Annual Report 2020
The right place, the right plan, the right team
and the right time.
Delivering on
our promise
Company Directory
DIRECTORS
Milan Jerkovic
Executive Chair
Neil Meadows
Operations Director
Greg Fitzgerald
Non-Executive Director
Anthony James
Non-Executive Director
Sara Kelly
Non-Executive Director
COMPANY SECRETARY
Dan Travers
REGISTERED OFFICE AND
PRINCIPAL PLACE OF BUSINESS
Level 3, 1 Altona Street
West Perth WA 6005
wilunamining.com.au
SHARE REGISTRY
Link Market Services Limited
Level 12, 250 St Georges Terrace
PERTH WA 6000
Ph: +1300 554 474
Fax: +612 9287 0303
SECURITIES EXCHANGE LISTING
Australian Securities Exchange
Code: WMX
SECURITIES ON ISSUE
Ordinary shares: 100,470,068
Unlisted options/ZEPO’s: 2,519,532
AUDITOR
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade
PERTH WA 6000
BANKERS
National Australia Bank
100 St Georges Terrace
PERTH WA 6000
ABN: 18 119 887 606
Contents
Corporate Overview
Company Highlights
Executive Chair’s Letter
Review Of Operations
Overview
Operations
Growth
Discovery
Corporate And Environmental, Sustainability
and Governance
Financial Report
DIrectors’ Report
Remuneration Report (Audited)
Auditor 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
Additional Information
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Shareholder Information
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Wiluna Mining | Annual Report 2020
The past year has delivered considerable change to
Wiluna Mining and to its shareholders. We are 12 months
into a staged 24 month strategic plan to revive the
Company and point it on the correct pathway, execute
the strategy, define the true scale of the Wiluna Mining
Complex and deliver real value to our shareholders.”
Milan Jerkovic, Executive Chair
Company Highlights
COMPANY
HIGHLIGHTS
Reserves (100%)
1.4 Moz
24.7Mt at 1.7g/t
Resources (100%)
Wiluna Mining Complex
Wiluna Mining Centre
7.3Moz
143Mt at 1.6g/t
5.1Moz
53Mt at 3g/t
Wiluna Mining Operation is currently
the 7th largest gold district in Australia
under single ownership
FY2020 Production
62kozpa
at AISC of A$1,950/oz
FY Hedging
34koz
at A$2,674/oz
• 2.1Mtpa CIL free milling operation
• 120kozpa by October 2021
• 250kozpa by January 2024
• Staged transition to concentrate
production with long 12+ years mine life
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Wiluna Mining | Annual Report 2020
Executive Chair’s Letter
The year ended 30 June 2020 was
a watershed for Wiluna Mining.
Following a couple of very difficult
years, the Company’s renewal
commenced around 12 months ago and
continues as I write this letter to you,
our loyal shareholders. This process will
continue for several more years as we
strive to make Wiluna a Tier 1 mine in
a Tier 1 jurisdiction1.
Dear Shareholders,
I am pleased to advise that, after a number of poor
years of financial performance, the Company posted
a net profit of A$14 million for the financial year
ended 30 June 2020. During the financial year, an
additional A$96 million of additional cash was
injected into the Company via operating cashflow,
equity raising and non-core asset sales. This allowed
us to improve our working capital position by
A$34 million, retire A$15 million of debt and fund
a A$61 million site-based capital development
programme. The improvement in financials and the
Company’s balance sheet this past year has been
significant, because we now have a platform to
move forward with confidence having put past
legacy issues behind us.
It had become very obvious to the Board towards
the end of the last financial year that the Company,
despite increasing gold prices, could not continue
down the same path and strategy that had been
pursued for the previous three years. Some of the
past issues included;
• Mining small and often unstable open pits
which required considerable capital to access
the good ore;
• Often these small open pits had a very short
mine life and regularly transitioned very quickly
from free milling to transitional ore, and then
refractory ore which complicated mine planning
and recoveries;
• Poor reconciliations in some of the open pits due
to the difficult geology;
• Development focus was lacking for the
underground mine at Golden Age which meant
we did not have the consistent availability of
high grade ore to blend with the lower grade
open pit ore; and,
• Inconsistent performance meant poor operational
cashflow and pressure on our balance sheet which
resulted in the Company not being able to invest
in a long dated mine plan.
As a result, towards the end of the 2019 financial
year, it was agreed that the following steps needed
to be taken;
1. We needed refreshed management to realign
the Company to a strategy that was not only
going to guarantee the long term future of the
Company, but was going to position the Company
to take advantage of the significant potential and
scale of the Wiluna Mining Complex and be able to
successfully execute this strategy;
2. We needed to repair and strengthen our balance
sheet;
3. We needed to maintain and increase immediate
operational cashflow;
4. We needed to transition to include gold
concentrate production from our vast resource
of refractory ore;
5. We needed to expand gold production in a
staged manner by undertaking feasibility to fully
develop a greater than 250kozpa, long life gold
operation; and,
6. Define the large Wiluna gold system to its full
potential via discovery.
1 Tier 1 Mine – Mine with a stated mine life of greater than ten years with annual production of greater than 300kozpa gold
or gold in concentrate; Tier 1 Jurisdiction is Australia, Canada and the USA
Executive Chair’s Letter
• Repay the secured debt to our contractor;
• Bring payables in line with normal credit terms;
• Repay an unpopular convertible note;
• Allowed us to exit our mining contractor from
the share registry;
• Spend considerable capital on the site-based
capital development programme;
• Help fund the advancement of our Stage 1
development plan through a very aggressive
drilling programme designed to enhance the
confidence category of Mineral Resources and
to convert Mineral Resources into Reserves; and,
• Assist in funding of the construction of the
concentrator.
This task of improving the balance sheet will
naturally be ongoing, because developing a
large scale project like the Wiluna Mining
Complex requires a strong balance sheet
so as to be able to properly exploit its true
potential, and although we have made giant
steps in the last 12 months the task is ongoing
and at the forefront of our thinking and
strategy looking forward.
The planning for a staged, two-phased development
is well underway. We consider this the most
prudent way to develop Wiluna to its potential
and take advantage of its vast scale. We also think
it is ambitious; when Stage 1 is completed, at the
current gold price it should generate approximately
A$100 million of normalised annual operating
cashflow. In Stage 2, if we were to achieve
approximately 250kozp within four years, this
would place Wiluna as one of the 20 largest single
site gold producing mines in a Tier 1 jurisdiction.
So, the rewards for a well-planned, responsible,
staged and well executed two-phased development
strategy are significant and should excite all Wiluna
Mining shareholders.
The final component we are currently undertaking
is what we call our discovery step. The reason that
I, and the team at Wiluna Mining, are so passionate
about the future of the Company is because of
the potential scale of the geology at the Wiluna
Mining Complex. Exploration and mining at Wiluna
has mostly been confined to shallow depths,
on average less than 600 metres below surface.
The potential from 600-1,800 metres is largely
untested and this will be our focus in the coming
months and years. The potential to increase the
already significant Mineral Resource at Wiluna is
very real and achievable. The exciting thing is the
potential is all ‘under the headframe’, located next
to existing workings and infrastructure.
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The Company posted a net
profit of A$14 million for
the financial year ended
30 June 2020. During the
financial year an additional
A$96 million of additional
cash was injected into
the Company via operating
cashflow, equity raising and
non-core asset sales.”
In addition to these six decisions, the Board decided
that we should rebrand the Company, maintaining
and refocusing on the proud name of Wiluna, which
has been a great, significant, and successful mining
centre over 120 years. This rebranding exercise
was completed late this financial year with the
name change to Wiluna Mining Corporation (Wiluna
Mining) and the consolidation of shares back to
a manageable and more respectable 100 million.
I am proud to say that at the time of writing,
12 months into a 24 month reset, the Company is
tracking well to its strategic plan. Management
has been replenished with a greater focus on
experienced technical people to guide the Company
through this development stage. The previous team,
led by Bryan Dixon, did a very good job under tough
conditions to bring together the entire land package
of Wiluna under one Company’s control and were
able to fast track production with limited resources
and they must be thanked and respected for the
job they performed. It was, however, felt that the
new strategy required new thinking and a new skill
set and this has largely been achieved in the past
12 months and I am very confident the team in
place can now confidently and skilfully guide Wiluna
Mining through the next three to five years of a very
exciting development phase.
The repair of the balance sheet has been completed
and now its improvement continues and is ongoing.
In the last 12 months we were able to bring an
additional A$117 million cash into the Company,
$96 million during the financial year just completed
(see above) and A$21 million post balance sheet
through debt, which enabled us to;
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Wiluna Mining | Annual Report 2020
In defining the significant discovery opportunities,
the Wiluna Mining Complex is not only the
Wiluna Mining Centre, but also includes discovery
opportunities at the following company assets
including;
• Regent- potentially another Wiluna and certainly
indications of its possible scale match those of
Wiluna;
• Lakeway- potential for a large-scale ‘Gruyere’ style
mineralised system;
• Prospective geology for ‘King of the Hills’ and
Bellevue vein-style deposits; and,
• Numerous Regional Greenfield and Brownfields
opportunities.
Unlike many of our ASX listed gold mining peers, we
do not have to look overseas to far flung locations
such as Alaska, Ontario, West Africa, Latin America
or PNG to try and chase growth and discovery
opportunities. We have all these opportunities on
our own 1,600km2 tenement package at Wiluna, in
the Tier 1 located Yilgarn Craton surrounded by our
largely funded, plentiful existing infrastructure, less
than two hours flying time from Perth.
Wiluna Mining’s Four Pillar of
Our Buiness
Having discussed two of the four pillars of our
business being growth and discovery, I would like to
make some comment on the other two pillars of our
business. Firstly, operations. We have gone to great
lengths to try and explain to our stakeholders that
the sole reason for us continuing with our small and
relatively high cost (on an AISC basis) production
operation is because firstly, we have now largely
incurred the majority of the mining costs for the
next 12-14 months production (especially at
Williamson); and secondly we are hopeful that our
operations will generate over A$40 million in
operating cashflow between now and the
commencement of Stage 1 in September 2021.
That is A$40 million that will go towards our
development and our drilling which will hopefully
increase the value of our assets and it is also
$40 million we will not need to fund from external
sources.
We expect open pit mining to be significantly
scaled down by the end of this year which will
save considerable operating costs from the start
of calendar 2021 which will improve operating
cashflow. It is not appropriate for us to be
compared with our operating peers at this stage
of our development. We are a development gold
company transitioning to producing primarily a low
cost gold concentrate from underground sulphide
ore that just happens to have an existing operation
that will be shut down in September 2021 to make
way for the new production circuit which will open
at that time.
The fourth pillar of our business is corporate and
Environmental, Sustainability and Governance (ESG).
At Wiluna Mining we cherish our safety record; we
are proud of our response to the COVID-19 crisis.
We also want to employ good people and create
good leaders. We respect all the people who
make up the Wiluna team, we want a safe and
caring culture, creating a respectful and trusting
relationship with our partners, our staff, our
community and our shareholders. We are striving
to work to a high ethical standard and to generate
value for our shareholders in a socially and
environmentally responsible manner.
Despite the great optimism we have for the future,
we recognise that the past three years have been
very challenging. I am proud of the way the team
at Wiluna Mining have handled these setbacks and
the tenacity they have shown to pull the Company
through the tough times. I am also very grateful
to the key stakeholders, and importantly our
shareholders, who have showed continued support
and belief as we work hard to unlock the vast
geological potential across our business. I would also
like to acknowledge the considerable efforts of our
founding and departing Managing Director Bryan
Dixon, whose spirited contributions to this Company
has laid the foundations for future success.
Discovery
Operations
Growth
Corporate
and ESG
Unlike many of our ASX listed gold
mining peers, we do not have to look
overseas to far flung locations to
try and chase growth and discovery
opportunities.”
The Company has been focused on developing a low
risk, low cost pathway to deliver value from its large
sulphide resource. There has been strong demand
from parties to secure gold concentrate and during
the year, we signed sales agreements for 100% of
the first three years of concentrate production with
leading international companies Trafigura and the
LSX listed, Polymetal Group. Post 30 June 2020 year
end we drew down on the A$21 million tranche 1 of
our pre-paid gold swap funding facility with London
based Mercuria Group. These transactions with
highly reputable, international organisations give us
confidence that we are attracting the right counter
parties to assist in growing our business.
Finally, I would like to thank all of partners, our
counterparties, stakeholders, our community at
Wiluna and in Perth, our staff, the management
team and my fellow Directors for the efforts and
the support they have shown in this transitional
year. The regional scale and quality of our resource
base is unique for a company of our size and we
are committed to executing a methodical, low-risk,
low cost pathway to define and commercialise this
value. As Wiluna strives towards implementing a
simple and transparent corporate strategy, I am
confident that shareholders will be rewarded.
