ASX Announcement – 29 October 2021
2021 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 2021.
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
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Annual
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ABN
87 095 092 158
DIRECTORS
Dr Foo Fatt Kah
Non-Executive Chairman
Mr Stewart Dickson
Managing Director & CEO
Mr Michael Moore
Non-Executive Director
Mr Nicholas Farr-Jones AM
Non-Executive Director
COMPANY SECRETARY
Mark Pitts
REGISTERED OFFICE
Suite 8, 7 The Esplanade
Mount Pleasant WA 6153
Australia
Telephone: +61 8 9316 9100
Email: info@variscan.com.au
Website: www.variscan.com.au
SHARE REGISTRY
Boardroom Pty Ltd
GPO Box 3993
Sydney NSW 2001
Australia
Telephone: +61 2 9290 9600
AUDITORS
HLB Mann Judd (WA) Partnership
Level 4, 130 Stirling Street
Perth WA 6000
Australia
Telephone: +61 8 9227 7500
STOCK EXCHANGE
ASX Limited
Level 40, Central Park,
152-158 St Georges Terrace
Perth WA 6000
SECURITIES EXCHANGE LISTING
Variscan Mines Limited’s shares are listed on the
Australian Securities Exchange (ASX: VAR)
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VARISCAN MINES
Annual Report 2021
Contents
Corporate Directory
Chairman’s Letter
Operational Review
Environmental, Social and Governance
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
Director’s Declaration
Independent Auditor’s Report
ASX Additional Information
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VARISCAN MINES
Annual Report 2021
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Chairman’s Letter
Chairman’s
Letter
I am pleased to present you with Variscan’s annual report for the year
ended June 30 2021 (FY21).
Dear fellow Variscan shareholders,
I am pleased to present you with Variscan’s annual report for the
Looking further ahead, we have begun to consider value-
year ended June 30 2021 (FY21).
During FY21, we continued to make significant progress in the
execution of our strategic priorities of seeking near-term zinc
production opportunities and mineral resource discoveries at
our Novales-Udias and Guarajaz zinc projects in Spain.
We concluded the fiscal year on a high note, announcing
accretive opportunities that exist for zinc, particularly in the
green energy sector for electric and hybrid cars, solar panels,
and wind turbines. Our acceptance during FY 21 as a member
of the European Battery Alliance (EBA250) will connect us to
innovation, industry insights and new financing channels as we
participate alongside other industry stakeholders across the
European Union’s battery value chain to develop a competitive
outstanding drilling results from the San Jose Mine where
and sustainable battery industry.
In FY22 and beyond we will continue to focus on developing our
high-grade Spanish zinc assets. I am confident that these assets
will enable us to deliver value to each of our shareholders and I
thank you for your ongoing support of Variscan’s efforts.
Yours sincerely
Dr Foo Fatt Kah
Chairman
we discovered multiple stacked lenses of high-grade zinc
mineralisation in the multiple zones. The discovery of these new
high-grade mineralised lenses is a strong indication that there is
considerable scale and tonnage potential.
Following this discovery, we have moved quickly to conduct a
follow-up drilling programme, which we commenced during the
third quarter. We have now reached another important phase
of fieldwork at San Jose, with phase 2 of the underground drill
campaign underway. We are confident that the drill targets we
have identified will provide opportunities for further discoveries
of new mineralised lenses.
All of this progress is being backed by a strong funding position,
following successful, over-subscribed capital raising being
completed at the end of the fiscal year.
We have also recently made good progress at the zinc-rich
polymetallic Guarajaz Project, where we have recently received
high-grade assay results from grab samples.
Although the Novales-Udias Project remains our key focus, the
results from Guarajaz show the depth of our project portfolio.
We believe that Guarajaz represents an excellent brownfield
polymetallic opportunity and have thus applied for a three-year
extension of our current exploration licence with the relevant
authorities.
In the near term, we will be advancing a number of follow up
activities at the Novales-Udias Project including but not limited
to: underground drilling at the San Jose Mine, a geophysical
survey of surface drill targets and associated surface drilling
application in the Buenahora licence area, a surface drilling
campaign to test step out extensions in the vicinity of the San
Jose Mine, and a range of ESG initiatives that support these
activities.
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VARISCAN MINES
Annual Report 2021
VARISCAN MINES
Annual Report 2021
5
Operational Review
Operational
Review
f Group Highlights – Year in Review
▯ Maiden drilling programme at San Jose Mine delivered
outstanding results including:
DDH NOVDD027: 16.9m @ 12.5% Zn + 2.0% Pb
DDH NOVDD046: 23m @ 11.5% Zn + 3.72% Pb
DDH NOVDD041: 18m @ 9.87% Zn + 3.24% Pb
▯ Integration of 3D underground laser survey at San Jose
Mine with historical database confirmed unmined
positive historical drilling intersections remaining
▯ Identified a new 3km parallel mineralised trend
approximately 1.5km west of the main 9km NE-SW
Novales Trend.
▯ Successful, over-subscribed placing to raise $4.25m.
Placement price representing 100% premium to
previous capital raise
▯ Application submitted for surface drilling over the
Buenahora licence area of the Novales-Udias project
▯ Accepted to join the European Battery Alliance – key
membership for development of EV battery supply chain
f Spain
During FY21, we continued to focus on our clear strategy to execute the
two-fold opportunity that the Novales-Udias projects present.
Specifically, we are aiming to seek near term zinc production opportunities at the San Jose–Novales Mine and to define a regionally
significant mineral resource.
Key highlights of the Novales-Udias projects include:
▯ Near term zinc production opportunity (subject to
▯ Reported historic production of super high grade
positive exploratory work)
▯ Large tenement holding of 68.3 km2 (including several
granted mining tenements)
▯ Novales Mine is within trucking distance (~ 80km) from
‘bolsas’ (ore bags) commonly 10-20% Zn and in some
instances +30% Zn3
▯ Recent undergound drilling results from the San Jose
Mine recorded multiple intersections at +15% Zn
the Asturias zinc smelter
▯ Collated a substantial database of some 88,000m of
▯ Classic MVT carbonate hosted Zn-Pb deposits
▯ Historic production of high-grade zinc; average grade
historic drilling
▯ Access and infrastructure all in place
reported as ~7% Zn2
▯ Local community and government support due to
▯ Simple mineralogy of sphalerite – galena – calamine
▯ Ore is strata-bound, epigenetic, lenticular and sub-
horizontal
historic mining activity
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VARISCAN MINES
Annual Report 2021
Operational Review
In the September quarter (Q1 FY21), we announced new high-
In the following quarter (Q2 FY21), we announced the results
grade rock chip sampling results conducted on prospects within
of the 3D laser survey which was integrated with the historical
the Buenahora licence area of the Novales-Udias Project. A total
drilling database, confirming unmined positive historical drilling
of 55 samples were analysed from 11 separate prospects within
intersections remaining.
the Variscan exploration permit, supporting the presence of in-
situ high-grade mineralisation at all but three of the exploration
prospects4.
During that quarter, we also conducted new infill geochemical
Meanwhile, the underground drilling programme at the San
Jose-Novales Mine successfully intersected mineralisation
grading 3% to 28% Zinc6 in a new area near the mine portal, This
is step out target 1,000m from the Central Zone which represents
soil sampling on prospects within the Buenahora licence area of
an interesting exploration target as it suggests previously
the Novales-Udias Project. A total of 379 samples were analysed
under-explored mineralised systems in between may have
from four separate prospects, all indicating the surficial extent
of in-situ high-grade stratiform mineralisation5.
In parallel, we continued to import and analyse historical data,
expanding the drilling data set. In addition, we conducted a 3D
laser survey of the San Jose-Novales Mine and received approval
to conduct underground drilling there.
discovery potential. The mineralisation style from the drill core
is consistent with sulphide-rich carbonate hosted (Mississippi
Valley Type) lenses observed in the stopes in the Central Zone
of the San Jose Mine. This area is easily accessible and has
seen very little historical mining activity. Together with positive
historical surface drilling data, this area has the potential for
mineralisation to be extended.
The September quarter also saw us accepted as a member of
the European Battery Alliance (EBA250), a group that brings
together stakeholders and industry participants across the
European Union’s battery value chain to drive a competitive and
sustainable battery industry in Europe by 2025. Joining EBA250
was an important step for us as it provides us with access to
During the March quarter (Q3 FY21), we announced the results of
21 underground channel samples taken from the San Jose Mine.
