Vital Metals Limited
ABN 32 112 032 596
Annual Financial Report
for the year ended 30 June 2018
For personal use only
Vital Metals Limited
Corporate Information
ABN 32 112 032 596
Directors
Mark Strizek (Managing Director)
Francis Harper (Non-Executive Chairman)
Peter Cordin (Non-Executive Director)
Andrew Simpson (Non-Executive Director)
Company Secretary
Matthew Foy
Registered Office
1/91 Hay Street
SUBIACO WA 6008
Telephone: +61 8 9388 7742
Facsimile: +61 8 9388 0804
Principal Place of Business
1/91 Hay Street
SUBIACO WA 6008
Telephone: (08) 9388 7742
Facsimile: (08) 9388 0804
Share Register
Automic Registry Services
Suite 1a, Level 1
7 Ventnor Ave
WEST PERTH WA 6005
Telephone: (08) 9324 2099
Facsimile: (08) 9321 2337
Auditors
BDO Audit (WA) Pty Ltd
38 Station Street
SUBIACO WA 6008
Bankers
Westpac Banking Corporation
140 St Georges Terrace
PERTH WA 6000
Internet Address
www.vitalmetals.com.au
Stock Exchange Listing
Vital Metals Limited shares are listed on the Australian Securities Exchange (ASX code: VML).
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Vital Metals Limited
Contents
Chairman’s Letter
Directors' Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Auditor’s Report
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Chairman’s Letter
Dear Shareholder,
I am pleased to present the 2018 Annual Report for Vital Metals Limited (ASX: VML).
The past year saw the Company strengthen its financial position considerably, primarily through the sale of its Watershed
tungsten project in Queensland for $15 million. The sale price was negotiated as broadly equivalent to the then market
capitalisation of the Company. The sale was announced in May 2018 and completed in August 2018.. The sale followed a
focussed but unsuccessful effort to attract offtakers for the project in order to secure project finance. Vital’s remaining
exploration assets are under review.
There were some changes to our Board during 2018, with former Chairman David Macoboy retiring after more than seven
years on the Board. David played an important role in the development of the Watershed Project and the DFS completed for
the project, and we thank him for that contribution. I would like to thank my fellow Directors, as well as our Management and
Staff, for their ongoing efforts
Vital has placed itself in a very strong financial position in a weak equity market for junior explorers. Our intention is to
carefully conserve our cash position in a market where a large number of projects are being shown to us as project valuations
continue to fall.
Francis Harper
Chairman
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Directors’ Report
Your Directors submit their report on the Consolidated Entity (referred to hereafter as the Group) consisting of Vital Metals Limited and
the entities it controlled at the end of, or during, the year ended 30 June 2018.
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. Where
applicable, all current and former directorships held in listed public companies over the last three years have been detailed below. Directors
were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Mark Strizek, BSc., MAusIMM, Managing Director
Mr Strizek holds a Bachelor of Science from Macquarie University and is a qualified geologist with over 16 years’ experience in the mining
industry. He is a Member of the Australasian Institute of Mining and Metallurgy. He has worked in open pit operations and exploration in
Western Australia and Queensland. He has also worked with Hellman & Schofield Pty Ltd as a consulting geologist, developing resource
models in commodities such as gold, iron ore, nickel and manganese. Prior to joining the Group, he worked with the Mineralogy group of
companies where he was involved in project development of iron ore, coal and petroleum resources in both Australia and Papua New
Guinea. Mr Strizek is also a non-executive director of Tietto Minerals Limited.
Andrew Simpson, Grad Dip. Bus (Curtin), MAICD, Non-Executive Director, Chairman of Audit Committee
Mr Simpson holds a Graduate Diploma in Business and Administration (majoring in Marketing and Finance) from Curtin University and
is currently the Managing Director and Principal of Resource and Technology Marketing Services Pty Ltd (RTM) in Perth.
He formed RTM in 1999 to specialise in strategic and business planning, resource project assessment and marketing. RTM is recognised
as one of Australia’s leading market research consultants to the international mining industry.
Mr Simpson is non-executive Chairman of Swick Mining Services Ltd and Symbol Mining Ltd. He is the former non-executive Chairman
of Territory Resources Ltd and India Resources Ltd. Mr Simpson is a Member of the Australian Institute of Company Directors.
Peter Cordin, BE, MIEAust, FAusIMM (CP), Non-Executive Director, Member of Audit Committee
Mr Cordin is a civil engineer with over 40 years’ experience in the evaluation and operation of resource projects within Australia and
overseas. He is the former Executive Chairman of Dragon Mining Limited which operated gold mines in Sweden and Finland. He has
direct experience in the management of diamond and gold operations and has been involved in the development of resource projects in
Kazakhstan and New Caledonia.
Mr Cordin is also a non-executive director of MC Mining Limited and Aurora Minerals Limited.
David Macoboy, BEcon, BComm (UWA), (Resigned 2 July 2018)
Mr Macoboy holds a Bachelor of Economics and a Bachelor of Commerce from the University of WA. David was a Fellow of the Australian
Institute of Company Directors and a Certified Practicing Accountant. He is a former Chairman of Ammtec Limited, AVZ Minerals Limited
and Territory Resources Ltd and has served on numerous other boards. He has not held any directorships of other listed companies in the
past three years.
Francis Harper LLB (Hons) B.Ec (appointed Chairman 2 August 2018)
Mr Harper has extensive experience in West African mining, having served as Chairman and as a major shareholder of West African
Resources Limited between 2009 and 2015.He is also a founding director of Blackwood Capital, which has raised over $1 billion for
smaller companies over the last 15 years.
Mr Harper is also non-executive Chairman of Tietto Minerals Limited.
COMPANY SECRETARY
Matthew Foy, BComm, ACIS, MAICD (appointed 17 November 2017)
Matthew was previously a senior adviser at the ASX facilitating the compliance of listed companies. Matthew possesses core competencies
in publicly listed and unlisted company secretarial and governance disciplines. His expertise is in corporate, commercial and securities law
with an emphasis on capital raisings and mergers and acquisitions. He contributes general corporate and legal skills along with a strong
knowledge of the ASX requirements.
Ian Hobson, Bbus, FCA, AICS, MAICD (resigned 17 November 2017)
Mr Ian Hobson holds a bachelor of business degree and is a Chartered Accountant and Chartered Secretary. Mr Hobson provides company
secretarial, corporate, management and accounting services to a number of listed public companies involved in the resource, services,
technology and biomedical industries.
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Vital Metals Limited
Interests in the shares and options of the Company and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of Vital Metals Limited were:
Mark Strizek
Andrew Simpson
Peter Cordin
Francis Harper
Ordinary
Shares
3,173,964
1,684,375
6,931,116
15,422,225
Options over
Ordinary
Shares
50,438,023
5,168,733
5,168,733
28,750,000
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were mineral exploration in Niger and in Burkina Faso, West Africa.
There was no significant change in the nature of the Group’s activities during the year.
DIVIDENDS
No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.
OPERATING AND FINANCIAL REVIEW
The consolidated loss of the Group after providing for income tax amounted to $3,253,430 (2017: $4,961,426).
OPERATIONS REVIEW
Vital Metals Limited (ASX:VML) is an explorer and developer holding a portfolio of gold, technology metals and base metals. Our projects
are located across a range of jurisdictions in West Africa and Germany.
Bouli Gold Project – Niger
The Bouli Gold Project is a portfolio of three highly prospective gold permits in Niger, West Africa covering 4,289km² held by a subsidiary
of SUMMA (a private Turkish company). Vital is working to earn interest in the project via the funding of an exploration work program.
Nahouri Gold Project – Burkina Faso
The Nahouri Gold Project (100% Vital) is located in southern Burkina Faso. The Project is made up of three contiguous permits; the Nahouri,
Kampala and Zeko exploration permits. The Project is located in highly prospective Birimian Greenstone terrain with 400 sq km of
contiguous tenements lying on the trend of the Markoye Fault Corridor.
Aue Project – Germany
The Aue Project (100% Vital) is located in the western Erzgebirge area of the German state of Saxony. The permit, comprising an area of
78 sq km is located in the heart of one of Europe’s most famous mining regions surrounded by several world class mineral fields. Historical
mining and intensive exploration work carried out between from the 1940’s and 1980’s showed high prospectivity of the Aue permit area
for cobalt, tungsten, tin, uranium and silver mineralisation.
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Figure 1: Project Locations Map
Bouli Gold Project, Niger, West Africa
Vital Metals signed an Exploration Agreement with SUMMA, a private Turkish company, to begin exploration on exploration permits in
Niger, West Africa. SUMMA has a broad range of multi-jurisdictional interests.
The Agreement covers three exploration permits (4,289km² in total) held by a subsidiary of SUMMA. Two permits, Bouli and Tringui-3,
are located 20km north of the Samira Hill mine near the Burkina Faso border, while the third permit, Keradet is in the Agadez region in
northern Niger and has not received any significant exploration work. Work is most advanced on the Bouli permit where exploration drilling
has intersected bedrock gold mineralisation at three prospects: Petit Druirkou, Burke Burke and Issa.
At Bella Tondi, located about 5km north-east of Burke Burke on Bouli, there had been significant hard rock artisanal mining over 1.5km
strike length involving up to 20,000 people. These artisanal workers were moved on by the government, allowing Vital free access to
undertake exploration.
Under terms of the Agreement with SUMMA, Vital had to undertake initial six-month work program, after which it could elect to proceed
or withdraw from the agreement. In July, Vital announced it would proceed with an agreement to earn 50% of the project, having spent more
than $1 million on exploration at Bouli, completing aeromagnetic surveys and drilling, predominately at the Bella Tondi prospect. Vital’s
exploration at Bella Tondi has identified an emerging high-grade gold zone, with visible core detected in core samples. In proceeding with
the agreement, announced in October 2017, Vital will spend an additional $5 million on exploration over two years to earn 50% of the
project. On the establishment of a 50/50 joint venture, Vital can acquire SUMMA’s stake for a 2.5% gross revenue royalty.
Exploration
Previous limited diamond drilling by SUMMA in 2017 on several prospects returned high-grade gold intercepts including:
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17.9m @ 7.92 g/t Au from 57.2m
1.6m @ 16.58 g/t Au from 63.7m
7.1m @ 2.73 g/t Au from 16.0m
5.8m @ 2.60 g/t Au from 45.8m
4.1m @ 3.20 g/t Au from 77.0m.
Vital commenced a 3,000m reverse circulation (RC) drill program at the Bella Tondi prospect in December 2017.
Vital reported an ultra-high-grade intercept of 4m @ 157 g/t Au from 76m in hole BTRC040 associated with an emerging high-grade
southern zone at Bella Tondi which extends for at least 200 metres. Other results included:
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BTRC040: 10m @ 63.5 g/t Au from 74m incl. 4m @ 157 g/t Au from 76m
BTRC005B: 8m @ 10.3 g/t Au from 62m including 2m @ 36.5g/t Au from 62m
BTRC029: 15m @ 3.1 g/t Au from 56m, ending in mineralisation
BTRC022B: 2m @ 13.1 g/t Au from 83m
BTRC026: 8m @ 2.9 g/t Au from 46m
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BTRC041: 2m @ 9.9 g/t Au from 64m
RC drilling intersected multiple voids down hole at Bella Tondi, thought to represent where higher grade material was mined by artisanal
workers.
Vital reported further results from Bella Tondi which identified more high-grade gold. They included:
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BTRC047: 20m @ 5.79 g/t Au from 100m including 2m@ 48.4 g/t Au from 102m, ending in mineralisation
BTRC043: 8m @ 1.2 g/t Au from 12m
BTRC045: 2m @ 2.4 g/t Au from 74m
BTRC048: 6m @ 1.9 g/t Au from 52m.
Vital commenced a diamond drilling program at Bella Tondi in the June quarter, with the aim of testing the continuity of high-grade gold
mineralisation down to a vertical depth of 150m. Visible gold in diamond drill core was reported in BTRD004, drilled under the ultra-high-
grade result of 4m at 157g/t Au. Visible gold was also identified in drill core from BTRD006 at a relatively shallow 115m down-hole.
Significant drilling results included:
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BTRC047: 20m @ 5.79 g/t Au from 100m to EOH including 2m @ 48.4g/t Au
BTRD004: 8m @ 7.26 g/t Au from 195m incl 2m @ 26.7 g/t Au
BTRD006: 5.87m @ 5.68 g/t Au from 109m
BTRC048: 6m @ 1.92 g/t Au from 52m
BTRC043: 8m @ 1.25 g/t Au from 12m
Cyanide leach analysis of RC chip samples previously analysed by fire assay was undertaken in Ouagadougou to test the leachability of the
gold mineralisation at Bella Tondi. Samples covered a wide range of gold grades from sub-mineralised to ultra-high grade. The results were
extremely encouraging with a good correlation between the original fire assay and cyanide leach assay for the mineralisation located within
the Bella Tondi Shear Zone. Vital is planning further metallurgical testing.
