Annual Report
2019
Contents
Corporate Directory
Chairman’s Letter
Review of Operations
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or
Loss and Other Comprehensive
Income
Consolidated Statement of Financial
Position
Consolidated Statement of Cash
Flows
Consolidated Statement of Changes
in Equity
Notes to the Consolidated Financial
Statements
Directors’ Declaration
Independent Auditor’s Report
Schedule of Tenements
Summary of Joint Ventures and
Governance Framework
Shareholder Information
Page
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59
Corporate Directory
Directors
Company Secretary
Mr Mark Pitts
Dr Foo Fatt Kah
Non-executive Chairman
Mr Stewart Dickson
Managing Director
Mr Michael Moore
Non-Executive Director
Mr Mark Pitts
Non-Executive Director
Mr Kwan Chee Seng
Alternate Director – Dr Foo Fatt Kah
Registered Office & Principal Place of
Business
Share Registry
Unit 8, 7 The Esplanade
Mount Pleasant WA 6153
P: +61 8 9316 9100
E: info@variscan.com.au
www.variscan.com.au
Boardroom Pty Ltd
GPO Box 3993
Sydney NSW 2001
P: +61 2 9290 9600
www.boardroomlimited.com.au
Auditors
Securities Exchange Listing
HLB Mann Judd
Level 4, 130 Stirling Street
Perth WA 6000
Listed on the Australian Securities Exchange (ASX)
Home Exchange: Perth
Code: VAR (Ordinary Shares)
1 > Variscan Mines Limited Annual Report 2019
Chairman’s Letter
Dear fellow Variscan shareholders
The past financial year has been one of significant transition for the Group, from the finalisation of the sale of the French
operations to Apollo Minerals Limited in September 2018, the board and management restructuring, renegotiating the
terms of the Rosario option agreement to provide the Group with a direct interest in the project and finally the
announcement of the agreement to acquire the Spanish zinc projects in Novales-Usias and Guajaraz.
The Board’s decision to transition away from its investment in France has allowed the Board to focus on those assets
which are best suited to quickly deliver results, and therein value to the Company and its shareholders.
The renegotiation of the Rosario option agreement achieved two of the Company’s goals: reducing the up-front cash costs
of the purchase significantly, while also providing the Group with an immediate interest in the project.
Finally, the Board is extremely optimistic about the opportunity provided with the Spanish zinc assets. These are two high-
quality assets in one of the most prospective areas of Europe, and in the vicinity of other world-class zinc mines and the
world’s second largest zinc smelter. Additionally, as the mining tenements have already been granted, completion of the
acquisition will allow the Group to commence work in a short time period. Finally, Spain is considered to be relatively low-
cost and importantly, politically stable.
Outlook
In the coming year shareholders can expect news from the following:
Subject to shareholder approval at an upcoming general meeting, completion of the acquisition of the Spanish zinc assets,
and commencement of exploration programmes;
Further exploration outcomes from the Rosario copper project in Chile; and
Acquisition of additional exploration assets, in line with our strategy.
As always, your Board is working to deliver the best results to shareholders and believes the greatest opportunities for the
Company lie with the Rosario and Spanish assets.
Yours sincerely,
Dr Foo Fatt Kah
Chairman
2 > Variscan Mines Limited Annual Report 2019
Review of Operations
CHILE
Rosario
On 18 December 2017, Variscan announced entering into an Option Agreement with the Chilean vendor over the licences
which comprise the Rosario Project. This transaction delivered on the Company’s strategy of acquiring new opportunities
outside of France and re-balancing the Company’s sovereign exposure.
The Rosario project is located approximately 120 kilometres east of the port city of Chanaral in the Atacama Region of
northern Chile. Chile is a proven mining jurisdiction and is the largest producer of copper globally.
It also lies less than 20 kilometres north of the El Salvador mine (owned by Codelco). It is one of the country’s larger copper
operations, within a region of dense mining activity (all scales) and good copper endowment.
Figure 1. Location of the Rosario Project
3 > Variscan Mines Limited Annual Report 2019
Review of Operations
Rock chip and grab sampling
Field work conducted by Variscan has included inspection of previous sample sites, all old mine workings, trenches within
the main project area and the location of 13 historic diamond drill-holes on nearby properties south of Rosario 6.
Forty-four samples were taken across the Rosario project and adjacent licences to complement the historic sampling
conducted between 2012-2014. Over 50% of samples taken recorded copper grades 1%+ Cu, with multiple sample grades
up to 4%+ Cu (see ASX announcement by Variscan dated 11 April 2018). In addition, a number of samples recorded
potentially significant silver assays up to 42 g/t Ag coincident with high copper results. Samples were assayed by ALS
Geochemistry at La Serena, Chile.
The sampling conducted by Variscan validates historic copper grades of up to 4.26% Cu recorded in surface rock chip and
grab samples within the two principal mineralised zones (‘A’ and ‘B’, Figure 1) and confirms the high-grade potential of the
Rosario project overall.
Figure 3. Plan of Rock Chip & Grab Sampling Results
Surface mapping and sampling programs
During the current year, the Company completed surface mapping and sampling programs over the Rosario project.
Through this, the copper mineralisation at the Rosario Prospect was assessed to be related to the up flow of fluids along
the NNW Mantos Gruesos Fault zone in probable mesothermal conditions and lateral inflow of the mineralizing solutions
into permeable layers of the Mantos Gruesos unit.
Oxide mineralisation also was transported into a secondary NW trending fault system. The lack of intense pyritization and
the overall alteration characteristics indicates low sulphidation and suggest that the primary ore is made up mainly by
copper sulphides. Copper mineralisation is hosted in the calcite infill of the main structure with thicknesses up to 20 m and
in permeable strata in contact with this structure. In Northern Chile, this type of mineralized structures is common in the
peripheries of intrusion related ore bodies and can constitute interesting targets for Cu-Ag or Cu-Au mineralisation.
4 > Variscan Mines Limited Annual Report 2019
Review of Operations
Lithology
At the Rosario Prospect, as a result of soft reliefs and pediplanes, most of the E and NW parts of the area are covered by
modern regolith and polymictic gravel deposits assigned to the Atacama Gravel Unit.
The lithology comprises basically volcanic and volcano sedimentary rocks, belonging to the Llanta Formation (Lower
Cretaceous) and to the Mantos Gruesos sequence (Cretaceous - Paleocene). This units show a N020° structural contact
defined by the Mantos Gruesos Fault were the hanging wall consist of andesites from the Mantos Gruesos unit in contact
with clastic and volcanoclastic rocks from the Llanta unit.
Lower Cretacic rocks comprised mainly amygdaloid and porphyritic andesites and are distributed to the East of the Mantos
Gruesos Fault. No significant mineralisation has been observed in this unit, alteration is restricted to silica- epidote-calcite
in voids.
Upper Cretacic – Paleocene units consist on andesites, volcanic breccias and sandstones that were integrated as different
sub units within the Mantos Gruesos sequence. These rocks show altered levels with Chlorite-Epidote alteration which is
apparently controlled by the flow of fluids through regional fault systems in which the Mantos Gruesos system plays a
predominant role.
The only intrusive identified so far consist on a dioritic porphyry that is roughly elongated parallel to the Mantos Gruesos
fault zone and is supposed to be of Oligocene age. No significant alteration or mineralisation is associated to this unit.
Geological structures
The major structures in the area define larger blocks of NNW orientation that define the topography and the distribution of
the outcrops of the different lithological units. The main structure is the NNW/70°-80° NE trending Mantos Gruesos Fault
that runs parallel to the creek, along the Los Ochenta fault, about 600 m to 800 m to the west. The distribution of the
lithological units suggest that the blocks are sequentially elevated towards the east. A second NW trending system is
related to the Sierra Castillo Fault system. No cinematic relation between both systems was observed. The Mantos
Gruesos Fault surface expression is a vein of Calcite and Calcite Silica breccia that host most of the observed
mineralisation.
Alteration
Alteration is reduced to silica-epidote – Calcite in voids and chlorite – epidote in andesites, volcanic breccias and
sandstones, in voids and invading apparently more permeable layers. Reported Magnetite in andesites should be of
syngenetic origin but some could be related to the intrusion of the dioritic porphyry. The most important hydrothermal
evidence seen and registered is the infill of calcite within the fault of the Mantos Hermoso zone and the NW structures on
the intersections, where the most important feeders of mineralised zones are located.
Mineralisation
Observed mineralisation comprises chrysocolla, minor brochantite and “almagres”, no primary or secondary copper
sulfides were identified. It is hosted in the calcite infill of the Mantos Gruesos fault that can reach up to 20 m, and in the
NW structures close to the intersection with the MGF. The small mines that are in the area are located at the crossings of
these two structural systems were the mineralisation is hosted in the calcite and as coatings in fractures. In the central
north part of the area copper oxides in volcanic sedimentary horizons (manto-type) were observed in the Mantos Gruesos
unit away from the main structural zone, indicating that the mineralisation fluids flowed out of the fault channel into
permeable volcanic-sedimentary layers.
5 > Variscan Mines Limited Annual Report 2019
Review of Operations
Figure 4. Rosario Project Structural Map
Renegotiation of terms
In June 2019, Variscan agreed to material amendments to the Rosario Project Option Agreement with the vendors (refer
ASX release 1 July 2019). As a result of the binding amendment, the total unconditional cash payments due to the project
vendors will reduce by 94% from US$5.0m to US$0.3m. The vendors have agreed to grant Variscan an Earn-In Right in
the Rosario Project reflecting expenditures made to date and in the future. The Earn-in Right provides Variscan with a
mechanism to acquire a Participating Interest in the Rosario Project by incurring expenditures connected with the project
and associated corporate costs incurred in-country as well as the payments to the vendors. Upon payment of USD$25,000
the Vendor shall grant a Participating Interest equal to 10.4% in the Rosario Project to Variscan. This payment was
completed in July 2019.
Future grants of participating interests are conditional on the expenditure commitments being made. Participating Interests
in the Rosario Project acquired by Variscan shall not be subject to claw-back by the vendors. However, Variscan has
granted to the vendors a right of first refusal to buy back the Participating Interest held by Variscan either in whole or in
part, subject to satisfactory commercial terms being agreed by the parties. The maximum Participating Interest that
Variscan can acquire is 90% having spent approximately US$2.25m in aggregate. The vendors will retain a free-carried
10% Participating Interest.
In addition to the revised schedule of payments being made to the vendors, Variscan shall subject to the satisfaction of
certain milestones make additional cash payments to the vendors, as follows:
6 > Variscan Mines Limited Annual Report 2019
Review of Operations
Amount Payable (USD)
Milestone Event to be satisfied
$250,000
$250,000
$500,000
Publication of Mineral Resource Estimate for the Rosario Project
Publication of a Scoping Study for the Rosario Project
Publication of Pre-Feasibility Study for the Rosario Project
$1,000,000
Declaration of Commercial Production at the Rosario Project
The milestone events or associated payments are in no way time-bound. The total consideration payable would be a
maximum of US$4.25m if all of the Earn-In and the conditional Milestone events were achieved which represents a
reduction of 15% from the original agreement.
Licences
Since the initial announcement of the option agreement, both the Salvadora and Abandonara licence areas have been
included as part of the Rosario project, with no additional cost to the Company. This increases the number of licences to
be acquired from three to five.
Figure 4. Salvadora
In July 2018, the Company confirmed the Chilean vendor had successfully upgraded the Rosario 6 and Rosario 7 licences
from exploration to exploitation status having been granted ‘Mensura’.
Mensura is the most secure form of tenement ownership in Chile. Mensura also carries full legal access to the minerals
and allows the owner to claim permits for surface rights and water rights for the purposes of mining.
Exploitation licences are granted for indefinite time and remain valid providing annual land rent payment is submitted. The
Company has confirmed the title and good standing of the licences comprising the Rosario Project.
The Rosario project currently comprises four granted exploration concessions, Rosario 6 and Rosario 7, Salvadora,
Abandonara and an exploration concession under application (Rosario 101). These concessions cover two outcropping
copper trends (Zones A and B) over a combined strike length of approximately 6 kilometres.
7 > Variscan Mines Limited Annual Report 2019
Review of Operations
Figure 2. Rosario Project Mineralisation Map
SPAIN
During the year the Company investigated further strategic acquisitions of advanced-stage exploration projects which
would complement the Company’s existing portfolio of base-metals interests in Chile and Australia. After the end of the
financial year, (refer ASX release 29 July 2019) the Company reached an agreement of terms to acquire two advanced
Zinc projects from a consortium of vendors led by Slipstream Resources Investments Pty Ltd (“Slipstream”).
The projects (Novales-Udias and Guajaraz), which include granted mining tenements and are located in established mining
jurisdictions in Spain.
Spain is a desirable location for mining with increasing activity and in-bound investment, and this transformational
acquisition provides Variscan shareholders with additional exposure to zinc, a commodity that continues to have a positive
pricing outlook.
Several key highlights of the projects include:
The Novales-Udias Project is centred around the former producing Novales underground mine with a large surrounding area
of exploration opportunities which include zinc soil anomalies over 2km long and close to 1km wide and up to 17% Zn. The
Project is advanced and includes a number of granted mining tenements.
Mississippi-Valley type (“MVT”) situated in the Basque-Cantabrian Basin, adjacent (~10km) to the Reocin deposit (62Mt at 8.7%
Zn and 1.0% Pb). Tenement area +68.3km2.
Old workings in Cantabria historically intersected karst-filled “ore bags” and recorded multiple intersections of 20-30m widths
and grades of 18-35% Zn.
8 > Variscan Mines Limited Annual Report 2019
Review of Operations
Near term production potential (subject to positive exploratory work) at the former producing Novales underground mine.
World’s second largest zinc smelter (Glencore owned, Asturias) within trucking distance (~80km) with excellent infrastructure
and local support for potential future mine development.
The Guajaraz Project is centred around the former producing La Union underground mine together with the adjacent Mina La
Blanca and Mina Manolita mines which forms a large surrounding exploration opportunity.
