shareholders of Core holding a larger portion of voting
rights of the combined entity than the continuing Titan shareholders and Core reflecting larger assets and
revenues than Titan, the transaction between Titan and Core is treated as a reverse acquisition. As such,
the assets and liabilities of the legal subsidiary (the accounting acquirer), being Core, are measured at
their pre-combination carrying amounts. The assets and liabilities of the legal parent (accounting acquiree),
being Titan are measured at fair value on the date of acquisition. The date of acquisition has been
assessed on the basis of the change in shareholdings in Titan as a result of the transaction between Titan
and Core and has been considered to be 30 January 2020. Accordingly, the consolidated financial
statements of Titan have been prepared as a continuation of the financial statements of Core from 30
January 2020. The comparative information presented in the consolidated financial statements is that of
Core.
The consideration in a reverse acquisition is deemed to have been incurred by the legal subsidiary in the
form of equity instruments issued to the shareholders of the legal parent entity. The acquisition-date fair
value of the consideration transferred has been determined by reference to the fair value of the number of
shares the legal subsidiary would have issued to the legal parent entity to obtain the same ownership
interest in the combined entity.
The excess of the consideration over the fair value of identifiable net assets and liabilities has not been
recognised as goodwill. Instead the deemed fair value of the interest in Titan issued to Core shareholders
to effect the combination (the consideration for the acquisition of the public corporate entity being Titan)
was recognised as an expense in the income statement. This expense has been presented as a “Corporate
Transaction Expense” in the consolidated statement of profit or loss and other comprehensive income.
The non-cash Corporate Transaction Expense totals US $17,677,000 at 30 January 2020.
The impact of the reverse acquisition on each of the primary statements is as follows:
• The consolidated statement of profit or loss and other comprehensive income:
- For the 12 month period to 31 December 2020 comprises 12 months of Core and the
period from 30 January 2020 to 31 December 2020 of Titan; and
- For the comparative period comprises the 12 month period to 31 December 2019 of Core.
• The consolidated statement of financial position:
- As at 31 December 2020 represents both Titan and Core as at that date; and
- As at 31 December 2019 represents Core as at that date.
• The consolidated statement of changes in equity:
- For the period ended 31 December 2020 comprises Core’s balance sheet at 1 January
2020, its loss for the period and transactions with equity holders for 12 months. It also
comprises Titan’s transactions within equity from 30 January 2020 to 31 December 2020
and the equity value of Core and Titan at 31 December 2020. The number of shares on
issue at year end represent those of Titan only; and
- For the comparative period comprises period from 1 January 2019 to 31 December 2019
of Core’s changes in equity.
• The consolidated statement of cash flows:
- For the 12 month period ended 31 December 2020 comprises:
▪ The cash balance of Core as at 1 January 2020;
▪ The cash transactions for the 12 months to 31 December 2020 of months of Core
and the period from 30 January 2020 to 31 December 2020 of Titan); and
▪ The cash balances of Core and Titan at 31 December 2020.
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- For the comparative period comprises 1 January 2019 to 31 December 2019 of Core’s
cash transactions.
e) New and Revised Standards that are effective for these Financial Statements
The adoption of the new or amended standards and interpretations did not result in any significant changes
to the Group’s accounting policies. In addition, the adoption of AASB 16 Leases had no material impact as
the Group had no lease contracts as at 1 January 2019.
Amendments to IFRS
The Group applied for the first-time certain standards and amendments, which are effective for annual
periods beginning on or after 1 January 2020. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet effective. The nature and effect of these
changes as a result of the adoption of these new standards are described below. Other than the changes
described below, the accounting policies adopted are consistent with those of the previous financial year.
Several other amendments and interpretations applied for the first time in 2020, but did not have an impact
on the consolidated financial statements of the Group and, hence, have not been disclosed.
Amendments to AASB 3: Definition of a Business
The amendment to AASB 3 Business Combinations clarifies that to be considered a business, an integrated
set of activities and assets must include, at a minimum, an input and a substantive process that, together,
significantly contribute to the ability to create output. Furthermore, it clarifies that a business can exist
without including all of the inputs and processes needed to create outputs. These amendments had no
impact on the consolidated financial statements of the Group, but may impact future periods should the
Group enter into any business combinations.
Amendments to AASB 7, AASB 9 and AASB 139 Interest Rate Benchmark Reform
The amendments to AASB 9 and AASB 139 Financial Instruments: Recognition and Measurement provide
a number of reliefs, which apply to all hedging relationships that are directly affected by interest rate
benchmark reform (IBOR). A hedging relationship is affected if the reform gives rise to uncertainty about
the timing and/or amount of benchmark-based cash flows of the hedged item or the hedging instrument.
These amendments have no impact on the consolidated financial statements of the Group as it does not
hedge nor have any IBOR benchmarked liabilities.
Amendments to AASB 101 and AASB 108 Definition of Material
The amendments provide a new definition of material that states, “information is material if omitting,
misstating or obscuring it could reasonably be expected to influence decisions that the primary users of
general purpose financial statements make on the basis of those financial statements, which provide
financial information about a specific reporting entity.” The amendments clarify that materiality will depend
on the nature or magnitude of information, either individually or in combination with other information, in the
context of the financial statements. A misstatement of information is material if it could reasonably be
expected to influence decisions made by the primary users. These amendments had no impact on the
consolidated financial statements of, nor is there expected to be any future impact to the Group.
Conceptual Framework for Financial Reporting issued on 29 March 2018
The Conceptual Framework is not a standard, and none of the concepts contained therein override the
concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the IASB
in developing standards, to help preparers develop consistent accounting policies where there is no
applicable standard in place and to assist all parties to understand and interpret the standards. This will
affect those entities which developed their accounting policies based on the Conceptual Framework. The
revised Conceptual Framework includes some new concepts, updated definitions and recognition criteria
for assets and liabilities and clarifies some important concepts. These amendments had no impact on the
consolidated financial statements of the Group.
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f) Standards issued but not yet effective and not early adopted by the Group
The new and amended standards and interpretations that are issued, but not yet effective, up to the date
of issuance of the Group’s financial statements, have been assessed. The Board are of the view that there
do not materially impact these financial statements. The Group intends to adopt these new and amended
standards and interpretations, if applicable, when they become effective.
g) Going Concern
The consolidated 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 loss for the 31 December 2020 financial year of
$35,635,000 (2019: $3,903,000) and had a net operating cash outflow of $8,526,000 (2019: $1,371,000).
The Consolidated Entity is currently in a working capital deficit position of $11,093,000 (31 December 2019:
14,687,000).
The Titan Consolidated Entity is no longer operating as a gold producer and is now focused on the
exploration and evaluation of its three main concession or tenement groups in Ecuador, namely the Dynasty
Gold project, the Copper Duke project and the Linderos Gold project.
During the year Titan sold the Vista plant along with the group’s interests in the Coriorcco property and the
Las Antas property earn-in agreement, all within Peru. On 15 April 2020, the Group announced the indefinite
suspension of all Core Gold’s production operations in Ecuador due to force majeure resulting from the
COVID-19 virus pandemic. As a result, all related labour and contractor relationships have been terminated.
The directors have prepared a cash flow forecast, which indicates that Group will have sufficient cash flows
to meet all commitments and working capital requirements for the 12 month period from the date of signing
this financial report. Included in the forecast are capital raisings and asset sales expected to be completed
within the next 12 months. The Group recently announced the signing of a term sheet for the sale of the
Portovelo plant and Zaruma mine and concessions for total value of US$15 million in instalments over the
coming 14 months to June 2022.
The Directors are confident that the Group will have 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 cashflow.
Should the Group be unsuccessful in its plans detailed above, there is uncertainty as to whether the Group
would continue as a going concern and therefore whether it would realise its assets and extinguish its
liabilities in the normal course of business and at the amounts stated in the financial report. The
consolidated financial statement do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or to the amount and classification of liabilities that might result
should the Group be unable to continue as a going concern and meet its debts as and when they fall due.
Significant Accounting Policies
The following significant policies have been adopted in the preparation of the Financial Report:
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:
• Has power over the investee;
• Is exposed, or has rights, to variable returns from its involvement with the investee; and
• 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.
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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.
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)
Revenue recognition
The Group’s primary product is gold and silver bullion.
Revenue is recognised at an amount that reflects the consideration to which the group is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer,
the consolidated entity: identifies the contract with a customer; identifies the performance obligations in the
contract; determines the transaction price which takes into account estimates of variable consideration and
the time value of money; allocates the transaction price to the separate performance obligations on the
basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises
revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the
customer of the goods or services promised.
j)
Interest revenue
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on
the financial asset.
k)
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.
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l) Trade and other receivables
Trade receivable (without a significant financing component) are initially recognised at their transaction
price and all other receivables are initially measured at fair value. Receivables are measured at
amortised cost if it meets both of the following conditions and is not designated as at fair value through
profit or loss:
-
-
it is held within a business model with the objective to hold assets to collect contractual cash flows;
and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
For the purposes of the assessment whether contractual cash flows are solely payments of principal
and interest, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’
is defined as consideration for the time value of money and for the credit risk associated with the
principal amount outstanding during a particular period of time and for other basic lending risks and
costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the
Group considers the contractual terms of the instrument. This includes assessing whether the financial
asset contains a contractual term that could change the timing or amount of contractual cash flows
such that it would not meet this condition. In making this assessment, the Group considers:
-
-
-
-
contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable rate features;
prepayment and extension features; and
terms that limit the Group’s claim to cash flows from specified assets (e.g. non recourse features).
The Group recognises an allowance for expected credit losses (“ECLs”) for all receivables not held at
fair value through profit or loss. ECLs are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate (“EIR”).
ECLs are recognised in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since initial recognition, a loss
allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).
For trade receivables and other receivables due in less than 12 months, the Group applies the
simplified approach in calculating ECLs, as permitted by AASB 9. Therefore, the Group does not track
changes in credit risk, but instead, recognises a loss allowance based on the financial asset’s lifetime
ECL at each reporting date. The Group has established a provision matrix that is based on its historical
credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic
environment. For any other financial assets carried at amortised cost (which are due in more than 12
months), the ECL is based on the 12-month ECL. The 12-month ECL is the proportion of lifetime ECLs
that results from default events on a financial instrument that are possible within 12 months after the
reporting date. However, when there has been a significant increase in credit risk since origination,
the allowance will be based on the lifetime ECL. When determining whether the credit risk of a financial
asset has increased significantly since initial recognition and when estimating ECLs, the Group
considers reasonable and supportable information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information and analysis, based on the Group’s
historical experience and informed credit assessment including forward-looking information.
m) 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:
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• Bullion - average fixed direct costs and variable direct costs.
• Gold in circuit - average cost.
• Stores - purchase cost on a first in first out cost method.
• Ore stockpiles - cost of mining on an average cost method.
• Work in progress - cost of mining and processing at an average cost method.
