ANNUAL
ANNUAL
REPORT
REPORT
2020
2020
CORPORATE DIRECTORY
DIRECTORS
Managing Director and CEO
Paul Burton
John Elkington Non-Executive Director and Chairman
Non-Executive Director
Greg Durack
Simon Morten Non-Executive Director
JOINT COMPANY SECRETARIES
Jason Giltay
Paula Raffo
REGISTERED OFFICE
Suite 20, 22 Railway Road
Subiaco Western Australia 6008
PO Box 1126
Subiaco Western Australia 6904
Telephone:
(08) 9327 0900
Facsimile:
(08) 9327 0901
Website:
www.tngltd.com.au
Email:
corporate@tngltd.com.au
SHARE REGISTRY
Computershare Investor Services Pty Limited
Level 11
172 St Georges Terrace
Perth Western Australia 6000
Telephone:
(08) 9323 2000
Facsimile:
(08) 9323 2033
AUDITORS
KPMG
235 St Georges Terrace
Perth WA 6000
DOMESTIC STOCK EXCHANGE
Australian Securities Exchange (ASX)
Code: TNG
INTERNATIONAL STOCK EXCHANGE
German Stock Exchanges
Code: HJI
Annual Report 30 June 2020
CONTENTS
Chairman and Managing Director’s Letter
Review of Operations
Directors’ Report
Lead Auditor’s Independence Declaration
Financial Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Governance Statement
2
4
11
24
25
25
26
27
28
29
55
56
60
62
A N N U A L R E P O R T 2 0 2 0
1
Dear Shareholders,
We are pleased to present TNG’s 2020
Annual Report and to recap what has
been an unprecedented year, dominated
by the onset and rapid escalation of the
novel coronavirus.
Our first priority is the health and safety of all members
of the TNG team, both at home and abroad, as well
as the broader community in which we operate, and
we moved swiftly to take all necessary measures to
ensure that everyone remained safe throughout this
period of uncertainty.
Despite the challenges associated with COVID-19, our
team and partners were able to progress an extensive
body of work during the year.
Fortunately, we have been able to continue advancing
pre-development activities for the world-class
Mount Peake Vanadium-Titanium-Iron Project in the
Northern Territory with limited disruptions, with the
Front-End Engineering and Design (“FEED”) Study,
permitting and approvals being our main focus.
During the year, our strategic development partner,
SMS group, made great inroads into the detailed
FEED Study with the completion of the first two phases,
FEL - 0 and FEL - 1, and of the majority of works related
to FEL - 2.
In parallel with the FEED Study, we also progressed
several major non-process infrastructure components
required at both the Mount Peake mine site and the
Darwin TIVAN® Processing Facility, with suppliers being
tendered and short-listed.
In terms of permitting and approvals, we made substantial
progress with the submission of both the mining
management plan for the Mount Peake mine site and the
Draft Environmental Impact Statement (“EIS”) for the
Darwin TIVAN® Processing Facility.
The Northern Territory Government also reinforced
its support for the Project by signing a new
Project Facilitation Agreement in May, providing
a whole-of-government approach that will further
assist TNG in securing any remaining approvals
required for Mount Peake.
On the Project funding front, we have been delighted
with the strong support and confidence in the Project
shown by our lead debt advisor, KfW IPEX-Bank.
2
TNG LIMITEDCHAIRMAN AND MANAGING DIRECTOR’S LETTER As a result, we have extended KfW’s mandate until
December 2020 to continue acting as our lead debt
advisor to arrange and structure a US$600 million debt
finance package for Mount Peake.
We would also like to thank you, our valued shareholders,
for your ongoing support and patience as we progress
towards the financing and development of this
world-class strategic metals asset.
In parallel with progressing the work streams required
to secure a senior debt facility, we submitted a detailed
proposal to the Northern Australia Infrastructure Facility
(“NAIF”) in October last year regarding infrastructure
funding for the Project, with discussion ongoing. We have
also been in regular contact with mezzanine finance and/
or equity investors to discuss their potential participation
in the project financing.
In summary, we have progressed all possible
components of this multi-faceted, world-scale project to
the best of our ability given the constraints on travel and
the restrictions imposed by the COVID-19 pandemic.
The achievements of the year are testament to the efforts
of our senior management group and dedicated team of
staff and consultants, and we would like to thank them
all sincerely for their hard work and commitment during
what has been another very busy year for TNG.
Yours faithfully,
John Elkington
Non-Executive Chairman
Paul Burton
Managing Director & CEO
3
ANNUAL REPORT 2020CHAIRMAN AND MANAGING DIRECTOR’S LETTER
OVERVIEW
TNG Limited (“TNG” or the “Company”)
is an Australian resource and mineral
processing technology company which is
progressing towards the development of
its 100%-owned world-class Mount Peake
Vanadium-Titanium-Iron Project (“Mount
Peake Project” or “Project”) in the Northern
Territory, Australia.
Despite the interruptions and constraints
imposed by the COVID-19 global health
and economic crisis, TNG made solid
progress across several fronts during the
2020 financial year towards the proposed
development of the Mount Peake Project.
Figure 1: Mount Peake Mine Site and TIVAN® Processing Facility location.
4
TNG LIMITEDREVIEW OF OPERATIONS MEASURES TAKEN IN RESPONSE TO
THE COVID-19 PANDEMIC
In March 2020, TNG implemented a swift and proactive
company-wide response to global disruptions arising from
the onset of the COVID-19 pandemic.
The Company’s primary aim was and is to ensure
the safety of its employees, directors, consultants,
contractors, advisors and the broader community in
which it operates, and TNG implemented a range of
measures to comply with its own internal policies and
those of the Federal, State and Territory Governments.
These included the implementation of working from
home arrangements, suspension of face-to-face business
meetings and suspension of all business travel in
Australia and internationally. All field-based activity in,
and travel to, the Northern Territory was suspended until
circumstances permitted in compliance with government
travel restrictions.
TNG adopted a pragmatic approach to its continuing
operations and development strategy, in order to
effectively manage operational disruptions, continue to
progress the Mount Peake Project and preserve its
cash position.
At the end of June 2020, the Company began returning
towards normalised working hours and arrangements
for its project management team and other staff as
restrictions within Western Australia were eased by the
State Government. The Company continues to closely
monitor the COVID-19 situation.
2020 HIGHLIGHTS
The key milestones achieved during the year relating to
the advancement of the Mount Peake Project included:
• Progression of the FEED Study for the Mount Peake
Project by SMS group (”SMS”) despite delays
experienced due to the COVID-19 crisis
• Optimisation of the Mount Peake Project delivery
strategy as part of the ongoing FEED Study based
on an initial production rate of 2 million tonnes per
annum ore throughput at the Beneficiation Plant
• Submission of the Draft EIS for the Darwin TIVAN®
Processing Facility (“DPF”)
• Submission of the Mining Management Plan
(“MMP”) for the Mount Peake mine site
• Execution of a Binding Term Sheet with GUNVOR
(Singapore) for potential off-take of 40% of the
expected production of vanadium pentoxide
• Execution of a Binding Term Sheet with Vimson Group
for the life-of-mine off-take of 100% of the high-purity
iron ore products and subsequent completion of a
Binding LOM Off-Take Agreement
• Submission of an application to the Northern Territory
Department of Infrastructure, Planning and Logistics
for the direct sale of Crown Land for the proposed
land site for the DPF
• Execution of a new Project Facilitation Agreement
with the Northern Territory Government for the
Mount Peake Project
• Expansion of the TIVAN® patent and TNG360 trade
mark globally
• Extension of the mandate with KfW IPEX-Bank
GmbH (“KfW”)
• Submission of application to NAIF regarding potential
infrastructure funding for the Mount Peake Project
• Appointment of leading global titanium industry
expert, Simon Morten, to the TNG Board
• Appointment of highly accomplished industry
professionals to the mining, processing and project
development team
• Completion of a fully underwritten pro rata
non-renounceable rights issue raising approximately
$5 million
5
ANNUAL REPORT 2020REVIEW OF OPERATIONS MOUNT PEAKE
VANADIUM-TITANIUM-IRON PROJECT
PROJECT SUMMARY AND
BUSINESS MODEL
The Mount Peake Project is a world-scale strategic metals
project located 235km north-west of Alice Springs, which
was discovered by and is 100%-owned by the Company.
The Project is well located close to existing key power and
transport infrastructure including the Alice Springs-Darwin
Railway and the Stuart Highway. Mount Peake is a shallow
and flat-lying ore body with a JORC Measured, Indicated
and Inferred Resource totalling 160 million tonnes
(118 million tonnes Measured, 20 million tonnes Indicated
and 22 million tonnes Inferred), grading 0.28% V2O5,
5.3% TiO2 and 23% Fe. Mount Peake is one of the largest
undeveloped vanadium-titanium-iron projects in the world.
The Mount Peake Project has Major Project Status with
the Northern Territory Government, which supports its
development.
The Company’s strategy for the Mount Peake Project is to
develop dedicated mining and processing operations to
produce three high-value, high-purity products for export
– vanadium pentoxide (V2O5), titanium dioxide pigment
(TiO2) and iron oxide (Fe2O3) - through the application of a
world first processing technology, known as the TIVAN®
Process, which is owned exclusively by TNG.
Mount Peake is proposed to be developed across two
sites in the Northern Territory (see Figure 1):
•
•
a mine site located on granted mining tenure 235km
north-west of Alice Springs, including an open pit
mining operation and Beneficiation Plant, which will
produce a magnetite concentrate; and
a downstream TIVAN® Processing Facility to be
located at a site in the Middle Arm Industrial Precinct
on the Darwin Harbour, which will process the
magnetite concentrate into the three end products
ready for export to global markets via the
Darwin Port.
An extensive logistics chain utilising road and rail haulage
will transport the magnetite concentrate from the mine
site to the Darwin site for processing.
FEED STUDY
The Company is currently completing a FEED Study for
the Mount Peake Project with the leading German
based engineering firm SMS group, which will provide
confirmation of the final capital expenditure required
for the Beneficiation Plant and the DPF in support of
development.
The scope of work for the FEED Study has been divided
into four front-end loading (“FEL”) phases – namely,
FEL - 0, FEL - 1, FEL - 2 and FEL - 3. This covers the
process plant equipment required for the mine site
Beneficiation Plant and the DPF, including all associated
plant and equipment.
Figure 2: Darwin processing facility 3D model (SMS group)
6
TNG LIMITEDREVIEW OF OPERATIONS SMS completed FEL - 0 and FEL - 1, and has finalised
the majority of works of FEL - 2 during the year. FEL - 2
(balance of work) and FEL - 3 were restructured during late
March 2020 to address the impact of COVID-19, with the
aim of optimising the progression of critical deliverables.
The key work streams related to design and engineering
saw limited disruption and continued to be progressed;
however, the overall timing of completion of the FEED
Study is likely to be impacted. A range of supporting
FEED work streams were deferred, but recommenced
in June 2020 as restrictions started to ease in heavily
affected locations, mainly in Europe.
Following the completion of FEL - 3, SMS will provide
TNG with a fixed-price Engineering, Procurement and
Construction (“EPC”) proposal for the delivery of the
mine site Beneficiation Plant and the DPF, which will
include production quantity, production rate and product
quality guarantees.
NON-PROCESS INFRASTRUCTURE
In parallel with the FEED Study, the Company is
completing the design work for all non-process
infrastructure (“NPI”) for the Beneficiation Plant
and the DPF with several work streams already in
advanced stages, including:
• Mine site – Village Accommodation: Tendered
and shortlisted
• Mine site – Haul Road: Tendered and shortlisted
• Mine site – Borefield: Tendered and shortlisted
• Mine site – Power to Borefield: Tendered and
shortlisted
• Mine site – Camp Catering: Tendered and shortlisted
• Mine site – Communications: Costs received
• Materials Handling Logistics: Preliminary offer
• Power & Gas: Tendered and shortlisted.
MINING
TNG is also progressing a tender process for the provision
of mining services, with the receipt and evaluation of
proposals from three mining contractors. Additionally, an
owner-operator scenario for mine, load and haul of ore
and waste is being evaluated by the Company.
OPTIMISED DELIVERY STRATEGY
In September 2019, TNG announced that it had optimised
its planned execution and delivery strategy for the
Project based on a single-stage production rate of
2 million tonnes per annum (“Mtpa”) ore throughput at
the Beneficiation Plant at the Mount Peake mine site.
Previous feasibility studies were conducted at an initial
3Mtpa ore production capacity, increasing to 6Mtpa by
expanding the plant after four years of production.
The update followed the completion of detailed financial
analysis of a revised mining schedule for the Project
that focuses on two higher-grade vanadium pits within
the Resource during the first 10 years of operations.
The optimised strategy will deliver reductions in upfront
capital cost and mining and processing rates, while
maintaining robust project economics.
An Interim Financial Model has identified a reduction
in pre-production capital expenditure of A$29 million to
A$824 million, with the project expected to achieve a
pre-tax and pre-finance Internal Rate of Return (“IRR”) of
approximately 33% and a Net Present Value (“NPV”) of
approximately A$2.8 billion (at an 8% discount rate).
At a reduced mining rate, the Project’s expected operating
expenditure will also be reduced, while the mine life of
the operation will be extended to 37 years. The Company
now expects to produce 100,000 tonnes per annum
(“tpa”) of titanium dioxide pigment, 6,000tpa of vanadium
pentoxide and 500,000tpa of iron oxide.
PROJECT PERMITTING
In parallel with the FEED Study, TNG is progressing final
permitting and approvals for the Mount Peake Project,
including negotiations with the Northern Territory
Government on a site allocated to the Company in the
Middle Arm Industrial Precinct at Darwin for the DPF,
review of the MMP for the Mount Peake mine site and
finalisation of the EIS for the DPF.
The EIS is a major component for the development of
the Mount Peake Project and the Company is currently
preparing a Supplement to the Draft EIS for the
DPF following receipt of a “Direction to Prepare a
Supplement to the Company’s Draft EIS” from the
Northern Territory Environment Protection Authority
(“NT EPA”) in April 2020.
OFF-TAKE AGREEMENTS
Titanium Dioxide Pigment
The Company has a binding life-of-mine off-take and
marketing agreement with DKSH (Switzerland) for
a minimum of 75,000 tpa and up to 100% of TNG’s
planned titanium dioxide production.
Vanadium Pentoxide
The Company has a binding life-of-mine off-take
agreement in place with Woojin (Korea) for 60% of
TNG’s forecast 6,000 tpa of vanadium pentoxide
production.
TNG is in advanced negotiations with Singaporean-based
Gunvor for a life-of mine off-take agreement for the
balance of 40% of vanadium pentoxide production.
7
ANNUAL REPORT 2020REVIEW OF OPERATIONS Northern Australia Infrastructure Facility
The Company formally submitted an application to NAIF
regarding infrastructure funding for the Project during
the year and is now progressing discussions with NAIF
regarding their funding process.
Equity Funding
TNG continues to evaluate different options for equity
financing. However, the final equity requirement will only
be determined following completion of the FEED Study
and confirmation of the level of debt funding available.
CORPORATE
BOARD OF DIRECTORS UPDATE
On 7 February 2020, John Davidson resigned as a
Non-Executive Director of the Company to focus on his
own business interests.
On 17 February 2020, highly experienced former Cristal
senior executive Mr Simon Morten transitioned to the
Company’s Board as a Non-Executive Director.
Mr Morten previously served as General Manager
– Titanium Production and continues to advise in a
consulting capacity.