At the Petit Druirkou prospect, Vital reported results which intersected thick envelopes of gold mineralisation from seven RC holes drilled
to test structural mineralisation and RAB anomalies. PDRC003 intersected 13m @ 1.6 g/t Au from 38m, part of a broader envelope of 27m
@ 0.9 g/t Au from 24m. Higher grade intercepts from the RC holes included:
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PDRC003: 13m @ 1.6 g/t Au from 38m
PDRC007: 6m @ 1.2 g/t Au from 0m
PDRC002: 2m @ 2.0 g/t Au from 132m
There was good correlation between the new RC drilling and previous diamond drilling, with PDRC003 reporting 13m @ 1.6g/t Au from
38m compared to BDD031, located 40m north, which reported 10m @ 1.67 g/t Au from 31m. Vital will need to undertake further exploration
to assess the potential of gold mineralisation at Petit Druirkou.
Airborne geophysical survey
Vital contracted Xcalibur Airborne Geophysics (PTY) Ltd to carry out an airborne geomagnetics program with a total line length of 9,060km
with a nominal 100m line spacing over the Bouli tenement package and 50m infill spacing above the Bella Tondi trend. The airborne survey
advanced Vital’s understanding and prospectivity of the Bouli project.
Interpretation of the survey data identified more than 20 gold targets with a combined strike of more than 20km located in favourable
structural settings and supported in many cases with positive gold grades from historical geochemistry. Vital is reviewing the data to identify
the highest priority targets.
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Figure 2: Bouli Gold Project drill intercepts
Nahouri Gold Project, Burkina Faso (formerly Doulnia Gold Project)
The Nahouri Project sits within the Markoye Structural Corridor in Burkina Faso, known to host several multi-million-ounce gold deposits,
including two recent major gold discoveries, Cardinal Resources’ Namdini Project in Ghana and West African Resources’ Sanbrado Gold
Project, Burkina Faso.
In the September quarter, Vital identified two new targets from results of a regional auger program.
Tangassogo
Auger drilling identified a 4km long by 1.5km wide north south trending corridor at Tangassogo with peak auger grades of up to 3.5g/t Au.
This north-south trending corridor is believed to be a significant structural feature and possibly one of the controlling structures responsible
for the ENE-trending Kollo mineralisation. Auger drilling sampled the saprolite, confirming the anomaly is primary and requires follow-up.
Boungou South
A 4km west-northwest trending auger anomaly with peak auger grades of up to 1.1g/t Au was located north-east of the Boungou South gold
prospect, which has returned previous RC drill results of 8m @ 9.3 g/t Au from 56m, 9m @ 3.6 g/t Au from 39m, 20m @ 1.5 g/t Au from
16m and 5m @ 3.2 g/t Au from 22m. This prospective corridor is associated with a structural feature interpreted from aeromagnetic data.
Vital is planning infill auger drilling.
Kollo South
Vital completed 723m of diamond drilling at Kollo South with a truck-mounted diamond drill rig (two diamond holes and two diamond
tails). Core drilling intersected potential ore grade zinc mineralisation with sphalerite mineralisation noted in most of the drill core recovered.
Hole KDD008 was extended from 167m to 387m, the deepest hole drilled at Kollo South, to test for gold mineralisation around 180m below
high-grade gold intercepts in KRC303. The drill-hole hit the target structure with the core intersecting several intensely sheared, altered,
highly silicified intervals with abundant sulphides, with zinc mineralisation being dominant.
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Exploration drilling at Kollo South previously intersected high value gold including 13m at 9.0 g/t Au from 174 including 2m at 46.2 g/t Au,
17m at 6.0 g/t Au from 114m including 2m at 30.5 g/t Au and 17m @ 3.34 g/t Au from 145m. Drilling demonstrated that the geometry of
the gold mineralisation is complex and the interplay with zinc mineralised is not fully understood. Further drilling will be required to map
out both mineralised systems.
Kollo Hill
The Company drilled 19 holes for 1,326m on four drill fences at Kollo Hill using a track-mounted RC rig. Gold assays of RC drill chips
reported several anomalous gold results from highly weathered and oxidised material including:
‐ KHRC011: 6m @ 0.8 g/t Au from 44m
‐ KHRC013: 2m @ 1.0 g/t Au from 2m
‐ KHRC013: 2m @ 0.9 g/t Au from 14m
‐ KHRC011: 4m @ 0.4 g/t Au from 28m
Analysis of RC pulps using a semi-quantitative portable XRF unit reported zinc mineralisation present in broad anomalous zones (both
depleted oxide zones as well as fresh sulphide) over a strike length of 450m.
Zinc prospects, Burkina Faso
Vital’s drilling at Kollo demonstrated high-grade gold mineralisation sitting within a large zinc VMS mineralised trend, known as Loubel,
part of a large zinc VMS system which wraps around the Tiebele dome. Historical exploration work has defined multiple Zn-Pb-Cu
anomalies over 30km of lightly explored contact. Previous drill holes only tested depleted oxide zone or shallow mineralisation and there
are several prospective zinc VMS-style targets with potential for discovery of a large zinc deposit with more drill testing or in areas where
mineralisation has not been closed off.
Airborne geophysics program
A 2,688-line km Heli-mag survey was completed on Zeko permit to acquire magnetic and radiometric data. This will assist drill target
delineation.
During the December quarter, the Nahouri license (previously Doulnia) was granted for three years, beginning on 27 December 2017. An
application for the second renewal of the Zeko permit for further 3 years was submitted to the Ministre des Mines et des Carrieres during
November 2017 and is currently being processed.
There was no drilling activity on the Nahouri project during the second half of the year, with work consisting of compilation and interpretation
of exploration data. The Company was approached by a number of parties expressing interest in the project. The Board is reviewing these
options and will determine the optimum exploration strategy that will add value to the company and its shareholders.
Vital presented a water well to the community in an official handover ceremony in the June quarter.
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Figure 3: Nahouri Gold Project, Burkina Faso
Aue Cobalt Project, Germany
The Aue project is in the Erzgebirge region of Saxony, Germany. The area has a rich history of cobalt production with mining occurring
from the 16th century through to the late 1930s. Vital acquired the project in 2015 for its tungsten prospectivity, with tungsten having been
mined at Zschorlau in the western part of the permit area from quartz‐wolframite veins between 1917 and 1959.
Previous East German exploration at Aue focused on uranium and tungsten, and the permit was not explored for cobalt using modern
exploration making it a very attractive cobalt play.
During the March quarter, Vital announced it would initiate exploration at Aue, with a program of field mapping and geochemical sampling.
Vital’s small geochemical program aimed to positively identify cobalt mineralisation at two key targets:
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The Stolln 7 mullock (dump) heap on the Schwarzwasser river between Aue and Lauter, where it collected five rock samples.
Stolln 7, located on the Schwarzwasser river was driven into a steep rock face around 1950 to explore potential uranium
mineralisation. Instead of uranium the miners encountered a Bi-Co-Ni vein striking WNW-ESE. A minor amount of material was
extracted and the adit was closed and sealed;
The historic Koenig David mine pit, where Vital collected 16 soil samples and a single rock chip sample from the base of the pit.
The Vital field team encountered multiple mineral collector diggings in the otherwise overgrown mullock heap. One of these diggings
contained a significant amount of material with pinkish secondary cobalt mineral coatings (erythrite, a secondary cobalt carbonate). Multiple
samples were taken, including some showing greyish primary mineralisation as well as light-colored native bismuth.
Vital submitted samples to ALS Romania for multi-element geochemistry. All samples from Stolln 7 contained cobalt concentrations ranging
from 300 to 700ppm, with the best mineralised sample containing 1.3% Ni, 0.8% Co, 0.3%Bi and 19ppm Ag.
Vital is awaiting results from soil samples taken from around the historic Koenig David sulphide mine with a Pb-Zn-Ag signature and an
area of noted Bi-Co-Ni mineralisation.
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Vital expects to undertake further field work to test locations with either known historic cobalt mining or are known to have Bi-Co-Ni
mineralisation.
Figure 4: Aue Cobalt Project location map
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CORPORATE
Sale of Watershed Project
In May 2018, Vital announced it had signed a binding term sheet to sell its Watershed Tungsten Project in Far North Queensland to Tungsten
Mining NL (ASX: TGN) for $15 million cash. The sale comprised 100% of the project as well as all associated exploration permits. The
sale was completed in August 2018, and Vital used a portion of the sale funds to repay $1.4 million to Macquarie, following which the
Company is debt free. An Amendment and Restated Royalty Deed for the Watershed Project has been executed, with Tungsten Mining NL
assuming the royalty obligation owing to Macquarie Bank.
Remaining funds will allow Vital to maintain its exploration program in West Africa Vital and also consider new opportunities in 2019 to
pursue value for its shareholders.
Bouli Project Earn-in
In July 2018, Vital announced it would proceed with an agreement to earn 50% of the Bouli Gold Project, Niger, through an earn-in
agreement with private Turkish company SUMMA, having already spent more than $1 million on exploration at Bouli, completing
aeromagnetic surveys and drilling, predominately at the Bella Tondi prospect, as part of an exploration agreement with SUMMA.
In proceeding with the agreement, announced in October 2017, Vital will spend an additional $5 million on exploration over two years to
earn 50% of the project. On the establishment of a 50/50 joint venture, Vital can acquire SUMMA’s stake for a 2.5% gross revenue royalty.
Capital Raising
In September 2017, Vital raised $1.98M through a heavily oversubscribed share placement to optimise the Watershed Tungsten Project and
continue gold exploration on its highly prospective Burkina Faso tenements. Argonaut and Blackwood Capital acted as joint lead managers
for the Placement which issued 263,938,807 New Shares to raise $1.98M, before costs, at a price of $0.0075 per New Share. Shares issued
under the Placement were pursuant to the Company’s 15% placement capacity under ASX Listing Rule 7.1 (158,362,684 shares) and 10%
placement capacity under ASX Listing Rule 7.1A (105,575,123).
In March 2018, Vital successfully received commitments for a two-tranche placement to raise up to $3.8 million through the issue of 422.2
million fully paid ordinary shares to sophisticated and institutional investors at an issue price of $0.009 per share. The Placement was
completed in two tranches:
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‐
329.9 million New Shares were issued on 5 April 2018 under Vital’s existing placement capacity under ASX Listing Rules 7.1
and 7.1A (Tranche 1) raising $3.8 million; and
Just under 93 million New Shares were issued on 26 June 2018, raising $837,000 at 0.9¢ per share (Tranche 2).
Vital used the funds raised in the Placement to accelerate exploration of the high-grade Bouli Gold Project. Blackwood Capital and Argonaut
were Joint Lead Managers of the placement.
Board & Management Changes
In November 2017, Vital announced the appointment of Matthew Foy as Company Secretary, following the resignation of Ian Hobson. Mr
Foy is experienced in the role, acting as a company secretary and corporate advisor for other ASX-listed companies.
David Macoboy retired as a Director of Vital Metals effective 2 July 2018, after serving on the board for more than seven years.
Francis Harper was appointed Vital Metals’ Non-Executive Chairman on 2 August 2018.
Mark Strizek
Managing Director
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Appendix A: Schedule of Interests in Mining Tenements as at 30 June 2018
Location
Company
Tenement
Percentage held
Burkina Faso
Vital Metals Burkina
(wholly owned subsidiary)
Germany
Vital Metals Limited
Far North Queensland*
North Queensland Tungsten Pty Ltd
(wholly owned subsidiary)
Nahouri (formerly known
as Doulnia)
Kampala
Zeko
Aue
EPM 25102
MDL127
EPM 18171
EPM 19809
EPM 25139
EPM 25940
ML 20535
ML 20536
ML 20537
ML 20538
ML 20566
ML 20567
ML 20576
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Note*: In May, Vital announced it had signed a binding term sheet to sell its Watershed Tungsten Project in Far North Queensland to
Tungsten Mining NL (ASX: TGN) for $15 million cash. The sale comprised 100% of the project as well as all associated exploration permits.
The sale was completed in August 2018.
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Appendix B: Mineral Resources and Ore Reserves Statement
Introduction
Mineral Resources can be defined as the concentration of material of economic interest in or on the earth’s crust, whereas Ore Reserves are
the parts of a Mineral Resource that can at present be economically mined.
Mineral Resources and Ore Reserves are reported as tonnes and grade (quality) above a minimum value (cut-off). We report estimates of
our Mineral Resources and Ore Reserves on an annual basis, but new discoveries of Mineral Resources can be estimated at any time.
Our estimates of Mineral Resources and Ore Reserves are undertaken by a team of highly skilled technical personnel including geologists,
mining engineers and metallurgist that qualify as Competent Persons under the JORC Code.
The JORC Code is a framework for classifying Mineral Resource and Ore Reserve estimates. Mineral Resources can be classified as
Measured, Indicated and Inferred, according to the level of geological knowledge and confidence. Ore Reserves can be classified as Proved
or Probable on the basis of the Mineral Resource classification and consideration of all JORC modifying factors.
Only Measured and Indicated Mineral Resources can be converted to Ore Reserves.
The figures included in our Mineral Resources and Ore Reserves statement are estimates only and not precise calculations, therefore
appropriate rounding according to JORC guidelines has been applied.
The Mineral Resource and Ore Reserve tables in this report provide a detailed breakdown of the estimates, which have been prepared
according to the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (the JORC Code).
Annual Review
VML conducts an annual review of its Mineral Resources and Ore Reserves. This process is managed by the Managing Director of VML.
Subsequent to 30 June 2018 there was a restatement of the Watershed Mineral Resource under the 2012 JORC Code and Guidelines. This
information was prepared and first disclosed under the 2004 JORC Code. There has not been any material change since it was last reported
and the Watershed Mineral Resource was restated and classified using the 2012 JORC Code and Guidelines.