Net realisable value is the estimated future sales value of the products that the expects to realised
when the product is processed and sold, less the estimated costs to complete and sell the product.
n)
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, and recognised on a units of production basis.
The following estimated useful lives / methodologies are used in the calculation of depreciation:
Plant and equipment
Computer equipment
Buildings
3 – 10 years
3 years
20 years
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 fair value less costs of disposal, the Consolidated entity considers any relevant quoted
market prices and/or subsequent arms-length transactions between two willing parties in determining
fair value less costs of disposal.
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.
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
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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.
o)
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:
•
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.
•
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.
p)
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.
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
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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.
q)
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:
• 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;
•
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
• 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
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
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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.
r)
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.
s)
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 closure and restoration
A provision for closure and restoration 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.
t)
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.
35
Notes to the Consolidated Financial Statements
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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.
u) Financial assets
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair
value through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for managing them. With the exception of
trade receivables that do not contain a significant financing component or for which the Group has
applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in
the case of a financial asset not at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI,
it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the
principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an
instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair
value through profit or loss, irrespective of the business model.
The Group’s business model for managing financial assets refers to how it manages its financial assets
in order to generate cash flows. The business model determines whether cash flows will result from
collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and
measured at amortised cost are held within a business model with the objective to hold financial assets
in order to collect contractual cash flows while financial assets classified and measured at fair value
through OCI are held within a business model with the objective of both holding to collect contractual
cash flows and selling.
Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e.,
the date that the Group commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Financial assets at amortised cost (debt instruments)
• Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt
instruments)
• Financial assets designated at fair value through OCI with no recycling of cumulative gains and
losses upon derecognition (equity instruments)
• Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
Financial assets at amortised cost are subsequently measured using the effective interest (EIR)
method and are subject to impairment. Gains and losses are recognised in profit or loss when the
asset is derecognised, modified or impaired.
The Group’s financial assets at amortised cost includes trade receivables and loans receivable.
Financial assets at fair value through OCI (debt instruments)
For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and
impairment losses or reversals are recognised in the statement of profit or loss and computed in the
36
Notes to the Consolidated Financial Statements
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same manner as for financial assets measured at amortised cost. The remaining fair value changes
are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is
recycled to profit or loss.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity
instruments designated at fair value through OCI when they meet the definition of equity under AASB
132 Financial Instruments: Presentation and are not held for trading. The classification is determined
on an instrument-by instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are
recognised as other income in the statement of profit or loss when the right of payment has been
established, except when the Group benefits from such proceeds as a recovery of part of the cost of
the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at
fair value through OCI are not subject to impairment assessment.
The Group’s financial assets carried at fair value through OCI are listed equity instruments.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the statement of financial position at
fair value with net changes in fair value recognised in the statement of profit or loss.
This category includes derivative instruments and listed equity investments which the Group had not
irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are
recognised as other income in the statement of profit or loss when the right of payment has been
established.
A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated
from the host and accounted for as a separate derivative if: the economic characteristics and risks are
not closely related to the host; a separate instrument with the same terms as the embedded derivative
would meet the definition of a derivative; and the hybrid contract is not measured at fair value through
profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognised
in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that
significantly modifies the cash flows that would otherwise be required or a reclassification of a financial
asset out of the fair value through profit or loss category.
Impairment
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held
at fair value through profit or loss. ECLs are based on the difference between the contractual cash
flows due in accordance with the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate. The expected cash flows will
include cash flows from the sale of collateral held or other credit enhancements that are integral to the
contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since initial recognition, a loss
allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs.
Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance
based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is
37
Notes to the Consolidated Financial Statements
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based on its historical credit loss experience, adjusted for forward-looking factors specific to the
debtors and the economic environment.
v)
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an
effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables and loans and borrowings. The
Group has no hedging instruments.
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified in two categories:
• Financial liabilities at fair value through profit or loss
• Financial liabilities at amortised cost (loans and borrowings)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing
in the near term. This category also includes derivative financial instruments entered into by the Group
that are not designated as hedging instruments in hedge relationships as defined by AASB 9.
Separated embedded derivatives are also classified as held for trading unless they are designated as
effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated
at the initial date of recognition, and only if the criteria in AASB 9 are satisfied. The Group has not
designated any financial liability as at fair value through profit or loss.
Financial liabilities at amortised cost (loans and borrowings)
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses
are recognised in profit or loss when the liabilities are derecognised as well as through the EIR
amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the
statement of profit or loss.
This category generally applies to interest-bearing loans and borrowings. For more information, refer
to Note 15.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled
or expires. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original liability and the recognition of
38
Notes to the Consolidated Financial Statements
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a new liability. The difference in the respective carrying amounts is recognised in the statement of
profit or loss.
w) 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.
x) 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
United States dollars, which is the functional currency of Core Gold Inc., the accounting acquirer / the
legal acquiree, refer Note 2(d) and is 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 year end 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.
y)
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.
z)
Share-based payments
Equity-settled share-based payments with employees 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.
39
Notes to the Consolidated Financial Statements
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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.
aa) 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
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.
40
Notes to the Consolidated Financial Statements
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 0 2 0
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.
bb) Leases
The Group as lessee
At inception of a contract, the Group assesses if the contract contains or is a lease. If there is a lease
present, a right-of-use asset and a corresponding lease liability are recognised by the Group where
the Group is a lessee. However, all contracts that are classified as short-term leases (ie a lease with
a remaining lease term of 12 months or less) and leases of low-value assets are recognised as an
operating expenses on a straight-line basis over the term of the lease.
Initially the lease liability is measured at the present value of the lease payments still to be paid at the
commencement date. The lease payments are discounted at the interest rate implicit in the lease. If
this rate cannot be readily determined, the Group uses the incremental borrowing rate.
Lease payments that may be included in the measurement of the lease liability are as follows:
–
– variable lease payments that depend on an index or rate, initially measured using the index or
fixed lease payments less any lease incentives;
–
–
rate at the commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
lease payments under extension options, if the lessee is reasonably certain to exercise the
options; and
– payments of penalties for terminating the lease, if the lease term reflects the exercise of an
option to terminate the lease.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, any lease
payments made at or before the commencement date and any initial direct costs. The subsequent
measurement of the right-of-use assets is at cost less accumulated depreciation and impairment
losses.
Right-of-use assets are depreciated over the lease term or useful life of the underlying asset,
whichever is the shortest.
Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects
that the Group anticipates to exercise a purchase option, the specific asset is depreciated over the
useful life of the underlying asset.
cc) Rounding of Amounts
The Parent Entity has applied the relief available to it under ASIC Corporations (Rounding in
Financial/Directors' Reports) Instrument 2016/191. Accordingly, amounts in the financial statements
have been rounded off to the nearest US$1,000.
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.
41
Notes to the Consolidated Financial Statements
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 0 2 0
(a) 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.
(b) Exploration expenditure
The Group capitalises expenditure relating to exploration and evaluation where it is considered
likely to be recoverable or where the activities have not reached a stage that permits a reasonable
assessment of the existence of reserves. While there are certain areas of interest from which no
reserves have been extracted, the directors are of the continued belief that such expenditure should
not be written off since feasibility studies in such areas have not yet concluded. Such capitalised
expenditure is carried at the end of the reporting period at $18,374 thousand.
(c) Impairment of Exploration expenditure
The future recoverability of deferred exploration and evaluation expenditure is dependent on
several
related
tenement/lease/concession itself or, if not, whether it successfully recovers the related exploration
and evaluation asset through sale.
the Group decides
including whether
to exploit
factors,
the
Factors that could impact the future recoverability include the level of reserves and resources,
future technological changes, costs of drilling and production, production rates, future legal
changes (including changes to environmental restoration obligations) and changes to commodity
prices.
(d) Provision for closure and restoration costs
A provision for restoration and rehabilitation is recognised when there is a present obligation as a
result of development 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
estimated future obligations include the costs of abandoning sites, removing facilities and restoring
the affected areas.
The provision for future restoration costs is the best estimate of the present value (including an
appropriate discount rate relevant to the time value of money plus any risk premium associated
with the liability) of the expenditure required to settle the restoration obligation at the reporting date.
Future restoration costs are reviewed annually and any changes in the estimate are reflected in the
present value of the restoration provision.
The initial estimate of the restoration and rehabilitation provision is capitalised into the cost of the
related asset and amortised on the same basis as the related asset, unless the present obligation
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.
42
Notes to the Consolidated Financial Statements
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4. SEGMENT INFORMATION
Identification of Reportable Segments
The Group 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 Group operates predominately in Ecuador and Peru. The
Peru gold toll processing plant was sold prior to year’s end and has been disclosed as a discontinued
operation. The reportable segments are based on aggregated operating segments determined by the
similarity of the services provided and other factors.
Segments
The Group has two reportable operating segments, which are gold sales in Ecuador and Exploration in
Ecuador and Peru.
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.
43
Notes to the Consolidated Financial Statements
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 0 2 0
The following is an analysis of the Group’s revenue and results by reportable operating segment for the
year under review:
Revenue
Year ended
Segment Result
Year ended
31-Dec-20
US $000’s
31-Dec-19
US $000’s
31-Dec-20
US $000’s
31-Dec-19
US $000’s
Continuing operations
Segment result before income tax –
Ecuador gold production and sales
Exploration Ecuador and Peru
6,025
24,525
-
-
6,025
24,525
Other income
Care and maintenance costs Ecuador
General and administration
Salaries, professional fees, and share
based payments expense
Foreign exchange gain / (loss)
Finance costs
Warrants and financial assets - fair
value movements
Impairment expense
Loss on extinguishment of financial
liabilities
Corporate transaction expense
(Loss) / profit before income tax
expense
Income tax expense
(Loss) / profit for the year from continuing operations
1,649
-
1,649
1,228
(2,204)
(3,146)
(6,723)
(50)
(936)
608
(2,274)
(3,599)
(17,677)
(33,124)
-
(33,124)
5,919
-
5,919
2,470
-
(7,142)
(4,626)
20
(1,525)
981
-
-
-
(3,903)
-
(3,903)
The revenue reported above represents revenue generated from gold sales to external customers.