OTHER PROJECTS
KULGERA PROJECT (EL32369 AND EL32370
– 100% TNG)
During the period, TNG applied for Exploration Licences
(“EL”) for the Kulgera Project, a 1,231km2 vanadium
and titanium exploration project located along the
South Australian border in the Northern Territory.
MOONLIGHT PROJECT (ELA32433 AND
ELA32434 – 100% TNG)
During the period, the Company also submitted
Exploration Licence Applications (“ELA”) for a 1,594km2
vanadium exploration project at Moonlight, located 80km
west of Daly Waters in the central Northern Territory.
CAWSE EXTENDED MINE PROJECT:
NICKEL-COBALT
(80%: MESMERIC/20%: TNG)
The Company has a 20% free-carried interest in the
Cawse Extended Mining Lease. No information was
supplied by Mesmeric Enterprises during the reporting
period. The Company continues to request an update.
Iron Ore
The Company has a binding life-of-mine off-take
agreement with leading Indian mining conglomerate
VIMSON Group for 100% of the high-purity iron products
intended to be produced by the Mount Peake Project
(executed subsequent to the financial year end).
TIVAN® PROCESS PATENT AND TNG360TM
TRADE MARK
The TIVAN® Process, which is based on the extraction
and recovery of high-purity vanadium pentoxide,
was developed by TNG and its metallurgical consultants,
Perth-based METS, and is a high value asset for
the Company.
The patented process is 100%-owned by TNG and
provides for the extraction of vanadium, titanium and iron
from their ores in commercial grades and quantities.
The Company’s titanium dioxide pigment “TNG360TM”
is planned to be the first grade of TiO2 produced by the
Mount Peake Project targeting the paint and coatings
market and will highlight the uniqueness of TNG’s
TiO2 pigment, which uses a new source of feedstock,
titanomagnetite, processed via the TIVAN® Process.
TNG has secured registration of its proprietary TIVAN®
hydrometallurgical process patent and its TNG360TM
titanium dioxide pigment product trade mark in several
countries and regions, including Australia, European
Union, Madrid Protocol, Singapore, the United Kingdom
and the United States of America.
PROJECT FINANCE
The final capital expenditure requirements for Mount
Peake will be confirmed following the completion of
the FEED Study with SMS. The Company continued to
progress its project financing strategy during the financial
year, for both the targeted debt and equity components.
Debt Funding
KfW IPEX-Bank has been appointed as the Company’s
exclusive senior debt advisor and arranger to lead a
targeted US$600 million debt raise for the development
and construction of the Mount Peake Project.
KfW has been working closely with TNG and SMS to
refine and optimise the Project financial model, with the
aim of achieving an improved debt/equity structure that
is tailored to match the robust economics of the Mount
Peake Project. The final capital requirements will be
precisely determined and optimised during the ongoing
FEED Study and lender’s due diligence.
As part of the debt funding process, the Company
is also in discussions with a number of leading
investment groups with the potential for an offer of
mezzanine finance.
8
TNG LIMITEDREVIEW OF OPERATIONS As at 30 June 2020, the Company reviewed its Mineral Resources and Ore Reserves which are as follows:
MOUNT PEAKE MINERAL RESOURCES AND ORE RESERVES
MINERAL RESOURCE
The Mount Peake Mineral Resource estimate set out below (Table 1) was released in an ASX Announcement entitled
“Additional Information on the Mount Peake Resource” on 26 March 2013 in accordance with the JORC Code (2012).
Table 1 – Mount Peake Mineral Resource estimate
Category
Tonnes (Mt)
V2O5%
TiO2%
Measured
Indicated
Inferred
TOTAL
118
20
22
160
0.29
0.28
0.22
0.28
5.5
5.3
4.4
5.3
Fe%
24
22
19
23
Al2O3%
SiO2%
8.2
9.1
10.0
8.6
33
34
38
34
Note: Mineral Resource is inclusive of Ore Reserves. Tonnage and grade figures in tables have been rounded and small discrepancies
in totals may occur. The Mineral Resource is reported using a 0.1% V2O5 cut-off. TNG is not aware of any new information or data that
materially affects the Mineral Resource estimate included in the ASX Announcement dated 26 March 2013 and all material assumptions
and technical parameters underpinning the estimate provided in that announcement continue to apply.
ORE RESERVE
The Mount Peake Ore Reserve estimate (Table 2) was reported in an ASX Announcement entitled “Mount Peake Feasibility
Results” on 31 July 2015 in accordance with the JORC Code (2012).
Table 2 – Mount Peake Ore Reserve estimate
Category
Proven
Probable
TOTAL
Tonnes (Mt)
0
41.1
41.1
V2O5%
-
0.42
0.42
TiO2%
-
7.99
7.99
Fe%
-
28.0
28.0
Note: Tonnage and grade figures in tables have been rounded to 2 or 3 significant figures and as a result small discrepancies may occur
due to the effect of rounding. Ore Reserve is reported using a 15% Fe cut-off. TNG is not aware of any new information or data that
materially affects the Ore Reserve estimate reported in the ASX Announcement dated 31 July 2015 and all material assumptions and
technical parameters underpinning the assessment provided in that announcement continue to apply.
The Company engaged independent consultants to prepare Mineral Resources and Ore Reserves estimates, in the course
of doing so the consultants have:
•
•
•
•
•
•
Reviewed TNG’s assay and QAQC data;
Generated electronic models that represent the interpreted geology, mineralisation and oxidation profiles, based on
drilling and geological information supplied by TNG;
Completed statistical analysis and variography for economic elements;
Estimated grades of economic elements using ordinary kriging and completed model validity checks;
Classified the Mineral Resource and Ore Reserve estimates in accordance with the JORC Code; and
Reported the estimates and compiled supporting documentation in accordance with JORC Code guidelines.
9
ANNUAL REPORT 2020REVIEW OF OPERATIONS TENEMENT LIST
As at 8 September 2020, the Group held interests in the following tenements:
Project
Mount Peake
Tenements
EL27069, EL27070, EL27941, EL29578,
EL30483, EL31389, EL31850, ML28341,
ML29855, ML29856, ML30686, AA31105,
AA32037
Equity
100%
Cawse Extended
M24/547, M24/548, M24/549, M24/550
20% free carried to production, or can be
converted to a 2% net smelter return on ore
mined. Unicorn Pit is now excised and a wet
tonne royalty applies.
Kulgera
Moonlight
EL32369, EL32370
ELA32433, ELA32434
100%
100%
Kintore East
M16/545
2% gold return interest on production.
AA: Access Authority (NT)
Exploration Licence (WA)
E:
EL: Exploration Licence (NT)
ELA: Exploration Licence Application (NT)
M: Mining Lease (WA)
ML: Mining Lease (NT)
REGULATORY DISCLOSURES
Production Targets and Financial Information
Information in relation to Mount Peake production
targets and financial information included in this report
is extracted from an ASX Announcement dated
11 September 2019 and titled “Optimised Delivery
Strategy for Mount Peake” available on the Company’s
website on www.tngltd.com.au. The Company
confirms that all material assumptions underpinning the
production target and financial information set out in
the announcement released on 11 September 2019
continue to apply and have not materially changed.
Competent Person’s Statement
The information in this report related to the Mount Peake
Mineral Resource estimates is extracted from an ASX
Announcement dated 26 March 2013 and titled “Additional
Information on the Mount Peake Resource” in accordance
with the JORC Code (2012) and is available to view on
www.tngltd.com.au and www.asx.com.au. The Company
confirms that it is not aware of any new information or
data that materially affects the information included in
the original market announcement and that all material
assumptions and technical parameters underpinning
the Mineral Resource estimates in the relevant market
announcement continue to apply and have not materially
changed. The Company confirms that the form and
context in which the Competent Person’s findings are
represented have not been materially modified from the
original market announcement.
The information in this report related to the Mount
Peake Ore Reserve estimates is extracted from an
ASX Announcement dated 31 July 2015 and titled
“Mount Peake Feasibility Results” in accordance
with the JORC Code (2012) and is available to view on
www.tngltd.com.au and www.asx.com.au. The Company
confirms that it is not aware of any new information or
data that materially affects the information included in
the original market announcement and that all material
assumptions and technical parameters underpinning
the Ore Reserve estimates in the relevant market
announcement continue to apply and have not materially
changed. The Company confirms that the form and
context in which the Competent Person’s findings are
represented have not been materially modified from the
original market announcement.
The information in this report related to the Kulgera
Project Mineral Resource estimates is extracted from
an ASX Announcement dated 8 July 2020 and titled
“TNG expands tenure with existing JORC resource” in
accordance with the JORC Code (2012) and is available
to view on www.tngltd.com.au and www.asx.com.au.
The Company confirms that it is not aware of any new
information or data that materially affects the information
included in the original market announcement and
that all material assumptions and technical parameters
underpinning the Mineral Resource estimates in the
relevant market announcement continue to apply and
have not materially changed. The Company confirms that
the form and context in which the Competent Person’s
findings are represented have not been materially
modified from the original market announcement.
10
TNG LIMITEDREVIEW OF OPERATIONS DIVIDENDS
No dividends were paid during the year and the Directors
have not declared a dividend and do not recommend
payment of a dividend.
EVENTS SUBSEQUENT TO
REPORTING DATE
Subsequent to the end of the financial year, the Company
has continued to progress engineering, permitting and
approvals, and planning works related to the proposed
development of the Mount Peake Project.
As announced on 27 July 2020, the Company executed a
Binding Life-of-Mine Off-take Agreement with the leading
Indian mining conglomerate VIMSON Group for 100% of
the high-purity iron products planned to be produced by
the Mount Peake Project.
On 1 September, the Company announced the
appointment of Ms Paula Raffo as Joint Company
Secretary. Ms Raffo joined TNG in April 2019 as Investor
and Public Relations Executive and will share the
Company Secretary duties with Mr Jason Giltay, TNG’s
General Manager Commercial & Company Secretary.
In the opinion of the Directors, there are no other matters
that have arisen since the end of the financial year that
may significantly affect:
•
•
•
the operations of the Group in future financial years;
the results of those operations in future financial
years; or
the Group’s state of affairs in future financial years.
The Directors of TNG Limited (“TNG” or “the Company”)
present their report on the consolidated entity consisting
of the Company and the entities it controlled at the end
of, or during, the financial year ended 30 June 2020
(hereafter referred to as the “Group”).
DIRECTORS
The names of each person who has been a Director of
the Company at any time during or since the end of the
financial year, unless noted otherwise, are as follows:
• Mr Paul Burton
• Mr John Elkington
• Mr Greg Durack
• Mr Simon Morten (appointed 17 February 2020)
• Mr John Davidson (resigned 7 February 2020)
PRINCIPAL ACTIVITIES
The principal activities of the Group during the course
of the financial year were the continued evaluation and
development planning for the Group’s Mount Peake
Project. There were no significant changes in the nature
of those activities of the Group during the year.
REVIEW & RESULTS OF OPERATIONS
A review of the operations during the financial year is set
out on pages 4 to 10.
The operating loss of the Group after income tax for
the year was $2.885 million (2019: loss $3.090 million).
The Group capitalised $16.397 million (2019: $9.867
million) on Exploration and Evaluation for the year.
As at 30 June 2020, the Group held $8.616 million
(2019: $20.114 million) in cash.
SIGNIFICANT CHANGES IN THE STATE
OF AFFAIRS
Significant changes in the state of affairs of the Group
during the financial year are detailed in the Review
of Operations on pages 4 to 10. In the opinion of the
Directors, there were no other significant changes in
the state of affairs of the Group that occurred during the
financial year under review not otherwise disclosed in
this Annual Report.
11
ANNUAL REPORT 2020DIRECTORS’ REPORT LIKELY DEVELOPMENTS
INFORMATION ON DIRECTORS
The Group will continue to focus on the evaluation, design
and engineering of the Mount Peake Project, with a focus
on the following milestones for the 2021 financial year:
MR PAUL BURTON - MANAGING DIRECTOR
AND CEO
completing the Front-End Engineering and Design
Study and associated design work;
Experience, Qualifications &
Special Responsibilities
Mr Burton is an experienced mining executive, having
worked in the resources sector throughout Australia and
overseas for the last 30 years.
Mr Burton has been involved in the discovery and
development of the Company’s main projects, including
the flagship Project Mount Peake and all projects spun
out into Todd River Resources Ltd. Previous career
appointments include senior and executive roles at
Anglo American, De Beers, Normandy Mining Ltd and
Minotaur Exploration Ltd.
Mr Burton holds a Bachelor of Science Honours degree
(BSc Hons) in Geology, and a Master of Science (MSc)
degree in Mineral Exploration and Mining from
McGill University in Canada. He is a Graduate of the
Australian Institute of Company Directors, a Fellow of
the Association of Applied Exploration Geochemists,
a member of both the Australian and Canadian Institutes
of Mining and Metallurgy, and a Member of the British
Institute of Directors.
Mr Burton was appointed as a Director of the Company
on 11 August 2008.
Other Listed Company Directorships
Mr Burton was a director of Todd River Resources Limited
from June 2014 to January 2019.
Director’s Interest in Securities
(as at the date of this report)
7,661,110 ordinary shares
•
•
•
•
securing all required regulatory permits for
development;
progressing the project financing package for
development; and
progressing towards a Final Investment Decision.
The material business risks faced by the Group that are
likely to have an effect on its financial prospects, and how
the Group manages these risks, are:
•
Future capital needs – the Group does not currently
generate cash from its operations. The Group will
require further funding in order to meet its corporate
expenses, to continue its evaluation, design and
engineering activities for the Mount Peake Project
and to finance the development and construction
of the Mount Peake Project. There is no assurance
that the Group will be successful in raising additional
capital on acceptable terms in the future, including to
fully finance and develop TNG’s projects.
• Exploration and development risks – whilst the
Group has already discovered Vanadium-Titanium-
Iron resources at the Mount Peake Project, there
is a risk that its mineral deposits may not be
commercially viable subject to factors outside of
the Group’s control including development costs,
changes in mineralisation, consistency and reliability
of ore grades and commodity prices. The Group
employs geologists, technical specialists and external
consultants where appropriate to address these risks.
• Commodity price and exchange rate risks – as a
Group which is focused on the development of its
Vanadium-Titanium-Iron project, the Group is exposed
to movements in these commodity prices, which
are quoted in foreign currency. The Group monitors
historical and forecast pricing for these commodities
from a range of sources in order to inform its planning
and decision making.
• Coronavirus (COVID-19) – the outbreak of the
coronavirus disease (COVID-19) is impacting global
economic markets and it may result in delays in
development, financing and to the government
approval processes relating to the Mount Peake
Project. The Group is monitoring the situation closely
and has considered the impact of COVID-19 on
the Group’s business and financial performance.
However, the situation is continually evolving, and the
consequences are therefore inevitably uncertain.
1 2
TNG LIMITEDDIRECTORS’ REPORT Mr Durack is a qualified Chemist (B. App. Sc. in App.
Chem. from WAIT, now Curtin University), but in a
practical sense worked as a Metallurgist in operations.
He is a member of the Australian Institute of Mining
and Metallurgy.
Mr Durack was appointed as a Director of the Company
on 31 May 2018.
Other Listed Company Directorships
Mr Durack has held no other directorships of publicly
listed companies during the last three years.