The governance arrangements and internal controls in place with respect to its estimates of mineral resources and ore reserves and the
estimation process include oversight of the competent person by the managing director and review by the board. No mining has commenced
and no additional mining studies have been completed.
Minerals Resources Statement – 30 June 2018
The Company’s total Measured, Indicated and Inferred Mineral Resources as at 30 June 2018 were 49.32Mt grading 0.14% WO3 for
70,400 tonnes of contained WO3. The 2018 Mineral Resources for Watershed remain unchanged from the 2012 estimate. This information
was prepared and first disclosed under the 2004 JORC Code. There has not been any material change since it was last reported. It was
subsequently restated and classified using the 2012 JORC Code and Guidelines on 4 July 2018.
Watershed Deposit Mineral Resources
WO3 %
Cut off
0.05
0.1
0.15
0.2
0.3
Measured
Indicated
Inferred
Combined
Mt WO3 % Mt WO3 % Mt WO3 % Mt WO3 %
9.47 0.16
28.36 0.14
11.49 0.15
49.32 0.14
4.42 0.25
11.51 0.24
4.73
0.26
20.66 0.25
2.69 0.34
6.66
0.32
2.83
0.35
12.18 0.33
1.93 0.41
4.56
0.39
2.05
0.41
8.53
0.40
1.09 0.53
2.40
0.52
1.17
0.54
4.66
0.53
Contained
WO3
Tonnes
70,400
50,700
40,400
34,100
24,600
Notes to table;
Mineral resources reported are inclusive of Ore Reserves.
Cut-off grade 0.05%WO3
Numbers are rounded to two significant figures. Discrepancies in totals may occur due to rounding.
100% of Mineral Resources are attributable to Vital Metals. Vital Metals agreed to sell the Watershed Tungsten Project in
north Queensland to Tungsten Mining NL for $15 million cash (ASX announcement 2 May 2018).
Resources initially reported July 30 2012, Quarterly Activities & Cash flow Report and subsequently restated and classified
on 3 July 2018 using the 2012 JORC Code and Guidelines.
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Vital Metals Limited
Ore Reserves Statement – 30 June 2018
The Company’s Proved and Probable Ore Reserves were estimated to be 21.3Mt grading 0.15% WO3 for 31,400 tonnes of contained
WO3. The reserves were first reported on 17 September 2014 in accordance with JORC Code 2012, the reported reserves are entirely for
Watershed. There have been no changes to the Ore Reserves in the past year, no mining has commenced and no additional mining studies
have been completed.
The classification of the Watershed Ore Reserves has been carried out in accordance with the recommendations of the JORC Code 2012.
All Proven Ore Reserves have been derived from Measured Mineral Resources and all Probable Ore Reserves have been derived from
Indicated Mineral Resources.
Category
Quantity (Mt)
WO3 Content (t)
Grade (% WO3)
Ore Reserves within Watershed Pits
Proven
Probable
Total Ore Reserve
Inferred Ore
Waste Excluding Inferred
Total Material
Strip Ratio
6.4
15.0
21.3
1.7
66.2
89.3
3.16
10,000
21,000
31,000
2,400
0.16
0.14
0.15
0.14
Notes to table:
Ore Reserves based on an APT price of US$375 and FX0.90
Mineral Resources are reported as inclusive of Ore Reserves
Numbers are rounded to two significant figures. Discrepancies in totals may occur due to rounding.
100% of Reserves are attributable to Vital Metals
Competent Person Statements
The information in this report that relates to exploration targets, exploration drilling data, exploration results & mineralisation
is based on information compiled by Mr Mark Strizek, who is a Member of The Australasian Institute of Mining and
Metallurgy. Mr Strizek is a full time employee of the Company and 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 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves”. Mr Strizek consents to the inclusion in the announcement of the matters based on the information in the form
and context in which it appears.
The information in this report that relates to Mineral Resources for the Watershed Deposit is based on information evaluated
by Mr Simon Tear who is a Member of The Australasian Institute of Mining and Metallurgy (MAusIMM) and who has sufficient
experience 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 2012 edition of the “Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves”. Mr Tear is a Director of H&S Consultants Pty Ltd and he consents
to the inclusion of the estimates in the report of the Mineral Resource in the form and context in which they appear.
The information in this report that relates to the Ore Reserves statement has been compiled in accordance with the guidelines
defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code – 2012
Edition). The Ore Reserves have been compiled by Mr Steve Craig of Orelogy Group Pty Ltd, who is a Fellow of Australasian
Institute of Mining and Metallurgy. Mr Craig has had sufficient experience in Ore Reserve estimation relevant to the style of
mineralisation and type of deposit under consideration to qualify as Competent Person as defined in the 2012 Edition of the
“Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Craig consents to the inclusion in this report
of the matters based on his information in the form and context in which it appears.
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Directors' Report continued
Operating Results for the Year
Summarised operating results are as follows:
2018
Revenues
$
Results
$
Consolidated entity revenues and loss from ordinary activities before income tax expense
10,742
(3,253,430)
Shareholder Returns
Basic loss per share (cents)
2018
(0.21)
2017
(0.82)
Risk Management
The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned with
the risks and opportunities identified by the board. The Company believes that it is crucial for all board members to be a part of this process,
and as such the board has not established a separate risk management committee.
The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the risks identified
by the Board. These include the following:
• Board approval of a strategic plan, which encompasses strategy statements designed to meet stake-holders needs and manage business
risk.
Implementation of board approved operating plans and budgets and board monitoring of progress against these budgets.
•
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than as disclosed in this Annual Report no significant changes in the state of affairs of the Group occurred during the financial year.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE
On 2 July 2018 the Company advised it will proceed with an agreement to earn 50% of the Bouli Gold Project in Niger through an earn-in
agreement with private Turkish company SUMMA.
On 10 August 2018 the Company advised it had completed the sale of the Watershed Tungsten Project in Queensland for $15 million, less
completion adjustments. Vital used a portion of the sale funds to repay $1.4 million to Macquarie, following which the Company is debt
free.
Other than set out above there were no other significant events after the reporting date.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Group intends to continue its exploration and development activities on its existing projects and to acquire further suitable projects for
exploration as opportunities arise.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group is subject to significant environmental regulation in respect to its exploration activities.
The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance
with all environmental legislation. The directors of the Group are not aware of any breach of environmental legislation for the year under
review.
REMUNERATION REPORT (Audited)
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.The
directors and key management personnel for the year ended 30 June 2018 were:
David Macoboy – Non-Executive Chairman (resigned 2 July 2018)
Mark Strizek – Managing Director
Andrew Simpson – Non-Executive Director
Peter Cordin – Non-Executive Director
Francis Harper – Non-Executive Chairman (appointed Chairman 2 August 2018)
Ian Hobson – Company Secretary (resigned 17 November 2017)
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Vital Metals Limited
Principles used to determine the nature and amount of remuneration
Remuneration Policy
Remuneration of Directors and Executives is referred to as compensation throughout this report. Key management personnel including
directors of the Company and other executives have authority and responsibility for planning, directing and controlling the activities of the
Group. Compensation levels for directors and Key Management Personnel of the Group are competitively set to attract and retain
appropriately qualified and experienced directors and executives.
The Board is responsible for compensation policies and practices. The Board, where appropriate, seeks independent advice on remuneration
policies and practices, including the compensation packages and terms of employment. No such advice was sought in the current year.
The compensation structures explained below are designed to attract suitably qualified candidates, reward the achievement of strategic
objectives, and achieve the broader outcome of creation of value for shareholders. The compensation structures take into account a number
of factors, including length of service and the particular experience of the individual concerned.
(i) Fixed Compensation
Fixed compensation consists of base compensation (which is calculated on a total cost basis and includes any FBT charges related to
employee benefits including motor vehicles), as well as employer contributions to superannuation funds. Compensation levels are reviewed
annually by the Board where applicable.
(ii) Share based remuneration
Share options are granted to key employees as the Directors believe that this is the most appropriate method of aligning performance to the
interests of shareholders. The share options are issued under the Vital Metals Ltd Share Option Plan and the Directors feel that it
appropriately links the long term incentives of key employees to the interest of shareholders. The ability to exercise the options is
conditional on continued service for a period as determined by the Board upon each issuance of options. The Group does not have a policy
that prohibits those that are granted share-based payments as part of their remuneration from entering into other arrangements that limit
their exposure to losses that would result from share price decreases. The share options issued to the Managing Director vest immediately
on issue and there are no performance conditions because the Board considers the link between the exercise price and share price at time
of issue to be a satisfactory driver.
(iii) Service contracts/agreements
Mark Strizek was appointed on 1 July 2011 as Chief Executive Officer of the Group on a service contract. This contact was for an initial
term of three months as CEO after which term Mr Strizek was invited to join the Board as Managing Director (effective 7 October 2011)
for an unlimited term which is capable of termination on 6 months’ notice. Upon termination Mr Strizek is entitled to payment of his
notice period. By agreement, Mr Strizek’s salary was adjusted to $200,000 plus superannuation effective 1 April 2017.
(iv) Non-Executive directors
Total compensation for all Non-Executive Directors, last voted upon by shareholders at the 2007 AGM, is not to exceed $400,000 per
annum. Effective from 1 July 2017, the Company’s Non-Executive Directors remuneration was amended, resulting in the Chairman
receiving $60,000 per annum inclusive of statutory superannuation and non-executive directors receiving $40,000 per annum inclusive of
statutory superannuation.
The remuneration policy for non-executive directors remains unchanged.
Company performance, shareholder wealth and directors’ and executives’ remuneration
No relationship exists between shareholder wealth, director and executive remuneration and Company performance due to the infant stage
of the Company’s operations.
The table below shows the gross revenue, losses and earnings per share for the last five years for the listed entity.
Net loss
Dividends paid
Share price at year end (cents)
Loss per share (cents)
2018
$
(3,253,430)
-
1.0
(0.21)
2017
$
(4,961,426)
-
1.1
(0.82)
2016
$
(1,156,042)
-
1.1
(0.31)
2015
$
(6,939,729)
-
3.0
(2.4)
2014
$
(1,375,531)
-
3.4
( 0.6 )
Use of remuneration consultants
The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2018.
Details of remuneration
Details of the remuneration of the directors and the key management personnel of the Group are set out in the following table.
The key management personnel of the Group are the directors and company secretary. Given the size and nature of operations of the
Group, there are no other employees who are required to have their remuneration disclosed in accordance with the Corporations Act 2001.
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Directors' Report continued
Key management personnel of the Group
Short-Term
Post
Employment
Share-based
Payments
Share-based
Payments
Total
Salary
& Fees
$
Non Monetary Superannuation
$
$
Options(1)
$
Shares
$
$
Directors
David Macoboy (Non-Executive) (resigned 2 July 2018)
2018
2017
Mark Strizek (Managing Director)
2018
2017
Andrew Simpson (Non-Executive)
2018
2017
Peter Cordin (Non-Executive)
2018
2017
Francis Harper (Non- Executive)
(appointed 15 May 2017)
2018
2017
65,800
54,800
200,000
177,500
40,000
39,999
36,530
36,529
46,667
5,000
-
-
-
-
-
-
-
-
-
-
Other key management personnel
Ian Hobson (Company Secretary) (resigned 17 November 2017)
-
-
29,300
63,500
2018
2017
6,251
5,205
19,000
16,862
-
-
3,470
3,470
-
-
-
-
-
77,440
61,351(1)
178,599 (1)
-
43,720
-
43,720
-
-
-
-
-
-
-
40,000(2)
-
-
-
-
-
-
-
-
Total key management personnel compensation
2018
2017
547,059
377,328
-
-
40,478
25,537
61,351
340,479
-
40,000
72,051
134,445
280,351
412,961
40,000
83,719
40,000
83,719
46,667
5,000
29,300
63,500
648,888
783,344
(1) The fair value of the options is calculated at the date of grant using a Black Scholes option valuation model, or share price up-and-in barrier model
and allocated to each reporting period evenly over the period from the grant date to vesting date. The value disclosed is the portion of the fair value
of the options recognised in this reporting period.
(2) Shareholders approved the issue of 2,000,000 shares at the market price of 2 cents per share to Mr Strizek at the 2016 AGM.
There were no options granted to key management personnel as compensation during the reporting period, other than those set out below.
Options granted as compensation
Options are issued at no cost to Directors and Executives as part of their remuneration. The options are not issued based on performance
criteria, but are issued to increase goal congruence between Executives, Directors and Shareholders. The following options over ordinary
shares of the Company were granted to or vesting with key management personnel during the year:
Granted
& Vested
Number Vesting Date Expiry Date
Exercise
Price
(cents)
Fair Value
per option at
grant date
(cents)
Grant Date
Exercised
Number
% of
Remuneration
Mark Strizek – Tranche A * 17/11/2017 14,465,912
Mark Strizek – Tranche B * 17/11/2017 14,465,913
* Options were valued based on a 100% volatility, and a risk free interest rate of 1.75%.