Thank you.
Milan Jerkovic
Executive Chair
31 August 2020
Executive Chair’s Letter
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Wiluna Mining | Annual Report 2020
REVIEW OF
OPERATIONS
Review of Operations
The 2020 financial year saw Wiluna Mining develop a clear,
long dated, staged 24 month strategy to not only turn the
Company around from a performance point of view, but to
also maximise value to our shareholders.
The Company has four pillars to its business:
Discovery
Operations
Growth
“Under the headframe”
exploration
Regional exploration
Currently operating
a CIL plant,
processing free
milling ore producing
approximately
62kzopa
aiming to generate
at least
A$4.0m
per month of
operating cashflow,
until October 2021
Growth to be delivered
in two stages
Stage 1
Gold doré and gold
in concentrate
production of
120kozpa
October 2021
Stage 2
Gold doré and gold
in concentrate
production of
+250kozpa
expected January 2024
Corporate
and ESG
Good, smart people
and strong leaders,
safe and responsible
culture, solid,
respectful and trusting
relationships with
our partners and
community, and high
ethical standards.
We want to
generate value for
our shareholders
in a socially and
environmentally
responsible way.
In addition to the four pillars of business, Wiluna Mining is halfway through
its 24 month, five-point strategy of creating shareholder value and turning
the Company’s fortunes around. When it commenced in September 2019 the
strategy set out to;
1. Strengthen the Balance Sheet – Ongoing
2. Increase and maintain immediate operational cashflows – Underway
3. Transition to include gold concentrate production – Underway
4. Expand gold production by undertaking feasibility to fully develop
a greater than 250kozpa, long life gold operation – Underway; and
5. Define the large Wiluna gold system to its full potential via
discovery – Underway
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Wiluna Mining | Annual Report 2020
Operations
Gold production for FY2020 was 61,885oz at an AISC of A$1,950/oz (Cash Cost per Ounce of
A$1,631/oz) with A$36 million of operating cash flow (net of sustaining capital expenditure)
generated. Over the same period there was significant concurrent investment into site-based
capital infrastructure (primarily the new tailings storage facility, TSF K) and preproduction mining
activities (primarily at Williamson).
These major investing activities will sustain and create substantial value over the next 12-15 months
as the Company transitions to the production of gold in concentrate.
Table 1: FY2020 Production & Costs Summary
Production
Open Pit Mining
Total mining
Strip ratio
Ore mined
Mined grade
Underground Mining
Total UG lateral development
Ore mined
Mined grade
Total ore mined
Total mined grade
Total OP & UG contained gold
Processing
Tonnes processed
Grade processed
Recovery
Gold Produced
Gold sold
Unit
bcm
w:o
t
g/t
m
t
g/t
t
g/t
oz
t
g/t
%
oz
oz
Sep’19
Qtr
Dec’19
Qtr
Mar’20
Qtr
Jun’20
Qtr
FY20
YTD
1,477,656 1,070,642 1,627,463 2,320,767 6,496,528
7.2
8.7
21.4
10.1
10.3
420,088
278,081
165,702
465,081 1,328,952
1.4
2.2
1.3
0.8
1.3
66
64
55
224
409
29,773
30,363
20,556
19,662
100,354
5.2
4.1
4.1
3.0
4.2
449,861
308,444
186,258
484,743 1,429,306
1.6
2.4
1.6
0.9
1.5
23,664
23,728
9,674
14,082
71,148
420,242
368,925
407,282
491,842 1,688,291
1.6
84%
17,565
17,783
2.2
75%
20,003
20,453
1.3
78%
12,950
12,635
0.9
81%
11,367
11,918
1.4
79%
61,885
62,788
Achieved gold price
A$/oz
1,882
2,072
2,267
2,460
2,131
Costs
Mining – net of costs capitalised to
preproduction
Processing
Site administration
Stockpile movements
Royalties, refining costs & silver sales
Sustaining capital expenditure
Overhead costs
All-In-Sustaining Costs Per Ounce
Unit
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
960
453
81
(160)
129
34
22
535
464
86
20
140
260
22
858
1,501
784
165
264
144
37
34
951
207
13
202
337
43
879
602
120
15
147
159
28
1,519
1,527
2,287
3,253
1,950
Review of Operations
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Table 2: Wiluna Gold Production
600
450
420
300
t
K
84%
1.6g/t
150
0
369
75%
2.2g/t
407
78%
1.3g/t
Sept’19
Dec’19
Mar’20
25
20
15
10
5
-
K
o
z
492
81%
0.9g/t
Jun’20
Gold Produced
Processed Tonnes (Kt)
Head Grade
Recovery
The year really was a story of two halves. The
September and December quarters saw 37,568oz
produced at AISC/oz of A$1,524 whilst the March
and June 2020 quarters saw production at 24,317oz
at AISC/oz of approximately A$2,707. The Company’s
AISC (in absolute dollars) averaged A$10 million
per month throughout the year however the higher
AISC/oz for the March and June 2020 quarters
was primarily driven by lower grades mined and
processed, and slower than expected access to
ore from Williamson and the Underground (due to
equipment issues which have since been rectified).
• Crushing and milling circuits performed above
nameplate capacity in the June 2020 quarter with
492kt of ore processed (March 2020 quarter:
407kt). Total tonnes processed for FY2020 was
1.7Mt (FY2019: 1.8Mt). Mill throughput will
decrease over FY2021 as the Company sources
harder transitional and fresh material from
Williamson.
• In the month of June 2020 pre-stripping activities
at Williamson were completed. The Williamson
orebody is exposed and is currently being mined
at very low strip ratios (<2.0 waste: ore).
• Production in the June 2020 quarter was impacted
by grade reconciliation issues in three small pits
being mined at Wiluna Mining Centre. The decision
to mine these small pits was made to compensate
for delayed access to ore at Williamson.
• Preproduction mining activities at Williamson
were completed in June. Total volumes remaining
to be mined at Williamson and across the Wiluna
Mining Centre will materially decrease over the
next 12 months, which will lead to the decision to
significantly reduce the size of the active open pit
mining fleet during that period. Williamson will
provide 1.2Mt of mill feed in FY2021. Stockpiles of
higher-grade ore are increasing.
• Production from the underground operations were
constrained in the March and June 2020 quarters
due to equipment and manning issues. Resourcing
has been bolstered and the equipment fleet fully
replaced to ensure mining rates return to FY2020
Q1 and Q2 levels of ~10,000tpm of ore production.
• Total underground lateral development increased
for the June 2020 quarter and was 224m compared
with the March 2020 quarter of 55m.
• Mining at Williamson is expected to be completed
during December 2020 and will provide feed to the
mill for the next twelve months.
• Production guidance for FY2021 is approximately
62koz at an AISC of approximately A$1,950/oz
and Cash Costs per Ounce of A$1,650/oz.
Costs reduce during the year as open pit waste
mining progressively declines.
From an operational point of view, FY2020 was
expected to be difficult despite an encouraging
start to the year in the first and second quarters.
This main issue can be pinpointed to the slow rate
of mining at the Williamson pit during the second
and third quarters which did not allow us to access
high grade ore at Williamson until late in the fourth
quarter, as well as the poor operating performance
of the Golden Age underground mine, mainly due
to continued equipment failure.
Other factors that contributed to the lower than
expected second half of FY2020 was once again
poor weather from Cyclones Blake and Damian
which affected the open pit operations in the
March quarter, and the onset of COVID-19.
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Wiluna Mining | Annual Report 2020
The slow mining rate at Williamson meant we had
limited access to high grade ore from the mines
during the last two quarters, which required
the treatment of lower grade stockpiles which
decreased ounces produced and increased our AISC.
Pre-stripping resulted in a very high stripping ratio
in the second half of the year compared with the
first half which also affected AISC for the March and
June quarters.
The issues at the Golden Age underground mine
related to several equipment matters. These matters
were primarily old equipment that needed replacing,
shortages of mining machinery operators which
directly reduced planned material movements and
impacted negatively on production and a shortage
of maintenance staff and replacement parts.
As mentioned, the Company has worked through
the COVID-19 pandemic successfully and to date has
had no cases of COVID-19. The COVID-19 Response
Plan measures implemented created unavoidable
disruptions to normal operations which affected
gold production, primarily with site access, isolation
and change in shift rotations.
As at the time of writing, the factors that affected
operations have, in the main, been addressed.
These include the Company now having access to
the high grade ore and reducing the stripping ratio.
During the year, the Company made a significant
investment in preproduction mining activities at
the Williamson, Matilda and Wiluna mining areas.
The very high stripping ratio of 21:1 in the March
quarter peaked at this level and our modelling shows
that it will average 6:1 for the next 12 months.
The Company commenced mining the higher-grade
ore at Williamson in June and therefore expects
strong production in the September and December
quarters, and a more stable production profile for
the next 12 months of its free milling operations,
which will provide strong cash flows prior to the
Stage 1 sulphide operations, and we are seeing this
in August and September of 2020.
Machinery equipment availability and performance
have been addressed with new equipment and
operators are now in place which will provide a
material uplift in mining rates from now on.
The ball mill motor was replaced in February along
with the refurbishment of the rod mill which
were both successfully commissioned by the end
of February. The Stage 1 sulphide development
which has commenced, with the increased focus on
underground mining, will enable the Company to
mitigate the disruption caused by seasonal weather
going forward by allowing high grade stockpiles
to build.
Wiluna Mining is 12 months into a 24 month
transitional period concluding in October 2021
when the commencement of gold production
from the Company’s higher grade, long dated
underground sulphide Mineral Resources is
scheduled to begin. During the transition period,
the Company is aiming to produce approximately
62kozpa from its existing free milling deposits.
This production profile will provide valuable
cashflow and production continuity prior to
the transition into producing 120kozpa of gold
concentrate (Stage 1 Sulphide Development Plan).
The refurbished rod mill is working very well, and
this will be an integral part of treating the baseload
production that is coming from Williamson.
Construction work on the new tailings dam has been
completed. During September 2020 the Company
completed a crusher renovation
which involved repairing the
primary and tertiary crusher
and replacing the secondary
crusher.
Figure 1:
Williamson Pit
Review of Operations
13
Growth
The Company continued to advance its Stage 1 sulphide development plan throughout the year.
The Company’s Sulphide Development Strategy involves a staged upscaling of operations and the
transition to mining the large sulphide resource at the Wiluna Mining Centre with treatment through
a new flotation plant. Stage 1 is the first of at least two stages of development planned and is
currently underway with the target of mining approximately 750,000tpa of underground ore producing
approximately 120,000ozpa of gold doré and gold in concentrate commencing in October 2021.
Indicative Timeline
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~62kozpa
Stage 1 Mine
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Increased
throughput
~250kozpa
Jan 2021 – Dec 2021: Stage 2 feasibility study
Drilling Program
Jan 2021: Stage 1
construction begins
Oct 2021: Stage 1
production begins
June 2022: Stage 2
construction begins
Jan 2024: Stage 2
production begins
Offtake agreements for 100% of the gold
concentrate for the first three years of production
has been secured with Trafigura and London-listed
Polymetal Group.
This drilling will assist the Company to convert
Inferred Resources to the Indicated category and
convert Resources to Reserves at areas to be mined
in the first 1 to 4 years.
In addition to the above, the following Stage 1
milestones were reached during the year and
subsequent to 30 June 2020.
The Wiluna Mining Centre is divided into four
geographical areas (Figure 2), centred on
underground mine portals and planned mining areas
of the Stage 1 Sulphides Development
plan. Mining is planned to commence
at the Wiluna North Mine area via the
existing Bulletin Decline, and at the
Wiluna Central Mine area via three
existing declines, and then extend to
the Wiluna South Mine area via three
existing declines in Eats Pit. The Stage 1
plan focuses on high grade sulphide ore
bodies close to existing decline access
and less than 600m deep, leading to
rapid low-cost access to ore.
Drilling “under the headframe” at the
Wiluna Mining Centre continued to
deliver consistent outstanding results in
support of the Company’s Stage 1 and 2
development plans.
Figure 2: Map of the Wiluna Mining
Centre. Stage 1 sulphide mining areas
are shown coloured
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Wiluna Mining | Annual Report 2020
Stage 1 Progress
The following activities have been progressed
for Stage 1 to date.
Mine development
Underground operations continue to provide
valuable high grade, free milling feed from the
Golden Age orebody to the process plant, whilst
rehabilitation of existing development and new
development commence to open stoping blocks
for initial sulphide mining areas.
Murray Engineering have been contracted to supply
and maintain mine fleet for current production
associated development and stoping, whilst
Byrnecut Contractors have been engaged to provide
equipment and personnel for existing development
rehabilitation and new development for resource-
reserve drill out programmes and production from
new mine areas.