The following is an analysis of the Group’s assets by reportable operating segment:
Assets
Ecuador gold production and sales
Exploration – Ecuador and Peru
Corporate assets
Consolidated total assets
Consolidated
31-Dec-20
31-Dec-19
US $000’s
-
19,991
8,638
28,629
US $000’s
20,314
248
181
20,743
The following is an analysis of the Group’s liabilities by reportable operating segment:
Liabilities
Ecuador gold production and sales
Exploration – Ecuador and Peru
Corporate liabilities
Consolidated total liabilities
31-Dec-20
31-Dec-19
US $000’s
US $000’s
1,850
508
17,462
19,820
16,760
-
2,570
19,330
44
Notes to the Consolidated Financial Statements
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5. REVENUE AND EXPENSES
The following is an analysis of the Group’s revenue for the year from continuing operations:
(a) Revenue
Revenue from gold sales
(b) Cost of sales
Cost of sales
(c) Cost of Sales
(i) Depreciation and amortisation
Plant and equipment
(d) General and Administration expenses
Compliance expenses
Insurance costs
Marketing and promotion
Advertising and investor relations
Travel and accommodation
Municipal taxes
Fines and penalties
Depreciation and amortisation – non operating
Other Administration costs
Consolidated
31-Dec-20
US $000’s
31-Dec-19
US $000’s
6,025
24,525
(3,378)
(16,853)
(998)
(1,753)
Consolidated
31-Dec-20
US $000’s
31-Dec-19
US $000’s
288
162
511
243
144
202
101
17
1,127
2,795
407
91
39
788
261
140
109
-
3,919
5,754
(e) Impairment
Impairment expense of totalling $2,625 thousand includes the following:
- VAT in Ecuador which is no longer considered recoverable as the Group is not expecting to generate
income in the near term to claim this receivable of $2,274 thousand (2019: $1,164 thousand); and
- Property, plant and equipment of $351 thousand (2019: nil)
(f) Loss on extinguishment of financial liabilities
In consideration for the settlement $2,966 thousand of financial liabilities (being loans and associated accrued
fees and interest), Titan Minerals Limited issued 69,521,000 shares. As a result of the settlement of these
liabilities in equity, a loss on extinguishment of $3,599 thousand representing the difference between the fair
value of the shares at settlement
45
Notes to the Consolidated Financial Statements
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 0 2 0
6.
INCOME TAX EXPENSE
Income tax recognised in profit or loss
Tax expense comprises:
Current tax expense
Deferred tax expense
Total tax expense
Consolidated
31-Dec-20
US $000’s
31-Dec-19
US $000’s
-
-
-
-
-
-
The prima facie income tax expense on pre-tax accounting (loss) / profit from continuing operations reconciles
to the income tax expense in the consolidated financial statements as follows:
(Loss) / profit from continuing operations
Income tax benefit calculated at 30% (2019: 27% Canada)
Expenses that are (not deductible) / income that is exempt in
determining taxable profit
Adjustment to prior year
Effect of different tax rates of subsidiaries operating in other
jurisdictions
Tax benefit not recognised as recovery not probable
(33,124)
9,937
(6,620)
-
(122)
(3,195)
-
(3,903)
1,055
878
(604)
182
(1,511)
-
The tax rate used in the above reconciliation is the tax rate of 30% (2019: 27% re Core Gold Inc) payable
by Australian corporate entities on taxable profits under Australian tax law. The corporate tax rate in Peru
is 29.5%, Canada 27.0% and Ecuador 25.0%.
Deferred tax balances as at 31 December 2020 were not recognised in the consolidated statement of
financial position.
The deferred tax balances relate to the Parent entity and the Australian tax group. All Canadian deferred
tax benefits of Core Gold Inc are no longer available with a greater than 50% change of control throughout
the year. Ecuador deferred tax benefits of the Core Gold group are no longer available with the concessions
/ tenements transferring to new entities as part of the corporate restructuring. All material deferred tax
benefits in Peru were transferred with the sale of Vista Gold SAC prior to year’s end.
The Australian deferred tax assets not recognised relate to the following accounts:
Temporary differences
Tax losses – revenue
Tax losses – capital
926
9,482
16,816
27,224
N/a.
N/a.
N/a.
N/a.
Comparative figures for 31 December 2019 have not been provided as they related to the Core Gold Inc.
Group rather than Australian deferred tax asset
46
Notes to the Consolidated Financial Statements
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 0 2 0
7. DISCONTINUED OPERATIONS
Loss from discontinued operations
Consolidated
31 Dec 2020
31 Dec 2019
US $000’s
US $000’s
Profit before tax on disposal - Coriorcco and Las Antas
Applicable income tax (expense) on disposal – Coriorcco and
Las Antas
Loss on disposal - Vista Gold S.A.C
(Loss) from discontinued operations
238
(563)
(2,186)
(2,511)
-
-
-
-
As announced on 24 August 2020, the Group entered into binding terms of the divestment of its non-core
assets in Peru.
A summary of the material terms is as follows:
Coriorcco and Las Antas:
Western Pacific Resources Corp (“Western Pacific”, and subsequently renamed Oro X Limited) acquired
Titan’s legal and beneficial right, title, and interest in options to acquire: (a) 100% of the legal and beneficial
and interest in a 2,000-hectare concession known as the Coriorcco property pursuant to a cession and
option agreement; and (b) up to 85% of the legal and beneficial and interest in a 1,400-hectare concession
known as the Las Antas Property pursuant to an earn-in agreement (together, the “Properties”) .
As consideration for the sale of the option rights over the Properties, Titan received:
(a) cash consideration of US$1,500,000; and
(b) 4,250,000 common shares in the capital of Western Pacific (the “Shares”).
In the event that Western Pacific exercises its option to acquire the Coriorcco property:
(a) Western Pacific will grant to Titan a 1% NSR over the Coriorcco property; and
(b) Western Pacific has agreed to make a conditional payment to Titan (in cash, Shares (priced at a
10-day VWAP of Shares prior to the relevant technical report) or a combination of both, at Western
Pacific’s option) on the basis of the size of any mineral resource (in the measured and indicated
category) that is established on the Coriorcco property in a technical report prepared in accordance
with National Instrument 43-101 as follows:
(i)
US$1,000,000 (cash and/or shares) if a measured and indicated resource of 500,000 to
999,999 ounces of gold is established;
US$1,500,000 (cash and/or shares) if a measured and indicated resource of 1,000,000 to
1,499,000 ounces of gold is established; and
US$2,000,000 (cash and/or shares) if a measured and indicated resource in excess of
1,500,000 ounces of gold is established.
(ii)
(iii)
The transaction was completed during the year, with the Group recognising a loss on disposal of the
exploration assets after income tax of $325 thousand.
Vista Gold Plant:
The sale was completed on 24 December 2020 via the sale 100% of the Group’s shares in its wholly
owned subsidiary, Vista Gold S.A.C, to AC 081 S.A.C.
47
Notes to the Consolidated Financial Statements
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 0 2 0
The consideration for the sale receivable by Titan is:
(a) a non-refundable payment of US$300,000 in cash, previously received;
(b) a further US$1,000,000 instalment due on 31 December 2020, of which US$500,000 was
received and US$500,000 remained as consideration receivable at year end and was
received on 5 January 2021.
(c) further instalments totalling US$1,670,000 due approximately quarterly over the coming 18
month period.
Loss for the period from discontinued operations
Revenue
Cost of goods sold
Gross profit
Other expenses
Profit before income tax
Loss on disposal
Attributable income tax expense
(Loss) for the period from discontinued operations
(attributable to owners of the company)
Cash flows from discontinued operations
Net cash inflow from operating activities
8. RECEIVABLES AND PREPAID EXPENSES
CURRENT
Other receivables
Prepaid – taxes
Prepaid – other
Consideration receivable (refer Note 7)
Advances – employees
Advances – suppliers
NON CURRENT
Consideration receivable (refer Note 7)
Prepaid – taxes
Period ended
24 Dec 2020
US $000’s
Year ended
31 Dec 2019
US $000’s
15,074
(13,522)
1,552
(772)
780
(2,966)
-
(2,186)
Period ended
24 Dec 2020
US $000’s
Year ended
31 Dec 2019
US $000’s
368
-
-
-
-
-
-
-
-
Consolidated
31 Dec 2020
31 Dec 2019
US $000’s
US $000’s
293
347
80
1,700
-
81
2,501
470
-
470
28
-
43
-
90
866
1,027
-
1,126
1,126
The Group does not hold any trade receivables as at 31 December 2020 (2019: nil). None of the reecivables
disclosed above are past due or impaired.
48
Notes to the Consolidated Financial Statements
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 0 2 0
9.
INVENTORIES
Consumables
Work in progress – gold inventory
Finished goods – gold inventory
10. FINANCIAL ASSETS
Shares in listed entities
Consolidated
31 Dec 2020
US $000’s
31 Dec 2019
US $000’s
95
-
-
95
440
248
455
1,143
Consolidated
31 Dec 2020
US $000’s
31 Dec 2019
US $000’s
2,300
2,300
-
-
The Shares held are 4.25 million Oro X shares received as part consideration for the sale of Coriorcco
and Las Antas options over exploration properties in Peru, refer Note 7.
These shares are classified as at fair value through profit or loss. These financial assets have been
valued based on the share price at the reporting date (Level 1).
11. ASSETS CLASSIFIED AS HELD FOR SALE
As at 31 December 2020 the Company had commenced a competitive process for the sale of the Zaruma
mine and related concessions / tenements plus the Portovelo process plant, including related liabilities,
accordingly they have been reclassified as held for sale.
Subsequent to year end on 15 April 2021, the Group announced it had entered into a term sheet for the
sale of the assets and liabilities (carrying values as detailed below) for US $15 million (refer Note 23).
49
Notes to the Consolidated Financial Statements
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 0 2 0
Net book value
Transfers from Property, Plant and Equipment:
Zaruma mine and concessions
Portovelo process plant
Mobile equipment
Land access and other buildings
Transfers from Inventories:
Spare parts – at net book value
Consolidated
31 Dec 2020
US $000’s
31 Dec 2019
US $000’s
-
-
-
-
-
-
-
-
-
-
-
-
The original cost of the assets held for sale, in excess of US $65 million, were fully depreciated and
impaired prior to 31 December 2019 and remained at US $nil as at 31 December 2020 (refer Note 12).
For related liabilities refer Note 16, Closure and restoration provisions, which total $1,850 thousand as at
31 December 2020.
50
Notes to the Consolidated Financial Statements
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 0 2 0
12. PROPERTIES, PLANT AND EQUIPMENT
Amounts denominated in US $000’s
Zaruma
Mines
Plant and
Equipment
Dynasty
Goldfields
Land and
Buildings
Total
Cost
Balance as at 31 December 2018
29,104
34,350
14,811
3,129
81,394
Additions
Asset retirement obligation – asset
Disposal
-
-
-
-
-
-
120
110
-
-
-
-
120
110
-
Balance as at 31 December 2019
29,104
34,350
15,041
3,129
81,624
Additions
Right of use asset – head office lease
Acquired as part of business combination
-
-
-
36
-
48
Transferred to available for sale assets
(29,104)
(34,350)
Transferred to exploration and evaluation
Balance as at 31 December 2020
Accumulated Depreciation and Amortisation
-
-
Balance as at 31 December 2018
(29,104)
Depreciation and amortisation
Disposal
-
-
-
84
(32,980)
(1,370)
-
Balance as at 31 December 2019
(29,104)
(34,350)
Acquired as part of business combination
Depreciation and amortisation
Impairment
-
-
-
(4)
(9)
-
Transferred to available for sale assets
29,104
34,350
Transferred to exploration and evaluation
Balance as at 31 December 2020
Net Book Value
As at 31 December 2019
As at 31 December 2020
-
-
-
-
-
(13)
-
71
Included in Land and Buliding are the following right of use assets:
Opening balance
Additions
Depreciation
Closing Balance
-
-
-
-
-
80
-
36
80
48
(1,646)
(65,100)
(15,041)
-
(15,041)
-
1,563
1,647
(549)
(243)
-
(792)
-
(54)
-
-
846
-
14,249
-
(340)
(20)
-
(360)
-
(952)
(351)
1,646
-
(17)
2,769
1,546
(62,973)
(1,633)
-
(64,606)
(4)
(1,015)
(351)
65,100
846
(30)
17,018
1,617
Consolidated
31 Dec 2020
31 Dec 2019
US $000’s
US $000’s
-
80
(8)
72
-
-
-
-
Interest expense related to associated lease liabilities for the year was US $2 thousand.
