ASX Announcement – 31 October 2022
2022 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 2022.
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
Annual
Report
2022
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
Dr Frank Bierlein*
Non-Executive Director
Mr Anthony Wehby*
Non-Executive Director
COMPANY SECRETARY
Mr 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
SECURITIES EXCHANGE LISTING
Variscan Mines Limited’s shares are listed on the
Australian Securities Exchange (ASX: VAR)
* Directors appointed subsequent to the end
of the Financial Year on 20 October 2022
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Annual Report 2022
Contents
Corporate Directory
Chairman’s Letter
Operational Review
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement Of Cash Flows
Consolidated Statement Of Changes In Equity
Notes To The Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
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Chairman’s Letter
Chairman’s
Letter
Variscan Mines has achieved a host of development milestones over the
year, culminating in the recent release of a JORC exploration target for our
Spanish-based Novales-Udias Mine Project.
On behalf of your Board of Directors, it gives me great pleasure to
Castilla-La Mancha, central Spain. These assays returned high-
present the annual report of Variscan Mines Limited (“Variscan”
grade zinc, lead and silver results.
or “the Company”) for the year ended 30 June 2022.
Looking ahead, the coming 12 months will see Variscan enter the
Over the course of this year, the Variscan team has worked
next stage of its stepwise exploration and development strategy
hard to prove up the prospectivity of our Spanish assets. These
for its Spanish assets.
sustained efforts are headlined by the announcement, made just
after year end, of a sizable preliminary JORC Exploration Target
for our Zinc-Lead Novales-Udias Project. While the potential
quantity and grade of this Exploration Target is conceptual in
nature, it indicates the potential for a mid-to-large scale, high-
grade deposit at this promising asset.
At San Jose, underground and surface drilling campaigns are
being planned. We are now working on the delivery of approvals
to undertake further surface drilling in and around the historic
mine and the start-up of a Phase 3 underground infill and
resource definition drilling program. The Company is, at the
same time, also working towards the publication of a focussed
The delivery of this JORC Exploration Target would not have
JORC compliant Mineral Resource Estimate and the completion
been possible without the successful completion of multiple
of a Mine Re-Start Concept Study for the San Jose Mine.
exploration programs at the Novales-Udias Project, where the
historic San Jose Mine is located, over the past 12 months.
Amid this hive of exploration activity, Variscan has maintained
engagement across its environmental, social and governance
At the start of the year, we undertook a structural mapping
(“ESG”) responsibilities. Recent activities have included
survey at the San Jose Mine which, whilst confirming existing
supporting the Novales Lemon Fiesta and employing local staff
drill targets, also identified 18 additional infill and step-out drill
within all areas of the Company.
targets. On the back of these results, the Company commenced
a Phase 2 underground drilling campaign which subsequently
confirmed the discovery of multiple stacked lenses of high-grade
zinc mineralisation in the Southwest Zone and Los Caracoles
Trend of the San Jose Mine, separate from the Central Zone
reported previously.
During this year past, we have unambiguously succeeded
in identifying and discovering near-term zinc production
opportunities and mineral resources at our projects in Spain. I
wish to express my heartfelt gratitude to our Board of Directors,
service providers and all our staff for their hard work and
persistence in a year where we have made solid progress - not
Assay results from the Phase 2 drilling programme started to
only in our exploration activities, but also as a company. We will
flow through from late in the Company’s third quarter, with more
continue to change and evolve as necessary to put our company
successful results being announced to the market after the end
of the financial year. These assays have effectively expanded
in the best possible position to optimise shareholder value from
the resources we have identified. With our outstanding team and
new areas of high-grade zinc mineralisation in the Central Zone
supportive shareholders, I have every confidence that Variscan’s
of San Jose.
future will be as exciting as it will be successful.
We commenced surface drilling upon the Buenahora Exploration
Yours sincerely
Licence after receiving our surface drilling permits from the
Government of Cantabria’s Department of Mines during the
fourth quarter of the financial year. This drill campaign is
currently on-going, and we look forward to updating the market
as we progress.
Outside of our Novales-Udias project, we also announced new
high-grade assay results from grab sampling conducted around
former mine areas and prospects within the Guarajaz Project in
Dr Foo Fatt Kah
Chairman
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Annual Report 2022
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Annual Report 2022
5
Operational Review
Operational
Review
f Group Highlights – Year in Review
It is my pleasure to report that the development of Variscan Mines’ highly
prospective Spanish assets have been materially advanced over the
Company’s financial year ended 30 June 2022.
A run of highly successful exploration activities over the past 12 months underwrote this success, which, just after the end of the
financial year, culminated in the delivery of a sizable, preliminary JORC Exploration Target for the Novales-Udias Project. The latter
announcement took Variscan much closer to its target of creating a regionally significant mineral resource.
f Spain
Novales-Udias project (Cantabria, northern Spain)
The Novales-Udias project has been the Company’s main effort during the reporting period. Our work programme has advanced the
project towards our stated objective of seeking early production opportunities.
Figure 1. Simplified Lithology of the Novales-Udias Project and proximity of the Reocin Mine & San Juan de Nieva Smelter
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VARISCAN MINES
Annual Report 2022
Operational Review
In late July 2022, the Company released details of a sizable, preliminary JORC Exploration Target defined for its Novales-Udias Project
(See ASX announcement, dated 28 July 2022). Although conceptual in nature, this Target indicates the potential for a mid-to-large scale,
high-grade deposit. The following table outlines the Target’s range and tonnage parameters.
Range
Lower Estimate
Upper Estimate
Tonnage (Mt)
Zinc (%)
Lead (%)
16.5
34
6.3
9.1
1.1
1.8
The potential quantity and grade of the Exploration Target is conceptual in nature. There has been insufficient exploration to
estimate a Mineral Resource for all target areas reported. It is uncertain if further exploration will result in the estimation of a
Mineral Resource. The Exploration Target has been prepared and reported in accordance with the 2012 edition of the JORC Code.
Figure 2. Plan view of Novales-Udias Project with Exploration Target areas (red)
VARISCAN MINES
Annual Report 2022
7
Operational Review
Putting this Target in perspective, a benchmarking exercise against a selection of other publicly reported Zinc (Zn)-Lead (Pb) Exploration
Targets suggests the Novales-Udias Project has significant potential for a Mineral Resource over a mid-to-large scale, high-grade
deposit. Ongoing exploration is planned to test this target.
Figure 3. Historical Mine and Workings Locations Over the Novales-Udias Project
Delivery of the preliminary JORC Exploration Target for Novales-
Udias just after year’s end was made possible by a range of
exploration activities at this Project over the course of the year.
These mostly revolved around the Phase 2 drill campaign that
got underway earlier in the year. It saw Variscan enter another
exciting phase of fieldwork at San Jose.
During the third quarter, Variscan announced to the market
that drill results from the Phase 2 programme had continued to
deliver high-grade discoveries beyond historical mine workings
at San Jose (See ASX announcement dated 15 March 2022). This
simultaneously expanded zones of mineralisation and created
new opportunities to expand tonnages by connecting mineralised
trends within the deposit.
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VARISCAN MINES
Annual Report 2022
Operational Review
Figure 4. Plan view of selected mineralised intersections from drilling in the 168 Trend and the Los Caracoles Trend
The prospectivity uplift provided by these results was highly significant - prior to the commencement of underground exploration
drilling by Variscan, the existence of these lower mineralised lenses was completely unknown. The continuing occurrences of high-
grade zinc mineralisation immediately below the main gallery level in multiple sections of the mine is very important for defining the
Company’s high-grade inventory and future development scenarios.