Director’s Interest in Securities
(as at the date of this report)
459,496 ordinary shares
MR SIMON MORTEN - INDEPENDENT
NON-EXECUTIVE DIRECTOR
Experience, Qualifications &
Special Responsibilities
Mr Morten has 30 years of experience in the titanium
pigment industry including extensive expertise in pigment
manufacture and processing. He spent most of his career
with Cristal, which was recently acquired by Tronox, one
of the world’s leading vertically integrated producers of
high-quality titanium products and zircon, with a diverse
global footprint.
Mr Morten holds a Bachelor Degree in Applied Science
(Chemistry) from the University of Central Queensland,
is a graduate of the Australian Institute of Company
Directors, and has served on various Boards that
controlled Cristal’s interests in Australia, the UK and
China.
Mr Morten was appointed as a Director of the Company
on 17 February 2020.
Other Listed Company Directorships
Mr Morten has held no other directorships of publicly
listed companies during the last three years.
Director’s Interest in Securities
(as at the date of this report)
148,148 ordinary shares
MR JOHN ELKINGTON - CHAIRMAN AND
NON-EXECUTIVE DIRECTOR
Experience, Qualifications &
Special Responsibilities
Mr Elkington is a highly experienced Australian mining
executive and company director. His other roles include
operating as an independent mining consultant providing
company management, strategic cash-flow modelling and
financial analysis, as well as project and risk management
advice for consulting, mining and development companies
in the mining industry.
Mr Elkington holds a Master of Science degree (Mineral
Economics) from the Western Australian School of
Mines, Curtin University. He is a Fellow of the Australian
Institute of Company Directors (FAICD) and a Fellow
of the Australasian Institute of Mining and Metallurgy
(FAusIMM).
Mr Elkington was appointed as a Director of the Company
on 1 February 2019.
Other Listed Company Directorships
Mr Elkington has held no other directorships of publicly
listed companies during the last three years.
It is noted that Mr Elkington was a Director and Chair of
the Mid West Ports Authority, a Government enterprise,
from February 2017 to February 2020.
Director’s Interest in Securities
(as at the date of this report)
Nil
MR GREG DURACK - INDEPENDENT
NON-EXECUTIVE DIRECTOR
Experience, Qualifications &
Special Responsibilities
Mr Durack is a highly experienced metallurgist and
mining executive with more than 30 years’ global mining
experience, bringing a vast depth of experience in project
evaluation, feasibility studies, project development and
mining operations to the TNG Board as the Company
advances key financing negotiations for its Mount
Peake Project and works towards commencing project
development.
Mr Durack has a distinguished career spanning multiple
commodities and projects. His consulting company was
the Study Manager for the Definitive Feasibility Study
for Pilbara Minerals Limited (ASX:PLS) Pilgangoora
Lithium-Tantalum Project in Western Australia’s Pilbara
region, and was also responsible for the metallurgical test
work program and process design for Stages 1 and 2, and
part of the process plant commissioning team providing
technical input.
1 3
ANNUAL REPORT 2020DIRECTORS’ REPORT BOARD MEETINGS
The number of Board meetings held during the financial
year, and the attendance of the Directors at each meeting,
were as follows:
Director
Board Meetings
Paul Burton
John Elkington
Greg Durack
Simon Morten 1
John Davidson 2
A
12
12
11
5
5
B
12
12
12
5
6
A - Number of meetings attended
B - Number of meetings held during the time the director held
office during the year
1 Simon Morten was appointed as a Director on 17 February 2020
2 John Davidson retired as a Director on 7 February 2020
Due to the Company’s size and level of operations, on
30 May 2019 the Board resolved to suspend the Audit
Committee and the Remuneration Committee and have
the Board assume these functions.
MR JOHN DAVIDSON - INDEPENDENT
NON-EXECUTIVE DIRECTOR (RETIRED)
Experience, Qualifications &
Special Responsibilities
Mr Davidson is a highly-regarded renewable energy
executive with more than 30 years’ experience
leading major strategic business initiatives, business
transformation and capital raising initiatives in a diverse
range of industries, particularly the renewable energy and
technology sectors. He was the founder and Managing
Director of Energy Made Clean, a leading Perth-based
renewable energy company providing off-grid power and
utility-scale solutions, which was acquired by ASX-listed
Carnegie Clean Energy Limited in 2016.
Mr Davidson has worked in strategic collaboration with
TNG since 2015 on the promotion, development and
growth of Australia’s emerging Vanadium Redox Flow
Battery (“VRB”) market, which will help TNG to progress
its strategy for full vertical integration of the vanadium
supply chain.
Mr Davidson manages a Kimberly based renewable
energy private company and is on the Executive
Committee of two not-for-profit organisations.
Mr Davidson was appointed as a Director of the Company
on 2 February 2017 and retired on 7 February 2020.
Other Listed Company Directorships
Mr Davidson was an executive director of Carnegie Clean
Energy Limited from February 2017 to June 2018.
COMPANY SECRETARY
MR JASON GILTAY
Experience, Qualifications &
Special Responsibilities
Mr Giltay is a senior finance executive with more than
19 years’ experience in the areas of corporate finance,
commercial management and business strategy. He
has extensive experience in the resources industry,
having consulted to and worked for a range of resources
companies engaged in exploration, project development,
operations and mining services. He holds a Bachelor of
Commerce and Postgraduate Diploma in HRM from the
University of Western Australia.
Mr Giltay joined the Company in July 2018 as General
Manager - Commercial, and was appointed Company
Secretary on 21 December 2018.
1 4
TNG LIMITEDDIRECTORS’ REPORT REMUNERATION REPORT (AUDITED)
3. EXECUTIVE REMUNERATION
This Remuneration Report, for the year ended
30 June 2020, which has been audited, details the
remuneration arrangements for the Key Management
Personnel (“KMP”) of the Company in accordance
with the requirements of the Corporations Act 2001
and its regulations.
1. INTRODUCTION
The Remuneration Report details the remuneration
arrangements for KMP who are defined as having
the authority and responsibility for planning, directing
and controlling the major activities of the Group, and
include both Executives and Non-Executive Directors
for the purpose of this report. The KMP covered in this
Remuneration Report are:
Executives
• Mr Paul Burton - Managing Director & CEO
(appointed a Director on 11 August 2008)
• Mr Jason Giltay - General Manager Commercial
(appointed 8 July 2018) & Company Secretary
(appointed 21 December 2018)
Non-Executive Directors
• Mr John Elkington (appointed 1 February 2019)
• Mr Greg Durack (appointed 31 May 2018)
• Mr Simon Morten (appointed 17 February 2020)
• Mr John Davidson (appointed 2 February 2017,
resigned 7 February 2020)
2. REMUNERATION GOVERNANCE
The Board is directly responsible for the review of
remuneration packages and policies applicable to
Senior Executives and Directors as well as oversight
of incentive structures, superannuation entitlements
and performance evaluation for all Directors.
ARRANGEMENTS AND PRINCIPLES
3.1 Remuneration principles and strategy
The Company’s remuneration policy is designed to
align the interests of the KMP with the interests of
shareholders, cognisant that the Company’s success
is driven by its ability to recruit, retain and motivate
high-quality personnel and Directors. The Company’s
remuneration policy is designed as follows:
• Structure remuneration practices to align with the
Company’s wider objectives and strategies.
• Provide a fixed remuneration component and, where
appropriate, offer specific short-term (cash bonuses)
and long-term (equity schemes) incentives that align
with the Company’s performance.
• Establish specific remuneration by taking into
account the stage of the Company’s development,
market conditions and comparable salary levels
for companies of a similar size and stage of
development, and operating in a similar sector.
• Align remuneration with role, responsibilities and
commitment.
• Utilise external independent advice on remuneration
on an as required basis.
The Board believes that this remuneration policy is
appropriate given the stage of development of the
Company and is appropriate in aligning personnel
performance with shareholder and business objectives.
The Board believes this policy has been effective in
attracting and retaining appropriately qualified and
experienced personnel to effectively manage the
Company’s activities and progress the Company’s
strategies.
3.2 Approach to setting remuneration
In FY2020, the executive remuneration framework
consisted of fixed and variable remuneration as described
below.
3.2.1 Fixed remuneration
Fixed remuneration consists of base salary, as well
as employer contributions to superannuation funds.
Remuneration levels are reviewed annually by the Board
through a process that considers individual performance,
the market and overall performance of the Company.
A senior executive’s remuneration is also reviewed
on promotion.
1 5
ANNUAL REPORT 2020DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED)
(continued)
3.2.2 Variable remuneration
Variable remuneration consists of performance linked
remuneration including short and long-term incentives
designed to incentivise and reward Executives for
meeting or exceeding specific objectives or as recognition
for strong individual performance.
Short-term incentives
Short-term incentives are provided in the form of cash
bonuses and/or salary increases, as set out in individual
employment agreements or as determined by the Board.
They are used to encourage and reward exceptional
performance in the realisation of strategic outcomes and
growth in shareholders’ wealth.
The Company (through the Board) has the discretion to
grant to the Executives additional incentives from time
to time in connection with the achievement of significant
milestones for the Company or otherwise in recognition
of services to the Company.
Options are granted for no consideration, vest on
grant date and do not carry voting rights or
dividend entitlements. Options are valued using
the Black-Scholes methodology.
No options were granted in FY2020.
• Performance Rights Plan (Approved by shareholders
at 2018 AGM)
TNG established the Performance Rights Plan to
attract and retain talented key personnel required for
the successful delivery of the Mount Peake Project,
and to appropriately incentivise its senior leadership
team to drive company performance for the benefit of
TNG and all shareholders.
The TNG Performance Rights Plan contemplates
the issue to Eligible Executives (being actual and
prospective full-time, part-time or casual employees,
executive Directors (excluding Non-Executive
Directors) and consultants) of rights which carry the
entitlement to be issued Shares on satisfaction of
performance conditions determined by the Board
(“Performance Rights”).
No Performance Rights were granted in FY2020.
Long-term incentives
• Non-Executive Director (NED) Rights Plan (Approved
Long term incentives comprise of shares, share options
and performance rights which are granted from time
to time to attract and retain talented and high calibre
personnel who are able to deliver the Company’s
business objectives. Incentive securities are also used
to ensure remuneration is competitive in relation to the
broader market and is linked to role, experience and
performance, and to ensure remuneration is compatible
with the Company’s phase of development and cash
position.
There is no policy currently in place for the KMP to limit
their exposure to risk in relation to the shares held and
share options granted as part of their remuneration.
• Option Plans (Approved by shareholders at
2016 AGM)
Under the TNG Employee and Non-Executive
Director and Consultant Option Plans, Eligible
Participants (being an Executive Director, a full
or part time employee, a Non-Executive Director,
the Company Secretary, or a consultant or contractor
of the Company) may be granted options as part
of their remuneration or fees. Each option entitles
the holder to subscribe for and be allotted one
TNG share (“Share”) at an exercise price per option to
be determined by the Board at the time it resolves to
make offers of options, having regard to such matters
as the Board considers appropriate (but which
exercise price will not be less than the market value
of a Share at that time).
by the Board May 2020)
The NED Rights Plan was established to attract and
retain talented Non-Executive Directors and to align
the interests of NEDs with those of Shareholders
in order to increase Shareholder value by enabling
Eligible NEDs to share in the future growth and
profitability of the Company.
The NED Rights Plan contemplates the issue to
Eligible NEDs of rights which carry the entitlement to
be issued Shares on satisfaction of vesting conditions
determined by the Board (“NED Rights”).
While some corporate governance bodies suggest
that NED remuneration should not be linked to
performance, in the circumstances of TNG and its
current stage of development, the Board considers
that it is appropriate to adequately incentivise and
reward NEDs (including as an attraction and retention
tool) based on performance and achievement of key
milestones. The Board is of the view that having
NED Rights vesting linked to performance conditions
will not compromise the Board’s objectivity and
independence and all decisions will continue to
be made solely in the interests of TNG and all
shareholders.
The key terms of the NED Rights Plan are the same
as the key terms of the Performance Rights Plan,
except that NED Rights may only be issued to
Non-Executive Directors.
No NED Rights were granted in FY2020.
1 6
TNG LIMITEDDIRECTORS’ REPORT REMUNERATION REPORT (AUDITED)
(continued)
• Company Share Plans
The TNG Employee Share Plan and TNG
Non-Executive Director and Consultant Share Plan
(together referred to as the “Company Share Plans”)
allow certain Group employees to acquire shares
of the Company (“Plan Shares”). Employees have
been given a limited recourse 5-year interest free loan
in which to acquire the Plan Shares.
The loan has not been recognised in the statement of
financial position, as the Company only has recourse
to the value of the shares. The arrangement is
accounted for as an in-substance option over ordinary
shares. The grant date fair value of the shares granted
to employees is recognised as an employee expense
with a corresponding increase in equity on grant date
on which the employees become unconditionally
entitled to the shares.
The fair value of the shares issued pursuant to the
Company Share Plans are measured using the
Black Scholes pricing model, taking into account the
terms and conditions upon which the in-substance
options were granted. The amount recognised as an
expense is adjusted to reflect the actual number of
shares that vest.
No Plan Shares were granted in FY2020.
3.3 Executive contracts
Paul Burton - Managing Director & CEO
•
Term of Agreement – October 2014 until terminated
by either party.
Jason Giltay – General Manager Commercial and
Company Secretary
•
Term of Agreement – July 2018 until terminated
by either party (Mr Giltay was appointed General
Manager Commercial in July 2018 and appointed
Company Secretary on 21 December 2018).
• Salary - $245,000 per annum excluding super plus
any reasonable expense incurred
• Early Termination - 3 months’ written notice by
either party.
3.4 Non-Executive Director remuneration
With respect to the remuneration of Non-Executive
Directors:
•
The full Board determines the remuneration of the
Non-Executive Directors.
• Non-Executive Director remuneration is reviewed
annually, based on market practice, duties and
accountability.
•
•
The maximum aggregate amount of Directors fees is
subject to shareholder approval at a General Meeting.
To align Directors’ interests with shareholder
interests, the Directors are encouraged to hold shares
in the Company and may receive Company options or
rights if approved by shareholders.
Total remuneration for all Non-Executive Directors,
approved by shareholders at the 2015 General Meeting,
is not to exceed $500,000 per annum. The current fee
structure is as follows:
• Base fee for the Chairperson is $120,000 per annum
plus superannuation.
• Salary - $476,100 per annum excluding super plus any
reasonable expense incurred.
• Base fee for the other Non-Executive Directors is
$60,000 per annum plus superannuation.
Non-Executive Directors are not provided with retirement
benefits apart from statutory superannuation.
•
Incentive Bonus – An incentive bonus based on
market capitalisation (MCIB) equivalent to 20% of
base salary, payable when the market capitalisation
of TNG reaches trigger points set by the Board:
$200 million; $300 million; $400 million; $500 million;
and any additional trigger points as agreed in writing
between TNG and Mr Burton from time to time or at
the Board’s discretion.
The incentive will be payable in cash or (subject to
shareholder approval) an equivalent amount in TNG
shares. If the market capitalisation of TNG remains
above a trigger point for a continuous period of at
least three months, then base salary will increase
(with effect from the end of the three-month period)
by the amount of the relevant MCIB payment.
• Early termination – The Company to give 6 months’
written notice or make a payment of 6 months’ salary
in lieu. The employee to provide 6 months’ written
notice. This applies to any reason other than gross
misconduct.
