ASX Announcement – 29 October 2020
2020 ANNUAL REPORT
Variscan Mines Limited ("Variscan" or the "Company" or the “Group”) (ASX:VAR) is pleased to attach
the Annual Report for the year ending 30 June 2020.
ENDS
For further information:
Variscan Mines Limited
Stewart Dickson
T: +61 8 9316 9100
E: info@variscan.com.au
This announcement has been authorised for issue by Mr Mark Pitts Company Secretary, Variscan Mines Limited.
Notes
Variscan Mines Limited (ASX:VAR) is a growth oriented, natural resources company focused on the
acquisition, exploration and development of high quality strategic mineral projects. The Company has
compiled a portfolio of high-impact base-metal interests in Spain, Chile and Australia.
The Company’s name is derived from the Variscan orogeny which was a geologic mountain building
event caused by Late Paleozoic continental collision between Euramerica (Laurussia) and Gondwana to
form the supercontinent of Pangea.
ASX:VAR Web - www.variscan.com.au
VARISCAN MINES LIMITED
ASX:VAR
ABN: 16 003 254 395
ANNUAL REPORT
ANNUAL REPORT
30 JUNE 2020
30 JUNE 2020
DIRECTORS
DR FOO FATT KAH
MR STEWART DICKSON
MR MICHAEL MOORE
DR SUSAN VEARNCOMBE
COMPANY SECRETARY
MR MARK PITTS
REGISTERED OFFICE
SUITE 8, 7 THE ESPLANADE
MOUNT PLEASANT WA 6153
AUSTRALIA
P: +61 8 9316 9100
E: info@variscan.com.au
SHARE REGISTER
BOARDROOM PTY LTD
GPO BOX 3993
SYDNEY NSW 2001
AUSTRALIA
P: +61 2 9290 9600
AUDITORS
HLB MANN JUDD
LEVEL 4, 130 STIRLING STREET
PERTH WA 6000
AUSTRALIA
+61 8 9227 7500
SECURITIES
EXCHANGE LISTING
VARISCAN MINES LIMITED’S SHARES
ARE LISTED ON THE AUSTRALIAN
SECURITIES
EXCHANGE (ASX: VAR)
Contents
CHAIRMAN’S LETTER
OPERATIONAL REVIEW
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
1
2
11
22
23
25
26
27
28
57
58
62
64
65
Letter from the Chair
Dear fellow Variscan Shareholders
Executing our strategy
During the year, we executed our strategic priority to identify and acquire value-accretive mineral projects whilst
simultaneously optimizing our asset portfolio.
The completion of the acquisition of the Novales-Usias and Guajaraz zinc projects in Spain was a significant milestone for
Variscan.
I am pleased to report that we delivered a transformational acquisition which provides a fantastic opportunity to explore
and develop some of the most prospective zinc projects in Europe. Our focus has been, and will continue to be, on these
high-quality assets which are delivering results, and therein value to the Company and its shareholders.
We have gone about our work in Spain in a logical, stepwise manner to ensure that we have a firm foundation of
understanding the projects and support from local communities.
The focus of our effort has been on the Novales-Udias project in Cantabria. We assess this to be the more advanced
project with significant potential to create value through the two-fold opportunity that it presents.
• Seek near-term production opportunities at the San Jose – Novales Mine
• Define a regionally significant mineral resource over the Buenahora licence akin to the former producing and proximal
Reocín Mine
Recently we have been pleased to report the delineation of a 9km mineralized trend across both the Buenahora exploration
and Novales mining permits. Being able to identify this camp scale footprint on trend with the historic San Jose – Novales
Mine and circa 10km from the world class Reocín Zine Mine (62Mt@8.7%Zn, 1%Pb) was the direct result of the fieldwork
completed and the collation of a valuable historical drilling database. We have an excellent foundation to now drill-test our
priority targets.
We are pleased by the progress made by Variscan in executing its strategy especially given the challenges we faced as a
small company amid uncertain capital markets and now a global heath pandemic. The prospects for Variscan are
encouraging; the Company has high-quality assets, robust leadership, and clear strategic objectives.
More widely we believe that Variscan is well positioned. The zinc mining industry saw a notable loss of mine supply due to
COVID-19. It will take time and capital to bring that back on stream. Prices continue to remain robust after a strong run
recently. The role of central banks, policy and stimulus will be important factors in determining the outlook for economic
activity and with it the price of zinc. We assess that stimulus will align with sustainable development. As governments
increasingly realise that increased metal usage is required for a green economy and the need for large-scale, job creating
infrastructure programmes to ameliorate the economic effects of the pandemic, we believe that the outlook for zinc could
be favourable. This is especially so in Europe.
Outlook
We are totally focused on the development of our high-quality zinc assets in Spain. In the coming year shareholders can
expect news from the following:
• Advancement of the exploration programme for Novales-Udias project including drilling; and
• Exploration outcomes from the Guajaraz project.
I share our Managing Director’s confidence about Variscan’s prospects and our ability to deliver value for shareholders
and all stakeholders.
Yours sincerely,
Dr Foo Fatt Kah
Chairman
Page | 1
Operations Review
Group Highlights
• Completion of the acquisition of the Novales-Udias and Guajaraz high-grade zinc projects in Spain
• Signed Technical Memorandum and Cooperation Agreement with the University of Cantabria in Torrelavega in
northern Spain which provides access to a large historical archive relating to the Reocín Mine and its surrounding
area.
• Retained Mr. Jesús Del Barrio, the former Operations Director of the San Jose - Novales Mine. He has extensive
operational experience of our key asset and mining in northern Spain
• Collated a significant database of surface and underground drilling information over the Novales-Udias Project in
Spain. Dataset comprises 426 underground drillhole collars, for approximately 29,902m and 102 surface drillhole
collars, totaling approximately 18,870m
• New high-grade infill geochemical soil sampling results and rock chip sampling results indicate southwest of the
Buenahora licence area as a high priority for future drilling
• Conducted 3D laser survey of the San Jose – Novales underground mine to calculate the extent of mine development
as well as identify in-situ and potential extensions of mineralisation
• Delineated 9km mineralized trend across both the Buenahoara exploration and Novales mining permits; camp scale
footprint identified on trend with the historic San Jose – Novales Mine; circa 10km from the world class Reocin Zine
Mine (62Mt@8.7%Zn, 1%Pb)
• Accepted as a member of the European Battery Alliance (EBA250)
• Government of Cantabria granted approval for underground drilling at the San Jose-Novales underground mine
• Maiden drilling programme to test highly prospective target area to commence shortly
Strategic progress
This has been a watershed year for Variscan. I am pleased to have achieved our strategic priority; completing the
transformational acquisition and leading Variscan forward with an exciting package of zinc assets in Spain. In short, we
delivered what we set out to do. We have much to do in 2020 and beyond to advance our highly prospective assets.
Page | 2
Operations Review
Spain
The Novales-Udias project is located in the Basque-Cantabrian Basin, some 30km southwest from the regional capital,
Santander. The project is centred around the former producing San Jose - Novales underground mine with a large
surrounding area of exploration opportunities which include a number of satellite underground and surface workings.
The Novales-Udias project has a number of advantages and hence is the reason we have focused our attention on it during
the financial year:
• Near term zinc production opportunity (subject to positive exploratory work)
•
• Regional exploration potential for another discovery analogous to Reocin (total past production and remaining
Large tenement holding of 68.3 km2 (including a number of granted mining tenements)
resource 62Mt @ 8.7% Zn and 1.0% Pb 1, 2)
• Novales Mine is within trucking distance (~ 80km) from the Asturias zinc smelter owned by Glencore
• Classic MVT carbonate hosted Zn-Pb deposits
• Historic production of high-grade zinc; average grade reported as ~7% Zn 3
• Simple mineralogy of sphalerite – galena – calamine
• Mineralisation is strata-bound, epigenetic, lenticular, and sub-horizontal
• Reported historic production of super high grade ‘bolsas’ (mineralised bags) commonly 10-20% Zn and in some
instances +30% Zn 4
• Assay results of recent targeted grab samples taken from within the underground Novales Mine recorded 31.83% Zn
and 62.3% Pb 5
• Access and infrastructure all in place
•
Local community and government support due to historic mining activity
1 Velasco, F., Herrero, J.M., Yusta, I., Alonso, J.A., Seebold, I. and Leach, D., 2003 - Geology and Geochemistry of the Reocin Zinc-Lead Deposit, Basque-Cantabrian Basin,
Northern Spain: in Econ. Geol. v.98, pp. 1371-1396.
2 Cautionary Statement: references in this announcement to the publicly quoted resource tonnes and grade of the Project are historical and foreign in nature and not
reported in accordance with the JORC Code 2012, or the categories of mineralisation as defined in the JORC Code 2012. A competent person has not completed sufficient
work to classify the resource estimate as mineral resources or ore reserves in accordance with the JORC Code 2012. It is uncertain that following evaluation and/or further
exploration work that the foreign/historic resource estimates of mineralisation will be able to be reported as mineral resources or ore reserves in accordance with the JORC
Code 2012.
3 Anecdotal evidence from original Novales miners interviewed during the WAI Due Diligence supported with historical production data from the School of Mines in
Torrelavega historical archives. (Refer ASX release 29 July 2019)
4 Anecdotal evidence from original Novales miners interviewed during the WAI Due Diligence. In addition, reports of the super high grade mineralisation are supported with
historical production data from the School of Mines in Torrelavega historical archives. (Refer ASX release 29 July 2019)
5 Refer to ASX Announcement of 19 December 2020
Page | 3
Operations Review
We believe that project presents a two-fold opportunity; the potential for early production at the former producing Novales
Mine and scope to develop a significant mineral resource over the surrounding tenement area (Buenahora licence) which
hosts multiple historic workings.
Through our partnership with the School of Mines at the University of Cantabria, we have collated a significant and valuable
database of surface and underground drilling information. This is invaluable as a cost-effective exploration tool and
provided a head-start for geological modelling and drill planning to make it more impactful. At the date of this document,
the dataset comprises 426 underground drillhole collars, for approximately 29,902m and 102 surface drillhole collars,
totaling approximately 18,870m.