Earlier in the year, Variscan identified new zones of high-grade zinc mineralisation in the Central Zone of the San Jose Mine from
its underground drilling programs (See ASX announcement dated 20 December 2021). These findings continued to demonstrate the
potential for more high-grade discoveries beyond the historical mine workings. They also far exceeded our original expectations.
VARISCAN MINES
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9
Operational Review
In August 2021, results from underground drilling undertaken ahead of the Phase 2 drill campaign confirmed the discovery of
multiple stacked lenses of high-grade zinc mineralisation in the South West Zone and Los Caracoles Trend of the San Jose Mine,
separate from the Central Zone reported previously (See ASX announcement dated 4 August 2021). In addition, the discovery of new
high-grade mineralised lenses above and below the main gallery in two distinct areas of the mine hinted at its considerable scale
and tonnage potential.
Figure 5. Diamond Drill Core from NOVDD058 in SW Zone illustrating massive sphalerite in dolostone
Note: Hole depth shown from 9.7m to 23.4m
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Annual Report 2022
Operational Review
Buenahora Exploration License (Cantabria, northern Spain)
The Buenahora Exploration License is within the Novales-Udias Zn-Pb Project in northern Spain. Exploration activities undertaken during
the year at this exciting prospect have backed our belief that mineralisation in Novales-Udias extends well beyond the historic San Jose mine.
During the fourth quarter, Variscan detected multiple new, extensive and intense chargeable bodies in a 12-line Direct Current Induced
Polarization (DCIP) survey over the Buenahora Exploration License (See ASX announcement dated 4 May 2022). These comprised
strong, undrilled, chargeability anomalies that were near surface with potential for additional targets at depth due to the strata bound,
vertically-stacked nature of orebodies in the district. The expectation is that high priority targets will yield a number of new discoveries.
The quantity and quality of targets derived from this survey added further scale potential to this highly prospective licence area.
Figure 6. Location of DCIP survey lines over the Buenahora Exploration Licence
In the very same quarter, Variscan commenced surface drilling on the Buenahora Exploration Licence (See ASX announcement dated
11 May 2022). This after the award of the ‘licencia de actividad’ from the local municipal authority, which gave Variscan approval for
an initial surface drill program of up to 50 drillholes. This diamond drilling campaign is expected to comprise over 2,000 drill-metres.
The immediate exploration strategy is to focus on targets that have the potential to deliver regionally significant resources (See ASX
announcement dated 20 October 2021).
Specifically, drilling will target:
1.
Interpreted anomalous chargeability zones derived from recent DCIP survey results;
2. Zinc-rich mineralization adjacent to known historical mine workings; and
3. New discoveries in untested areas of the licence area.
This drill campaign directly supports a key stated objective of Variscan’s exploration plan, which is to define a regionally significant
mineral resource similar in size and grade to the former producing and proximal Reocín Mine. We will be testing for zinc mineralization
along strike and at depth over the 9km Novales Trend and 3km sub-parallel mineral trend over the Novales-Udias Project area.
The strong working relationship we built with the Government’s Department of Mines over the course of surface drilling license
approval process has been a definite positive. We will continue to work closely with the Department over time Variscan progresses
the Project’s development.
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Operational Review
Guarajaz Project (central Spain)
While the Novales-Udias Project remains our immediate and main focus, Variscan is undertaking targeted efforts aimed at proving up
the prospectivity of the Guarajaz Project, located in Castilla-La Mancha (central Spain) (See ASX announcement dated 27 September
2021). Very little exploration work has been undertaken in this license area for nearly 40 years.
Late in the Company’s first quarter of the financial year, the Company announced that assay results from grab samples collected
during follow-up geological field work at Variscan’s zinc-rich polymetallic Guarajaz Project had returned high-grade zinc, lead and
silver results. These demonstrated excellent potential for the recently identified drill targets to have good depth extensions and to
aggregate into a substantial strike-extensive mineralised systems.
Figure 7. Plan view of Guarajaz project area showing new grab sample assay results for zinc, lead and silver
Variscan believes Guarajaz represents an excellent, de-risked brownfield polymetallic project. Reflective of this belief in the
prospectivity of this Project, the Company filed an application with the authorities in Castilla-La Mancha during the year for a 3-year
extension of the current exploration licence over the Guarajaz tenement area. Variscan Mines’ local Spanish subsidiary, Variscan La
Mancha, has already validly fulfilled the requirements for an extension to the exploration permit, the initial 3 year term of which expired
during the year. From the expiry date to the official extension date, the title is valid.
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Annual Report 2022
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 Salvador mine (owned by Codelco). It is one of the country’s larger copper
operations, within a region of dense mining activity (all scales) and a good copper endowment.
The Rosario Project comprises three granted exploitation concessions, Rosario 6, Rosario 7 and Salvadora, one granted mineral
exploration licence (Abandonara) and an exploration concession under application (Rosario 101). These concessions cover two
outcropping copper trends (Zones A and B) over a combined strike length of approximately 6 kilometres.
As a result of the impact of the continuing worldwide COVID-19 pandemic and due to our ongoing focus on our Spanish zinc projects,
no significant activities were conducted on the Rosario Project during the year.
f Australia
Variscan’s Australian-based project was materially downsized in the
preceding year.
As at the end of the year it held:
▯ A 0.5% net profits royalty on production from a uranium mine on the Junction Dam tenement.
▯ Minority interests in a number of areas of eastern and central Australia.
No specific activities were undertaken by Variscan in these areas during FY22 as the Company focussed on its Spanish zinc projects.
f COVID-19
While disruptions caused by the ongoing global COVID-19 pandemic
became less severe during the year, the Board, management and the entire
Variscan team remain vigilant.
Variscan continues to adopt a proactive and pragmatic approach and remains ready to fully comply with any shifts in regulations
aimed at safeguarding the health of our staff and contractors as well as the local communities. We currently anticipate that all existing
exploration programmes will be completed on schedule.
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Operational Review
f Looking ahead
Exploration activities across Variscan’s Spanish assets have continued at
pace over the early part of the Company’s 2023 financial year.
Figure 8. Diamond drillcore from NOVDD108 illustrating massive sphalerite in dolostone.
Note: Hole depth shown from 5.40m to 16.90m, hole 108.
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Annual Report 2022
Operational Review
In August 2022, Variscan announced another round of assay results from the now completed, highly successful Phase 2 underground
drilling programme at the San Jose Mine (See ASX announcements dated 25 August 2022). These continued to expand and infill zones
of high-grade zinc mineralisation in the La Caseta Trend within the Central Zone of the San Jose Mine. They additionally linked new
richly mineralised intersections in between known areas of workings, indicating continuity within and beyond the La Caseta Trend.
There was also an encouraging drill result from step-out testing of adjacent near-surface mines (El Eucaliptal).
Figure 9. Cross-section of Stope 191 illustrating new drillhole NOVDD113 and the lower lens of the La Caseta Trend.
VARISCAN MINES
Annual Report 2022
15
Operational Review
This announcement followed earlier positive news coming out of the Phase 2 underground drilling at San Jose Mine (See ASX
announcements dated 7 July 2022). These continued to expand zones of high-grade zinc mineralization in the La Caseta and Los
Caracoles trends within the Central Zone, extended the 168 Trend, now linking it up with the adjacent richly mineralized La Caseta and
Los Caracoles trends and Identified new zones of mineralization in adjacent near-surface mines (Eloisa and El Eucaliptal) stepping
out up to 600m from the San Jose Mine, increasing scale potential.
Figure 10. Plan view of selected mineralised intersections from drilling in the La Caseta Trend,
168 Trend and the Los Caracoles Trend.
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VARISCAN MINES
Annual Report 2022
Operational Review
f Our next steps
Further drilling at the San Jose Mine is anticipated as we proceed with
mineral resource definition and a Mine Re-Start Concept Study to identify
the potential economics and work-streams to support a re-start of initial,
small-scale mining at San Jose.