51
Notes to the Consolidated Financial Statements
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 0 2 0
13. EXPLORATION AND EVALUATION EXPENDITURE
Consolidated
31 Dec 2020
US $000’s
31 Dec 2019
US $000’s
Capitalised exploration and evaluation expenditure
18,374
248
Reconciliation of the carrying amounts of exploration and evaluation assets at the beginning and end of the
current financial year:
Carrying amount at the beginning of the year
- additions
combinations
- acquisitions through business combination (Peru)
combinations
- disposals
- impairment
- transferred from property, plant and equipment
Carrying amount at the end of the year
14. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
CURRENT
Trade payable
Payroll related payable and accruals
Government payable – IVA, Taxes, Royalty,
Concessions
Other payables
248
3,719
3,492
(3,280)
-
14,195
18,374
248
-
-
-
-
-
248
Consolidated
31 Dec 2020
31 Dec 2019
US $000’s
US $000’s
9,548
54
202
1,203
11,007
9,656
2,103
1,314
614
13,687
Certain trade payables in Ecuador are on deferred payment terms with payment plans agreed between
the Company’s subsidiaries and a number of suppliers. Other than the above, creditors are typically settled
within standard credit terms of 45 days.
15. LOANS PAYABLE
Consolidated
31 Dec 2020
31 Dec 2019
US $000’s
US $000’s
-
-
2,619
3,200
5,819
416
435
-
-
851
CURRENT
Equipment loan (i)
Short term loan (ii)
Silverstream SECZ loan (iii)
Sophisticated and professional investors loan (iv)
52
Notes to the Consolidated Financial Statements
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 0 2 0
(i) Equipment Loan
This loan was settled during the year through the return of the equipment loaned.
(ii) Short term loan
This loan was settled in cash during the year
(iii) Silverstream SECZ Loan
Mantle Mining S.A.C, a, wholly owned subsidiary of the Consolidated Entity, holds a loan from Silverstream
SECZ. The loan is interest free, and requires the total payment of US$3,700,000 over 15 instalments
commencing on 1 July 2018 and ending on 30 June 2022. As at 31 December 2020, an amount of
US$2,619,000 unchanged from 30 June 2020, remains owing after repayments made to date.
The Silverstream agreement dated 25 March 2018 is secured over the Torrecillas concessions in Peru
which Mantle Mining S.A.C. has with Silverstream SECZ. The Torrecillas concessions were relinquished
on 7 Janaury 2021 (after Silverstream SECZ chose not to finance their renewals).
There is no parent company guarantee with Titan Minerals Limited in place, with no method of recourse for
the lender to pursue back to Titan Minerals Limited in the case of default.
(iv) Sophisticated and professional investors
On 21 December 2020, the Group entered into a secured debt facility with a group of sophisticated and
professional investors. This was utilised to replace and pay out in full the previous secured debt facility of
US$3 million held by Titan from a separate group of sophisticated and professional investors. The previous
facility was originally provided on 25 March 2019 to assist in funding the acquisition of the Core Gold group.
The material terms of the current debt facility are:
• Amount: A$4,155,280
• Term: 30 June 2021
•
• Facility establishment fee: 6%
• Security: Pledges over all the shares that Titan Minerals Limited holds in each of its subsidiaries
Interest: 15% per annum payable at repayment date
which form part of any of the following projects located in Ecuador:
(A) known as the Dynasty Gold Project
(B) known as the Copper Duke Project
(C) known as the Linderos Gold Project
• At repayment, an option by the lenders to receive up to the equivalent of A$1,150,000 in principal
repayments through the issue of ordinary shares in Titan Minerals Limited.
Finance costs:
As at 31 December 2020, A$17 thousand (US$13 thousand) of interest was accrued in relation to the
current loan from sophisticated and professional investors and recognised as finance costs. Facility
establishment fees of A$249,317 (US$191,974) were paid during December 2020 and recognised as
finance costs.
53
Notes to the Consolidated Financial Statements
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 0 2 0
16. PROVISIONS FOR CLOSURE AND RESTORATION
CURRENT
Provisions for closure and restoration -
classified as available for sale
NON CURRENT
Provision for closure and restoration
Consolidated
31-Dec-20
US $000’s
31-Dec-19
US $000’s
1,850
1,850
508
508
2,358
-
-
2,222
2,222
2,222
Provision for closure and restoration costs has been recognised for future costs to remediate disturbances
on concessions and landholdings including the plant footprint, related tailings dams and open cut mine, in
order to meet the laws and regulations for the protection of the environment, as described by the relevant
Government regulators in Ecuador.
17. 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
Elimination of existing legal acquiree (Core Gold Inc.) shares
Shares of legal acquirer (Titan Minerals Limited) at acquisition date
Issue of shares for the acquisition of Titan Minerals Limited
- Issued 17 January 2020
- Issued 30 January 2020
- Issued 11 February 2020
- Issued 14 February 2020
- Issued 26 May 2020
Shares issued 4 June 2020 for share placement
Shares issued 5 August 2020 for shareholder purchase plan
Shares issued 24 August 2020 to lenders and suppliers in lieu of
cash
Shares issued 24 August 2020 for Director participation in placement
Shares issued 29 October 2020 to lenders and suppliers in lieu of
cash
Shares issued 31 December 2020 to lenders in lieu of cash
Less: capital raising costs
31 December 2020
Number
US $000’s
1,139,452,483
1,139,452,483
166,873,828
(166,873,828)
318,441,687
265,109,348
137,474,385
40,180,722
1,291,664
44,891,259
185,376,955
30,769,231
71,644,696
7,692,307
12,304,664
24,275,565
-
150,494
150,494
110,949
-
-
10,754
5,577
1,630
52
1,821
8,321
1,436
6,939
359
1,001
2,244
(589)
Balance at end of the year
1,139,452,483
150,494
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.
54
Notes to the Consolidated Financial Statements
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 0 2 0
(b)
Shares under option – unlisted
Recipient
Number of
shares
under option
Exercise
Price
AUD $
Expiry
date
Vested
Canaccord Genuity (Australia) Limited
Canaccord Genuity (Australia) Limited
Canaccord Genuity (Australia) Limited
1,200,000
1,500,000
1,800,000
$0.05
$0.06
$0.07
1 July 2021
100%
1 July 2021
100%
1 July 2021
100%
Canaccord Genuity (Australia) Limited
10,000,000
$0.125
31 Dec 2023
100%
Canaccord Genuity (Australia) Limited
10,000,000
$0.175
31 Dec 2023
100%
Canaccord Genuity (Australia) Limited
14,000,000
$0.15
31 Dec 2023
100%
Directors, Management and Consultants
37,120,000
$0.0001
24 August
2024
0%
As at 31 December 2020, there are 38,500,000 unlisted options issued to corporate advisors, and
37,120,000 incentive options issued to Directors, Managements and Consultants (refer Note 27 for further
details).
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:
Total number of options outstanding as at 1 January 2020
Elimination of existing legal acquiree (Core Gold Inc.) options
Options of legal acquirer (Titan Minerals Limited) at acquisition date
Share options issued
Total number of options outstanding as at 31 December 2020
No options were exercised during the year.
18. RESERVES
Share based payments reserve
Convertible debenture reserve
Foreign currency translation reserve
Movements in Share based payments reserve
At the beginning of the financial year
Additions
Transfer from convertible debenture reserve
55
Number of Options
(Unlisted)
7,565,000
(7,565,000)
4,500,000
71,120,000
75,620,000
Consolidated
31-Dec-20
31-Dec-19
US $000’s
US $000’s
20,372
-
(414)
19,958
16,437
3,900
35
20,372
16,437
35
-
16,472
16,283
154
-
16,437
Notes to the Consolidated Financial Statements
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 0 2 0
The share based payments reserve is used to accumulate the fair value of share based payments issued,
including options and performance rights.
Movements in Foreign currency translation reserve
At the beginning of the financial year
Movement
19. LOSS PER SHARE
Basic and diluted loss per share from continuing operations
Loss from Continuing Operations Attributable to Equity Holders of
Titan Minerals Ltd
Consolidated
31-Dec-20
31-Dec-19
-
(414)
(414)
-
-
-
Consolidated
31-Dec-20
Cents
(2.984)
US $000’s
(33,124)
No.
31-Dec-19
Cents
(2.41)
US $000’s
(3,903)
No.
Weighted average number of ordinary shares used in the
calculation of basic EPS
Potential ordinary shares not considered to be dilutive at year end
1,110,085,798
161,960,000
-
-
Basic and diluted loss per share from discontinued operations
Loss from Discontinued Operations Attributable to Equity Holders
of Titan Minerals Ltd
Cents
(0.226)
US $000’s
(2,511)
No.
Cents
-
US $000’s
No.
Weighted average number of ordinary shares used in the
calculation of basic EPS
Potential ordinary shares not considered to be dilutive at year end
1,110,085,798
161,960,000
-
-
There were no potential ordinary shares considered to be dilutive at year end.
56
Notes to the Consolidated Financial Statements
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 0 2 0
20. SUBSIDIARIES
Country of
incorporation
USA
Peru
Peru
Peru
Name of entity
Mundo Minerals USA Inc
Compañía Minera
Austrandina S.A.C
Compañía Minera Santa
Raquel S.A.C
Compañía Minera Santa
Carmela S.A.C
Andina Resources
Limited
Vista Gold S.A.C
Mantle Mining S.A.C
Andean Metals S.A.C
Porphyry Assets S.A.C
Core Gold Inc (group of companies,
acquired 30 January 2020)
Peru
Peru
Peru
Peru
Australia
Titan Minerals S.A.S.
Ecuador
100%
NEK Development Corp.
(with Ecuador branch)
Panama
100%
(1) Sold effective 24 December 2020.