Recently we have been pleased to report that we have defined a 9km mineralised trend over our licence areas. This is a
major step forward. By combining multiple data points, we have been able to show the regional scale of the opportunity
presented by the Novales-Udias project as well as identify an important drill target area to the south and south west of the
San Jose – Novales Mine. We anticipate near-mine extensions and continuation and will be a key area of step-out targeting
in the forthcoming drilling campaign.
Large areas near-mine and along trend are still open and untested providing significant exploration potential and value
upside.
The area directly to the southwest of the San Jose mine (2.7km length) is devoid of exploratory work apart from sporadic
historical surface drillholes and the evidence of historical underground workings as extending far as the De Dûna
underground workings in the southern part of the Buenahora permit.
Towards Los Llagos the historic galleries curve to the southeast finishing at the De Dûna mine. De Dûna is close to the
fold nose of the Novales anticline; the southernmost part and the eastern limb of the anticline is mostly untested for
mineralisation and represents a substantive target for new discovery.
Page | 4
Operations Review
Figure 1. Overview of 9km mineralised and historically mined trend across the Buenahora and Novales permits.
Page | 5
Operations Review
Figure 2. Map showing potential drilling target areas to south and south west of San Jose Mine and additional infill
drillholes with selected high-grade zinc intersections.
The Company’s immediate focus is progressing with preparation for drilling at the San Jose Mine supported by the following
near-term activities:
•
Integration of the underground 3D laser survey will establish mined ore to allow depletion of geological models and
define remaining areas of in-situ mineralisation at the San Jose Mine; and
• Refinement of drill targets to test unmined mineralisation identified.
Figure 3. San Jose – Novales Mine: local infrastructure in place
Page | 6
Operations Review
Figure 4. 3D Laser survey of the San Jose – Novales Mine
Page | 7
Operations Review
Exploration fieldwork over the Buenahora licence returned new high-grade infill geochemical soil sampling results and rock
chip sampling results which indicate the southwest of the Buenahora licence area as a high priority for future drilling (see
Figure 5).
Figure 5. Soil geochemistry contours with highlighted peak soil, rock chip values and historical drilling in the
southwest of the Buenahora exploration permit
Page | 8
Operations Review
ESG
We are committed to engaging with the communities within with we operate and to create substantial and lasting economic
opportunities in those communities. During the year, we held an information meeting at the City Hall of Ruiloba with the
Mayors and representatives of Ruiloba, Alfoz de Lloredo, Udías and Comillas. The formal meeting with the senior
representatives was convened to provide information about progress of the Novales-Udias Project, as well as to discuss
applications for the forthcoming drilling programme planned by Variscan. Variscan set out its ESG commitments including
its intention to apply best practice.
Government representatives, including the Director of Industry, Energy & Mining and the Mayor of Alfoz de Lloredo have
also attended underground site visits.
COVID-19
The global COVID-19 pandemic prompted significant lockdown restrictions to be imposed in Spain. Variscan adopted a
proactive and pragmatic approach to the COVID-19 measures implemented in Spain which included a substantial reduction
to cash compensation paid. Variscan has acted and will continue to operate in full compliance with the regulations to safe
guard the health of our staff and contractors as well as the local communities. We are all committed to doing the right thing
and continually align ourselves with shareholders and stakeholders.
Page | 9
Operations Review
Corporate & Financial
Over the last twelve months the Board has been re-organised to ensure efficient and effective governance and
management with the right mix of skills and experience to deliver our strategy and uphold high standards.
During the financial year we were also pleased to successfully close a placement of $3 million to institutional and
sophisticated investors, raised in conjunction with the acquisition of the Spanish Zinc assets.
Expenditure on exploration activities was relatively low as the Group only acquired the Spanish assets midway into the
financial year and of the remaining six months, 50% of that time was subject to COVID-19 related restrictions. The current
expenditure rate on exploration on the highly prospective zinc projects is healthy.
After the end of the financial year, the Group sold its entire shareholding in Thompson Resources Ltd (ASX:TMZ), resulting
in proceeds of $478,971. The non-dilutive cash inflow has been allocated to the development of the Group’s high-quality
zinc assets in Spain and clearly signifies our main effort.
The Group has been accepted as a member of the European Battery Alliance (EBA250). EBA250 brings together interested
stakeholders and industry participants across the European Union’s battery value chain to drive a competitive and
sustainable battery industry in Europe by 2025 to capture a new market worth €250Bn/year.
Zinc has the potential to make a big difference in the battery and energy storage revolution. A secure and ethical supply of
zinc into European technology companies will be important. Zinc is 100% recyclable and so is potentially one of the cleanest
metals for battery use available.
We welcome the opportunity to collaborate with industry partners to make a positive contribution to a greener, cleaner, and
more secure energy future. Providing the next generation of high-grade zinc supply will be important and we look forward
to working with the EBA.
Looking ahead
I am grateful to all my colleagues for their efforts in 2019-2020, which have made it a defining and transformational year
for the organisation. At times it has been challenging but we have achieved what we set out to do.
We are re-positioned with high-quality zinc assets and totally focused on their advancement to drive shareholder value
whilst maintaining cost-discipline and resource-allocation.
I am excited about the future prospects for Variscan and look forward to the future with confidence.
Stewart Dickson
Managing Director & CEO
Page | 10
Directors’ Report
Your directors submit their report for the year ended 30 June 2020.
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 University College London and holds an MBA from Henley Business School.
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.
During the past three years Michael Moore has not served as a director of any other ASX listed company.
Page | 11
Directors’ Report
Dr Susan Vearncombe, Ph.D, Msc (Hons) B.Soc.Sci, MAIG, RPGeo
Non-executive director (appointed 21 August 2020)
Susan was appointed a Non-Executive Director on 21 August 2020.
Susan has over 30 years’ experience in the exploration and mining sectors. Susan has a very strong technical background
that spans projects across Australasia, North and South America, Asia, Africa and Europe. She has held former executive
managerial and non-executive positions and most recently been involved with the identification and commercialisation of
projects on the Iberian Peninsula. Susan was key in the origination and incubation of the high-quality zinc assets in Spain
acquired by the Company and as co-vendor of these properties has a significant, indirect shareholding in the Company.
During the past three years Susan has served as a director of Auris Minerals Limited.
Simon Fyfe, BBus
Non-executive director (resigned 21 August 2020)
Simon was appointed a Non-Executive Director on 30 January 2020 and resigned on 21 August 2020.
During the past three years Simon has not served as a director of any other ASX listed company.
Mark Pitts, BBus, FCA, GAICD
Non-executive director (resigned 30 January 2020) 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. He ceased to act as a director on 30 January 2020.
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.
During the past three years Mark Pitts served as a director of 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 – resigned 30 January 2020
During the past three years Kwan Chee Seng has not served as a director of any other ASX listed company.
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:
Number of securities held
directly and indirectly
Ordinary
Shares
Options
4,887,849
1,210,386
4,135,127
1,000,000
700,000
11,000,000
-
-
Director
Dr Foo Fatt Kah
Mr Stewart Dickson
Mr Michael Moore
Dr Susan Vearncombe
Page | 12
Directors’ Report
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 $1,125,142 (2019:
$451,709). Included in this amount is the amount for exploration expenditure during the year of $50,386 (2019: $243,290).
Expenditure on exploration activities was relatively low as the Group only acquired the Spanish assets half-way into the
financial year, and of the remaining six months, 50% of that time was subject to COVID-19 related restrictions. The current
expenditure rate of exploration on the highly prospective Spanish zinc assets is healthy. The previous year result (2019)
included a gain from discontinued operations of $672,943, which resulted in a loss from continuing operations for that year
of $1,124,652. There were no discontinued operations in the current financial year.
Dividends
No dividends were paid or proposed during the year.
Review of operations
Group Overview
During the financial year, the Group’s operations have been focused upon the acquisition and exploration of the Spanish
Zinc projects. In addition, the Group is continuing to investigate its Rosario Copper project in Chile and holds a number of
minor interests in Australian mineral tenements.
Acquisition of Spanish Zinc Projects
On 12 December 2019, Variscan Mines Limited acquired 100% of the voting shares of Slipstream Resources Spain Pty
Ltd and Slipstream Resources Spain 2 Pty Ltd, which combined form the Spanish Zinc Asset acquisition, comprising the
Novales and Guajaraz exploration areas.
The total cost of the acquisition was $3,090,279 and comprised an issue of equity instruments, valued at $2,491,176 (of
which a portion was due to be issued six months after settlement), and cash consideration of $599,103.
The Group issued 1,165,588,235 ordinary shares (on a pre-equity consolidation basis) with a fair value of $0.002 each,
based on the quoted price of the shares of Variscan Mines Limited at the date of exchange.
On 7 July 2020, following the end of the financial year, the Company issued 4,000,000 shares to Slipstream Resources
Investments Pty Ltd, the major vendor of the Spanish Zinc Assets, in satisfaction of the outstanding initial purchase
consideration for the acquisition.
Board & Management Changes
On 30 January 2020, the board appointed Mr Simon Fyfe as a Non-Executive Director. On the same date, Mr Mark Pitts
stepped down from his role as Non-Executive Director, remaining as the Company Secretary. Furthermore, Mr Kwan Chee
Seng resigned from his role as an alternate director to Dr Foo Fatt Kah.
Impact of COVID-19 Pandemic
The Group reacted promptly to the COVID-19 pandemic and conducted a full review of its activities and expenditures
during March 2020. It focussed on delaying fieldwork to safeguard the safety of employees, whilst reducing overheads
where possible to conserve working capital against the growing uncertainty and volatility. While Spain was particularly
affected by the pandemic, the impact on the Group’s operations was relatively minor as the region in which the Group
operates was one of the least-affected in the Country. However, movement restrictions and uncertainty did reduce
exploration expenditure during this time. Management understood the severity of COVID-19 and acted quickly to implement
protocols and procedures to ensure the safety and well-being of its personnel in both Spain and Australia.