The channel samples, taken over a 300m length at the portal
and a 600m length indicate good continuity of the stratabound
mineralisation which retains its high-grade tenor as it extends7.
European supranational and institutional funding as well as
During the third quarter we acquired new data from drilling
valuable industry insights and value-chain connectivity.
previously conducted by Asturiana de Zinc (Xstrata Zinc) which
HHIIGGHH GGRRAADDEE SSPPAANNIISSHH ZZIINNCC PPRROOJJEECCTTSS
VARISCAN MINES
Annual Report 2021
7
6
1.
2.
Refer ASX Announcements dated 25 May 2021 and 15 June 2021.
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.
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.
4.
5.
6.
7.
8.
Refer ASX Announcement dated 2 November 2020.
Refer ASX Announcement dated 2 November 2020.
Refer ASX announcement dated 9 March 2021.
Refer ASX announcement dated 2 February 2021.
Refer ASX announcement dated 25 May 2021 and ASX announcement
dated 15 June 2021.
Operational Review
led to the discovery of new exploration targets, increased the
confidence level of certain existing targets and identified a
new 3km parallel mineralised trend approximately 1.5km west
of the main 9km NE-SW Novales Trend. The acquisition and
interpretation of our valuable dataset comprising 88,617m of
drilling data has enabled significant exploration time and cost
savings as well as providing a sound basis for future resource
estimation.
In the final quarter of the fiscal year, we announced the second
and third batch of assay results from the underground drilling
programme at the San Jose Mine8.
Pleasingly, the drilling discovered new zinc-rich mineralised
lenses in the Central Zone of the San Jose Mine and extended
the discovery of mineralised lenses below the La Caseta Trend
as well as confirming high-grade mineralisation on the Los
Caracoles Trend.
The discovery of new high-grade mineralised lenses below the
main gallery is a major development for Variscan. It suggests
significant potential fro discovering additional lenses throughout
the San Jose Mine as the remainder of the mine has had barely
any drilling to test for lower lying lenses. In aggregate, that could
provide considerable scale and tonnage potential.
NNOOVVAALLEESS--UUDDIIAASS PPRROOJJEECCTT –– CCAANNTTAABBRRIIAA,, NNOORRTTHHEERRNN SSPPAAIINN
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VARISCAN MINES
Annual Report 2021
7
Operational Review
f Chile
The Rosario Project is located approximately 120 kilometres by road east of
the port city of Chanaral in the Atacama Region of northern Chile. Chile is a
proven mining jurisdiction and is the largest producer of copper globally.
The Rosario project lies about 20 kilometres north of the El
concession under application (Rosario 101). These concessions
Salvador mine (owned by Codelco). It is one of the country’s larger
cover two outcropping copper trends (Zones A and B) over a
copper operations, within a region of dense mining activity (all
combined strike length of approximately 6 kilometres.
scales) and a good copper endowment.
As a result of the impact of the continuing worldwide COVID-19
The Rosario Project comprises three granted exploitation
pandemic and due to our ongoing focus on our Spanish zinc
concessions, Rosario 6, Rosario 7 and Salvadora, one granted
projects, no significant activities were conducted on the Rosario
mineral exploration licence (Abandonara) and an exploration
Project during FY21.
VARISCAN MINES
Annual Report 2021
9
Operational Review
f Australia
During Q1 FY21, we disposed of our shareholding holding in Thompson
Resources Limited (ASX: TMZ), which resulted in non-dilutive cash inflows
of approximately $0.5m.
We also participated in the restructuring of the joint venture
Variscan continues to hold minority interests in a number of
arrangements over the Junction Dam tenement in South
areas of eastern and central Australia. No specific activities
Australia. Following this, Variscan holds a 0.5% net profits
were undertaken by us in these areas during FY21 due to the
royalty on production from a uranium mine on the Junction Dam
aforementioned focus on our our Spanish zinc projects.
tenement.
f Covid-19
The global COVID-19 pandemic prompted significant restrictions to be
imposed in Spain.
These policy responses have evolved and relaxed in the course
staff and contractors as well as the local communities. Currently,
of the pandemic. Variscan continues to adopt a proactive
we anticipate being able to conduct the planned exploration
and pragmatic approach and will continue to operate in full
work.
compliance with the regulations to safeguard the health of our
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VARISCAN MINES
Annual Report 2021
Operational Review
f Corporate and financial
On 21 June 2021, we announced that we had received binding commitments
for a Placement to raise $4.25m (before costs), which was completed on 28
June 2021.
The Placement introduced several new, high-quality, institutional
During the year, we acknowledged the resignations of Mr Simon
and sophisticated investors, whilst also being strongly supported
Fyfe and Dr Susan Vearncombe as a Non-Executive Directors,
by existing significant shareholders of Variscan. The Company
and were pleased to announce the appointment of Mr Nicholas
is now well funded to follow-up on the exploration success it has
(“Nick”) Farr-Jones OAM. Mr Farr-Jones has extensive experience
achieved.
within the global mining sector, particularly in Europe
f Looking ahead
Post the June quarter (Q4 FY21), we presented new drilling targets for
inclusion in the next phase of underground drilling at the San Jose Mine
which were identified from the results of structural geological fieldwork
conducted in association with Consulting de Geologia y Mineria, S.L.
Following this, we appointed experienced Spanish drilling
We are well-funded and in a strong position to continue
contractor Sondeos y Peforaciones Industriales de Bierzo SA to
accelerating our aggressive exploration programme at the
conduct follow-up drilling at the San Jose Mine.
Novales-Udias Project, including follow-up drilling at the
In September 2021, the Phase 2 underground diamond drilling
programme at the San Jose Mine commenced.
While the Novales-Udias Project remains our main focus, we
are continuing to make efficient and targeted efforts to prove
the prospectivity of other projects in our portfolio. In line with
San Jose Mine and drilling high priority targets at the highly
prospective surrounding Buenahora licence area.
I would like to take this opportunity to thank all of my colleagues
for their hard work in FY21 and all shareholders for their ongoing
support.
this, we received high-grade assay results from grab samples
We look forward to providing you with further updates as our
collected during follow-up geological field work at our zinc-rich
exploration activities continue.
polymetallic Guarajaz Project later that month.
Our immediate focus is to progress underground drilling at the
Stewart Dickson
San Jose Mine and returning results as soon as possible. In
addition, we are advancing a number of follow-up activities and
deliverables including:
▯ A geophysical survey of surface drill targets over the
Buenahora licence area;
Managing Director & CEO
▯ Delivery of a pending surface drilling application
covering the Buenahora licence area; and
▯ A surface drilling campaign to test step out
extensions in the vicinity of the San Jose Mine
VARISCAN MINES
Annual Report 2021
11
Environmental, Social and Governance
Environmental, Social and Governance (ESG)
Variscan is a Responsible Corporate Citizen. Variscan is committed to a
sustainable approach to responsible business and reiterates the ongoing
commitment to be a good corporate citizen and a supportive and reliable
partner for local communities.
We strive to contribute to the sustainable development of
wellbeing of our people and decent work and economic growth.
the regions in which we operate and to create long-lasting
Additionally, we have also outlined SDGs of which we can support
contributions to the economic, as well as the social prosperity
the delivery and on which we can have a positive impact as a
of local residents.
smaller business; this includes goals 4, 6, 7, 9, 10, 12, 14, 15, 16.
Stakeholders around the world are increasingly looking to
How we contribute to the advancement of goals 1, 3 and 8:
businesses to help address global development challenges. The
United Nations (UN) Sustainable Development Goals (SDGs) set
out a framework which helps businesses and their stakeholders
better understand and address those challenges. In 2015 the UN
member states adopted 17 SDGs for tackling poverty, protecting
our planet and working towards sustained peace and prosperity.
Our operations are located in the regions of Cantabria and
Castilla-La Mancha, where Variscan seeks to make a positive
contribution to the achievement of the UN SDGs by promoting
regional development through creating opportunities for local
residents. We are increasing local employment opportunities
and have continued to maintain our local workforce despite the
Our business activity touches directly and indirectly on many of
challenges presented by COVID-19.
the UN SDGs and we continue to look for opportunities to do more
to support the SDGs.