Ownership
interest
2020
100%
100%
Ownership
interest
2019
100%
100%
Principal Activity
Administrative holding company
Administrative holding company
100%
100%
Administrative holding company
100%
100%
Administrative holding company
100%
- (1)
100%
100%
100%
100%
100%
Administrative holding company
100%
100%
100%
100%
-
-
-
Processing plant operator
Gold exploration
Administrative holding company
Administrative holding company
Refer Note 29
Operating company for exploration
services
Newly incorporated, to hold mineral
concessions
21. CONTINGENCIES AND COMMITMENTS
As at 31 December 2020, the Core Gold Group has in excess of 20 pending lawsuits in Ecuador that may
result in up to US$1.5 million (31 December 2019 - US$1.0 million) in damages. The Group is currently
working with its legal counsel and does not expect to settle this balance in full. The Group is subject to
various investigations, claims, legal, labour and tax proceedings covering matters that arise in the ordinary
course of business activities.
The Internal Revenue Service in Ecuador (“IRS”) has issued an audit request for the year ended 31
December 2017 relating to Green Valley Resources – GVR S.A., a subsidiary acquired by Titan as part of
the Core Group acquisition. At this stage, there is no quantifiable amount of any potential liability, if any,
that may arise.
Each of these matters is subject to various uncertainties and it is possible that some of these matters may
be resolved unfavourably for the Group. Certain conditions may exist as of the date the financial statements
are issued that may result in a loss to the Group.
Numerous minor unsubstantiated and unclaimed amounts relating to Dynasty Mining and Metals (the
predecessor to the Core Gold group) prior to December 2017 have been derecognised. The potential for
any satisfaction through future payment is considered highly improbable. Previous amounts totalled
Canadian $589 thousand (US$440 thousand).
The Group has agreed to issue Canaccord Genuity (Australia) Limited (“Canaccord”), its corporate advisor,
10,000,000 options with an exercise price of A$0.125 expiring 31 December 2023 if one of the following
occurs:
57
Notes to the Consolidated Financial Statements
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 0 2 0
(a)
(b)
Canaccord introduces a new substantial shareholder to the Company’s share register; or
the Board of Titan determines, in its absolute discretion, between the date of this agreement
and the 31 December 2023, that Canaccord should be awarded the options for its
assistance with share register construction and investor relations support. In particular, the
Company will have regard to circumstances where Canaccord has introduced a number of
shareholders which purchase shares in a single transaction or series of transactions where
the effect is equivalent or similar to the introduction of a substantial shareholder.
The Group has no other significant commitments or contingent liabilities as at 31 December 2020.
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
Cash in transit
Consolidated
31-Dec-20
31-Dec-19
US $000’s
2,772
500
3,272
US $000’s
181
-
181
(b) Reconciliation of loss for the year to net cash flows used in operating
activities
(Loss) for the year
Adjustments for:
(35,635)
Depreciation and amortisation of non-current assets
Share based payments
Foreign exchange
Finance costs
Finance costs – Asset Retirement Obligations
Impairment
Loss on extinguishment of financial liabilities
Fair value movement of financial assets
Derivative liability gain – warrants
Corporate Transaction Expense
(Increase)/decrease in assets:
Trade and other receivables, prepaid expenses and long-
term assets
Inventories
Increase/(decrease) in liabilities:
Trade and other payables
Current tax liability
Net cash used in operating activities
1,175
3,607
50
936
136
2,625
3,599
(538)
(70)
17,677
(818)
1,048
(2,882)
564
(8,526)
(3,903)
1,753
154
(18)
793
-
1,164
-
-
(981)
-
924
573
(1,830)
-
(1,371)
58
Notes to the Consolidated Financial Statements
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 0 2 0
(c) Non-cash financing and investing activities
During the year, a total of $2,966 thousand of financial liabilities, fees and interest was settled in equity.
As a result of the settlement of these liabilities in equity, the Company recognised a loss on extinguishment
of $3,599 thousand.
During the year, the Company issued 488,947,378 shares to acquire Core Gold Inc. (refer Note 29).
There were no other non-cash financing activities.
23. EVENTS AFTER THE REPORTING PERIOD
As announced on 15 April 2021, Titan Minerals Limited has entered into a term sheet to divest its Zaruma
Mine and related concessions / tenements plus the Portovelo Process Plant for US $15 million.
The schedule of staged payments from the purchaser is:
(c) US$2,000,000 Non-refundable cash deposit payable by Pelorus upon signing of the Term Sheet
(d) US$3,000,000 Payable within 30 days on signing of the Share Sale Agreement
(e) US$2,500,000 Payable on 1 August 2021
(f) US$2,500,000 Payable on 1 December 2021
(g) US$2,500,000 Payable on1 March 2022
(h) US$2,500,000 Payable on 1 June 2022
Titan is also entitled to a 2% net smelter return royalty on the value of any recovered and realisable copper
produced from any of the Zaruma Mine concessions.
There has not been any other matters or circumstances 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.
24. KEY MANAGEMENT PERSONNEL
Remuneration of key management personnel
Short term employee benefits
Post-employment benefits
Share based payments
Termination benefits
31-Dec-20
31-Dec-19
US $000’s
US $000’s
672,023
13,087
1,611,760
-
531,755
-
337,689
-
2,296,870
869,444
The disclosure above represents the full financial years ending 31 December 2020 and 31 December
2019 for the key management personnel of Titan Minerals Limited.
Refer to the Remuneration Report on pages 16 - 18 of the Directors Report for further details.
59
Notes to the Consolidated Financial Statements
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 0 2 0
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 20 to the Consolidated 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.
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
Issued capital
Reserves
Accumulated losses
Shareholder Equity
Statement of Comprehensive Income
Loss after tax
Total comprehensive loss
c)
Expenditure commitments by the parent entity:
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Parent
31-Dec-20
US $000’s
31-Dec-19
US $000’s
2,259
2,458
4,717
6,473
4,701
11,174
(6,457)
161,920
5,668
(174,045)
(6,457)
607
1,528
2,135
4,763
-
4,763
(2,628)
86,577
1,484
(90,689)
(2,628)
Parent
31-Dec-20
US $000’s
31-Dec-19
US $000’s
(83,356)
(83,356)
(9,442)
(9,442)
-
-
-
-
-
-
There are no material guarantees by the Parent Company to its subsidiaries.
60
Notes to the Consolidated Financial Statements
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 0 2 0
26. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
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.
Cash and short-term deposits;
Trade and other receivables;
Financial assets
The material financial instruments to which the Group has exposure include:
(i)
(ii)
(iii)
(iv) Accounts payable
Borrowings
(v)
The carrying values of these financial instruments approximate their fair values. The carrying values of the
Group’s financial instruments are as follows:
Financial Assets
Cash and Cash Equivalents
Receivables
Financial assets
Total Financial Assets
Financial Liabilities
Trade and other payables
Borrowings
Total Financial Liabilities
Net Exposure
31-Dec-20
US $000’s
31-Dec-19
US $000’s
3,272
2,463
2,300
8,035
11,007
5,892
16,899
(8,864)
181
1,154
-
1,335
13,687
3,351
17,038
(15,703)
The table reflects the undiscounted contractual settlement terms for financial instruments of a fixed period
of maturity as well as management’s expectations of settlement period for all other financial instruments.
Receivables and prepaid expenses maturing as follows:
Less than 6 months
6 months to 1 year
Later than 1 year but not longer than 5 years
Over 5 years
Trade and other payables maturing as follows:
Less than 6 months
6 months to 1 year
Later than 1 year but not longer than 5 years
Over 5 years
61
31-Dec-20
US $000’s
31-Dec-19
US $000’s
1,993
-
470
-
2,463
11,007
-
-
-
11,007
28
-
1,126
-
1,154
13,687
-
-
-
13,687
Notes to the Consolidated Financial Statements
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 0 2 0
Borrowings maturing as follows:
Less than 6 months
6 months to 1 year
Later than 1 year but not longer than 5 years
Over 5 years
(a) Market Risk
Foreign Exchange Risk
31-Dec-20
US $000’s
31-Dec-19
US $000’s
5,830
11
51
-
5,892
3,351
-
-
-
3,351
The Group operates internationally and is exposed to foreign exchange risk arising primarily from its parent
company operating in Australian dollars and raising equity on the ASX in Australian dollars while its
principal operations are all denominated in US dollars.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency of US dollars.
The carrying amounts of the Group’s foreign currency denominated assets and monetary liabilities at the
end of the reporting year are as follows:
Assets
Liabilities
31-Dec-20
US$ 000’s
31-Dec-19
US$ 000’s
31-Dec-20
US$ 000’s
31-Dec-19
US$ 000’s
Australian dollars (AUD)
Canadian dollars (CAD)
2,463
23
-
259
(4,570)
(2,699)
-
(4,597)
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 2020 was 0.05% (31 December 2019: 0.45%). All
trade and other receivables, other financial assets and trade payables are non-interest bearing.
Interest bearing liabilities include short term loans. The interest rate on short term loans payable is
currently 15.0% (2019: Not available), refer Note 15. A change in interest rate on short term loans of +/-
1.0% would result in an increase (decrease) in interest expenses of US $32 thousand, noting the
Silverstream SECZ loan is interest free.
Price risk
The Group is exposed to commodity price risk through its gold sales. As of the 24 December 2020 the
Consolidated Entity is no longer a producer or seller of gold.
The Group has not hedged the price at which it sells gold.
(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 group is exposed to credit risk with regard to the consideration receivable from the Vista Gold SAC,
sale refer Notes 7 and 8 totalling US$2.17 million, of which US$0.50 million was received immediately
subsequent to year end on 5 January 2021. Titan has assessed the credit risk of the purchaser and
concluded that there is no impairment of the receivable as at 31 December 2020.
62
Notes to the Consolidated Financial Statements
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 0 2 0
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 Ecuador is held with Banco Pichincha Quito Ecuador which
is an appropriate financial institution with an external credit rating of B-.
(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.
27. SHARE-BASED PAYMENTS
Performance Rights
Performance rights convert to shares on the date of vesting with no exercise price or share issue price
being payable.
At the Annual General Meeting held on 30 May 2019, shareholders approved to grant 15,000,000
(1,500,000 post consolidation) performance rights to Mr Travis Schwertfeger (at time of issue, the Chief
Operating Officer) as part of his remuneration. The performance rights have the following terms:
Tranche
Performance
Rights
consolidation)
(post-
Milestone
D
E
F
500,000
500,000
500,000
The Shares achieving a daily VWAP of greater
than $0.05 for a period of 10 consecutive Trading
Days (post consolidation: $0.50)
The Shares achieving a daily VWAP of greater
than $0.06 for a period of 10 consecutive Trading
Days (post consolidation: $0.60)
The Shares achieving a daily VWAP of greater
than $0.07 for a period of 10 consecutive Trading
Days (post consolidation: $0.70)
Expiry Date
2 years from
the date of
issue
(i) Fair value of performance rights granted
Set out below is the assessed fair value at grant date of performance rights granted:
Class D – COO – granted 30 May 2019
Class E – COO– granted 30 May 2019
Class F – COO– granted 30 May 2019
Fair value at grant date
$0.005
$0.003
$0.002
The fair value of the performance rights is being expensed over the vesting period.