Strong news flow is expected over the coming months as results from our drilling and field exploration over Buenahora is combined
with drilling and studies on San Jose.
Variscan’s immediate focus is progressing with the following activities; all of which are expected to be completed by the end of calendar
year 2022:
▯ Returning assay results from the current Buenahora surface drilling campaign together with supplementary exploration
results.
▯ Reporting results of underground drilling at the Pepita target within the Buenahora Exploration Licence.
▯ Publishing a focused JORC compliant Mineral Resource estimate for the San Jose Mine.
▯ Reporting a Mine Re-Start Concept Study for the San Jose Mine.
▯ Delivery of approvals to undertake further surface drilling in and around the San Jose Mine to test step-out targets.
▯ Phase 3 underground infill and resource definition drilling at the San Jose Mine.
▯ In support of the above activities, the delivery of associated environmental, social and governance (ESG) initiatives.
Recent activities have included supporting the Novales Lemon Fiesta and employing local staff in geological and
administrative roles.
The giant steps we have made in our development journey over the year would not have been possible without the support of all our
stakeholders. I would personally like to thank all our staff for their diligence throughout this period. Their efforts were an integral
component of Variscan’s highly successful exploration and development programme over the past 12 months. Also, a big thank you to
all shareholders for their ongoing support. And last but not least, I would like to acknowledge the ongoing support given to Variscan
by the local communities where our projects are located.
We look forward to providing you all with additional updates on our exploration activities as additional milestones in our development
strategy are achieved.
Stewart Dickson
Managing Director & CEO
The information in this document that relates to the Exploration Target, Exploration results and technical information about the
Novales-Udias project is based on, and fairly represents information and supporting documentation reviewed by by Dr. Mike Mlynarczyk,
Principal of the Redstone Exploration Services, a geological consultancy acting as an external consultant for Variscan Mines. Dr.
Mlynarczyk is a Professional Geologist (PGeo) of the Institute of Geologists of Ireland, and European Geologist (EurGeol) of the European
Federation of Geologists, as well as Fellow of the Society of Economic Geologists (SEG). With over 10 years of full-time exploration
experience in MVT-style zinc-lead systems in several of the world’s leading MVT provinces, Dr. Mlynarczyk has sufficient experience
which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined in the December 2012 edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves” (‘JORC Code’). Dr. Mlynarczyk consents to the inclusion in the report of the matters based upon
the information in the form and context in which it appears.
VARISCAN MINES
Annual Report 2022
17
Directors’ Report
Directors’
Report
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Annual Report 2022
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
Michael Moore BEng (Hons), MAusIMM, MAICD
Non-Executive Director
Dr Foo was appointed a Director of the Company on 7 October
Mike was appointed a Non-Executive Director on 4 August 2015.
2009. Dr Foo is the Managing Director and co-founder of Luminor
Mike is a mining engineer from the Camborne School of Mines
Capital, a private equity fund management company based in
with over 20 years of operational and executive management
Singapore. He has over 20 years’ experience in the investment
experience across a diverse range of commodities in Australia,
banking, fund management and advisory businesses spanning
Indonesia, West Africa and Europe.
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.
Stewart Dickson BA (Hons), MBA
Managing Director
Stewart was appointed a Director of the Company on 1 May 2017.
Stewart is an experienced corporate financier with a decade of
investment banking experience. Most recently, he was Managing
Director and Head of Metals & Mining at Cantor Fitzgerald Europe,
based in London. He had responsibility for client coverage of
public and private mining companies across precious metals
and base metals, bulks, fertilizers and specialty metals. He has
a broad range of international financial advisory, equity capital
markets and corporate broking transaction experience including
initial public offerings, financings and M&A.
Prior to investment banking, Mr Dickson served in the British
Army as a commissioned officer and saw operational service
overseas. Stewart is a graduate of University College London
and holds an MBA from Henley Business School.
He is currently serving as Managing Director for Golden State
Mining Limited (ASX:GSM) and Chairman of First Development
Resources Limited.
Mike has previously held other senior and executive management
roles with several companies, including Rock Australia Mining
& Civil Pty Ltd, Carnegie Minerals PLC, and with ASX listed
Montezuma Mining Company Ltd where he was the Chief
Executive Officer until April 2015. In addition, he served for 3
years on the board of Cape Care, a not-for-profit aged care
provider in Western Australia.
Mike is a member of the Australian Institute of Company Directors
and the Australian Institute of Mining and Metallurgy.
During the past three years, with the exception of Golden State
Mining Limited as noted above, Michael Moore has not served as
a director of any other ASX listed companies.
Nicholas Farr-Jones AM LLB
Non-executive Director
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
director.
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
He was appointed as a Non-Executive Director of Trans-Siberian
leadership. He was awarded the Order of Australia in 1992 for
Gold plc on 19 September 2017, a gold producer listed on the AIM
services to rugby union, having captained the Australian rugby
market of the London Stock Exchange.
team to World Cup success in 1991.
During the past three years Stewart Dickson has not served as a
During the past three years Nicholas Farr-Jones has not served
director of any other ASX listed company.
as a director of any other ASX listed company.
VARISCAN MINES
Annual Report 2022
19
Directors’ Report
f Directors (continued)
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
Company Directors. He has more than 30 years’ experience in
statutory reporting and business administration.
Mark has been directly involved with and consulted to a number
of public companies holding senior financial management
positions. He is a Director of the corporate advisory firm
Endeavour Corporate providing company secretarial support,
corporate and compliance advice to a number of ASX listed public
companies.
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VARISCAN MINES
Annual Report 2022
Directors’ Report
f Directors’ Interests
As at the date of this report, the interests of the Directors in the shares,
options and performance rights of Variscan Mines Limited were:
Number of securities held directly and indirectly
Director
Dr Foo Fatt Kah
Mr Stewart Dickson
Mr Michael Moore
Mr Nicholas Farr-Jones
Ordinary shares
5,018,107
7,330,772
793,786
1,135,544
Options
3,000,000
5,000,000
3,000,000
750,000
Performance Rights
-
2,500,000
-
-
f Principal activities
The principal continuing activity of the Group is the exploration for
economic metal and mineral deposits.
f Results
The net result of operations of the Group after applicable income tax was a
loss of $827,051 (2021: $684,613).
Included in this result is the amount for share-based payments for the year of $191,175 (2021: $183,246).
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
During the year, there have been no changes to the Board of Directors, nor senior management.
VARISCAN MINES
Annual Report 2022
21
Directors’ Report
Impact of COVID-19 Pandemic
During the previous financial year, as a result of the improvement in conditions worldwide, the Group had resumed its exploration
operations, while still maintaining appropriate health and safety measures to ensure the wellbeing of its staff, contractors, and
suppliers. These measures have continued throughout the financial year ended 30 June 2022.
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 2022 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.
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VARISCAN MINES
Annual Report 2022
Directors’ Report
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.
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
$1.00
$0.055
$0.065
$0.080
$0.12
$0.095
$0.10
$0.11
20 November 2022
30 November 2023
30 November 2023
30 November 2023
30 September 2024
30 November 2023
30 November 2023
30 November 2023
ORD
ORD
ORD
ORD
ORD
ORD
ORD
ORD
500,000
4,000,000
4,000,000
4,000,000
2,500,000
1,500,000
1,500,000
1,500,000
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 first tranche of the Managing Director performance rights, including the performance condition to remain in continuous
service until 30 November 2021, have now vested and are exercisable at any point until the expiry date.
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 11 & 12 to the financial statements for further details of the options and rights
outstanding.