(1) Vesting conditions – Share price of $0.02 or greater for 10 consecutive business days prior to 31 December 2018, provide Mark Strizek
remains an employee of the Company until at least 31 December 2018
24/11/2017
‐
(1)
24/11/2019
24/11/2019
10.95%
10.95%
0.30
0.20
N/A
N/A
1.2
1.2
Exercise of options granted as compensation
During the reporting period, there were no shares issued on the exercise of options previously granted as compensation, nor were there any
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Vital Metals Limited
Directors' Report continued
modifications to the terms of previously granted options.
Analysis of options granted as compensation
Details of vesting profiles of the options granted as remuneration to Key Management Personnel of the Group are detailed below:
Options granted
Number
Date
% vested in
current year
% expired in
current year
Financial years in which
grant vest
Directors
Mark Strizek
Mark Strizek
Mark Strizek
David Macoboy
David Macoboy
Peter Cordin
Peter Cordin
Andrew Simpson
Andrew Simpson
Mark Strizek*
* Tranche B options remain unvested
7,175,564
6,506,198
15,000,000
3,253,099
6,000,000
2,168,733
3,000,000
2,168,733
3,000,000
28,931,825
23/11/2015
25/11/2016
02/05/2017
25/11/2016
02/05/2017
25/11/2016
02/05/2017
25/11/2016
02/05/2017
17/11/2017
-
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
-
-
-
-
-
-
-
-
-
-
30 June 2017
30 June 2017
30 June 2017
30 June 2017
30 June 2017
30 June 2017
30 June 2017
30 June 2017
30 June 2018
Analysis of movements in options
The movement during the reporting period, by value, of options over ordinary shares in the Company held by each key management person
and each of the named executives are detailed below:
Directors
Mark Strizek
David Macoboy (resigned 2 July 2018)
Andrew Simpson
Peter Cordin
Francis Harper
Granted in year
$(A)
Value of Options
Exercised in year
$(B)
Cancelled / Lapsed in
year
$(C)
61,351
-
-
-
-
-
-
-
-
-
100,000
-
-
-
-
(A)
(B)
(C)
The value of the Tranche A options granted in the year is the fair value of the options calculated at grant date using a Black Scholes
option valuation model; The value of the Tranche B options were valued using “share price up-and-in barrier model”. The total
value of the options granted is included in the table above. This amount is allocated to remuneration over the vesting period.
The value of options exercised in the year is calculated as the market price of shares of the Company as at close of trading on the
date the options were exercised after deducting the price paid to exercise the option.
The value of the options that lapsed during the year represents the fair value of the options calculated at grant date using a Black
Scholes option valuation model.
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Additional disclosures relating to key management personnel
Shareholding
The numbers of shares in the Company held during the financial year by each director of Vital Metals Ltd and other key management
personnel of the Group, including their personally related parties, are set out below.
2018
Balance at
start of the
year
Received during
the year on the
exercise of
options
Received as
Compensation Other changes
during the
year
Balance at
end of the
year
Directors of Vital Metals Limited
Ordinary shares
David Macoboy (resigned 2 July 2018)
Mark Strizek
Andrew Simpson
Peter Cordin
Francis Harper
Other key management personnel of the Group
Ordinary shares
Ian Hobson (resigned 17 November 2018)
Notes:
1. Purchase of ordinary shares following shareholder approval at 0.9¢ per share.
2. Shareholding on date of resignation.
17,500,000
3,173,964
1,684,375
6,931,116
11,700,000
210,067
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,722,2251
17,500,000
3,173,964
1,684,375
6,931,116
15,422,225
(210,067)2
Option holding
The numbers of options over ordinary shares in the Company held during the financial year by each director of Vital Metals Ltd and other
key management personnel of the Group, including their personally related parties, are set out below:
2018
Balance at
start of the
year
Granted as
compensation Exercised
Other
changes
Balance at
end of the
year
Vested and
exercisable Unvested
Directors of Vital Metals Limited
David Macoboy
9,253,099
-
(Resigned 2 July 2018)
28,681,852 28,931,825
Mark Strizek
-
5,168,733
Andrew Simpson
-
5,168,733
Peter Cordin
Francis Harper
-
12,500,000
Other key management personnel of the Group
Ian Hobson
(resigned 17 November 2018)
-
-
-
-
- (7,175,654)(1)
-
-
-
6,250,000(2)
-
-
9,253,099
50,438,023
5,168,733
5,168,733
18,750,000
9,253,099
50,438,023
5,168,733
5,168,733
18,750,000
-
-
-
-
-
-
-
-
-
-
All vested options are exercisable at the end of the year.
(1) Expiry of options exercisable at $0.04 on or before 24 November 2017
(2)
Issued in connection with a capital raising fee and as approved by shareholders.
Loans to key management personnel
There were no loans to key management personnel during the year (2017: nil).
Other transactions with key management personnel
There were no transactions with key management personnel during the year other than salaries and wages as disclosed in the remuneration
report.
Voting and comments made at the Company's 2016 Annual General Meeting ('AGM')
At the 2017 AGM, 98% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2017.
The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
End of audited Remuneration Report
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Vital Metals Limited
DIRECTORS’ MEETINGS
During the year the Company held 8 meetings of directors. The attendance of directors at meetings of the board were:
David Macoboy
Mark Strizek
Andrew Simpson
Peter Cordin
Francis Harper (appointed May 2017)
Notes
A – Number of meetings attended.
Directors Meetings
B
A
8
8
8
8
8
8
8
8
8
8
Audit Committee Meetings
A
1
*
1
1
*
B
1
*
1
1
*
B – Number of meetings held during the time the director held office during the year.
* – Not a member of the relevant committee.
SHARES UNDER OPTION
At the date of this report there are 263,849,101 unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Movements of share options during the year:
Issued, exercisable at 1.2 cents, on or before 24 November 2019
Issued, exercisable at 1.0 cents on or before 17 November 2021
Expired, exercisable at 4.0 cents, on or before 24 November 2017
Number of options
186,937,742
28,931,825
25,000,000
(9,687,133)
Total number of options outstanding as at 30 June 2018
231,182,434
Movements of share options since 30 June 2018
Issued, exercisable at 1.5 cents on or before 19 July 2022
Total number of options outstanding as date of this report
The balance is comprised of the following:
Date options issued
7 Dec 2016
12 May 2017
12 May 2017
12 May 2017
24 Nov 2017
24 Nov 2017
19 July 2018
3 Sept 2018
Expiry date
25 Nov 2018
31 Dec 2018
30 Apr 2021
30 Apr 2021
17 Nov 2021
24 Nov 2019
19 July 2022
19 July 2022
Total number of options outstanding at the date of this report
Exercise price (cents)
2.7
1.625
2
2.3
1.0
1.2
1.5
1.5
32,666,667
263,849,101
Number of options
14,096,763
86,153,846
50,000,000
27,000,000
25,000,000
28,931,825
30,000,000
2,666,667
263,849,101
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of
any other body corporate.
INSURANCE OF DIRECTORS AND OFFICERS
The Company has entered into an agreement to indemnify all directors and the company secretary against any liability arising from a claim
brought by a third party against the Company. The agreement provides for the Company to pay all damages and costs which may be
awarded against the officer or director.
During the period the Company has paid an insurance premium in respect of a Directors’ and Officers’ Liability Insurance Contract. The
insurance premium relates to liabilities that may arise from an Officer’s position, with the exception of conduct involving a wilful breach
of duty or improper use of information or position to gain personal advantage.
The officers covered by the insurance policies are the Directors and the Company Secretary. The contract of insurance prohibits the
disclosure of the nature of the liabilities and the amount of premium.
LEGAL PROCEEDINGS
The company was not a party to any legal proceedings during the year.
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Directors' Report continued
Vital Metals Limited
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the
Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
NON-AUDIT SERVICES
No non-audit services were provided by BDO, the Company’s auditor, during the financial year.
The Group has not provided any indemnity to the Auditors.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 23.
Signed in accordance with a resolution of the directors.
Francis Harper
Chairman
Perth, 28 September 2018
22
For personal use only
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF VITAL METALS LIMITED
As lead auditor of Vital Metals Limited for the year ended 30 June 2018, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Vital Metals Limited and the entities it controlled during the period.
Jarrad Prue
Director
BDO Audit (WA) Pty Ltd
Perth, 28 September 2018
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
For personal use only Vital Metals Limited
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
YEAR ENDED 30 JUNE 2018
Notes
Consolidated
REVENUE
Sundry income
Total income
EXPENDITURE
Exploration and evaluation expenditure
Administration expenses
Total expenses
RESULTS FROM OPERATING ACTIVITIES
Finance income
Finance expense
Net finance expense
LOSS BEFORE INCOME TAX
INCOME TAX BENEFIT / (EXPENSE)
2018
$
10,742
10,742
2,155,072
938,498
3,093,570
2017
$
2,727
2,727
3,622,109
1,089,499
4,711,608
(3,082,828)
(4,708,881)
13,721
(184,323)
(170,602)
12,050
(264,595)
(252,545)
(3,253,430)
(4,961,426)
-
-
5
4
6
LOSS FOR THE YEAR ATTRIBUTABLE TO OWNERS OF VITAL METALS LTD
(3,253,430)
(4,961,426)
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Other comprehensive income/(loss) for the year, net of tax
74,870
74,870
(8,925)
(8,925)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO OWNERS
OF VITAL METALS LTD
(3,178,560)
(4,970,351)
Basic and diluted loss per share for loss attributable to the ordinary equity
holders of the Company (cents per share)
24
(0.21)
(0.82)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the Consolidated
Financial Statements.
24
For personal use only
Consolidated Statement of Financial Position
Vital Metals Limited
AT 30 JUNE 2018
Notes
Consolidated
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Assets held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Exploration and evaluation expenditure
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Borrowings
Liabilities held for sale
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Non-current Borrowings
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed Equity
Reserves
Accumulated losses
TOTAL EQUITY
7
9
8
10
11
9
11
12
13
2018
$
3,219,228
166,281
8,484,271
11,869,780
19,660
-
19,660
2017
$
2,674,830
69,496
-
2,744,326
23,804
7,588,322
7,612,126
11,889,440
10,356,452
558,075
37,039
1,367,126
400,000
2,362,240
-
-
-
1,396,661
43,778
-
-
1,440,439
1,308,223
400,000
1,708,223
2,362,240
3,148,662
9,527,200
7,207,790
52,845,649
2,666,193
(45,984,642)
9,527,200
47,810,512
2,128,490
(42,731,212)
7,207,790
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated Statements.
25
For personal use only
Consolidated Statement of Changes in Equity
Vital Metals Limited
YEAR ENDED 30 JUNE 2018
Consolidated
Notes
Contributed
Equity
$
Share-Based
Payment
Reserve
$
Convertible
Note
Reserve
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
$
Total
$
BALANCE AT 1 JULY 2016
41,344,085
757,110
133,901
397,292
(37,769,786)
(4,862,602)
Loss for the year
OTHER COMPREHENSIVE INCOME/(LOSS)
Exchange differences on translation of
foreign operations
TOTAL COMPREHENSIVE INCOME/(LOSS)
FOR THE YEAR
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Issue of Shares
Share issue transaction costs
Convertible note issued
Options issued during the year
-
-
-
-
-
-
-
-
-
-
(4,961,426)
(4,961,426)
(8,925)
-
(8,925)
(8,925)
(4,961,426)
(4,970,351)
13
13
25
7,303,270
(836,843)
-
-
-
-
-
749,571
-
-
99,541
-
-
-
-
-
-
-
7,303,270
(836,843)
99,541
749,571
BALANCE AT 30 JUNE 2017
47,810,512
1,506,681
233,442
388,367
(42,731,212)
7,207,790
Loss for the year
OTHER COMPREHENSIVE INCOME/(LOSS)
Exchange differences on translation of
foreign operations
TOTAL COMPREHENSIVE INCOME/(LOSS)
FOR THE YEAR
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Issue of Shares
Share issue transaction costs
Options issued during the year
-
-
-
-
-
-
13
13
25
5,787,709
(752,572)
-
-
-
462,832
-
-
-
-
-
-
-
(3,253,430)
(3,253,430)
74,871
-
74,871
74,871
(3,253,430)
(3,178,559)
-
-
-
-
-
-
5,787,709
(752,572)
462,832
BALANCE AT 30 JUNE 2018
52,845,649
1,969,513
233,442
463,238
(45,984,642)
9,527,200
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial Statements.
26
For personal use only
Consolidated Statement of Cash Flows
Vital Metals Limited
YEAR ENDED 30 JUNE 2018
Notes
Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Payments for exploration and evaluation costs
Payments to suppliers and employees
Interest received
Other receipts
NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration expenditure
NET CASH INFLOW / (OUTFLOW) FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid
Repayment of loan
Proceeds from issue of options
Proceeds from issue of shares
Payment of capital raising costs
NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
23
7
2018
$
(3,365,123)
(811,829)
13,592
-
(4,163,360)
2017
$
(2,455,891)
(674,708)
12,050
2,727
(3,115,822)
(680,421)
(680,421)
(570,905)
(570,905)
-
-
-
5,787,609
(373,049)
5,414,560
571,779
2,674,830
(27,381)
3,219,228
(256,831)
(1,000,000)
2,500
6,663,271
(435,751)
4,973,189
1,286,462
1,388,368
-
2,674,830
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial Statements.