The Directors of the Company agreed to reduce their cash compensation by 40% from 1 May 2020 for a minimum period
of 3 months. The ultimate satisfaction of the accrued balance has yet to be determined and may be completed through
repayment in cash or equity issues, or a combination of both. Furthermore, the Group’s employees in Spain also agreed
to restructure their employment terms or reduce their fees. Finally, the Company terminated or delayed several contractor
agreements with consultants and personnel.
Page | 13
Directors’ Report
Significant changes in the state of affairs
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 2020 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 6 July 2020 the Group announced the completion of the sale of its holding of 18,100,000 ordinary shares in
Thompson Resources Limited (ASX:TMZ) at an average sale price of $0.0296 per share, resulting in a cash inflow
to the Group of $478,971.
• On 7 July 2020 the Company completed the issue of 4,000,000 shares to Slipstream Resources Investments Pty
Ltd, the major vendor of the Spanish Zinc Assets, in satisfaction of the outstanding initial purchase consideration for
the acquisition completed in December 2019.
• On 21 August 2020, Mr Simon Fyfe resigned as a Non-Executive Director and Dr Susan Vearncombe was appointed
to the Board.
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. The premiums paid are not disclosed as such disclosure is prohibited under the terms of the contract.
Likely developments and expected results
As the Group’s mineral projects are at an early stage of exploration, it is not possible to postulate likely developments and
any expected results.
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:
Exercise Price of Option
Expiry Date of Options
Class of Share
Number of Shares under
option
$0.16
$0.60
$1.00
31 May 2021
20 November 2021
20 November 2022
ORD
ORD
ORD
29,669,247
500,000
500,000
30,669,247
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.
Page | 14
Directors’ Report
Remuneration report (audited)
This remuneration report for the year ended 30 June 2020 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
Stewart Dickson
Mike Moore
Simon Fyfe
Kwan Chee Seng
Mark Pitts
Patrick Elliott
Gregory Jones
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (resigned 30 September 2018)
Alternate Director (resigned 30 January 2020)
Non-Executive Director (appointed 30 September 2018,
resigned 30 January 2020)
Company Secretary
Non-Executive Chairman (resigned 30 September 2018)
Executive Director (resigned 30 September 2018)
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 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”).
Page | 15
Directors’ Report
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 $36,000 p.a. which are consistent with industry average fees.
At present, no Committee fees are paid to Directors.
Performance on shareholder wealth
In considering the Group’s performance and benefits for shareholder wealth, the Board have regarded to the following
indices in respect of the current and previous four financial years:
2020
2019
2018
2017
2016
Loss per share (cents)
(0.76)
(1.76)
(19.40)
(14.00)
(7.60)
Net loss ($)
(1,125,142)
(451,709)
(6,997,545)
(3,914,121)
(1,360,558)
Share Price at 30 June
$0.016
$0.030
$0.060
$0.152
$0.306
The above Loss per share (in cents per share) and Share Price at 30 June results for the previous four years have been
adjusted by a factor of 20 to display the impact of the share consolidation completed during the year.
Service agreements
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: £172,500 p.a. plus VAT as applicable (2019: £105,000 p.a. plus VAT) as at 30 June 2020. Mr
Dickson’s annual base fee was reduced from £172,500 to £105,000 on 26 October 2018, and was reinstated upon
the approval of the acquisition of the Spanish Zinc Assets. At this date, Mr Dickson also became entitled to a cash
bonus of £25,000, which was subsequently paid, and an equity bonus of £50,000, which was satisfied through the
issue of 2,405,225 (post-consolidation) ordinary shares on 12 December 2019, as approved by shareholders at the
Company’s 2019 Annual General Meeting. 1,000,000 (post-consolidation) long term incentive options (refer note 13)
were issued to S Dickson and approved by shareholders at the Company’s 2017 AGM. The options vest at the rate
of 25% per year of each year of employment service by S Dickson.
Termination payments: Nil.
•
Page | 16
e
c
n
a
m
r
o
f
r
e
P
l
a
t
o
T
s
n
o
i
t
p
O
s
e
r
a
h
S
n
o
i
t
a
u
n
n
a
r
e
p
u
S
e
c
i
v
r
e
s
g
n
o
L
d
e
r
r
e
f
e
D
s
u
n
o
B
h
s
a
C
g
n
i
t
l
u
s
n
o
C
&
y
r
a
l
a
S
s
t
n
e
m
y
a
p
d
e
s
a
b
-
e
r
a
h
S
-
t
s
o
P
t
n
e
m
y
o
p
m
e
l
m
r
e
t
-
g
n
o
L
s
t
i
f
e
n
e
b
s
t
i
f
e
n
e
b
m
r
e
t
-
t
r
o
h
S
0
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
)
d
e
t
a
d
i
l
o
s
n
o
c
(
n
o
i
t
a
r
e
n
u
m
e
r
P
M
K
d
n
a
s
r
o
t
c
e
r
i
D
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
Page | 17
e
v
a
e
l
s
e
e
F
&
y
r
a
l
a
S
s
e
e
F
s
e
e
F
-
-
-
-
-
%
5
3
-
0
0
0
6
3
,
0
0
8
9
1
,
0
0
0
8
4
,
-
-
-
-
-
-
-
-
0
0
0
0
5
,
-
-
2
7
8
0
3
4
,
5
9
0
6
,
9
0
2
6
9
,
%
6
2
2
7
6
4
8
5
,
5
9
0
6
,
9
0
2
6
9
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
d
e
s
a
b
%
$
)
b
(
$
$
$
$
-
-
4
4
3
,
3
7
8
5
,
0
2
0
0
4
,
2
0
0
4
,
2
)
a
(
$
8
6
3
,
8
4
)
f
(
3
1
6
,
9
5
2
-
-
-
$
$
6
5
6
,
6
4
$
-
-
-
-
-
-
-
-
-
0
0
6
,
3
3
0
0
4
,
7
1
0
0
0
,
8
4
1
3
7
,
8
2
8
6
3
,
8
4
3
1
6
9
5
2
,
6
5
6
,
5
4
1
n
o
s
k
c
D
S
i
e
r
o
o
M
M
)
c
(
e
f
y
F
S
)
d
(
s
t
t
i
P
M
o
o
F
K
F
)
e
(
n
a
w
K
S
C
1
m
o
r
f
%
0
4
t
s
a
e
l
t
a
y
b
s
e
e
f
r
i
e
h
t
f
r
e
e
d
o
t
d
e
e
r
g
a
t
n
e
m
e
g
a
n
a
m
i
r
o
n
e
s
d
n
a
d
r
a
o
b
e
h
t
i
,
c
m
e
d
n
a
p
I
9
1
-
D
V
O
C
e
d
w
-
d
l
r
o
w
e
h
t
i
f
o
t
h
g
i
l
n
i
s
e
r
u
s
a
e
m
g
n
v
a
s
-
t
s
o
c
i
f
o
t
r
a
p
s
A
)
a
(
i
.
d
e
n
m
r
e
t
e
d
e
b
o
t
t
e
y
s
i
s
t
n
u
o
m
a
e
s
e
h
t
f
o
t
n
e
m
e
l
t
t
e
s
e
h
t
l
f
o
e
a
c
s
d
n
a
e
r
u
t
a
n
e
h
T
.
0
2
0
2
y
a
M
r
M
,
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
e
-
n
o
n
s
a
l
e
o
r
i
s
h
r
o
F
.
h
a
K
t
t
a
F
o
o
F
r
D
o
t
r
o
t
c
e
r
i
d
e
v
i
t
a
n
r
e
t
l
a
n
a
s
a
i
d
e
t
n
o
p
p
a
d
n
a
8
1
0
2
r
e
b
m
e
t
p
e
S
0
3
n
o
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
e
-
n
o
n
a
s
a
d
e
n
g
s
e
R
i
l
.
y
r
a
a
s
o
n
i
s
e
v
e
c
e
r
n
a
w
K
.
e
v
o
b
a
s
e
e
F
g
n
i
t
l
u
s
n
o
C
n
i
d
e
d
u
c
n
l
i
e
r
a
t
y
r
a
e
r
c
e
S
y
n
a
p
m
o
C
e
h
t
s
a
e
o
r
l
i
s
h
r
o
f
d
a
p
i
s
t
n
u
o
m
A
.
0
2
0
2
y
r
a
u
n
a
J
0
3
n
o
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
e
-
n
o
n
a
s
a
d
e
n
g
s
e
R
i
l
i
.
y
s
u
o
v
e
r
p
d
e
u
s
s
i
s
n
o
i
t
p
o
r
o
f
r
a
e
y
l
i
a
c
n
a
n
i
f
i
s
h
t
n
i
i
d
e
s
n
g
o
c
e
r
s
e
s
n
e
p
x
e
e
h
t
s
t
n
e
s
e
r
p
e
R
.
0
2
0
2
y
r
a
u
n
a
J
0
3
d
e
t
n
o
p
p
A
i
)
b
(
)
c
(
)
d
(
)
e
(
-
I
D
V
O
C
e
h
t
o
t
e
u
d
d
e
r
r
e
e
d
f
s
e
e
f
e
h
t
h
t
i
w
s
A
.