VARISCAN MINES
Annual Report 2022
23
Directors’ Report
f Remuneration report (audited)
This remuneration report for the year ended 30 June 2022 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.
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
Nicholas Farr-Jones
Non-Executive Director (appointed 1 July 2021)
Dr Susan Vearncombe
Non-Executive Director (appointed 21 August 2020, resigned 30 June 2021)
Mark Pitts
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;
▯ Acceptability to shareholders;
▯ Performance linkage/alignment of executive
compensation;
▯ Transparency; and
▯ Capital management.
Fees and payments to the Company’s Non-Executive Directors
and Senior Executives reflect the demands which are made
on, and the responsibilities of, the Directors and the senior
management. Such fees and payments are reviewed annually
by the Board. The Company’s Executive and Non-Executive
Directors, Senior Executives and Officers are entitled to receive
options under the Company’s Employee Share Option Plan
(“ESOP”).
24
VARISCAN MINES
Annual Report 2022
Directors’ Report
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 $250,000 per annum to be apportioned among the
p.a. which are consistent with industry average fees. At present,
NEDs in such a manner as the Board determines. Directors are
no Committee fees are paid to Directors.
also entitled to be paid reasonable travelling, accommodation
and other expenses incurred in consequence of their attendance
at Board meetings and otherwise in the execution of their duties
as Directors.
f Use of remuneration consultants
No remuneration consultants were engaged during the years ended 30 June
2021 or 30 June 2022.
f Performance on shareholder wealth
In considering the Group’s performance and benefits for shareholder
wealth, the Board have regarded the following indices in respect of the
current and previous four financial years:
Performance Condition
2021
2020
Loss per share (cents)
(0.31)
(0.32)
2019
(0.76)
2018
2017
(1.76)
(19.40)
Net loss ($)
(827,051)
(684,613)
(1,125,142)
(451,709)
(6,997,545)
Share Price at 30 June
$0.025
$0.075
$0.016
$0.030
$0.060
Remuneration is most directly linked to performance of shareholder wealth through the use of share options and performance
rights as noted on pages 12 and 13 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
(2021: £132,500 p.a. plus VAT as applicable) as at 30
June 2022.
▯ Termination payments: Nil.
VARISCAN MINES
Annual Report 2022
25
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VARISCAN MINES
Annual Report 2022
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Directors’ Report
f Performance Rights holdings of Key Management Personnel
During the previous 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:
▯ Tranche 1: 1,250,000 performance rights vested
upon completion of 12 months of continuous service
(on 30 November 2021), and are exercisable into
ordinary shares in the Company. These rights expire if
unexercised on 30 November 2023.
▯ Tranche 2: 1,250,000 performance rights will vest
upon completion of 24 months of continuous service
(on 30 November 2022), and are exercisable into
ordinary shares in the Company. These rights expire if
unexercised on 30 November 2023.
As the Tranche 1 performance rights have now vested, they are exercisable at the request of the holder at any point until their expiry.
There have been no movements in performance rights held during the year.
f Compensation options and performance rights granted during the year
A total of 4,500,000 unquoted options were granted as compensation
during the period to directors and key management personnel, the details
of which are as follows:
Options - Tranche 4
Options - Tranche 5
Options - Tranche 6
Number of securities granted
1,500,000
1,500,000
1,500,000
Grant date
25 Nov 2021
25 Nov 2021
25 Nov 2021
Vesting condition / date
None
None
None
Expiration date
Exercise price
30 Nov 2023
30 Nov 2023
30 Nov 2023
$0.095
$0.10
$0.11
VARISCAN MINES
Annual Report 2022
29
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 4
Options - Tranche 5
Options - Tranche 6
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)
$0.042
$0.095
25 Nov 2021
30 Nov 2023
2
125%
0.55%
-
$0.0196
1,500,000
100%
1.42
$0.042
$0.10
25 Nov 2021
30 Nov 2023
2
125%
0.55%
-
$0.0191
1,500,000
100%
1.42
Total value
$29,400
$28,650
$0.042
$0.11
25 Nov 2021
30 Nov 2023
2
125%
0.55%
-
$0.0183
1,500,000
100%
1.42
$27,450
f Options and Rights granted during the previous year
A total of 12,000,000 unquoted options and 2,500,000 performance rights
were granted as compensation during the previous financial year 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)
30
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 2022
Directors’ Report
The fair value of the options issued as compensation during the previous
financial year 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 4
Options - Tranche 5
Options - Tranche 6
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 30 June 2021
Remaining life (years)
Total value
$0.028
$0.055
26 Nov 2020
30 Nov 2023
3.01
150%
0.20%
-
$0.0206
4,000,000
33% (a)
2.42
$82,400
$0.028
$0.065
26 Nov 2020
30 Nov 2023
3.01
150%
0.20%
-
$0.0200
4,000,000
33% (a)
2.42
$80,000
$0.028
$0.080
26 Nov 2020
30 Nov 2023
3.01
150%
0.20%
-
$0.0193
4,000,000
33% (a)
2.42
$77,200
(a)
Represents the portion vested at 30 June 2021. As at 30 June 2022, a total of 67% have vested.
The fair value of the performance rights issued as compensation during the prior year 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).
There were no alterations to the terms and conditions of options granted as remuneration since their grant date. There were no
forfeitures during the period.
The Company has established an 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 (2021: Nil).
VARISCAN MINES
Annual Report 2022
31
Directors’ Report
f Options and Rights lapsed during the year
Transactions with directors and key management personnel
During the current year, amounts totalling $37,800 were paid to Endeavour Corporate Pty Ltd, a Company Associated with Mr Mark
Pitts, for accounting and administration services (2021: $28,600). These amounts are separate from the fees paid to Mr Pitts through
his role as Company Secretary and are not included in the Key Management Personnel remuneration table on page 9.
Directors’ Benefits, Emoluments and Share Options
During its annual budget review, the Board reviews the Directors’ Emoluments. Remuneration levels, including participation in the
Company’s ESOP, are set to provide reasonable compensation in line with the Company’s limited financial resources. During the year
no Director of the Company has received or become entitled to receive any additional benefits to their 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 remuneration levels.
There is no retirement scheme for Non-Executive Directors.
End of Audited Remuneration report.
32
VARISCAN MINES
Annual Report 2022
Directors’ Report
f Meetings of directors
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 Nicholas Farr-Jones
Total Number of Meetings Held
Non-audit services
Number of Meetings Held
whilst a director
Number Attended
12
12
12
12
12
12
12
12
12
The Company’s auditor did not provide any non-audit services during the year ended 30 June 2022 (2021: Nil).
Signed this 27th day of September 2022 in accordance with a resolution of the Directors.