63
Notes to the Consolidated Financial Statements
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 0 2 0
Incentive Options
Incentive Options
Movements in incentive options
Balance at the beginning of the year
Issued on 25 August 2020 – Directors and Key Management
Personnel
Issued on 25 August 2020 – Key Management Personnel (CFO)
Issued on 25 August 2020 – Consultants
Issued on 4 November 2020 – Consultants
Balance at the end of the year
31 December 2020
Number
37,120,000
37,120,000
-
30,000,000
3,000,000
2,000,000
2,120,000
37,120,000
Share Based
Payment
US $000’s
1,671
1,671
-
1,447
76
96
52
1,671
During the year, the Company issued incentive options with the following terms to Directors, staff and
consultants.
Vesting
category
Vesting Condition
A
B
C
D
The Company announcing on its ASX Market
Announcements
a minimum
Platform
2,000,000 ounces of gold (Au) or gold
equivalent (in accordance with clause 50 of the
JORC code) at the Dynasty Gold Project in
Ecuador.
The Company announcing on its ASX Market
Announcements
a minimum
Platform
2,500,000 ounces of gold (Au) or gold
equivalent (in accordance with clause 50 of the
JORC code) at the Dynasty Gold Project in
Ecuador.
The VWAP of Company Shares is at least
$0.15 for 10 consecutive trading days
The VWAP of Company Shares is at least
$0.30 for 10 consecutive trading days or at 24
months after the issue of the Incentive Options.
Options
9,370,000
Exercise
Price
(AUD)
$0.0001
9,675,000
$0.0001
8,750,000
$0.0001
9,325,000
$0.0001
Expiry Date
4 years from
the date of
issue
4 years from
the date of
issue
4 years from
the date of
issue
4 years from
the date of
issue
64
Notes to the Consolidated Financial Statements
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 0 2 0
Below is a summary of the key inputs and valuation methodology of the incentive options issued:
Directors, Key Management Personnel and Consultants – Issued 25 August 2020
Vesting Category
A
B
C
D
Valuation model
Black-Scholes Black-Scholes Hoadleys Hybrid
ESO Model
Hoadleys Hybrid
ESO Model
Options exercisable at (AUD):
$0.0001
$0.0001
$0.0001
$0.0001
Grant date
Expiry date
Estimated volatility
Risk-free interest rate
Fair value (AUD):
31 July 2020
31 July 2020
31 July 2020
31 July 2020
24 August 2024 24 August 2024 24 August 2024 24 August 2024
110%
0.34%
$0.14
110%
0.34%
$0.14
110%
0.34%
$0.12
110%
0.34%
$0.11
Key Management Personnel (CFO) – Issued 25 August 2020
Vesting Category
A
B
C
D
Valuation model
Black-Scholes
Black-Scholes Hoadleys Hybrid
ESO Model
Hoadleys Hybrid
ESO Model
Options exercisable at (AUD):
$0.0001
$0.0001
$0.0001
$0.0001
Grant date
Expiry date
Estimated volatility
Risk-free interest rate
Fair value (AUD):
30 June 2020
30 June 2020
30 June 2020
30 June 2020
24 August 2024 24 August 2024 24 August 2024 24 August 2024
110%
0.33%
$0.077
110%
0.33%
$0.077
110%
0.33%
$0.061
110%
0.33%
$0.054
Consultants – Issued 4 November 2020
Vesting Category
A
B
D
Valuation model
Black-Scholes
Black-Scholes Hoadleys Hybrid
ESO Model
Options exercisable at (AUD):
$0.0001
$0.0001
$0.0001
Grant date
Expiry date
Estimated volatility
Risk-free interest rate
30 October 2020 30 October 2020 30 October 2020
24 August 2024 24 August 2024 24 August 2024
110%
0.20%
110%
0.20%
110%
0.20%
Fair value (AUD):
$0.115
$0.115
$0.085
65
Notes to the Consolidated Financial Statements
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 0 2 0
Options
On 21 September 2020, the Company issued 34,000,000 options to Canaccord Genuity (Australia) Limited,
comprised of:
-
-
-
10,000,000 unquoted options exercisable at $0.125 each on or before 31 December 2023;
14,000,000 unquoted options exercisable at $0.15 each on or before 31 December 2023; and
10,000,000 unquoted options exercisable at $0.175 each on or before 31 December 2023.
The options were valued using a Black Scholes valuation model. The key inputs into the valuation were:
Options exercisable at (AUD):
$0.125
$0.15
$0.175
Grant date
Expiry date
Estimated volatility
Risk-free interest rate
Fair value (AUD):
17 September 2020 17 September 2020 17 September 2020
31 December 2023
31 December 2023 31 December 2023
110%
0.26%
$0.085
110%
0.26%
$0.082
110%
0.26%
$0.078
On 10 August 2018, the Company issued the 45,000,000 (post consolidation: 4,500,000) options to
Canaccord Genuity (Australia) Limited, comprised of:
-
-
-
12,000,000 (post consolidation: 1,200,000) unquoted options exercisable at $0.05 (post consolidation:
$0.50) each on or before 1 July 2021;
15,000,000 (post consolidation: 1,500,000) unquoted options exercisable at $0.06 (post consolidation:
$0.60) each on or before 1 July 2021; and
18,000,000 (post consolidation: 1,800,000) unquoted options exercisable at $0.07 (post consolidation:
$0.70) each on or before 1 July 2021.
The options were valued using a Black Scholes valuation model. The key inputs into the valuation were:
Options exercisable at:
Grant date
Expiry date
Estimated volatility
Risk-free interest rate
Fair value
$0.05
(post consol: $0.50)
10 August 2018
$0.06
(post consol: $0.60)
10 August 2018
$0.07
(post consol: $0.70)
10 August 2018
1 July 2021
1 July 2021
1 July 2021
75.93%
1.82%
$0.01
75.93%
1.82%
$0.009
75.93%
1.82%
$0.008
66
Notes to the Consolidated Financial Statements
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 0 2 0
Expenses Arising from Share-based Payment Transactions
Total expenses arising from share-based payment transactions recognised during the year were as
follows:
Performance rights
Incentive options
Options
Total share-based payments expense
Impact of foreign exchange translation
Total share based payments impact of the share based payment
reserve
28. REMUNERATION OF AUDITORS
Auditor of the parent entity
Audit and review of the annual and half year financial report
Audit and review of other financial reports
Other auditors – associate firms of the auditor of the parent entity
Audit or review of the financial report
31-Dec-20
$000’s USD
31-Dec-19
$$000’s USD
16
1,671
1,920
3,607
293
3,900
-
-
154
154
-
154
31-Dec-20
$000’s USD
31-Dec-19
$000’s USD
125
-
125
182
72
14
86
37
29. BUSINESS COMBINATION
As described in Note 2(d), on 30 January 2020, Titan Minerals Limited acquired control of greater than
50% of the common shares and voting rights of Core Gold Inc., and completed the legal acquisition of
100% of the common shares in Core Gold Inc. on 26 May 2020.
Under the principles of AASB 3, the transaction between Titan and Core is treated as a reverse acquisition,
whereby the accounting acquirer is deemed to be Core and Titan is deemed to be the accounting acquiree.
Refer to the effect upon the basis of preparation at Note 2(d) Reverse acquisition.
67
Notes to the Consolidated Financial Statements
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 0 2 0
Legal acquisition:
As part of the legal acquisition of Core Gold Inc., Titan Minerals Limited acquired the following subsidiaries:
Name of entity
Core Gold Inc.
1165412 B.C. Ltd
GV Gold Holdings Limited
Empire Sun Investment Limited
Elipe S.A
Green Valley Resources – GVR
S.A
Golden Valley Planta S.A.
Greentrade Ecuador Overseas
Inc.
Minsupport S.A.(in
administration)
Country of
incorporation
Canada
Canada
Ownership
interest
100%
100%
Canada
British Virgin
Islands
Ecuador
Ecuador
Ecuador
Panama
Ecuador
100%
100%
100%
100%
100%
100%
100%
Principal Activity
Holding company
Holding company
Holding company
Holding company
Mineral exploration and
concession holder
Plant operator and
producer
Plant owner
Holding company
General and
adminstration
Acquisition consideration:
As consideration for the issued capital of Core, Titan issued 488,947,378 shares to the shareholders of
Core. No cash was paid as part of the acquisition consideration.
Fair value of consideration transferred:
Under the principles of AASB 3, the transaction between Titan and Core is treated as a reverse acquisition.
As such, the assets and liabilities of the legal subsidiary (the accounting acquirer), being Core, are
measured at their pre-combination carrying amounts. The assets and liabilities of the legal parent
(accounting acquiree), being Titan are measured at fair value on the date of acquisition.
The consideration in a reverse acquisition is deemed to have been incurred by the legal subsidiary (Core)
in the form of equity instruments issued to the shareholders of the legal parent entity (Titan). The
acquisition-date fair value of the consideration transferred has been determined by reference to the fair
value of the number of shares the legal subsidiary (Core) would have issued to the legal parent entity Titan
to obtain the same ownership interest in the combined entity. Therefore, the deemed fair value of the
acquisition of Titan (Accounting Subsidiary) was determined to be 93,567,799 shares on issue in Titan at
approximately $0.21 USD for a total value of US$19,834 thousand.
68
Notes to the Consolidated Financial Statements
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 0 2 0
Goodwill (Corporate transaction expense):
Goodwill is calculated as the difference between the fair value of consideration transferred less the fair
value of the identified net assets of the legal parent, being Titan. Details of the transaction are as follows:
Fair value of consideration transferred
Fair value of assets and liabilities held at acquisition date:
Inventories
• Cash
• Receivables and prepaid expenses
•
• Properties, plant and equipment (including Vista plant)
• Exploration and evaluation properties (including Coriorcco and Las Antas)
• Trade and other payables
• Loans payable
• Provision for closure and restoration
Fair value of identifiable assets and liabilities acquired
Goodwill (Corporate transaction expense)
Fair Value
US $000’s
19,834
3,094
2,234
578
3,568
3,492
(6,252)
(4,275)
(282)
2,157
17,677
The goodwill calculated above represents goodwill in Titan, however this has not been recognised, as
Titan (the accounting acquire) does not hold any cash generating units for which goodwill can be attributed
to. Instead the deemed fair value of the interest in Core issued to existing Titan shareholders to effect the
combination (the consideration for the acquisition of Titan) was recognised as an expense in the
consolidated statement of profit or loss and other comprehensive income. This expense has been
presented as a “Corporate Transaction Expense” on the face of the consolidated statement of profit or loss
and comprehensive income.
As at acquisition date, there was a non-controlling interest of 17.66% relating to shareholders in Core Gold
Inc who had not accepted the offer as at 30 January 2020. As at acquisition date, the value of this non-
controlling interest was US $452 thousand. The legal parent Titan Minerals Limited acquired this remaining
interest on 26 May 2020, as such the non-controlling interest as at 31 December 2020 is $nil.