People are at the heart of our business. Through our work and
by taking a proactive ‘Local First’ approach, we focus on making
Through our operations we are aligned to and directly contribute
positive, sustainable contributions to the economic, as well as
to the development of SDGs 1, 3 and 8, which are supporting
the social prosperity of the residents of Cantabria and Castilla-
global efforts to reach no poverty, ensuring good health and
La Mancha.
f Goal 1: No Poverty
▯ We invest in our people and in the regions in which we operate, providing attractive and inclusive employment
opportunities and training.
▯ We pay taxes to regional governments and municipalities.
f Goal 3: Good Health and Well-being
▯ We maintain a rigorous health and safety protocol and reporting practices. At our operations, we test for traces of
substance misuse and screen for symptoms of COVID-19 related illness.
▯ We take serious steps to prevent toxic emissions that could negatively impact the health of our employees and local
communities.
▯ We encourage a healthy lifestyle among our employees and promote personal well-being.
f Goal 8: Decent Work and Economic Growth
▯ We provide skilled work and communicate employment opportunities locally, and contribute positively to the regional
economies.
▯ Our focus on local procurement, by ensuring we integrate local suppliers into our supply chains where possible, ensures
the economic development of the region.
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VARISCAN MINES
Annual Report 2021
Environmental, Social and Governance
How we support goals:
Through our operations, we want to contribute to the development of local communities, deliver long term value to our employees,
invest in local infrastructure, spur innovation and invest in environmental protection. We seek to ensure that our activities do not harm
our employees, local communities or the environment. These SDGs include areas where we can have a positive impact in the region
of presence as well as areas where we strive to mitigate any potential negative impacts.
Empowering our community
f Goal 4: Quality Education
f Goal 9: Industry, Innovation and Infrastructure
f Goal 10: Reduced Inequalities
f Goal 16: Peace, Justice and Strong Institutions
▯ Varsican is an equal opportunities employer and we provide fair wages. We
provide equitable access to employment opportunities.
▯ We provide training to all our employees to refresh and upgrade their skills;
we are committed to developing our workforce and providing employees
with opportunity to progress within our Company. In addition to this, we
pride ourselves as a local employer and provide skilled and manual work,
contributing to economic growth.
▯ We maintain an open and transparent approach to communicating with
authorities on a local, federal and national level and strive to prevent all
forms of conflict by ensuring clear channels of stakeholder engagement.
f Goal 6: Clean Water and Sanitation
f Goal 7: Affordable and Clean Energy
f Goal 12: Responsible Consumption and Production
f Goal 14: Life Below Water
f Goal 15: Life on Land
▯ We take our responsibility with regard to environmental stewardship very
seriously. We carry out baseline assessments to understand and preserve
existing ecosystems surrounding our areas of operations, both above land
and below water.
▯ In addition, we make concerted efforts to conserve our water use, and
ensure that waste is disposed of safely. We monitor water quality.
▯ We monitor our fuel consumption closely and examine opportunities to
reduce our energy consumption and thereby contribute to a potential
reduction in emissions.
VARISCAN MINES
Annual Report 2021
13
Directors Report
Directors
Report
14
VARISCAN MINES
Annual Report 2021
Directors Report
f 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. 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 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.
Michael Moore BEng (Hons), MAusIMM, MAICD
Non-Executive Director
Mike was appointed a Non-Executive Director on 4 August 2015.
Mike is a mining engineer from the Camborne School of Mines
with over 20 years operational and executive management
experience across a diverse range of commodities in Australia,
Indonesia, West Africa and Europe.
He has previously held senior and executive management roles
with a number of companies including Rock Australia Mining
& Civil Pty Ltd, Carnegie Minerals PLC and with ASX listed
Montezuma Mining Company Ltd where he was CEO.
Mike is a member of the Australian Institute of Company Directors
and the Australian Institute of Mining and Metallurgy. Mike is
currently serving as Managing Director of Golden State Mining
Limited as well as serving on the board of Cape Care.
During the past three years Michael Moore has not served as a
director of any other ASX listed company.
Nicholas Farr-Jones AM LLB
Non-executive Director
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
Nick was appointed a Non-Executive Director on 1 July 2021.
Nick has over 25 years of experience in the global mining sector
as a specialist in natural resources investment and corporate
governance. Additionally, he is an experienced public company
investment banking experience. Most recently, he was Managing
director.
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
Nick qualified as a lawyer before pursuing a career in investment
banking. Notably he was responsible for the metal derivative
business of Societe Generale in Europe and Africa before leading
its commodity finance business in Australia. He is currently a
Director of Taurus Funds Management, headquartered in Sydney,
which specialises in bespoke financing solutions for global mid-
tier and junior mining companies. Nick also holds a number of
charitable appointments and is a highly regarded speaker on
leadership. He was awarded the Order of Australia in 1992 for
services to rugby union, having captained the Australian rugby
and holds an MBA from Henley Business School.
team to World Cup success in 1991.
He was appointed as a Non-Executive Director of Trans-Siberian
During the past three years Nicholas Farr-Jones has not served
Gold plc on 19 September 2017, a gold producer listed on the AIM
as a director of any other ASX listed company.
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.
VARISCAN MINES
Annual Report 2021
15
Directors Report
f Directors (continued)
Dr Susan Vearncombe
Ph.D, Msc (Hons) B.Soc.Sci, MAIG, RPGeo
Non-executive director
(appointed 21 August 2020, resigned 30 June 2021)
Susan was appointed a Non-Executive Director on 21 August
2020 and resigned on 30 June 2021.
Mark Pitts BBus, FCA, GAICD
Company Secretary
Mark was appointed Company Secretary of the Company on 2
March 2018.
Mark is a Fellow of Chartered Accountants Australia and New
Zealand and a graduate member of the Australian Institute of
During the past three years Susan Vearncombe has not served
Company Directors. He has more than 30 years’ experience in
as a director of any other ASX listed company.
statutory reporting and business administration.
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 Fyfe has not served as a
director of any other ASX listed company.
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 which was removed from the official list of
the ASX on 15 April 2019.
16
VARISCAN MINES
Annual Report 2021
Directors Report
f Directors’ Interests
As at the date of this report, the interests of the Directors in the shares and
options of Variscan Mines Limited were:
Director
Dr Foo Fatt Kah
Mr Stewart Dickson
Mr Michael Moore
Mr Nicholas Farr-Jones
Ordinary shares
5,018,107
6,705,772
793,786
1,135,544
Options
750,000
2,000,000
750,000
-
The above table includes indirect shareholdings held by related parties to the directors.
f Principal activities
The principal continuing activity of the Group is the exploration of
economic metal and mineral deposits.
f Results
The net result of operations of the Group after applicable income tax was a
loss of $684,613 (2020: $1,125,142).
Included in this result is the amount for share-based payments for the year of $183,246 (2020: $6,095) and an increase in the value of
financial assets at fair value through profit or loss of $77,771 (2020: increase of $36,200).
f Dividends
No dividends were paid or proposed during the year.
f Review of operations
Group Overview
During the financial year, the Group’s operations have been focused on the exploration of its wholly owned Zinc projects in Spain. 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.
Board & Management Changes
On 21 August 2020, the board appointed Dr Susan Vearncombe as a Non-Executive Director, upon the resignation of Mr Simon Fyfe.
On 30 June 2021, Dr Vearncombe retired as a director to focus on her other interests. On 1 July 2021, the Board appointed Mr Nicholas
Farr-Jones AM as a Non-Executive Director.
VARISCAN MINES
Annual Report 2021
17
Directors Report
Impact of COVID-19 Pandemic
During the previous financial year, in response to the initial outbreak of the global COVID-19 pandemic, the Board enacted a suite of
measures to reduce activities in Spain, which at that point was a global locus for the pandemic. Additionally, cost-reduction measures
were put into place to position the Group to react swiftly to the rapidly evolving situation.
During the current financial year, as a result of the improvement in conditions worldwide, the Group has resumed its exploration
operations, while still maintaining appropriate health and safety measures to ensure the wellbeing of its staff, contractors, and
suppliers.
f 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.
f Significant events after the reporting date
There were, at the date of this report, no matters or circumstances which have arisen since 30 June 2021 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.
f 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.
f 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.
f 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.