Stewart Dickson
Managing Director & CEO
VARISCAN MINES
Annual Report 2022
33
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 2022, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
27 September 2022
N G Neill
Partner
Page | 16
34
VARISCAN MINES
Annual Report 2022
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 2022
Notes
3
Continuing operations
Interest income
Total income
Compliance expenses
Professional services expenses
Finance expenses
Directors expenses
Travel and accommodation expenses
Share based payments
12,13
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
4
Consolidated
2022
$
578
578
(100,877)
(206,576)
(114)
2021
$
6,106
6,106
(69,492)
(142,065)
(102)
(232,573)
(218,220)
(10,821)
(191,175)
-
(80,665)
(822,801)
(5,202)
374
(4,828)
(827,051)
-
-
(183,246)
77,771
(48,383)
(583,737)
(106,209)
(773)
(106,982)
(684,613)
-
(827,051)
(684,613)
78,338
78,338
1,390
1,390
Total comprehensive loss for the period
(748,713)
(683,223)
Basic and diluted loss per share (cents per share)
14
(0.31)
(0.32)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income
should be read in conjunction with the accompanying notes
VARISCAN MINES
Annual Report 2022
35
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
f As at 30 June 2022
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
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
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
Notes
2022
$
2021
$
6
7
8
9
10
11
13
1,945,935
258,707
4,436,385
50,908
2,204,642
4,487,293
67,351
31,564
6,710,006
4,755,448
62,757
6,840,114
9,044,756
229,348
5,016,360
9,503,653
281,065
281,065
281,065
232,424
232,424
232,424
8,763,691
9,271,229
34,018,303
33,968,303
722,487
472,974
(25,977,099)
(25,170,048)
8,763,691
9,271,229
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes
36
VARISCAN MINES
Annual Report 2022
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
f For the year ended 30 June 2022
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Finance costs
Consolidated
Notes
2022
$
2021
$
(638,995)
(773,982)
578
(114)
6,106
(102)
Net cash outflow from operating activities
20
(638,531)
(767,978)
Cash flows from investing activities
Exploration and evaluation expenditure
(1,804,964)
(1,489,503)
Sale of financial assets
Payments for property, plant and equipment
-
(38,034)
475,971
(33,604)
Net cash outflow from investing activities
(1,842,998)
(1,047,136)
Cash flows from financing activities
Proceeds from issue of shares
Payments for share issue costs
Net cash inflow from financing activities
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
50,000
(55,550)
(5,550)
(2,487,079)
4,436,385
(3,371)
4,250,000
(143,000)
4,107,000
2,291,886
2,146,123
(1,624)
Cash and cash equivalents at the end of the year
6
1,945,935
4,436,385
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
VARISCAN MINES
Annual Report 2022
37
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
f For the year ended 30 June 2022
Issued
capital
Share-based
payment
reserve
Consolidated
Foreign
currency
translation
reserve
Accumulated
losses
Total
29,841,639
159,917
5,921
(24,485,435)
5,522,042
-
-
-
-
-
-
(684,613)
(684,613)
1,390
-
5,921
1,390
1,390
(684,613)
(683,223)
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)
-
-
-
-
-
-
-
-
-
-
-
-
-
4,250,000
160,000
64,568
183,246
-
(225,404)
Share issue costs
30 June 2021
1 July 2021
Loss for the period
Other comprehensive income, for
the period, net of income tax
Total comprehensive loss for the
periodactivities
Share based payments
Lapse of options
30 June 2022
33,968,303
465,663
7,311
(25,170,048)
9,271,229
33,968,303
465,663
7,311
(25,170,048)
9,271,229
-
-
-
-
-
-
-
-
(827,051)
(827,051)
78,338
-
1,390
78,338
(827,051)
(748,713)
-
-
-
-
-
50,000
191,175
20,000
-
-
-
191,175
(20,000)
34,018,303
636,838
85,649
(25,977,099)
8,763,691
Issue of share capital for cash
50,000
The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
38
VARISCAN MINES
Annual Report 2022
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 2022 was authorised for issue
in accordance with a resolution of the Directors on 27 September 2022. 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 been assessed has
having no material impact on the Group’s financial statements and have not been adopted by the Group for the year ended 30 June 2022.
Adoption of new and revised standards
Standards and Interpretations applicable to 30 June 2022
In the year ended 30 June 2022, 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 2021. 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.
VARISCAN MINES
Annual Report 2022
39
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.
For the year ended 30 June 2022, the Group has incurred a loss before tax of $827,051 and net cash outflows from operating and investing
activities of $2,481,529. As at 30 June 2022 the Group had $1,945,935 in cash and cash equivalents and net current assets of $1,923,577.
Whilst not immediately required, the Group may need to raise additional funds to meet its planned and budgeted exploration expenditure
as well as regular corporate overheads.
The Group’s capacity to raise additional funds will be impacted by the success of the ongoing exploration activities and market conditions.
Additional sources of funding available to the Group include a capital raising via preferential issues to existing shareholders or placements
to new and existing investors. If necessary, the Group can delay exploration expenditure and the directors can also institute cost saving
measures to further reduce corporate and administrative costs.
However, should the above planned activities to raise or conserve capital not be successful, there exists a material uncertainty surrounding
the Group’s ability to continue as a going concern and, therefore, realise its assets and dispose of its liabilities in the ordinary course of
business and at the amounts stated in the financial report.
Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination shall be
measured at fair value, which shall be calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer,
the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-
controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree
either at fair value of at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation
in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and other pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the
acquiree is remeasured at fair value as at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with AASB 139
either in profit or loss or in other comprehensive income. If the contingent consideration is classified as equity, it shall not be remeasured.
Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short-term deposits,
with a maturity date not exceeding six months, readily convertible to a known amount of cash and subject to an insignificant risk of
change in value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above,
net of outstanding bank overdrafts, if any.
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:
40
VARISCAN MINES
Annual Report 2022
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
▯ Such costs are expected to be recouped through successful development and exploitation of the area, or alternatively
through its sale; and
▯ Exploration and/or evaluation activities in the area have not yet reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves.
Once a development decision has been taken, all past and future exploration and evaluation expenditure in respect of the area of
interest is aggregated within costs of development.
Exploration and evaluation – impairment
The Group assesses at each reporting date whether there is an indication that an asset has been impaired and for exploration and
evaluation costs whether the above carry forward criteria are met.
Accumulated costs in respect of areas of interest are written off or a provision made in the profit or loss when the above criteria do
not apply or when the Directors assess that the carrying value may exceed the recoverable amount. The costs of productive areas are
amortised over the life of the area of interest to which such costs relate on the production output basis.
Provisions are made where farm-in partners are sought and there is a possibility that carried-forward expenditures may have to be
written off in the future if a farm-in partner is not found. In the event that farm-in agreements are reached or the Group undertakes
further exploration in its own right on those properties, the provisions would be reviewed and if appropriate, written back.
Investments and other financial assets
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial
instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or
when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
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.
VARISCAN MINES
Annual Report 2022
41
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other
receivables fall into this category of financial instruments.
b) Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at
fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely
payments of principal and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for
those designated and effective as hedging instruments, for which the hedge accounting requirements apply.
The category, during the comparative financial period, contained an equity investment. The Group accounted 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 (2021: 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.
42
VARISCAN MINES
Annual Report 2022
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
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
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
VARISCAN MINES
Annual Report 2022
43
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
vesting conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to
which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No
adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the
determination of fair value at grant date. The profit or loss charge or credit for a period represents the movement in cumulative expense
recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.
If the terms of an equity-settled award are modified, at a minimum an expense is recognised as if the terms had not been modified. In
addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or
is otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of the cancellation, and any expense not yet recognised
is recognised immediately. However, if a new award is substituted for the cancelled award and designated a replacement award on the
date it is granted, the cancelled and the new award are treated as if there was a modification of the original award, as described in the
previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share except
where such dilution would serve to reduce a loss per share.
Revenue recognition
Revenue is recognised to depict the transfer of promised goods or services to customers at an amount that reflects the consideration
expected to be entitled in exchange for those goods or services. The following specific recognition criteria must also be met before
revenue is recognised.
Rendering of services
Revenue from consulting services are recognised when provided.
Interest
Revenue is recognised as interest accrues using the effective interest method.
Royalties
Royalties are recognised in accordance with substance of the relevant agreement.
Contract exploration
Contract exploration revenue (consulting fees) earned from third parties is recognised when rights to receive the revenue are assured.
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:
44
VARISCAN MINES
Annual Report 2022
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
Except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss.