1 7
ANNUAL REPORT 2020DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (continued)
4. CONSEQUENCES OF PERFORMANCE ON SHAREHOLDER WEALTH
In considering the consolidated entity’s performance on shareholder wealth, the Board notes that at this stage of
development, as a company pre-planning for development of its primary asset the Mount Peake Project and with no
operational assets, there is no relevant direct link between the Company’s financial performance and earnings, and the
advancement of shareholder wealth.
Profit/(loss) attributable to
owners of the Company
Dividends paid
Share price at 30 June
Change in share price
Return on capital employed
2020
2019
2018
2017
2016
(2,885,329)
(3,089,785)
(3,329,120)
(4,436,184)
(7,139,305)
-
$0.06
(38%)
(4%)
-
$0.10
(25%)
(3%)
-
$0.13
(8%)
(3%)
-
$0.14
8%
(4%)
-
$0.13
(16%)
(7%)
5. DIRECTORS’ AND EXECUTIVE OFFICERS’ REMUNERATION
Details of the nature and amount of each major element of remuneration of each director of the Company, and other key
management personnel of the Group are detailed below.
5.1 Details of Remuneration
5.1.1 Details of Base Remuneration for the years ended 30 June 2020 and 30 June 2019
Salary &
Fees 1
FY2020
Super-
annuation
$
$
Total
$
Salary &
Fees 1
FY2019
Super-
annuation
$
$
461,451
245,000
-
43,838
23,275
-
505,289
268,275
-
163,337
10,830
174,167
53,897
31,506
33,012
-
5,120
1,817
3,136
-
59,017
33,323
36,148
-
476,100
215,115
49,490
64,250
54,795
-
54,795
100,553
Total
$
521,330
235,551
49,490
69,000
60,000
-
45,230
20,436
-
4,750
5,205
-
5,205
60,000
-
100,553
988,203
88,016
1,076,219
1,015,098
80,826
1,095,924
Executives
Paul Burton
Jason Giltay 2
Simon Robertson 3
Directors
John Elkington 1, 4
Greg Durack
Simon Morten 1, 5
John Davidson 6
Rex Turkington 1, 7
Total
1 8
TNG LIMITEDDIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (continued)
5.1.2 Details of Remuneration for the year ended 30 June 2020
Base
Remuneration
Salary, Fees
& Super 1
$
505,289
268,275
174,167
59,017
33,323
36,148
Short-Term
Long-Term
Bonus
$
95,220
25,000
-
-
-
-
Share-based
payments
$
-
-
-
-
-
-
-
Executives
Paul Burton
Jason Giltay 2
Directors
John Elkington 1, 4
Greg Durack
Simon Morten 1, 5
John Davidson 6
Total
1,076,219
120,220
5.1.3 Details of Total Remuneration for the year ended 30 June 2019
Base
Remuneration
Salary, Fees
& Super 1
$
521,330
235,551
49,490
69,000
60,000
60,000
100,553
1,095,924
Short-Term
Long-Term
Bonus
Share-based
payments
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
Executives
Paul Burton
Jason Giltay 2
Simon Robertson 3
Directors
John Elkington 1, 4
Greg Durack
John Davidson 6
Rex Turkington 1, 7
Total
Proportion of
remuneration
performance
related
%
16%
9%
-
-
-
-
Proportion of
remuneration
performance
related
%
-
-
-
-
-
-
-
-
Total 8
$
600,509
293,275
174,167
59,017
33,323
36,148
1,196,439
Total 8
$
521,330
235,551
49,490
69,000
60,000
60,000
100,553
1,095,924
1 Includes consulting fees, refer to Note 26 (c)
2 Appointed General Manager Commercial in July 2018, and appointed as Company Secretary on 21 December 2018
3 Resigned as Company Secretary on 21 December 2018
4 Appointed as a Director on 1 February 2019
5 Appointed as a Director on 17 February 2020
6 Retired as a Director on 7 February 2020
7 Retired as a Director on 31 March 2019
8 Accrued annual leave and long service leave as noted in table 5.1.4 are not included in the total above, but forms
part of the total remuneration for the year.
1 9
ANNUAL REPORT 2020DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (continued)
5.1.4 Details of Accrued Leave for the year ended 30 June 2020 and 30 June 2019
FY2020
FY2019
Annual
Leave 1
Long Service
Leave 2
$
$
Total
$
Annual
Leave 1
Long Service
Leave 2
$
$
Total
$
33,108
4,711
37,819
79,350
112,458
-
4,711
79,350
117,169
35,570
12,830
48,400
79,350
114,920
-
79,350
12,830
127,750
Executives
Paul Burton 1, 2
Jason Giltay 1
Total
1 Includes accrued annual leave not taken over and above base salary detailed within the service contracts item 3.3.
2 Includes accrued long service leave not taken over and above base salary detailed within the service contracts item 3.
5.1.5 Analysis of bonuses included in the remuneration
Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to each director of the
Company, and other key management personnel are detailed below.
Paul Burton 1
Jason Giltay
Included in remuneration
$ (A)
95,220
25,000
Short-term incentive bonus
% vested in year
% forfeited in year
100%
100%
-
-
(A) Amounts included in remuneration for the financial year were approved by the Board of Directors and represent the amount related to
the financial year based on achievement of personal goals and satisfaction of specified criteria.
1 Mr Paul Burton agreed to use the proceeds from his bonus to cover the costs of the purchase of 2,000,000 Plan Shares as a way to
return the investment to the Company.
5.2 Equity instruments
All performance rights and options refer to performance rights and options over ordinary shares of TNG Limited, which are
exercisable on a one-for-one basis under the respective long-term incentive plans.
5.2.1 Rights and options over equity instruments granted as compensation
During the period no rights or options were granted as remuneration to the KMP.
5.2.2 Exercise of options granted as compensation
During the period no options were exercised by the KMP.
2 0
TNG LIMITEDDIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (continued)
5.2.3 Details of equity incentives affecting current and future remuneration
Details of vesting profiles of the options held by KMP of the Company, which expired on 13 December 2019, are detailed
below.
Executives
Paul Burton
Jason Giltay
Non-Executive Directors
John Elkington
Greg Durack
Simon Morten
Instrument
Grant date
% vested in
year
% forfeited
in year
Financial
years which
grant vest
Expiry date
Options
4,000,000
13-Dec-16
0%
100%
1-Jul-16
13-Dec-19
-
-
-
-
-
-
Options
1,000,000
29-Jun-18
-
-
-
-
-
0%
-
0%
-
-
-
-
-
-
100%
1-Jul-18
13-Dec-19
-
-
-
100%
1-Jul-16
13-Dec-19
John Davidson 1
Options
1,000,000
6-Feb-17
1 Retired as a Director on 7 February 2020
5.2.4 Options over equity instruments
Held at
1 July 2019
Granted as
remuneration
Expired
Exercised
Purchased
Other
Held at
30 June
2020
Vested and
exercisable
at 30 June
2020
Executives
Paul Burton
4,000,000
Jason Giltay
Non-Executive
Directors
John Elkington
-
-
Greg Durack
1,000,000
Simon Morten
-
John Davidson 1
1,000,000
1 Retired as a Director on 7 February 2020
-
-
-
-
-
-
4,000,000
-
-
1,000,000
-
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5.2.5 Modification of terms of equity-settled share-based payment transactions
On 26 November 2014, the Company granted 4,000,000 Plan Shares to Mr Paul Burton at a purchase price of $0.143 with
repayment date on 27 November 2019, being five years from the date of issue of the Plan Shares, unless earlier repayment
was otherwise required under the terms of the TNG Employee Share Plan.
At the 2019 Annual General Meeting held on 18 November 2019, shareholder approval under section 208(1) of the
Corporations Act 2001 was sought and received to extend the Repayment Date of Mr Paul Burton’s Plan Shares by
four years to 27 November 2023.
Apart from the terms of the Plan Shares abovementioned, no terms of other equity-settled share-based payment
transactions (including shares or options granted as remuneration to a key management person) have been altered or
modified by the issuing entity during the reporting period or the prior period.
2 1
ANNUAL REPORT 2020DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (continued)
6. MOVEMENTS IN SHARES
The movement during the reporting period in the number of ordinary shares in TNG Limited held, directly, indirectly or
beneficially, by each KMP, including their related parties, is as follows:
Held at
1 July 2019
Purchases
Received on
exercise of
options
Sales
Held at
30 June 2020
7,461,110
200,000
-
-
437,615
-
633,480
-
-
21,881
148,148
31,674
-
-
-
-
-
-
-
-
-
-
-
-
7,661,110
-
-
459,496
148,148
665,154
Executives
Paul Burton
Jason Giltay
Non-Executive Directors
John Elkington
Greg Durack
Simon Morten
John Davidson 1
1 Holding at date of retirement
7. OTHER TRANSACTIONS AND BALANCES WITH KEY MANAGEMENT PERSONNEL
AND THEIR RELATED PARTIES
Key management personnel, or their related parties, may hold positions in other entities that result in them having control
or joint control over the financial or operating policies of those entities.
Some of these entities transacted with the Company during the year. The terms and conditions of the transactions with
Key Management Personnel and their related parties were no more favourable than those available, or which might
reasonably be expected to be available, on similar transactions to non-Key Management Personnel related entities on an
arm’s length basis.
The audited remuneration report ends here.
2 2
TNG LIMITEDDIRECTORS’ REPORT
ENVIRONMENTAL REGULATION
The Group holds various mineral licences to regulate its
activities in Australia. These licences include conditions
and regulation with respect to the management and
rehabilitation of areas disturbed during the course of its
activities. However, the Board believes that the Group
has adequate systems in place for the management of
its environmental requirements and is not aware of any
breach of those environmental requirements as they apply
to the Group.
PROCEEDINGS ON BEHALF OF
THE GROUP
No person has applied for leave under section 237 of
the Corporations Act 2001 of Court to bring proceedings
on behalf of the Group or intervened in any proceeding
to which the Group is a party for the purpose of taking
responsibility on behalf of the Group for all or any part of
those proceedings. The Group was not a party to any such
proceedings under section 237 of the Corporations Act
2001 during the financial year.
CLIMATE CHANGE
NON-AUDIT SERVICES
The TNG Board is aware of the risks related to climate
change and committed to manage these risks in its
operational activities. The Group is also committed to
assist efforts to combat climate change by promoting
energy efficiency and reducing emissions in its business
activities.
INDEMNIFICATION OF DIRECTORS
AND OFFICERS
The Company has agreed to indemnify current and
former Directors and officers against all liabilities to
another person (other than the Company or a related body
corporate), including legal expenses that may arise from
their position as Directors and Officers of the Company
and its controlled entities, except where the liability
arises out of conduct involving a lack of good faith or for a
pecuniary penalty under section 1317G or a compensation
order under section 1317H of the Corporations Act 2001.
INSURANCE PREMIUMS FOR
DIRECTORS AND OFFICERS
During and since the end of the financial year, the
Company has paid premiums to insure each of the
Directors and Officers 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 $26,663
(2019: $22,875) exclusive of GST.
During the year, KPMG provided non-audit services.
The directors are satisfied that the provision of non-audit
services is compatible with the general standard of
independence for auditors imposed by the Corporations
Act 2001. The nature and scope of each type of non-audit
service provided means that auditor independence was
not compromised. Refer to Note 7.
LEAD AUDITOR’S INDEPENDENCE
DECLARATION
The Lead Auditor’s Independence Declaration as
required under section 307C of the Corporations Act 2001
immediately follows this Directors’ Report and forms
part of the Directors’ Report for the financial year ended
30 June 2020.
ROUNDING
The Group is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument
2016/191 and in accordance with that instrument,
amounts in the Consolidated Statements and Directors’
Report have been rounded off to the nearest thousand
dollars, unless otherwise stated.
This Directors’ Report is made in accordance with a
resolution of the Directors:
Paul Burton
Managing Director & CEO
23 September 2020
2 3
ANNUAL REPORT 2020DIRECTORS’ REPORT Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of TNG Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of TNG Limited for the
financial year ended 30 June 2020 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Jane Bailey
Partner
Perth
23 September 2020
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
2 4
TNG LIMITEDLEAD AUDITOR’S INDEPENDENCE DECLARATION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2020
Other Income
Total Income
Corporate and administration expenses
Employment expenses
Depreciation and amortisation expenses
Loss from continuing operations
Finance income
Finance costs
Net finance income
Loss before tax
Income tax expense
Note
6(a)
6(b)
6(c)
6(a)
6(a)
2020
$’000
2019
$’000
149
149
(1,574)
(1,490)
(188)
(3,103)
236
(18)
218
410
410
(1,969)
(1,748)
(50)
(3,357)
267
-
267
(2,885)
(3,090)
8
-
-
Loss for the year attributable to the owners of the Company
(2,885)
(3,090)
Other comprehensive income
Items that will not be reclassified to profit or loss
Equity Investments at FVOCI-net change in fair value
13
Tax effect on other comprehensive income (loss)
Other comprehensive loss for the year
Total comprehensive loss for the year attributable to
the owners of the company
(127)
-
(127)
(392)
-
(392)
(3,012)
(3,482)
Loss per share (cents per share)
Basic (loss) per share (cents)
Diluted (loss) per share (cents)
9
9
(0.26)
(0.26)
(0.33)
(0.33)
The Consolidated Statement of Profit or Loss and other Comprehensive Income is to be read in conjunction with the notes
to the financial statements.
2 5
ANNUAL REPORT 2020FINANCIAL REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
Note
2020
$’000
2019
$’000
Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Other Investments
Current assets
Other receivables
Plant and equipment
Right-of-use-asset
Exploration and evaluation expenditure
Non-current assets
Total assets
Liabilities
Trade and other payables
Provisions
Lease Liability
Current liabilities
Lease liability
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
11
12
13
14
15
16
17
18
18
19
19
8,616
20,114
258
358
192
374
60
319
9,424
20,867
67
60
350
46,288
46,765
-
73
-
32,076
32,149
56,189
53,016
2,282
464
146
2,892
215
215
1,314
329
-
1,643
-
-
3,107
1,643
53,082
51,373
102,595
(3,356)
(46,157)
53,082
97,874
(3,229)
(43,272)
51,373
The Consolidated Statement of Financial Position is to be read in conjunction with the notes to the financial statements.
2 6
TNG LIMITEDFINANCIAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2020
Cash flows from operating activities
Cash receipts from customers
Cash payments in the course of operations
Interest received
Interest paid
Note
2020
$’000
2019
$’000
116
652
(3,269)
(3,669)
248
(18)
261
-
Net cash used in operating activities
24
(2,923)
(2,756)
Cash flows from investing activities
Payments for plant and equipment
Payments for exploration and evaluation
expenditure
Research and development rebate
Security deposits refunded/(paid)
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue costs
Repayments of lease liability
Net cash from financing activities
(23)
(55)
(15,298)
2,185
(3)
(13,139)
4,980
(259)
(157)
4,564
(9,642)
1,551
(93)
(8,239)
25,525
(145)
-
25,380
14,385
5,729
Net increase/(decrease) in cash and cash equivalents
Cash at the beginning of the financial year
(11,498)
20,114
Cash and cash equivalents at the end of the financial year
11
8,616
20,114
The Consolidated Statement of Cash Flows is to be read in conjunction with the notes to the financial statements
2 7
ANNUAL REPORT 2020FINANCIAL REPORT
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2020
Issued
Capital
$’000
Accumulated
losses
$’000
Reserves
$’000
Total Equity
$’000
Balance at 1 July 2018
72,494
(40,896)
(2,123)
29,475
Adjustment for transition to new
accounting standards
Restated balance at 1 July 2018
Other comprehensive income (loss)
Net loss for the year
Equity Investments at FVOCI-net
change in fair value
Total comprehensive loss
Transactions with owners recorded
directly in equity
Share placement
On market acquisition of Company Share Plan
Company Share Plan – loan repayment
Share issue costs
Balance at 30 June 2019
Balance at 1 July 2019
Other comprehensive income (loss)
Net loss for the year
Equity Investments at FVOCI-net
change in fair value
Total comprehensive loss
Transactions with owners recorded
directly in equity
Share placement
Share issue costs
-
714
72,494
(40,182)
(714)
(2,837)
-
29,475
-
(3,090)
-
-
-
23,865
1,319
341
(145)
97,874
(3,090)
-
(3,090)
-
-
-
-
-
-
-
4,980
(259)
(2,885)
-
(2,885)
-
-
(392)
(392)
-
-
-
-
(127)
(127)
-
-
(392)
(3,482)
23,865
1,319
341
(145)
51,373
(127)
(3,012)
4,980
(259)
53,082
(43,272)
(3,229)
97,874
(43,272)
(3,229)
51,373
-
(2,885)
Balance at 30 June 2020
102,595
(46,157)
(3,356)
The amounts recognised directly in equity are disclosed net of tax.