18
VARISCAN MINES
Annual Report 2021
Directors Report
f 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 received
upon exercise
Number of Shares
under option
$0.60
$1.00
$0.055
$0.065
$0.80
20 November 2021
20 November 2022
30 November 2023
30 November 2023
30 November 2023
ORD
ORD
ORD
ORD
ORD
500,000
500,000
4,000,000
4,000,000
4,000,000
13,000,000
Details of performance rights issued to the Company’s managing director
as at the date of this report are:
Performance Condition
Expiry Date of Rights
Class of Share received
upon vesting
Number of Rights
Continuous service until
30 November 2021
Continuous service until
30 November 2022
30 November 2023
30 November 2023
ORD
ORD
1,250,000
1,250,000
2,500,000
The holders of these options and performance rights do not have the right, by virtue of the option or performance rights, 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 13 & 14 to the financial statements for further details of the options and rights
outstanding.
f Remuneration report (audited)
This remuneration report for the year ended 30 June 2021 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.
VARISCAN MINES
Annual Report 2021
19
Directors Report
f Details of key management personnel
Details of KMP of the Group are set out below:
Directors
Dr Foo Fatt Kah
Stewart Dickson
Mike Moore
Non-Executive Chairman
Managing Director & CEO
Non-Executive Director
Dr Susan Vearncombe
Non-Executive Director (appointed 21 August 2020, resigned 30 June 2021)
Simon Fyfe
Mark Pitts
Non-Executive Director (resigned 21 August 2020)
Non-Executive Director (appointed 30 September 2018, resigned 30 January 2020)
Company Secretary
f 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
These criteria result in a framework which can be used to provide
strategic objectives and the creation of value for shareholders.
a mix of fixed and variable remuneration, and a blend of short-
The Board believes that executive remuneration satisfies the
and long-term incentives in line with the Company’s limited
following key criteria:
financial resources.
▯ Competitiveness and reasonableness;
Fees and payments to the Company’s Non-Executive Directors
▯ Acceptability to shareholders;
▯ Performance linkage/alignment of executive
compensation;
▯ Transparency; and
▯ Capital management.
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”).
f 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
The Chairman’s fee is set at $50,000 p.a. and NED fees at $36,000
maximum of $250,000 per annum to be apportioned among the
p.a. which are consistent with industry average fees. At present,
NEDs in such a manner as the Board determines. Directors are
no Committee fees are paid to Directors.
also entitled to be paid reasonable travelling, accommodation
and other expenses incurred in consequence of their attendance
at Board meetings and otherwise in the execution of their duties
as Directors.
20
VARISCAN MINES
Annual Report 2021
Directors Report
f Use of remuneration consultants
No remuneration consultants were engaged during the years ended 30 June
2020 or 30 June 2021.
f Performance on shareholder wealth
In considering the Group’s performance and benefits for shareholder
wealth, the Board have regarded the following indices in respect of the
current and previous four financial years:
Performance Condition
2021
2020
2019
2018
2017
Loss per share (cents)
(0.32)
(0.76)
(1.76)
(19.40)
(14.00)
Net loss ($)
(684,613)
(1,125,142)
(451,709)
(6,997,545)
(3,914,121)
Share Price at 30 June
$0.075
$0.016
$0.030
$0.060
$0.152
The above Loss per share (in cents per share) and Share Price for the years ending 30 June 2019, 2018, and 2017 have been adjusted
by a factor of 20 to display the impact of the share consolidation completed during the financial year ended 30 June 2020.
Remuneration is most directly linked to performance of shareholder wealth through the use of share options and performance
rights as noted on page 25 below.
f 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: £132,500 p.a. plus VAT as applicable
(2020: £172,500 p.a. plus VAT as applicable) as at 30
June 2021.
▯ Termination payments: Nil.
VARISCAN MINES
Annual Report 2021
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24
VARISCAN MINES
Annual Report 2021
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Directors Report
f Performance Rights holdings of Key Management Personnel
During the financial year, 2,500,000 performance rights were issued in
two equal tranches of 1,250,000 each to the Company’s CEO and Managing
Director, Stewart Dickson, upon the following terms:
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:
▯ Tranche 1: 1,250,000 performance rights vest into
ordinary shares of the Company upon completion of 12
months of continuous service (on 30 November 2021),
and expire if unexercised on 30 November 2023.
▯ Tranche 2: 1,250,000 performance rights vest into
ordinary shares of the Company upon completion of 24
months of continuous service (on 30 November 2022),
and expire if unexercised on 30 November 2023.
f Compensation options: granted and vested during the year
A total of 12,000,000 unquoted options and 2,500,000 performance rights
were granted as compensation during the period to directors and key
management personnel, the details of which are as follows:
Options -
Tranche 1
Options -
Tranche 2
Options -
Tranche 3
Performance
Rights –
Tranche 1
Performance
Rights –
Tranche 2
Number of securities granted
4,000,000
4,000,000
4,000,000
1,250,000
1,250,000
Grant date
9 Dec 2020
9 Dec 2020
9 Dec 2020
9 Dec 2020
9 Dec 2020
Vesting condition / date
(a)
(a)
(a)
30 Nov 2021
30 Nov 2022
Expiration date
Exercise price
30 Nov 23
30 Nov 23
30 Nov 23
30 Nov 23
30 Nov 23
$0.055
$0.065
$0.080
N/A
N/A
(a)
Each tranche of options vests in three equal amounts. The first third vested upon grant, the second after 12
months and the final third after 24 months.
VARISCAN MINES
Annual Report 2021
25
Directors Report
The fair value of the options issued as compensation as set out above was
determined by reference to the Black-Scholes option pricing model, the key
inputs into which and resulting valuation are summarised as follows:
Options - Tranche 1
Options - Tranche 2
Options - Tranche 3
Underlying security spot price
on date of grant
Exercise price
Grant date
Expiration date
Total life (years)
Expected volatility
Risk-free rate
Expected dividend yield
Value per security
Number of securities
Portion vested at balance date
Remaining life (years)
$0.028
$0.055
26 Nov 2020
30 Nov 2023
3.01
150%
0.20%
-
$0.0206
4,000,000
33%
2.42
$0.028
$0.065
26 Nov 2020
30 Nov 2023
3.01
150%
0.20%
-
$0.0200
4,000,000
33%
2.42
Total value
$82,400
$80,000
$0.028
$0.080
26 Nov 2020
30 Nov 2023
3.01
150%
0.20%
-
$0.0193
4,000,000
33%
2.42
$77,200
The fair value of the performance rights issued as compensation
as set out above was determined by reference to the underlying
share price on the date of grant, being $0.028 per security
(totalling $70,000).
Directors’ Benefits, Emoluments
and Share Options
During its annual budget review, the Board reviews the Directors’
Emoluments. Remuneration levels, including participation in the
There were no alterations to the terms and conditions of options
Company’s ESOP, are set to provide reasonable compensation
granted as remuneration since their grant date. There were no
in line with the Company’s limited financial resources. During
forfeitures during the period.
The Company has established an Employee Share Option Plan
(“ESOP”) for the benefit of Directors, officers, senior executives,
employees and consultants. No securities have been issued
under the ESOP during the current year (2020: Nil).
Transactions with directors and
key management personnel
During the current year, amounts totalling $28,600 were paid to
the year no Director of the Company has received or become
entitled to receive any additional benefits to their ordinary
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
Endeavour Corporate Pty Ltd, a Company Associated with Mr
remuneration levels.
Mark Pitts, for accounting and administration services (2020:
$27,600). These amounts are separate from the fees paid to Mr
There is no retirement scheme for Non-Executive Directors.
Pitts through his role as Company Secretary and are not included
End of Audited Remuneration report.
in the Key Management Personnel remuneration table above.
26
VARISCAN MINES
Annual Report 2021
Directors Report
f Compensation options: granted and vested during the year
The following table sets out the number of Directors’ meetings 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:
Dr Foo Fatt Kah
Mr Stewart Dickson
Mr Michael Moore
Mr Simon Fyfe
Dr Susan Vearncombe
Total Number of Meetings Held
Non-audit services
Number of Meetings Held
whilst a director
Number Attended
9
9
9
1
8
9
9
9
9
1
8
The Company’s auditor did not provide any non-audit services during the year ended 30 June 2021 (2020: Nil).
Signed this 29th day of September 2021 in accordance with a resolution of the Directors.