27
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting
of Vital Metals Limited and its subsidiaries. The financial statements are presented in Australian dollars. Vital Metals Limited is a company
limited by shares, domiciled and incorporated in Australia. The financial statements were authorised for issue by the directors on 26
September 2017. The Directors have the power to amend and reissue the financial statements.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board and the Corporations Act 2001. Vital Metals Limited is a for-profit entity for the
purpose of preparing the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the Vital Metals Limited Group also comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
(ii) New accounting standards and interpretations
New, revised or amended Accounting Standards and Interpretations adopted by the Group
A number of new or amended standards became applicable for the current reporting period. The adoption of these Accounting standards
however, did not have any significant impact on the financial performance or position of the Group. Any new, revised and amending
Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Standards issued but not yet effective
A number of new standards, amendment of standards and interpretations have recently been issued but are not yet effective and have not
been adopted by the Group as at the financial reporting date.
The Group has reviewed these standards and interpretations, and with the exception of the items listed below for which the final impact is
yet to be determined, none of the new or amended standards will significantly affect the Group’s accounting policies, financial position or
performance.
Summary
Application date of standard *
1 January 2018
Application date
for Group *
1 July 2018
1 January 2018
1 July 2018
Reference
and title
AASB 9
Financial Instruments
AASB 15
Revenue from Contracts with
Customers
AASB 9 (December 2014) is a
new Principal standard which
replaces AASB 139. This new
Principal version supersedes
AASB 9 issued in December
2009 (as amended) and AASB 9
(issued in December 2010) and
includes a model for
classification and measurement, a
single, forward-looking ‘expected
loss’ impairment model and a
substantially-reformed approach
to hedge accounting.
AASB 15 provides a single,
principles-based five-step model
to be applied to all contracts with
customers. Guidance is provided
on topics such as the point at
which revenue is recognised,
accounting for variable
consideration, costs of fulfilling
and obtaining a contract and
various related matters. New
disclosures regarding revenue are
also introduced.
Based on an initial impact
assessment, the new standard is
28
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reference
and title
AASB 16
Leases
Summary
Application date of standard *
Application date
for Group *
1 January 2019
1 July 2019
not expected to significantly
impact revenue recognition.
This Standard introduces a single
lessee accounting model and
requires a lessee to recognise
assets and liabilities for all leases
with a term of more than 12
months, unless the underlying
asset is of low value. A lessee is
required to recognise a right-of-
use asset representing its right to
use the underlying leased asset
and a lease liability representing
its obligation to make lease
payments.
* Designates the beginning of the applicable annual reporting period
(iii) Early adoption of standards
The Group has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2015.
(iv) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale
financial assets, which have been measured at fair value.
(b) Going Concern
The financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activity
and the realisation of assets and the settlement of liabilities in the normal course of business.
(c) Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Vital Metals Limited (“Company” or
“parent entity”) as at 30 June 2018 and the results of all subsidiaries for the year then ended. Vital Metals Ltd and its subsidiaries together
are referred to in these financial statements as the Group or the consolidated entity.
Subsidiaries are all entities (including special purpose entities) over which the Group has control. The Group controls an entity when it is
exposed to, or has the right to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that
control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the Group.
(d) 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 full Board of Directors.
The Group has identified two reportable segments being exploration activities undertaken in Australia and Burkina Faso. These segments
include the activities associated with the determination and assessment of the existence of commercially economic reserves, from the
Group’s mineral assets in these geographic locations.
Segment performance is evaluated based on the operating profit or loss or cash flows and is measured in accordance with the Group’s
accounting policies.
(e) Foreign currency translation
(i) Functional and presentation currency
The consolidated financial statements are presented in Australian dollars, which is Vital Metals Limited's functional and presentation
29
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(e) Foreign currency translation
(i) Functional and presentation currency (continued)
currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates
of monetary assets and liabilities, denominated in foreign currencies, are recognised in profit or loss.
(iii) Foreign operations
The assets and liabilities of foreign operations are translated to the functional currency as exchange rates at the reporting date. The income
and expenses of foreign operations are translated to Australian dollars at exchange rates at the dates of the transactions.
Foreign currency difference are recognised in other comprehensive income, and presented in the foreign currency translation reserve in
equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities are recognised in other
comprehensive income. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor
likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net
investment in a foreign operation and are recognised in other comprehensive income, and are presented in the translation reserve in equity.
When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are
reclassified to profit or loss, as part of the gain or loss on sale.
(f) Finance income
Finance income comprises interest income earned on funds invested in bank accounts and call deposits. Interest is recognised on an accruals
basis in the statement of profit or loss and other comprehensive income, using the effective interest method.
(g) Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income
tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused
tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period
in the countries where the Company’s subsidiaries operate and generate taxable income. Management periodically evaluates positions
taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments
in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that
the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Tax consolidation
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated Group with effect from 3 October 2005
and are therefore taxed as a single entity from that date. The head entity within the tax-consolidated group is Vital Metals Limited.
The controlled entities have been fully compensated for all deferred tax assets and liabilities transferred to Vital Metals Limited on the date
of forming a tax consolidated group. The entities have also entered into a tax sharing and compensation agreement where the wholly owned
entities reimburse Vital Metals Limited for any current income tax payable or receivable by Vital Metals Limited in respect of their
activities. The group has decided to use the “separate taxpayer within group” approach in accordance with UIG 1052 to account for the
current and deferred tax amounts amongst the entities within the consolidated group.
30
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(h) Leases
Leases where a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating
leases (note 18). Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a
straight-line basis over the period of the lease.
(i) Impairment of assets
Assets, except for deferred tax assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an
impairment are reviewed for possible reversal of the impairment at each reporting date.
(j) Financial assets
Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets are
recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to
receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the
financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate
asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the
Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
The Group has the following non-derivative financial assets: loans and receivables and financial assets available-for-sale.
Financial assets available-for-sale
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in
any of the previous categories of financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein are
recognised in other comprehensive income and presented within equity in the fair value reserve in equity. When an investment is
derecognised, the cumulative gain or loss in equity is transferred to profit or loss.
Available-for-sale financial assets comprise equity securities.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are
recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are
measured at amortised cost using the effective interest method, less any impairment losses.
Loans and receivables comprise cash and cash equivalents and other receivables. Cash and cash equivalents comprise cash balances and
call deposits with original maturities of three months or less.
Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial
liabilities are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The
Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. Financial assets and
liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right
to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
The Group has the following non-derivative financial liabilities: trade and other payables.
Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition these financial liabilities are measured at amortised cost using the effective interest rate method.
(k) Property, plant and equipment
All property, plant and equipment is stated at historical cost less depreciation and impairment. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged
to the statement of profit or loss and other comprehensive income during the reporting period in which they are incurred.
31
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(k) Property, plant and equipment (continued)
Depreciation of property, plant and equipment is calculated using the straight-line method to allocate their cost, net of their residual values,
over their estimated useful lives. The rate of depreciation for buildings is 10% and for plant and equipment and office equipment the rates
vary between 5% and 33.3% per annum.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is
written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note
1(i)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of profit
or loss and other comprehensive income.
(l) Exploration and evaluation expenditure
The Group applies the most appropriate accounting policy for exploration and evaluation expenditure incurred for each area of interest.
From 1 July 2017, the Group has changed its accounting policy for exploration and evaluation expenditure incurred on the Burkina Faso
area of interest from capitalising to expensing. This change in accounting policy has been applied retrospectively from the earliest presented
reporting period. The result of this retrospective application is no change to the Statement of Profit or Loss and Other Comprehensive
Income and no change to the Statement of Financial Position for the comparative periods presented. This change in accounting policy for
the Burkina Faso area of interest has been made as the directors believe it provides more relevant and reliable information for the users of
the financial report.
Exploration and evaluation expenditure for the Australian area of interest continue to be capitalised as follows:
Exploration for and evaluation of mineral resources is the search for mineral resources after the entity has obtained legal rights to explore
in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource.
Accordingly, exploration and evaluation expenditures are those expenditures incurred by the Company in connection with the exploration
for and evaluation of minerals resources before the technical feasibility and commercial viability of extracting mineral resources are
demonstrable.
Accounting for exploration and evaluation expenditures is assessed separately for each ‘area of interest’. An ‘area of interest’ is an
individual geological area which is considered to constitute a favourable environment for the presence of a mineral deposit or has been
proved to contain such a deposit.
Expenditure incurred on activities that precede exploration and evaluation of mineral resources, including all expenditure incurred prior to
securing legal rights to explore an area, is expensed as incurred. For each area of interest the expenditure is recognised as an exploration
and evaluation asset where the following conditions are satisfied:
a) The rights to tenure of the area of interest are current; and
b) At least one of the following conditions is also met:
i. The expenditure is expected to be recouped through successful development and commercial exploitation of an area of interest, or
alternatively by its sale; and
ii. Exploration and evaluation activities in the area of interest have not, at reporting date, reached a stage which permits a reasonable
assessment of the existence or otherwise of ‘economically recoverable reserves’ and active and significant operations in, or in
relation to, the area of interest are continuing. Economically recoverable reserves are the estimated quantity of product in an area
of interest that can be expected to be profitably extracted, processed and sold under current and foreseeable conditions.
Exploration and evaluation assets include:
Acquisition of rights to explore;
Topographical, geological, geochemical and geophysical studies;
Exploratory drilling, trenching, and sampling; and
Activities in relation to evaluating the technical feasibility and commercial viability of extracting the mineral resource.
General and administrative costs are allocated to, and included in, the cost of exploration and evaluation assets only to the extent that those
costs can be related directly to the operational activities in the area of interest to which the exploration and evaluation assets relate. In all
other instances, these costs are expensed as incurred.
Government grants received in relation to exploration and evaluation expenditure are recorded as a deduction in the carrying value of the
asset.
Exploration and evaluation expenditure is not depreciated as it is not yet ready for use.
Impairment testing of exploration and evaluation expenditure
Exploration and evaluation expenditure is assessed for impairment if sufficient data exists to determine technical feasibility and commercial
viability or facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
32
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Notes to the Consolidated Financial Statements continued
Vital Metals Limited
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(l) Exploration and evaluation expenditure (continued)
Exploration and evaluation expenditure is tested for impairment when any of the following facts and circumstances exist:
The term of exploration licence in the specific area of interest has expired during the reporting period or will expire in the near future,
and is not expected to be renewed;
Substantive expenditure on further exploration for and evaluation of mineral resources in the specific area are not budgeted nor planned;
Exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities
of mineral resources and the decision was made to discontinue such activities in the specified area; or
Sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the
exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.
Where a potential impairment is indicated, an assessment is performed for each cash generating unit that is no larger than the area of
interest. The Group performs impairment testing in accordance with accounting policy note 1(i).
(m) Employee benefits
(i) Annual leave and long service leave
Liabilities for annual leave and long service leave expected to be settled within 12 months of the reporting date are recognised in other
payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities
are settled.
(ii) Share-based payments
The Group provides benefits to 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’) - refer to note 27.
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 is determined by an internal valuation using an appropriate option pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting
date’).
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 number of options that, in the opinion of the directors of the Group, will ultimately vest. This
opinion is formed based on the best available information at reporting date. 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.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised
for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement
award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award.
(n) Provisions
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. 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.
Site Restoration
In accordance with the Group’s environmental policy and applicable legal requirements, a provision for site restoration is recognised in
respect of the estimated cost of rehabilitation, decommissioning and restoration of the area disturbed during exploration activities up to
reporting date, but not yet rehabilitated. Such activities include dismantling infrastructure, removal and treatment of waste material, and
land rehabilitation, including re-contouring, topsoiling and revegetation of the disturbed area.
The amount recognised as a liability represents the estimated future costs discounted to present value at a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a
finance cost in the income statement.
A corresponding asset is recognised in Property, Plant and Equipment only to the extent that it is probable that future economic benefits
associated with the rehabilitation, decommissioning and restoration expenditure will flow to the entity.
Costs arising from unforeseen circumstances, such as contamination from discharge of a toxic material, are recognised as a provision with
a corresponding expense recognised in the income statement when an obligation, which is probable and capable of reliable estimation,
arises.
At each reporting date the site restoration provision is re-measured to reflect any changes in discount rates and timing or amounts of the
costs to be incurred. Such changes in the estimated liability are accounted for prospectively from the date of the change and are added to,
or deducted from, the related asset where it is probable that future economic benefits will flow to the entity.
33
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Notes to the Consolidated Financial Statements continued
Vital Metals Limited
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(o) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the
period of the borrowings using the effective interest method. Fees paid on the establishment of the loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down.
The fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non-convertible
bond. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the bonds. The
remainder of the proceeds is allocated to the conversion option and recognised in shareholders’ equity, net of tax effects.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and
the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or
finance costs.
(p) 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.
Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of
the acquisition as part of the purchase consideration.
(q) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders of the company by the weighted average
number of ordinary shares outstanding during the financial year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income
tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(r) Goods and Services Tax (GST) and Value Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or
payable to, the taxation authority is included with other receivables or payables in the Statement of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are
recoverable from, or payable to the respective taxation authorities, are presented as operating cash flows.
(s) Amendments to AASBs and the new Interpretation that are mandatorily effective for the current reporting period
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the
AASB) that are relevant to their operations and effective for the current year.
New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the Consolidated
Entity do not have any material impact on the disclosures or the amounts recognised in the Company’s financial statements.