0
2
0
2
e
n
u
J
0
3
t
a
s
a
n
o
s
k
c
D
i
r
i
M
o
t
g
n
w
o
d
n
a
d
a
p
n
u
i
i
s
n
a
m
e
r
i
h
c
h
w
8
8
8
,
5
9
$
f
o
t
n
u
o
m
a
d
e
u
r
c
c
a
n
a
s
i
l
a
t
o
t
i
s
h
t
n
i
d
e
d
u
c
n
l
I
)
f
(
.
i
d
e
n
m
r
e
t
e
d
e
b
o
t
t
e
y
s
a
h
t
n
u
o
m
a
i
s
h
t
f
o
t
n
e
m
e
l
t
t
e
s
e
h
t
l
f
o
e
a
c
s
d
n
a
e
r
u
t
a
n
e
h
t
,
e
v
o
b
a
d
e
t
o
n
i
c
m
e
d
n
a
p
9
1
e
c
n
a
m
r
o
f
r
e
P
l
a
t
o
T
)
g
(
s
n
o
i
t
p
O
n
o
i
t
a
u
n
n
a
r
e
p
u
S
e
c
i
v
r
e
s
g
n
o
L
u
e
i
l
n
i
s
e
r
a
h
S
s
u
n
o
B
g
n
i
t
l
u
s
n
o
C
&
y
r
a
l
a
S
d
e
s
a
b
e
v
a
e
l
s
r
o
t
c
e
r
i
D
f
o
s
e
e
F
s
e
e
F
d
e
s
a
b
-
e
r
a
h
S
-
t
s
o
P
s
t
n
e
m
y
a
p
t
n
e
m
y
o
p
m
e
l
m
r
e
t
-
g
n
o
L
s
t
i
f
e
n
e
b
s
t
i
f
e
n
e
b
m
r
e
t
-
t
r
o
h
S
9
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
)
d
e
t
a
d
i
l
o
s
n
o
c
(
n
o
i
t
a
r
e
n
u
m
e
r
P
M
K
d
n
a
s
r
o
t
c
e
r
i
D
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
Page | 18
-
-
-
-
-
%
0
1
0
0
0
6
3
,
0
0
0
0
5
,
0
0
0
9
,
0
0
0
5
1
,
0
0
5
2
1
,
-
-
-
-
-
0
0
5
6
4
,
-
1
2
1
6
5
2
,
0
0
7
4
2
,
%
6
1
2
1
5
2
4
,
0
0
7
4
2
,
.
e
v
o
b
a
s
e
e
F
g
n
i
t
l
u
s
n
o
C
n
i
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
$
$
$
$
-
-
-
-
-
-
0
0
0
,
3
0
0
0
,
3
s
e
e
F
$
-
-
-
-
-
-
-
-
$
$
-
0
0
5
,
6
4
$
1
2
4
,
1
3
2
-
-
-
-
-
0
0
0
,
3
2
0
0
0
,
6
3
0
0
0
,
7
2
0
0
0
,
9
0
0
0
,
2
1
0
0
5
,
2
1
1
2
4
,
4
5
2
0
0
0
,
3
4
1
r
M
,
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
e
-
n
o
n
s
a
l
e
o
r
i
s
h
r
o
F
.
h
a
K
t
t
a
F
o
o
F
r
D
o
t
r
o
t
c
e
r
i
d
e
v
i
t
a
n
r
e
t
l
a
n
a
s
a
i
d
e
t
n
o
p
p
a
d
n
a
8
1
0
2
r
e
b
m
e
t
p
e
S
0
3
n
o
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
e
-
n
o
n
a
s
a
d
e
n
g
s
e
R
i
l
.
y
r
a
a
s
o
n
i
s
e
v
e
c
e
r
n
a
w
K
8
1
0
2
’
s
y
n
a
p
m
o
C
e
h
t
o
t
t
n
e
u
q
e
s
b
u
s
d
e
u
s
s
i
d
n
a
d
e
v
o
r
p
p
a
e
r
e
w
h
c
h
w
i
,
s
e
r
a
h
s
s
a
s
e
e
f
i
s
h
f
o
h
t
n
o
m
r
e
p
0
0
0
,
1
$
e
k
a
t
o
t
d
e
e
r
g
a
s
e
n
o
J
r
M
.
8
1
0
2
r
e
b
m
e
t
p
e
S
0
3
d
e
n
g
s
e
R
i
)
j
(
.
g
n
i
t
e
e
m
l
a
r
e
n
e
g
l
a
u
n
n
a
.
8
1
0
2
r
e
b
m
e
t
p
e
S
0
3
d
e
n
g
s
e
R
i
)
k
(
d
e
d
u
c
n
l
i
e
r
a
t
y
r
a
e
r
c
e
S
y
n
a
p
m
o
C
e
h
t
s
a
l
e
o
r
i
s
h
r
o
f
d
a
p
i
s
t
n
u
o
m
A
.
8
1
0
2
r
e
b
m
e
t
p
e
S
0
3
n
o
r
o
t
c
e
r
i
d
e
v
i
t
u
c
e
x
e
-
n
o
n
a
t
s
a
d
e
n
o
p
p
A
i
l
i
.
y
s
u
o
v
e
r
p
d
e
u
s
s
i
s
n
o
i
t
p
o
r
o
f
r
a
e
y
l
i
a
c
n
a
n
i
f
i
s
h
t
n
i
i
d
e
s
n
g
o
c
e
r
s
e
s
n
e
p
x
e
e
h
t
s
t
n
e
s
e
r
p
e
R
n
o
s
k
c
D
S
i
e
r
o
o
M
M
)
h
(
s
t
t
i
P
M
o
o
F
K
F
)
i
(
n
a
w
K
S
C
)
j
(
s
e
n
o
J
G
)
k
(
t
t
o
i
l
l
E
P
)
g
(
)
h
(
)
i
(
l
t
a
o
T
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
r
e
h
t
o
e
g
n
a
h
c
t
e
N
n
i
d
e
t
n
a
r
g
s
e
r
a
h
S
s
u
n
o
b
s
a
d
e
t
n
a
r
G
n
o
d
e
u
s
s
i
s
e
r
a
h
S
y
l
u
J
1
t
a
e
c
n
a
l
a
B
l
e
n
n
o
s
r
e
P
t
n
e
m
e
g
a
n
a
M
y
e
K
f
o
s
n
o
i
t
c
a
s
n
a
r
t
d
n
a
i
l
s
g
n
d
o
h
e
r
a
h
S
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
Page | 19
,
9
4
8
7
8
8
4
,
,
0
0
0
0
0
0
2
,
0
0
0
0
0
7
,
0
0
0
0
0
5
,
,
7
2
1
5
3
1
4
,
,
0
0
0
0
5
2
1
,
,
0
0
0
0
5
2
1
,
-
,
1
1
9
4
5
8
0
2
,
-
-
,
0
0
0
0
0
5
2
,
-
-
-
-
-
-
-
-
-
-
-
5
2
2
,
5
0
4
,
2
-
-
-
-
-
-
n
o
p
u
/
0
2
0
2
n
o
i
t
a
n
g
s
e
r
i
s
e
e
f
f
o
u
e
i
l
s
n
o
i
t
p
o
f
o
e
s
i
c
r
e
x
e
-
9
4
8
,
7
8
8
,
2
2
0
9
,
9
7
4
0
0
0
,
0
0
2
0
0
0
,
0
5
2
,
1
1
1
9
,
4
5
3
,
8
1
n
o
/
9
1
0
2
t
n
e
m
t
n
o
p
p
a
i
n
o
s
k
c
D
S
i
e
r
o
o
M
M
)
a
(
e
f
y
F
S
)
b
(
s
t
t
i
P
M
o
o
F
K
F
)
b
(
n
a
w
K
S
C
0
2
0
2
e
n
u
J
0
3
i
n
o
i
t
a
n
g
s
e
r
n
o
p
u
t
n
e
m
t
n
o
p
p
a
i
l
i
t
a
e
b
a
s
c
r
e
x
e
d
n
a
d
e
t
s
e
V
/
0
2
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
r
e
h
t
o
e
g
n
a
h
c
t
e
N
n
o
i
t
a
r
e
n
u
m
e
r
s
a
d
e
t
n
a
r
G
n
o
/
9
1
0
2
y
l
u
J
1
t
a
e
c
n
a
l
a
B
l
e
n
n
o
s
r
e
P
t
n
e
m
e
g
a
n
a
M
y
e
K
f
o
s
n
o
i
t
c
a
s
n
a
r
t
d
n
a
l
i
s
g
n
d
o
h
n
o
i
t
p
O
,
6
8
3
0
1
2
1
,
,
6
8
3
0
1
2
1
,
-
-
-
-
0
0
0
0
5
7
,
t
c
e
l
f
e
r
i
s
g
n
d
o
h
l
-
-
-
,
9
6
8
0
4
2
8
,
e
v
o
b
a
e
h
T
.
1
o
t
0
2
f
o
,
0
0
0
0
0
0
1
,
o
i
t
a
r
a
n
o
d
e
c
u
d
e
r
e
b
l
d
u
o
w
l
a
t
i
p
a
c
f
o
s
s
a
c
l
h
c
a
e
y
b
e
r
e
h
w
l
a
t
i
p
a
c
s
t
i
f
o
n
o
i
t
a
d
i
l
o
s
n
o
c
a
l
d
e
t
e
p
m
o
c
y
n
a
p
m
o
C
e
h
t
,
0
2
0
2
y
r
a
u
n
a
J
2
n
O
0
2
0
2
y
r
a
u
n
a
J
0
3
d
e
n
g
s
e
R
i
)
b
(
0
2
0
2
y
r
a
u
n
a
J
0
3
d
e
n
o
p
p
A
t
i
)
a
(
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
8
3
,
0
1
2
,
1
0
0
0
,
0
0
0
,
1
n
o
s
k
c
D
S
i
e
r
o
o
M
M
)
a
(
e
f
y
F
S
)
b
(
s
t
t
i
P
M
o
o
F
K
F
9
6
8
,
0
4
2
,
8
)
b
(
n
a
w
K
S
C
i
.
s
s
a
b
l
a
t
i
p
a
c
f
o
n
o
i
t
a
d
i
l
o
s
n
o
c
-
t
s
o
p
a
n
o
l
i
s
g
n
d
o
h
e
h
t
Directors’ Report
Compensation options: granted and vested during the year
No options were granted during the current or previous financial year. The following options were granted during the
previous financial year:
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. No
securities have been issued under the ESOP during the current year (2019: Nil).
Transactions with directors and key management personnel
During the current year, amounts totalling $27,600 were paid to Endeavour Corporate Pty Ltd, a Company Associated with
Mr Mark Pitts, for accounting and administration services (2019: $19,550).
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.
Page | 20
Directors’ Report
Meetings of directors
The following table sets out the number of Directors’ held during the financial year and the number of meetings attended
by each Director for which they were entitled to attend. Due to the size and composition of the board, the roles of the Audit
and Risk and Remuneration Committees are fulfilled by the board as a whole.