To compliment the current equipment and
development work, the first development crew
from Byrnecut is expected to be mobilised in the
December quarter, with further development crews
to be mobilised during June 2021 to maintain the
required work programme.
Dewatering at East Pit
Board approves construction of the concentrator
Since our last quarterly report several significant
milestones have been achieved. At our most recent
Board meeting, the Directors of Wiluna Mining
approved the concentrator construction works.
This includes the Company entering an EPC contract
with GR Engineering Services Limited (“GRES”).
Pit and Mine dewatering
Dewatering of open pit voids and underground
workings at Wiluna has made considerable progress
with the Happy Jack South decline access and
the new Essex decline portal position reached.
Rehabilitation and dewatering of the Happy Jack
South workings will commence in the December
quarter.
Dewatering of the large East Pit is expected to
reach the first of three existing decline portals in
the December 2020 quarter allowing progressive
dewatering of the southern mining development
on East and West lodes.
Underground dewatering of the Bulletin, Woodley
and Burgundy-Calais areas has progressed ahead
of planned resource drilling locations for the 2020
drilling plan.
Crusher and mill refurbishment
The first stage in the sulphide development plan
will utilise the existing crushing and grinding
circuits to provide feed to the new flotation circuit.
Considerable work has been completed to prepare
the crushing circuit for processing of a 100%
underground fresh ore feed. This includes the
replacement of the secondary cone crusher with a
near identical crusher to the current tertiary crusher.
The rod mill was refurbished and brought online in
January 2020 (see ASX announcement 12 February
2020) to provide additional
grinding capacity. These
changes to the comminution
circuit have recently been
tested on fresh ore feed to
confirm their performance
on harder ore at the desired
plant throughput rate.
Expanded Willuna Camp
Figure 3: Photos of
various infrastructure
updates
Review of Operations
15
Drilling and Resource Development
Drilling and resource development has
progressed significantly with the completion
of 48,800 metres of additional drilling up to
30 June 2020 and the release of an updated
Mineral Resource Statement (see ASX
announcement on 30 September 2020).
The focus on the drilling has been to increase
the level of confidence in the Mineral Resource
at the Wiluna Mining Centre towards updating
the Reserves and increasing the strength of
the mining plan. The global Mineral Resource
ranges from 143Mt @ 1.6 g/t for 7.3 Moz to
71 Mt @ 2.2 g/t for 5.0Moz depending on
the selected cut-off grade, and the Mineral
Resource of the Wiluna Mining Centre
alone using a 1.0 g/t cut-off increased to
53.0Mt @ 3.0 g/t for 5.1 Moz.
For the sulphide development plan the relevant
Mineral Resource number using a 2.5 g/t cut-off
is 23.9Mt @ 4.89 g/t for 3.76Moz at the Wiluna
Mining Centre. Mineral Resource updates will
continue to follow as drilling of the large Wiluna
gold system continues. A further Mineral Resource
update and interim Reserves statement supporting
the sulphide development and its funding will
be released early in the new year. The Company
continues its aggressive drilling programme
with FY2021 drilling expenditure expected to be
approximately A$30 million.
Additionally, the true scale and potential of the
Wiluna Mining Centre is yet to be understood.
What we know is that the system extends over
at least 3.5km of strike with deepest workings
to 1,000m and deepest drilling to only 1,200m.
The main mineralisation is not closed off along
strike or down dip and the gold endowment of
cross cutting structures both within the main
mineralisation and peripheral to it has been
insufficiently assessed. The potential for both high
grade lode structures as previously interpreted
and exploited or wider shear zones potentially
lending themselves to bulk mining methods has
yet to be fully tested.
A significant Mineral Resource development
drilling programme is underway to fully scope out
the depth, scale and optimal mine plan to best
exploit the mine. Whilst the immediate drilling focus
is to confirm Reserves within the immediate mining
areas to support a 3 to 5 year production window,
this will be complemented by a broader drill plan
to fully define the very large mineralised system to,
inform long term optimisation studies and define
the ultimate scale of the operation.
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New Tailings Dam
Tailings dam construction
The new tailings storage facility, TSF K, stage 1
construction has been completed and the facility
has been commissioned. Design of stage 2 of TSF K
has been completed and the permitting process has
commenced.
Upgrading the Wiluna Camp village
A total of 60 additional rooms have been installed
and commissioned in the Wiluna Mine Village in
addition to refurbishment of approximately 20
existing rooms in readiness for the construction
of the new concentrator and ramp up in
underground activities.
Approvals
All Approvals required to maintain the Stage 1
development schedule are in place.
Offtake Agreements
The Company has secured offtake agreements on
competitive terms for 100% of its expected gold in
concentrate for the first three years of operation
with reputable international companies. Up to 70%
of concentrate will be sold to LSX listed Polymetal
Group and 30% to International trading group
Trafigura (see ASX announcements 31 March 2020
for the Polymetal Group and 2 March 2020 for
Trafigura). The offtake arrangements include;
• Wiluna Mining to produce a 50-80 g/t concentrate;
• Gold payables including treatment costs and
transport is approximately 80% of the gold spot
price; and,
• The Company can still hedge their gold production
via a cash settlement arranging, in lieu of delivering
fine gold ounces.
16
Wiluna Mining | Annual Report 2020
Figure 4: Underground drilling in progress
Reserve and Mine Planning
Feasibility Studies
Updating mine designs and development
schedules based on the new Mineral Resource
models has commenced and will culminate in the
release of an Ore Reserve update and mine plan
in January 2021. The 2020 drilling programme
from June to September, which was not included
in the September Mineral Resource update, will
be incorporated into the planned January 2021
Resource and Reserve update.
With the success of the 2020 resource drilling
programme and resulting Mineral Resource
announcement (see ASX announcement
30 September 2020) the Company is confident
that sufficient Reserves will be delineated in the
planned January 2021 Mineral Resource and Reserve
update to support and conclude the Sulphide
Feasibility Study in 2021. Various supporting studies
have commenced including;
Detailed mine design and scheduling of the Wiluna
Mining Centre in support of the first stage sulphide
plant construction has been completed based on the
updated ore resource model and will be finalised
before the end of the year. Development will
focus initially in the first 600 vertical metres in the
Bulletin, Happy Jack, and Essex areas. These areas
are dewatered and close to existing development
leading to low cost, low risk and rapid ramp up
in production. Production from these readily
available areas will underpin the staged sulphide
development and provide early access to future
production areas as the ongoing resource drilling
programme confirms and converts Inferred Mineral
Resource to Indicated Mineral Resource category.
• Comminution options assessment;
• Scoping level plant design and cost;
• Stoping methods option studies to determine
preferred methods for the range of mineralisation
widths and orientations across the 3.5km strike
length of the system;
• Paste fill plant design and reticulation options;
• Metallurgical optimisation for expanded plant
design; and,
• Surface hydrology design for Phase 2 layout.
The Stage 2 Sulphide Development Feasibility Study
will be completed in the last quarter of 2021 with
the scale of the expansion based on the Mineral
Resource models to be announced in January 2021.
Review of Operations
17
Long Term Planning and Life of
Mine Infrastructure
The staged sulphide development plan is an
important steppingstone to embark on the re-
development of Wiluna and to provide the Company
with a long term stable cash flow. It is not expected,
however, to be the end of the development story.
Given the expected long mine life and scalability of
the underground development and potential for
future concurrent underground and open pit mining
feeding parallel sulphide and free milling processing
routes, the long term, life of mine development
requires early planning to maximise value and
minimise lost opportunities.
The Company has identified a number of value
adding opportunities to access in parallel to the
development of the sulphide processing plant.
The option studies have the potential to add
long term value to the business, and enhanced
environmental responsibility. Some key studies
include;
• Renewable power generation replacing or
augmenting gas power as site power demands
increase;
• Tailings reprocessing and disposal underground to
reduce both existing and future tailings footprints;
• Bulk mining options (surface and/or underground)
to reduce operating costs and cut-off grades;
• Power efficiency studies to reduce total site power
demand; and,
• Concurrent sulphide, free milling and tailings
re-treatment to increase gold production and cash
flow and reduce fixed costs on a unit cost basis
(reduce cut-off grade).
Table 3: Timetable for Stage 1 concentrator construction
Item
Award of Design and Construction Contract
Unconstrained project commencement
Long lead equipment (Concentrate Filter and Flotation Cells) orders placed
Site access available and establishment of Site facilities
Commencement of concrete installations
Commencement of structural, mechanical, piping, and electrical installation
Commencement of dry commissioning
Practical completion and commencement of ore commissioning
Date
2 December 2020
2 December 2020
13 December 2020
6 January 2021
4 March 2021
29 April 2021
2 September 2021
20 October 2021
Table 4: Estimate Costs (these costs were released 26 Feb 2020 and have been updated where stated)
Item
Concentrator – updated since 26 February 2020 announcement
Pre-production Underground Mine activities/infrastructure development
Drilling
Feasibility
Contingency (10%) – updated since 26 February 2020 announcement
Total Cost
Less expenditure to date
Total Costs Going Forward
Current funding sources from projected cash inflows
Cash and Bullion as at 30 September 2020
$26 million
$37 million
$9 million
$2 million
$7 million
$81 million
$12 million
$69 million
$13 million
Operating cashflow from transitional operations before investing activities (Oct20 to Sep21)
$48 million
Mercuria Tranche 21
Total current funding sources
$40 million
$101 million
Note 1: Tranche 2 drawdown of A$40 million from Mercuria is subject to their credit approval of an updated financial
model. This amount of A$40 million excludes any associated drawdown costs, as well as Tranche 1 & 2 principal and
interest repayments (of which Tranche 1 repayments are A$19m between October 2020 and July 2021).
Note 2: Updated reserves, mine plan and financials will be released in January 2021 on completion of the current
reserves in the December quarter. These costs do not include corporate overhead and resource/ reserve definition
drilling for Stage 2 sulphide development plan.
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Wiluna Mining | Annual Report 2020
Discovery
The Wiluna Mining Centre is a very large gold system with 11Moz endowment (combined current
resources and production). The Company released a new Mineral Resource update in late September
and has commenced mine planning work for a Reserves update in January 2021. With a Mineral Resource
of 53.0Mt @ 3.00 g/t for 5.10Moz at a 1.0g/t cut-off, including 58% still in the Inferred category, there
are significant opportunities for additional Mineral Resources and the life-of-mine extensions through
additional infill drilling.
Over 5km Strike
REMAINS OPEN
along Strike and at Depth
Adelaide/Moonlight
Happy Jack
Calvert
Essex
Bulletin
East/West
Calais
Figure 5: Wiluna Mining Centre showing scale of the operation and drilling target locations
During the March and June 2020 quarters in
particular, the drill bit continued to deliver at Wiluna
supporting the Company’s sulphide development
strategy. The Company completed 45,100 metres
of drilling in 2020 at the Wiluna Mining Centre.
This drilling aligns with the Company’s Stage 1
sulphide development plan, with the primary focus
on sulphide ore bodies in support of the proposed
mine development sequence to;
1. Significantly increase the confidence in sulphide
resources from Inferred to Indicated category,
which will underpin Stage 1 Reserves;
2. Add Reserve ounces in high grade, shallow zones,
close to existing mine development that can be
rapidly brought into production at low cost; and,
3. Find new, high grade shoots that will enhance the
ounces per vertical metre and, more importantly,
increase the grade. This will help consolidate
Stage 1 and enhance the transition into Stage 2
which is to increase production to +250kozpa of
gold and gold in concentrate over a long mine life.
Outstanding results were achieved, confirming that
the Company’s confidence in the geological scale
and potential for high grade discoveries at shallow
depths and close to existing development at Wiluna;
• Drill results at Wiluna Central (Essex) and Wiluna
North (Bulletin) intersecting shallow sulphide
mineralisation (refer ASX announcements
23 June 2020 and 26 May 2020); and,
• Sulphide resource drilling at Wiluna South (East
Lode), Wiluna North (Lennon) and Wiluna Central
(Calvert) (refer ASX announcements 22 September
2020, 2 September 2020 and 27 July 2020).
Review of Operations
19
The Essex and Bulletin underground mining zones are located close to
surface and close to existing infrastructure, which allows for rapid and
low-cost development. Exceptional results released from Essex in the June
2020 quarter have confirmed a new high grade lode discovery and further
extensions to the south. These latest results are expected to further improve
the grade and geological confidence of current Mineral Resources and
Reserves at Essex.