(t) Critical accounting estimates and judgements
The preparation of these financial statements requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements are:
Share-based payment transactions
34
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(t) Critical accounting estimates and judgements (continued)
The fair value of employee share options is measured using a binomial option valuation model. Measurement inputs include share price on
measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes
expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and
general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market
performance conditions attached to the transactions are not taken into account in determining fair value.
Compound financial instruments
Compound financial instruments issued by the Group comprise convertible facility that can be converted to ordinary shares at the option
of the holder, when the number of shares to be issued is fixed. The liability component of a compound financial instrument is recognised
initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially
at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component.
Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying
amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the
effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition.
Interest related to the financial liability is recognised in the statement of profit or loss and other comprehensive income. On conversion the
financial liability is reclassified to equity and no gain or loss is recognised.
(u) Held for Sale assets/liabilities
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered primarily through a sale
transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying
amount and fir value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets
and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from
this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A
gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any
cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset
is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for
sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the
other assets in the Statement of Financial Position. The liabilities of a disposal group classified as held for sale are presented separately
from other liabilities in the Statement of Financial Position.
In May 2018, the Company announced that it had entered into a binding terms sheet with Tungsten Mining NL to dispose of the 100%
interest in the Watershed Tungsten Project located in north Queensland for a cash consideration of $15 million. Hence, the project has been
classified as Assets and Liabilities Held for Sale in the current financial year.
35
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Notes to the Consolidated Financial Statements continued
Vital Metals Limited
30 JUNE 2018
2.
FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk and
liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the financial performance of the Group.
Risk management is carried out by the full Board of Directors as the Group believes that it is crucial for all board members to be involved
in this process. The Managing Director, with the assistance of senior management as required, has responsibility for identifying, assessing,
treating and monitoring risks and reporting to the board on risk management.
(a) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the
Consolidated Entity’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters, while optimising the return.
The Group is exposed to fluctuations in foreign exchange rates of the CFA Franc in relation to its activities in Burkina Faso. The group
maintains minimal working capital in Burkina Faso and only transfers cash funds as required, as such the Statement of Financial Position
exposure at any point in time is not significant. Foreign exchange risk will also arise from future commercial transactions and recognised
assets and liabilities denominated in a currency that is not the entity’s functional currency and net investments in foreign operations.
The Group is also exposed to fluctuations in interest rates in relation to its cash deposits and commodity prices in relation to the carrying
value of its exploration and evaluation assets. The Group monitors all of the above-mentioned risks and takes action as required.
The Group’s exposure to interest rate risk, and the effective weighted average interest rate for each class of financial asset and financial
liability is set out below.
Weighted
Average
Interest Rate
%
Variable
Interest Rate
$
Fixed Interest
Rate
$
Non-Interest
Bearing
$
Total
$
2018
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Borrowings
Net financial assets/(liabilities)
2017
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Borrowings
0.8
9.05
0.8
9.05
3,219,228
-
3,219,228
1,367,066
1,367,066
1,852,162
2,674,830
-
2,674,830
-
1,308,223
1,308,223
1,366,607
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
166,281
166,281
558,075
-
558,075
(391,794)
-
69,495
69,495
1,396,661
-
-
(1,327,166)
3,219,228
166,281
3,385,509
558,075
1,367,066
1,925,142
1,460,368
2,674,830
69,495
2,744,325
1,396,661
1,308,223
2,704,884
39,441
At 30 June 2018, if interest rates had changed by -/+ 25 basis points from the weighted average rate for the period with all other variables
held constant, post-tax loss for the Group would have been $8,048 higher/lower (2017: -/+ 25 basis points, $6,685 higher/lower) as a result
of lower/higher interest income from cash and cash equivalents.
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations.
The Group’s exposure to credit risk is low and limited to cash and cash equivalents and other receivables. The majority of cash and cash
equivalents $3,219,228 at 30 June 2018 ($2,674,830 at 30 June 2017) are held with financial institutions that have a AA- credit rating
(Standard & Poor’s). The majority of the receivables relate to amounts owing by project partners.
The maximum exposures to credit risk are the amounts as shown in the Statement of Financial Position.
36
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
30 JUNE 2018
FINANCIAL RISK MANAGEMENT (cont’d)
2.
(c) Liquidity risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable
securities are available to meet the current and future commitments of the Group. Due to the nature of the Group’s activities, being mineral
exploration, the Group has limited access to credit facilities, with the primary source of funding being equity raisings. The Board of
Directors constantly monitor the state of equity markets in conjunction with the Group’s current and future funding requirements, with a
view to initiating appropriate capital raisings as required.
The financial liabilities of the Group are confined to borrowings (being a convertible loan facility) and trade and other payables as disclosed
in the statement of financial position. All trade and other payables are due within 12 months of the reporting date.
The convertible loan facility is due for repayment on 31 December 2018. It is the Directors’ view that the terms of this convertible loan
facility will likely be re-negotiated and extended. An alternative would be for the financier to exercise their 86.1 million share options at
an exercise price of 1.625 cents and extinguish the debt.
The following are the contractual maturities of trade and other payables:
Carrying
Amount
$
Contractual
Cash Flow
$
6 Months or
Less
$
6 – 12 Months
$
1 – 2 Years
$
2018
Non-derivative financial liabilities
Trade and other payables
Borrowings
2017
Non-derivative financial liabilities
Trade and other payables
Borrowings
558,075
1,367,066
1,925,142
558,075
1,367,066
1,925,142
558,075
1,367,066
1,925,142
1,396,661
1,308,223
2,704,884
1,396,661
1,308,223
2,704,884
1,396,661
-
1,396,661
-
-
-
-
-
-
-
-
-
-
1,308,223
1,308,223
(d) Accounting classification of Fair Values
The carrying amounts of all financial assets and liabilities approximate their respective net fair values at reporting date.
Fair value estimation
Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further
information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
Trade and other receivables
Fair value, which is determined for disclosure purposes, is estimated as the present value of future cash flows, discounted at the market
rate of interest at the reporting date.
Trade and other payables
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows,
discounted at the market rate of interest at the reporting date.
Borrowings
Fair value, which is determined for disclosure purposes, at the time of for establishing the financial liability and based on the present value
of the remaining cash flows, discounted at the assessed weighted average cost of capital.
37
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
30 JUNE 2018
SEGMENT INFORMATION
3.
The consolidated entity has two reportable segments being mineral exploration and prospecting for minerals in Australia and Burkina Faso.
Further segment reporting information is provided in Note 1(d).
Australia
Burkina Faso
2018
$
2017
$
2018
$
2017
$
Segment income
10,742
2,727
-
-
Consolidated Total
2017
2018
$
$
10,742
2,727
13,721
24,463
12,040
14,767
Reconciliation of segment income to total
revenue before tax:
Interest revenue
Total revenue
Segment loss
Reconciliation of segment loss to net loss
before tax:
Depreciation
Personell expenses
Finance expense
Other corporate and administration
Net loss before tax
(1,681,044)
-
(463,286)
(3,675,059)
(2,130,609)
(3,675,059)
(4,144)
(457,445)
(184,323)
(476,908)
(3,253,430)
(7,522)
(676,293)
(264,595)
(337,958)
(4,961,426)
Segment operating assets
3,331,532
7,606,733
60,000
43,830
3,391,532
7,650,563
Reconciliation of segment operating assets
to total assets:
Cash and cash equivalents (head office)
Receivables (head office)
Property, plant & equipment (head office)
Total assets
3,177,288
148,303
6,848,221
13,565,343
2,640,294
60,201
5,394
10,356,452
Segment operating liabilties
-
463,062
1,684,454
1,241,175
1,684,454
1,704,237
Reconciliation of segment operating
liabilities to total liabilities:
Payables and provisions (head office)
Borrowings (head office)
Total liabilities
4.
NET FINANCIAL INCOME
Interest income
Interest expense
986,563
1,367,126
4,038,143
136,202
1,308,223
3,148,662
Consolidated
2018
$
13,721
184,323
184,323
2017
$
12,050
264,595
264,595
Net finance income/(expense)
(170,603)
(252,545)
38
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
Consolidated
2018
$
2017
$
-
83,309
-
2,919
1,225
-
4,144
417,401
40,044
-
-
457,445
-
-
-
-
-
(3,248,340)
(974,502)
35,065
4,444,696
-
-
150,594
-
-
(6,005)
(3,649,847)
-
35,038
426,185
3,035
4,846
2,173
(2,532)
7,522
362,351
30,550
343,478
(158,044)
578,335
-
-
-
-
-
(4,961,426)
(1,364,392)
116,211
-
1,248,181
-
-
-
-
-
-
EXPENSES
5.
The following significant expense items not separately highlighted in the
Statement of Profit or Loss and Other Comprehensive Income are
relevant in explaining the financial performance:
Operating lease expense
Share-based payments – consulting / director fees (refer also note 24)
Depreciation of non-current assets in administration expenses
Buildings
Plant and equipment
Furniture and equipment
Less transfer to capitalised exploration and evaluation expenditure
Total depreciation
Personnel expenses
Wages and salaries
Contributions to defined contribution superannuation funds
Equity settled share based payment transactions
Less transfer to capitalised exploration and evaluation expenditure
Total personnel expenses
6.
INCOME TAX
(a) The major components of income tax are:
Statement of Profit or Loss and Other Comprehensive Income
Current income tax
Current income tax benefit
Deferred income tax
Relating to origination and reversal of temporary differences
Unused tax losses not recognised as deferred tax asset
Tax rebate from R&D activities
Income tax benefit reported in the Statement of Profit or Loss and Other
Comprehensive Income
The aggregate amount of income tax attributable to the financial period differs
from the amount calculated on the operating loss. The differences are:
Accounting loss
Prima facie tax benefit at the Australian tax rate of 30% (2017: 27.5%)
Add tax effect of:
Non-deductible items
Sale of subsidiary
Tax losses not brought to account
R&D expenditure used for tax offset
Burkina Faso operations not brought to account
Less tax effect of:
R&D tax offset
Accrued income – R&D
Capital raising costs
Utilisation of tax losses not brought to account
Income tax benefit
39
For personal use only
Vital Metals Limited
Notes to the Consolidated Financial Statements continued
6.
INCOME TAX (CONTINUED)
(b) Deferred income tax
Statement of Financial Position
Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Property, plant and equipment – depreciation
Exploration expenses
Set-off against tax assets
Deferred tax assets
Tax value of losses carried forward
Set-off of deferred tax liability
Accrued expenses
Provisions
Other prepayments/capital expenditure
Non-recognition of deferred tax assets
Consolidated
2018
$
2017
$
5,732
2,508,572
(2,514,304)
-
7,808,597
(2,514,304)
21,000
133,980
163,434
(5,612,707)
-
6,303
1,237,961
(1,244,264)
-
9,385,527
(1,244,265)
12,907
122,039
131,879
(8,408,087)
-
(c) Tax losses
At 30 June 2018, the Consolidated Entity has $26,028,658 (2017: $32,129,188) of taxable losses that are available for offset against future
taxable profits of the consolidated entity, subject to the loss recoupment requirements in the Income Tax Assessment Act 1997. During the
year ended 30 June 2018, the Consolidated Enity had taxable income of $8,100,530 which comprise mainly the capital gains from the sale
of a subsidiary company, NQT. Albeit the sale was completed in 2019 income year, the terms of the agreement were effective prior to 30
June 2018 for the purpose of Capital Gains Tax. Carried forward losses of $8,100,530 were applied against the taxable income on the basis
that the Consolidated Entity satisfied the loss recoupment requirements in the Income Tax Assessment Act 1997.
No deferred tax asset has been recognised in the Statement of Financial Position in respect of the amount of these losses, as it is not
presently probable future taxable profits will be available against which the Company can utilise the benefit.
Unrecognised deferred tax assets
Tax losses – revenue (at 30% for 2018 27.5% for 2017)
7,808,597
9,385,527
(d) Tax consolidation legislation
Vital Metals Ltd and its controlled entities implemented the tax consolidations legislation as of 4 October 2005. The Australian Tax Office
was notified of this decision on lodgement of the 2006 income tax return.
Upon the completions of the sale of subsidiary post 30 June 2018, North Queensland Tungsten has exited the consolidated group as at 9
August 2018. Vital Metals Ltd remains the head entity of the consolidated group for income tax purposes.
(e) Corporate Tax Rate
In 2018, the government enacted a change in the eligibility to access the lower income tax rate for small business entities of 27.5%. Vital
Metals Ltd does not satisfy these requirements and is therefore subject to the corporate tax rate of 30%.
7.
CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term deposits
Cash and cash equivalents as shown in the statement of financial position and
the statement of cash flows
Refer to note 2 for the Group’s exposure to interest rate risk and credit risk.
3,210,478
8,750
2,656,080
18,750
3,219,228
2,674,830
40
For personal use only
Vital Metals Limited
Notes to the Consolidated Financial Statements continued
8.