Stewart Dickson
Managing Director & CEO
VARISCAN MINES
Annual Report 2021
27
Auditor’s Independence Declaration
Auditor’s Independence Declaration
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 2021, 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 2021
N G Neill
Partner
Page | 15
28
VARISCAN MINES
Annual Report 2021
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
f For the year ended 30 June 2021
Continuing operations
Interest income
Total income
Compliance expenses
Professional services expenses
Finance expenses
Occupancy expenses
Directors expenses
Travel and accommodation expenses
Exploration expenditure expensed as incurred
Share based payments
Increase in fair value of financial assets
Other expenses
Total expenses
Realised loss on foreign exchange
Unrealised gain/(loss) on foreign exchange
Total foreign exchange loss
Loss before income tax expense
Income tax expense
Loss for the period
Other comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income for the period, net of tax
Notes
3
14
8
4
Consolidated
2021
$
2020
$
6,106
6,106
(69,492)
(142,065)
(102)
-
(218,220)
-
-
(183,246)
77,771
(48,383)
1,692
1,692
(76,655)
(359,303)
(1,432)
(875)
(551,577)
(52,655)
(50,386)
(6,095)
36,200
(45,727)
(583,737)
(1,108,505)
(106,209)
(773)
(106,982)
(684,613)
-
(19,035)
706
(18,329)
(1,125,142)
-
(684,613)
(1,125,142)
1,390
1,390
5,921
5,921
Total comprehensive loss for the period
(683,223)
(1,119,221)
Basic and diluted loss per share (cents per share)
16
(0.32)
(0.76)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income
should be read in conjunction with the accompanying notes
VARISCAN MINES
Annual Report 2021
29
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
f As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Other financial assets - at fair value
Plant and equipment
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
Notes
2021
$
2020
$
6
7
8
9
10
11
12
13
15
4,436,385
2,146,123
50,908
17,501
4,487,293
2,163,624
-
31,564
398,200
-
4,755,448
3,296,140
229,348
5,016,360
9,503,653
91,567
3,785,907
5,949,531
232,424
-
232,424
232,424
267,489
160,000
427,489
427,489
9,271,229
5,522,042
33,968,303
29,841,639
472,974
165,838
(25,170,048)
(24,485,435)
9,271,229
5,522,042
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes
30
VARISCAN MINES
Annual Report 2021
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
f For the year ended 30 June 2021
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Finance costs
Consolidated
Notes
2021
$
2020
$
(773,982)
(777,947)
6,106
(102)
1,692
(1,432)
Net cash outflow from operating activities
22
(767,978)
(777,687)
Cash flows from investing activities
Exploration and evaluation expenditure
(1,489,503)
(387,777)
Sale of financial assets
Payments for property, plant and equipment
Payment for subsidiaries, net of cash acquired
25
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payments for share issue costs
475,971
(33,604)
-
(1,047,136)
4,250,000
(143,000)
-
-
(594,819)
(982,596)
3,106,700
(148,652)
Net cash inflow from financing activities
4,107,000
2,958,048
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
2,291,886
2,146,123
(1,624)
1,197,765
948,358
-
Cash and cash equivalents at the end of the year
6
4,436,385
2,146,123
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
VARISCAN MINES
Annual Report 2021
31
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
f For the year ended 30 June 2021
Issued
capital
Share-based
payment
reserve
24,456,205
153,822
Issue of share capital
5,701,585
Share based payments
-
6,095
(316,151)
-
1 July 2019
Loss for the period
Other comprehensive income, for
the period, net of income tax
Total comprehensive loss for the
periodactivities
Share issue costs
30 June 2020
1 July 2020
Loss for the period
Other comprehensive income, for
the period, net of income tax
Total comprehensive loss for the
periodactivities
-
-
-
-
-
-
Issue of share capital for cash
4,250,000
Issue of deferred share capital
Issue of share capital in lieu of fees
160,000
64,568
Share based payments
-
183,246
Options issued as share issue costs
(122,500)
122,500
(225,404)
-
Share issue costs
30 June 2021
Consolidated
Foreign
currency
translation
reserve
Accumulated
losses
Total
-
-
(23,360,293)
1,249,734
(1,125,142)
(1,125,142)
5,921
-
5,921
5,921
(1,125,142)
(1,119,221)
-
-
-
-
-
-
5,701,585
6,095
(316,151)
-
(684,613)
(684,613)
1,390
-
1,390
1,390
(684,613)
(683,223)
-
-
-
-
-
-
-
-
-
-
-
-
4,250,000
160,000
64,568
183,246
-
(225,404)
-
-
-
-
-
-
-
-
-
-
29,841,639
159,917
5,921
(24,485,435)
5,522,042
29,841,639
159,917
5,921
(24,485,435)
5,522,042
33,968,303
465,663
7,311
(25,170,048)
9,271,229
The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
32
VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
Notes to the Financial Statements
f 1. Corporate information
The financial report of Variscan Mines Limited (Variscan or the Company) for the year ended 30 June 2021 was authorised for issue in
accordance with a resolution of the Directors on 29 September 2021. 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 Group are described in the Directors’ Report.
f 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, 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 Group for the year ended 30 June 2021.
Adoption of new and revised standards
Standards and Interpretations applicable to 30 June 2021
In the year ended 30 June 2021, 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 2020. As a result of
this review, the Group has determined there is no material impact of the new and revised standards on the results for the financial
year, and no changes required to Group Accounting Policies.
Basis of consolidation
The consolidated financial statements comprise the financial statements of Variscan Mines Limited (Variscan or the Company) and
its subsidiaries 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.
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.
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Annual Report 2021
33
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
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.
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.
Exploration and evaluation
Exploration and evaluation
Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area of interest. Such
expenditure comprises net direct costs and an appropriate portion of related overhead expenditure, but does not include general
overheads or administrative expenditure not having a specific connection with a particular area of interest. Exploration and evaluation
costs in relation to separate areas of interest for which rights of tenure are current are brought to account in the year in which they
are incurred and carried forward provided that:
▯ Such costs are expected to be recouped through successful development and exploitation of the area, or alternatively
through its sale; and
▯ Exploration and/or evaluation activities in the area have not yet reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves.
Once a development decision has been taken, all past and future exploration and evaluation expenditure in respect of the area of
interest is aggregated within costs of development.
Exploration and evaluation – impairment
The Group assesses at each reporting date whether there is an indication that an asset has been impaired and for exploration and
evaluation costs whether the above carry forward criteria are met.
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VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
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.
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
VARISCAN MINES
Annual Report 2021
35
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
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.
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 (2020: 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 group’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
36
VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
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.
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.
VARISCAN MINES
Annual Report 2021
37
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
If the terms of an equity-settled award are modified, at a minimum an expense is recognised as if the terms had not been modified. In
addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement,
or is otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of the cancellation, and any expense not yet recognised
is recognised immediately. However, if a new award is substituted for the cancelled award and designated a replacement award on
the date it is granted, the cancelled and the new award are treated as if there was a modification of the original award, as described
in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share
except where such dilution would serve to reduce a loss per share.
Revenue recognition
Revenue is recognised to depict the transfer of promised goods or services to customers at an amount that reflects the consideration
expected to be entitled in exchange for those goods or services. The following specific recognition criteria must also be met before
revenue is recognised.
Rendering of services
Revenue from consulting services are recognised when provided.
Interest
Revenue is recognised as interest accrues using the effective interest method.
Royalties
Royalties are recognised in accordance with substance of the relevant agreement.
Contract exploration
Contract exploration revenue (consulting fees) earned from third parties is recognised when rights to receive the revenue are assured.
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.
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VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
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.
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 will be 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.
VARISCAN MINES
Annual Report 2021
39
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
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.
Significant accounting judgements, estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events.
The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain
assets and liabilities within the next annual reporting period are:
Share-based payment transactions
The Company measures the cost of equity-settled share-based payments at fair value at the grant date using the Black-Scholes
formula taking into account the terms and conditions upon which the instruments were granted and estimates of volatility.
Capitalisation and write-off of capitalised exploration costs
The determination of when to capitalise and write-off exploration expenditure requires the exercise of judgement based on
assessments of results, various assumptions, and other factors such as historical experience, current and expected economic
conditions. Refer to Note 10 for further details.
Earnings/Loss per share
Basic earnings/loss per share is calculated as net profit/loss attributable to members of the Group, adjusted to exclude any costs of
servicing equity divided by the weighted average number of ordinary shares.
Diluted earnings/loss per share is calculated as net profit/loss attributable to members of the Group, adjusted for:
▯ Costs of servicing equity.
▯ The after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses.
▯ Other non-discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares.
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments,
has been identified as the Managing Director.