Director
Dr Foo Fatt Kah
Mr Stewart Dickson
Mr Michael Moore
Mr Mark Pitts
Mr Simon Fyfe
Total Number of Meetings Held
Non-audit services
Number of
Meetings Held
whilst a
director
Number
Attended
9
9
9
5
4
9
9
9
9
5
4
The Company’s auditor provided any non-audit services during the year ended 30 June 2020 (2019: Nil).
Signed this 29th day of September 2020 in accordance with a resolution of the Directors.
Stewart Dickson
Managing Director
Page | 21
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 2020, 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
29 September 2020
N G Neill
Partner
Page | 22
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the year ended 30 June 2020
Continuing operations
Interest income
Gain on settlement of share-based payments
Other income
Total income
Compliance expenses
Professional services expenses
Finance expenses
Occupancy expenses
Depreciation and amortisation
Directors expenses
Travel and accommodation expenses
Exploration expenditure expensed as incurred
Exploration expenditure written off
Share based payments
Increase / (Decrease) in fair value of financial assets
Other expenses
Total expenses
Realised gain/(loss) on foreign exchange
Unrealised gain/(loss) on foreign exchange
Total foreign exchange gain/(loss)
Notes
3
12
3
9
13
8
Consolidated
2020
$
2019
$
1,692
-
-
16,569
94,641
250
1,692
114,459
(76,655)
(65,512)
(359,303)
(121,246)
(1,432)
(875)
-
(1,310)
(5,006)
(1,721)
(551,577)
(383,941)
(52,655)
(50,386)
-
(6,095)
36,200
(52,571)
(153,022)
(90,268)
(24,700)
(307,700)
(45,727)
(17,020)
(1,108,505)
(1,224,017)
(19,035)
(15,141)
706
46
(18,329)
(15,095)
(Loss) from continuing operations before income tax expense
(1,125,142)
(1,124,652)
Income tax expense
(Loss) from continuing operations after income tax expense
Discontinued operations
Loss after tax from discontinued operation
Loss for the period
4
24
-
-
(1,125,142)
(1,124,652)
-
672,943
(1,125,142)
(451,709)
Page | 23
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the year ended 30 June 2020
Consolidated
2020
$
2019
$
Notes
Other comprehensive income, net of income tax
Items that have been reclassified to profit or loss
Recognition of net exchange differences on disposal of foreign
operation
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income/(loss) for the period, net of tax
-
(527,210)
5,921
5,921
-
(527,210)
Total comprehensive income/(loss) for the period
5,921
(978,919)
Loss per share from continuing and discontinued operations
• Basic and diluted loss per share (cents per share)
Loss per share from continuing operations
• Basic and diluted loss per share (cents per share)
(Gain/loss) per share from discontinued operations
• Basic and diluted gain/(loss) per share (cents per share)
15
15
15
(0.76)
(1.76)
(0.76)
1.07
-
(0.69)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes
Page | 24
Consolidated Statement of Financial Position
As at 30 June 2020
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Other financial assets - at fair value
Deferred exploration and evaluation expenditure
Other non-current assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Share consideration payable
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
2020
$
2019
$
Notes
6
7
8
9
10
11
12
14
2,146,123
17,501
2,163,624
398,200
3,296,140
91,567
948,358
19,088
967,446
362,000
37,908
-
3,785,907
399,908
5,949,531
1,367,354
267,489
160,000
427,489
117,620
-
117,620
427,489
117,620
5,522,042
1,249,734
29,841,639
24,456,205
165,838
153,822
(24,485,435)
(23,360,293)
5,522,042
1,249,734
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes
Page | 25
Consolidated Statement of Cash Flows
For the year ended 30 June 2020
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Finance costs
Consultancy fees and rental income received
Consolidated
2020
$
2019
$
Notes
(777,947)
(848,963)
1,692
(1,432)
-
19,314
-
7,553
Net cash outflow from operating activities
21
(777,687)
(822,096)
Cash flows from investing activities
Exploration and evaluation expenditure
Rental bonds refunded / (paid)
Net cash disposed on sale of subsidiary
Payment for subsidiaries, net of cash acquired
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payments for share issue costs
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effect of exchange rate fluctuations on cash held
(387,777)
(190,930)
-
-
(594,819)
6,565
(64,157)
-
(982,596)
(248,522)
3,106,700
(148,652)
2,958,048
-
(2,638)
(2,638)
1,197,765
(1,073,256)
948,358
2,019,859
-
1,755
Cash and cash equivalents at the end of the period
6
2,146,123
948,358
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
Page | 26
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Consolidated
Share-
based
payment
reserve
Foreign
currency
translation
reserve
Investment
revaluation
reserve
Issued
capital
Accumulated
losses
Total
24,366,724
129,122
527,210
235,300
(23,143,884)
2,114,472
-
-
-
(235,300)
235,300
-
1 July 2018 – as previously
reported
Initial impact of adoption of
AASB 9
Balance at 1 July 2018 -
restated
Loss for the period
Other comprehensive loss for
the period, net of income tax
Total comprehensive loss for
the period
24,366,724
129,122
527,210
-
-
-
-
(527,210)
(527,210)
Share based payments
92,119
24,700
Share issue costs
(2,638)
-
30 June 2019
24,456,205
153,822
1 July 2019
24,456,205
153,822
Loss for the period
Other comprehensive income,
for the period, net of income tax
Total comprehensive loss for
the period
-
-
-
Issue of share capital
5,701,585
-
-
-
-
Share based payments
-
6,095
Share issue costs
(316,151)
-
-
-
-
-
-
5,921
5,921
-
-
-
30 June 2020
29,841,639
159,917
5,921
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(22,908,584)
2,114,472
(451,709)
(451,709)
-
(527,210)
(451,709)
(978,919)
-
-
116,819
(2,638)
(23,360,293)
1,249,734
(23,360,293)
1,249,734
(1,125,142)
(1,125,142)
-
5,921
(1,125,142)
(1,119,221)
-
-
-
5,701,585
6,095
(316,151)
(24,485,435)
5,522,042
The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
Page | 27
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
1. Corporate information
The financial report of Variscan Mines Limited (Variscan or the Company) for the year ended 30 June 2020 was authorised
for issue in accordance with a resolution of the Directors on 29 September 2020. 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 2020.
Adoption of new and revised standards
Standards and Interpretations applicable to 30 June 2020
In the year ended 30 June 2020, 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 2019. As a result of this review, the Group has determined there is no material impact of the new and revised
standards, particularly AASB 16 Leases on the results for the financial year.
AASB 16 Leases
The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and other interpretations
and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and
leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of
financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-
use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance
costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when
compared to lease expenses under AASB 117. For classification within the statement of cash flows, the interest portion is
disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing
activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases.
Impact of adoption
As the Group was not party of any existing lease agreements captured within the scope of AASB 16 at 1 July 2019, there
was no impact on the comparative financial information reported in these financial statements.
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.
All intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group
transactions have been eliminated in full.
Page | 28
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
2. Summary of significant accounting policies (continued)
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.
For the year ended 30 June 2020, the Group has incurred a loss before tax of $1,125,142 and net cash outflows from
operating and investing activities of $1,760,283. As at 30 June 2020 the Group had $2,146,123 in cash and cash
equivalents and net current assets of $1,736,135.
Subsequent to the end of the financial year, the Group sold its investment in Thompson Resources Limited (ASX:TMZ)
which generated a net cash inflow of $475,971.
Whilst not immediately required, the Group may need to raise additional funds to meet its planned and budgeted exploration
expenditure as well as regular corporate overheads.
The Group's capacity to raise additional funds will be impacted by the success of the ongoing exploration activities and
market conditions. Additional sources of funding available to the Group include a capital raising via preferential issues to
existing shareholders or placements to new and existing investors. If necessary, the Group can delay exploration
expenditure and the directors can also institute cost saving measures to further reduce corporate and administrative costs.
However, should the above planned activities to raise or conserve capital not be successful, there exists a material
uncertainty surrounding the Group’s ability to continue as a going concern and, therefore, realise its assets and dispose of
its liabilities in the ordinary course of business and at the amounts stated in the financial 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.
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.
Page | 29
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
2. Summary of significant accounting policies (continued)
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.
Exploration and evaluation – impairment
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.
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.
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.
Page | 30
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
2. Summary of significant accounting policies (continued)
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
a) 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.
b) 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.
c) 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.
d) 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.
Page | 31
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
2. Summary of significant accounting policies (continued)
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.
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 to 5 years (2019: 2 to 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 Liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise
of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option
is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend
on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use
asset is fully written down.
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.
Page | 32
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
2. Summary of significant accounting policies (continued)
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.
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.
Page | 33
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
2. Summary of significant accounting policies (continued)
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.
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.
Page | 34
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
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
During the current period, the results of the Spanish subsidiaries 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.
Page | 35
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
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 9 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.
Page | 36
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
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.
3.
Income
Income
Interest income
Miscellaneous income
4.
Income tax
Prima facie income tax (credit) on operating (loss) at 30% (2019:
27.5%)
Deferred tax assets not recognised
Other
Income tax expense
Consolidated
2020
$
2019
$
1,692
-
1,692
16,569
250
16,819
Consolidated
2020
$
2019
$
(337,543)
(124,220)
337,543
124,199
-
-
21
-
No provision for income tax is considered necessary in respect of the Company for the period ended 30 June 2020.
The Group has a deferred income tax liability of Nil (2019: 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 $14,604,528 (2019: $13,479,386) as at 30 June 2020.
A benefit of 30% (2019: 27.5%) of approximately $4,381,358 (2019: $3,706,831) 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.
Page | 37
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
4.
Income tax
Tax consolidation
Variscan Mines Limited and its 100% owned Australian subsidiaries 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.
Franking credits
Franking credits of $2,810,116 (2019: $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
Consolidated
2020
$
2019
$
Amounts received or due and receivable by:
HLB Mann Judd (NSW) Partnership, for:
Audit and review of the financial report of Variscan Mines Limited
-
49,718
HLB Mann Judd (Western Australian Partnership), for:
Audit and review of the financial report of Variscan Mines Limited (a)
26,138
16,500
Audit and review of the financial report of Variscan Mines Limited
26,138
66,218
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.
Includes accruals at balance date.
6. Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
Consolidated
2020
$
2019
$
646,123
948,358
1,500,000
-
2,146,123
948,358
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.