69
Stantons International Audit and Consulting Pty Ltd trading as
Chartered Accountants and Consultants
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
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
TITAN MINERALS LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Titan Minerals Limited the Company and its subsidiaries (“the Group”), which
comprises the consolidated statement of financial position as at 31 December 2020, the consolidated statement of profit
or loss and other 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.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Material Uncertainty Related to Going Concern
We draw attention to Note 2(g) to the financial statements which indicates that the consolidated financial statements have
been prepared on the going concern basis. As at 31 December 2020, the Group had cash and cash equivalents of
US$3,272,000, and incurred a loss after income tax from continuing operations of US$33,124,000, had net operating cash
outflows of US$8,526,000 and working capital deficiency of US$11,093,000. These events or conditions, along with other
matters as set forth in Note 2(g) indicate that a material uncertainty exists that may cast significant doubt on the Group’s
ability to continue as a going concern.
The ability of the Group to continue as a going concern and meet its planned exploration, administration and other
commitments is dependent upon the Group raising further working capital, disposal of non-core assets, successfully
recommencing profitable operations and/or exploiting the Group’s mineral and other assets. The recent market uncertainty
arising from the financial effects of the COVID-19 virus, may impact on the Group’s ability to raise further working capital
and or to commence profitable operations.
In the event that the Group is not successful in raising further equity or dispose non-core assets or successfully
recommencing profitable operations and /or exploiting the Group’s mineral and other assets, the Group may not be able
to meet its liabilities as and when they fall due and the realisable value of the Group’s current and non-current assets may
be significantly less than book values.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report of the current period. These matters were addressed in the context of our audit of the financial report as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the
matters described below to be key audit matters to be communicated in our report.
Liability limited by a scheme approved under Professional Standards Legislation.
Key Audit Matters
How the matter was addressed in the audit
Carrying Value of Exploration and Evaluation
Expenditure
The Group has capitalised exploration and
evaluation expenditure totalling US$18,374,000
(refer to Note 13) in terms of the application of the
Group’s accounting policy for exploration and
evaluation expenditure, as set out in Note 2(o).
The carrying value of Capitalised Exploration and
Evaluation expenditure is a key audit matter due to:
•
•
•
The significance of the total balance (64% of
total assets);
to assess management’s
The necessity
the
requirements of
the
application of
accounting standard Exploration
for and
Evaluation of Mineral Resources (“AASB 6”),
in light of any indicators of impairment that
may be present;
The assessment of significant judgements
made by management in relation to the
Capitalised Exploration and Evaluation
Expenditure.
Inter alia, our audit procedures
following:
included
the
i. Assessing the Group’s right to tenure over
exploration areas of interest by corroborating
the ownership of the relevant licences for
mineral resources to government registries
and relevant third party documentation;
ii. We
tested
the additions
to capitalised
exploration and evaluation expenditure by
evaluating a sample of recorded expenditure
for consistency to the underlying records, the
capitalisation requirements of the Group’s
accounting policy and requirements of AASB
6
iii. Reviewing the directors’ assessment of the
carrying value of
the exploration and
evaluation expenditure, ensuring the veracity
of the data presented and that management
has considered
the effect of potential
impairment indicators, commodity prices and
the stage of the Group’s projects against
AASB 6;
intentions
iv. Evaluation of Group documents
for
for
consistency with
the
the
continuing of exploration and evaluation
activities in certain areas of interest and
corroborated with enquiries of management.
Inter alia, the documents we evaluated
included:
▪ Minutes of meetings of the board and
management; and
▪ Announcements made by the Group to
the Australian Securities Exchange;
▪ Cash forecasts;
▪ Agreements entered
in relation
Company
exploration and evaluation assets.
into by
the
to disposal of
v. Consideration of
requirements of
the
accounting standard AASB 6. We assessed
the financial statements in relation to AASB
6 to ensure appropriate disclosures are
made.
Valuation of Share Based Payments
As disclosed in Note 27, during the period the
Company granted a number of share options and
performance rights to employees, directors, and
consultants to conserve cash and provide them with
long-term incentives.
The Company and an independent consultant of the
Company prepared the valuation of the options and
expensed the related the related share-based
payment expense in accordance with its accounting
policy and with AASB 2 Share Based Payment
(“AASB 2”) in the consolidated statement of profit or
loss and other comprehensive income.
for share-based payments was
Accounting
identified as a key audit matter due to the
complexity and judgemental estimates used in
determining the fair value of the share-based
payments.
Accounting for the Reverse Acquisition
As described in Note 2(d) and Note 29, during the
period Titan Minerals Limited (“Titan”) acquired all
of the outstanding ordinary shares in Core Gold Inc.
(“Core”) at an offer of 3.1 Titan shares for each Core
share. Titan acquired control of greater than 50% of
the ordinary shares and voting rights of Core on 30
January 2020 and completed the legal acquisition
of 100% of the ordinary shares in Core on 26 May
2020.
With the previous shareholders of Core holding a
larger portion of voting rights of the combined entity
than
the
the continuing Titan shareholders,
transaction between Titan and Core is treated as a
reverse acquisition under the principles of AASB 3.
The accounting for the reverse acquisition of Core
is a key audit matter due to the accounting
complexity of the transaction, the level of judgement
and the level of audit effort involved.
Management judgement was required to determine
that Core met the definition of ‘business’ and
therefore, could be accounted for as a business
combination rather than an asset acquisition.
Additionally, management judgement was required
to determine that fair value of the assets and
liabilities of Titan Minerals Limited on the date of
acquisition and assessing whether Core had taken
control over titan Minerals Limited and therefore, the
transaction accounted for as a “reverse acquisition”.
The financial statements have therefore been
Inter alia, our audit procedures included the following:
i. Reviewing
the relevant agreements
to
obtain an understanding of the contractual
nature and terms and conditions of the
share-based payment arrangements;
ii. Reviewing management’s determination of
the fair value of the share-based payments
granted, considering the appropriateness of
the valuation models used and assessing
the valuation
the underlying
inputs,
assumptions used and discussed with
management the justification for inputs
used (share price of the underlying equity,
risk free rate and volatility);
iii. Assessing the allocation of the share-based
payment expense over the relevant vesting
period;
iv. We assessed the accounting treatment and
its application in accordance with AASB 2;
and
v. We assessed whether
the
disclosures met
accounting standards.
the Group’s
requirements of
Inter alia, our audit procedures included the following:
i. Obtaining an understanding of
the
transaction through the review of the sale
and purchase agreements between the
entities involved and the relevant ASX
Announcements
the
and
determination of the accounting acquirer
and whether the transaction constituted a
business or asset acquisition;
assessed
ii. Assessing management’s
proposed
accounting treatment in accordance with
applicable accounting standards;
iii. Checking the calculation of the share-
based payment, fair value of identifiable net
assets acquired, including any separately
identifiable intangible assets;
iv. Considering whether any fair values or
adjustments to fair values have been dealt
with in accordance with relevant accounting
standards.
v. Assessing
the appropriateness of
the
acquisition journals at acquisition date and
checking
the
financial statements are in accordance with
the basis of preparation as disclosed in note
2(d) for the reverse acquisition.
the disclosures
that
in
vi. Assessing the adequacy of the related
disclosures in the financial report and
prepared as if the business of Core continued post
transaction.
Finally, management exercised
to
conclude that certain costs associated with the
transaction, including shares issued to related
parties, were share-based payments and did not
form consideration for the reverse acquisition
judgement
.
that comparative
information
ensured
disclosed in the financial statements is that
of
the
the continuing business of
accounting acquirer (Core).
Issued Capital
As disclosed in Note 17, the Group’s Issued Capital
amounted to US$150,494,000. During the reporting
period, 1,139,452,483 ordinary shares were issued
resulting in an increase in Issued Capital of
US$39,545,000 (net of capital raising costs). The
shares issued during the year included shares
issued to acquire Core, shares issued to raise funds
and to settle certain liabilities or for services.
Contributed Equity is a key audit matter due to:
•
•
the quantum of share capital issued during the
year; and
the varied nature of the movements during the
year.
We have spent significant audit effort on ensuring
the Issued Capital was appropriately accounted for
and disclosed.
Inter alia, our audit procedures
following:
included
the
i. Obtaining an understanding of the underlying
transactions;
ii. Verifying all issued capital movements to the
relevant ASX announcements;
iii. Vouching proceeds from capital raisings to bank
relevant supporting
statements and other
documentation;
iv. Verifying underlying capital raising costs and
these costs were appropriately
ensuring
recorded;
v. Ensuring that the ordinary shares issued as
consideration for the reverse acquisition of Core
Gold Inc. are appropriately accounted for in
accordance with
relevant accounting
standards;
the
vi. Ensuring consideration for services provided
were measured in accordance with AASB 2
Share-Based Payments and agreed the related
costs to relevant supporting documentation;
vii. Ensuring that the ordinary shares issued to
extinguish financial liabilities were accounted for
in accordance with the AASB Interpretation 19
Extinguishing Financial Liabilities with Equity
Instruments and agreed to relevant supporting
documentation; and
viii. Ensuring
the requirements of
the relevant
accounting standards and disclosures achieve
fair presentation and reviewing the financial
statements to ensure appropriate disclosures
are made.
Other Information
The directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 31 December 2020, but does not include the financial report and our auditor’s
report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any form of
assurance opinion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain
professional scepticism throughout the audit. An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial report.
The procedures selected depend on the auditor's judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity's preparation of the financial report that gives a true and fair view in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the Directors, as well as evaluating the overall presentation of the financial report.
We conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor's report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether
the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in Internal control that we identify during our audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements. We also
provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance in the audit
of the financial report of the current period and are therefore key audit matters. We describe these matters in our auditor's
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 16 to 18 of the directors’ report for the year ended 31
December 2020.
In our opinion, the Remuneration Report of Titan Minerals Limited for the year ended 31 December 2020 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)
Samir Tirodkar
Director
West Perth, Western Australia
30 April 2021
ADDITIONAL INFORMATION AS AT 28 APRIL 2021
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
Ordinary
Shares
154
297
342
1038
656
2,487
Holdings of less than a marketable parcel
1,458
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.
There are no current on-market buy-back
arrangements for the Company.
REGISTERED OFFICE OF THE COMPANY
Suite 6, 295 Rokeby Road
Subiaco Western Australia 6005
Tel:
Fax:
+61 (8) 6555 2950
+61 (8) 6166 0261
SHARE REGISTRY
The registers of shares and options of the
Company are maintained by:-
Automic Share Registry
Level 2
267 St Georges Terrace
Perth WA 6000
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.