The Consolidated Statement of Changes in Equity is to be read in conjunction with the notes to the financial statements.
2 8
TNG LIMITEDFINANCIAL REPORT 1
REPORTING ENTITY
Critical Judgements
TNG Limited (“TNG” or “the Company”) is a company
domiciled in Australia. The address of the Company’s
registered office is Suite 20, 22 Railway Road Subiaco,
Western Australia 6008.
The consolidated financial report of the Company as
at and for the year ended 30 June 2020 comprises the
Company and its subsidiaries (together referred to as the
“Group”). The Group is a for profit entity and primarily is
involved in the exploration of minerals within Australia.
2 BASIS OF PREPARATION
(a) Statement of compliance
The consolidated financial statements are general
purpose financial statements which have been prepared in
accordance with Australian Accounting Standards (AASBs)
adopted by the Australian Accounting Standards Board
(AASB) and the Corporations Act 2001. The consolidated
financial statements comply with International Financial
Reporting Standards (IFRS) and Interpretations adopted
by the International Accounting Standards Board (IASB).
(b) Basis of measurement
The consolidated financial statements have been prepared
on the historical cost basis except for the following:
•
•
•
investments in equity instruments (FVOCI);
share based payments are measured at fair value; and
lease liability.
Assumptions and estimation uncertainties
Exploration and evaluation assets
The ultimate recovery of the value of exploration
and evaluation assets is dependent on successful
development and commercial exploitation, or alternatively,
sale, of the underlying mineral exploration properties.
The Group undertakes at each reporting date,
a review for indicators of impairment of these assets.
Should an indicator of impairment exist, there is
significant estimation and judgments in determining
the inputs and assumptions used in determining the
recoverable amounts.
The key areas of estimation and judgement that are
considered in this review included:
• Recent drilling results and reserves/resource
estimates;
• Environmental issues that may impact the underlying
tenements;
•
•
•
•
The estimated market value of assets at the review
date;
Independent valuations of underlying assets that may
be available;
Fundamental economic factors such as mineral
prices, exchange rates and current and anticipated
operating cost in the industry; and
The Group’s market capitalisation compared to its net
assets.
The methods used to measure fair values are discussed
further in Note 4.
Information used in the review process is agreed to
externally available information where appropriate.
(c) Functional and presentation currency
These consolidated financial statements are presented
in Australian dollars, which is the Company’s functional
currency and the functional currency of all entities
in the Group. The Group is of a kind referred to in
ASIC Corporations (Rounding in Financial/ Directors’
Reports) Instrument 2016/191 and in accordance with
that instrument, amounts in the Consolidated Financial
Statements and Directors’ Report have been rounded
off to the nearest thousand dollars ($000), unless
otherwise stated.
(d) Use of estimates and judgements
In preparing these consolidated financial statements,
management has made judgements and estimates that
affect the application of the Group’s accounting policies
and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to estimates are recognised
prospectively.
Changes in these estimates and assumptions as new
information about the presence or recoverability of an ore
reserve becomes available, may impact the assessment
of the recoverable amount of exploration and evaluation
assets. If, after having capitalised the expenditure a
judgement is made that recovery of the expenditure
is unlikely, an impairment loss is recorded in the profit
or loss in accordance with accounting policy 3(h). The
carrying amounts of exploration and evaluation assets are
set out in note 15.
Coronavirus (COVID-19) – the outbreak of the coronavirus
disease (COVID-19) is impacting global economic
markets and it may result in delays in development,
financing and to the government approval processes
relating to the Mount Peake Project. The Group is
monitoring the situation closely and has considered
the impact of COVID-19 on the Group’s business
and financial performance. However, the situation is
continually evolving, and the consequences are
therefore inevitably uncertain.
2 9
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS 2 BASIS OF PREPARATION (continued)
3 SIGNIFICANT ACCOUNTING POLICIES
(e) Going Concern
The financial report has been prepared on a going
concern basis, which contemplates the continuity of
normal business activity and the realisation of assets and
settlement of liabilities in the normal course of business.
During the year, the Group incurred a loss after tax of
$2,885,000 and net cash outflows from operating and
investing activities of $16,062,000. As at 30 June 2020,
the Group has cash in hand of $8,616,000 and a working
capital surplus of $6,532,000.
The Group’s principal activities are the continued
evaluation and development planning of the Group’s
Mount Peake Project. The Group will require further
funding to meet its ongoing obligations and, subject to
the results of its ongoing exploration and engineering
activities, expand or accelerate its work programs.
The Directors believe that the Group will be able to
secure further funding as it has demonstrated, in the
past, its ability to successfully raise additional funds,
which is in part attributed to the opportunity presented
by the Group’s Mount Peake Project – a large, global
scale project in a stable and pro-development jurisdiction,
underpinned by a new processing technology that is
targeted to produce three high-quality product streams,
and which has attracted a number of development
partners.
The Group has a number of potential additional funding
options available to it, including potential farm-in
arrangements or strategic project investment or other
similar arrangements. If necessary, the Group can delay
exploration and engineering expenditures, and can also
institute cost saving measures to further reduce corporate
and administrative costs.
The Directors have approved the cashflow forecast
which shows that the Group has sufficient cash to meet
its obligations, as and when they become due, for at
least 12 months from the date of signing of the financial
statements. On this basis, the Directors believe the use
of the going concern basis of preparation in the financial
statements is appropriate.
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements, and have been applied consistently
by Group’s entities.
(a) Basis of preparation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company.
Control exists when the Company has the power,
directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain
benefits from its activities. In assessing control,
potential voting rights that presently are exercisable
or convertible are taken into account. The financial
statements of subsidiaries are included in the
consolidated financial report from the date that
control commences until the date that control
ceases.
(ii) Loss of control of a subsidiary
When the Group loses control over a subsidiary
it derecognises the assets and liabilities of the
subsidiary, and any related and other components
of equity. Any resulting gain or loss is recognised
in profit or loss. Any interest retained in the former
subsidiary is measured at fair value when control
is lost.
(iii) Transactions eliminated on consolidation
Intragroup balances, and any unrealised gains
and losses or income and expenses arising from
intragroup transactions, are eliminated in preparing
the consolidated financial statements.
(b) Income tax
Income tax expense comprises current and deferred tax.
It is recognised in profit or loss except to the extent that
it relates to items recognised directly in equity or in other
comprehensive income.
Current tax
Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the period
and any adjustment to tax payable or receivable in respect
of previous years. It is measured using tax rates enacted
or substantively enacted at the reporting date. Current
tax payable also includes any tax liability arising from the
declaration of dividends.
3 0
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS
Tax consolidation
•
The Company and its wholly-owned Australian
resident entity are part of a tax-consolidated group.
As a consequence, all members of the tax-
consolidated group are taxed as a single entity.
The head entity within the tax-consolidated group is
TNG Limited. Current tax liabilities and assets and
deferred tax assets arising from unused tax losses
and relevant tax credits of the members of the tax
consolidated group are recognised by TNG Limited
(as the head company of the tax-consolidated group).
• Entities within the tax-consolidated group have not
entered into a tax sharing or tax funding agreement
with TNG Limited. The effect of not having entered
into a tax sharing or tax funding agreement is that
whilst TNG Limited (as the head company of the
tax-consolidated group) will be liable for the income
tax debts of the tax-consolidated group that are
applicable to the period of consolidation, income tax
debts may be recovered from subsidiary members
in certain circumstances.
(c) Goods and services tax
(i)
Revenues, expenses and assets are recognised
net of the amount of GST except where the GST
incurred on a purchase of goods and services is not
recoverable from the taxation authority, in which
case the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense
item as applicable;
(ii)
Receivables and payables are stated with the
amount of GST included;
(iii) The net amount of GST recoverable from, or payable
to, the taxation authority is included as part of
receivables or payables in the balance sheet;
(iv) Cash flows are included in the Cash Flow Statement
on a gross basis and the GST component of cash
flows arising from investing and financing activities,
which is recoverable from, or payable to, the taxation
authority, are classified as operating cash flows; and
(v)
Commitments and contingencies are disclosed net
of the amount of GST recoverable from, or payable
to, the taxation authority.
3
SIGNIFICANT ACCOUNTING POLICIES
(continued)
Deferred tax
Deferred tax is recognised in respect of temporary
differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Deferred tax is
not recognised for:
•
•
temporary differences on the initial recognition
of assets or liabilities in a transaction that is not
a business combination and that affects neither
accounting or taxable profit or loss.
temporary differences related to investments in
subsidiaries, associates or jointly controlled entities
to the extent that the Company is able to control the
timing of the reversal of the temporary differences
and it is probable that they will not reverse in the
foreseeable future.
•
taxable temporary differences arising on the initial
recognition of goodwill.
Deferred tax assets are recognised for unused tax losses,
unused tax credits and deductible temporary differences
to the extent that it is probable that future taxable profits
will be available against which they can be used. Deferred
tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
Deferred tax is measured at the tax rates that are
expected to be applied to temporary differences when
they reverse, using tax rates enacted or substantively
enacted at the reporting date. The measurement of
deferred tax reflects the tax consequences that would
follow from the manner in which the Company expects,
at the reporting date, to recover or settle the carrying
amount of its assets and liabilities. Deferred tax assets
and liabilities are offset only if certain criteria are met.
Unrecognised deferred income tax assets are reassessed
at each reporting date and are recognised to the extent
that it has become probable that future taxable profit will
allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured
at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been enacted
or substantively enacted at the statement of financial
position date.
Income taxes relating to items recognised directly in
equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are
offset only if a legally enforceable right exists to set off
current tax liabilities and the deferred tax assets and
liabilities relate to the same taxable entity and the same
taxation authority.
3 1
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS 3
SIGNIFICANT ACCOUNTING POLICIES
(continued)
(d) Plant and equipment
(i) Recognition and measurement
Items of plant and equipment are stated at cost or
deemed cost less accumulated depreciation and
impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the asset.
Where parts of an item of plant and equipment
have different useful lives, they are accounted for as
separate items of plant and equipment.
(ii) Subsequent costs
The Group recognises in the carrying amount of an
item of plant and equipment the cost of replacing
part of such an item when that cost is incurred if
it is probable that the future economic benefits
embodied within the item will flow to the Group
and the cost of the item can be measured reliably.
All other costs are recognised in the Statement of
Comprehensive Income as an expense as incurred.
(iii) Depreciation
Depreciation is charged to the profit and loss on a
straight-line basis over the estimated useful lives
of each part of an item of plant and equipment.
The estimated useful lives in the current and
comparative periods are as follows:
Leasehold improvements 4 years
Plant and equipment
3 to 8 years
Fixtures and fittings
3 to 8 years
Right-of-use-asset
Depreciation is over the
shorter of the useful
life of the asset and
the lease term, unless
the title to the asset
transfers at the end of
the lease term, in which
case depreciation is over
the useful life.
The residual value, the useful life and the
depreciation method applied to an asset are
reassessed annually.
(e) Foreign currency translation
Transactions in foreign currencies are translated to the
functional currency of the Group at the foreign exchange
rate ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the
statement of financial position date are translated to
Australian dollars at the foreign exchange rate ruling at
that date.
Foreign exchange differences arising on translation are
recognised in the profit and loss. Non-monetary assets
and liabilities that are measured in terms of historical cost
in a foreign currency are translated using the exchange
rate at the date of the transaction. Non-monetary assets
and liabilities denominated in foreign currencies that are
stated at fair value are translated to Australian dollars at
foreign exchange rates ruling at the dates the fair value
was determined.
(f) Changes in significant accounting policies
AASB 16 Leases
AASB 16 introduces a single, on-balance sheet lease
accounting model for lessees. A lessee recognises a
right-of-use asset representing its right to use the
underlying asset and a lease liability representing its
obligation to make lease payments. There are recognition
exemptions for short-term leases (12 months or less) and
leases of low-value items. Lessor accounting remains
similar to the current standard – i.e. lessors continue to
classify leases as finance or operating leases.
The Group has adopted AASB 16 Leases from 1 July
2019, but has not restated comparatives for the 2019
reporting period, as permitted under the specific
transitional provisions in the standard using the modified
retrospective method of transition. On transition to
AASB 16, the group elected to apply the practical
expedient to grandfather the assessment of which
transactions are leases. The reclassifications and the
adjustments arising from the new leasing rules are
therefore recognised in the opening balance on
1 July 2019.
Accounting policy
Until the 2019 financial year, leases of property, plant and
equipment were classified as operating leases. Payments
made under operating leases were charged to profit or
loss on a straight-line basis over the period of the lease.
From 1 July 2019, leases are recognised as a right-of-use
asset and a corresponding liability at the date at which the
leased asset is available for use by the Group. Each lease
payment is allocated between the liability and finance
cost. The finance cost is charged to profit or loss over
the lease period to produce a constant periodic rate of
interest on the remaining balance of the liability for each
period. The right-of-use asset is depreciated over the
shorter of the asset’s useful life and the lease term on a
straight–line basis.
3 2
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS 3
SIGNIFICANT ACCOUNTING POLICIES
(continued)
•
any lease payments made at or before the
commencement date.
Assets and liabilities arising from the lease are initially
measured on a present value basis. Lease liabilities
include the net present value of the following lease
payments:
•
•
•
fixed payments.
variable lease payment that are based on an index or
a rate.
the option to renew the lease.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined,
the lessee’s incremental borrowing rate is used, being the
rate that the lessee would have to pay to borrow the fund
necessary to obtain an asset of similar value in a similar
economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
•
the amount of the initial measurement of lease
liability.
Payments associated with short-term leases and leases
of low-value assets are recognised on a straight-line basis
as an expense in profit or loss. Short-term leases are
leases with a lease term of 12 months or less. Low-value
assets are assets with a replacement value of less than
US$5,000.
Adjustments recognised on adoption of AASB 16
On adoption of AASB 16, The Group recognised lease
liabilities in relation to leases which had previously been
classified as ‘operating leases’ under the principles of
AASB 117 Leases. These liabilities were measured at
the present value of the remaining lease payments,
discounted using the lessee’s incremental borrowing
rate as at 1 July 2019. The weighted average lessee’s
incremental borrowing rate applied to the lease liabilities
on 1 July 2019 was 4.25%.