Figure 5. Location of the Novales-Udias and Guajaraz Projects
Initial Consideration for the Transaction is A$2.2 million payable through the issue of 1,100,000,000 new ordinary shares
to the Vendors at a price of A$0.002 per ordinary share (the ‘Issue Price’), subject to shareholder approval. The Company
will also assume obligations to repay debt of A$0.6 million in cash. Additional milestone-based consideration, conditional
on the delineation of JORC Mineral Resources (as summarised below) of A$2.2 million is to be satisfied through the issue
of a further 1,100,000,000 new ordinary shares to the Vendors at the Issue Price subject to shareholder approval and ASX
waiver. The vendors have agreed to a voluntary escrow of these shares.
FRANCE
Variscan completed the sale of its subsidiary, Variscan Mines SAS and its 20% interest in the Couflens asset to Apollo
Minerals Limited on 14 September 2018. As a condition of the approval of this sale, the French government cancelled most
of the Group’s remaining French mineral licences.
AUSTRALIA
The Group maintains several minority interests or net smelter royalties in a number of exploration licences in New South
Wales.
9 > Variscan Mines Limited Annual Report 2019
Review of Operations
FINANCIAL & CORPORATE
Board & Management Changes
On 30 September 2018, the Board undertook a significant restructure, with Messrs Elliot and Jones resigning from the
Company, and the appointment of Mr Mark Pitts, the Company Secretary, as a non-executive director. Furthermore, Mr
Kwan Chee Seng resigned as a director but has remained as an alternate director to Dr Foo Fatt Kah. In addition to these
board changes, the administrative functions of the Company were moved from Sydney to Perth, resulting in significant cost
savings for the Group. This process was completed in September 2019 with the transition of the Company’s auditors from
the Sydney firm to the Perth firm of HLB Mann Judd.
Competent Persons Statement
Where the Company refers to exploration results previously advised to the ASX it confirms that it is not aware of any new
information or data that materially affects the information included in previous announcements and all material assumptions
and technical parameters disclosed in those announcements continue to apply and have not materially changed.
10 > Variscan Mines Limited Annual Report 2019
Directors’ Report
Your directors submit their report for the year ended 30
June 2019.
University College London and holds an MBA from
Henley Business School.
Directors
The names and details of the Company’s directors in
office during the financial year and until the date of this
report are as follows. Directors were in office for this
entire period unless otherwise stated.
Dr Foo Fatt Kah, MB, BCh, BAO, MBA
Non-Executive Chairman
Dr Foo was appointed a Director of the Company on 7
October 2009. Dr Foo is the Managing Director and co-
founder of Luminor Capital, a private equity fund
management company based in Singapore. He has over
20 years’ experience in the investment banking, fund
management and advisory businesses spanning Europe
and Asia. He was previously Head of Asian Equities for
SG Securities Asia (the Asian Investment Banking
business for Societe Generale) covering 10 Asian
countries ex-Japan. Since 2004 Dr Foo has been active
as an investor, overseeing investments in Resources,
Energy and Healthcare.
Dr Foo is qualified in Medicine (MB, B Ch, BAO) and
Business Administration (M.B.A.) from the Queen's
University, United Kingdom, with further continuing
education qualifications from Insead on Economic Value
Added (EVA) and International Project Management. He
has experience with listed companies in Singapore,
being previously Executive Director of CyberVillage
Holdings Ltd and currently Lead Independent Director of
PEC Ltd.
During the past three years Foo Fatt Kah has not served
as a director of any other ASX listed company.
Stewart Dickson, BA (Hons), MBA
Managing Director
Stewart was appointed a Director of the Company
on 1 May 2017. Stewart is an experienced corporate
financier with a decade of
investment banking
experience. Most recently, he was Managing Director
and Head of Metals & Mining at Cantor Fitzgerald
Europe, based in London. He had responsibility for client
coverage of public and private mining companies across
precious metals and base metals, bulks, fertilizers and
specialty metals. He has a broad range of international
financial advisory, equity capital markets and corporate
broking transaction experience including initial public
offerings, financings and M&A.
Prior to investment banking, Mr Dickson served in the
British Army as a commissioned officer and saw
operational service overseas. Stewart is a graduate of
11 > Variscan Mines Limited Annual Report 2019
He was appointed as a Non-Executive Director of Trans-
Siberian Gold plc on 19 September 2017, a gold
producer listed on the AIM market of the London Stock
Exchange.
During the past three years Stewart Dickson has not
served as a director of any other ASX listed company.
Michael Moore BEng (Hons),
MAusIMM, MAICD
Non-executive director
Mike was appointed a Non-Executive Director on 4
August 2015.
Mike is a mining engineer from the Camborne School of
Mines with over 20 years operational and executive
management experience across a diverse range of
commodities in Australia, Indonesia, West Africa and
Europe.
He has previously held senior and executive
management roles with a number of companies including
Rock Australia Mining & Civil Pty Ltd, Carnegie Minerals
PLC and with ASX listed Montezuma Mining Company
Ltd where he was CEO.
Mike is a member of the Australian Institute of Company
Directors and the Australian Institute of Mining and
Metallurgy. Mike is currently serving as Managing
Director of Golden State Mining Limited as well as
serving on the board of Cape Care.
During the past three years Michael Moore has not
served as a director of any other ASX listed company.
Mark Pitts, BBus, FCA, GAICD
Non-executive director and Company
Secretary
Mark was appointed Company Secretary of
the
Company on 2 March 2018 and as a non-executive
director from 30 September 2018.
Mark is a Fellow of Chartered Accountants Australia and
New Zealand and a graduate member of the Australian
Institute of Company Directors. He has more than 30
years’ experience in statutory reporting and business
administration.
Mark has been directly involved with and consulted to a
number of public companies holding senior financial
management positions. He is a Partner in the corporate
advisory firm Endeavour Corporate providing company
secretarial support; corporate and compliance advice to
a number of ASX listed public companies.
Directors’ Report
During the past three years Mark Pitts served as a
director Mareterram Limited. Mareterram Limited was
removed from the official list of the ASX on 15 April 2019.
Kwan Chee Seng
Alternate director to Dr Foo Fatt Kah
Chee Seng was appointed a Director of the Company on
17 February 2009. He has over 30 years of experience
in management and investment as a businessman in
various sectors such as renewable sustainable energy,
base metal resources and the biotechnology business.
He also has extensive experience as an investor,
particularly in the area of Mergers and Acquisitions
(M&A).
from
In 2001, he acquired various local and international
operations
the engineering division of SGX
Mainboard-listed Van der Horst Limited (now known as
Interra Resources Limited). After the acquisition, he
restructured and rationalised the acquired entities, and
successfully divested them with significant returns.
Besides being the Chairman of his investment holding
company, Chee Seng has sat on the Boards of
numerous listed companies as a major shareholder.
Presently, he sits on the Board of SGX Mainboard-listed
GRP Limited as an Executive Director and is responsible
for the Group's property business development. He is
also a Non-Executive Director of SGX Catalist-listed
Starland Holdings Limited, an 83.5% indirectly owned
subsidiary of GRP Limited. Thus, he brings to Variscan
a unique set of skills with an M&A angle.
During the past three years Kwan Chee Seng has not
served as a director of any other ASX listed company.
Gregory Jones, BSc (Hons), MAusIMM,
MAIG
Former Executive Technical Director –
resigned 30 September 2018
During the past three years Gregory had also served as
a director of the following other listed companies:
Eastern Iron Limited – appointed April 2009, resigned 27
November 2017
During the past three years Patrick had also served as a
director of the following other listed companies:
Argonaut Resources NL – appointed June 2003
Global Geoscience Limited – appointed April 2003
Directors' interests in shares and
options
As at the date of this report, the interests of the Directors
in the shares and options of Variscan Mines Limited
were:
Shares directly and
indirectly held
57,756,974
9,598,043
Options
directly and
indirectly held
24,207,716
20,000,000
367,098,218
164,817,372
4,000,000
-
-
-
Directors
F K Foo
S Dickson
C S Kwan
M Moore
M Pitts
Principal activities
The principal continuing activity of the consolidated entity
is the exploration of economic metal and mineral
deposits.
Results
The net result of operations of the consolidated entity
after applicable income tax was a loss of $451,709
(2018: $6,997,545). This
from
discontinued operations of $672,943 (2018: loss of
$5,801,194) and the write-off of exploration expenditure
during the year of $243,290 (2018: $184,051). The loss
from continuing operations after income tax for the year
was $1,124,652 (2018: $1,196,351)
includes a gain
Dividends
No dividends were paid or proposed during the year.
Review of operations
The Group’s review of operations can be found on pages
3 to 10 of this report.
Silver City Minerals Limited – appointed April 2009
Thomson Resources Ltd – appointed July 2009
Significant changes in the state of
affairs
Moly Mines Limited – appointed August 2014, resigned
9 April 2018
Patrick Elliott, BCom, MBA, CPA
Former Chairman – resigned 30
September 2018
The Directors are not aware of any significant changes
in the state of affairs of the Group occurring during the
financial period, other than as disclosed in this report.
Significant events after the reporting
date
There were, at the date of this report, no matters or
circumstances which have arisen since 30 June 2019
12 > Variscan Mines Limited Annual Report 2019
Directors’ Report
that have significantly affected or may significantly affect
the operations of the Group, the results of those
operations, or the state of affairs of the Group, in future
financial years, other than:
On 1 July 2019
the Company announced an
Amendment to the Option Agreement to acquire the
Rosario Copper Project
in Chile (the “Unilateral
Purchase Option Contract”). Through this amendment,
the Company has, subsequent to year end, made
payment of USD25,000 to acquire a 10.4% interest in
the project. Further staged payments of up
to
USD2,250,000 can be made by the Company to
increase its ownership interest to 90%. Finally, upon the
satisfaction of certain milestones, a maximum additional
amount of USD2,000,000 may be payable to the
vendors;
located
in Spain
On 29 July 2019 the Company announced that it had
entered into an agreement to acquire two advanced zinc
projects
from Slipstream Resources
Investments Pty Ltd. The two projects, Novales-Udias
and Guajaraz, include granted mining tenements and
are
jurisdictions.
in established mining
Consideration to acquire the projects is through the
issue of 1,100,000,000 ordinary shares at $0.002 ($2.2
million) and the assumption of $0.6m in cash debt.
Additional milestone-based consideration of up to
1,100,000,000 shares at $0.002 ($2.2 million) may be
payable upon the satisfaction of certain performance
milestones. Finally, shareholder approval and a
minimum equity raising of $2.4 million is required to
complete the transaction; and
On 2 August 2019 the Company allotted 287,500,000
ordinary shares at $0.002 per share raising $575,000
before costs.
Indemnification and insurance of
directors and officers
The Company has not, during or since the end of the
financial period, in respect of any person who is or has
been an officer of the Company or a related body
corporate, indemnified or made any relevant agreement
for indemnifying against a liability incurred as an officer,
including costs and expenses in successfully defending
legal proceedings. The Company maintains adequate
Directors and Officers insurance coverage.
Insurance premiums
During the financial period 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 or
officer of the Company, other than conduct involving a
wilful breach of duty in relation to the Company.
13 > Variscan Mines Limited Annual Report 2019
The premiums paid are not disclosed as such disclosure
is prohibited under the terms of the contract.
Environmental performance
Variscan holds exploration licences issued by New South
Wales Department of Industry - Resources and Energy
and
the South Australian Department of State
Development and PER’s issued pursuant to French
mining laws which specify guidelines for environmental
impacts in relation to exploration activities. The licence
conditions provide for the full rehabilitation of the areas
of exploration in accordance with the relevant guidelines
and standards. There have been no significant known
breaches of licence conditions.
Likely developments and expected
results
As the Group’s mineral projects are at an early stage of
exploration,
likely
developments and any expected results.
is not possible
to postulate
it
The Group is advancing with the identification of new
opportunities outside of France, notably with the option
over the Rosario Project in Chile, which was amended
subsequent to year end to provide the Group with an
interest of 10.4% in the project. Furthermore, the Group
has entered into an agreement to, subject to shareholder
approval and a successful capital raising, acquire two
advanced zinc projects in Spain which will further
diversify the Group’s exploration asset portfolio, while
also diversifying geological and commodity price risks.
The Group also retains a substantial shareholding in
Thompson Resources and several minor interests in
Joint Ventures in Australia.
Shares under option or issued on
exercise of options
Details of unissued shares or interests under option for
Variscan Mines Limited as at the date of this report are:
No. shares
under
option
593,384,943
10,000,000
10,000,000
613,384,943
Class
of
share
Ord
Ord
Ord
Exercise
price of
option
$0.008
$0.03
$0.05
Expiry date
of options
31 May 2021
20 Nov 2021
20 Nov 2022
The holders of these options do not have the right, by
virtue of the option, to participate in any share issue of
the Company or of any other body corporate or
registered scheme.
Refer to the Remuneration Report and Notes 12 & 13 to
the financial statements for further details of the options
outstanding.
Directors’ Report
Remuneration report (audited)
This remuneration report for the year ended 30 June
2019 outlines the remuneration arrangements of the
Group in accordance with the requirements of the
Corporations Act 2001 (the Act) and its regulations. This
information has been audited as required by section
308(3C) of the Act.
The remuneration report details
the remuneration
arrangements for key management personnel (KMP)
who are defined as those persons having authority and
responsibility for planning, directing and controlling the
major activities of the Company and the Group, directly
or indirectly, including any director (whether executive or
otherwise) of the parent company.
Details of key management personnel
Details of KMP of the Group are set out below.
Directors
Dr Foo Fatt Kah
Non-Executive Chairman
Stewart Dickson
Managing Director
Mike Moore
Non-Executive Director
Kwan Chee Seng
Alternate Director
Mark Pitts
Patrick Elliott
Gregory Jones
Dr Jack Testard
Executives
Wendy Corbett
Michelle Lilley
Ivo Polovineo
Non-Executive Director
(appointed 30 September
2018) and Company
Secretary (appointed 2
March 2018)
Non-Executive Chairman
(resigned 30 September
2018)
Executive Technical Director
(resigned 30 September
2018)
Executive Director
(resigned 29 March 2018)
Managing Geologist (until 30
June 2018) 1
Finance Manager (until 30
June 2018) 1
Company Secretary
(resigned 2 March 2018)
1 – Wendy Corbett and Michelle Lilley have been
assessed as not meeting the definition of “executives”
for the year ended 30 June 2019.