76
ADDITIONAL INFORMATION AS AT 28 APRIL 2021
TWENTY LARGEST HOLDERS OF ORDINARY SHARES
Position
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Holder Name
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED
BUTTONWOOD NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY
LIMITED
TAZGA TWO PTY LTD
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED
UBS NOMINEES PTY LTD
MRS JENNY MARY BAGULEY &
MR JOHN RICHARD BAGULEY
MEADOWCROFT INVESTMENTS PTY LTD
BACCHUS CAPITAL ADVISERS LIMITED
RBM CORPORATION PTY LTD
BLOCK CAPITAL GROUP LIMITED
MR JOHN VIEIRA &
MRS TRACEY LOIS VIEIRA
J STIMPSON PTY LTD
ARALAD MANAGEMENT PTY LTD
MRS JENNY MARY BAGULEY &
MR JOHN RICHARD BAGULEY
BNP PARIBAS NOMS PTY LTD
FERNLAND HOLDINGS PTY LTD
Total
Holding
219,393,233
83,763,533
60,096,129
48,805,296
% IC
19.25%
7.35%
5.27%
4.28%
35,017,129
3.07%
28,259,407
2.48%
28,049,094
2.46%
27,669,434
2.43%
23,157,845
22,000,000
2.03%
1.93%
15,994,052
1.40%
13,736,729
12,210,000
9,940,882
8,727,856
1.21%
1.07%
0.87%
0.77%
7,500,000
0.66%
7,358,020
0.65%
6,459,359
0.57%
6,097,322
0.54%
6,000,000
0.53%
670,235,320
58.82%
77
ADDITIONAL INFORMATION AS AT 28 APRIL 2021
SUBSTANTIAL SHAREHOLDERS
Holder Name
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BUTTONWOOD NOMINEES PTY LTD
Securities
219,393,233
83,763,533
60,096,129
%
19.25%
7.35%
5.27%
Mining tenements
Project
Location
Tenement
Interest at end of
quarter
Dynasty
Dynasty
Dynasty
Dynasty
Dynasty
Copper Duke
Copper Duke
Copper Duke
Copper Duke
Copper Duke
Copper Duke
Copper Duke
Copper Duke
Copper Duke
Copper Duke
Copper Duke
Copper Duke
Copper Duke
Linderos
Linderos
Linderos
Linderos
Copper Field
Copper Field
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
Loja, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
PILO 9
ZAR
ZAR 1
CECILIA 1
ZAR TRES A
BARBASCO
BARBASCO 1
BARBASCO 2
BARBASCO 4
CAROL
CATACOCHA
COLANGA
COLANGA 2
GLORIA
GLORIA 1
GONZA 1
LUMAPAMBA
LUMAPAMBA 1
CHORRERA
DYNASTY 1
LINDEROS E
NARANJO
COOPER 1
COOPER 4
BETHZABETH
ANA MICHELLE
NUEVA ESPERANZA
EL SALVADOR X-3
LOS CIPRECES
LOS LAURELES 2
MACHAY
EL TABLÓN
EL TABLÓN 1
IAM ZARUMA
LA ENVIDIA
MARA 8
MINANCA
NUEVA ESPERANZA 2
NUEVA ESPERANZA 3
NUEVA ESPERANZA 6
RESUC 4
RUTH
SAN ANTONIO DE PADUA
SAN JOSÉ 2
SUCA
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%(1)
100%
100%(2)
100%
100%
100%
100%
100%
2%
100%
100%
100%
100%
100%
100%
100%
100%
78
ADDITIONAL INFORMATION AS AT 28 APRIL 2021
Project
Location
Tenement
Interest at end of
quarter
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Zaruma
Alce
Phoebe
Phoebe
Phoebe
Phoebe
Phoebe
Phoebe
Phoebe
Cart
Colossus
Jaw
Jaw
San Santiago
San Santiago
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
El Oro, Ecuador
Southern Peru
Southern Peru
Southern Peru
Southern Peru
Southern Peru
Southern Peru
Southern Peru
Southern Peru
Central Peru
Central Peru
Southern Peru
Southern Peru
Southern Peru
Southern Peru
SUCA 4
EL RETAZO 3
LA CALERA
LA DURA
MALVAS 1
SOROCHE UNIFICADO
BARBASCO 1A
BARBASCO UNIFICADO
ALCE
PHOEBE 1
PHOEBE 2
PHOEBE 3
PHOEBE 4
PHOEBE 5
TOROLUMI
TOROLUMI II
CART01
COLOSSUS01
JAW01
JAW02
San Santiago De Acari
Virgen Del Carmen 2004P
100%
100%
100%
100%
100%(3)
57.5%
50%
20%
100%
100%
100%
100%
100%
100%
100%
100%
100%(4)
100%(4)
100%(4)
100%(4)
100%
100%
(1) A 14.16% proportion of the concession divested by Core Gold Inc. and transfer of divested mining rights
subject to government approval of transfer.
(2) A 51.2% proportion of the concession divested by Core Gold and transfer of divested mining rights
subject to government approval of transfer.
(3) A 50% proportion of the concession divested by Core Gold and transfer of divested mining rights subject
to government approval of transfer.
(4) Concession applications through wholly owned Peruvian subsidiaries of Titan with pending registration
of final documentation of granted mineral rights
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 – 4th 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.
79
ADDITIONAL INFORMATION AS AT 28 APRIL 2021
CANADIAN SHAREHOLDERS
The Company advises that is a designated foreign issuer as that term is defined in National Instrument 71-
102 – Continuous Disclosure and other Exemptions Relation to Foreign Issuers and it is subject to the foreign
regulatory requirements of the Australian Securities Exchange.
NOTES TO MINERAL RESOURCE
Dynasty Project
The information in this announcement relating to Mineral Resource Estimates for the Dynasty Gold Project is
a foreign estimate and is not reported in accordance with the JORC Code and it is uncertain that following
further exploration work that this foreign estimate will be able to be reported as a mineral resource in
accordance with the JORC Code.. The Foreign Estimate initially reported in the document titled “Quarterly
Activities Report for the Three Months Ended 31 March 2020”, dated 30 April 2020 (Initial Dynasty
Announcement) is not reported in accordance with the JORC Code and a competent person has not done
sufficient work to classify the foreign estimate as mineral resources in accordance with the JORC Code.
Titan’s intention is to continue undertaking further exploration work planned for the Dynasty Gold Project to
underpin a mineral resource estimation report in accordance with the principles of the JORC Code. The work
plan outlined in the Initial Dynasty Announcement to achieve an updated resource estimation included:
(i) Comprehensive re-logging of archived historical core available and digital photograph acquisition of
core material previously drilled on the project,
(ii) Additionally drilling to define geometry of mineralisation and underpin 3D geological modelling,
confirm confidence in projected mineralisation and selective twinning of previous drilling for
verification purposes
(iii) Additional metallurgical studies to underpin assumption or predictions in preliminary economic
assessments
As at the time of reporting, Titan has completed the proposed comprehensive re-logging campaign.
The campaign of additional drilling is ongoing, with an emphasis on systematically collecting the first oriented
diamond drilling on the Dynasty project across each of the prospect areas hosting known mineralisation. The
foreign resource estimate is comprised of three prospect areas, Cerro Verde, Iguana, and Papayal prospects
and initial drill tests have been completed on the Iguana and Papayal Prospects which host just over 30% of
the foreign resource estimation. An additional 12,000m of drilling is planned for the Cerro Verde Prospect
area, anticipated to be completed for the 2nd and 3rd quarters of 2021.
Preliminary metallurgical study work is anticipated to be initiated with recovered core material from planned
drilling on the Cerro Verde Prospect
In addition to the exploration activities proposed in the Initial Dynasty Announcement, the Company has also
completed a significant number of bulk density measurements in drilled areas, and several petrographic
samples for lithologic definition and gold deportment studies are in progress.
Geologic modelling is being progressed concurrent with ongoing drilling activity to expedite mineral resource
estimation work following completion of planned drilling activity. Independent consulting group, Mining Plus,
has been engaged to deliver the Dynasty JORC Compliant Resource. Mining Plus is a global mining services
provider specialising in geology, mining engineering and geotechnical engineering across open pit and
underground projects. Having already completed a site visit and review of historical datasets, this quarter
Mining Plus has commenced an intermediate scope of work to review current datasets confirming that ongoing
data acquisition is to a JORC standard.
80
ADDITIONAL INFORMATION AS AT 28 APRIL 2021
Jerusalem Project
The information in this announcement relating to Mineral Resource Estimates for the Jerusalem Gold Project
is a foreign estimate and is not reported in accordance with the JORC Code and it is uncertain that following
further exploration work that this foreign estimate will be able to be reported as a mineral resource in
accordance with the JORC Code. The Foreign Estimate initially reported in the document titled “Titan Minerals
Jerusalem Project Concession in Ecuador Reinstated to 100% Ownership”, dated 21 September 2020 (Initial
Jerusalem Announcement) is not reported in accordance with the JORC Code and a competent person has
not done sufficient work to classify the foreign estimate as mineral resources in accordance with the JORC
Code.
Titan’s intention is to continue undertaking further exploration work proposed for the Jerusalem Gold Project
to underpin a mineral resource estimation report in accordance with the principles of the JORC Code. The
work plan outlined in the Initial Jerusalem Announcement to achieve an updated resource estimation included:
(i) audit, verification and re-logging program of historical diamond core stored at the Jerusalem Gold
Project site,
(ii) where available, compilation of underground mine surveys to assess impact of previous mining on
the foreign resource estimate completed in 2014
(iii) in-fill drilling to define geometry of mineralisation and underpin development of a 3D geological model
(to establish controls for geostatistical modelling techniques in resource estimation), confirm
confidence in projected mineralisation, and selective twinning of previous drilling for verification
purposes, and
(iv) additional metallurgical studies to underpin assumption or predictions in preliminary economic
assessments
As at the time of reporting titan had not yet initiated the proposed work program, with commencement of field
exploration activities subject to completion of an environmental audit of the project area following a hiatus in
continuity of title on the project area, and proposed field work will follow-on from community engagement,
socialisation, and environmental baseline study work in accordance with statutory requirements in Ecuador
and industry best practices.
Titan confirms that it is not in possession of any new information or data that materially impacts on the reliability
of the Foreign Mineral Resource Estimates for the Dynasty Gold Project or the Jerusalem Gold Project and
included in the Initial Dynasty Announcement or the Initial Jerusalem Announcement. Titan confirms that the
supporting information provided in the Initial Dynasty Announcement and the Initial Jerusalem announcement
continues to apply and have not materially changed.
COMPETENT PERSON’S STATEMENT
The information in this report that relates to Exploration Results is based on information compiled by Mr Travis
Schwertfeger, who is a Member of The Australian Institute of Geoscientists. Mr Schwertfeger is the Chief
Geologist for the Company and has sufficient experience which is relevant to the style of mineralisation and
type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent
Person as defined in the JORC 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Mr Schwertfeger consents to their inclusion in the report of the matters
based on his information in the form and context in which it appears.
Mr. Schwertfeger confirms that the technical information in this release and information provided relating to
the Mineral Resource Estimates for the Dynasty Gold Project have been provided under ASX Listing Rules
5.12.2 to 5.12.7 and is an accurate representation of the available data and studies for the Dynasty Goldfield
Project located in southern Ecuador as a Foreign Estimate.
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