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VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
f 3.
Income
Income
Interest income
Net cash outflow from operating activities
f 4. Income tax
2021
$
6,106
6,106
2021
$
Prima facie income tax (credit) on operating (loss) at 30% (2020: 30%)
(205,384)
Deferred tax assets not recognised
Other
Income tax expense
205,384
-
-
Consolidated
2020
$
1,692
1,692
Consolidated
2020
$
(337,543)
337,543
-
-
No provision for income tax is considered necessary in respect of the Company for the period ended 30 June 2021. 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
$15,289,141 (2020: $14,604,528) as at 30 June 2021.
A benefit of 30% (2020: 30%) of approximately $4,586,742 (2020: $4,381,358) 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.
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 (2020: $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.
VARISCAN MINES
Annual Report 2021
41
Notes to the Financial Statements
f 5. Auditors’ remuneration
Amounts received or due and receivable by:
HLB Mann Judd (WA) Partnership, for:
Audit and review of the financial report of Variscan Mines Limited
f 6. Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
Consolidated
2021
$
29,283
29,283
2020
$
26,138
26,138
Consolidated
2021
$
4,436,385
-
4,436,385
2020
$
646,123
1,500,000
2,146,123
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.
f 7. Receivables
Current
Other Debtors
GST/VAT receivable
Prepayments
Consolidated
2021
$
3,300
29,239
18,369
50,908
2020
$
-
717
16,784
17,501
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 expected credit losses is recognised when there is objective evidence that it is impaired. No
allowance for expected credit losses is required.
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VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
f 8.
Investments
Investment – ASX-listed securities – Thompson Resources Ltd (a)
Consolidated
2021
$
-
-
2020
$
398,200
398,200
This investment was disposed of on 6 July 2020 for total net proceeds of $475,971, resulting in a gain of $77,771. In accordance with
the Group’s accounting policy at Note 2, this is disclosed as an increase in the value of financial assets at fair value through profit or
loss in the Statement of Profit or Loss and Other Comprehensive Income.
f 9. Plant & equipment
Plant and equipment – at cost
Accumulated depreciation
Net book value
Reconciliation of plant and equipment is as follows:
Opening carrying value
Additions
Depreciation
Consolidated
2020
$
-
-
-
-
-
-
-
2021
$
33,604
(2,040)
31,564
-
33,604
(2,040)
31,564
Depreciation expenses related to the plant and equipment utilised solely in the exploration and evaluation activities of the Group is
capitalised to deferred exploration and evaluation expenditure. Refer Note 10.
VARISCAN MINES
Annual Report 2021
43
Notes to the Financial Statements
f 10. Deferred exploration and evaluation expenditure
Exploration and evaluation phase:
Costs brought forward
Consolidated
2021
$
2020
$
3,296,140
37,908
Acquisition of Spanish Zinc Assets (refer Note 25)
-
2,994,947
Costs incurred during the year
Depreciation capitalised (refer Note 9)
Expenditure written off during the year
Impact of foreign currency exchange differences
1,469,352
261,307
2,040
-
(12,084)
-
-
1,978
Costs carried forward
4,755,448
3,296,140
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
3,997,971
2,570,011
678,751
78,726
647,403
78,726
4,755,448
3,296,140
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.
f 11. Current liabilities – payables
Trade creditors (a)
Accrued expenses (b)
Consolidated
2021
$
169,369
63,055
232,424
2020
$
117,080
150,409
267,489
(a)
(b)
Trade creditors are non-interest bearing and are generally settled on 30-day terms.
The comparative balance 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 initial stages of the COVID-19 global pandemic.
44
VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
f 12. Share consideration payable
Shares to be issued (4,000,000 Ordinary shares)
f 13. Contributed equity
Consolidated
2021
$
-
-
2020
$
160,000
160,000
Consolidated
2021
$
2020
$
Share capital
266,107,024 (2020: 206,093,551) ordinary shares fully paid
35,766,600
30,763,428
Option issue consideration reserve
Nil (2020: 29,669,247) listed options on issue
Share issue costs
Movements in ordinary shares on issue
At 1 July 2019
Shares issued for cash
-
528,604
(1,798,297)
(1,450,393)
33,968,303
29,841,639
Number
Value
$
1,271,073,585
25,061,842
1,553,350,000
3,106,700
Shares issued to acquire Spanish Zinc Assets
1,165,588,235
2,331,176
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
Shares issued for cash
Shares issued in settlement of deferred share consideration (note 12)
Shares issued in lieu of directors fees
Value of lapsed VAROA quoted options transferred
At 30 June 2021
83,750,000
48,104,500
(3,915,772,769)
167,500
96,209
-
206,093,551
30,763,428
53,125,000
4,250,000
4,000,000
2,888,473
-
160,000
64,568
528,604
266,107,024
35,766,600
VARISCAN MINES
Annual Report 2021
45
Notes to the Financial Statements
f 13. Contributed equity (continued)
Number
Value
$
Movements in quoted options on issue
At 1 July 2019
593,384,943
528,604
Impact of equity consolidation on a 20 to 1 basis
At 30 June 2020
Lapse of quoted options
At 30 June 2021
(563,715,696)
29,669,247
(29,669,247)
-
-
528,604
(528,604)
-
On 31 May 2021, 29,669,247 quoted options lapsed unexercised. Upon their expiry, the value previously attributed to the Option Issue
Consideration Reserve, forming part of gross Contributed Equity, was transferred to the value of Issued Share Capital.
In addition to the above quoted options, the Company has 13,000,000 unquoted options on issue at balance date. Refer Note 14 for
details.
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.
f 14. 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 2021 and 2020. No securities have been issued under
the ESOP during the financial year ended 30 June 2021 (2020: Nil).
Option pricing model and terms of options
The Company has 13,000,000 unquoted options currently on issue as a result of share-based payment arrangements. 12,000,000
options were issued during the current financial year as share-based payments (2020: Nil). These share-based payments were valued
by reference to the Black-Scholes option pricing model.
Furthermore, as part of the share placement completed on 28 June 2021, the Company agreed to issue 2,500,000 unquoted options
exercisable at 12 cents per share to the lead manager of the placement. These options, which have a 3-year expiry period, are to be
issued either subject to shareholder approval or once the Company’s share placement capacity allows.
46
VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
f 14. Share-based payments and unquoted options (continued)
The following table lists the inputs into this model and the terms of options granted in the Company:
Options -
Tranche 1 to Key
Management
Personnel
Options -
Tranche 2 to Key
Management
Personnel
Options -
Tranche 3 to Key
Management
Personnel
Lead manager
options
Number of securities
4,000,000
4,000,000
4,000,000
2,500,000
Underlying security spot price on date of grant
Exercise price
Grant date
Expiration date
Total life (years)
Expected volatility
Risk-free rate
Expected dividend yield
Value per security
Vesting condition / date
Portion vested at balance date
Remaining life (years)
$0.028
$0.055
$0.028
$0.065
$0.028
$0.080
$0.075
$0.12
26 Nov 2020
26 Nov 2020
26 Nov 2020
28 June 2021 (b)
30 Nov 2023
30 Nov 2023
30 Nov 2023
28 June 2024 (c)
3.01
150%
0.20%
-
3.01
150%
0.20%
-
3.01
150%
0.20%
-
$0.0206
$0.0200
$0.0193
(a)
33%
2.42
(a)
33%
2.42
(a)
33%
2.42
3.00
125%
0.20%
-
$0.049
None
N/A
(d)
(a)
(b)
(c)
Each tranche of options vests in three equal amounts. The first third vested upon grant, the second after 12
months and the final third after 24 months.
These options have yet to be issued, although a deemed grant date of 28 June 2021 has been used as the date
at which the Company incurred the obligation to issue these options.
These options have a life of 3 years, and therefore an estimated expiration date equal to three years after the
Grant Date has been used in determining the value of the options.
(d)
The options have not yet been issued and therefore there is no current remaining life.