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures,
deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable
future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the profit or loss.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
Where the GST incurred on the purchase of goods and services is not recoverable from the taxation authority, in which case the GST
is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing
and financial activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
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
VARISCAN MINES
Annual Report 2022
45
Notes to the Financial Statements
f 2. Summary of significant accounting policies (Continued)
the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s
value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-
generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount,
the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to
continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset
is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses
may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised
impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since
the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. The
increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount,
in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future
periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Significant accounting judgements, estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events.
The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain
assets and liabilities within the next annual reporting period are:
Share-based payment transactions
The Company measures the cost of equity-settled share-based payments at fair value at the grant date using the Black-Scholes
formula taking into account the terms and conditions upon which the instruments were granted and estimates of volatility.
Capitalisation and write-off of capitalised exploration costs
The determination of when to capitalise and write-off exploration expenditure requires the exercise of judgement based on
assessments of results, various assumptions, and other factors such as historical experience, current and expected economic
conditions. Refer to Note 9 for further details.
Earnings/Loss per share
Basic earnings/loss per share is calculated as net profit/loss attributable to members of the Group, adjusted to exclude any costs of
servicing equity divided by the weighted average number of ordinary shares.
Diluted earnings/loss per share is calculated as net profit/loss attributable to members of the Group, adjusted for:
▯ Costs of servicing equity.
▯ The after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses.
▯ Other non-discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares.
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments,
has been identified as the Managing Director.
46
VARISCAN MINES
Annual Report 2022
Notes to the Financial Statements
f 3.
Income
Income
Interest income
Net cash outflow from operating activities
f 4. Income tax
Consolidated
2022
$
578
578
2021
$
6,106
6,106
Consolidated
2022
$
2021
$
Prima facie income tax (credit) on operating (loss) at 30% (2020: 30%)
(248,115)
(205,384)
Deferred tax assets not recognised
Other
Income tax expense
Deferred tax assets have not been recognised
in respected to the following items:
Unrecognised deferred tax assets
Accrued expenses and provisions
Capital raising costs
Income tax losses
Unrecognised deferred tax liabilities
Temporary timing differences related to:
Exploration and evaluation expenditure
Net deferred tax asset not recognised
57,240
190,875
-
39,104
78,669
-
205,384
-
18,917
111,321
4,674,851
4,844,802
4,792,624
4,975,040
(2,013,002)
(1,426,634)
2,779,622
3,548,905
No provision for income tax is considered necessary in respect of the Company for the period ended 30 June 2022.
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 30 June 2022 of $16,592,970 (2021: $16,149,341).
No recognition has been given to any deferred income tax liabilities which may arise from the recognition of capitalised exploration
and evaluation expenditures, as the Company has sufficient expected carried-forward tax losses to negate such a liability.
A benefit of 30% (2021: 30%) of approximately $4,674,851 (2021: $4,844,802) 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.
VARISCAN MINES
Annual Report 2022
47
Notes to the Financial Statements
f 4. Income tax (Continued)
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 (2021: $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.
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 (a)
(a)
Includes accruals at balance date.
f 6. Cash and cash equivalents
Cash at bank and in hand
Consolidated
2022
$
30,780
30,780
2021
$
29,283
29,283
Consolidated
2022
$
1,945,935
1,945,935
2021
$
4,436,385
4,436,385
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.
48
VARISCAN MINES
Annual Report 2022
Notes to the Financial Statements
f 7. Receivables
Current
Other Debtors
GST/VAT receivable
Prepayments
Consolidated
2022
$
3,300
235,601
19,806
258,707
2021
$
3,300
29,239
18,369
50,908
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.
f 8. 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
2022
$
71,638
(4,287)
67,351
31,564
38,034
(2,247)
67,351
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 9.
VARISCAN MINES
Annual Report 2022
49
Notes to the Financial Statements
f 9. Deferred exploration and evaluation expenditure
Exploration and evaluation phase:
Costs brought forward
Costs incurred during the year
Depreciation capitalised (refer Note 8)
Expenditure written off during the year
Consolidated
2022
$
2021
$
4,755,448
1,978,666
2,247
-
3,296,140
1,469,352
2,040
-
Impact of foreign currency exchange differences
(26,355)
(12,084)
Costs carried forward
6,710,006
4,755,448
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
5,934,870
3,997,971
696,410
78,726
678,751
78,726
6,710,006
4,755,448
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 10. Current liabilities – payables
Trade creditors (a)
Accrued expenses
Consolidated
2022
$
154,569
126,496
281,065
2021
$
169,369
63,055
232,424
(a)
Trade creditors are non-interest bearing and are generally settled on 30-day terms.
50
VARISCAN MINES
Annual Report 2022
Notes to the Financial Statements
f 11. Contributed equity
Share capital
266,732,024 (2021: 266,107,024) ordinary shares fully paid
35,816,600
35,766,600
Consolidated
2022
$
2021
$
Share issue costs
Movements in ordinary shares on issue
At 1 July 2020
Shares issued for cash
Shares issued in settlement of deferred share consideration
Shares issued in lieu of directors fees
Value of lapsed VAROA quoted options transferred
At 30 June 2021
Shares issued for cash
At 30 June 2022
Movements in quoted options on issue
At 1 July 2020
Lapse of quoted options
At 30 June 2021
No movements during the year
At 30 June 2022
(1,798,297)
(1,798,297)
34,018,303
33,968,303
Number
Value
$
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
625,000
50,000
266,732,024
35,816,600
Number
Value
$
29,669,247
528,604
(29,669,247)
(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.
The Company has 19,500,000 unquoted options on issue at balance date. Refer Note 12 for details.
VARISCAN MINES
Annual Report 2022
51
Notes to the Financial Statements
f 11. Contributed equity (continued)
Terms and conditions of contributed equity
Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the
proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Options
Options do not carry voting rights or rights to dividends until options are exercised.
f 12. Share-based payments and unquoted options
Option pricing model and terms of options
The Company has 19,500,000 unquoted options currently on issue as a result of share-based payment arrangements. 4,500,000
options were issued during the current financial year as share-based payments to directors and other key management personnel
(2021: 12,000,000 options issued to directors and other key management personnel). 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, were issued
during the current period.
The following table lists the inputs into this model and the terms of options granted in the Company:
Number of securities
1,500,000
1,500,000
1,500,000
2,500,000
Options -
Tranche 4
Options -
Tranche 5
Options -
Tranche 6
Lead manager
options
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
Remaining life (years)
$0.042
$0.095
$0.042
$0.10
$0.042
$0.11
$0.075
$0.12
25 Nov 2021
25 Nov 2021
25 Nov 2021
28 June 2021 (a)
30 Nov 2023
30 Nov 2023
30 Nov 2023
30 Sept 2024
2
125%
0.55%
-
$0.0196
1.42
2
125%
0.55%
-
$0.0191
1.42
2
125%
0.55%
-
$0.0183
1.42
3
125%
0.20%
-
$0.049
2.25
(a)
These options were issued during the current financial year on 27 September 2021, a grant date of 28 June 2021
has been used as the date at which the Company incurred the obligation to issue these options.
52
VARISCAN MINES
Annual Report 2022
Notes to the Financial Statements
f 12. Share-based payments and unquoted options (continued)
The following table lists the valuation model inputs for options granted during the previous year:
Number of securities
4,000,000
4,000,000
4,000,000
Options - Tranche 1
to Key Management
Personnel
Options - Tranche 2
to Key Management
Personnel
Options - Tranche 3
to Key Management
Personnel
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
26 Nov 2020
26 Nov 2020
26 Nov 2020
30 Nov 2023
30 Nov 2023
30 Nov 2023
3
150%
0.20%
-
3
150%
0.20%
-
3
150%
0.20%
-
$0.0206
$0.0200
$0.0193
(b)
67%
1.42
(b)
67%
1.42
(b)
67%
1.42
(b)
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.