Remuneration philosophy
The objective of the Company’s remuneration framework
is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework
14 > Variscan Mines Limited Annual Report 2019
aligns executive reward with achievement of strategic
objectives and the creation of value for shareholders.
The Board believes that executive remuneration satisfies
the following key criteria:
Competitiveness and reasonableness;
Acceptability to shareholders;
Performance
linkage/alignment
of
executive
compensation;
Transparency; and
Capital management.
These criteria result in a framework which can be used
to provide a mix of fixed and variable remuneration, and
a blend of short- and long-term incentives in line with the
Company’s limited financial resources.
Fees and payments to the Company’s Non-Executive
Directors and Senior Executives reflect the demands
which are made on, and the responsibilities of, the
Directors and the senior management. Such fees and
payments are reviewed annually by the Board. The
Company’s Executive and Non-Executive Directors,
Senior Executives and Officers are entitled to receive
options under the Company’s Employee Share Option
Plan (“ESOP”).
Non-Executive Directors remuneration
arrangements
Directors are entitled to remuneration out of the funds of
the Company but the remuneration of the Non-Executive
Directors (NED) may not exceed in any year the amount
fixed by the Company in general meeting for that
purpose. The aggregate remuneration of the NEDs has
been fixed at a maximum of $250,000 per annum to be
apportioned among the NEDs in such a manner as the
Board determines. Directors are also entitled to be paid
reasonable
travelling, accommodation and other
expenses incurred in consequence of their attendance at
Board meetings and otherwise in the execution of their
duties as Directors.
The Chairman’s fee is set at $50,000 p.a. and NED fees
at $36,000 p.a. which are consistent with industry
average fees. At present, no Committee fees are paid to
Directors.
As a result of feedback received from shareholders at the
Company’s 2017 and 2018 annual general meetings, the
Company undertook a significant restructure of the
board’s composition and, as a result, has reduced total
payments to Key Management Personnel by $372,448
or 47%. No remuneration consultants were engaged for
this process.
Directors’ Report
Performance on shareholder wealth
In considering the Group’s performance and benefits for shareholder wealth, the Board have regarded to the following
indices in respect of the current and previous four financial years:
Loss per share (cents)
Net loss ($)
Share Price at 30 June
Service agreements
2019
(0.04)
(451,709)
$0.0015
2018
(0.97)
(6,997,545)
$0.0030
2017
2016
2015
(0.70)
(3,914,121)
$0.0076
(0.38)
(0.98)
(1,360,558)
(1,929,515)
$0.0153
$0.0240.
Remuneration and other terms of engagement for key management personnel are formalised in contractor agreements.
Details of these arrangements are set out below:
Managing Director – Stewart Dickson
Contract term: No fixed term. Either party may terminate the letter of employment with six months’ notice.
Remuneration: £105,000 p.a. plus VAT as applicable (2018: £172,500 p.a. plus VAT) as at 30 June 2019. Mr Dickson’s annual
base fee was reduced from £172,500 on 26 October 2018, which will be reinstated upon the acquisition of a Company business
or assets. Upon satisfaction of this milestone, Mr Dickson will also be entitled to a cash bonus of £25,000 and £50,000 to be
satisfied through the issue of ordinary shares, subject to shareholder approval. Long term incentive 20,000,000 share options
(refer note 14) were issued to S Dickson and approved by shareholders at the Company’s AGM held on 6 November 2017.
The options will vest at the rate of 25% per year of each year of employment service by S Dickson.
Termination payments: Nil.
Non-executive Director and Company Secretary – Mark Pitts
Contract term: No fixed term. Either party may terminate the letter of employment with three months’ notice.
Remuneration: $36,000 per annum for non-executive director services and $12,000 per annum for Company Secretarial
services. Fees are paid to Endeavour Corporate Pty Ltd, an entity associated with Mr Pitts. Additional fees for accounting and
administration charges of $2,300 per month are paid to Endeavour Corporate.
Termination payments: Nil.
Directors and KMP remuneration (consolidated) for the year ended 30 June 2019
Long-
term
benefits
Share-
based
payments
Post-
employment
Short-term benefits
Cash
salary
and fees
$
46,500
Consulting
fees
$
-
-
231,421
36,000
27,000
9,000
12,000
12,500
-
23,000
-
-
-
143,000
254,421
F K Foo
S Dickson
M Moore
M Pitts(a)
C S Kwan(b)
G Jones(c)
P Elliott(d)
Totals
Shares in
lieu of
Directors
fees
$
Long
service
leave
$
Superannuation
$
Options (e)
$
-
-
-
-
-
3,000
-
3,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
46,500
-
24,700
256,121
-
-
-
-
-
36,000
50,000
9,000
15,000
12,500
Consisting
of options
%
-
10%
-
-
-
-
24,700
425,121
6%
(a) Appointed as a non-executive director on 30 September 2018. Amounts paid for his role as the Company Secretary
are included in Consulting Fees above.
(b) Resigned as a non-executive director on 30 September 2018 and appointed as an alternative director to Dr Foo Fatt
Kah. For his role as non-executive director, Mr Kwan receives no salary.
(c) Resigned 30 September 2018. Mr Jones agreed to take $1,000 per month of his fees as shares, which were approved
and issued subsequent to the Company’s 2018 annual general meeting.
(d) Resigned 30 September 2018.
(e) Represents the expenses recognised in this financial year for options issued previously.
15 > Variscan Mines Limited Annual Report 2019
Directors’ Report
Directors and KMP remuneration (consolidated) for the year ended 30 June 2018
Short-
term benefits
Cash
salary
and
fees
$
Shares in
lieu of
Directors’
fees (e)
$
Consu-
lting fees
$
Long-
term
benefits
Post
empl-
oyment
Long
service
leave
$
Super-
annuat-
ion
$
Share-based
payments
Shares in
lieu of
Directors’
fees (f)
$
Op-
tions
$
Total
$
Consis-
ting of
options
%
Directors
P Elliott
S Dickson
G Jones
C S Kwan
F K Foo
M Moore
J Testard (a)
12,500
-
-
255,568
38,448
9,000
9,000
11,257
44,468
-
-
-
-
-
37,500
33,726
21,952
27,000
27,000
24,000
-
-
-
37,500
-
-
-
-
Total Directors
124,673
255,568
171,178
37,500
Other key management personnel
M Pitts (b)
W Corbett
-
-
M Lilley (c)
100,201
I Polovineo (d)
-
Other KMP
100,201
16,000
3,930
16,020
36,600
72,550
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
784
-
784
-
-
9,519
-
9,519
-
-
50,000
13,800
5,867
308,961
3,600
-
-
-
2,329
-
-
-
-
-
101,500
36,000
36,000
36,041
46,797
-
2%
-
-
-
-
-
19,729
5,867
615,299
1%
-
-
-
-
-
-
-
-
-
-
16,000
3,930
125,740
36,600
182,270
-
-
-
-
-
Totals
224,874
328,118
171,178
37,500
10,303
19,729
5,867
797,569
1%
(a) Resigned 29 March 2018.
(b) Appointed 2 March 2018.
(c) Approximately $60,000 of M Lilley’s cash salary was on charged to other companies for her time and is included in
consulting revenue in the Consolidated Statement of Profit and Loss and Other Comprehensive Income.
(d) Resigned 2 March 2018.
(e) Proposed issuance of shares is subject to shareholder approval. Should the resolution not be passed then these
amounts will be paid in cash.
(f) For certain months during the reporting period, Executive Directors elected to receive shares in lieu of director fees.
The shares were approved at the Company’s AGM in November 2017.
Share holdings and transactions of Key Management Personnel
Balance at 1
July 2018 / on
appointment
Shares issued
on exercise of
options
Shares granted in
lieu of fees
Net change
other
Directors
F K Foo
S Dickson
M Moore
M Pitts
C S Kwan
G Jones (a)
P Elliott (b)
53,256,974
1,380,000
-
-
362,598,218
13,053,218
32,677,537
-
-
-
-
-
-
-
4,500,000
8,218,043
4,000,000
-
4,500,000
-
-
(a) Subsequent to his resignation, Mr Jones received 4,158,667 shares in lieu of fees.
(b) Subsequent to his resignation, Mr Elliott received 6,250,000 shares in lieu of fees.
Balance at 30
June 2019 /
upon
resignation
-
-
-
-
-
-
-
57,756,974
9,598,043
4,000,000
-
367,098,218
13,053,218
32,677,537
16 > Variscan Mines Limited Annual Report 2019
Directors’ Report
Option holdings and transactions of Key Management Personnel
Balance at 1
July 2018 / on
appointment
Granted as
remuneration
Net change other
Balance at 30
June 2019 /
upon
resignation
Vested and
exercisable at
30 June 2019
Directors
F K Foo
S Dickson
M Moore
M Pitts
C S Kwan
G Jones
P Elliott
25,207,716
20,000,000
1,000,000
-
166,317,372
2,800,000
9,751,870
-
-
-
-
-
-
(1,000,000)
24,207,716
24,207,716
-
20,000,000
10,000,000
(1,000,000)
-
-
-
-
--
(1,500,000)
164,817,372
164,817,372
-
-
2,800,000
9,751,870
-
-
Compensation options: granted and vested during the year
No options were granted during the current financial year. The following options were granted during the previous financial
year:
Share-based payments awarded during the previous financial year to Key Management
Personnel
KMP
S Dickson
Grant
date
6 Nov 2017
Granted
no.
Vested
no.
20,000,000 10,000,000
Vest-
ed
%
50
Total value of
options granted
(Note 13)
$
39,000
These options were issued in two equal tranches. The first tranche is exercisable at 3 cents per share on or before 20
November 2021. The second tranche is exercisable at 5 cents per share on or before 20 November 2022. Both tranches
vest on the basis of 25% on each anniversary date of the commencement of Mr Dickson’s appointment.
There were no alterations to the terms and conditions of options granted as remuneration since their grant date. There
were no forfeitures during the period.
The Company has established an ESOP for the benefit of Directors, officers, senior executives and consultants.
Transactions with directors and key management personnel
During the current year, amounts totalling $19,550 were paid to Endeavour Corporate Pty Ltd, a Company Associated with
Mr Mark Pitts, for accounting and administration services (2018: Nil).
During the prior year, the Company entered into a Loan agreement with two of its Directors, Dr Foo Fat Kah and Mr Kwan
Chee Seng. The loan amount was for $340,000 with a maturity date of June 2018. Interest of 18% was payable on maturity
of the loan and an amount of $15,300 interest was paid equally to each Director totalling $30,600. The loan amount and
interest were repaid in full in June 2018. No further loans were provided during to subsequent to the year ended 30 June
2019.
Directors' Benefits, Emoluments and Share Options
During its annual budget review, the Board reviews the Directors' Emoluments. Remuneration levels, including participation
in the Company's ESOP, are set to provide reasonable compensation in line with the Company's limited financial resources.
During the year no Director of the Company has received or become entitled to receive any additional benefits to their
ordinarily directors fees by reason of a contract made by the Company or a related corporation with the Director or with a
firm of which he is a member, or with a company in which he has a substantial financial interest.
Due to the difficulty in the measurement of performance using quantitative indicators in the mineral exploration industry,
there is no formal link between financial performance of the group and remuneration levels.
There is no retirement scheme for Non-Executive Directors.
End of Audited Remuneration report.
17 > Variscan Mines Limited Annual Report 2019
Directors’ Report
Meetings of directors
The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during
the financial year and the number of meetings attended by each Director for which they were entitled to attend.
P Elliott
F K Foo
S Dickson
M Moore
M Pitts
C S Kwan
G Jones
Board of directors
Held
Attended
Audit committee
Held
Attended
1
5
5
5
4
1
1
1
5
5
5
4
1
1
1
1
-
-
-
-
1
1
1
-
-
-
-
1
There were five meetings of the board of directors during the financial year, and one meeting of the audit committee.
Upon the resignation of Messrs Elliott and Jones on 30 September 2018, the Directors resolved that, due to the small size
of the board, the entire board should act as the Audit Committee. There is currently no remuneration committee. The Board
operates the functions of the Audit Committee and the Remuneration and Nomination Committee in accordance with each
committee’s Charter.
Non-audit services
Neither the Company’s current auditor nor previous auditor provided any non-audit services during the year ended 30 June
2019 (2018: Nil).
Signed this 27th day of September 2019 in accordance with a resolution of the Directors.