Cost
The lease liability recognised on date of transition is comprised as follows:
Discounted operating lease commitments using incremental borrowing
rate at 1 July 2019
Additional lease commitments from adopting AASB 16
Lease liability recognised as at 1 July 2019
Lease liability at transition
Additions
Interest Expense
Lease repayments
Lease liability at the end of the period
Comprising:
Current
Non-current
30 June 2020
$,000
1 July 2019
$,000
235
253
488
-
-
-
-
-
-
488
12
18
(157)
361
146
215
361
Right-of-use-assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or
accrued lease payments relating to that lease recognised in the balance sheet as at 30 June 2019.
Initial recognition 1 July 2019
Additions
Accumulated depreciation
Net book amount
30 June 2020
$,000
488
12
(150)
350
3 3
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS
b) At least one of the following conditions is also met:
(i)
(ii)
The expenditure is expected to be recouped
through successful development and
commercial exploitation of an area of interest,
or alternatively by its sale; or
Exploration and evaluation activities in the area
of interest have not, at reporting date, reached a
stage which permits a reasonable assessment
of the existence or otherwise of ‘economically
recoverable reserves’ and active and significant
operations in, or in relation to, the areas of
interest are continuing. Economically recoverable
reserves are the estimated quantity of product
in an area of interest that can be expected to be
profitably extracted, processed and sold under
current and foreseeable conditions.
Exploration and evaluation assets include:
• Acquisition of rights to explore;
•
Topographical, geological, geochemical and
geophysical studies;
• Exploratory drilling, trenching, and sampling;
and
• Activities in relation to evaluating the
technical feasibility and commercial viability
of extracting the Mineral Resource.
General and administrative costs are allocated to, and
included in, the cost of exploration and evaluation assets
only to the extent that those costs can be related directly
to the operational activities in the area of interest to which
the exploration and evaluation assets relate. In all other
instances, costs are expensed as incurred.
Exploration and evaluation assets are transferred
to Development Assets once technical feasibility
and commercial viability of an area of interest is
demonstrable. Exploration and evaluation assets are
assessed for impairment, and any impairment loss is
recognised, prior to being reclassified.
The carrying amount of the exploration and evaluation
assets is dependent on successful development and
commercial exploitation, or alternatively, sale of the
respective area of interest.
3
SIGNIFICANT ACCOUNTING POLICIES
(continued)
Practical expedients applied:
In applying AASB 16 for the first time, the Group has
used the following practical expedients permitted by the
standard:
• Grandfathering at the date of initial application.
• Using a single discount rate to a portfolio of leases
with reasonably similar characteristics.
• Using hindsight in determining the lease term if the
contract contains options to extend the lease.
The value of practical expedient applied for variable
expenses was $42,587.
(g) Share capital
Ordinary shares
Incremental costs directly attributable to issue of ordinary
shares and share options are recognised as a deduction
from equity, net of any related income tax benefit.
(h) Intangible assets
Exploration and evaluation assets
Exploration for and evaluation of Mineral Resources is
the search for Mineral Resources after the entity has
obtained legal rights to explore in a specific area, as
well as the determination of the technical feasibility and
commercial viability of extracting the Mineral Resource.
Accordingly, exploration and evaluation expenditure are
those expenditures by the Group in connection with
the exploration for and evaluation of Mineral Resources
before the technical feasibility and commercial viability of
extracting a Mineral Resource are demonstrable.
Accounting for exploration and evaluation expenditures
is assessed separately for each ‘area of interest’.
An ‘area of interest’ is an individual geological area which
is considered to constitute a favourable environment
for the presence of a mineral deposit or has been proved
to contain such a deposit.
Expenditure incurred on activities that precede exploration
and evaluation of mineral resources, including all
expenditure incurred prior to securing legal rights to
explore an area, is expensed as incurred. For each area
of interest, the expenditure is recognised as an
exploration and evaluation asset where the following
conditions are satisfied:
a)
The rights to tenure of the area of interest are
current; and
3 4
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS 3
SIGNIFICANT ACCOUNTING POLICIES
(continued)
Impairment testing of exploration and
evaluation assets
Exploration and evaluation assets are assessed for
impairment if sufficient data exists to determine
technical feasibility and commercial viability or facts and
circumstances suggest that the carrying amount exceeds
the recoverable amount.
Exploration and evaluation assets are tested for
impairment when any of the following facts and
circumstances exist:
•
The term of exploration licence in the specific area of
interest has expired during the reporting period or will
expire in the near future, and is not expected to be
renewed;
• Substantive expenditure on further exploration for and
evaluation of mineral resources in the specific area
are not budgeted nor planned;
• Exploration for and evaluation of mineral resources
in the specific area have not led to the discovery of
commercially viable quantities on Mineral Resources
and the decision was made to discontinue such
activities in the specified area; or
• Sufficient data exists to indicate that, although a
development in the specific area is likely to proceed,
the carrying amount of the exploration asset is
unlikely to be recovered in full from successful
development or by sale.
Where a potential impairment is indicated, an assessment
is performed for each Cash Generating Unit [CGU]
(consisting of Mount Peake, Cawse Extended and
Kintore East) which is no larger than the area of interest.
The Group performs impairment testing in accordance
with accounting policy 3(i)(ii).
(i) Impairment
(i) Financial assets
A financial asset is considered to be impaired if
objective evidence indicates that one or more events
have had a negative effect on the estimated future
cash flows of that asset.
Under the new standard AASB 9, on initial
recognition, a financial asset is classified as
measured at: amortised cost; fair value through
other comprehensive income (“FVOCI”) – debt
investment; FVOCI equity instrument; or FVTPL.
The classification of financial assets under AASB 9
is generally based on the business model in which a
financial asset is managed and its contractual cash
flow characteristics.
AASB 9 largely retains the requirements in
AASB 139 Financial Instruments: Recognition
and Measurement for the classification and
measurement of financial liabilities. However,
it eliminates the previous AASB 139 categories
for financial assets of held to maturity, loans and
receivables and available for sale.
Cash and cash equivalents and other receivables
classified as amortised cost are subject to
impairment testing and are assessed collectively in
groups that share similar credit risk characteristics.
All impairment losses are recognised in profit or
loss. Any cumulative loss in respect of investment
in equity instrument financial asset is recognised
in equity Fair Value through Other Comprehensive
Income (FVOCI).
An impairment loss is reversed if the reversal can
be related objectively to an event occurring after the
impairment loss was recognised.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial
assets, other than deferred tax assets, are reviewed
at each reporting date to determine whether there is
any indication of impairment. If any such indication
exists, then the asset’s recoverable amount is
estimated. For goodwill and intangible assets that
have indefinite lives or that are not yet available
for use, recoverable amount is estimated at each
reporting date.
An impairment loss is recognised in profit and
loss if the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount.
A cash-generating unit is the smallest identifiable
asset group that generates cash flows that largely
are independent from other assets and groups.
Impairment losses are recognised in profit or loss.
Impairment losses recognised in respect of
cash-generating units are allocated first to reduce
the carrying amount of any goodwill allocated to
the units and then to reduce the carrying amount
of the other assets in the unit (group of units) on a
pro rata basis.
The recoverable amount of an asset or cash-
generating unit is the greater of its value in use and
its fair value less costs to sell. 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.
3 5
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS (ii) Short term benefit
Liabilities for employee benefits for wages,
salaries, annual leave and sick leave represent
present obligations resulting from employees’
services provided to reporting date, calculated at
undiscounted amounts based on remuneration wage
and salary rates that the Group expects to pay as at
reporting date including related on-costs, such as
workers’ compensation insurance and payroll tax.
(iii) Defined contribution funds
Obligations for contributions to defined contribution
superannuation funds are recognised as an expense
in the profit or loss as incurred.
(k) Earnings per share
The Group presents basic and diluted earnings per share
(EPS) data for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to ordinary
shareholders of the Group by the weighted average
number of ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding for the
effects of all diluted potential ordinary shares, which
comprise convertible notes and share options granted
to employees.
(l) Provisions
A provision is recognised in the statement of financial
position when the Group has a present legal or
constructive obligation as a result of a past event, and it
is probable that an outflow of economic benefits will be
required to settle the obligation. If the effect is material,
provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and,
when appropriate, the risks specific to the liability.
(m) Income and Expenses
a.
Leases (AASB 16)
Lease payments under leases (AASB 16) are
apportioned between the finance charge and the
reduction of the liability. The finance charge is
allocated to each period during the lease term so as
to produce a constant period rate of interest on the
remaining balance of the liability.
3
SIGNIFICANT ACCOUNTING POLICIES
(continued)
An impairment loss in respect of goodwill is not
reversed. In respect of other assets, impairment
losses recognised in prior periods are assessed at
each reporting date for any indications that the loss
has decreased or no longer exists. An impairment
loss is reversed if there has been a change in
the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the
extent that the asset’s carrying amount does not
exceed the carrying amount that would have been
determined, net of depreciation of amortisation,
if no impairment loss had been recognised.
(j) Employee benefits
(i) Share based payments
The grant date fair value of share-based payment
awards granted to employees is recognised as an
employee expense, with a corresponding increase
in equity, over the period that the employees
unconditionally become entitled to the awards.
The amount recognised as an expense is adjusted to
reflect the number of awards for which the related
service and non-market vesting conditions are
expected to be met, such that the amount ultimately
recognised as an expense is based on the number
of awards that do meet the related service and
non-market performance conditions at the vesting
date. For share-based payment awards with
non-vesting conditions, the grant date fair value of
the share-based payment is measured to reflect such
conditions and there is no true-up for differences
between expected and actual outcomes.
The TNG Employee Share Plan and TNG
Non-Executive Director and Consultant Share Plan
(together referred to as the “Company Share Plans”)
allow certain Group employees to acquire shares of
the Company. Employees have been given a limited
recourse 5-year interest free loan in which to acquire
the shares. The loan has not been recognised in the
statement of financial position, as the Company
only has recourse to the value of the shares. The
arrangement is accounted for as an in-substance
option over ordinary shares. The grant date fair value
of the shares granted to employees is recognised as
an employee expense with a corresponding increase
in equity on grant date on which the employees
become unconditionally entitled to the shares.
The fair value of the shares issued pursuant to the
Company Share Plans are measured using the Black
Scholes pricing model, taking into account the terms
and conditions upon which the in-substance options
were granted. The amount recognised as an expense
is adjusted to reflect the actual number of shares
that vest.
3 6
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS 3
SIGNIFICANT ACCOUNTING POLICIES
(continued)
b. Finance income and expenses
Finance income comprises interest income on funds
invested. Interest income is recognised as it accrues,
using the effective interest method.
Finance expenses comprise of interest expense
on borrowings, loss on held for trading investments
and lease liability on right-of-use assets.
All borrowing costs are recognised in profit or loss
using the effective interest method or incremental
borrowing rate.
c. Government grants
The Group recognises the refundable research and
development tax incentive (received under the tax
legislation passed in 2011) as a government grant.
This incentive is refundable to the Group regardless
of whether the Group is in a tax payable position
and is deducted against capitalised exploration and
evaluation expenditure. Government grants are
recognised when there is reasonable assurance
that (a) the Group will comply with the conditions
attaching to them; and (b) the grants will be received.
(n) Segment reporting
Segment results that are reported to the Board include
items directly attributable to a segment as well as those
that can be allocated on a reasonable basis.
The Group operated predominately in one business
segment and in one geographical location in both current
and previous years.
4 DETERMINATION OF FAIR VALUES
A number of the Group’s accounting policies and
disclosures require the determination of fair value, for
both financial and non-financial assets and liabilities.
Fair values have been determined for measurement
and/or disclosure purposes based on the following
methods. Where applicable, further information about the
assumptions made in determining fair values is disclosed
in the notes specific to that asset or liability.
(i) Equity investments
The fair value of investment in equity instruments
(FVOCI) (2018: Available for sale financial assets) is
determined by reference to their quoted bid price at
the reporting date and is considered to be a level 1 in
the fair value hierarchy.
(ii) Share-based payment transactions
The fair value of employee options is measured using
the Black-Scholes formula. Measurement inputs
include share price on measurement date, exercise
price of the instrument, expected volatility (based
on weighted average historic volatility adjusted
for changes expected due to publicly available
information), weighted average expected life of
the instruments (based on historical experience
and general option holder behaviour), expected
dividends, and the risk-free interest rate (based
on government bonds). Service and non-market
performance conditions attached to the transactions
are not taken into account in determining fair value.
(iii) Right-of-use-assets & Lease Liability
The right-of-use-asset is measured at cost at
the commencement date less any depreciation.
Additionally, the cost is subsequently adjusted for
any remeasurement of the lease liability resulting
from reassessment or lease modifications.
However, the initial measurement of the lease
liability is the present value of lease payments
over the lease term, discounted using the interest
rate implicit in the lease if it can be determined,
otherwise at the lessee’s incremental borrowing
rate.
3 7
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS 5 FINANCIAL RISK MANAGEMENT
Overview
This note presents information about the Group’s exposure to credit, liquidity and market risks, their objectives, policies and
processes for measuring and managing risk, and the management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
Management monitors and manages the financial risks relating to the operations of the Group through regular reviews of
the risks.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s trade and other receivables and cash and cash equivalents.
For the Company it also arises from receivables due from subsidiaries.
Presently, the Group undertakes exploration and evaluation activities exclusively in Australia. At the statement of financial
position date there were no significant concentrations of credit risk for the Group.
Cash and cash equivalents
The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have an
acceptable credit rating. Cash and cash equivalents are held with Australian banks rated AA- by Standard & Poor’s.
Trade and other receivables
As the Group operates primarily in exploration activities it does not carry a material balance of trade receivables and
therefore is not exposed to credit risk in relation to trade receivables
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum
exposure to credit risk at the reporting date was:
Trade and other receivables
Cash and cash equivalents
None of the Group’s trade and other receivables are past due.
Note
12
11
Consolidated Carrying amount
2020
$’000
2019
$’000
258
8,616
8,874
374
20,114
20,488
3 8
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS 5 FINANCIAL RISK MANAGEMENT (continued)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate cash reserves from funds raised in the market and by
monitoring forecast and actual cash flows.
The following are the contractual maturities of financial liabilities, including estimated interest payments:
Consolidated
30 June 2020
Carrying
amount
Contractual
cash flows
<3 months
>12 months
Note
$’000
$’000
$’000
$’000
Trade and other payables
Lease liabilities
16
18
2,282
361
2,643
2,282
361
2,643
2,282
36
2,318
-
325
325
30 June 2019
Carrying
amount
Contractual
cash flows
<3 months
>12 months
Note
$’000
$’000
$’000
$’000
Trade and other payables
Lease liabilities
16
18
1,314
-
1,314
1,314
-
1,314
1,314
-
1,314
-
-
-
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group’s income or the value of its holdings of financial instruments.
The objective of market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising the return.
Interest rate risk
The Group is exposed to interest rate risk (primarily on its cash and cash equivalents and loans and borrowings),
which is the risk that a financial instrument’s value will fluctuate as a result of changes in the market interest rates on
interest-bearing financial instruments. The Group does not use derivatives to mitigate these exposures.
The Group adopts a policy of ensuring that as far as possible it maintains excess cash and cash equivalents in high
interest-bearing accounts.
3 9
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS 5 FINANCIAL RISK MANAGEMENT (continued)
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
Variable rate instruments
Cash and cash equivalents
Fixed rate instruments
Cash and cash equivalents
Security deposits
Lease Liability
Consolidated carrying amount
Note
2020
$’000
2019
$’000
11
11
12
18
1,616
12,114
7,000
214
(361)
8,469
8,000
212
-
20,326
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a
change in interest rates at the reporting date would not affect profit or loss.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased or decreased the Group’s equity
and profit or loss by $16,160 (2019: $121,140).