NON-CURRENT ASSETS – EXPLORATION & EVALUATION EXPENDITURE
Consolidated
2018
$
2017
$
Exploration and evaluation expenditure
Costs carried forward in respect of areas of interest in the exploration and
evaluation phases:
Opening net book amount
Exploration expenditure
Exploration expenditure – expensed
R&D tax incentive claim
Transfer to Assets held for Sale (see note 9)
Closing net book amount
7,588,322
4,261,072
(3,365,123)
-
(8,484,271)
-
9
The closing balances relate to the following areas of interest:
Watershed Tungsten Project, Queensland
Nahouri Gold Project, Burkina Faso
Bouli Project, Niger
Aue Cobalt Project, Germany
-
-
-
-
-
7,017,417
4,297,556
(3,622,109)
(104,542)
7,588,322
7,588,322
-
-
-
7,588,322
The recoverability of the carrying amounts of exploration and evaluation assets is dependent on the successful development and commercial
exploitation or sale of the respective area of interest.
The Group undertakes at least on an annual basis a comprehensive review for indicators of impairment of these assets. There is significant
estimation in determining the inputs and assumptions used in determining the recoverable amounts. The key areas requiring estimation
and assumptions may include: recent drill results and reserves and resource estimates; fundamentals and economic factors such as
commodity prices; exchange rates and current and anticipated operating costs in the industry; and the Group's market capitalisation
compared to its net assets and independent valuations that may be available.
Watershed Tungsten Project
As at balance date, the Group holds 100% of the Watershed Project. Refer to Note 9.
Nahouri Gold Project
The Nahouri Gold Project Group is located in southern Burkina Faso, West Africa. On 18 July 2013 the Group entered into an agreement
to acquire the 30% minority interest in two permits included in the Nahouri Gold Project from its joint venture partner, Ampella Mining,
in exchange for a royalty. The Group owns 100% of all permits that comprise the Nahouri Gold Project. The exploration and evaluation
expenditure is expensed as incurred.
41
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
9.
ASSETS/LIABILITIES HELD FOR SALE
Assets
Exploration capitalised
Liabilities
Site Restoration provision
Net assets held for sale
Consolidated
2018
$
8,484,271
8,484,271
(400,000)
(400,000)
8,084,271
2017
$
-
-
-
-
-
On 2 May 2018, the Company announced the signing of a binding term sheet to sell 100% interest of the Watershed Tungsten Project
(Watershed) to ASX-listed company Tungsten Mining NL (TGN). The agreed consideration for Watershed was for $15,000,000 cash.
The Watershed sale was completed subsequent to the end of the period, on 10 August 2018.
10. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
Trade creditors and accruals
Carrying value is considered to approximate fair value. Refer to note 2 for the
Group’s interest rate and liquidity risk.
Consolidated
2018
$
2017
$
558,075
1,396,661
11. NON-CURRENT LIABILITIES – BORROWINGS
Bank facility at amortised cost
1,367,126
1,308,223
The Group renewed the $3 million debt facility on 4 July 2016 to 30 June 2017. In accordance with the terms of the amended facility,
Macquarie was previously issued with 68,181,818 options with an exercise price of 4.4 cents which expired on 30 June 2017, which if
exercised would have extinguished the debt. Macquarie had the option to exercise all or part of the options during the term of the facility.
On 31st May 2017, the Group partly repaid the $3 million debt facility with Macquarie Bank Limited by $1 million cash and 48,000,000
shares in the Company to the value of $600,000 leaving a balance of $1.4 million. In accordance with the terms of the amended facility
Macquarie was issued with 86,153,846 options with an exercise price of 1.625 cents and expiring on 31 December 2018, which if exercised
will extinguish the debt. Macquarie has the option to exercise all or part of the options during the term of the facility. The loan facility is
repayable by 31 December 2018 with an interest rate of 7% over the bank bill swap rate. As a result of the amendment, an equity element
was recognised during the year for the revised conversion option of the loan. The debt component was fair valued first using the market
interest rate and the residual is recognised as equity (being the conversion option). The facility is secured by a general security over all of
the assets of Vital Metals Limited and its subsidiary, North Queensland Tungsten Pty Ltd. Total assets pledged as security as at 30 June
2018: $8,084,271. A gross revenue royalty of 1.5% on production from the Watershed Tungsten Project is payable to Macquarie Bank
Limited. An Amendment and Restated Royalty Deed for the Watershed Project has been executed, with Tungsten Mining NL assuming the
royalty obligation owing to Macquarie Bank. Subsequent to the end of the financial year, the Company has settled the remaining amount of
the facility in cash. An Amendment and Restated Royalty Deed for the Watershed Project has been executed, with Tungsten Mining NL
assuming the royalty obligation owing to Macquarie Bank.
Accounting standards require the separate recognition of the debt and equity components of the Convertible Loan Facility. At the date of
recognition of the new convertible note, the debt and equity components of the facility were separated according to their fair values. The
liability component is subsequently recorded at amortised cost. The liability for the 1.5% royalty has been assessed as being valued at nil at
both 4 July and balance date due to the early stage of the project and there is no present obligation to pay the royalty at balance date.
42
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
12. NON-CURRENT LIABILITIES – PROVISIONS
Site Restoration Provision
Opening balance
Transfer to Held for Sale Assets/Liabilities
Closing balance
13. CONTRIBUTED EQUITY
(a) Share capital
9
400,000
(400,000)
-
400,000
-
400,000
2018
2017
Notes
Number of
shares
$
Number of
shares
$
Ordinary shares fully paid
12(b), 12(d) 1,742,611,288
52,845,650
1,055,751,226
47,810,512
Total contributed equity
1,742,611,288
52,845,650
1,055,751,226
47,810,512
(b) Movements in ordinary share capital
Beginning of the financial year
Issued during the year:
-
-
-
-
-
-
-
-
-
-
-
Less: transaction costs
End of the financial year
Rights issue shortfall 7 July 2016
Placement 26 July 2016
Placement 17 August 2016
Placement 30 November 2016
Placement 27 March 2017
Placement 9 May 2017
Placement 12 May 2017
Placement 12 May 2017 (debt settlement)
Placement 25 September 2017
Placement 5 April 2018
Placement 26 June 2018
(c) Movements in options on issue
Beginning of the financial year
Issued during the year:
Exercisable at 4.2 cents on or before 26 Nov 2016
Exercisable at 2.7 cents on or before 25 Nov 2018
Exercisable at 1.625 cents on or before 31 Dec 2018
Exercisable at 2 cents on or before 30 April 2021
Exercisable at 2.3 cents on or before 30 April 2021
Exercisable at 1.2 cents and expiring 24 November 2019
Exercisable at 1.0 cents and expiring 17 November 2021
Expired/cancelled during the year:
Exercisable at 5.1 cents on or before 30 June 2017
Exercisable at 4.0 cents on or before 24 November 2017
End of the financial year
1,055,751,226
47,810,512
481,070,861
41,344,085
-
-
-
-
-
-
-
-
263,937,807
329,922,257
92,999,998
1,742,611,288
-
-
-
-
-
-
-
-
1,981,409
2,969,300
837,000
(752,572)
52,845,649
43,100,877
1,132,821
68,446,667
2,000,000
140,000,000
260,000,000
12,000,000
48,000,000
-
-
-
-
1,055,751,226
474,109
12,461
1,026,700
40,000
1,750,000
3,250,000
150,000
600,000
-
-
-
(836,843)
47,810,512
Number of options
2018
2017
186,937,742
91,083,640
-
-
-
-
-
28,931,825
25,000,000
(13,214,689)
14,096,763
86,153,846
50,000,000
27,000,000
-
-
-
(9,687,133)
231,182,434
(68,181,818)
-
186,937,742
(d) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number
of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is
entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have
a limited amount of authorised capital.
43
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
13.
CONTRIBUTED EQUITY (continued)
(e) Capital risk management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
developments of the business. The Board’s focus has been to raise sufficient funds through equity (via rights issues and placements) to
fund exploration and evaluation activities. There were no changes in the Group’s approach to capital management during the year. Neither
the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
Management also monitor capital through the gearing ratio (net debt/total capital). Current gearing ratios are considered acceptable. The
gearing ratio at 30 June 2018 is shown below:
Total borrowings
Less: cash and cash equivalents (Note 7)
Net debt
Total equity
Total capital
Gearing ratio
14. RESERVES
Consolidated
2018
$
1,367,126
(3,219,228)
(1,852,102)
9,527,200
7,675,098
2017
$
1,308,223
(2,674,830)
(1,366,607)
7,207,790
5,841,183
(24.13)%
(23.4)%
(i) Share based payment reserve
The share-based payments reserve is used to recognise the fair value of options issued. Refer to note 25 for details.
(ii) Convertible note reserve
The convertible note reserve is used to recognise the fair value of the equity component of the convertible loan facility as described in
Note 11.
(ii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve, as
described in note 1(e). The reserve is recognised in profit or loss when the net investment is disposed of.
15. DIVIDENDS
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
16. KEY MANAGEMENT PERSONNEL DISCLOSURES
Consolidated
Key management personnel compensation
Short-term benefits
Post-employment benefits
Share-based payments
2018
$
547,059
40,478
61,351
648,888
2017
$
377,328
25,537
380,479
783,444
Other disclosures regarding key management personnel are made in the remuneration report on pages 10 to 14.
44
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
17. REMUNERATION OF AUDITORS
Remuneration of the auditor of the parent entity for:
Audit and review of financial reports
No non-audit services were performed during 2018 or 2017.
18. COMMITMENTS
Consolidated
2018
$
2017
$
42,333
37,795
(a) Exploration commitments
The Group has certain minimum obligations in pursuance of the terms and conditions of tenement licences in the forthcoming year. Whilst
these obligations are capable of being varied from time to time, in order to maintain current rights of tenure to mining tenements, the Group
will be required to outlay amounts of approximately $265,000 (2017: $678,972). These obligations are expected to be fulfilled in the normal
course of operations.
Consolidated
2018
$
2017
$
-
-
-
-
-
22,786
-
22,786
(b) Lease commitments: Group as lessee
Operating leases (non-cancellable):
Minimum lease payments
within one year
later than one year but not later than five years
Aggregate lease expenditure contracted for at reporting date but not
recognised as liabilities
19. RELATED PARTY TRANSACTIONS
(a) Parent entity
The ultimate parent entity within the Group is Vital Metals Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in note 20.
(c) Key management personnel
Disclosures relating to key management personnel are set out in note 16.
(d) Loans to related parties
Vital Metals Ltd has provided unsecured, interest free loans to each of its wholly owned subsidiaries totalling $29,981,397 at 30 June 2018
(2017: $27,627,926). An impairment assessment is undertaken each financial year by examining the financial position of the subsidiary
and the market in which the subsidiary operates to determine whether there is objective evidence that the subsidiary is impaired. When
such objective evidence exists, the Company recognises an allowance for the impairment loss. The Company has recognised cumulative
impairment losses of $25,417,031 at 30 June 2018 (2017: $23,769,304).
20. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1(c):
Name
Country of Incorporation
Equity Holding(1)
Class of Shares
North Queensland Tungsten Pty Ltd
Ordinary
Ordinary
Vital Metals Burkina Sarl
(1) The proportion of ownership interest is equal to the proportion of voting power held.
Australia
Burkina Faso
2018
%
100
100
2017
%
100
100
45
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
21. CONTINGENCIES
A financial advisor fee totalling $330,000 payable to Argonaut Capital was contingent upon the successful sale of the Watershed Tungsten
Project. The outstanding amount was settled in full subsequent to the finalisation of the sale (refer to Note 22).
There were no other contingencies.
22. EVENTS OCCURRING AFTER THE REPORTING DATE
On 2 July 2018 the Company advised it will proceed with an agreement to earn 50% of the Bouli Gold Project in Niger through an earn-in
agreement with private Turkish company SUMMA.
On 10 August 2018 the Company advised it had completed the sale of the Watershed Tungsten Project in Queensland for $15 million, less
completion adjustments. Vital used a portion of the sale funds to repay $1.4 million to Macquarie, following which the Company is debt
free. The Company settled the contingent amount outstanding of $330,000 to Argonaut Capital for their services as financial advisor for
the sale.
Subsequent to the end of the financial year, an Amendment and Restated Royalty Deed for the Watershed Project has been executed, with
Tungsten Mining NL assuming the royalty obligation to Macquarie Bank.
Other than set out above there were no other significant events after the reporting date.
23. STATEMENT OF CASH FLOWS
Reconciliation of net loss after income tax to net cash outflow from
operating activities
Net loss for the year
Non-Cash Items
Depreciation of non-current assets
Non-cash finance expense on loan facility
Share based payments
Shares issued in lieu of Director Fees
Foreign exchange differences
Other Adjustments
Borrowing costs included as a cash flow from financing activities
Interest paid included as a cash flow from financing activities
Loss/(Profit) on sale of non-current assets
Change in operating assets and liabilities, net of effects from purchase of
controlled entities
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
(Decrease)/increase in provisions
Net cash outflow from operating activities
Consolidated
2018
$
2017
$
(3,253,430)
(4,961,426)
4,144
-
83,309
-
(27,381)
-
-
-
7,522
7,764
343,477
40,000
(8,925)
-
256,831
-
(96,785)
(873,217)
-
(4,163,360)
(23,084)
1,206,768
15,251
(3,115,822)
There were no non cash investing during the year (2017: Nil). Non cash financing activities of $58,903 (2017: $600,000).
46
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
24. LOSS PER SHARE
(a) Reconciliation of earnings used in calculating loss per share
Loss attributable to the owners of the Company used in calculating basic and
diluted loss per share
(b) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in
calculating basic and diluted loss per share.