ESSEX
WURC0846:
6.00m @ 53.73g/t from 109m,
incl. 1m @ 283g/t
WURC0848:
4.00m @ 12.08g/t from 107m,
incl. 2m @ 21.30g/t
WURC0850:
2.00m @ 10.92g/t from 133m
& 2m @ 5.43g/t from 139m
WURC0851:
4.00m @ 9.73g/t from 128m
WURC0853:
8.00m @ 11.80g/t from 144m,
incl. 4m @ 22.10g/t
WURC0856:
8.00m @ 5.31g/t from 168m,
incl. 2m @ 18.12g/t
8.00m @ 15.20g/t from 248m,
incl. 5m @ 23.00g/t
5.00m @ 3.95g/t from 287m,
incl. 3m @ 6.26g/t
WURC0861:
4.00m @ 24.46g/t from 159m,
incl. 1m @ 94.5g/t
6.00m @ 16.78g/t from 174m
5.00m @ 3.13g/t from 199m,
incl. 2m @ 21.30g/t
11.00m @ 10.51g/t from 220m
WURC0862:
14.00m @ 9.52g/t from 162m,
incl. 1 m @ 10.50g/t
4.00m @ 6.75g/t from 230m,
incl. 2m@11.41g/t
WURC0864:
3.00m @ 8.49g/t from 226m
5.00m @ 4.06g/t from 246m
Figure 6: Essex high grade results infilling current
Inferred and Indicated Resource areas
Previous operators installed underground development
to the base of the ore body, which requires minimal
dewatering and rehabilitation to gain access to ore.
The existing access also provides a platform for
planned drilling from underground to drill out the
newly defined high grade zones.
Drilling designed to infill the Inferred Resource at
Bulletin North returned outstanding results within
50m of the existing decline and previously stoped
areas. These latest results are expected to improve
the grade and geological confidence of current
Mineral Resources at Bulletin.
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Wiluna Mining | Annual Report 2020
BULLETIN
BULP0014:
7.40m @ 15.82g/t from 40.56m
BULP0015:
4.10m @ 4.88g/t from 44.15m
BULP0025:
14.45m @ 17.16g/t from
18.95 incl. 7.45m @ 31.22g/t
BULP0026:
12.40m @ 7.93g/t from 31.4m
WURC0835:
12.00m @ 7.01g/t from 184m
incl. 4m @ 16.59g/t
Figure 7: Sulphides
resource development
results from Bulletin and
Inferred Resource infill
targets
EAST LODE
Highlights from East Lode:
WURC0872:
6.00m @ 8.66g/t from 298m
WURC0877:
8.00m @ 8.35g/t from 102m
Figure 8: East Lode South
cross section with shallow
sulphide intersection and
high grade zones in situ in
historical drilling and open
at depth
Subsequently, the focus of drilling shifted to the Calvert
and East Lode zones in the Wiluna Mine Central and
Wiluna Mine South areas.
Review of Operations
21
At Calvert, high grade zones occur within a broad halo of mineralisation that
may be amenable to either narrow-lode long-hole stoping or bulk mining
(e.g. WURD0060: 76.5m @ 1.77g/t), with scenarios to be explored in upcoming
mine planning work.
CALVERT
Highlights from sulphide
resource drilling at Calvert:
WURD0059:
1.92m @ 10.05g/t from
358.08m
WURD0060:
Within 76.5m @ 1.77g/t
envelope from 380.5m:
1.65m @ 7.35g/t from
431.25m
2.47m @ 12.78g/t from
448.53m
WURD0061:
8.00m @ 5.11g/t
WURD0079:
3.85m @ 9.30g/t from
408.35m
Figure 9: Calvert cross section
showing high grade zone within very
wide lower-grade zone that may be
amenable to bulk underground mining
The Company reported further high
grade results from resource extension
drilling at the Golden Age and Lennon
zones (refer ASX Announcements
2 September 2020, 27 July 2020,
8 July 2020 and 4 April 2020). Golden
Age is a quartz reef style of deposit
with coarse gold, whereas Lennon sits
in the immediate footwall to Golden
Age and comprises multiple high
grade sulphide shears, processing
through the existing free milling
circuit and through the planned
sulphide flotation circuit as part of
the Stage 1 development plan.
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Wiluna Mining | Annual Report 2020
Current underground production at Golden Age and Lennon is
planned to supplement baseload free milling feed and is an important
source of cash flow ahead of Stage 1 sulphide production. Resource
extension drilling at Golden Age Lower, 100-200m below the current
mine workings, returned high grade intercepts and demonstrate the
ore body remains open at depth.
GOLDEN AGE
GARD0130:
5.96m @ 112.98g/t
GARD0102:
1.80m @ 8.92g/t
GARD0104:
2.50m @ 10.53g/t &
2.40m @ 12.67g/t
GARD0106:
2.12m @ 8.55g/t
GARD0112:
7.1m @ 7.47g/t,
incl. 2.7m @ 17.32g/t
Figure 10: Golden Age
and Lennon resource
development targets in the
Wiluna North Mine Area
LENNON
Significant results from
shallow sulphide resource
drilling at Lennon (Figure 8)
include:
BUUD0086:
5.21m @ 5.82g/t and
2.56m @ 8.46g/t
BUUD0090:
2.25m @ 5.28g/t
BUUD0091:
5.15m @ 18.25g/t
BUUD0094:
11.25m @ 4.26g/t
Figure 11: Lennon plan
view with significant
intercepts in multiple
parallel gold structures
Review of Operations
23
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Wiluna Mining | Annual Report 2020
Free Milling Resource and Reserve Development
After the year end, results were reported for resource infill and extension drilling completed at
Regent (2,245m RC) and Williamson (1,520m DD). Regent is an advanced resource conversion target
located 8km from the Wiluna Plant and under the new Mineral Reserve estimate is included in the
Wiluna Mining Centre. Regent is geologically akin to Wiluna-style deposits, with free milling oxide
and transitional minerlisation overlying fresh sulphides at depth. Results from Regent demonstrate
strong widths and grades, and further drilling is planned as the mineralisation remains open along
strike and at depth.
REGENT
RGRC0003:
10m @ 1.51g/t from 63m
RGRC0005:
11m @ 3.24g/t from 140m
incl. 2m @ 5.95g/t
RGRC0008:
16m @ 1.51g/t from 145m
RGRC0009:
8m @ 3.93g/t from 157m
incl. 3m @ 7.04g/t
RGRC0014:
10m @ 2.11g/t from 80m
incl. 1m @ 7.18g/t
RGRC0016:
11m @ 2.07g/t from 105m
incl. 2m @ 5.27g/t
Figure 12: Regent plan view showing targets for infill
drilling and hole locations
Wiluna Mining
geologist reviewing
core samples
Review of Operations
25
Final assay results were also reported for infill drilling completed at Williamson, located at the Lake
Way Mining Centre. A pit cutback is currently in progress on the southern part of the Williamson
Mineral Resource, which provides the baseload free milling feed during the transition to sulphide
production from October 2021. The programme was designed to infill the Inferred Mineral Resource
within a potential northern pit cutback, with results leading to conversion of the Mineral Resource to
Indicated category (Table 5).
WILLIAMSON
WMDD0017:
3.40m @ 5.79g/t from 96.60m
WMDD0018:
22.10m @ 2.86g/t from 133m,
incl. 2.85m @ 14.65g/t
WMDD0021:
16.10m @ 0.90g/t from
159.00m, incl. 0.8m @ 8.96g/t
WMDD0022:
10.65m @ 1.81g/t from
177.35m, incl. 0.35m @
12.40g/t and 0.70m @ 8.21g/t
Figure 13: Williamson
plan view showing
recent drill hole
locations, infilling
the Inferred resource
within the conceptual
northern pit cutback.
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Wiluna Mining | Annual Report 2020
After year end, the Company released its updated September 2020 Mineral Resource
Summary (Table 5 below) and plans to release an update Mineral Resources and Reserve
Statement in January 2021.
Table 5: 2020 Mineral Resource Summary
Total Mineral Resources
Measured
Indicated
Inferred
Total 100%
Mining
Centre
Wiluna
Matilda
Mt g/t Au
-
-
-
-
Lake Way
1.93
1.28
Galaxy
-
-
Koz
Au
Mt g/t Au
Koz
Au
Mt g/t Au
Koz
Au
Mt
g/t Au
Koz
Au
- 18.31
3.61 2,125 34.67
2.67 2,979
52.98
3.00
5,104
-
80
-
3.51
0.94
0.13
1.51
1.61
3.08
170
48
12
1.41
3.53
0.16
2.43
1.19
2.98
110
135
15
4.93
6.40
0.28
1.77
1.28
3.02
281
263
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Sub Total
1.93
1.28
80
22.89
3.20
2,356
39.77
2.53
3,240
64.59
2.73
5,676
Tailings and Stockpiles
Tailings
-
-
- 33.16
Stockpiles
0.51
0.9
15
2.16
0.57
0.51
611
35
Sub Total
0.51
0.89
15 35.32
0.57
646
-
-
-
-
-
33.16
2.67
-
35.83
0.57
0.58
0.57
611
50
661
Global Total
2.44
1.20
94 58.20
1.60 3,002 39.77
2.53 3,240 100.42
1.96
6,337
Reporting
Cut-Off
Total Mineral Resources (Wiluna Deposits Only)
Measured
Indicated
Inferred
Total 100%
g/t Au
Mt g/t Au
Koz
Au
Mt g/t Au
Koz
Au
Mt g/t Au
Koz
Au
Mt
g/t Au
Koz
Au
0.4
1.0
2.5
-
-
-
-
-
-
- 32.41
2.33 2,428 63.19
1.79 3,631
95.59
1.97
6,058
- 18.31
3.61 2,125 34.67
2.67 2,979
52.98
3.00
5,104
- 10.23
5.25 1,727 13.69
4.62 2,033
23.93
4.89
3,760
Review of Operations
27
Corporate And Environmental,
Sustainability and Governance (ESG)
Position and Performance
As at 30 June 2020, the Company had A$11.4
million in cash and bullion (cash of A$8.9 million,
bank guarantees of A$0.6 million and bullion of
A$1.9 million) (30 June 2019 – A$4.2 million).
Net cash at 30 June 2020 was A$11.1 million
(2019: Net debt A$11.8 million). Debt as at 30 June
2020 related to finance leases of A$0.3 million
(2019: Debt A$16 million).
The profit after tax for FY2020 was A$14 million
(2019: Loss of A$73 million). The FY2020 result
included Other Income of A$24 million, most of
which was due to the sale of non-core assets during
the year, namely the Lake Way Transaction with
Salt Lake Potash Ltd (see ASX announcement
dated 8 October 2020). Gold sold during the year
was 62,788oz @ A$2,131/oz.
Table 6: FY2020 Quarterly Cashflows
Capital Management
In September 2019, the Company announced a
A$7 million Capital raising via a A$4 million
placement and a A$3 million Share Purchase Plan
at a price of $0.01 (pre-consolidation) per share.
Additionally, the Company completed a Placement of
A$26 million in two tranches, and a fully underwritten
Entitlement Issue of A$26.1 million at a price of
$0.01 (pre-consolidation) per share. The A$52 million
equity issue was closed in April 2020.
Subsequently, in June 2020, the Company completed
a share consolidation of 100 to 1, reducing shares
on issue from 10,028,258,811 to 100,283,702.
Quoted and unquoted options were also
consolidated accordingly.
Operating cash flow before capital
expenditure and pre-production mining
Sustaining capital expenditure
Site operating cash flow, net of sustaining
capital expenditure
Non-sustaining capital expenditure
Pre-production mining
Site operating cash flow, net of all capital
expenditure and pre-production mining
Net corp/admin costs
Development expenditure (studies, resource
development and other projects)
Treasury activities (hedging, offtake discount
& working capital movements)
Sep’19
A$00)
Dec’19
A$000
Mar’20
A$000
Jun’20
A$000
FY20
Full Year
10,741
20,563
7,781
5,823
44,908
(597)
(5,199)
10,144
15,364
(448)
7,334
(3,108)
(9,351)
2,715
35,557
(86)
(220)
9,838
(1,795)
(7,258)
(9,725)
(3,280)
(14,886)
(9,312)
(11,157)
(27,947)
6,311
(11,703)
(11,722)
(7,276)
(1,220)
(1,265)
(1,164)
(1,172)
(1,075)
(1,795)
(1,310)
(4,769)
(5,886)
(10,118)
(7,940)
(13,132)
4,567
(7,185)
(23,690)
Proceeds from equity issued
3,820
2,889
10,750
38,231
55,690
Debt service (principal & interest)
(4,853)
(3,272)
(3,091)
(4,108)
(15,323)
Net proceeds from sale of noncore assets
Debt drawdowns
Net Cash Flows
Opening Cash and Bullion
Closing Cash and Bullion
2,925
1,625
2,930
4,198
7,127
8,100
-
-
-
(1,439)
(2,347)
7,127
5,689
5,689
3,341
-
-
8,020
3,341
11,025
1,625
7,163
4,198
11,361
11,361
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Wiluna Mining | Annual Report 2020
Debt Management
In order to simplify its capital structure, Wiluna
finalised the process to repay and discharge its
secured Convertible Security Funding Agreement
with an entity managed by The Lind Partners
(“Lind”). Additionally, the Company entered into a
new A$19 million working capital facility with MACA
Limited (“MACA”). On 22 April 2020, the Group
fully extinguished all loan amounts outstanding
with MACA Mining Limited. Consequently, MACA
released its security over the Group’s assets.