Stewart Dickson
Managing Director
18 > Variscan Mines Limited Annual Report 2019
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Variscan Mines Limited for the
year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
27 September 2019
N G Neill
Partner
19 > Variscan Mines Limited Financial Report 2019
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 30 June 2019
Income
Interest income
Gain on settlement of share based payments
Other income
Total income
Expenses
Compliance expenses
Professional services expenses
Finance expenses
Occupancy expenses
Depreciation and amortisation
Directors expenses
Employee benefits expense
Travel and accommodation expenses
Exploration expenditure expensed and written off
Share based payments
Impairment of financial assets
Decrease in value of financial assets
Other expenses
Total expenses
Foreign exchange
Realised gain/(loss) on foreign exchange
Unrealised gain/(loss) on foreign exchange
Total foreign exchange gain/(loss)
Note
3
12
3
5(a)
9
10
13
8
8
2019
$
16,569
97,641
250
114,459
(65,512)
(121,246)
(1,310)
(5,006)
(1,721)
(383,941)
(142)
(52,571)
(243,290)
(24,700)
-
(307,700)
(16,878)
2018
$
4,864
-
204,672
209,536
(76,730)
(179,858)
(30,600)
(49,358)
(1,435)
(524,351)
-
(18,479)
(184,051)
(5,867)
(235,300)
-
(101,141)
(1,224,017)
(1,407,170)
(15,141)
46
(15,095)
-
1,283
1,283
(Loss) from continuing operations before income tax expense
(1,124,652)
(1,196,351)
Income tax (expense)
(Loss) from continuing operations after income tax expense
Discontinued operations
Gain / (Loss) from discontinued operations
(Loss) for the year
Other comprehensive income/(loss)
Items that have been reclassified to profit or loss
Recognition of net exchange differences on disposal of foreign
operation
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income/(loss) for the period, net of tax
4
24
-
-
(1,124,652)
(1,196,351)
672,943
(451,709)
(5,801,194)
(6,997,545)
(527,210)
-
-
-
214,980
214,980
Total comprehensive (loss) for the period
(978,919)
(6,782,565)
Earnings/(Loss) per share (cents per share)
Basic and diluted (loss) per share – continuing operations
Basic and diluted earnings/(loss) per share – discontinued
operations
15
15
(0.09)
0.05
(0.04)
(0.17)
(0.80)
(0.97)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes
20 > Variscan Mines Limited Annual Report 2019
Consolidated Statement of Financial Position
As at 30 June 2019
Assets
Current assets
Cash and cash equivalents
Receivables
Assets classified as held for sale
Total current assets
Non-current assets
Investments
Property, plant and equipment
Deferred exploration and evaluation expenditure
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Liabilities directly associated with assets classified as held for sale
Total current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Note
2019
$
2018
$
6
7
24
8
9
10
11
24
948,358
19,088
-
967,446
362,000
-
37,908
399,908
1,367,354
1,898,067
43,157
378,486
2,319,710
669,700
1,721
90,268
761,689
3,081,399
117,620
-
117,620
556,513
410,414
966,927
117,620
1,249,734
966,927
2,114,472
12
14
24,456,205
24,366,724
153,822
891,632
(23,360,293)
(23,143,884)
1,249,734
2,114,472
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes
21 > Variscan Mines Limited Annual Report 2019
Consolidated Statement of Cash Flows
For the year ended 30 June 2019
Cash flows from operating activities
Payment to suppliers and employees
Consultancy fees and rental income received
R&D tax offset
Interest received
Note
2019
$
2018
$
(848,963)
(1,649,410)
7,553
-
19,314
213,975
628,273
2,337
Net cash flows used in operating activities
21
(822,096)
(804,825)
Cash flows from investing activities
Purchase of plant and equipment
Expenditure on mining interests (exploration)
Sale of available for sale assets
Cash disposed on sale of subsidiary
Deposit received for sale of subsidiary (discontinue operation)
Tenement security deposits & bank guarantees (paid)/recovered
-
(840)
(190,930)
(1,115,316)
-
(64,157)
-
6,565
567,055
-
200,000
-
Net cash flows used in investing activities
(248,522)
(349,101)
Cash flows from financing activities
Proceeds from issue of shares and options
Payment of share issue costs
Proceeds from borrowings
Payment for borrowing costs
Repayment of borrowings
Net cash flows (used in) / from financing activities
Net increase/(decrease) in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
21
Cash and cash equivalents at end of the year – continuing operations
Cash and cash equivalents at end of the year – discontinued operations
Cash and cash equivalents at end of the year
-
(2,638)
-
-
-
(2,638)
(1,073,256)
1,755
2,019,859
948,358
948,358
-
948,358
2,122,693
(44,531)
340,000
(30,600)
(340,000)
2,047,562
893,636
5,352
1,120,871
2,019,859
1,898,067
121,792
2,019,859
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
22 > Variscan Mines Limited Annual Report 2019
Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
At 1 July 2017
(Loss) for the period
Other comprehensive income/(loss)
Total comprehensive (loss) for the
period
Transactions with owners in their
capacity as owners:
Issue of share capital (net of share issue
costs)
Share based payments
Transfer expired options to
Accumulated losses
Transferred to loss for year on sale of
investments
Consolidated
Contributed
equity
$
Accumulated
losses
$
Reserves
$
Total equity
$
22,355,868
(16,364,161)
829,117
6,820,824
-
-
-
(6,997,545)
-
(6,997,545)
-
214,980
214,980
(6,997,545)
214,980
(6,782,565)
2,086,264
-
-
-
-
2,086,264
5,867
5,867
(75,408)
217,823
(142,415)
-
-
(1)
(15,917)
(15,918)
At 30 June 2018
24,366,724
(23,143,884)
891,632
2,114,472
At 1 July 2018 – as previously
reported
Impact of adoption of AASB 9
At 1 July 2018 – restated
(Loss) for the period
Other comprehensive income/(loss)
Total comprehensive (loss) for the
period
Transactions with owners in their
capacity as owners:
Share based payments
Share issue costs
At 30 June 2019
24,366,724
(23,143,884)
891,632
2,114,472
-
235,300
(235,300)
-
24,336,724
(22,908,584)
656,332
2,114,472
-
-
-
(451,709)
-
-
(527,210)
(451,709)
(527,210)
(451,709)
(527,210)
(978,919)
92,119
(2,638)
-
-
24,700
116,819
-
(2,638)
24,456,205
(23,360,293)
153,822
1,249,734
The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
23 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
1. Corporate information
The financial report of Variscan Mines Limited (Variscan or the Company) for the year ended 30 June 2019 was authorised
for issue in accordance with a resolution of the Directors on 27 September 2019. Variscan is a for-profit entity for the
purposes of preparing the financial statements.
Variscan Mines Limited (the parent) is a company limited by shares incorporated and domiciled in Australia whose shares
are publicly traded on the Australian Securities Exchange under ASX Code VAR.
The consolidated financial statements comprise the financial statements of Variscan Mines Limited and its subsidiaries
(the Group or Consolidated Entity).
The nature of the operations and principal activities of the Consolidated Entity are described in the Directors’ Report.
2. Summary of significant accounting policies
Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements
of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board. It has been prepared on a historical cost basis except for investments in listed shares and
derivative financial instruments, which are measured at fair value.
Statement of compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (IASB).
Accounting standards issued but not yet effective
Australian Accounting Standards and interpretations that have been issued or amended but are not yet effective have not
been adopted by the Consolidated Entity for the year ended 30 June 2019. The Consolidated Entity plans to adopt the
following standards which are considered relevant, at their application dates as detailed below.
AASB 16 Leases (effective 1 January 2019)
AASB 16 removes the classification of leases as either operating leases or finance leases for the lessee effectively treating
all leases as finance leases. Short term leases (less than 12 months) and leases of a low value are exempt from the lease
accounting requirements. Lessor accounting remains similar to current practice. The Directors have assessed the likely
impact of the adoption of AASB 16 and concluded that it is likely to be immaterial.
Adoption of new and revised standards
Standards and Interpretations applicable to 30 June 2019
In the year ended 30 June 2019, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Company and effective for the current reporting period beginning on or after 1
July 2018. As a result of this review, the Group has initially applied AASB 9 Financial Instruments and AASB 15 Revenue
from contracts with customers from 1 July 2018.
Due to the transition methods chosen by the Group in applying AASB 9 Financial Instruments and AASB 15 Revenue from
contracts with customers, comparative information throughout the interim financial statements has not been restated to
reflect the requirements of the new standards.
AASB 9 Financial Instruments
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement and makes changes to a number of
areas including classification of financial instruments, measurement, impairment of financial assets and hedge accounting
model.
Full details of the Company’s accounting policy regarding Financial Instruments is detailed below.
The Group has applied AASB 9 retrospectively with the effect of initially applying this standard recognised at the date of
initial application, being 1 July 2018 and has elected not to restate comparative information. Accordingly, the information
presented for 30 June 2018 has not been restated. The impact of the adoption of AASB 9, as compared to the previously
applicable standard, AASB 139, is as follows:
24 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
2. Summary of significant accounting policies (continued)
EQUITY
Equity attributable to equity holders of the parent
Contributed equity
Reserves
Accumulated losses
Total equity
AASB 139
30 June 2018
$
24,456,205
368,822
(23,150,119)
1,674,908
Impact of change
$
AASB 9
30 June 2018
$
-
24,456,205
(235,300)
235,300
133,522
(22,914,819)
-
1,674,908
There would be no impact on other balances or results for the comparative financial periods if the Group had elected to
restate comparative financial information.
On initial application date, an election has been made to designate available-for-sale financial instruments that are non-
derivative equity instruments at fair value through profit or loss (FVTPL). Previously recognised fair value adjustments in
the Investment Revaluation Reserve are transferred from the reserve to accumulated losses. As from the initial application
date further gains or losses will be recognised in the Profit or Loss. Where applicable, individually immaterial FVTPL equity
instruments have been aggregated for disclosure purposes.
As it is material to the Group, an adjustment of $235,300 has been made to accumulated losses and the Investment
Revaluation Reserve as at 1 July 2018 and has been recognised in the Statement of Changes in Equity for the year ended
30 June 2019.
AASB 15 Revenue from Contracts with Customers
From 1 July 2018 the Group has adopted AASB 15 which replaces AASB 118 Revenue, AASB 111 Construction Contracts
and several revenue related Interpretations. The standard provides a single comprehensive model for revenue recognition.
The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or
services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement
approach that is based on an allocation of the transaction price. Credit risk is presented separately as an expense rather
than adjusted against revenue.
Since 1 July 2018, the Group recognises revenue as follows, which has not changed from prior periods:
Rendering of services
Revenue from consulting services are recognised when provided.
Interest
Interest revenue is recognised as interest accrues using the effective interest method.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
The adoption of AASB 15 has not had any effect on the financial performance or position of the Group. No adjustment was
required to be recognised to the opening balance of accumulated losses at 1 July 2018 as a result of the adoption of AASB
15.
Other amending Accounting Standards and interpretations
Several other amending Accounting Standards and Interpretations apply for the first time for the reporting period
commencing 1 July 2018. These other amending Accounting Standards and Interpretations did not result in any
adjustments to the amounts recognised or disclosures in the interim financial report.
Basis of consolidation
The consolidated financial statements comprise the financial statements of Variscan Mines Limited (Variscan or the
Company) and its subsidiaries (collectively, the Group) as at 30 June each year.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using
consistent accounting policies.
25 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
2. Summary of significant accounting policies (continued)
All intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group
transactions have been eliminated in full.
Non-controlling interests are allocated their share of profit after tax and are presented within equity in the consolidated
statement of financial position, separately from the equity of the owners of the parent. Losses are attributable to the non-
controlling interest even if that results in a deficit balance.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated
from the date on which control is transferred out of the Group. At this date, any retained interest in the entity is remeasured
to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount
for the purposes of subsequently accounting for the retained interest as an associate.
Going Concern
The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities
and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Directors believe that
the Group will have sufficient working capital to meet its minimum project development and administrative expenses in the
next twelve months following the date of signing of the financial report.
On 29 July 2019 the Company announced that it had entered into an agreement to acquire two advanced zinc projects in
Spain, in conjunction with the raising of $3 million via placement to sophisticated and institutional investors, in the following
tranches:
-
-
Tranche 1 was completed on 2 August 2019 via the issue of 287,500,000 ordinary fully paid shares at $0.002 per
share, raising $575,000 before costs, utilising the Company’s existing security placement capacity under ASX
listing rules 7.1 and 7.1A; and
Tranche 2 is expected to be completed, upon the granting of shareholder approval, via the issue of approximately
1,200,000,000 shares at an issue price of $0.002 per share, raising approximately $2,400,000. Furthermore, the
Company will seek approval to accept up to an additional $1,000,000.
Of this total amount raised, approximately $600,000 will be used in satisfaction of the cash payments to acquire the Spanish
zinc projects, with the rest being available to further the Company’s planned exploration and evaluation projects as well as
general working capital.
Should shareholder approval not be obtained, or the proposed capital raising not be successful, the Directors are confident
that the existing capital of the Company is sufficient to continue work upon the Rosario copper project, investigate further
opportunities and meet ongoing working capital requirements for a period of at least twelve months from the date of this
report.
Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred in a business
combination shall be measured at fair value, which shall be calculated as the sum of the acquisition-date fair values of the
assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity
issued by the acquirer, and the amount of any non-controlling interest in the acquiree. For each business combination, the
acquirer measures the non-controlling interest in the acquiree either at fair value of at the proportionate share of the
acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting
policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in
host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity
interest in the acquiree is remeasured at fair value as at the acquisition date through profit or loss.
26 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
2. Summary of significant accounting policies (continued)
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be
recognised in accordance with AASB 139 either in profit or loss or in other comprehensive income. If the contingent
consideration is classified as equity, it shall not be remeasured.
Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short-term
deposits, with a maturity date not exceeding six months, readily convertible to a known amount of cash and subject to an
insignificant risk of change in value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as
defined above, net of outstanding bank overdrafts, if any.
Exploration, evaluation, development
Exploration and evaluation
Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area of
interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure, but does
not include general overheads or administrative expenditure not having a specific connection with a particular area of
interest.
Exploration and evaluation costs in relation to separate areas of interest for which rights of tenure are current are brought
to account in the year in which they are incurred and carried forward provided that:
Such costs are expected to be recouped through successful development and exploitation of the area, or alternatively through
its sale; and
Exploration and/or evaluation activities in the area have not yet reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves.
Once a development decision has been taken, all past and future exploration and evaluation expenditure in respect of the
area of interest is aggregated within costs of development.
Exploration and evaluation – impairment
The Group assesses at each reporting date whether there is an indication that an asset has been impaired and for
exploration and evaluation costs whether the above carry forward criteria are met.
Accumulated costs in respect of areas of interest are written off or a provision made in the profit or loss when the above
criteria do not apply or when the Directors assess that the carrying value may exceed the recoverable amount. The costs
of productive areas are amortised over the life of the area of interest to which such costs relate on the production output
basis.