Sensitivity analysis
The Group operates primarily in the exploration and evaluation phase and accordingly the Group’s financial assets and
liabilities are subject to minimal commodity price risk.
Investments in equity instrument (FVOCI)
All of the Group’s equity investments are listed on the ASX. For such investments classified as investment in equity
instrument, a 1% increase in the share price at the reporting date, would have increased equity by $19,256 (2019: $3,191).
An equal change in the opposite direction would have decreased equity by the same amount.
Capital Management
The Group has defined its capital as paid up share capital net of accumulated losses. The Group’s objectives when
managing capital are to safeguard the Group’s ability to continue as a going concern, so as to maintain a strong capital base
sufficient to maintain future exploration and development of its projects. In order to maintain or adjust the capital structure,
the Group may return capital to shareholders, issue new shares or sell assets or reduce debt. The Group’s focus has been
to raise sufficient funds through equity to fund engineering, exploration and evaluation activities.
There were no changes in the Group’s approach to capital management during the year. Risk management policies and
procedures are established with regular monitoring and reporting. Neither the Company nor any of its subsidiaries are
subject to externally imposed capital requirements.
4 0
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS 6
INCOME AND EXPENSES
(a) Income
Other income
Total income
Interest income
Finance income
Interest expense
Finance expense
Net finance income
Consolidated
Note
2020
$’000
2019
$’000
149
149
236
236
(18)
(18)
218
410
410
267
267
-
-
267
Other income consists of temporary boosting cash flow for Employers under the Government Stimulus Package due to
the impact of Covid-19 pandemic. Initial payment was made from March to June 2020. The payment will be equal to the
lesser of 100 percent of PAYG withheld on employees’ salary and wages (up from 50 percent) or $50,000 for both the year
ended 30 June 2020, and $50,000 for the next financial year from July to September 2020. The Group received the first half
amounting to $50.000 as at 30 June 2020, and the remaining $50,000 will be received in four monthly equal instalments in
the next financial year.
Additionally, an incentive from the Federal Government on the Job-keeper program which broadly comprises a wage
subsidy to help businesses keep staff employed. From 30 March 2020 to 27 September 2020, the subsidy of $1,500 per
fortnight, per eligible employee. TNG has participated in the program and continues to lodge the monthly declaration on the
job-keeper payments until September 2020. The Group received $99,000 for the job keeper payments as at 30 June 2020.
(b) Corporate and administration expenses
Travel and accommodation
Legal fees
Promotional
Contractors and consultancy
Occupancy
Taxation Fees
Insurance
Share registry, ASIC & ASX
General Office Maintenance
Accounting costs
Other
Consolidated
Note
2020
$’000
2019
$’000
161
280
244
229
64
74
53
109
152
77
131
293
227
326
360
207
71
50
117
158
1
159
Total Corporate and Administration
1,574
1,969
(c) Employment expenses
Wages and salaries 1
Other associated personnel expenses
Increase (Decrease) in liability for long service leave
Contributions to defined contribution plans
Total Employment expenses
1,339
17
33
101
1,490
1,621
21
(10)
116
1,748
1 Total Wages and Salaries incurred during the year including amounts capitalised to exploration and evaluation was $2,449,502
(2019: $2,130,859).
4 1
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS 7 AUDITORS’ REMUNERATION
Auditors of the Group -
KPMG Australia:
Audit and review of financial reports
Tax advice
Total Auditor’s remuneration
8
INCOME TAX
A reconciliation between tax expense and pre-tax loss:
Accounting (loss) before income tax
At the domestic tax rate of 27.5% (2019: 27.5%)
Reconciling items
Other non-deductible expenses
Tax losses and temporary differences not brought to account
Income tax expense reported in the income statement
Unused tax losses carried forward
Potential tax benefit @ 27.5% (2019: 27.5%)
Tax losses offset against deferred tax liabilities
Unrecognised tax benefit
Consolidated
2020
$
2019
$
41,100
15,525
56,625
42,310
-
42,310
Consolidated
2020
$’000
2019
$’000
(2,885)
(793)
(3,090)
(850)
130
663
-
146
704
-
65,844
51,656
18,107
(12,115)
5,992
14,206
(7,669)
6,537
All unused tax losses were incurred by Australian entities.
Potential future income tax benefits net of deferred tax liabilities attributable to income tax losses (both consolidated and
Parent Entity) have not been brought to account because the Directors do not believe it is appropriate to regard realisation
of the future income tax benefits as probable.
The benefits of these tax losses will only be obtained if:
future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;
the conditions for deductibility imposed by tax legislation continue to be complied with; and
(i)
(ii)
(iii) no changes in tax legislation adversely affect the Group in realising the benefit.
4 2
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS 8
INCOME TAX (CONTINUED)
Deferred income tax
Statement of financial position
Deferred income tax relates to the following:
Deferred Tax Liabilities
Exploration and evaluation assets
Deferred Tax Assets
Other
Brought forward tax losses offset against deferred tax liabilities
Consolidated
2020
$’000
2019
$’000
12,587
8,070
(472)
(12,115)
-
(401)
(7,669)
-
9 EARNINGS PER SHARE
The calculation of basic earnings per share for the year ended 30 June 2020 was based on the loss attributable to ordinary
shareholders of $2,885,329 (2019: loss $3,329,120) and a weighted average number of ordinary shares on issue during the
year ended 30 June 2020 of 1,120,009,401 (2019: 929,967,107).
Loss attributable to ordinary shareholders
(Loss) for the period
(Loss) attributable to ordinary shareholders
Weighted average number of ordinary shares
Number of ordinary shares at 1 July
Effect of shares issued
Weighted average number of ordinary shares at 30 June
Basic (loss) per share (cents)
Diluted (loss) per share (cents)
Effect of dilutive securities
2020
$’000
2019
$’000
(2,885)
(2,885)
(3,090)
(3,090)
2020
Numbers
2019
Numbers
1,070,994,327
831,853,710
53,550,797
98,113,397
1,120,009,401
929,967,107
(0.26)
(0.26)
(0.33)
(0.33)
The Company had no other securities on issue, other than ordinary shares, at 30 June 2020.
4 3
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS 10 SEGMENT INFORMATION
The Board has determined that the Group has one reportable segment, being mineral exploration in Australia. As the Group
is focused on mineral exploration, the Board monitors the Group based on actual versus budgeted consolidated results.
This internal reporting framework is the most relevant to assist the Board in making decisions regarding the Group and its
ongoing exploration activities, while also taking into consideration the results of exploration work that has been performed
to date. The financial results from this segment are equivalent to the financial statements of the Group as a whole.
All of the Group’s assets are located in one geographical segment being Australia.
11 CASH AND CASH EQUIVALENTS
Cash at bank
Short term deposits
12 TRADE AND OTHER RECEIVABLES
Current
Other receivables
Short term security deposits 1
GST receivables
Consolidated
2020
$’000
2019
$’000
1,616
7,000
8,616
12,114
8,000
20,114
Consolidated
2020
$’000
2019
$’000
46
147
65
258
30
212
132
374
1 Bank short term deposits maturing 11 months 6 days are paying interest at a weighted average interest rate of 0.55% (2019: 2.13%).
13 OTHER INVESTMENTS
Investments in equity instruments
Number
$’000
Number
$’000
2020
2019
Peninsula Energy Ltd
Spirit Telecom Energy Ltd
Todd River Resources Ltd
Balance at end of year
90,000
17,392
7,000,000
7,107,392
6
4
182
192
90,000
17,392
7,000,000
7,107,392
28
4
287
319
The Group’s investments in equity securities are classified as Investment in equity instruments (FVOCI). Subsequent
to initial recognition, they are measured at fair value. Gains or losses on revaluation of asset are recognised in other
comprehensive income (FVOCI). At 30 June 2020, management recognised fair value adjustment of negative $126,510
through other comprehensive income. The reduction in fair value is largely due to the significant decline in the share price
of Todd River Resources.
4 4
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS 14 RIGHT-OF-USE ASSET
Cost
Initial recognition 1 July 2019
Additions
Accumulated depreciation
Balance at 30 June
15 EXPLORATION AND EVALUATION EXPENDITURES
Cost
Balance at 1 July
Exploration and evaluation expenditure
Research and development rebate
Balance at 30 June
Exploration expenditure capitalised during the year
Drilling and exploration
Feasibility and evaluation
Total exploration expenditure
Consolidated
2020
$’000
2019
$’000
488
12
(150)
350
-
-
-
-
Consolidated
2020
$’000
2019
$’000
32,076
16,397
(2,185)
46,288
1,628
14,769
16,397
23,759
9,868
(1,551)
32,076
1,209
8,659
9,868
The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful
development and commercial exploitation or sale of the respective areas. At balance date the carrying amount of
engineering, exploration and evaluation expenditure was $46,288,275 of which $46,159,103 was attributable to the
Mount Peake project and the balance relating to other current exploration programs.
16 TRADE AND OTHER PAYABLES
Current
Trade payables
Accruals
Other payables
Trade payables are normally settled on a 30-day basis.
Consolidated
2020
$’000
2019
$’000
462
1,514
306
2,282
503
497
314
1,314
4 5
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS
Consolidated
2020
$’000
2019
$’000
297
167
464
329
135
464
195
134
329
315
14
329
Consolidated
2020
$’000
2019
$’000
488
12
18
(157)
361
146
215
361
-
-
-
-
-
-
-
-
17 PROVISIONS
Employee provisions
Current
Annual leave
Long-service leave
Balance at 1 July
Net provisions recognised/(used) during the year
Balance at 30 June
18 LEASE LIABILITY
Lease liability at transition
Additions
Interest expense
Lease repayments
Balance at 30 June
Current liability
Non-current liability
4 6
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS 19 ISSUED CAPITAL AND RESERVES
Issued and paid-up share capital
(a) Movements in shares on issue
Consolidated
2020
$’000
2019
$’000
102,595
97,874
2020
2019
Number
$’000
Number
$’000
Balance at the beginning of year
Share placement
1,070,994,327
53,550,797
97,874
4,980
831,853,710
239,140,617
On market acquisition of Company Share Plan
Company Share Plan paid
Share issue costs
Balance at the end of year
-
-
-
-
-
(259)
-
-
-
1,124,545,124
102,595
1,070,994,327
97,874
72,494
23,865
1,319
341
(145)
Terms and conditions of contributed equity
Holders of ordinary shares are entitled to receive dividends that may be declared from time to time and are entitled to one
vote per share at shareholders’ meetings. In the event of winding up of the Company, ordinary shareholders rank after all
other shareholders and creditors and are fully entitled to any proceeds from liquidation.
Reserves
Fair Value through other comprehensive income reserve 1
Transaction Reserve 2
Total Reserves
Consolidated
2020
$’000
2019
$’000
1,210
2,146
3,356
1,083
2,146
3,229
Transaction Reserve is used to record the fair value of shares accounted for during the in-specie distribution.
1 Reflects the movement in fair value of investments in equity instrument (FVOCI).
2 In 2017, TNG demerged its assets via its subsidiary Todd River Resources to create a base metal focused exploration company.
TNG transferred $7,000,000 of the NT base Metal Assets to Todd River Resources in consideration of 35,000,000 shares at a price of
$0.20 per share. 28,000,000 of these shares were distributed and transferred via an in specie distribution to TNG Ltd’s shareholders
on a pro-rata basis (in specie Distribution). This in specie distribution was accounted for at the fair value of the assets
distributed and the remainder was accounted for in the Share capital account.
4 7
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS 20 COMMITMENTS
Engineering and Exploration expenditure commitments
In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum
exploration work to meet the minimum expenditure requirements specified by various State governments.
These requirements are subject to renegotiation when application for a mining lease is made and at other times.
These obligations are not provided for in the financial report.
Consolidated
2020
$’000
2019
$’000
Exploration commitments payable not provided for in the financial report:
Within one year
823
709
21 CONTINGENT LIABILITIES
The details and estimated maximum amounts of contingent liabilities that may become payable are set out below.
The Directors are not aware of any circumstance or information which could lead them to believe that these liabilities
will crystallise and consequently no provisions are included in the financial statements in respect of these matters.
(a) Guarantees - Parent
A guarantee has been provided to support unconditional office
lease performance bonds
(b) Guarantees - Subsidiary
A guarantee has been provided to support unconditional
environmental performance bonds
Consolidated
2020
$’000
2019
$’000
47
47
47
47
Consolidated
2020
$’000
2019
$’000
167
167
165
165
The Group has various security deposits totalling $214,149 representing bank guarantees of $46,116 for the office lease
in Perth, $1,083 for site office in Alice Springs (NT) and $100,000 for Central Land Council (NT). Another $66,950 was also
paid directly to the Department of Primary Industry and Resources for various tenements in Mount Peake for rehabilitation
guarantee which is accounted for as non-current assets.
Indemnities have been provided to Directors and certain executive officers of the Company in respect of liabilities to
third parties arising from their positions, except where the liability arises out of conduct involving a lack of good faith.
No monetary limit applies to these agreements and there are no known obligations outstanding at 30 June 2020.
4 8
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS
22 DEED OF CROSS GUARANTEE
Pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785 the whollyowned subsidiaries listed below
are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports, and
Directors’ reports.
It is a condition of the Instrument that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee.
The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding
up of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under other
provisions of the Act, the Company will only be liable in the event that after six months any creditor has not been paid in
full. The subsidiaries have also given similar guarantees in the event that the Company is wound up.
The subsidiaries subject to the Deed are Connaught Mining NL and Enigma Mining Limited. A consolidated statement of
comprehensive income and consolidated statement of financial position, comprising the Company and controlled entities
which are a party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, for the
year ended 30 June 2020 is set out as follows:
Other Income
Total Income
Corporate and administration expenses
Employment expenses
Depreciation and amortisation expenses
Loss from continuing operations
Finance income
Finance costs
Net finance income
Loss before tax
Income tax expense
Loss for the year
Items that will not be reclassified to profit or loss
Equity investments at FVOCI-net change in fair value
Tax effect on other comprehensive income
Other comprehensive loss for the income (loss) for the year
Total comprehensive loss for the year
Statement of Comprehensive income and retained earnings
Profit (loss) before income tax
Movements in retained earnings
Retained earnings at beginning of the year
Retained earnings at end of year
Consolidated
2020
$’000
2019
$’000
149
149
(1,572)
(1,490)
(188)
(3,101)
236
(18)
218
410
410
(1,967)
(1,748)
(50)
(3,355)
267
-
267
(2,883)
(3,088)
-
-
(2,883)
(3,088)
(127)
-
(127)
(3,011)
(2,883)
(2,883)
(44,368)
(47,251)
(392)
-
(392)
(3,480)
(3,088)
(3,350)
(41,280)
(44,368)
4 9
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS Consolidated
2020
$’000
2019
$’000
8,615
20,112
258
358
10
368
59
32
9,241
20,571
182
67
60
(1,093)
350
46,288
45,854
55,095
2,282
464
146
2,892
215
215
287
-
73
(1,087)
-
32,076
31,349
51,920
1,314
329
-
1,643
-
-
3,107
1,643
51,988
50,277
102,595
(3,356)
(47,251)
51,988
97,874
(3,229)
(44,368)
50,277
22 DEED OF CROSS GUARANTEE (CONTINUED)
Statement of Financial Position
Cash assets
Trade and other receivables
Prepayments
Other investments
Total current assets
Other investments
Other receivables
Plant and equipment
Loan and borrowings from related parties
Right-of-use-asset
Exploration and evaluation expenditure
Total non-current assets
Total assets
Trade and other payables
Provision
Lease liability
Total current liabilities
Lease liability
Total non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Retained earnings
Total equity
5 0
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS 23 CONSOLIDATED ENTITIES
Subsidiaries
Connaught Mining NL
Enigma Mining Limited
Tennant Creek Gold (NT) Pty Ltd
Manbarrum Mining Pty Ltd
TNG Energy Pty Ltd ¹
TNG Gold Pty Ltd
TIVAN Technology Pty Ltd
¹ Direct subsidiary of Enigma Limited
Country of Incorporation
2020
% of Ownership
2019
% of Ownership
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
24 NOTES TO THE STATEMENTS OF CASH FLOWS
Reconciliation of cash flows from operating activities
Net profit/(loss) for the period
Add/(less) non-cash items:
Depreciation and amortisation
Interest expense
Change in assets and liabilities:
Change in current payables and provisions
Change in current receivables and prepayments
Net cash used in operating activities
Reconciliation of lease liabilities arising from financing activities
Lease liability at transition 1 July 2019
Additions
Interest expense
Lease liability at 30 June 2020
Net cash used in financing activities
Upon adoption of AASB 16 Leases, the 30 June 2019 were disclosed as operating leases.