On 14 August 2020, Wiluna Mining announced that
all documentation concerning the gold prepaid swap
financing facility and gold hedging facility provided
by Mercuria Energy Trading Pte Ltd had been
completed. The Company has executed the prepaid
swap and the hedging transactions. The A$21 million
prepaid swap proceeds (“Tranche 1”) will be repaid
in full by delivering 699oz of gold per month over
12 months, totalling 8,388oz. The facility gives
Wiluna Mining the flexibility of drawing a further
A$40 million (“Tranche 2”), subject to Mercuria credit
approval, to further advance the Stage 1 Expansion.
Wiluna Mining’s favourable, ongoing hedging
facility with Mercuria will see 34,000oz sold at an
average price of A$2,674/oz, which is net
of transaction costs, maturing over the next
12 months. This hedge facility is welcomed in
a time of important cash flow management and
high gold prices, as well as developing a longer-
term relationship with Mercuria.
With such diverse activities taking place on the site,
safety is constantly in focus. The Company is pleased
to report that there were no major accidents at the
site for the year. The 12-month LTIFR for the site
was 2.0.
Safety Measures
During the year, the Company continued to
implement substantial measures to ensure the
safety of all of its personnel, contractors, suppliers
and community in response to COVID-19. We are
pleased to report that there were no COVID-19
incidents at site or at the Perth office during the
year or subsequently to the year end. The Company
will continue to maintain these measures and will
closely monitor the situation at both the site and
Perth office for as long as the pandemic continues.
We can report that despite these measures, the
result of the impact of the virus on the Group’s
operations has been minimal.
Wiluna Mining Rescue Crew
team members during a
training exercise
Review of Operations
29
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Community involvement –
Wiluna Mining sponsoring the
Murlpirrmarra Community
football weekend
Left: Wiluna Mining 2020
Martu Eagles Football Team
30
Wiluna Mining | Annual Report 2020
Goal to Become a Tier 1 Producer
Wiluna Mining is first and foremost a development and growth
Company focused on the Staged development of the Company’s large
underground sulphide system which we plan to bring online in Stage 1
by September 2021. The Company emphasize that the current free
milling operation through to next September exists purely to provide
operating cashflow to assist in funding the staged development of the
sulphide operation. Wiluna Mining’s goal is to become a Tier 1 gold
producer in a Tier 1 jurisdiction1.
1 Tier 1 gold producer/mine is defined as a single mine with production of 300kozpa,
gold reserves of greater than 3Moz’s and a life of mine of greater than 10 years.
Tier 1 gold jurisdiction is considered Australia, Canada and the United States.
New Appointments
On 22 May 2020, the Company announced the
appointment of Ms Sara Kelly as a Non-Executive
Director. In addition, on 9 June, Executive Chair
Mr Milan Jerkovic extended his contract for a
further three years. Both these appointments
greatly enhance the leadership and stability of the
Company. Wiluna Mining is delighted to welcome
Ms Kelly to the Board and to have a leader of
Mr Jerkovic’s standing overseeing the day to day
management of the Company at such a crucial time
in its history and development.
Review of Operations
31
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ESG Team Formalised
Furthermore, the Company formalised its
Environmental, Social and Governance (ESG) team
and platform which will be driven by the Company’s
latest appointment to the Board of Directors,
Sara Kelly. Ms Kelly will work with several Senior
Management as well as an external consultant
who is highly experienced in ESG matters
and is assisting the Wiluna Mining ESG team.
The Company will continue to develop its
ESG policies and platform as this is an
extremely important part of its operating
and ongoing business.
Successful Rebrand
Additionally, in June the Company
successfully rebranded as Wiluna Mining,
as well as completing a 1 for 100 share
consolidation.
Top: Wiluna Mining were proud to
support the RFDS in the Goldfields
with a $10,000 donation
Centre: Wiluna Mining Indigenous
Liaison Officer Trish Botha with
Wiluna Community members
Left: Community members and
a very big truck!
32
Wiluna Mining | Annual Report 2020
FINANCIAL
REPORT
Directors’ Report
Review and Results of Operations
Remuneration Report (Audited)
Auditor 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
Basis of Preparation
Performance for the Year
Operating Assets and Liabilities
Other Disclosures
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Shareholder Information
33
36
41
51
53
54
55
56
57
57
62
88
93
100
101
106
Directors’ Report
33
Directors’ Report
Your Directors submit the Financial Report of Wiluna Mining Corporation Limited
(Wiluna or the Company) and its controlled entities (the Group) for the year ended
30 June 2020.
DIRECTORS
The names of Directors who held office during or since the end of the financial year are
as follows.
Milan Jerkovic
B.App.Sc (Geol), GDip (Mining), GDip (Mineral Economics), FAusIMM MAICD
Executive Chair
Mr Jerkovic is a geologist with over 35 years’ experience in the mining industry including
resource evaluation, operations, financing, acquisition, project development and general
management. Mr Jerkovic is also principal of the Xavier Group. He was previously the CEO
of Straits Resources Limited, has held positions with WMC, BHP, Nord Pacific, Hargraves,
Tritton and Straits Asia and was the founding chair of Straits Asia Resources.
Appointed:
27 November 2015
Committee memberships:
Other listed board memberships:
Nil
Nil
Previous listed board memberships: Geopacific Resources Limited, Metals X Limited
Interest in shares:
Interest in options:
1,110,420
259,241
Anthony James
BEng, AWASM, FAusIMM
Non-Executive Director
Mr James is a mining engineer with considerable operational, new project development
and corporate experience including roles as Managing Director of Carbine Resources Ltd,
Atherton Resources Ltd and Mutiny Gold Ltd. At Atherton Resources, Mr James achieved a
favourable outcome for shareholders following the takeover by Auctus Minerals. At Mutiny
Gold, Mr James led the implementation of a revised development strategy for the Deflector
copper-gold deposit in Western Australia that resulted in the successful merger of Mutiny
Gold and Doray Minerals Ltd.
Prior to this, Mr James held a number of senior executive positions with international gold
producer Alacer Gold Corporation following the merger of Anatolia Minerals and Avoca
Resources in 2011. As the Chief Operations Officer of Avoca Resources, he played a key role
in Avoca’s initial growth and success, leading the feasibility, development and operations of
the Trident Underground Mine and the Higginsville Gold Operations.
Appointed:
22 June 2018
Committee memberships:
Audit & Risk, Remuneration & Nomination
Other listed board memberships:
Carbine Resources Limited,
Apollo Consolidated Limited
Galena Mining Limited
Previous listed board memberships: Nil for the last three years
Interest in shares:
Interest in options:
None
None
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Wiluna Mining | Annual Report 2020
Greg Fitzgerald
BBus, CA
Non-Executive Director (Lead Independent Director)
Mr Fitzgerald is a Chartered Accountant with more than 30 years’ of gold mining and
resources related experience, and extensive executive experience in managing finance
and administrative matters for listed companies. He held the positions of Chief Financial
Officer and Company Secretary for ASX 200 company, Resolute Mining Limited, for more
than 15 years until his resignation in 2017.
Appointed:
19 February 2018
Committee memberships:
Audit & Risk (Chair)
Remuneration & Nomination (Chair)
Other listed board memberships:
Nil
Previous listed board memberships: Nil for the last three years
Interest in shares:
Interest in options:
None
None
Sara Kelly
LLB, BComm
Non-Executive Director
Ms Kelly has significant transactional and industry experience having worked in private
practice, as a corporate advisor, and as in-house counsel. Ms Kelly regularly acts for
ASX listed companies and their Directors and officers in relation to capital raisings,
recapitalisations of ASX shells, asset acquisitions and disposals, Corporations Act and
Listing Rules compliance, corporate reconstructions and insolvency, director’s duties,
meeting procedure, as well as general corporate and commercial advice.
Ms Kelly is a Partner at Edwards Mac Scovell, a boutique litigation, insolvency and
corporate firm based in Perth, Western Australia.
Appointed:
22 May 2020
Committee memberships:
Audit & Risk, Remuneration & Nomination
Other listed board memberships:
Nil
Previous listed board memberships: Ragnar Metals Limited
Homestay Care Limited
Interest in shares:
Interest in options:
None
None
Neil Meadows
B.App.Sc (Metallurgy), M.App.Sc (Metallurgy), GDip (Bus Admin), MAusIMM, Dip AICD
Executive Director – Operations
Mr Meadows is a metallurgist with over 30 years’ experience in the mining and processing
industries. Prior to joining Wiluna Mining, he worked as Chief Operating Officer for
European Metals Holdings Limited. Mr Meadows’ previous roles include COO of Karara
Mining Ltd, Managing Director of IMX Resources Ltd, COO of Queensland Nickel Pty Ltd
and General Manager of Murrin Murrin Operations for Minara Resources Ltd.
Appointed:
1 December 2019 (General Manager of Major
Projects and Business Improvement until
appointment to the Board)
Committee memberships:
Other listed board memberships:
Nil
Nil
Previous listed board memberships: Nil for the last three years
Interest in shares:
Interest in options:
None
159,231
Daniel Travers
BSc (Hons), FCCA
Company Secretary
Appointed:
3 May 2019
Mr Travers is a Fellow of the Association of Chartered Certified Accountants with over
10 years’ experience in the administration and accounting of publicly listed companies
following significant public practice experience. Mr Travers holds undergraduate degrees
with honours in both Mathematics and Accounting and is an employee of Endeavour
Corporate, which specialises in the provision of company secretarial and accounting
services to ASX listed entities in the mining and exploration industry.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the financial year were;
• production of gold from the Wiluna Gold Operation; and,
• gold exploration and development.
Directors’ Report
35
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Wiluna Mining | Annual Report 2020
Review and Results of Operations
Production
Gold production during the year was 61,885oz. In FY2020 the Company generated positive
cash flows from operations and over the same period significant concurrent investment
was made into site-based capital infrastructure (primarily the new tailings storage facility,
TSF K) and preproduction mining activities (primarily at Williamson). These major investing
activities will sustain and create substantial value over the next 12-15 months as the
Company transitions to the production of gold in concentrate.
The Company’s performance in the first half of FY2020 was strong with gold production
of 37,568oz @ an AISC of A$1,524/oz. The mined and processed grade for the first half of
FY2020 of 1.9g/t reflected better than expected performance in the transitional and fresh
material towards the base of the Wiluna open pit mines.
The March and June 2020 quarters were below expectations with gold produced of
24,317oz @ an AISC of A$2,770/oz and were hampered by slower than expected access
to ore from Williamson and the Underground. The higher AISC/oz for the March 2020 and
June 2020 quarters was primarily driven by lower grades mined and processed.
Table 1: FY2020 Gold Production Statistics
Mining
Open pit strip ratio
Total ore mined (UG and open pit)
Total mined grade
Total mined contained ounces
Processing
Tonnes processed
Grade processed
Plant recovery
Gold Produced
Units
30 June 2020
30 June 2019
Waste/Ore
10.3
9.1
t
g/t
oz
t
g/t
%
oz
1,429,306
1,938,606
1.5
71,148
1.3
79,785
1,688,291
1,807,931
1.4
79
61,885
1,950
1.3
85
65,406
1,760
All-In Sustaining Cost
A$/oz
Discovery
During the FY2020 year the drill bit continued to deliver at Wiluna, supporting the
Company’s sulphide expansion strategy. The Company completed 49,800 metres of drilling
in FY2020 across the Wiluna Mining Operation, including 17,464m of DD and 27,673m of RC
completed at the Wiluna Mining Centre in support of the Company’s Stage 1 expansion plan.
The primary focus has been Reserve Development drilling of sulphide ore bodies in support
of the proposed mine development sequence to:
1. Significantly increase the confidence in sulphide Resources from Inferred to Indicated
category, which will underpin Stage 1 Reserves.
2. Add Reserve ounces in high grade, shallow zones, close to existing mine development that
can be rapidly brought into production at low cost.
3. Find new, high grade shoots that will enhance the ounces per vertical metre and, more
importantly, increase the grade. This will help consolidate Stage 1 and enhance the
transition into Stage 2 which is to increase production to +250kozpa of gold doré and
gold in concentrate over a long mine life.