Page | 38
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
7. Receivables
Current
Trade Debtors
GST/VAT receivable
Interest receivable
Prepayments
Consolidated
2020
$
2019
$
-
717
-
16,784
17,501
4,134
-
14,954
-
19,088
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)
Consolidated
2020
$
2019
$
398,200
398,200
362,000
362,000
The market value on ASX of the Group’s 18,100,000 shares in Thomson Resources Ltd (TMZ) at 30 June 2020
was $398,200 ($0.022 per share). This investment was disposed of on 6 July 2020, refer to details in Note 26.
9. Deferred exploration and evaluation expenditure
Consolidated
2020
$
2019
$
37,908
90,268
2,994,947
-
261,307
37,908
-
(90,268)
1,978
-
3,296,140
37,908
Exploration and evaluation phase:
Costs brought forward
Acquisition of Spanish Zinc Assets (refer Note 25)
Costs incurred during the year
Expenditure written off during the year
Impact of foreign currency exchange differences
Costs carried forward
Page | 39
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
9. Deferred exploration and evaluation expenditure (continued)
Exploration expenditure costs carried forward are made up of:
Novales/Udias Zinc Project - Spain
Guajaraz Zinc Project – Spain
Rosario Copper project - Chile
Costs carried forward
Consolidated
2020
$
2019
$
2,570,011
647,403
78,726
3,296,140
-
-
37,908
37,908
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.
10. Current liabilities – payables
Trade creditors (a)
Accrued expenses (b)
Consolidated
2020
$
117,080
150,409
267,489
2019
$
54,212
63,408
117,620
Trade creditors are non-interest bearing and are generally settled on 30-day terms.
Includes accrued director’s fees as a result of the cash fee deferral agreed by the directors to conserve the
Company’s cash reserves through the COVID-19 global pandemic.
11. Share consideration payable
Shares to be issued (4,000,000 Ordinary shares)
Consolidated
2020
$
160,000
160,000
2019
$
-
-
Page | 40
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
12. Contributed equity
Consolidated
2020
$
2019
$
Share capital
206,093,551 (2019: 1,271,073,585) ordinary shares fully paid
30,763,428
25,061,842
Option issue consideration reserve
29,669,247 (2019: 593,384,943) listed options on issue
Share issue costs
528,604
528,604
(1,450,393)
(1,134,241)
29,841,639
24,456,205
The comparative numbers of ordinary shares and listed options on issue are noted at their pre-consolidation values. Details
regarding the impact of the share consolidation can be found in the following tables.
Movements in ordinary shares on issue
At 1 July 2018
Shares issued in lieu of directors’ fees
At 30 June 2019
Shares issued for cash
Shares issued to acquire Spanish Zinc Assets
Issued in lieu of share issue costs
Issued to managing director under contract
Impact of equity consolidation on a 20 to 1 basis
At 30 June 2020
Movements in quoted options on issue
At 1 July 2018
At 30 June 2019
Number
Value
$
1,239,446,875
24,969,723
31,626,710
92,119
1,271,073,585
25,061,842
1,553,350,000
3,106,700
1,165,588,235
2,331,176
83,750,000
48,104,500
(3,915,772,769)
167,500
96,209
-
206,093,551
30,763,428
Number
Value
$
593,384,943
593,384,943
528,604
528,604
Impact of equity consolidation on a 20 to 1 basis
(563,715,696)
-
At 30 June 2019
29,669,247
528,604
An additional 1,000,000 unlisted options are on issue under Share-based payments Note 13.
Page | 41
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
12. Contributed equity (continued)
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 and unquoted options
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 2020 and 2019.
Option pricing model and terms of options
The Company has 1,000,000 (post-consolidation) unquoted options currently on issue as a result of share-based payment
arrangements. No options were issued during the current financial year as share-based payments (2019: Nil). These share-
based payments were valued by reference to the Black-Scholes option pricing model. The following table lists the inputs
into this model and the terms of options granted in the Company:
Issue date
Nov 17
Nov 17
Number of
options
issued (a)
500,000
500,000
Exercise
price (a)
Expiry
date
Expected
volatility
Risk-free
rate
Expected
life (years)
Estimated
fair value
(a)
$0.60
20 Nov 21
80.00%
$1.00
20 Nov 22
80.00%
2.58%
2.58%
4.0
5.0
$0.040
$0.038
On 2 January 2020, the company completed a 20:1 equity consolidation. As a result, the number of unquoted
options on issue was reduced to 1,000,000 (500,000 per tranche). The exercise price was therefore increased
by a factor of 20. Finally, the Estimated fair value disclosed in the table above has been adjusted by a factor of
20 to reflect the correct total fair value for the issue.
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.
Page | 42
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
13. Share-based payments (continued)
Summary of movement of unquoted options on issue in the parent entity
Movements in unquoted options on issue
At 1 July 2018
Granted during the year
Expired/Lapsed during the year
Number
Value
$
32,450,000
129,122
-
(12,450,000)
-
-
Expense recognised for further vesting during the year
-
24,700
At 30 June 2019
Impact of equity consolidation
Expense recognised for further vesting during the year
At 30 June 2020
20,000,000
153,822
(19,000,000)
-
-
6,095
1,000,000
159,917
The outstanding balance as at 30 June 2020 is represented by:
•
•
500,000 which expire on 20 November 2021 exercisable at $0.60 per share
500,000 which expire on 20 November 2022 exercisable at $1.00 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
2020
$
2019
$
$0.80
-
-
$0.80
$0.80
1.89
$1.00
-
$1.00
$0.80
$0.80
2.89
Range of exercise price
$0.60 - $1.00
$0.60 - $1.00
The above weighted average disclosures have been adjusted for the current and comparative period for the impact of the
20 to 1 equity consolidation.
Page | 43
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
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
Balance at end of financial year
Investment revaluation reserve
Balance at the beginning of financial year
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
Balance at the beginning of financial year
Effect of exchange rate fluctuation
Consolidated
2020
$
2019
$
159,917
153,822
-
5,921
-
-
165,838
153,822
153,822
6,095
159,917
-
-
-
-
-
5,921
129,122
24,700
153,822
235,300
-
(235,300)
-
527,210
-
Recognition of net exchange differences on disposal of foreign
operation
Balance at end of financial year
-
(527,210)
5,921
-
a) Share-based compensation reserve
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.
Investment revaluation reserve
b)
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.
c) 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.
Page | 44
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
15. Earnings/(Loss) per share
Earnings/(loss) used
earnings/(loss) per share:
in calculating basic and diluted
From continuing operations
From discontinued operations
Consolidated
2020
$
2019
$
(1,125,142)
(1,124,652)
-
(1,125,142)
672,943
451,709
Consolidated
2020
2019
Number
Number
Weighted average number of ordinary shares outstanding during
the year used in calculation of basic and diluted EPS
147,246,739
63,003,461
The above weighted average number of ordinary shares has been adjusted to reflect the impact of the 20:1 equity
consolidation completed on 2 January 2020.
Basic and diluted earnings/(loss) per share:
From continuing operations
From discontinued operations
Consolidated
2020
2019
Cents per
share
Cents per
share
(0.76)
-
(0.76)
(1.76)
1.07
(0.69)
The above basic and diluted earnings/(loss) per share has been adjusted to reflect the impact of the 20:1 equity
consolidation completed on 2 January 2020.
For the year ended 30 June 2020, all potential ordinary shares for the calculation of diluted loss per share from both
continuing and discontinued operations are considered anti-dilutive.
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.
Page | 45
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
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
Consolidated
2020
$
2019
$
482,368
400,421
-
-
102,304
584,672
-
-
24,700
425,121
The consolidated financial statements include the financial statements of Variscan Mines Limited (the Parent Entity) and
the following subsidiaries:
Name
Bluestone 23 Pty Ltd
Variscan Mines SAS
Variscan Mines Europe Limited
Slipstream Resources Spain Pty
Ltd
Slipstream Resources Spain 2 Pty
Ltd
Variscan Mines Cantabria, SL
Variscan Mines La Mancha, SL
Country of
incorporation
Australia
France
UK
Australia
Australia
Spain
Spain
% Equity interest
$ Investment
2020
2019
2020
2019
100
-
100
100
100
100
100
100
-
100
-
-
-
-
5,000
5,000
-
1
2,403,748
686,531
4,439
4,500
-
1
-
-
-
-
Variscan Mines SAS (France) was disposed on 14 September 2018. Variscan Mines Europe Limited was incorporated on
29 January 2018.
During the period, after acquisition, the Company changed the names of the two Spanish subsidiaries. They were formerly
named Slipstream Resources Spain SLU and Slipstream Guajaraz, SL, respectively.
Transactions with key management personnel
During the current year, amounts totalling $27,600 were paid to Endeavour Corporate Pty Ltd, a Company Associated with
Mr Mark Pitts, for accounting and administration services (2019: $19,550).
Page | 46
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
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 2020 were as follows:
Hillston – diluting to 16%
Callabonna – diluting to 30%
Junction Dam (a)
Consolidated
2020
2019
% Interest
% Interest
39.2%
49%
-
39.2%
49%
9.9%
During the period the major partner to the Joint Venture acquired the Company’s remaining interest. The
Company retains a 0.5% net profit royalty on any production from a uranium mine.
19. Segment information
AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about
components of the Group that are regularly reviewed by the Chief Operating Decision Maker in order to allocate resources
to the segment and to assess its performance.
The Group’s operating segments have been determined with reference to the monthly management accounts used by the
Chief Operating Decision maker to make decisions regarding the Group’s operations and allocation of working capital.
Due to the size and nature of the Group, the Board as a whole has been determined as the Chief Operating Decision
Maker.
Based on the quantitative thresholds included in AASB 8, there are currently two geographical segments, being Australia
and Spain, which are considered for management purposes to form part of the single reportable segment of mineral
exploration.
Segment information
The following tables present revenue and profit information and certain asset and liability information regarding
geographical segments for the year ended 30 June 2020.