Summary of movement of unquoted options on issue in the parent entity
Movements in unquoted options on issue
At 1 July 2019
Impact of equity consolidation
Expense recognised for further vesting during the year
At 30 June 2020
Issue of options to Directors and Key Management Personnel
Fair value of options to be issued to lead manager of placement
Expense recognised for further vesting during the year
At 30 June 2021
Number
Value
$
20,000,000
153,822
(19,000,000)
-
1,000,000
12,000,000
-
-
13,000,000
-
6,095
159,917
150,121
122,500
2,338
434,876
VARISCAN MINES
Annual Report 2021
47
Notes to the Financial Statements
f 14. Share-based payments and unquoted options (continued)
The outstanding balance as at 30 June 2021 is represented by:
Exercise Price of Option
Expiry Date of Options
Class of Share received
upon exercise
Number of Shares under
option
$0.60
$1.00
$0.055
$0.065
$0.80
20 November 2021
20 November 2022
30 November 2023
30 November 2023
30 November 2023
ORD
ORD
ORD
ORD
ORD
500,000
500,000
4,000,000
4,000,000
4,000,000
13,000,000
Weighted Average disclosures for unquoted 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
2021
$
2020
$
$0.80
$0.062
-
$0.123
$0.213
2.30
$0.80
-
-
$0.80
$0.80
1.89
Range of exercise price
$0.055 - $1.00
$0.60 - $1.00
Performance rights issued as share-based payments
During the financial year, the shareholders of the Company approved the issue of 2,500,000 performance rights to the Company’s
Managing Director and CEO, Stewart Dickson. The fair value of these performance rights was determined by reference to the
underlying share price on the date of grant, being $0.028 per security.
Details of performance rights issued to the Company’s managing director during the year are:
Performance Condition
Expiry Date of
Rights
Fair value per
security
Number of Rights
Continuous service until 30 November 2021
30 November 2023
Continuous service until 30 November 2022
30 November 2023
$0.028
$0.028
1,250,000
1,250,000
2,500,000
48
VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
f 14. Share-based payments and unquoted options (continued)
Summary of movement of performance rights on issue in the parent entity
Movements in performance rights on issue
At 1 July 2020
Issued to managing director / CEO
At 30 June 2021
f 15. Reserves
Share-based compensation reserve
Foreign currency translation reserve
Share-based compensation reserve
Balance at the beginning of financial year
Share-based payments
Balance at end of financial year
Foreign currency translation reserve
Balance at the beginning of financial year
Effect of exchange rate fluctuation
Balance at end of financial year
Number
-
2,500,000
2,500,000
Value
$
-
30,788
30,788
Consolidated
2021
$
465,663
7,311
472,974
159,917
305,746
465,663
5,921
1,390
7,311
2020
$
159,917
5,921
165,838
153,822
6,095
159,917
-
5,921
5,921
(a)
Share-based compensation reserve
The share-based compensation reserve is used to recognise the fair value of unlisted options and performance
rights issued but not exercised as described in Note 2 and referred to in Note 14.
(b)
Foreign currency translation reserve
The foreign currency translation reserve recognised the net exchange differences on foreign operations.
VARISCAN MINES
Annual Report 2021
49
Notes to the Financial Statements
f 16. Earnings/(Loss) per share
Earnings/(loss) used in calculating basic and diluted
earnings/(loss) per share
Weighted average number of ordinary shares outstanding during the
year used in calculation of basic and diluted EPS
Consolidated
2021
$
2020
$
(684,613)
(1,125,142)
Consolidated
2021
Number
2020
Number
211,930,392
147,246,739
Consolidated
2021
Cents per share
2020
Cents per share
Basic and diluted earnings/(loss) per share
(0.32)
(0.76)
All potential ordinary shares for the calculation of diluted loss per share are considered anti-dilutive.
f 17. 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
Consolidated
2021
$
2020
$
365,071
482,368
-
-
183,248
548,319
-
-
102,304
584,672
50
VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
f 18. Related party disclosures
Subsidiaries
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 Europe Limited
Country of
incorporation
Australia
UK
Slipstream Resources Spain Pty Ltd
Australia
Slipstream Resources Spain 2 Pty Ltd
Australia
Variscan Mines Cantabria, SL
Variscan Mines La Mancha, SL
Spain
Spain
% Equity interest
$ Investment
2021
2020
2021
2020
100
100
100
100
100
100
100
100
100
100
100
100
5,000
5,000
1
1
2,403,748
2,403,748
686,531
686,531
4,439
4,500
4,439
4,500
Transactions with key management personnel
During the current year, amounts totalling $28,600 were paid to Endeavour Corporate Pty Ltd, a Company Associated with Mr Mark
Pitts, for accounting and administration services (2020: $27,600).
f 19. Farm-in / Farm-out arrangements
The Company is a party to a number of exploration farm-in / farm-out 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. These arrangements 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 arrangements. Percentage equity interests in these arrangements at
30 June 2021 were as follows:
Hillston – diluting to 16%
Callabonna – diluting to 30%
f 20. Segment information
Consolidated
2021
% Interest
39.2%
49%
2020
% Interest
39.2%
49%
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
VARISCAN MINES
Annual Report 2021
51
Notes to the Financial Statements
f 20. Segment information (continued)
nature of the Group, the Managing Director 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 2021.
Australia
Spain
Total
2021
$
2020
$
2021
$
2020
$
2021
$
2020
$
Segment income
6,106
1,692
Segment loss before income
tax expense
(684,613)
(1,096,085)
-
-
-
6,106
1,692
(29,057)
(684,613)
(1,125,142)
Segment assets
7,838,622
5,441,883
1,665,031
507,648
9,503,653
5,949,531
Segment liabilities
(204,174)
(401,008)
(28,250)
(26,481)
(232,424)
(427,489)
f 21. 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 (2020: nil)
f 22. Statement of Cash Flows
Consolidated
2021
$
2020
$
Reconciliation of net cash outflow from operating activities to
operating loss after income tax
Operating loss after income tax
(684,613)
(1,125,142)
Exploration expenditure expensed or written-off
Share-based payment expense
Fair value (increase) on financial assets
Shares issued in lieu of fees
Foreign exchange variances
-
183,246
(77,771)
64,568
3,014
50,386
6,095
(36,200)
96,210
4,993
52
VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
f 22. Statement of Cash Flows (continued)
Change in assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in other assets
(Decrease)/increase in trade and other creditors
Consolidated
2021
$
(33,407)
(137,781)
(85,234)
2020
$
1,587
37,377
187,007
Net cash outflow from operating activities
(767,978)
(777,687)
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)
Consolidated
2021
$
2020
$
4,436,385
2,146,123
4,436,385
2,146,123
f 23. 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.
VARISCAN MINES
Annual Report 2021
53
Notes to the Financial Statements
f 23. Financial risk management objectives and policies (continued)
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.
The expected settlement of the Group’s financial liabilities is as follows:
Carrying
amount
Contracted
cash flows
< 6 months 6-12 months
1-2 years
2-5 years
30 June 2021
Trade and other payables
232,424
232,424
232,424
232,424
232,424
232,424
30 June 2020
Trade and other payables
267,489
267,489
267,489
Share consideration payable
160,000
160,000
160,000
427,489
427,489
427,489
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Interest rate risk
At reporting date, the Group is exposed to floating weighted average interest rates at 30 June 2021 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
Consolidated
2021
0.02%
$4,436,385
-
-
2020
0.05%
$646,123
0.85%
$1,500,000
54
VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
f 23. Financial risk management objectives and policies (continued)
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
Pre-tax Loss
lower / (higher)
2021
$
44,364
(44,364)
2020
$
21,461
(21,461)
Consolidated
Equity
lower / (higher)
2021
$
44,364
(44,364)
2020
$
21,461
(21,461)
+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 2021, although this exposure and all other foreign
currency exposure during the current financial year has been assessed as immaterial.
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, noting that the Group sold all its investments during the year:
VARISCAN MINES
Annual Report 2021
55
Notes to the Financial Statements
f 23. Financial risk management objectives and policies (continued)
Pre-tax Loss
Lower / (Higher)
Equity
Lower / (Higher)
2021
$
-
-
2020
$
79,640
(79,640)
2021
$
-
-
2020
$
79,640
(79,640)
+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 2021 and 2020.
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.
Pre-tax Loss
Lower / (Higher)
Equity
Lower / (Higher)
2021
$
-
-
2020
$
-
-
398,200
398,200
-
-
2021
$
-
-
-
-
2020
$
-
-
398,200
398,200
Financial assets
Investments
Total financial assets
Financial assets
Investments
Total financial assets
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
56
VARISCAN MINES
Annual Report 2021
Notes to the Financial Statements
f 24. 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
Consolidated
2021
4,400,782
9,371,885
(204,176)
(204,176)
9,167,709
33,968,303
2020
2,112,163
5,740,316
(401,008)
(401,008)
5,339,308
29,841,639
(25,273,568)
(24,668,169)
472,974
9,167,709
(605,399)
1,389
165,838
5,339,308
(1,096,602)
5,921
Total comprehensive (loss) of the parent entity
(604,010)
(1,090,681)
The accounting policies of the Parent Entity are consistent with those of the Group as disclosed in Note 2, except for Investments
in Subsidiaries, which are accounted for at cost less accumulated impairment losses.
f 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 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.