The Company intends to release a new Resource update in late September 2020 and has
commenced mine planning work for a Reserves update in December 2020.
Review and Results of Operations
37
Growth
The Company continued to advance its Stage 1 Sulphide Expansion plan during the year.
The Company’s Sulphide Expansion plan involves a staged upscaling of operations and the
transition to mining the large sulphide resource at the Wiluna Mining Centre with treatment
through a new flotation plant. Stage 1, the first of at least two planned development phases,
is currently underway with the target of mining approximately 750,000tpa of underground ore
producing approximately 120,000ozpa of gold doré and gold in concentrate commencing in
September 2021.
Offtake agreements for 100% of the gold concentrate for the first three years of production
have been secured with Trafigura and London-listed Polymetal Group.
Corporate
As at 30 June 2020, the Company had A$11.4 million in cash and bullion (cash of A$8.9 million,
bank guarantees of A$0.6 million and bullion of A$1.9 million) (30 June 2019 – A$4.2 million).
Net cash at 30 June 2020 was A$11.1 million (2019: Net debt A$11.8 million). Debt as at 30 June
2020 related to finance leases of A$0.3 million (2019: Debt A$16 million).
Results
The profit after tax for the financial year was A$14,250,000 (2019: Loss of A$73,161,000).
The Group’s net assets at the end of the year were A$138,537,000 (2019: A$62,177,000).
The FY2020 result included Other Income of A$24 million, most of which was due to the sale of
non-core assets during the year, namely the Lakeway Transaction with Salt Lake Potash Ltd.
Gold sold during the year was 62,788oz @ A$2,131/oz. There were 4,720oz of forward
gold sales contracts in place at 30 June 2020, at an average price of A$2,504/oz, maturing by
31 August 2020.
New Corporate Branding and Trading Name
On 22 June 2020, the Company announced the adoption of a new brand and identify, advising
that it would trade under the name ‘Wiluna Mining Corporation Limited’ and the ASX code ‘WMX’.
Share Consolidation
In June 2020, the Company completed a share consolidation of 100 to 1, reducing shares
on issue from 10,028,258,811 to 100,283,702. Quoted and unquoted options were also
consolidated accordingly.
Equity Placements
In September 2019, the Company announced a A$7 million Capital raising via a A$4 million
placement and a A$3 million Share Purchase Plan at a price of $0.01 (pre-consolidation) per share.
Additionally, the Company completed a Placement of A$26 million in two tranches, and a fully
underwritten Entitlement Issue of A$26.1 million at a price of $0.01 (pre-consolidation) per
share. The A$52 million Equity Issue was closed in April 2020.
Lakeway Transaction with Salt Lake Potash Ltd
The Lake Way Transaction was completed in early October 2019, with the full A$10 million
contribution to Williamson Mining incurred as at 30 June 2020. During the year Salt Lake Potash
(S04) also exercised its option to acquire the Southern Borefield infrastructure for consideration
of A$3 million. At balance date, approximately A$4.2 million was still receivable from Salt Lake.
Debt Financing and Working Capital Facility
In order to simplify its capital structure, Wiluna finalised the process to repay and discharge its
secured Convertible Security Funding Agreement with an entity managed by The Lind Partners
(Lind). The outstanding balance of A$2,925,000 on 2 September 2019 was settled through a cash
payment of A$1,625,000 and the issue of 144,444,445 fully paid ordinary shares in the Company.
Lind released its security over the Group’s assets.
Additionally, the Company entered into a new A$19 million working capital facility with MACA
Limited (MACA).
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38
Wiluna Mining | Annual Report 2020
On 22 April 2020, the Group fully extinguished all loan amounts outstanding with MACA
Mining Limited. Consequently, MACA released its security over the Group’s assets.
COVID-19
A COVID-19 Management and Response Plan was activated in early March 2020 in
accordance with Western Australia State Government requirements and Australian
Department of Health guidelines. As part of this plan, the Company required all employees
or contractors who had incidental exposure to someone who has been diagnosed with
the COVID-19 virus, and anyone who has travelled international, to stay at home for a
self-isolation period of 14 days, regardless of whether they are showing symptoms.
Likely Developments and Expected Results of Operations
There are no likely developments of which the Directors are aware which could significantly
affect the results of the Group’s operations in subsequent financial years not otherwise
disclosed in the Principal Activities and Operating and Financial Review or the Events
Subsequent to Reporting Date sections of the Directors’ Report.
Dividends Paid or Recommended
The Directors do not recommend the payment of a dividend for the 30 June 2020
financial year and no amount has been paid or declared by way of a dividend to the
date of this report.
Significant Changes in State of Affairs
There were no significant changes in the state of affairs of the Group during the
financial year.
Events Subsequent to Reporting Date
Debt Financing
On 14 August 2020, Wiluna Mining announced that all documentation concerning the
gold prepaid swap financing facility and gold hedging facility provided by Mercuria Energy
Trading Pte Ltd had been completed. The Company has executed the prepaid swap and the
hedging transactions. The A$21 million prepaid swap proceeds (Tranche 1) will be repaid
in full by delivering 699oz of gold per month over 12 months, totaling 8,388oz. The facility
gives Wiluna Mining the flexibility of drawing a further A$40 million (Tranche 2), subject to
Mercuria credit approval, to further advance the Stage 1 Expansion.
Wiluna Mining’s favorable, ongoing hedging facility with Mercuria will see 34,000oz sold
at an average price of A$2,674/oz, which is net of transaction costs, maturing over the next
12 months.
Apex Gold Share Issue
On 5 August 2020, Wiluna Mining announced the issue of 186,366 shares to RF Capital Pty
Ltd pursuant to a deferred consideration payment of A$260,000 relating to the Company’s
initial acquisition of the Wiluna Gold Project.
The milestone achieved to trigger the deferred consideration, which is the final such
performance milestone pursuant to the terms of the sale and purchase agreement, was
the production hurdle of 100,000 ounces of gold derived from the prescribed Wiluna
tenements, which was achieved in July 2020. The shares were issued at the 30-day VWAP
as at 3 August 2020 which was A$1.395.
COVID-19
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been
financially positive for the Group up to 30 June 2020, it is not practicable to estimate the
potential impact, positive or negative, after the reporting date. The situation is rapidly
developing and is dependent on measures imposed by the Australian Government and other
countries, such as maintaining social distancing requirements, quarantine, travel restrictions
and any economic stimulus that may be provided.
Review and Results of Operations
39
Apart from the above, there are no other matters or circumstances that have arisen since
the end of the financial year which significantly affected or could significantly affect the
operations of the Group, the results of those operations, or the state of affairs of the Group
in future financial years.
Meetings of Directors
The number of Directors’ meetings held (including meetings of the Committees of the
Board) and number of meetings attended by each of the Directors of the Company during
the financial year are as follows.
Directors’
Meetings
Audit and Risk
Committee
Remuneration and
Nomination Committee
Director
Eligible
Attended
Eligible
Attended
Eligible
Attended
Milan Jerkovic
Neil Meadows(i)
Greg Fitzgerald
Anthony James
Sara Kelly(ii)
9
4
9
9
1
9
4
9
9
1
-
-
3
3
-
-
-
3
3
-
-
-
3
3
-
-
-
3
3
-
(i) Mr Meadows was appointed as a director on 1 December 2019.
(ii) Ms Kelly was appointed as a director on 22 May 2020.
Environmental Issues
The Group is subject to significant environmental regulations under various legislation.
The Group aims to ensure that it complies with the identified regulatory requirements in
each jurisdiction in which it operates. The Wiluna Operation is mining multiple deposits and
is planning to mine various other locations. The timing and preparation for mining each of
these deposits is dependent on the reconciled performance of each and the ongoing mine
evaluation and planning process. Each time a new deposit is mined, separate regulatory
approvals are required and the timing of this process is continually changing in a fluid mine
planning process. As a direct result of this, at any one time, the formal approval process may
still be outstanding at the time mining commences, which is usual in practice.
Options
Options on Issue at the Date of this Report
Expiry Date
Quoted/Unquoted
Exercise Price
Grant Date
11 May 2018
31 December 2021
6 December 2018
13 February 2024
16 April 2019
16 April 2019
5 July 2019
26 August 2019
10 July 2020
Total
12 October 2020
12 October 2020
30 June 2023
30 June 2023
30 June 2024
Unquoted
Unquoted
Quoted
Quoted
Unquoted
Unquoted
Unquoted
$0.00
$8.00
$3.00
$3.00
$0.00
$0.00
$0.00
Number
120,187
720,000
5,736,662
1,000,000
729,612
137,748
811,985
9,256,194
Shares Issued on the Exercise of Options
No shares of the Company were issued during the year ended 30 June 2020 and up to the
date of this report on the exercise of options granted.
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Wiluna Mining | Annual Report 2020
Indemnifying Officers and Auditors
In accordance with the constitution, except as may be prohibited by the Corporations
Act 2001 every Officer, or agent of the Company shall be indemnified out of the property
of the Company against any liability incurred by him in his capacity as Officer or agent of
the Company or any related corporation in respect of any act or omission whatsoever and
howsoever occurring or in defending any proceedings, whether civil or criminal.
No indemnification has been paid with respect to the Group’s auditor.
Auditor
RSM Australia Partners continues in office in accordance with Section 327 of the
Corporations Act 2001.
Auditor Independence
A copy of the Auditor’s Independence Declaration as required under Section 307C of the
Corporations Act 2001 is attached to the Director’s Report.
Non-audit Services
Details of the amounts paid or payable to the Auditor for non-audit services provided during
the financial year by the Auditor are outlined in the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year,
by the auditor (or by another person or firm on the Auditor’s behalf), is compatible with the
general standard of independence for Auditors imposed by the Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in the financial statements
do not compromise the external Auditor’s independence requirements of the Corporations
Act 2001 for the following reasons;
• all non-audit services have been reviewed and approved to ensure that they do not impact
the integrity and objectivity of the Auditor; and,
• none of the services undermine the general principles relating to Auditor independence as
set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting
Professional and Ethical Standards Board, including reviewing or auditing the Auditor’s
own work, acting in a management or decision-making capacity for the Company, acting as
advocate for the Company or jointly sharing economic risks and rewards.
Officers of the Company who are Former Partners of The Auditor
There are no officers of the Company who are former partners of RSM Australia Partners.
Rounding
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/
Directors’ Report) Instrument 2016/91 and in accordance with that class order, amounts
in the financial statements have been rounded off to the nearest thousand dollars, or in
certain cases, to the nearest dollar.
Remuneration Report (Audited)
41
Remuneration Report (Audited)
This Remuneration Report outlines the director and executive remuneration arrangements
of the Company and the Group in accordance with the requirements of the Corporations
Act 2001 and its Regulations. For the purposes of this report, Key Management Personnel
of the Group are defined as those persons having authority and responsibility for planning,
directing and controlling the major activities of the Company and the Group, including any
director (whether executive or otherwise) of the parent company.
Remuneration Framework
At the Board’s absolute discretion, the Board, the Executive and Key Management Personnel
are eligible to participate in the incentive arrangements of the Company. The incentive
plan focuses the efforts of the executive and management team on business performance,
business sustainability, business growth and long-term value creation. It provides for clear
‘line of sight’ objectives to maximise the effectiveness of the participants’ total incentive
awards and facilitates the meaningful accumulation of Company securities by participants
to enforce an ownership mentality which in addition to having a retentive benefit, also
further aligns management interests with those of the Shareholders. The Remuneration
Policy, including the incentive plan, has been tailored to increase goal congruence between
shareholders and executives. Two methods have been applied to achieve this aim, being the
Operations and Growth Incentive Plan (short term) and the Value Creation Plan (long term)
which is administered under the Company’s Employee Option Plan (EOP).
Remuneration Framework Overview
Category
Fixed Pay
Incentive Pay
Reward Pay
Definition of Pay Category
Element
Purpose
Pay which is linked to the present value or
market rate of the role
Pay for delivering the plan and growth
agenda for the Group which must create
value for shareholders. Incentive pay will
be linked to achievement of ‘line-of-sight’
performance goals
It reflects ‘pay for performance’
Pay for creating value for shareholders.
Reward pay is linked to shareholder
returns.
It reflects ‘pay for results’
Total Fixed
Remuneration
(TFR)
Short-Term
Incentive (STI)
Pay for meeting role
requirements
Incentive for the
achievement of annual
objectives
Incentive for the
achievement of sustained
business value
Long-Term
Incentive (LTI)
Reward for performance
over the long term
The incentive opportunities under the Remuneration Policy contain a maximum amount of
Total Incentive Opportunity (TIO), as shown below.