Provisions are made where farm-in partners are sought and there is a possibility that carried-forward expenditures may
have to be written off in the future if a farm-in partner is not found. In the event that farm-in agreements are reached or the
Group undertakes further exploration in its own right on those properties, the provisions would be reviewed and if
appropriate, written back.
Investments and other financial assets
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of
the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial
asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is
derecognised when it is extinguished, discharged, cancelled or expires.
27 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
2. Summary of significant accounting policies (continued)
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the
transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction
costs (where applicable).
For the purpose of subsequent measurement, financial assets, other than those designated and effective as hedging
instruments, are classified into the following categories:
amortised cost
fair value through profit or loss (FVTPL)
equity instruments at fair value through other comprehensive income (FVOCI)
debt instruments at fair value through other comprehensive income (FVOCI).
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs,
finance income or other financial items, except for impairment of trade receivables which is presented within other
expenses.
The classification is determined by both:
the entity’s business model for managing the financial asset
the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs,
finance income or other financial items, except for impairment of trade receivables which is presented within other
expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as
FVTPL):
they are held within a business model whose objective is to hold the financial assets to collect its contractual cash flows
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and
most other receivables fall into this category of financial instruments as well as listed bonds that were previously classified
as held-to-maturity under AASB 39.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are
categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual
cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments
fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting
requirements apply.
The category also contains an equity investment. The Group accounts for the investment at FVTPL and did not make the
irrevocable election to account for the investment in unlisted and listed equity securities at fair value through other
comprehensive income (FVOCI). The fair value was determined in line with the requirements of AASB 9, which does not
allow for measurement at cost.
Assets in this category are measured at fair value with gains or losses recognised in profit or loss.
The fair values of financial assets in this category are determined by reference to active market transactions or using a
valuation technique where no active market exists.
28 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
2. Summary of significant accounting policies (continued)
Equity instruments at fair value through other comprehensive income (Equity FVOCI)
Investments in equity instruments that are not held for trading are eligible for an irrevocable election at inception to be
measured at FVOCI.
Under Equity FVOCI, subsequent movements in fair value are recognised in other comprehensive income and are never
reclassified to profit or loss.
Dividend from these investments continue to be recorded as other income within the profit or loss unless the dividend
clearly represents return of capital.
This category includes unlisted equity securities that were previously classified as ‘available-for-sale’ under AASB 139.
Any gains or losses recognised in other comprehensive income (OCI) are not recycled upon derecognition of the asset.
Debt instruments at fair value through other comprehensive income (Debt FVOCI)
Financial assets with contractual cash flows representing solely payments of principal and interest and held within a
business model of collecting the contractual cash flows and selling the assets are accounted for at debt FVOCI.
The Group accounts for financial assets at FVOCI if the assets meet the following conditions:
they are held under a business model whose objective it is to “hold to collect” the associated cash flows and sell financial assts;
and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the asset
Trade and other receivables
The Group makes use of a simplified approach in accounting for trade and other receivables and records the loss allowance
as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for
default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience,
external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.
The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics
they have been grouped based on the days past due.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the
Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives
and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised
in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are
included within finance costs or finance income.
Interest in jointly controlled operations – joint ventures
The Group has an interest in exploration joint ventures that are jointly controlled. A joint venture is a contractual
arrangement whereby two or more parties undertake an economic activity that is subject to joint control. A jointly controlled
operation involves use of assets and other resources of the venturers rather than establishment of a separate entity. The
Group recognises its interest in the jointly controlled operations by recognising the assets that it controls and the liabilities
that it incurs. The Group also recognises the expenses that it incurs and its share of any income that it earns from the sale
of goods or services by the jointly controlled operations.
29 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
2. Summary of significant accounting policies (continued)
Plant and equipment
Plant and equipment assets are stated at historical cost less accumulated depreciation and any accumulated impairment
losses.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset, namely motor vehicles and
plant and equipment – depreciated over 2 - 5 years (2018: 2 - 5 years).
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate
the carrying value may not be recoverable.
An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected
from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and
the carrying amount of the item) is included in the profit or loss in the period the item is derecognised.
Leases
In determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating
leases.
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease
term.
Trade and other payables and provisions
Trade payables and other payables are carried at amortised cost. They represent liabilities for goods and services provided
to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make
future payments in respect of the purchase of these goods and services.
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the profit or loss net of any reimbursement.
If the effect of the time value of money 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 where appropriate, the risks
specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Employee entitlements
Wages, salaries, annual leave, and long service leave
Liabilities for wages and salaries are recognised and are measured as an amount unpaid at the reporting date at current
pay rates in respect of employee’s services up to that date.
Superannuation
The Group contributes to defined contribution superannuation funds for its employees. The cost of these contributions is
expensed as incurred. A liability in respect of superannuation at the current superannuation guarantee rate has been
accrued at the reporting date.
30 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
2. Summary of significant accounting policies (continued)
Share-based payment transactions
In addition to salaries, the Group provides benefits to certain employees (including Directors) of the Group in the form of
share-based payment transactions, whereby employees render services in exchange for shares or rights over shares
(“equity-settled transactions”).
There is currently an Employee Share Option Plan in place to provide these benefits.
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which
they are granted. The fair value of the options is determined by using the Black-Scholes or binomial option pricing model,
or in the case of listed options, the listed option price at the date the options were issued.
In valuing transactions settled by way of issue of options, no account is taken of any vesting limits or hurdles, or the fact
that the options are not transferable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in
which the vesting conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the
award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the
extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that
will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of
these conditions is included in the determination of fair value at grant date. The profit or loss charge or credit for a period
represents the movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon
a market condition.
If the terms of an equity-settled award are modified, at a minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of the cancellation, and any expense not
yet recognised is recognised immediately. However, if a new award is substituted for the cancelled award and designated
a replacement award on the date it is granted, the cancelled and the new award are treated as if there was a modification
of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per
share except where such dilution would serve to reduce a loss per share.
Revenue recognition
Revenue is recognised to depict the transfer of promised goods or services to customers at an amount that reflects the
consideration expected to be entitled in exchange for those goods or services. The following specific recognition criteria
must also be met before revenue is recognised.
Rendering of services
Revenue from consulting services are recognised when provided.
Interest
Revenue is recognised as interest accrues using the effective interest method.
Royalties
Royalties are recognised in accordance with substance of the relevant agreement.
Contract exploration
Contract exploration revenue (consulting fees) earned from third parties is recognised when rights to receive the revenue
are assured.
31 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
2. Summary of significant accounting policies (continued)
Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted
or substantively enacted by the reporting date.
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
Except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or
loss.
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:
Except where the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss.
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse
in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be
utilised.
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 reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the profit or loss.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
Where the GST incurred on the 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.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables
in the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising
from investing and financial activities, which is recoverable from, or payable to, the taxation authority are classified as
operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
32 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
2. Summary of significant accounting policies (continued)
Currency
Functional currency translation
The functional and presentation currency for the parent company is Australian dollars ($). The functional currency of
overseas subsidiaries is the local currency.
Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at
the date of the translation. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of
exchange at the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value was determined.
Translation of Group Companies’ functional currency to presentation currency
In the comparative period, the results of the French subsidiary were translated into Australian Dollars (presentation
currency). Income and expenses for each profit or loss item were translated at the average exchange rate, unless this was
not a reasonable approximation of the cumulative effects of the rates prevailing on the transaction dates, in which case
income and expenses were translated at the dates of the transactions. Assets and liabilities were translated at exchange
rates prevailing at reporting date. All resulting exchange differences were recognised in other comprehensive income, until
the date of disposal of the net investment in the foreign operation, at which point the cumulative amount of the foreign
currency translation reserve was recognised in the net loss for the year.
Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s
recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and
is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those
from other assets or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such
cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount
of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered
impaired and is written down to its recoverable amount.
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. Impairment
losses relating to continuing operations are recognised in those expense categories consistent with the function of the
impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation
decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying
amount of the asset is increased to its recoverable amount. The increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is
treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the
asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
33 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
2. Summary of significant accounting policies (continued)
Recoverable amount of assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an
indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of
an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the higher of fair value less costs to sell and value in use.
Significant accounting judgements, estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future
events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of certain assets and liabilities within the next annual reporting period are:
Share-based payment transactions
The Company measures the cost of equity-settled share-based payments at fair value at the grant date using the Black-
Scholes formula taking into account the terms and conditions upon which the instruments were granted and estimates of
volatility.
Capitalisation and write-off of capitalised exploration costs
The determination of when to capitalise and write-off exploration expenditure requires the exercise of judgement based on
assessments of results, various assumptions and other factors such as historical experience, current and expected
economic conditions. Refer to Note 10 for further details.
Earnings/Loss per share
Basic earnings/loss per share is calculated as net profit/loss attributable to members of the Group, adjusted to exclude any
costs of servicing equity divided by the weighted average number of ordinary shares.
Diluted earnings/loss per share is calculated as net profit/loss attributable to members of the Group, adjusted for:
Costs of servicing equity.
The after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as
expenses.
Other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential
ordinary shares.
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus
element.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Managing Director.
Non-current assets (or disposal groups) held for sale and discontinued operations.
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured
at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets
arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights
under insurance contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less
costs to sell. A gain in recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal
group), but not in excess of any cumulative impairment loss previously recognised. A gain of loss not previously recognised
by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.
34 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
2. Summary of significant accounting policies (continued)
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are
classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held
for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented
separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are
presented separately from other liabilities in the Statement of Financial Position.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to
dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately in the profit or loss. The Consolidated Statement of Profit and
Loss and Other Comprehensive Income’s comparative figures at 30 June 2018 have been restated to reflect the
reclassification of the discontinued operation.
3.
Income
Income
Interest income
Rental income
Consulting fees
Gain on sale of investments
Miscellaneous income
4.
Income tax
Prima facie income tax (credit) on operating (loss) at 27.5% (2018:
27.5%)
Deferred tax assets not recognised
Other
Income tax expense
2019
$
16,569
-
-
-
250
16,819
2018
$
4,864
72,855
115,900
15,917
-
209,536
2019
$
2018
$
(124,220)
(1,924,325)
124,199
1,924,325
21
-
-
-
No provision for income tax is considered necessary in respect of the Company for the period ended 30 June 2019.
The Group has a deferred income tax liability of Nil (2018: Nil) associated with exploration costs deferred for accounting
purposes but expensed for tax purposes. No recognition has been given to any deferred income tax asset which may arise
from available tax losses. The Company has estimated its losses at $13,479,386 (2018: $12,749,266) as at 30 June 2019.
A benefit of 27.5% (2018: 27.5%) of approximately $3,706,831 (2018: $3,506,048) associated with the tax losses carried
forward will only be obtained if:
The Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the
deductions for the losses to be realised;
The Company continues to comply with the conditions for deductibility imposed by the law; and
No changes in tax legislation adversely affect the Company in realising the benefit from the deductions for the losses.
35 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
4.
Income tax
Tax consolidation
Variscan Mines Limited and its 100% owned subsidiaries (Bluestone 23) formed a tax consolidated group with effect from
1 November 2007. Variscan Mines Limited is the head entity of the tax consolidated group. No amounts have been
recognised in the financial statements in respect of this agreement on the basis that the possibility of default is remote.
There are Nil (2018: Nil) unrecognised tax losses attributable to Variscan Mines SAS which is not tax consolidated with
the parent company.
Franking credits
Franking credits of $2,810,116 (2018: $2,810,116) are available for subsequent years.
The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for:
Franking credits that will arise from the payment of the amount of the provision for income tax,
Franking debits that will arise from the payment of dividends recognised as a liability at the reporting date, and
Franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of
subsidiaries were paid as dividends.
5. Auditors’ remuneration
(a) Audit Services
Amounts received or due and receivable by:
HLB Mann Judd (NSW) Partnership, for:
Audit and review of the financial report of Variscan Mines Limited
Amounts received or due and receivable by:
HLB Mann Judd (Western Australian Partnership), for:
Audit and review of the financial report of Variscan Mines Limited
Total remuneration for Audit Services
2019
$
2018
$
49,718
48,300
16,5001
66,218
-
48,300
On 5 September 2019, the Company announced that HLB Mann Judd (NSW) Partnership had resigned as the Company’s
auditors and HLB Mann Judd (Western Australian Partnership) were appointed.
1 – represents the accrual for the audit of the financial report for the year ended 30 June 2019.
6. Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
2019
$
948,358
-
948,358
2018
$
97,923
1,800,144
1,898,067
Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amount of cash and cash
equivalents represents fair value.
Short-term deposits are made for varying periods of between one day and six months, depending on the immediate cash
requirements of the Group, and earn interest at the respective short-term deposit rates.
36 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
7. Receivables
Current
Trade Debtors
GST/VAT receivable
Interest receivable
Prepayments
Rental bonds
Other debtors
2019
$
-
4,134
-
14,954
-
-
19,088
2018
$
7,303
13,290
2,746
12,834
6,565
419
43,157
Receivables are non-interest bearing and generally 30-day terms and trading terms are being followed by debtors and
there are no overdue amounts. An allowance for impairment loss is recognised when there is objective evidence that it is
impaired. No allowance for impairment loss is required. The amounts not past due have been assessed to be not impaired.
8.
Investments
Investment –TMZ
(a)
2019
$
362,000
362,000
2018
$
669,700
669,700
(a)
The market value on ASX of the Group’s 18,100,000 shares in Thomson Resources Ltd (TMZ) at 30 June 2019
was $362,000 ($0.02 per share).