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
VARISCAN MINES
Annual Report 2021
57
12 December 2019
$
2,331,176
160,000
599,103
3,090,279
Notes to the Financial Statements
f 25. Acquisition of Spanish Zinc Assets (continued)
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
$
4,284
65,419
62,597
174,271
(36,204)
-
-
-
2,819,912
-
Fair value
$
4,284
65,419
62,597
2,994,183
(36,204)
3,090,279
3,090,279
12 December 2019
$
599,103
(4,284)
594,819
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
Net cash outflow arising on acquisition
Cash paid
Less: Net cash acquired with the subsidiary
Net cash outflow
Impact of acquisition on the results of the Group
If the combination had taken place at the beginning of the comparative period, there would have been no significant change in the
net result for the comparative period.
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.
f 26. Events after the reporting date
There were, at the date of this report, no matters or circumstances which have arisen since 30 June 2021 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.
58
VARISCAN MINES
Annual Report 2021
Directors’ Declartion
Directors’
Declaration
1.
In the directors’ opinion:
(a) the financial statements and notes set out on pages 29 to 58 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 group’s financial position as at 30 June 2021 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.
3.
The notes to the financial statements include a statement of compliance with International Financial Reporting Standards.
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer for the year ended
30 June 2021 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 2021
VARISCAN MINES
Annual Report 2021
59
Independent Auditor’s Report
Independent Auditor’s Report
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 2021, 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 2021 and of its
financial performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated
in our report.
Page | 48
60
VARISCAN MINES
Annual Report 2021
Independent Auditor’s Report
Key Audit Matter
How our audit addressed the key audit matter
Exploration and evaluation asset
Refer to note 10
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group
capitalises all exploration and evaluation
expenditure, including acquisition costs and
subsequently applies the cost model after
recognition.
Our audit focused on the Group’s assessment of
the carrying amount of the capitalised exploration
and evaluation asset, as this is one of the most
significant assets of the Group. We planned our
work to address the audit risk that the capitalised
expenditure may no longer meet the recognition
criteria of the standard. In addition, we
considered it necessary to assess whether facts
and circumstances existed which suggest that the
carrying amount of an exploration and evaluation
asset may exceed its recoverable amount.
Our procedures included but were not limited to
the following:
• We obtained an understanding of the key
processes associated with management’s
review of the carrying values of each area
of interest;
• We considered management’s assessment
of potential indicators of impairment;
• We obtained evidence that the Group has
current rights to tenure of its areas of
interest;
• We examined the exploration budget for the
year ending 30 June 2022 and discussed
with management the nature of planned
ongoing activities;
• We enquired with management, reviewed
ASX announcements and reviewed minutes
of Directors’ meetings to ensure that the
Group had not resolved to discontinue
exploration and evaluation at any of its
areas of interest; 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 financial report for the year ended 30 June 2021, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Page | 49
VARISCAN MINES
Annual Report 2021
61
Independent Auditor’s Report
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.
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.
Page | 50
62
VARISCAN MINES
Annual Report 2021
Independent Auditor’s Report
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 2021.
In our opinion, the Remuneration Report of Variscan Mines Limited for the year ended 30 June
2021 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 2021
N G Neill
Partner
Page | 51
VARISCAN MINES
Annual Report 2021
63
ASX Additional Information
Schedule of Tenements
f Listing of tenements held as at 13 October 2021
Tenement
SPAIN
Cantabria
Tenement No.
Interest
Joint Venture Details
Buenahora Fraction 1
Buenahora Fraction 2
IP 16.662-01
IP 16.662-02
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
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
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%
64
VARISCAN MINES
Annual Report 2021
ASX Additional Information
Tenement
Tenement No.
Interest
Joint Venture Details
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
Tenement
CHILE – Note 1
Rosario 6 1-40
Rosario 7 1-60
Rosario 101
Salvadora
Abandonara
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%
IP 4.203
100%
Tenement No.
Interest
Joint Venture Details
0310259624
0310259632
03102N2229
0310231355
0310248487
10.4%
10.4%
10.4%
10.4%
10.4%
Tenement
Tenement No.
Interest
Joint Venture Details
NEW SOUTH WALES
Willyama
Hillston
Native Dog
Woodlawn South
EL 8075
0%
Note 2
EL 6363
39.2%
EL 8236
ELs 7257
and 7469
0%
0%
Perilya can earn 80%,
Eaglehawk 9.8%
Note 2
Royalty interest only
VARISCAN MINES
Annual Report 2021
65
ASX Additional Information
Tenement
Tenement No.
Interest
Joint Venture Details
SOUTH AUSTRALIA
Junction Dam
Callabonna
Tenement
FRANCE – Note 4
St Pierre
Beaulieu
EL
= Exploration Licence
PER
= Permis Exclusif de Recherche (France)
IP
EC
= Investigation Permit (Spain)
= Exploration Concession (Spain)
EL 5682
0%
Marmota acquired 100%
ownership. See Note 3
EL 5360
49%
Red Metal 51%, can earn 70%
Tenement No.
Interest
Joint Venture Details
PER
PER
100%
100%
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.
f 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.
66
VARISCAN MINES
Annual Report 2021
ASX Additional Information
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.
f 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 2021 and approved by the Board on 29 October 2021, 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 4rd 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.
Shareholder Information
f Shareholder Information as at 12 October 2021
Ordinary fully paid shares
266,732,024 fully paid ordinary shares on issue.
Substantial shareholders
CITICORP NOMINEES PTY LIMITED
Shareholding
%
39,304,716
14.736%
SLIPSTREAM RESOURCES INTERNATIONAL PTY LTD
35,000,000
13.122%
DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT
16,968,750
6.362%
As at 12 October 2021, there were 983 shareholders with less than a marketable parcel of $500.
Top 20 shareholders of ordinary shares
CITICORP NOMINEES PTY LIMITED
Number
%
39,304,716
14.736%
SLIPSTREAM RESOURCES INTERNATIONAL PTY LTD
35,000,000
13.122%
DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
EFFECTIVE INVESTMENTS PTY LTD
16,968,750
6.362%
9,538,667
3.576%
7,546,432
2.829%
VARISCAN MINES
Annual Report 2021
67
ASX Additional Information
Top 20 shareholders of ordinary shares
FELDI LIMITED
HISPANIBAL SL
LIGHTNING JACK PTY LTD
SCINTILLA STRATEGIC INVESTMENTS LIMITED
CCGF HOLDING PTY LIMITED
OPEKA DALE PTY LTD
DR FATT KAH FOO
BNP PARIBAS NOMS PTY LTD
KWAN CHEE SENG
SAMMEX CONSULTING PTY LTD
UPSKY EQUITY PTY LTD
RUBI HOLDINGS PTY LTD
MERCER STREET GLOBAL OPPORTUNITY FUND LLC
Number
%
7,330,772
2.748%
7,279,412
2.729%
7,080,000
2.654%
3,850,000
1.443%
3,607,125
1.352%
3,480,000
1.305%
2,886,839
1.082%
2,821,175
1.058%
2,725,000
1.022%
2,531,250
0.949%
2,500,000
0.937%
2,500,000
0.937%
2,350,000
0.881%
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
2,184,610
0.819%
MR GEORGE EVAN LOUIZIDIS
Total Securities of Top 20 Holdings
Total of Securities
2,000,000
0.750%
163,484,748
61.292%
266,732,024
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Voting rights
Distribution of shareholders
No of shareholders
Ordinary shares
%
743
195
93
274
225
1,530
155,602
506,426
744,436
11,737,105
253,588,455
266,732,024
0.06%
0.19%
0.28%
4.40%
95.07%
100.00%
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.
68
VARISCAN MINES
Annual Report 2021
www.variscan.com.au
VARISCAN MINES
Annual Report 2021
69
70
VARISCAN MINES
Annual Report 2021
VARISCAN MINES
Annual Report 2021
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