(3,253,430)
(4,961,426)
Number of shares
Number of shares
1,573,787,505
606,394,094
(c) Information on the classification of options
As the Group has made a loss for the year ended 30 June 2018, all options on issue are considered antidilutive and have not been included
in the calculation of diluted earnings per share. These options could potentially dilute basic earnings per share in the future.
25. SHARE-BASED PAYMENTS
(a) Broker options
55 million options were granted to brokers as part of capital raising. 25 million of these options were issued during the year.
The terms and conditions relating to the grants of the broker options are as follows, with all options to be settled by physical delivery of
shares:
Grant Date
12 May 2017
15 September 2017
20 March 2018
Expiry Date
30 April 2021
17 November 2021
19 July 2022
Exercise Price
$0.02
$0.01
$0.015
Number Outstanding at Year End
2018
50,000,000
25,000,000
- (1)
75,000,000
2017
50,000,000
-
-
50,000,000
(1) 30,000,000 Broker options were granted pre year end, but issued post year end subsequent to receiving shareholder approval on
20 June 2018.
The weighted average fair value of options granted during 2018 was 0.8 cents (2017: 0.8 cents). The value of the options has been
recognised as a capital raising expense.
The value of services received was unable to be reliably measured and therefore, the price was calculated by using a Black Scholes model
applying the following inputs.
Valuation information
$0.01 Options, grant date 15 September 2017
Exercise price (cents)
Life of the option (years)
Expected share price volatility
Risk free interest rate
Share price at grant date
$0.015 Options, grant date 20 March 2018
Exercise price (cents)
Life of the option (years)
Expected share price volatility
Risk free interest rate
Share price grant date
47
1
4.16
100%
1.95%
0.8
1
4.08
120%
2.12%
1.1
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
25.
SHARE-BASED PAYMENTS (continued)
Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this is indicative of future
trends, which may not eventuate.
The fair value and grant date of the options is based on historical exercise patterns, which may not eventuate in the future.
(b) Employee Share Option Plan
The Vital Metals Limited Share Option Plan was approved in April 2005.
The issue to each individual Employee, Key Employee or Director is controlled by virtue of the provisions of both the Share Plan and the
Australian Stock Exchange Limited Listing Rules. Under the Share Scheme the number of shares an eligible person will be entitled to
receive each year will be determined by the Board of Directors in their sole discretion.
Employees, key employees and Directors are entitled to take up ordinary shares at a cost determined by the Board with regard to the market
value of the shares when the Board resolves to offer the Option.
The terms and conditions relating to the grants of the share option plan are as follows, with all options to be settled by physical delivery of
shares:
Grant Date
11 December 2015
25 November 2016
23 March 2017
17 November 2017
20 June 2018
Expiry Date
24 November 2017
25 November 2018
30 April 2021
24 November 2019
19 July 2022
Exercise Price
$0.04
$0.27
$0.23
$0.012
$0.015
Number Outstanding at Year End
2018
-
14,096,763
27,000,000
28,931,825(1)
- (2)
70,028,588
2017
9,687,133
14,096,763
27,000,000
-
-
50,783,896
(1) Options issued to Mark Strizek split between Tranche A and Tranche B (refer to page 12 of Directors Report)
(2) 2,666,667 Advisor options were granted pre year end on 20 June 2018, but were issued subsequent to the end of the period.
Set out below are summaries of the employee options granted:
Outstanding at the beginning of the year
Granted
Forfeited/cancelled
Exercised
Expired
Outstanding at year-end
Exercisable at year-end
Consolidated
2018
2017
Weighted
average
exercise price
cents
2.74
1.2
-
-
4
1.93
1.93
Weighted
average
exercise price
cents
4.12
2.44
-
-
4.2
2.74
2.74
Number of
options
22,901,822
41,096,763
-
-
(13,214,689)
50,783,896
50,783,896
Number of
options
50,783,896
28,931,825
-
-
(9,687,133)
70,028,588
70,028,588
The weighted average remaining contractual life of share options outstanding at the end of the financial year was 1.17 years (2017: 2.51
years), and the exercise price ranges from 1.2 to 2.7 cents.
There were no share options exercised in 2018 or 2017.
48
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
25.
SHARE-BASED PAYMENTS (continued)
Valuation information
Mark Strizek Options – Tranche A
Exercise price (cents)
Life of the option (years)
Fair value per option (cents)
Expected share price volatility
Risk free interest rate
Share price at grant date – 17 November 2017
Note: No vesting conditions – vests immediately
Mark Strizek Options – Tranche B
1.2
2.02
0.3
100%
1.79%
0.7
Exercise price (cents)
Life of the option (years)
Fair value per option (cents)
Expected share price volatility
Risk free interest rate
Share price at grant date – 17 November 2017
Note: Vesting conditions – Share price of $0.02 or greater for 10 consecutive business days prior to 31 December 2018, provide Mark Strizek remains an
employee of the Company until at least 31 December 2018
1.2
2.02
0.2
100%
1.79%
0.7
Advisor Options
Exercise price (cents)
Life of the option (years)
Fair value per option (cents)
Expected share price volatility
Risk free interest rate
Share price at grant date – 20 June 2018
1.5
4.08
0.57
120%
2.12%
1.1
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Options issued to employees/directors
Shares issued for capital raising (value based on options value)
Consolidated
2018
$
83,309
83,309
379,523
2017
$
343,478
343,478
401,093
49
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
26. PARENT ENTITY INFORMATION
The following information relates to the parent entity, Vital Metals Limited, at 30 June 2018. The information presented here has been
prepared using accounting policies consistent with those presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-Current liabilities
Total liabilities
Contributed equity
Reserves
Accumulated losses
Total equity
Loss for the year
2018
$
3,289,424
6,207,011
9,496,435
324,786
1,367,126
1,691,912
2017
$
2,671,562
5,522,286
8,193,848
136,202
1,308,223
1,444,425
52,845,649
2,202,955
(47,244,083)
7,804,522
47,810,512
1,740,123
(42,801,212)
6,749,423
(4,442,622)
(1,283,040)
Total comprehensive loss for the year
(1,442,622)
(1,283,040)
The parent entity did not have any guarantees, contingent liabilities, or any contractual commitments for the acquisition of property, plant
and equipment, as at 30 June 2018 or 30 June 2017.
50
For personal use only
Notes to the Consolidated Financial Statements continued
Vital Metals Limited
Directors' Declaration
Vital Metals Limited
In the directors’ opinion:
(a)
the consolidated financial statements comprising the statement of profit or loss and other comprehensive income, statement of
financial position, statement of changes in equity, statement of cash flows and accompanying notes set out on pages 24 to 50 are
in accordance with the Corporations Act 2001, including:
(i)
complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its performance for the
financial year ended on that date;
(ii)
(b)
(c)
(d)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
the remuneration disclosures included in the Directors’ Report (as part of the audited Remuneration Report), for the year ended 30
June 2018, comply with Section 300A of the Corporations Act 2001; and
a statement that the attached financial statements are in compliance with International Financial Reporting Standards has been
included in note 1(a) to the financial statements.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Francis Harper
Chairman
Perth, 28 September 2018
51
For personal use only
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Vital Metals Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Vital Metals Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2018, 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 report, 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:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year ended on that date; and
(ii)
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 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 confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
For personal use only Accounting for share-based payments
Key audit matter
How the matter was addressed in our audit
During the financial year ended 30 June 2018, the
Our audit procedures included, but were not limited
Group issued equity instruments, in the form of
to the following:
options, to eligible directors, employees and brokers as
detailed in Note 25.
(cid:120)
reviewing the relevant agreements to obtain
an understanding of the contractual nature
The Group performed valuations of the options and
of the share-based payment arrangements;
recorded the related share-based payment expense or
share capital costs in accordance with AASB 2 Share-
based Payments in the consolidated statement of profit
or loss and other comprehensive income.
(cid:120)
assessing management’s determination of
the fair value of the options issued,
considering the appropriateness of the
valuation model used and involving our
Due to the complex and judgemental estimates used in
internal valuation specialists to assess the
determining the value of the options, we consider the
inputs used in the models; and
accounting for the share-based payments to be a key
audit matter.
(cid:120)
assessing the adequacy of the related
disclosures in Note 25 to the financial
statements.
Other information
The directors are responsible for the other information. The other information comprises the
information contained in Directors’ Report for the year ended 30 June 2018, but does not include the
financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s
report, and the Annual Report, which is expected to be made available to us after that date.
Our opinion on the financial report does not cover the other information and 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
identified above 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 on the other information that we obtained prior to the date
of this auditor’s report, 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.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to the directors and will request that it is corrected. If it is not
corrected, we will seek to have the matter appropriately brought to the attention of users for whom
our report is prepared.
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.
For personal use only 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 has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the 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.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 16 to 20 of the directors’ report for the
year ended 30 June 2018.
In our opinion, the Remuneration Report of Vital Metals Limited, for the year ended 30 June 2018,
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.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, 28 September 2018
For personal use only Vital Metals Limited
ASX Additional Information
Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows.
The information is current as at 17 September 2018
(a) Distribution of quoted equity securities
Analysis of numbers of quoted equity security holders by size of holding:
1
1,001
5,001
10,001
100,001
-
-
-
-
1,000
5,000
10,000
100,000
and over
The number of shareholders holding less than a marketable parcel of shares are:
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
Ordinary shares
Number of holders Number of shares
108
201
151
1,296
1,487
3,243
1,366
38,980
595,515
1,252,495
72,451,465
1,668,272,834
1,742,611,289
38,197,610
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
17
18
19
20
Troca Enterprises Pty Ltd
AUSDRILL INTERNATIONAL PTY LTD
Hayes Pty Ltd
MR ALEXANDER MICHAEL WORT
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR CAIGEN WANG
BNP PARIBAS NOMS PTY LTD
ARGONAUT EQUITY PARTNERS PTY LIMITED
NEREENA PTY LTD
SOUTHERN CROSS CAPITAL PTY LTD
JEUMONT PTY LTD
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED -
A/C 2
MR RUSSELL GREGORY GARROD
NOVASC PTY LTD
MR ROSS EDWARD GUSTAFSON
MR PAUL JOHN BERNDT
HAMMERHEAD HOLDINGS PTY LTD
MR OWEN JOHN COOTE &
MRS MONIQUE RENEE COOTE
AFM PERSEUS FUND LIMITED
MR FRANCIS ROBERT HARPER
Totals: Top 20 holders of VML Ordinary Fully Paid
Total Remaining Holders Balance
Total Holders Balance
55
Listed ordinary shares
Number of shares
Percentage of
ordinary shares
83,000,000
68,000,000
34,386,260
32,000,000
26,674,572
24,519,273
22,065,000
19,696,667
18,922,473
18,566,667
17,500,000
15,903,063
15,200,000
15,000,000
13,954,712
12,500,000
12,000,000
12,000,000
11,927,543
4.76%
3.90%
1.97%
1.84%
1.53%
1.41%
1.27%
1.13%
1.09%
1.07%
1.00%
0.91%
0.87%
0.86%
0.80%
0.72%
0.69%
0.69%
0.68%
11,853,334
11,700,000
497,369,564
1,245,241,725
1,742,611,289
0.68%
0.67%
28.54%
71.46%
100.00%
For personal use only
Vital Metals Limited
(c) Substantial shareholders
As at 17 September 2018 there were no substantial shareholders who had notified the Company in accordance with section 671B of the
Corporations Act 2001 as having a substantial interest of 5% or more in the Company’s voting securities.
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction. There are no voting rights attached to any
class of options that is on issue.
(e) On-market Buy-Back
Currently there is no on-market buy-back of the Company’s securities.
(f) Unquoted equity securities
The unquoted options outstanding are as follows:
Number
14,096,763
Class
Unlisted options exercisable at 2.7 cents
expiring 25 November 2018
Holders with more than 20% interest in that class
Mark Strizek (6,506,198)
David Macoboy (3,253,099)
86,153,846
Unlisted options exercisable at 1.625 cents
expiring 31 December 2018
Macquarie Bank Ltd (86,153,846)
50,000,000
Unlisted options exercisable at 2.0 cents
expiring 30 April 2021
Argonaut Investments Pty Ltd (25,000,000)
JSR Nominees Pty Ltd (12,500,000)
Francis Harper (12,500,000)
27,000,000
Unlisted options exercisable at 2.3 cents
expiring 30 April 2021
Mark Strizek (15,000,000)
David Macoboy (6,000,000)
25,000,000
Unlisted options exercisable at 1.0 cents
expiring 17 November 2021
Argonaut Investments Pty Ltd (12,500,000)
JSR Nominees Pty Ltd (6,250,000)
Francis Harper Pty Ltd (6,250,000)
28,931,825
Unlisted options exercisable at 1.2 cents
expiring 14 November 2019
Susan Strizek (28,931,825)
32,666,667
Unlisted options exercisable at 1.5 cents
expiring 19 July 2022
Argonaut Investments Pty Ltd (10,000,000)
Francis Harper (10,000,000)
Boston First Capital Pty Ltd (10,000,000)
(g) Corporate Governance
Pursuant to the ASX Listing Rules, the Company’s Corporate Governance Statement will be released in conjunction with
this report. The Company’s Corporate Governance Statement is available on the Company’s website at:
https://www.vitalmetals.com.au/corporate/corporate-governance/
56
For personal use only