Maximum Total Incentive Opportunity as a Percentage of TFR on an Annual Basis
Plan
WMX Ops & Growth
WMX Value Creation
Performance Period
One Year (STI)
Three Year Vest (LTI)
Award
Executives
Cash
48% – 88% p.a.*
ZEPOs
20% p.a.
TIO
68% – 108% p.a.
* The Executive Chair’s employment contract for the year ended 30 June 2020 allowed for a STI maximum
amount of 88% of his TFR. From 1 July 2020, this maximum percentage reduces to 48%, in line with the
other Executives (who have a maximum STI which is 48% of their TFR in both periods).
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Wiluna Mining | Annual Report 2020
Remuneration Report (continued)
The maximum amount of TIO will only be delivered to the Directors, the Executive and/or
Key Management Personnel if the highest performance levels for each of the performance
hurdles are achieved. The actual value of incentives may be zero if the performance hurdles
are not met.
The Total Annual Remuneration (i.e. TFR + STI + LTI) for the Key Management Personnel
has been set at a level that is broadly in line with the average Total Annual Remuneration
for a peer group of Australian based gold miners.
Performance Hurdles
Participation in the incentive opportunities of the Remuneration Policy is based on
successful milestone achievements against the following performance hurdles.
Short-Term Incentive (STI) Performance Metrics
Paid in the form of a cash bonus and to ensure goal alignment, are consistent amongst
all the Executive;
Company performance (80%)
• Safety measures (Total Reportable Injury Frequency Rate – TRIFR);
• Company operating cash flow;
• All in sustaining cost per ounce produced; and,
• Production target gold ounces.
Individual performance (20%)
• Individual specific goals and supervisory discretion.
Long-Term Incentive (LTI) Performance Metrics
Paid in Zero Exercise Price Options (ZEPOs) and to ensure goal alignment, are consistent
amongst all the Executive;
• Performance versus ASX Gold Index (*);
• Reserves increased; and,
• Resources maintained.
(*) The hurdle relating to the performance versus the ASX Gold Index will see 50% of this
portion of the ZEPOs vest if WMX’s share price outperforms the ASX Gold Index. 100% of
this portion of the ZEPOs will vest if the WMX share price outperforms the ASX Gold Index
by at least 50%. The payout will increase on a straight line basis between these two points.
ZEPOs issued from 1 July 2020 will only have the performance metric of Performance versus
ASX Gold Index.
Vesting conditions for LTI performance hurdles will be tested once only at the end of every
three year measurement period.
Executive Chair Remuneration
Effective 1 July 2020, the Executive Chair’s remuneration became as follows.
Total Fixed Remuneration
Total fixed remuneration increased from A$400,000pa to A$420,000pa. Notice period is
12 months to be given by the Company in year one of the contract, nine months to be given
by the Company in year two of the contract and six months to be given by the Company in
year three of the contract. Mr Jerkovic is required to give the Company three months’ notice
at any time during the three years of the contract. The employment contract for the position
of Executive Chair ends on 30 June 2023.
Remuneration Report (Audited)
43
Remuneration Report (continued)
Short-Term Incentives (STI)
Up to 48% of fixed remuneration per annum for each year of the contract. Participation in
the incentive opportunities of the Remuneration Policy is based on successful milestone
achievements against the following Key Performance Indicators (KPI).
Company KPIs (80%)
• Safety measures (Total Reportable Injury Frequency Rate – TRIFR);
• Company operating cash flow;
• All in sustaining cost per ounce produced; and,
• Production target gold ounces.
Individual performance (20%)
• Individual specific goals and Board’s discretion.
Long-Term Incentives (LTI)
LTIs expiring on 31 December 2021 remain unchanged, being 2,500,000 unquoted ZEPOs
with a A$nil exercise price. Furthermore, at a general meeting of shareholders on 24
September 2019, shareholders approved the issue of 2,522,596 ZEPOs with a A$nil
exercise price to Mr Jerkovic which are subject to certain performance conditions and
expire 30 June 2023.
To align with other Key Management Personnel, it will be put to the Company’s shareholders
at the 2020 Annual General Meeting that the Executive Chair be issued 20% of his total fixed
remuneration in ZEPOs.
Voting and Comments Made at the Company’s 2019 Annual
General Meeting (AGM)
At the 2019 AGM 98% of the votes received supported the adoption of the Remuneration
Report for the year ended 30 June 2019. The Company did not receive any specific feedback
at the AGM regarding its remuneration practices.
Key Management Personnel
The Key Management Personnel of the Company consisted of the following directors
and executives:
Directors
Milan Jerkovic
Anthony James
Greg Fitzgerald
Sara Kelly
Neil Meadows
Position
Executive Chair
Non-Executive Director
Non-Executive Director
Non-Executive Director – appointed 22 May 2020
Operations Director – appointed 1 December 2019
(Previously GM – Major Projects & Business Improvement)
Key Management Personnel (KMP)
Position
Anthony Rechichi
Chief Financial Officer
Cain Fogarty
Jim Malone
Wayne Foote
Guy Simpson
GM – Geology and Business Development
GM – Investor Relations & Communications – appointed 1 March 2020
GM – Major Projects – appointed 30 March 2020
GM – Operations and Planning – resigned 22 April 2020
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44
Wiluna Mining | Annual Report 2020
Remuneration Report (continued)
The details of the Key Management Personnel’s remuneration have been set out in the
following tables.
Remuneration Structure for Key Management Personnel
Remuneration is based on the following components approved by the Remuneration and
Nomination Committee;
• base pay and non-monetary benefits;
• short-term performance incentives;
• long-term performance incentives; and,
• other remuneration such as superannuation and long service leave.
Table 1: Contract Terms for Key Management Personnel
Name
Milan
Jerkovic
Anthony
James
Anthony
Rechichi
Cain
Fogarty
Greg
Fitzgerald
Jim
Malone
Title
Executive Chair
Non-Executive
Director
Chief Financial
Officer
GM – Geology
and Business
Development
Non-Executive
Director
GM – Investor
Relations &
Communications
Neil
Meadows
Operations
Director
Sara
Kelly
Wayne
Foote
Non-Executive
Director
GM – Major
Projects
Term of
Agreement
Notice Period by
Employee
Notice Period by
Company
Termination
Benefit
Ends
30/06/23
Three months’
notice
12 months year one
n/a
Nine months year two
Six months year three
Open
Open
Open
Open
Open
Open
Open
Open
Upon resignation
as Director
Upon termination
as Director
Three months’
notice
Three months’
notice
Three months’ notice
Three months’ notice
Upon resignation
as Director
Upon termination
as Director
Three months’
notice
Three months’
notice
Three months’ notice
Three months’ notice
Upon resignation
as Director
Upon termination
as Director
Three months’
notice
Three months’ notice
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Remuneration Report (Audited)
45
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46
Wiluna Mining | Annual Report 2020
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Remuneration Report (Audited)
51
Remuneration Report (continued)
Consequences of Performance on Shareholder Wealth
The earnings of the Group for the five years to 30 June 2020 are summarised below.
Sales revenue
($’000)
126,562
102,466
118,252
2020
$’000
2019
$’000
2018
$’000
2017
$’000
47,331
2016
$’000
-
Profit/(loss)
after income tax
Share price at
30 June
($’000)
14,250
(73,161)
(20,027)
(6,844)
(8,009)
$ per share
1.34(i)
0.011
0.07
0.28
0.70
Basic profit/(loss)
per share
cents per
share
24.43(i)
(4.29)
(2.95)
(2.28)
(3.73)
(i) Note, the Company performed a 100:1 share consolidation on 25 May 2020.
Loans to Key Management Personnel
There were no loans to Key Management Personnel during the years ended 30 June 2020.
Other Transactions with Key Management Personnel and
Their Related Parties
Xavier Group Pty Ltd(i)
Transactions with
Related Parties
Balances
Outstanding
$’000
318
$’000
40
(i) Entity related to Milan Jerkovic, Executive Chair. Mr Jerkovic is an officer and co-owner of Xavier Group Pty Ltd.
All transactions were made on normal commercial terms and conditions and at market rates.
End of audited Remuneration Report.
Auditor Independence Declaration
Signed in accordance with a resolution of the Board of Directors pursuant to Section 298(2)(a)
of the Corporations Act 2001.
Milan Jerkovic
Executive Chair
Perth, 28 August 2020
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52
Wiluna Mining | Annual Report 2020
Auditor Independence Declaration (continued)
THE POWER OF BEING UNDERSTOODAUDIT | TAX | CONSULTINGRSM Australia Partnersis a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036Liability limited by a scheme approved under Professional Standards LegislationRSM Australia PartnersLevel 32, Exchange Tower 2 The Esplanade Perth WA 6000GPO Box R1253 Perth WA 6844T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111 www.rsm.com.au AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Wiluna Mining Corporation Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) Any applicable code of professional conduct in relation to the audit. DAVID WALL Partner RSM Australia Partners Perth, WA Dated: 28 August 2020 Consolidated Statement of Profit or Loss and Other Comprehensive Income
53
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the Year Ended 30 June 2020
Consolidated
2020
$’000
2019
$’000
Note
Continuing Operations
Revenue from gold and silver sales
Cost of production relating to gold sales
Gross Profit/(Loss) Before Depreciation and Amortisation
Depreciation and amortisation relating to gold sales
Gross Profit/(Loss) from Operations
Other income
Administration expenses
Non-capital exploration expenditure
Depreciation of non-mine site assets
Share-based payments
Finance costs
Treasury – realised (loss)/gain
Treasury – unrealised gain/(loss)
Asset impairment charges
Other expenses
Profit/(Loss) Before Income Tax Expense for the
Year from Continuing Operations
Income tax expense
Profit/(Loss) After Income Tax Expense for the
Year From Continuing Operations
Other Comprehensive Income
1
2
2
4
3
3
5
5
15
6
126,562
(96,528)
30,034
(28,541)
1,493
24,051
(5,559)
(42)
(63)
(456)
(9,278)
(13)
4,117
-
-
102,466
(103,459)
(993)
(14,077)
(15,070)
6,582
(4,775)
(1,293)
(65)
(132)
(9,084)
2,126
(5,851)
(45,002)
(597)
14,250
(73,161)
-
-
14,250
(73,161)
-
-
Total Comprehensive Profit/(Loss) for the Year, Net of Tax
14,250
(73,161)
Basic profit/(loss) per share attributable to ordinary equity
holders of Wiluna Mining Corporation Limited (cents per share)
Diluted profit/(loss) per share attributable to ordinary equity
holders of Wiluna Mining Corporation Limited (cents per share)
7
7
The accompanying notes form part of these financial statements.
Cents
Cents
24.43
(429.00)
24.02
(429.00)
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54
Wiluna Mining | Annual Report 2020
Consolidated Statement of Financial Position
As at 30 June 2020
Consolidated
Current Assets
Cash and cash equivalents
Gold bullion awaiting settlement
Trade and other receivables
Inventories
Financial assets
Total Current Assets
Non-Current Assets
Other receivables
Right of use assets
Plant and equipment
Mine properties – areas in production
Mine properties – areas in development
Exploration and evaluation expenditure
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Financial liabilities
Interest-bearing liabilities
Lease liability on right of use assets
Total Current Liabilities
Non-Current Liabilities
Interest-bearing liabilities
Provisions
Lease liability on right of use assets
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
The accompanying notes form part of these financial statements.
Note
16
17
24
25
19
24
20
11
12
13
14
26
27
19
18
20
18
27
20
22
23
2020
$’000
8,904
1,887
7,075
15,779
8
33,653
570
9,792
63,583
91,642
4,677
12,974
183,238
216,891
34,456
1,443
363
168
6,196
42,626
125
31,374
4,229
35,728
78,354
2019
$’000
693
2,939
2,594
16,308
10
22,544
400
-
45,166
69,780
3,581
5,209
124,136
146,680
41,375
1,342
4,478
11,933
-
59,128
207
25,168
-
25,375
84,503
138,537
62,177
236,865
6,177
(104,505)
138,537
175,285
5,647
(118,755)
62,177
Consolidated Statement of Changes in Equity
55
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Transactions with Owners in their Capacity as Owners
At 1 July 2019
Profit after income tax for the year
Other comprehensive income, net of tax
Total Comprehensive Profit for the Year
Share-based payments expense
Shares issued, net of transactions costs
At 30 June 2020
At 1 July 2018
Loss after income tax for the year
Other comprehensive income, net of tax
Total Comprehensive Loss for the Year
Issued
Capital
$’000
175,285
-
-
-
-
61,580
236,865
145,459
-
-
-
Transactions with Owners in their Capacity as Owners
Share-based payments expense
Shares issued, net of transactions costs
Expiry of options
At 30 June 2019
5,992
23,834
-
175,285
The accompanying notes form part of these financial statements.