Australia
Spain
Total
2020
$
2019
$
2020
$
2019
$
2020
$
2019
$
Segment income
1,692
114,459
-
Segment loss before income
tax expense
(1,096,085)
(451,709)
(29,057)
Segment assets
5,441,883
1,367,354
507,648
Segment Liabilities
(401,008)
(117,620)
(26,481)
-
-
-
-
1,692
114,459
(1,125,142)
(451,709)
5,949,531
1,367,354
(427,489)
(117,620)
During the year ended 30 June 2019, the Group operated in one reportable and geographical segment, however it did
have discontinued operations. For details relating to these operations, refer Note 24.
Page | 47
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
20. Commitments
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 (2019: 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
Fair value adjustment on financial assets
Gain on settlement of share-based payments
Shares issued in lieu of fees
Foreign exchange variances
Non-cash gain on disposal of foreign operation
Change in assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in other assets
(Decrease)/increase in trade and other creditors
Net cash outflow from operating activities
Consolidated
2020
$
2019
$
(1,125,142)
(451,709)
-
50,386
6,095
-
(36,200)
1,721
243,290
24,700
307,700
-
-
(97,641)
96,210
4,993
18,582
(1,755)
-
(816,774)
1,587
37,377
17,505
-
187,007
(67,715)
(777,687)
(822,096)
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)
Page | 48
Consolidated
2020
$
2019
$
2,146,123
948,358
2,146,123
948,358
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
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.
Page | 49
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
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:
Consolidated
2020
2019
0.05%
0.02%
$646,123
$948,358
0.85%
$1,500,000
-
-
Consolidated
Pre-tax Loss
lower / (higher)
Consolidated
Equity
lower / (higher)
2020
$
2019
$
2020
$
21,461
9,483
21,461
(21,461)
(9,483)
(21,461)
2019
$
9,483
(9,483)
+1% (100 basis points)
-1% (100 basis points)
The above table reflects the impact on the Group’s loss before income tax and equity from a movement in interest rates of
1%, or 100 basis points, for the current and comparative financial periods.
Share market risk
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 Euro/$ exchange rates for the year ended 30 June 2020, although
this exposure and all other foreign currency exposure during the current financial year has been assessed as immaterial.
Page | 50
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
22. Financial risk management objectives and policies (continued)
Other receivables
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:
Pre-tax Loss
Equity
Lower / (Higher)
Lower / (Higher)
2020
$
2019
$
2020
$
2019
$
79,640
72,400
79,640
72,400
(79,640)
(72,400)
(79,640)
(72,400)
+20%
-20%
Accounting policies
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 were denominated in Australian dollars during the years ended 30 June 2020 and 2019.
Fair value risk
The group uses three different methods in estimating the fair value of a financial investment. The methods comprise -
•
•
•
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.
Valuation
technique:
market
observable
inputs
(Level 2)
$
Valuation
technique: non
market
observable
inputs
(Level 3)
$
Quoted market
price
(Level 1)
$
Total
$
398,200
398,200
-
-
-
-
398,200
398,200
2020
Financial assets
Investments
Total financial assets
Page | 51
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
22. Financial risk management objectives and policies (continued)
Valuation
technique:
market
observable
inputs
(Level 2)
Quoted market
price
(Level 1)
2019
$
$
Valuation
technique: non
market
observable
inputs
(Level 3)
$
Total
$
Financial assets
Investments
Total financial assets
362,000
362,000
-
-
-
-
362,000
362,000
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
Reserves
Total shareholders’ equity
(Loss) of the parent entity
Other comprehensive income
Total comprehensive (loss) of the parent entity
Consolidated
2020
2019
2,112,163
964,994
5,740,316
1,156,080
401,008
401,008
117,620
117,620
5,339,308
1,038,460
29,841,639
24,456,205
(24,668,169)
(23,571,567)
165,838
153,822
5,339,308
1,038,460
(1,096,602)
(3,210,772)
5,921
(527,210)
(1,090,681)
(3,737,982)
The accounting policies of the Parent Entity are consistent with those of the Consolidated Entity as disclosed in Note 2,
except for Investments in Subsidiaries, which are accounted for at cost less accumulated impairment losses.
Page | 52
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
24. Discontinued operations
On 14 September 2018, legal completion of the sale of the French subsidiary (Variscan Mines SAS) to Apollo Minerals
Limited occurred.
Details of the sale of the subsidiary
14 September
2018
$
200,000
200,000
367,410
567,410
-
527,210
1,094,620
14 September
2018
$
64,157
16,664
48,397
95,257
224,475
(410,266)
(181,619)
(591,885)
(367,410)
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
Page | 53
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
24. Discontinued operations (continued)
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
which forms part of the year ended 30 June 2019.
Financial Performance
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
Gain / (loss) from discontinued operations
Cash Flows
Cash flows from operating activities
Payments to suppliers and employees
Effects on exchange rate on cash
Net cash (outflows) from discontinued operations
14 September
2018
$
(349,227)
(72,450)
(421,677)
-
(421,677)
1,094,620
672,943
(134,815)
1,755
(133,060)
25. Acquisition of Spanish Zinc Assets
Acquisition
On 12 December 2019, Variscan Mines Limited acquired 100% of the voting shares of Slipstream Resources Spain Pty
Ltd and Slipstream Resources Spain 2 Pty Ltd, which combined form the Spanish Zinc Asset acquisition, comprising the
Novales and Guajaraz exploration areas. This acquisition is considered an asset acquisition as the subsidiaries acquired
do not meet the definition of a business.
The total cost of the acquisition was $3,090,279 and comprised an issue of equity instruments (of which a portion was due
to be issued six months after settlement) and cash consideration.
The Group issued 1,165,588,235 ordinary shares (on a pre-equity consolidation basis) with a fair value of $0.002 each,
based on the quoted price of the shares of Variscan Mines Limited at the date of exchange.
Page | 54
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
25. Acquisition of Spanish Zinc Assets (continued)
Consideration transferred
Acquisition date fair value of the consideration transferred
Shares issued, at fair value (1,165,588,235 Ordinary shares)
Shares to be issued (80,000,000 Ordinary shares)
Cash consideration
Total consideration
12 December
2019
$
2,331,176
160,000
599,103
3,090,279
The number of shares noted in the table above has been reported on a pre-equity consolidation basis. After the impact of
the 20:1 equity consolidation, the number of shares issued on acquisition would be 58,279,412 and on 7 July 2020 the
Company issued 4,000,000 ordinary shares in satisfaction of the “Shares to be issued” above.
Assets acquired and liabilities assumed at the date of acquisition
The Group has recognised the fair values of the identifiable assets and liabilities of the acquired subsidiaries as follows:
Acquiree’s
carrying amount
before
acquisition
Fair value
adjustment
Fair value
$
$
$
Cash and cash equivalents
Trade and other receivables (included VAT receivable)
Deposits
Deferred exploration and evaluation expenditure
Trade payables
Fair value of identifiable net assets
Total consideration paid
4,284
65,419
62,597
174,271
(36,204)
-
-
-
4,284
65,419
62,597
2,819,912
2,994,183
-
(36,204)
3,090,279
3,090,279
Net cash outflow arising on acquisition
Cash paid
Less: Net cash acquired with the subsidiary
Net cash outflow
12 December
2019
$
599,103
(4,284)
594,819
Impact of acquisition on the results of the Group
If the combination had taken place at the beginning of the period, there would have been no significant change in the net
result for the period.
Page | 55
Consolidated Notes to the Financial Statements
For the year ended 30 June 2020
25. Acquisition of Spanish Zinc Assets (continued)
Milestone consideration
In accordance with the acquisition agreements, the Company must issue additional shares upon the satisfaction of certain
exploration milestones. These milestones are for the definition, in accordance with JORC 2012, of an Inferred Mineral
Resource (or greater) of:
• Milestone 1: 4 million tonnes at 7% Zn
• Milestone 2: 8 million tonnes at 7% Zn
Upon satisfaction of each of these milestones, the Company must issue 27,500,000 ordinary shares to the vendors of
Slipstream Spain Pty Ltd and Slipstream Spain 2 Pty Ltd, and 2,426,471 shares to Hispanibal S.L. as the vendor of the
“Hispanibal Option”, for a total of 59,852,941 Ordinary Shares if both milestones are met.
As at the date of this report, the Directors are of the view that the work conducted on the projects to date is not of a
sufficiently advanced stage to determine the probability of meeting these milestones and therefore no current obligation
has been recorded in this interim financial report.
26. Events after the reporting date
There were, at the date of this report, no matters or circumstances which have arisen since 30 June 2020 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 6 July 2020 the Group announced the completion of the sale of its holding of 18,100,000 ordinary shares in
Thompson Resources Limited (ASX:TMZ) at an average sale price of $0.0296 per share, resulting in a cash inflow
to the Group of $475,971.
• On 7 July 2020 the Company completed the issue of 4,000,000 shares to Slipstream Resources Investments Pty
Ltd, the major vendor of the Spanish Zinc Assets, in satisfaction of the outstanding initial purchase consideration for
the acquisition completed in December 2019.
• On 21 August 2020, Mr Simon Fyfe resigned as a Non-Executive Director and Dr Susan Vearncombe was appointed
to the Board.
Page | 56
Directors’ Declaration
1.
In the directors’ opinion:
(a) the financial statements and notes set out on pages 23 to 56 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 2020 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 2020 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
29 September 2020
Page | 57
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 2020, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year 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.
Material uncertainty related to going concern
We draw attention to Note 2 in the financial report, which indicates that a material uncertainty exists
that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion
is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. . In addition to the matter described in the Material
Uncertainty Related to Going Concern we have determined the matters described below to be the
key audit matters to be communicated in our report.
Page | 58
Key Audit Matter
How our audit addressed the key audit
matter
Carrying value of deferred exploration and
evaluation expenditure
(Note 9 in the financial report)
The Group has capitalised deferred exploration and
evaluation expenditure of $3,296,140 as at 30 June
2020 in relation to its projects in Spain and Chile.
Our audit procedures determined that the carrying
value of deferred exploration and evaluation
expenditure was a key audit matter as it was an area
which required a significant amount of audit effort
and communication with
those charged with
governance and was determined to be of key
importance to the users of the financial statements.