9. Property, plant and equipment
Motor vehicle
$
Plant and
equipment
$
Year ended 30 June 2018
Opening net book amount
Additions
Depreciation expense – continuing
operations
Depreciation expense – discontinued
operations
Transferred to discontinued operations
Closing net book amount
At 30 June 2018
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2019
Opening net book amount
Depreciation expense
Closing net book amount
At 30 June 2019
Cost
Accumulated depreciation
Net book amount
37 > Variscan Mines Limited Annual Report 2019
11,245
-
-
(9,073)
(2,172)
-
-
-
-
-
-
-
-
-
-
105,744
840
(1,435)
(47,531)
(55,897)
1,721
70,370
(68,649)
1,721
1,721
(1,721)
-
-
-
-
Total
$
116,989
840
(1,435)
(56,604)
(58,069)
1,721
70,370
(68,649)
1,721
1,721
(1,721)
-
-
-
-
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
10. Deferred exploration and evaluation expenditure
Exploration and evaluation phase:
Costs brought forward
Costs incurred during the year
Expenditure written off during the year
2019
$
90,268
37,908
(90,268)
Held for sale – costs incurred during the year
Held for sale – expenditure written off during the year (Note 24)
Held for sale – deferred exploration balance (Note 24)
Costs carried forward
Exploration expenditure costs carried forward are made up of:
Expenditure on joint venture areas
Capitalised costs to acquire interest in Rosario Copper project - Chile
Costs carried forward
-
-
-
37,908
-
37,908
37,908
2018
$
4,374,186
86,753
(85,253)
1,024,413
(5,217,180)
(92,651)
90,268
90,268
-
90,268
The above amounts represent costs of areas of interest carried forward as an asset in accordance with the accounting
policy set out in Note 2. The ultimate recoupment of deferred exploration and evaluation expenditure in respect of an area
of interest carried forward is dependent upon the discovery of commercially viable reserves and the successful
development and exploitation of the respective areas or alternatively sale of the underlying areas of interest for at least
their carrying value. Amortisation, in respect of the relevant area of interest, is not charged until a mining operation has
commenced.
In accordance with Note 2, the Directors write off exploration expenditure where they assess that the asset is impaired.
Exploration expenditure is written off either by a reassessment by the Group that has reduced the interpreted potential of
the licence for mineral deposits and, or a joint venture partner has withdrawn from a project.
During the financial year ended 30 June 2019, the Directors reviewed the carrying value of the assets carried forward as
Deferred Exploration and Evaluation Expenditure and determined that they should be written off, as they related to the
Company’s previous interest in Australian exploration projects, which the Company continues to retain royalty rights and
other non-controlling rights to. Since completion of the disposal of the Company’s French assets during the period, it has
focused its exploration resources on its Chilean copper project and to identifying new projects.
11. Current liabilities – payables
Trade creditors *
Accrued expenses
GST payable
Apollo Minerals deposit for sale of French subsidiary **
Accrued payroll and payroll deductions
2019
$
54,212
63,408
-
-
-
117,620
2018
$
130,292
210,161
664
200,000
15,396
556,513
* Trade creditors are non-interest bearing and are generally settled on 30 day terms.
** During the comparative period the Company received $200,000 being the initial cash consideration for the sale of its
French subsidiary. The $200,000 was part of the overall consideration payable by Apollo Minerals to Variscan totalling up
to a maximum of $4.25m. In September 2018, legal completion of the sale of the French subsidiary occurred and
accordingly the above $200,000 has been recognised in the net gain on disposal of foreign operations in the current
financial year.
38 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
12. Contributed equity
Share capital
2019
$
2018
$
1,271,073,585 (2018: 1,239,446,875) ordinary shares fully paid
25,061,842
24,969,723
Option issue consideration reserve
593,384,943 (2018: 593,384,943) listed options on issue
Share issue costs
528,604
(1,134,241)
24,456,205
528,604
(1,131,603)
24,366,724
*A further 20,000,000 (Director and employees) unlisted options are included under Share-based payments in Note 13.
Movements in ordinary shares on issue
At 1 July 2017
Shares issued
Shares issued
Shares issued
Transfer to options issue consideration reserve
Transfer to options issue consideration reserve
Number
$
674,088,999
1,972,933
362,377,339
201,007,604
-
-
(a)
(b)
(c)
(d)
(e)
23,198,422
19,729
1,449,509
804,030
(322,574)
(179,393)
At 30 June 2018
1,239,446,875
24,969,723
Shares issued in lieu of directors’ fees
(f)
31,626,710
92,119
At 30 June 2019
1,271,073,585
25,061,842
(a)
(b)
(c)
(d)
(e)
(f)
The Company issued 1,972,933 shares at $0.010 per share in December 2017 to Directors in lieu of a proportion
of the Directors’ cash remuneration payable by the Company for the quarter commencing 1 October 2017 which
was approved by shareholders at the AGM held on 6 November 2017.
The Company issued 362,377,339 shares at $0.004 per share in May 2018 under a Rights Issue. An attaching one
for one free listed option was issued under the Rights Issue. These options were valued at $322,574 leaving a value
of $1,126,934 to be allocated to share capital.
The Company issued 201,007,604 shares at $0.004 per share in June 2018 under a placement of Shortfall relating
to the Rights Issue referred to in (e). An attaching one for one free listed option was issued. These options were
valued at $179,393 leaving a value of $624,637 to be allocated to share capital.
Value of the options in (e) transferred to option issue consideration reserve of $322,574.
Value of the options in (f) transferred to option issue consideration reserve of $179,393.
The Company issued 24,410,210 shares at $0.002 per share and 7,216,500 shares at $0.006 per share in
December 2018 to Directors in lieu of a proportion of Directors’ cash remuneration payable by the Company for the
period from 1 July 2017 to 30 September 2018 which was approved by shareholders at the AGM held on 5
November 2018. These shares were issued in full satisfaction of outstanding directors’ fees totalling $189,760, and
accordingly, a gain has been recorded within the loss for the year of $97,641.
39 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
12. Contributed equity (continued)
Movements in options on issue
At 1 July 2017
Expiry of unlisted options
Listed options granted
Listed options granted
At 30 June 2018
At 30 June 2019
Number
$
(a)
(b)
(c)
29,347,830
(29,347,830)
563,384,943
30,000,000
593,384,943
593,384,943
75,408
(75,408)
501,968
26,636
528,604
528,604
(a)
(b)
(c)
A total of 29,347,830 unlisted options with an exercise price of $0.05 per share expired on 29 January 2018.
The Company issued 563,384,943 listed options with an exercise price of $0.008 per shares and expire on 31 May
2021 under the Rights Issue and placement of Shortfall in May and June 2018. The options were valued at a total
of $501,968 using a Black Scholes methodology with an expected volatility of 80% and average risk-free rate of
2.78% which led to an estimated value of $0.0009 per option
The Company issued 30,000,000 options with an exercise price of $0.008 per shares and expire on 31 May 2021
under the Rights Issue and placement of Shortfall in May and June 2018. These options were approved by Board
to be issued prior to 30 June 2018 and were issued on 9 July 2018. The options were valued at a total of $26,636
using a Black Scholes methodology with an expected volatility of 80% and risk-free rate of 2.61% which led to an
estimated value of $0.0009 per option.
An additional 20,000,000 options are on issue under Share-based payments Note 13.
Terms and conditions of contributed equity
Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate
in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Options
Options do not carry voting rights or rights to dividends until options are exercised.
13. Share-based payments
Types of share-based payment plans
Share-based payments
An Employee Share Option Plan (ESOP) has been established where selected officers, employees and consultants of the
Company can be issued with options over ordinary shares in Variscan Mines Limited. The options, issued for nil
consideration, will be issued in accordance with a performance review by the Directors. The options cannot be transferred
and will not be quoted on the ASX. Options expire if not exercised 90 days after a participant resigns from the Company.
There have been no cancellations or modifications to any of the plans during 2019 and 2018.
40 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
13. Share-based payments (continued)
Summary of options granted by the parent entity
Outstanding at the beginning of the year
Granted during the year
Expired during the year
Outstanding at the end of the year
2019
no.
32,450,000
-
(12,450,000)
20,000,000
2018
no.
28,100,000
20,000,000
(15,650,000)
32,450,000
The outstanding balance as at 30 June 2019 is represented by:
10,000,000 which expire on 20 November 2021 exercisable at $0.03 per share
10,000,000 which expire on 20 November 2022 exercisable at $0.05 per share
There are an additional 593,384,943 listed options under Contributed Equity in Note 12 which is represented by:
593,384,943 which expire on 31 May 2021 exercisable at $0.008 per share
Weighted Average disclosures for options granted by the parent entity
Weighted average exercise price of options at 1 July
Weighted average exercise price of options granted during period
Weighted average exercise price of options expired during period
Weighted average exercise price of options outstanding at 30 June
Weighted average exercise price of options exercisable at 30 June
Weighted average contractual life remaining
Range of exercise price
Option pricing model and terms of options
2019
$0.05
-
$0.05
$0.04
$0.04
2.89
2018
$0.06
$0.04
-
$0.04
$0.05
2.56
$0.03 - $0.05
$0.03 - $0.05
The following table lists the inputs to the options model and the terms of options granted in Variscan Mines Limited:
Issue
date
Nov 17
Nov 17
Number of
options
issued
10,000,000
Exer-
cise
price
$0.03
Expiry
date
20 Nov 21
Expect-
ed
volatility
80.00%
Risk-
free
rate
2.58%
Expect-
ed life
years
4.0
10,000,000
$0.05
20 Nov 22
80.00%
2.58%
5.0
Estimat-
ed fair
value
$0.0020
$0.0019
Model used
Black Scholes
Black Scholes
(a)
(a)
20,000,000
(a) 20,000,000 options were issued to Managing Director of the Company S Dickson and approved by shareholders at
the Company’s AGM held on 6 November 2017. The options will vest at the rate of 25% per year of each year of
employment service by Mr Dickson and recognised over this vesting period.
41 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
14. Reserves
Share-based compensation reserve
Investment revaluation reserve
Foreign currency translation reserve
Share-based compensation reserve
Balance at the beginning of financial year
Share-based payment expense
Transfer expired options to Retained Earnings
Balance at end of financial year
Investment revaluation reserve
Balance at the beginning of financial year
(i)
(ii)
Investment revaluation reserve adjustment on sale of investment
Impact of initial adoption of AASB 9
Balance at end of financial year
Foreign currency translation reserve
(iii)
Balance at the beginning of financial year
Effect of exchange rate fluctuation
Recognition of net exchange differences on disposal of foreign
operation
Balance at end of financial year
(i) Share-based compensation reserve
2019
$
153,822
-
-
153,822
2019
$
129,122
24,700
-
153,822
235,300
-
(235,300)
-
527,210
-
(527,210)
2018
$
129,122
235,300
527,210
891,632
2018
$
265,670
5,867
(142,415)
129,122
251,217
(15,917)
-
235,300
312,230
214,980
-
-
527,210
The share-based compensation reserve is used to recognise the fair value of unlisted options issued but not exercised
as described in Note 2 and referred to in Note 13.
(ii)
Investment revaluation reserve
The investment revaluation reserve recognised the gain or loss (excluding impairment losses) on available for sale
investments as per Note 8 for the year ended 30 June 2018. Upon initial adoption of AASB 9, the investment was
classified as Fair Value through Profit or Loss and the balance of the reserve was transferred to the opening
accumulated losses balance.
(iii) Foreign currency translation reserve
The foreign currency translation reserve recognised the net exchange differences on foreign operations. Upon
disposal of the net investment in the foreign operation during the year, the balance was recognised in the net gain or
loss on disposal.
42 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
15. Earnings/(Loss) per share
Earnings/(loss) used in calculating basic and diluted earnings/(loss)
per share:
From continuing operations
From discontinued operations
Weighted average number of ordinary shares outstanding during the
year used in calculation of basic EPS
Basic and diluted earnings/(loss) per share:
From continuing operations
From discontinued operations
2019
$
2018
$
(1,124,652)
672,943
(451,709)
(1,196,351)
(5,801,194)
(6,997,545)
Number
Number
1,260,069,223
721,193,122
Cents per share
Cents per share
(0.09)
0.05
(0.04)
(0.17)
(0.80)
(0.97)
For the year ended 30 June 2019, all potential ordinary shares for the calculation of diluted loss per share from continuing
operations are considered anti-dilutive. Potential ordinary shares for the calculation of diluted loss per share from
discontinued operations have been assessed to have nil impact on with weighted average number of shares and therefore
no impact on earnings per share.
For the year ended 30 June 2018, all potential ordinary shares for the calculation of diluted loss per share from both
continuing and discontinued operations are considered anti-dilutive.
16. Key management personnel
Key management personnel (KMP) remuneration
Compensation for key management personnel
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Share-based payments
Total compensation
17. Related party disclosures
Subsidiaries
2019
$
400,421
-
-
24,700
425,121
2018
$
724,170
37,500
10,303
25,596
797,569
The consolidated financial statements include the financial statements of Variscan Mines Limited (the Parent Entity) and
the following subsidiaries:
% Equity interest
$ Investment
Name
Bluestone 23 Pty Ltd
Variscan Mines SAS
Country of
incorporation
Australia
France
Variscan Mines Europe Limited *
UK
2019
100
-
100
2018
100
100
100
2019
5,000
-
1
2018
5,000
2,461,379
1
Variscan Mines SAS (France) was disposed on 14 September 2018. Variscan Mines Europe Limited was incorporated
on 29 January 2018.
43 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
17. Related party disclosures (continued)
Transactions with key management personnel
During the prior year, the Company entered into a Loan agreement with two of its Directors, Dr Foo Fat Kah and Mr Kwan
Chee Seng. The loan amount was for $340,000 with a maturity date of June 2018. Interest of 18% was payable on maturity
of the loan and an amount of $15,300 interest was paid equally to each Director totalling $30,600. The loan amount and
interest were repaid in full in June 2018.
During the current year, amounts totalling $19,550 were paid to Endeavour Corporate Pty Ltd, a Company Associated with
Mr Mark Pitts, for accounting and administration services (2018: Nil).
18. Joint ventures
The Company is a party to a number of exploration joint venture agreements to explore for copper, gold, zinc, lead and
uranium. Under the terms of the agreements the Company may be required to contribute towards the exploration and other
costs if it wishes to maintain or increase its percentage holdings. The joint ventures are not separate legal entities. There
are contractual arrangements between the participants for sharing costs and future revenues in the event of exploration
success. There are no assets and liabilities attributable to Variscan at reporting date resulting from these joint ventures.