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 2022 and 2021. No securities have been
issued under the ESOP during the financial year ended 30 June 2022 (2021: Nil).
VARISCAN MINES
Annual Report 2022
53
Notes to the Financial Statements
f 12. Share-based payments and unquoted options (continued)
Summary of movement of unquoted options on issue in the parent entity
Movements in unquoted options on issue
At 1 July 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
Issue of options to Directors and Key Management Personnel
Issue of options to lead manager of placement,
recognised during the previous financial year
Lapse of options
Expense recognised for further vesting during the year
At 30 June 2022
The outstanding balance as at 30 June 2022 is represented by:
Number
1,000,000
12,000,000
-
-
13,000,000
4,500,000
2,500,000
(500,000)
-
19,500,000
Value
$
159,917
150,121
122,500
2,338
434,876
85,500
-
(20,000)
73,759
574,135
Exercise Price of Option
Expiry Date of Options
Class of Share received
upon exercise
Number of Shares under
option
$1.00
$0.055
$0.065
$0.080
$0.120
$0.095
$0.010
$0.011
20 November 2022
30 November 2023
30 November 2023
30 November 2023
30 September 2024
30 November 2023
30 November 2023
30 November 2023
ORD
ORD
ORD
ORD
ORD
ORD
ORD
ORD
500,000
4,000,000
4,000,000
4,000,000
2,500,000
1,500,000
1,500,000
1,500,000
19,500,000
54
VARISCAN MINES
Annual Report 2022
Notes to the Financial Statements
f 12. Share-based payments and unquoted options (continued)
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
2022
$
2021
$
$0.123
$0.108
$0.60
$0.106
$0.066
1.50
$0.80
$0.062
-
$0.123
$0.213
2.30
Range of exercise price
$0.055 - $1.00
$0.055 - $1.00
Performance rights issued as share-based payments
During the previous 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
Summary of movement of performance rights on issue in the parent entity
Movements in performance rights on issue
At 1 July 2021
Further vesting expense recognised during the year
At 30 June 2022
Number
2,500,000
-
-
Value
$
30,788
31,916
62,704
VARISCAN MINES
Annual Report 2022
55
Notes to the Financial Statements
f 13. Reserves
Share-based compensation reserve
Foreign currency translation reserve
Share-based compensation reserve
Balance at the beginning of financial year
Share-based payments
Lapse of options
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
Consolidated
2022
$
636,838
85,649
722,487
465,663
191,175
(20,000)
636,838
7,311
78,338
85,649
2021
$
465,663
7,311
472,974
159,917
305,746
-
465,663
5,921
1,390
7,311
(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 12.
(b)
Foreign currency translation reserve
The foreign currency translation reserve recognised the net exchange differences on foreign operations.
56
VARISCAN MINES
Annual Report 2022
Notes to the Financial Statements
f 14. Earnings/(Loss) per share
Earnings/(loss) used in calculating basic and
diluted earnings/(loss) per share
Consolidated
2022
$
2021
$
(827,051)
(684,613)
Consolidated
2022
Number
2021
Number
Weighted average number of ordinary shares outstanding during the
year used in calculation of basic and diluted EPS
265,850,566
211,930,392
Basic and diluted earnings/(loss) per share
(0.31)
(0.32)
All potential ordinary shares for the calculation of diluted loss per share are considered anti-dilutive.
Consolidated
2022
Cents per share
2021
Cents per share
f 15. 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
2022
$
2021
$
397,146
365,071
-
-
176,593
573,739
-
-
183,248
548,319
VARISCAN MINES
Annual Report 2022
57
Notes to the Financial Statements
f 16. 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
2022
2021
2022
2021
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 $37,800 were paid to Endeavour Corporate Pty Ltd, a Company Associated with Mr Mark
Pitts, for accounting and administration services (2021: $28,600).
f 17. 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 2022 were as follows:
Hillston – diluting to 16%
Callabonna – diluting to 30%
f 18. Segment information
Consolidated
2022
% Interest
39.2%
49%
2021
% 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
nature of the Group, the Managing Director has been determined as the Chief Operating Decision Maker.
58
VARISCAN MINES
Annual Report 2022
Notes to the Financial Statements
f 18. Segment information (Continued)
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 years ended 30 June 2022 and 2021.
Australia
Spain
Total
2022
$
2021
$
2022
$
2021
$
2022
$
2021
$
Segment income
578
6,106
Segment loss before income
tax expense
(827,051)
(684,613)
-
-
-
-
578
6,106
(827,051)
(684,613)
Segment assets
5,680,162
7,838,622
3,364,594
1,665,031
9,044,756
9,503,653
Segment liabilities
(226,122)
(204,174)
(54,943)
(28,250)
(281,065)
(232,424)
f 19. 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 (2021: nil)
Milestone consideration – Spanish Zinc Project Acquisition
In accordance with the acquisition of the Spanish Zinc Projects, 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.
VARISCAN MINES
Annual Report 2022
59
Notes to the Financial Statements
f 20. Statement of Cash Flows
Reconciliation of net cash outflow from operating activities to
operating loss after income tax
Operating loss after income tax
Share-based payment expense
Fair value (increase) on financial assets
Shares issued in lieu of fees
Foreign exchange variances
Change in assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in other assets
(Decrease)/increase in trade and other creditors
Consolidated
2022
$
2021
$
(827,051)
191,175
-
-
3,371
(27,309)
-
21,283
(684,613)
183,246
(77,771)
64,568
3,014
(33,407)
(137,781)
(85,234)
Net cash outflow from operating activities
(638,531)
(767,978)
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
Consolidated
2022
$
2021
$
1,945,935
1,945,935
4,436,385
4,436,385
f 21. 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.
60
VARISCAN MINES
Annual Report 2022
Notes to the Financial Statements
f 21. Financial risk management objectives and policies (Continued)
Financial instrument risk exposure and management
As is common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. These main
risks, arising from the group’s financial instruments are interest rate risk, liquidity risk, share market risk and credit risk. This note
describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes
for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and has the
responsibility for designing and operating processes that ensure the effective implementation of the objectives and policies to the
Group’s finance function. The Board receives quarterly reports through which it reviews the effectiveness of the processes put in
place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s
competitiveness and flexibility. Further details regarding these policies are set out below:
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting
its financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve
this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a period of at least 45 days.
The Board receives cash flow projections on a monthly basis as well as information regarding cash balances. At balance date, these
projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected
circumstances.
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 2022
Trade and other payables
281,065
281,065
281,065
281,065
281,065
281,065
30 June 2021
Trade and other payables
232,424
232,424
232,424
232,424
232,424
232,424
-
-
-
-
-
-
-
-
-
-
-
-
VARISCAN MINES
Annual Report 2022
61
Notes to the Financial Statements
f 21. Financial risk management objectives and policies (Continued)
Interest rate risk
At reporting date, the Group is exposed to floating weighted average interest rates at 30 June 2022 for financial assets as follows:
Weighted average rate of cash balances
Cash balances
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
2022
0.09%
2021
0.02%
$1,945,935
$4,436,385
Consolidated
Pre-tax Loss
lower / (higher)
2022
$
19,459
(19,459)
2021
$
44,364
(44,364)
Consolidated
Equity
lower / (higher)
2022
$
19,459
(19,459)
2021
$
44,364
(44,364)
+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 2022, 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.
62
VARISCAN MINES
Annual Report 2022
Notes to the Financial Statements
f 21. Financial risk management objectives and policies (Continued)
Equity price risk
During the previous year, the Group disposed of its investments in equity interests in listed securities, and therefore, no equity price
risk exposure exists at 30 June 2022 (2021: Nil exposure).