Our procedures included but were not
limited to the following:
• We obtained an understanding of
the key processes associated with
the
of
management’s
the deferred
carrying value of
exploration
evaluation
and
expenditure;
review
• We
considered
the Directors’
assessment of potential indicators of
impairment;
• We obtained evidence
the
Group has current rights to tenure of
its areas of interest;
that
• We examined the exploration budget
for the year ending 30 June 2021
and discussed with management the
nature of planned ongoing activities;
to
exploration expenditure during the
year; and
additions
reviewed
• We
• We examined the disclosures made
in the financial report.
Acquisition of Spanish Zinc Projects
(Note 25 in the financial report)
The Group acquired an interest in two exploration
areas in Spain during the year.
Our procedures included but were not
limited to the following:
this
Our audit procedures determined
transaction was a key audit matter as it was an area
which required a significant amount of audit effort
and communication with
those charged with
governance and was determined to be of key
importance to the users of the financial statements.
that
• We
reviewed
purchase
transaction in conjunction with the
relevant agreements;
the
• We ensured the correct application
of acquisition accounting; and
• We examined the disclosures made
in the financial report.
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 for the year ended 30 June 2020, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance 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.
Page | 59
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 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.
Page | 60
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 2020.
In our opinion, the Remuneration Report of Variscan Mines Limited for the year ended 30 June
2020 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
29 September 2020
N G Neill
Partner
Page | 61
Schedule of Tenements
Listing of tenements held as at 26 October 2020
Tenement
Tenement No.
Interest
Joint Venture Details
IP 16.662-01
IP 16.662-02
EC 94
EC 512
EC 1565
EC 2557
EC5220
EC5374
EC8049
EC8165
EC11589
EC11594
EC12942
EC12952
EC13079
EC13080
EC13154
EC13170
EC13175
EC13176
EC13260
EC13641
EC14238
EC14554
EC14640
EC14945
EC14949
EC14947
EC14948
EC14954
EC14979
EC14980
EC14981
EC14982
EC15672
EC13641-10
EC14554-20
EC14954-10
EC14980-30
EC15672-10
EC2557-30
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
IP 4.203
100%
SPAIN
Cantabria
Buenahora Fraction 1
Buenahora Fraction 2
San José
La Torra
Tres Amigos
Torpeza
Andrea
Andrea-demasía a
Es
Dudosa
Cargadoiro
Tres amigos-demasía a
Flor del pueblo
Torpeza-demasía a
Torpeza-3ª demasía a
Torpeza-2ª demasía a
Flor del pueblo-demasía a
Dudosa-demasía a
Andrea-3ª demasía a
Andrea-2ª demasía a
Cargadoiro-demasía a
Ampliación a Matilde
Aumentada
Campitos
Campitos-demasía a
Carmenchu
Amelita
Eloísa
Ampliación a Matilde-demasía a
Cargadoiro 2
Amelita-demasía a
Carmenchu-demasía a
Eloísa-demasía a
Carmenchu-2ª demasía a
6º Aumento a porvenir
Ampliación a Matilde-demasía a
Campitos-segunda demasía a
Cargadoiro 2- demasía a
Carmenchu-tercera demasía a
6º Aumento a porvenir-demasía a
Torpeza-tercera demasía a
Toledo
Guajaraz
Page | 62
Schedule of Tenements
Tenement
Tenement No.
Interest
Joint Venture Details
CHILE – Note 1
Rosario 6 1-40
Rosario 7 1-60
Rosario 101
Salvadora
Abandonara
NEW SOUTH WALES
Willyama
Hillston
Native Dog
Woodlawn South
SOUTH AUSTRALIA
Junction Dam
0310259624
10.4%
0310259632
10.4%
03102N2229
10.4%
0310231355
10.4%
0310248487
10.4%
EL 8075
0% Note 2
EL 6363
39.2% Perilya can earn 80%, Eaglehawk 9.8%
EL 8236
0% Note 2
ELs 7257 and
7469
0% Royalty interest only
EL 5682
0% Marmota acquired 100% ownership. See
Note 3
Callabonna
EL 5360
49% Red Metal 51%, can earn 70%
FRANCE – Note 4
St Pierre
Beaulieu
PER
PER
100%
100%
EL
= Exploration Licence
PER
= Permis Exclusif de Recherche (France)
IP
EC
= Investigation Permit (Spain)
= Exploration Concession (Spain)
Note 1: On 1 July 2019 the Company announced it had successfully renegotiated the terms of the existing Option Agreement to
provide the Company with a participating interest of 10.4%. The Company can earn up to 90% of the project through payment of
amounts totaling approximately US$2.25 milllion.
Note 2: 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 a NSR (Net Smelter Return).
Note 3: Marmota has earned 100% of the uranium rights only in EL 5682. Variscan has a 0.5% net profits royalty on production
from a uranium mine.
Note 4: 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 has yet to receive
a response. The timetable for the completion of the relinquishment process is unknown.
Page | 63
Summary of Joint Ventures and Governance Framework
Details of Joint Ventures
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.
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 2020 and approved by the Board on 30 October 2020, 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.
Page | 64
Shareholder Information
Shareholder Information as at 26 October 2020
Ordinary fully paid shares
210,093,551 fully paid ordinary shares on issue. 34,076,694 ordinary shares are subject to a voluntary escrow until 12
December 2020.
Substantial shareholders
SLIPSTREAM RESOURCES INVESTMENTS PTY LTD
CITICORP NOMINEES PTY LIMITED
SLIPSTREAM RESOURCES INVESTMENTS PTY LTD
DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT
Shareholding
22,000,000
19,706,644
14,920,000
11,968,750
As at 26 October 2020, there were 1,020 shareholders with less than a marketable parcel of $500.
Top 20 shareholders of ordinary shares
Number
%
SLIPSTREAM RESOURCES INVESTMENTS PTY LTD
EFFECTIVE INVESTMENTS PTY LTD
EFFECTIVE INVESTMENTS PTY LTD
RUBI HOLDINGS PTY LTD
SCINTILLA STRATEGIC INVESTMENTS LIMITED
FELDI LIMITED
WAINIDIVA PTY LIMITED
WAINIDIVA PTY LTD
DR FATT KAH FOO
BNP PARIBAS NOMS PTY LTD
KWAN CHEE SENG
SYRACUSE CAPITAL PTY LTD
UPSKY EQUITY PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
RECO HOLDINGS PTY LTD
Total Securities of Top 20 Holdings
Total of Securities
9.380%
7.102%
5.697%
3.465%
3.370%
2.618%
2.618%
2.380%
2.023%
1.968%
1.618%
1.428%
1.312%
1.309%
1.297%
1.249%
1.190%
1.049%
0.976%
7,279,412
7,080,000
5,500,000
5,500,000
5,000,000
4,250,000
4,135,129
3,400,000
3,000,000
2,756,581
2,751,175
2,725,000
2,625,000
2,500,000
2,204,113
2,050,952
131,352,756
62.521%
210,093,551
Range
No of shareholders
Ordinary shares
Distribution of shareholders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Page | 65
743
207
58
175
153
1,336
161,358
534,852
434,005
6,728,106
202,235,230
210,093,551
Shareholder Information
Options
29,669,296 listed options and 1,000,000 unlisted options on issue.
Substantial listed option holders
CITICORP NOMINEES PTY LIMITED
Shareholding
8,598,824
As at 26 October 2020, there were 132 listed option holders with less than a marketable parcel of $500.
Top 20 option holders of listed options
CITICORP NOMINEES PTY LIMITED
RAREWEALTH CORPORATION PTY LTD
IQ GLOBAL ASSET PARTNERS PTY LTD
MR DAVID KENNEDY
JAWAF ENTERPRISES PTY LTD
SLAM CONSULTING PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
RECO HOLDINGS PTY LTD
SCHAMMER PTY LTD
SYRACUSE CAPITAL PTY LTD
FIRST INVESTMENT PARTNERS PTY LTD
MR JOHN VIEIRA & MRS TRACEY LOIS VIEIRA
RATDOG PTY LTD
PANSTYN INVESTMENTS PTY LTD
JETOSEA PTY LTD
MR MARTIN MUSIC
MR XIANGTIAN ZHENG
Total Securities of Top 20 Holdings
Total of Securities
Number
%
8,598,824
1,250,000
1,120,833
1,000,000
1,000,000
986,937
969,142
953,098
875,000
875,000
780,297
729,167
671,172
638,810
625,000
500,000
437,594
375,000
359,103
350,000
28.982%
4.213%
3.778%
3.370%
3.370%
3.326%
3.266%
3.212%
2.949%
2.949%
2.630%
2.458%
2.262%
2.153%
2.107%
1.685%
1.475%
1.264%
1.210%
1.180%
23,444,977
79.021%
29,669,296
Range
Number of option holders
Options
Distribution of listed option holders
31
27
16
44
42
160
8,633
69,175
110,556
1,546,849
27,934,083
29,669,296
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Page | 66
Shareholder Information
Voting rights
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.
Page | 67
DIRECTORS
DR FOO FATT KAH
MR STEWART DICKSON
MR MICHAEL MOORE
DR SUSAN VEARNCOMBE
COMPANY SECRETARY
MR MARK PITTS
REGISTERED OFFICE
SUITE 8, 7 THE ESPLANADE
MOUNT PLEASANT WA 6153
AUSTRALIA
P: +61 8 9316 9100
E: info@variscan.com.au
SHARE REGISTER
BOARDROOM PTY LTD
GPO BOX 3993
SYDNEY NSW 2001
AUSTRALIA
P: +61 2 9290 9600
AUDITORS
HLB MANN JUDD
LEVEL 4, 130 STIRLING STREET
PERTH WA 6000
AUSTRALIA
+61 8 9227 7500
SECURITIES
EXCHANGE LISTING
VARISCAN MINES LIMITED’S SHARES
ARE LISTED ON THE AUSTRALIAN
SECURITIES
EXCHANGE (ASX: VAR)
VARISCAN MINES LIMITED
ASX:VAR
ABN: 16 003 254 395
ANNUAL REPORT
ANNUAL REPORT
30 JUNE 2020
30 JUNE 2020