Percentage equity interests in joint ventures at 30 June 2019 were as follows:
Variscan Mines Limited
(New South Wales – gold, base metals and iron)
Hillston – diluting to 16%
Mundi Plains1
Callabonna – diluting to 30%
Junction Dam –base and precious metals rights
Junction Dam – uranium rights3
% interest 2019
39.2%
% interest 2018
39.2%
-
49%
9.9%
0%
12.4%
49%
9.9%
0%
1 – During the period the Company’s 12.4% interest in the Mundi Plains Joint Venture lapsed.
2 - Junction Dam – uranium rights. The Company has retained a 3.75% net profits royalty on production from a uranium
mine.
19. Segment information
The operating segments identified by management are as follows:
1. Exploration projects funded directly by Variscan (“Exploration”) operating in France and Australia and;
2.
Investments in other companies (“Investing”).
Regarding the Exploration segment, the Board of Directors receives information on the exploration expenditure incurred.
This information is disclosed in Note 10 of this financial report. No segment revenues are disclosed as each exploration
tenement is not at a stage where revenues have been earned. Furthermore, no segment costs are disclosed as all segment
expenditure is capitalised, with the exception of expenditure written off which is disclosed in Note 10.
Regarding the Investing segment, the Board of Directors reviews the value of investments held in other exploration
companies. The value of the investing segment is disclosed in Note 8 of this financial report. Segment revenues and other
income are disclosed in Note 3 (interest received and gains on disposal of investments). Financial information about each
of these tenements is reported to the Managing Director on an ongoing basis.
Corporate office activities are not allocated to operating segments as they are not considered part of the core operations
of any segment and comprise of the following:
Interest revenue
Corporate costs
Depreciation and amortisation of non-project specific property, plant and equipment.
The Group’s accounting policy for reporting segments is consistent with that disclosed in Note 2.
44 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
20. Commitments
Lease commitments
The Company previously had obligations under the terms of lease agreements for office premises in France as follows:
Payable not later than one year
Payable later than one year and not later than five years
2019
$
-
-
-
2018
$
39,057
27,754
66,811 *
* The above amount formed part of the sale of the French subsidiary and has been netted off against the transaction
consideration.
Exploration licence expenditure requirements
In order to maintain the Group’s tenements in good standing with the various mines departments, the Group may be
required to incur exploration expenditure under the terms of each licence.
There are nil exploration licence commitments at year end (2018: nil).
21. Statement of Cash Flows
Reconciliation of net cash outflow from operating activities to
operating loss after income tax
Operating loss after income tax
Depreciation
Exploration expenditure expensed or written-off
Share-based payment expense
Impairment of investments
Gain on settlement of share-based payments
Shares issued in lieu of fees
Provisions for annual leave and long service leave
Foreign exchange variances
Non-cash gain on disposal of foreign operation
Non-cash gain on sale of investment
Other
Change in assets and liabilities:
(Increase)/decrease in receivables
(Decrease)/increase in trade and other creditors
Net cash outflow from operating activities
2019
$
(451,709)
1,721
243,290
24,700
307,700
(97,641)
18,582
-
(1,755)
(816,774)
-
-
17,505
(67,715)
(822,096)
2018
$
(6,997,545)
54,382
5,302,432
5,867
235,300
-
(72,853)
-
-
(15,917)
59,311
489,520
134,678
(804,825)
For the purpose of the Statement of Cash Flows, cash includes cash on hand, at bank, deposits and bank bills used as
part of the cash management function. The Group does not have any unused credit facilities.
The balance at 30 June comprised:
Cash and cash equivalents (including cash balance classified as held
for sale)
Money market securities – bank deposits (Note 6)
Cash on hand
2019
$
948,358
-
948,358
2018
$
219,715
1,800,144
2,019,859
45 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
22. Financial risk management objectives and policies
The Company’s Board considers the Company’s overall risk management framework and policies, including quarterly
review by the Board of the Company’s financial position and financial forecasts and maintaining adequate insurances.
AASB 7 requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial
instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity
analysis to market risk.
Capital management
The Group considers its capital to comprise its ordinary share capital and its retained earnings, net of accumulated losses.
In managing its capital, the Group’s primary objective as an explorer is to maintain a sufficient funding base to enable the
Group to meet its working capital and strategic investment needs. The Group has no debt at the year end hence has a nil
gearing ratio.
In making decisions to adjust its capital structure to achieve these aims, either through altering its new share issues, or
consideration of debt, the Group considers not only its short-term position but also its long-term operational and strategic
objectives.
Financial instrument risk exposure and management
As is common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.
These main risks, arising from the group’s financial instruments are interest rate risk, liquidity risk, share market risk and
credit risk. This note describes the Group’s objectives, policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect of these risks is presented throughout these financial
statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated
in this note.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and has
the responsibility for designing and operating processes that ensure the effective implementation of the objectives and
policies to the Group’s finance function. The Board receives quarterly reports through which it reviews the effectiveness of
the processes put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Group’s competitiveness and flexibility. Further details regarding these policies are set out below:
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty
in meeting its financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become
due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a
period of at least 45 days.
The Board receives cash flow projections on a monthly basis as well as information regarding cash balances. At balance
date, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under
all reasonably expected circumstances.
46 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
22. Financial risk management objectives and policies (continued)
Interest rate risk
At reporting date, the Group is exposed to floating weighted average interest rates at 30 June 2019 for financial assets as
follows:
Weighted average rate of cash balances
Cash balances
Weighted average rate of term deposits and at call accounts
Term deposits and at call accounts
All other financial assets and liabilities are non-interest bearing
The Group’s exposure to interest rate risk is set out in the following tables:
2019
2018
0.02%
$948,358
-
-
0.02%
$219,715
2.03%
$1,800,144
Risk exposure and responses
Pre tax loss
Equity
Judgements of reasonably possible movements:
Lower/ (higher)
Lower/ (higher)
Consolidated
+1% (100 basis points)
-1% (100 basis points)
Share market risk
2019
$
9,483
2018
$
20,199
2019
$
9,483
2018
$
20,199
(9,483)
(20,199)
(9,483)
(20,199)
The Company relies greatly on equity markets to raise capital for its exploration activities and is thus exposed to equity
market volatility. When market conditions require, for prudent capital management, in consultation with its professional
advisers the Group looks to alternative sources of funding, including the sale of assets and royalties.
Credit risk
Credit risk arises principally from the Group’s cash, cash equivalents, receivables and tenement security deposits.
The Group’s exposure to credit risk arises from potential default of the counter party, with the maximum exposure equal to
the carrying amount of these instruments.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the
Group’s policy to securitise its trade and other receivables.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts
is not significant.
Foreign currency risk
The Group is exposed to foreign currency risk on purchases that are denominated in a currency other than the Australian
dollar. The Group does not enter into derivative financial instruments to hedge such transactions denominated in a foreign
currency. The Group is primarily exposed to change in USD/$ exchange rates for the year ended 30 June 2019, although
this exposure and all other foreign currency exposure during the current financial year has been assessed as immaterial.
During the year ended 30 June 2018, the Company had a material exposure with respect to EURO/$ exchange rates. The
sensitivity of profit or loss to changes in the exchange rates arose mainly from Euro expenditure in the Group’s French
operation during the prior financial year and the impact on other components of equity arose from foreign currency
translations.
47 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
22. Financial risk management objectives and policies (continued)
Sensitivity
EURO/$ exchange rate – increase 10%
EURO/$ exchange rate – decrease 10%
Exposure
Impact on post tax
profit
Impact on other
components of equity
2019
$
-
-
2018
$
(102,253)
102,253
2019
$
-
-
2018
$
66,886
(66,886)
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars, was as
follows (the Group has no material exposure to EURO foreign currency risk for the year ended 30 June 2019):
Trade receivables
Trade payables
Exploration asset
Other receivables
EURO converted to AUD
2019
$
-
-
-
2018
$
35,154
116,441
92,651
Other receivables comprise GST. Credit worthiness of debtors is undertaken when appropriate.
Equity price risk
Price risk arises from investments in equity securities. All significant equity investments held by Variscan are publicly traded
on the ASX. The price risk for listed securities is material in terms of the possible impact on profit and loss or total equity
and as such a sensitivity analysis is completed below. The capacity of the Company to raise capital from time to time may
be influenced by either or both market conditions and the price of Variscan’s quoted shares at that time.
At balance date, the Group is exposed to a stock exchange risk on its investments (Note 8). The Group’s exposure to
share price movement is set out in the following tables:
Risk exposure and responses
Pre tax loss
Equity
Judgements of reasonably possible movements in
share prices:
Consolidated
+20%
-20%
Accounting policies
Lower/ (higher)
Lower/ (higher)
2019
$
-
-
2018
$
-
-
2019
$
2018
$
72,400
133,940
(72,400)
(133,940)
Accounting policies in relation to financial assets and liabilities and share capital are contained in Note 2.
Fair value of financial assets and liabilities
The fair value of all monetary financial assets and financial liabilities of the Group approximate their carrying value.
There are no off-balance sheet financial asset and liabilities at year-end.
All financial assets and liabilities are denominated in Australian dollars during the year ended 30 June 2019. During the
year ended 30 June 2018, the Group held a bank account though Variscan SAS, the French subsidiary and a Euro bank
account held by the parent entity.
Fair value risk
The group uses three different methods in estimating the fair value of a financial investment. The methods comprise -
48 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
22. Financial risk management objectives and policies (continued)
Level 1 – the fair value is calculated using quoted prices in active markets; and
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices)
Level 3 – the fair value is estimated using inputs other than quoted prices.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the
tables below.
2019
Financial assets
Investments
Total financial assets
2018
Financial assets
Investments
Total financial assets
Quoted market
price
(Level 1)
Valuation technique
market observable
inputs
(Level 2)
Valuation technique
non market
observable inputs
(Level 3)
$
362,000
362,000
$
$
-
-
-
-
Quoted market
price
(Level 1)
$
669,700
669,700
Valuation technique
market observable
inputs
(Level 2)
Valuation technique
non market
observable inputs
(Level 3)
$
$
-
-
-
-
Total
$
362,000
362,000
Total
$
669,700
669,700
Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting
date without any deduction for transaction costs.
The fair value of derivatives that do not have an active market are based on valuation techniques. Level 2 derivatives
include market observable inputs whilst level 3 derivatives do not include market observable inputs.
Transfer between categories
There were no transfers between levels during the year.
23. Parent entity information
Information relating to the parent entity Variscan Mines Limited:
Current assets
Total assets
Current liabilities
Total liabilities
Net Assets
Issued capital
Accumulated losses
Investment revaluation reserve
Share based payment reserve
Total shareholders’ equity
(Loss) of the parent entity
Other comprehensive income
Total comprehensive (loss) of the parent entity
2019
$
964,994
1,156,080
117,620
117,620
1,038,460
24,456,205
(23,571,567)
-
153,822
1,038,460
(3,210,772)
(527,210)
(3,737,982)
2018
$
1,879,596
4,829,364
556,513
556,513
4,272,851
24,366,724
(20,360,795)
137,800
129,122
4,272,851
(1,138,232)
182,823
(955,409)
The parent entity has lease commitments as stated in Note 20. The parent entity holds the lease commitment for its
subsidiaries.
49 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
24. Discontinued operations
On 14 September 2018, legal completion of the sale of the French subsidiary (Variscan Mines SAS) to Apollo Minerals
Limited occurred.
(a) Details of the sale of the subsidiary
Cash consideration received
Total sale consideration
Carrying amount of net liability sold
Gain on sale before income tax and reclassification of foreign currency translation
reserve
Income tax expense
Reclassification of foreign currency translation reserve
Gain on sale after income tax
Net liabilities at date of sale
Assets
Cash and cash equivalents
Receivables
Property, plant & equipment
Deferred exploration and evaluation expenditure
Total Assets
Liabilities
Trade and other payables
Provisions
Total Liabilities
Net liabilities at date of sale
14 Sep 2018
$
200,000
200,000
367,410
567,410
-
527,210
1,094,620
14 Sep 2018
$
64,157
16,664
48,397
95,257
224,475
(410,266)
(181,619)
(591,885)
(367,410)
50 > Variscan Mines Limited Annual Report 2019
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
24. Discontinued operations (continued)
(b) Financial performance and cash flows of the discontinued operation
The financial performance and cash flow information presented are for the period from 1 July 2018 to 14 September 2018
and the year ended 30 June 2018 respectively.
Financial Performance
CIR (R&D) refund
Exploration expenditure
Employee costs net of on-charges to exploration projects
Other operating expenses
Loss from discontinued operations
Income tax expense
Loss after income tax from discontinued operations
Gain on sale of subsidiary after income tax – refer (a)
Gain / (loss) from discontinued operations
Cash Flows
Cash flows from operating activities
Payments to suppliers and employees
CIR (R&D) refunds
Expenditure on mining interests (exploration)
Effects on exchange rate on cash
14 Sep 2018
30 June 2018
$
-
-
(349,227)
(72,450)
(421,677)
-
(421,677)
1,094,620
672,943
$
229,439
(5,217,180)
(470,837)
(342,616)
(5,801,194)
-
(5,801,194)
-
(5,801,194)
(134,815)
-
-
1,755
(660,221)
628,273
(1,028,563)
5,349
Net cash (outflows) from discontinued operations
(133,060)
(1,055,162)
(c) Assets and liabilities held for sale
The major classes of assets and liabilities comprising the operation classified as held for sale at 30 June 2018 are as
follows:
Current assets
Cash and cash equivalents
Receivables
Property, plant & equipment
Deferred exploration and evaluation expenditure
Assets classified as held for sale
Current liabilities
Trade and other payables
Provisions
Liabilities directly associated with assets classified as held for sale
Net liabilities classified as held for sale
51 > Variscan Mines Limited Annual Report 2019
30 June 2018
$
121,792
105,974
58,069
92,651
378,486
(256,818)
(153,596)
(410,414)
(31,928)
Consolidated Notes to the Financial Statements
For the year ended 30 June 2019
25. Events after the reporting date
There were, at the date of this report, no matters or circumstances which have arisen since 30 June 2019 that have
significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of
affairs of the Group, in future financial years, other than:
On 1 July 2019 the Company announced an Amendment to the Option Agreement to acquire the Rosario Copper Project in
Chile (the “Unilateral Purchase Option Contract”). Through this amendment, the Company has, subsequent to year end, made
payment of USD25,000 to acquire a 10.4% interest in the project. Further staged payments of up to USD2,250,000 can be
made by the Company to increase its ownership interest to 90%. Finally, upon the satisfaction of certain milestones, a maximum
additional amount of USD2,000,000 may be payable to the vendors;
On 29 July 2019 the Company announced that it had entered into an agreement to acquire two advanced zinc projects in Spain
from Slipstream Resources Investments Pty Ltd. The two projects, Novales-Udias and Guajaraz, include granted mining
tenements and are located in established mining jurisdictions. Consideration to acquire the projects is through the issue of
1,100,000,000 ordinary shares at $0.002 ($2.2 million) and the assumption of $0.6m in cash debt. Additional milestone-based
consideration of up to 1,100,000,000 shares at $0.002 ($2.2 million) may be payable upon the satisfaction of certain
performance milestones. Finally, shareholder approval and a minimum equity raising of $2.4 million is required to complete the
transaction; and
On 2 August 2019 the Company allotted 287,500,000 ordinary shares at $0.002 per share raising $575,000 before costs.