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 2022 and 2021.
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.
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
f 22. 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
2022
1,802,295
8,723,342
(226,121)
(226,121)
8,497,221
2021
4,400,782
9,371,885
(204,176)
(204,176)
9,167,709
34,018,303
33,968,303
(26,157,920)
(25,266,257)
636,838
8,497,221
(891,663)
-
465,663
9,167,709
(604,010)
-
Total comprehensive (loss) of the parent entity
(891,663)
(604,010)
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.
VARISCAN MINES
Annual Report 2022
63
Notes to the Financial Statements
f 23. Events after the reporting date
There were, at the date of this report, no matters or circumstances which have arisen since 30 June 2022 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.
64
VARISCAN MINES
Annual Report 2022
Directors’ Declartion
Directors’
Declaration
1.
In the directors’ opinion:
(a) the financial statements and notes set out on pages 17 to 45 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 2022 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 2022 required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Stewart Dickson
Managing Director
27 September 2022
VARISCAN MINES
Annual Report 2022
65
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 and its controlled entities (“the Group”),
which comprises the consolidated statement of financial position as at 30 June 2022, 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 2022 and of its financial
performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 2 in the financial report, which indicates that a material uncertainty exists
that may cast significant doubt on the Entity’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material Uncertainty
Related to Going Concern section, we have determined the matter described below to be the key audit
matters to be communicated in our report.
Page | 47
66
VARISCAN MINES
Annual Report 2022
Independent Auditor’s Report
Key Audit Matter
How our audit addressed the key audit matter
Exploration and evaluation assets
Refer to note 9
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 verified a sample of exploration
expenditure capitalised; and
• We examined the disclosures made in the
financial report.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2022, 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 | 48
VARISCAN MINES
Annual Report 2022
67
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 | 49
68
VARISCAN MINES
Annual Report 2022
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 2022.
In our opinion, the Remuneration Report of Variscan Mines Limited for the year ended 30 June 2022
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
27 September 2022
N G Neill
Partner
Page | 50
VARISCAN MINES
Annual Report 2022
69
ASX Additional Information
Schedule of Tenements
f Listing of tenements held as at 14 October 2022
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
70
VARISCAN MINES
Annual Report 2022
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%
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 2022
71
ASX Additional Information
Tenement
Tenement No.
Interest
Joint Venture Details
SOUTH AUSTRALIA
Junction Dam
Callabonna
Tenement
FRANCE – Note 4
St Pierre
Beaulieu
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%
EL
= Exploration Licence
PER
= Permis Exclusif de Recherche (France)
IP
EC
= Investigation Permit (Spain)
= Exploration Concession (Spain)
Note 1:
On 1 July 2019 the Company announced it had successfully renegotiated the terms of the existing Option Agreement to
provide the Company with a participating interest of 10.4%. The Company can earn up to 90% of the project through payment
of amounts totaling approximately US$2.25 milllion.
Note 2:
Under an agreement with Silver City Minerals Limited, Broken Hill Operations and Eaglehawk Geological Consulting Pty Ltd
Variscan has converted its interest in parts of these tenements to a NSR (Net Smelter Return).
Note 3:
Marmota has earned 100% of the uranium rights only in EL 5682. Variscan has a 0.5% net profits royalty on production from
a uranium mine.
Note 4:
The remaining exploration licences owned by Variscan Mines SAS (excluding the Couflens PER) have been conditionally
acquired by a new wholly owned subsidiary, Variscan Mines Europe Limited. Pursuant to the approval for the Subsidiary
Sale, the Ministry of Economy and Finance has imposed, without prior consultation, the compulsory relinquishment of the
remaining licences. The Company has approved the relinquishment request and has yet to receive a response. The timetable
for the completion of the relinquishment process is unknown.
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.
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.
72
VARISCAN MINES
Annual Report 2022
ASX Additional Information
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 2022 and approved by the Board on 19 October 2022, 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 14 October 2022
Ordinary fully paid shares
266,732,024 fully paid ordinary shares on issue.
Substantial shareholders
CITICORP NOMINEES PTY LIMITED
Shareholding
38,755,046
SLIPSTREAM RESOURCES INTERNATIONAL PTY LTD
35,625,000
DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT
16,968,750
As at 14 October 2022, there were 1,098 shareholders with less than a marketable parcel of $500.
VARISCAN MINES
Annual Report 2022
73
ASX Additional Information
Top 20 shareholders of ordinary shares
CITICORP NOMINEES PTY LIMITED
Number
%
38,755,046
14.530%
SLIPSTREAM RESOURCES INTERNATIONAL PTY LTD
35,625,000
13.356%
DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT
16,968,750
6.362%
FELDI LIMITED
HISPANIBAL SL
LIGHTNING JACK PTY LTD
BNP PARIBAS NOMS PTY LTD
EFFECTIVE INVESTMENTS PTY LTD
OPEKA DALE PTY LTD
CCGF HOLDING PTY LIMITED
DR FATT KAH FOO
DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT
KWAN CHEE SENG
MR MICHAEL ANTHONY PARNELL
BNP PARIBAS NOMINEES PTY LTD
SPINERGY CAPITAL PTY LTD
MERCER STREET GLOBAL OPPORTUNITY FUND LLC
7,330,772
2.748%
7,150,000
2.681%
7,080,000
2.654%
5,801,250
2.175%
5,000,000
1.875%
4,750,000
1.781%
3,607,125
1.352%
2,886,839
1.082%
2,800,000
1.050%
2,725,000
1.022%
2,550,981
0.956%
2,477,097
0.929%
2,300,000
0.862%
2,250,000
0.844%
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
2,158,994
0.809%
MR GEORGE EVAN LOUIZIDIS
MR SIMON ANDREW TESTER
Total Securities of Top 20 Holdings
Total of Securities
2,000,000
0.750%
1,887,450
0.708%
156,104,304
58.525%
266,732,024
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Distribution of shareholders
No of shareholders
Ordinary shares
%
740
184
74
323
245
1,566
153,739
467,728
588,404
13,248,118
252,274,035
266,732,024
0.06
0.18
0.22
4.97
94.58
100.00
74
VARISCAN MINES
Annual Report 2022
ASX Additional Information
Unquoted securities
The Company has the following unquoted securities on issue:
Description
Number
Number of
holders
Performance rights, fully vested on 30 November 2021, expiring 30 November 2023
1,250,000
Performance rights, vesting on 30 November 2022, expiring 30 November 2023
1,250,000
Unquoted options, exercisable at $1.00 on or before 20 November 2022
Unquoted options, exercisable at $0.095 on or before 30 November 2023
Unquoted options, exercisable at $0.10 on or before 30 November 2023
Unquoted options, exercisable at $0.11 on or before 30 November 2023
Unquoted options, exercisable at $0.055 on or before 30 November 2023
Unquoted options, exercisable at $0.065 on or before 30 November 2023
Unquoted options, exercisable at $0.08 on or before 30 November 2023
Unquoted options, exercisable at $0.12 on or before 30 September 2024
500,000
1,500,000
1,500,000
1,500,000
4,000,000
4,000,000
4,000,000
2,500,000
1
1
1
5
5
5
5
5
5
1
Voting rights
There are no restrictions on voting rights for ordinary shares. On a show of hands every member present or by proxy shall have one
vote and upon a poll each share shall have one vote. Where a member holds shares which are not fully paid, the number of votes to
which that member is entitled on a poll in respect of those part paid shares shall be that fraction of one vote which the amount paid
up bears to the total issued price thereof.
Option holders have no voting rights until the options are exercised.
There is no current on-market buy-back.
VARISCAN MINES
Annual Report 2022
75
www.variscan.com.au