Consolidated
2020
$’000
2019
$’000
(2,885)
(3,090)
188
18
50
-
(2,679)
(3,040)
(296)
52
(2,923)
53
231
(2,756)
Consolidated
2020
$’000
2019
$’000
(488)
(12)
(18)
361
(157)
-
-
-
-
-
5 1
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS
25 EMPLOYEE BENEFITS
Defined contribution superannuation funds
The Group made contributions to the employee’s nominated superannuation funds. The amount recognised as an expense
was $100,559 for the financial year ended 30 June 2020 (2019: $116,208).
Share-based payments
During the year no securities were issued to employees as an employee benefit.
26 RELATED PARTIES
(a) Compensation of key management personnel
Key management personnel compensation comprised the following:
Compensation by category
Key Management Personnel
Short-term
Post-employment
Consolidated
2020
$’000
2019
$’000
1,196
38
1,234
1,096
48
1,144
Information regarding individual Directors and executives’ compensation and equity disclosures as permitted by
Corporations Regulation 2M.3.03 and 2M.6.04 is provided in the Remuneration Report section of the Directors’ Report.
(b) Other transactions with key management personnel
The terms and conditions of the transactions with key management personnel and their related parties were no more
favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key
management personnel related entities on an arm’s length basis.
The following payments were also paid for consulting fees to Southern Mining Consultants $49,337 (2019: $14,250) and
Miceva Family Trusts $12,375 (2019: $0) of which John Elkington and Simon Morten are related parties respectively. This is
included in the directors’ remuneration.
None were outstanding at 30 June 2020 (2019: $0).
5 2
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS 27 PARENT ENTITY INFORMATION
As at, and throughout, the financial year ending 30 June 2020 the parent entity of the Group was TNG Limited.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Issued capital
Reserves
Accumulated losses
Total shareholders’ equity
Loss for the year
Total comprehensive loss for the year
Tax consolidation
2020
$’000
2019
$’000
9,073
44,298
53,371
922
361
1,283
102,595
10,839
(61,346)
20,067
31,189
51,256
919
-
919
97,874
10,966
(58,503)
52,088
50,337
(2,844)
(2,971)
(3,086)
(3,478)
TNG and its 100% owned Australian subsidiaries formed a tax consolidated group with effect from 1 July 2003. TNG is the
head entity of the tax consolidated group. Members of the group have not entered into a tax sharing agreement.
The parent entity has entered into a Deed of Cross Guarantee with the effect that the Company guarantees debts in
respect of certain subsidiaries. Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed are
disclosed in Note 22.
Operating lease commitments
Operating lease commitments are payable as follows:
Within one year
Between one year and 5 years
Contingent Liabilities
Guarantees
A guarantee has been provided to support unconditional
Office lease performance bonds
Total estimated contingent liabilities
2020
$’000
2019
$’000
-
-
-
148
87
235
2020
$’000
2019
$’000
47
47
47
47
5 3
ANNUAL REPORT 2020NOTES TO THE FINANCIAL STATEMENTS 28 EVENTS SUBSEQUENT TO BALANCE DATE
Subsequent to the end of the financial year, the Company has continued to progress engineering, permitting and approvals,
and planning works related to the proposed development of the Mount Peake Project.
As announced on 27 July 2020, the Company executed a Binding Life-of-Mine Off-take Agreement with the leading
Indian mining conglomerate VIMSON Group for 100% of the high-purity iron products planned to be produced by the
Mount Peake Project.
Other than as mentioned above, or elsewhere in this report, financial statements or notes thereto, at the date of this
report there are no other matters or circumstances which have arisen since 30 June 2020 that have significantly affected
or may significantly affect:
a)
the Consolidated Entity’s operations in future years, or
b)
the results of those operations in future financial years, or
c)
the Consolidated Entity’s state of affairs in future financial years.
5 4
TNG LIMITEDNOTES TO THE FINANCIAL STATEMENTS
In the opinion of the Directors of TNG Limited (the “Company”):
1
The consolidated financial statements and notes, that are set out on pages 25 to 54, and the Remuneration Report in
pages 15 to 22 in the Directors’ Report, are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance, for the
financial year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporation Regulations 2001, and
2
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.
There are reasonable grounds to believe that the Company and the group entities identified in note 23 will be able to
meet any obligation or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee
between the Company and those group entities pursuant to ASIC Corporations (Wholly owned Companies) Instrument
2016/785.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the
Chief Executive Officer (or equivalent) for the financial year ended 30 June 2020.
The Directors draw attention to note 2(a) of the consolidated financial statements which includes a statement of
compliance with International Financial Reporting Standards.
Signed in accordance with the resolution of the Directors:
Paul Burton
Managing Director & CEO
Dated 23 September 2020
5 5
ANNUAL REPORT 2020DIRECTORS’ DECLARATION Independent Auditor’s Report
To the shareholders of TNG Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
TNG Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance with the
Corporations Act 2001, including:
• Giving a true and fair view of the Group’s
financial position as at 30 June 2020 and of
its financial performance for the year ended
on that date; and
The Financial Report comprises:
• Consolidated statement of financial position as
at 30 June 2020.
• Consolidated statement of profit or loss and
other comprehensive income, consolidated
statement of changes in equity, and
consolidated statement of cash flows for the
year then ended.
• Notes including a summary of significant
•
Complying with Australian Accounting
Standards and the Corporations Regulations
2001.
accounting policies.
• Directors’ Declaration.
The Group consists of the Company and the
entities it controlled at the year-end or from time
to time during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in
Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
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.
This matter was 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 this matter.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
5 6
TNG LIMITEDINDEPENDENT AUDITOR’S REPORT
Carrying value of exploration and evaluation expenditure ($46,288,000)
Refer to Note 15 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The carrying value of exploration and
evaluation expenditure (E&E) is a key audit
matter due to the:
• Significance of the activity to the Group’s
business.
• Greater level of audit effort to evaluate the
Group’s application of the requirements of
the industry specific accounting standard
AASB 6 Exploration for and Evaluation of
Mineral Resources, in particular the
conditions allowing capitalisation of
relevant expenditure and assessment of
impairment indicators for the area of
interest with the most significant
capitalised E&E, being Mount Peake. The
presence of impairment indicators would
necessitate a detailed analysis by the
Group of the value of E&E, therefore given
the criticality of this to the scope and depth
of our work, we involved senior team
members to challenge the Group’s
determination that no such indicators
existed.
In assessing the conditions allowing
capitalisation of relevant expenditure, we
focused on:
• Documentation available regarding rights to
tenure, via licensing, and compliance with
relevant conditions, to maintain current
rights to an area of interest and the
Group’s intention and capacity to continue
the relevant E&E activities.
•
The Group’s determination of whether the
E&E are expected to be recouped through
successful development and exploitation of
the area of interest, or alternatively, by its
sale.
Our procedures included:
• We evaluated the Group’s accounting policy
to recognise exploration and evaluation
assets using the criteria in the accounting
standard.
•
For Mount Peake, we assessed the Group’s
current rights to tenure by checking the
ownership of the relevant licences to
government registries and evaluating
agreements in place with other parties. We
also tested for compliance with conditions,
such as minimum expenditure
requirements, on a sample of licences.
• We tested the Group’s additions to E&E for
the year by evaluating a statistical sample of
recorded expenditure for consistency to
underlying records, the capitalisation
requirements of the Group’s accounting
policy and the requirements of the
accounting standard.
• We evaluated documents, such as minutes
of Board meetings and ASX announcements
for consistency with the Group’s stated
intentions for continuing E&E in Mount
Peake. We corroborated this through
interviews with key operational and finance
personnel.
• We analysed the Group’s determination of
recoupment through successful
development and exploitation of the area by
evaluating the Group’s documentation of
planned future/continuing activities including
work programmes and project and corporate
budgets for a sample of areas.
• We obtained the budget to identify planned
expenditure and funding requirements for
Mount Peake, for evidence of the ability to
fund continued activities.
• We compared the results from the external
expert engaged by the Group regarding the
existence of economically recoverable
reserves for consistency with the treatment
of E&E.
5 7
ANNUAL REPORT 2020INDEPENDENT AUDITOR’S REPORT
In assessing the presence of impairment
indicators, we focused on those that may draw
into question the commercial continuation of E&E
activities for Mount Peake. In addition to the
assessments above and given the financial
position of the Group, we paid particular attention
to:
•
•
The Group’s determination of whether the
E&E are expected to be recouped through
successful development and exploitation of
the area of interest, or alternatively, by its
sale.
The ability of the Group to fund the
continuation of activities.
• Results from latest activities regarding the
existence or otherwise of economically
recoverable reserves at Mount Peake
provided by an external expert.
Other Information
Other Information is financial and non-financial information in TNG Limited’s annual reporting which is
provided in addition to the Financial Report and the Auditor's Report. The Directors are responsible for
the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information.
In doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• Preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001.
•
Implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error.
• Assessing the Group and Company’s ability to continue as a going concern and whether the use of
the going concern basis of accounting is appropriate. This includes disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless they
either intend to liquidate the Group and Company or to cease operations, or have no realistic
alternative but to do so.
5 8
TNG LIMITEDINDEPENDENT AUDITOR’S REPORT
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
• 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 Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They 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 the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our Auditor’s
Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
TNG Limited for the year ended 30 June 2020
complies with Section 300A of the Corporations
Act 2001.
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 responsibilities
We have audited the Remuneration Report
included in pages 15 to 22 of the Directors’ report
for the year ended 30 June 2020.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit
conducted in accordance with Australian Auditing
Standards.
KPMG
Jane Bailey
Partner
Perth
23 September 2020
5 9
ANNUAL REPORT 2020INDEPENDENT AUDITOR’S REPORT
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in
this report is set out below.
The Company has 1,124,545,124 fully paid ordinary shares on issue. There are 4,940 holders of these ordinary shares as at
8 September 2020. Shares are quoted on the Australian Securities Exchange under the code TNG and on European Stock
Exchanges, including the Frankfurt Stock Exchange under the code HJI.
Substantial shareholders as at 8 September 2020
Substantial holders in the Company are set out below:
Shareholder
Deutsche Balaton and Associates
V. M. Salgaocar & Bro. (Singapore) Pte. Ltd
Warren William and Marilyn Helena Brown
Aosu Investment and Development Co. Ltd and Associates
Twenty largest shareholders as at 8 September 2020
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
19
V M Salgaocar & Bro (Singapore) Pte Ltd
Mr Warren William Brown + Mrs Marilyn Helena Brown
Sparta AG
Aosu Investment and Development Co Pty Ltd
DELPHI Unternehmensberatung Aktiengesellschaft
Deutsche Balaton Aktiengesellschaft
SMS Investments S A
J P Morgan Nominees Australia Pty Limited
Mr Adam Furst
Mr Todd Brouwer
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Mr Jeffrey Jay Johns
Mr Ernie Roosendaal + Mrs Sylvia Roosendaal
Mr Bruno Dimasi + Mrs Jennifer Louise Dimasi
Mr Zhigang Wang
L Antonino & Co Nominees Pty Ltd + Delpag Holdings Pty Ltd
Mr Stephen Gordon Hill
Mr Paul Burton
Researched Investments Pty Ltd
Units
138,116,782
110,692,082
84,000,000
60,508,643
% Units
12.28%
9.84%
7.47%
5.38%
Units
110,692,082
% Units
9.84
82,500,000
65,000,000
56,208,643
43,576,882
29,539,900
14,700,000
14,418,723
11,308,424
7,041,111
6,604,372
6,064,493
5,660,041
4,750,000
4,450,000
4,300,000
4,135,075
4,100,000
4,000,000
4,000,000
7.34
5.78
5.00
3.88
2.63
1.31
1.28
1.01
0.63
0.59
0.54
0.50
0.42
0.40
0.38
0.37
0.36
0.36
0.36
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
Total Remaining Holders Balance
483,049,746
641,495,378
42.96
57.04
6 0
TNG LIMITEDASX ADDITIONAL INFORMATION Distribution of listed equity securities as at 8 September 2020
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of Holders
% Units
251
547
703
2,236
1,203
4,940
0.00
0.17
0.50
7.80
91.53
100.00
The number of shareholders holding less than a marketable parcel is 939.
Voting rights
The voting rights attaching to the Company’s fully paid ordinary shares, as set out in the Company’s constitution,
are as follows:
(a)
(b)
at meetings of members or classes of members each member entitled to vote may vote in person or by proxy
or attorney; and
on a show of hands every person present who is a member has one vote, and on a poll every person present
in person or by proxy or attorney has one vote for each fully paid ordinary share held.
On-market buy-back
There currently no on-market buy-back being undertaken by the Company.
Item 7 of Section 611 of the Corporations Act
No issues of securities approved under Item 7 of section of 611 of the Corporations Act are yet to be completed.
Restricted securities as at 8 September 2020
8,500,000 shares which were issued in previous years pursuant to the Company’s share plans remain on issue.
A “Holding lock” in relation to these shares was put in place in accordance with the terms and conditions of the original
offer. This holding lock will remain in place until certain restrictions are satisfied unless waived by the Board.
There were no securities on issue subject to voluntary escrow as at 8 September 2020.
6 1
ANNUAL REPORT 2020ASX ADDITIONAL INFORMATION The Board of Directors is responsible for the corporate governance of the Company. The Board guides and monitors the
business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are
accountable.
TNG’s Corporate Governance Statement (“Statement”), as approved by the Board of Directors, sets out the main corporate
governance practices in place throughout the financial year ended 30 June 2020 and remains current at the date of this
report, with reference to the Corporate Governance Principles and Recommendations 3rd Edition of the ASX Corporate
Governance Council.
The Company’s Statement and copies or summaries of the TNG policies referred to in it are published on TNG’s website at:
https://www.tngltd.com.au/corporate/corporate-governance/
6 2
TNG LIMITEDCORPORATE GOVERNANCE STATEMENT u
a
.
m
o
c
.
n
g
s
e
d
n
r
o
c
a
i
9
7
0
0
8