52 > Variscan Mines Limited Annual Report 2019
Directors’ Declaration
1.
In the directors’ opinion:
(a) the financial statements and notes set out on pages 20 to 52 are in accordance with the Corporations Act 2001,
including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019 and of its
performance for the financial year ended on that date; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2. The notes to the financial statements include a statement of compliance with International Financial Reporting
Standards.
3. The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer for the year
ended 30 June 2019 required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Stewart Dickson
Managing Director
27 September 2019
53 > Variscan Mines Limited Annual Report 2019
INDEPENDENT AUDITOR’S REPORT
To the members of Variscan Mines Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Variscan Mines Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June
2019, the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies, and the
directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the
Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. We have determined the matters described below to be the key audit
matters to be communicated in our report.
Key Audit Matter
Going Concern
Note 2
The Group has net assets of $1,249,734 and a
working capital surplus of $849,826 at 30 June
2019.
Cash balances of $948,358 were held at 30 June
2019 with the entity recording cash outflows of
$822,096 for the year then ended.
How our audit addressed the key audit
matter
We considered the appropriateness of the going
concern basis of accounting by evaluating and
testing the cash flow projections prepared by the
Group.
We vouched cash receipts of $575,000 from the
capital raising subsequent to balance date to
the
supporting documentation, assessed
reasonableness of forecast expenditure and
obtained representations from the directors as
54 > Variscan Mines Limited Financial Report 2019
Key Audit Matter
Going Concern (cont)
Note 2
If the directors of the Company deemed it
inappropriate for the financial statements to be
prepared on the going concern basis, the values of
certain assets and liabilities as set out in the
financial statements may have significantly
differed.
The going concern basis of accounting was a key
audit matter due to the potential for a material
uncertainty relating to this matter.
How our audit addressed the key audit
matter
to the adequacy of cash resources and the
completeness of financial statement disclosures
in respect of going concern.
Our responsibilities in respect of the going
concern basis of accounting are included below
under Auditor’s responsibilities for the audit of
the financial report. In the directors’ opinion the
receipt of funds subsequent to balance date
removed any uncertainty relating to going
concern.
We concur with the directors’ assessment.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report annual report for the year ended 30 June 2019, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
55 > Variscan Mines Limited Financial Report 2019
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
-
-
-
-
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year ended 30
June 2019.
In our opinion, the Remuneration Report of Variscan Mines Limited for the year ended 30 June 2019
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
27 September 2019
N G Neill
Partner
56 > Variscan Mines Limited Financial Report 2019
Schedule of Tenements
Schedule of Tenements, as at 24 September 2019
Tenement
Tenement No.
Interest Joint Venture Details
New South Wales
Broken Hill
Willyama
Hillston
Native Dog
Lachlan Fold Belt
EL 8075
EL 6363
EL 8236
0%
Note 1
39.2% Perilya can earn 80%, Eaglehawk 9.8%
0%
Note 1
Woodlawn South
ELs 7257 and 7469
0%
Royalty interest only
South Australia
Junction Dam
EL 5682
9.9%
Teck 87%, Eaglehawk 2.5%, Marmota 100% in
uranium rights only, Note 2
Callabonna
EL 5360
49%
Red Metal 51%, can earn 70%
France (Note 3)
St Pierre
Beaulieu
PER
PER
EL = Exploration Licence
PER = Permis Exclusif de Recherche (France)
100%
100%
Note 1: These tenements are subject to agreements with Silver City Minerals Limited whereby Silver City Minerals Limited
must meet expenditure commitments within various time frames. Under an agreement with Silver City Minerals
Limited, Broken Hill Operations and Eaglehawk Geological Consulting Pty Ltd, Variscan has converted its interest
in parts of these tenements to an NSR (Net Smelter Return).
Note 2: Marmota has earned 100% of the uranium rights only in EL 5682 (previously EL 4509). Variscan has retained a
3.75% net profits royalty on production from a uranium mine. These interests are calculated at 30 June 2019.
Note 3: The remaining exploration licences owned by Variscan Mines SAS (excluding the Couflens PER) have been
conditionally acquired by a new wholly owned subsidiary, Variscan Mines Europe Limited. Pursuant to the
approval for the Subsidiary Sale, the Ministry of Economy and Finance has imposed, without prior consultation,
the compulsory relinquishment of the remaining licences. The Company has approved the relinquishment request
and to-date three of the five remaining licences have been relinquished. The timetable for the completion of the
relinquishment process is unknown.
Note 4: On 1 July 2019 the Company announced that it had renegotiated the existing Unilateral Purchase Option Contract
(“Option Agreement”) with the vendors of the Rosario Copper Project to provide the Company with a participating
interest of 10.4% in the four original tenements, and also an additional license area referred to as “Abandonara”.
Details of these tenements are as follows:
Tenement (Note 4)
Tenement No.
Property Size
Rosario 6 1-40
0310259624
Rosario 7 1-60
0310259632
Rosario 101
03102N2229
Salvadora 1-14
0310231355
Abandonara
0310248487
194ha
190ha
300ha
60ha
100ha
57 > Variscan Mines Limited Annual Report 2019
Summary of Joint Ventures and Governance Framework
Summary of Joint Ventures, as at 24 September 2019
Callabonna EL 5360, SA
Variscan 49%. Red Metal has earned a 51% interest by spending $1 million and can earn a 70% interest by spending $3
million. Variscan then can contribute with 30% or reduce to a 15% interest, carried to completion of a BFS and repayable
from Variscan’s share of net proceeds of mine production.
Hillston EL 6363, NSW
Variscan 39.2% and Eaglehawk 9.8%, Perilya 51%. Perilya can earn an 80% interest in this tenement by completing
expenditure of $1.5 million. Variscan and Eaglehawk can then each participate with their respective interests of 16% and
4% or convert to a 10% and 2.5% free-carried interest to completion of a BFS. On completion of a BFS, Variscan and
Eaglehawk can participate or convert their interests to a NSR royalty.
Junction Dam EL 5682, SA
Variscan 9.9%, Teck 87% and Eaglehawk 2.5% in base and precious metal rights. Variscan can elect to participate at its
interest rate current at the time of election, or dilute to an NSR royalty.
Marmota Energy Limited has earned a 100% interest in the uranium rights only. Marmota is sole funding uranium
exploration and Variscan, Teck and Eaglehawk are entitled to receive a combined royalty of 5% Net Profits on any
production from a uranium mine on the tenement.
Woodlawn South ELs 7257 and 7469, NSW
Variscan holds an NSR royalty interest in both these tenements.
Willyama and Native Dog, ELs 8075 and 8236 NSW
Under various agreements with Silver City Minerals Limited, Variscan holds an NSR royalty interest in each of these
tenements.
Governance Framework
The Board of Variscan Mines Limited (Variscan) has responsibility for corporate governance for the Company and its
subsidiaries (the Group) and has implemented policies, procedures and systems of control with the intent of providing a
strong framework and practical means for ensuring good governance outcomes which meet the expectations of all
stakeholders.
The Corporate Governance Statement, dated 30 June 2019 and approved by the Board on 16 October 2019, sets out
corporate governance practices of the Group which, taken as a whole, represents the system of governance.
The framework for corporate governance follows the 3rd Edition of the ASX Corporate Governance Council’s Principles
and Guidelines. The Directors have implemented policies and practices which they believe will focus their attention and
that of their Executives on accountability, risk management and ethical conduct. The Board will continue to review its
policies to ensure they reflect any changes within the Group, or to accepted principles and good practice.
Where the Board considers the Group is not of sufficient size or complexity to warrant adoption of all the recommendations
set out in the ASX Corporate Governance Council’s published guidelines, these instances have been highlighted.
This Corporate Governance Statement together with governance policies and committee charters is available on our
website at https://www.variscan.com.au/index.php/corporate-information/corporate-governance.
58 > Variscan Mines Limited Annual Report 2019
Shareholder Information
Shareholder Information
Information relating to shareholders at 24 September 2019.
Ordinary fully paid shares
1,558,573,585 fully paid ordinary shares on issue.
Options
593,384,943 listed options and 20,000,000 unlisted options on issue.
Substantial shareholders
CITICORP NOMINEES PTY LIMITED
DELPHI UNTEMEHMENSBERATUNG AKTIENGESELLSCHAFT
As at 24 September 2019, there were 1,080 shareholders with less than a marketable parcel of $500.
Shareholding
347,397,172
227,500,000
Top 20 shareholders of ordinary shares
CITICORP NOMINEES PTY LIMITED
DELPHI UNTEMEHMENSBERATUNG AKTIENGESELLSCHAFT
WAINIDIVA PTY LTD
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
RHB SECURITIES SINGAPORE PTE LTD
MR CHEN-KANG WANG
RAREWEALTH CORPORATION PTY LTD
MR CHRIS CARR & MRS BETSY CARR
RECO HOLDINGS PTY LTD
SYRACUSE CAPITAL PTY LTD
MR BYRON SCHAMMER
JAWAF ENTERPRISES PTY LTD
MR PATRICK JAMES DYMOCK ELLIOTT
MR JOHN VIEIRA & MRS TRACEY LOIS VIEIRA
PANSTYN INVESTMENTS PTY LTD
SLAM CONSULTING PTY LTD
LAWRENCE CROWE CONSULTING PTY LTD
Number
347,552,747
227,500,000
60,000,000
55,053,529
44,182,278
40,054,075
31,220,010
30,000,000
27,000,000
26,019,030
21,500,000
20,919,992
20,000,000
19,673,421
19,583,333
19,254,117
17,238,730
16,700,000
16,662,190
15,131,619
%
22.3
14.6
3.8
3.5
2.8
2.6
2.0
1.9
1.7
1.7
1.4
1.3
1.3
1.3
1.3
1.2
1.1
1.1
1.1
1.0
1,075,245,071
483,328,514
1,558,573,585
69.0
31.0
100.0
No of shareholders
Ordinary shares
336
179
130
329
318
1,292
132,350
470,139
1,066,001
13,642,810
1,543,262,285
1,558,573,585
JETOSEA PTY LTD
DR FATT KAH FOO
Total of top 20 holdings
Other holdings
Total fully paid shares issued
Distribution of shareholders
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
59 > Variscan Mines Limited Annual Report 2019
Number
155,507,673
%
26.21
25,000,000
20,000,000
19,738,730
19,382,853
19,061,953
17,500,000
17,500,000
15,605,921
15,273,670
14,583,333
13,423,421
12,500,000
10,100,000
10,000,000
10,000,000
9,788,981
8,751,871
7,750,095
7,500,000
4.21
3.37
3.33
3.27
3.21
2.95
2.95
2.63
2.57
2.46
2.26
2.11
1.70
1.68
1.68
1.65
1.48
1.31
1.26
428,968,501
164,416,442
593,384,943
72.29
27.71
100.00
Shareholder Information
Top 20 option holders of listed options
CITICORP NOMINEES PTY LIMITED
RAREWEALTH CORPORATION PTY LTD
JAWAF ENTERPRISES PTY LTD
SLAM CONSULTING PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
RECO HOLDINGS PTY LTD
SYRACUSE CAPITAL PTY LTD
SCHAMMER PTY LTD
FIRST INVESTMENT PARTNERS PTY LTD
RHB SECURITIES SINGAPORE PTE LTD
MR JOHN VIEIRA & MRS TRACEY LOIS VIEIRA
MR PATRICK JAMES DYMOCK ELLIOTT
RAVEN INVESTMENT HOLDINGS PTY LTD
MR MARK ANDREW TKOCZ
LAWRENCE CROWE CONSULTING PTY LTD
RATDOG PTY LTD
MR MICHAEL SEAN HOBBS & MS ANN KELLY
PANSTYN INVESTMENTS PTY LTD
MS YAFEN ZHU
JETOSEA PTY LTD
Total of top 20 holdings
Other holdings
Total fully paid shares issued
Distribution of listed option holders
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Voting rights
Number of option holders
Options
9
9
4
34
116
172
6,523
31,557
34,702
1,482,966
591,829,195
593,384,943
There are no restrictions on voting rights for ordinary shares. On a show of hands every member present or by proxy shall
have one vote and upon a poll each share shall have one vote. Where a member holds shares which are not fully paid,
the number of votes to which that member is entitled on a poll in respect of those part paid shares shall be that fraction of
one vote which the amount paid up bears to the total issued price thereof.
Option holders have no voting rights until the options are exercised.
There is no current on-market buy-back.
60 > Variscan Mines Limited Annual Report 2019
Variscan Mines Limited (ASX:VAR)
ABN: 16 003 254 395