Consolidated
Reserves
$’000
5,647
-
-
-
530
-
6,177
4,621
-
-
-
2,386
-
(1,360)
5,647
Accumulated
Losses
$’000
(118,755)
14,250
-
Total
$’000
62,177
14,250
-
14,250
14,250
-
-
(104,505)
(46,954)
(73,161)
-
530
61,580
138,537
103,126
(73,161)
-
(73,161)
(73,161)
-
-
1,360
8,378
23,834
-
(118,755)
62,177
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56
Wiluna Mining | Annual Report 2020
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2020
Cash Flows from Operating Activities
Proceeds from gold sales
Payments to suppliers and employees
Interest received
Interest paid
Hedge premium income
Toll treatment revenue
Other
Net Cash Flows from Operating Activities
Cash Flows from Investing Activities
Purchase of plant and equipment
Proceeds from disposal of plant and equipment
Proceeds from sale of non-core assets, net of costs
Payments for exploration and evaluation
Payments for mine properties
Proceeds from pre-production gold sales
Other
Note
4
16
Consolidated
2020
$’000
2019
$’000
127,614
103,083
(110,562)
(106,092)
9
52
(3,779)
(2,461)
-
-
1,071
14,353
2,126
3,125
406
239
(23,638)
(10,946)
-
10,335
(8,962)
(28,184)
7,422
-
4
2,850
(7,599)
(14,743)
5,267
4
Net Cash Flows used in Investing Activities
(43,027)
(25,163)
Cash Flows from Financing Activities
Proceeds from issue of equities
Payment of share issue costs
Proceeds from loan, net of fees
Repayment of loans
Proceeds from finance lease
Repayment of finance lease
Change in bank guarantees
Repayment of lease liabilities
Net Cash Flows from Financing Activities
Net increase/(decrease) in cash held
Cash and cash equivalents at beginning of the year
Cash and Cash Equivalents at End of the Year
The accompanying notes form part of these financial statements.
59,136
(3,446)
1,625
24,131
(1,838)
5,401
(14,104)
(22,737)
104
(197)
-
(6,233)
36,885
8,211
693
8,904
242
(208)
(116)
-
4,875
(20,049)
20,742
693
Notes to the Consolidated Financial Statements
57
THE NOTES TO THE
FINANCIAL STATEMENTS
For the Year Ended 30 June 2020
Basis of preparation
These Consolidated Financial Statements and notes represent those of Wiluna Mining
Corporation Limited (the Company or Wiluna) and its controlled entities (the Group).
The financial statements were authorised for issue on 28 August 2020 by the Directors of
the Company.
The Financial Report is a general purpose Financial Report which;
• has been prepared in accordance with Australian Accounting Standards, Australian
Accounting Interpretations, other authoritative pronouncements of the Australian
Accounting Standards Board (AASB), International Financial Reporting Standards (IFRS) and
the Corporations Act 2001;
• are presented in Australian dollars, which is the Company’s and Group’s functional and
presentation currency, with all values rounded to the nearest thousand dollars ($’000)
unless otherwise stated, in accordance with ASIC Instrument 2016/91;
• have been prepared on an accruals basis and are based on historical costs, modified, where
applicable, by the measurement at fair value of selected non-current assets, financial
assets and financial liabilities;
• adopts all new and amended Accounting Standards and Interpretations issued by the
AASB that are relevant to the operations of the Group and effective for reporting periods
beginning on or after 1 July 2019; and,
• does not early adopt Accounting Standards and Interpretations that have been issued or
amended but are not yet effective.
Changes in Accounting Policies
The Group has adopted all the new, revised and amended Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board that are mandatory
for the current reporting period.
Any new, revised or amended Accounting Standards and Interpretations that are not yet
mandatory have not been early adopted by the Group.
The following Accounting Standards and Interpretations are most relevant to the
consolidated entity.
AASB 16 Leases
The Group has adopted AASB 16 ‘Leases’ (AASB 16) from 1 July 2019. The standard replaces
AASB 117 ‘Leases’ (AASB 117) and for lessees, eliminates the classifications of operating
leases and finance leases. Except for short-term leases and leases of low-value assets,
right-of-use assets and corresponding lease liabilities are recognised in the statement of
financial position.
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58
Wiluna Mining | Annual Report 2020
Right-of-use Assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use
asset is measured at cost, which comprises the initial amount of the lease liability, adjusted
for, as applicable, any lease payments made at or before the commencement date net of
any lease incentives received, any initial direct costs incurred, and, except where included
in the cost of inventories, an estimate of costs expected to be incurred for dismantling and
removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of
the lease or the estimated useful life of the asset, whichever is the shorter. Where the
Group expects to obtain ownership of the leased asset at the end of the lease term, the
depreciation is over its estimated useful life. Right-of-use assets are subject to impairment
or adjusted for any re-measurement of lease liabilities.
Lease Liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is
initially recognised at the present value of the lease payments to be made over the term of
the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the Group’s incremental borrowing rate. Lease payments comprise of
fixed payments less any lease incentives receivable, variable lease payments that depend on
an index or a rate, amounts expected to be paid under residual value guarantees, exercise
price of a purchase option when the exercise of the option is reasonably certain to occur,
and any anticipated termination penalties. The variable lease payments that do not depend
on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method.
The carrying amounts are remeasured if there is a change in the following: future lease
payments arising from a change in an index or a rate used; residual guarantee; lease
term; certainty of a purchase option and termination penalties. When a lease liability is
remeasured, an adjustment is made to the corresponding right-of-use asset, or to profit or
loss if the carrying amount of the right-of-use asset is fully written down.
Transition
Straight-line operating lease expense recognition is replaced with a depreciation charge
for the right-of-use assets (included in operating costs) and an interest expense on the
recognised lease liabilities (included in finance costs). In the earlier periods of the lease,
the expenses associated with the lease under AASB 16 will be higher when compared
to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax,
Depreciation and Amortisation) results improve as the operating expense is now replaced
by interest expense and depreciation in profit or loss.
For classification within the statement of cash flows, the interest portion is disclosed in
operating activities and the principal portion of the lease payments are separately disclosed
in financing activities. For lessor accounting, the standard does not substantially change how
a lessor accounts for leases.
In accordance with the transition provisions of AASB 16, the Group has adopted the
modified retrospective transition approach to implementing the new standard. Under this
approach, comparatives are not restated. Instead, the reclassifications and adjustments
arising from the new leasing rules are recognised in the statement of financial position on
1 July 2019.
Notes to the Consolidated Financial Statements
59
The impact on the statement of financial position as at 1 July 2019 on the adoption of
AASB16 are noted below.
Right-of-Use Assets
Buildings
Plant & equipment
Total Right-of-Use Assets
Lease Liabilities
Current
Non-current
Total Lease Liabilities
Impact on Opening Accumulated Losses as at 1 July 2019
$’000
617
16,040
16,657
6,234
10,423
16,657
-
The leases recognised by the Group under AASB 16 predominantly relate to contractor-
provided equipment and office premises.
Going Concern
The Financial Statements have been prepared on the going concern basis, which
contemplates continuity of normal business activities and the realisation of assets and
the discharge of liabilities in the normal course of business.
As disclosed in the 30 June 2020 Financial Statements, the consolidated entity had net
current liabilities of A$9 million, which includes the lease liability of A$6.2 million (relating
to Right-of-use Assets). Despite the net current liability position as at 30 June 2020, the
Group had positive net cash inflows from operating activities of A$14.4 million for the year
and had net assets of A$138.5 million at that date. Therefore, the Directors believe that
the going concern basis of preparation of the Financial Report remains appropriate, after
consideration of the following mitigating factors;
• The Company has secured a total of A$21 million via drawdown of the Tranche 1 prepaid
swap financing facility agreed with Mercuria1. Those funds exceed short-term working
capital commitments and enable the Group to commence activities relating to the Stage 1
Expansion2;
• The Group’s mining operation has generated positive operating cash flows since the
Group’s capital restructure in early 2018, and the Group has forecasted to continue to
achieve positive cash flows from its operations which, following the headroom created by
the new funds to meet short-term debt repayments and working capital commitments, will
generate sufficient cash inflows to meet the repayment of trade debts and other liabilities
when they become due and payable; and,
• The Company has further flexibility of drawing on a further A$40 million (Tranche 2),
subject to Mercuria credit approval to further advance the Stage 1 Expansion1. This
transaction is not critical to maintain the going concern assumption, however it furthers
the Company’s ability to complete the transition to sulphide gold concentrate production
via the Stage 1 Expansion.
Accordingly, the Directors believe that the Group will be able to continue as a going
concern and that it is appropriate to adopt the going concern basis in the preparation of
the Financial Report.
1 Refer to the ASX release dated 14 August 2020.
2Refer to the ASX release dated 3 February 2020.
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Wiluna Mining | Annual Report 2020
Principles of Consolidation
The Consolidated Financial Statements incorporate the assets, liabilities and results of all
subsidiaries of the Company at the end of the reporting period. A list of controlled entities
(subsidiaries) at year end is contained in Note 29.
The Financial Statements of Subsidiaries are prepared for the same reporting period as the
parent company, using consistent accounting policies. Adjustments are made to bring into
line any dissimilar accounting policies that may exist.
Intercompany transactions, balances and unrealised gains on transactions between entities
in the Group are eliminated. Subsidiaries are consolidated from the date on which control
is obtained to the date on which control is disposed. The acquisition of subsidiaries is
accounted for using the acquisition method of accounting.
Foreign Currency Translation
The financial statements are presented in Australian dollars, which is the Group’s functional
and presentation currency.
Foreign currency transactions are translated into Australian dollars 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 financial year-end exchange
rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
Other Accounting Policies
Significant and other accounting policies that summarise the measurement basis used and
are relevant to an understanding of the financial statements are provided throughout the
Notes to the Financial Statements. Where possible, wording has been simplified to provide
clearer commentary on the Financial Report of the Group. Accounting policies determined
as non-significant are not included in the financial statements. There have been no changes
to the Group’s accounting policies that are no longer disclosed in the financial statements.
Coronavirus (COVID-19) Pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19)
pandemic has had, or may have, on the consolidated entity based on known information.
This consideration extends to the nature of the products and services offered, customers,
supply chain, staffing and geographic regions in which the consolidated entity operates.
Other than as addressed in specific notes, there does not currently appear to be either
any significant impact upon the financial statements or any significant uncertainties with
respect to events or conditions which may impact the consolidated entity unfavourably as
at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
Key Estimates and Judgements
The preparation of the financial statements requires management to make judgements,
estimates and assumptions that affect the reported amounts in the financial statements.
Management continually evaluates its judgements and estimates in relation to assets,
liabilities, contingent liabilities, revenue and expenses. The judgements, estimates and
assumptions material to the Financial Report are found in the following notes.
Note 2
Note 12
Note 13
Note 14
Note 20
Note 25
Note 27
Note 28
Cost of goods sold
Mine properties – areas in production
Mine properties – areas in development
Exploration and evaluation expenditure
Leases
Inventories
Provisions
Share-based payments
Notes to the Consolidated Financial Statements
61
The Notes to the FInancial Statements
The notes include information which is required to understand the financial statements
and is material and relevant to the operations and the financial position and performance
of the Group.
Information is considered relevant and material if, for example;
• The amount is significant due to its size and nature;
• The amount is important for understanding the results of the Group;
• It helps to explain the impact of significant changes in the Group’s business; or
• It relates to an aspect of the Group’s operations that is important to its future
performance.
The notes are organised into the following sections;
• Performance for the year;
• Production and growth assets;
• Cash, debt and capital;
• Operating assets and liabilities; and,
• Other disclosures.
A brief explanation is included under each section.
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Wiluna Mining | Annual Report 2020
Performance for the Year
This section focuses on the results and performance of the Group. This covers both
profitability and the return to shareholders via earnings per share combined with
cash generation.
1. REVENUE FROM GOLD AND SILVER SALES
Gold and Silver Sales
- gold sales at spot price(i)
- loss on gold forward contracts
Total Gold Sales
Silver sales
Total Gold and Silver Sales
Consolidated
2020
$’000
135,102
(8,708)
126,394
168
126,562
2019
$’000
107,589
(5,305)
102,284
182
102,466
(i) Pre-production gold sales are capitalised and are not included in sales revenue.
Accounting Policies
The Group recognises revenue as follows.
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group
is expected to be entitled in exchange for transferring goods or services to a customer.
For each contract with a customer, the Group: identifies the contract with a customer;
identifies the performance obligations in the contract; determines the transaction price
which takes into account estimates of variable consideration and the time value of money;
allocates the transaction price to the separate performance obligations on the basis of
the relative stand-alone selling price of each distinct good or service to be delivered; and
recognises revenue when or as each performance obligation is satisfied in a manner that
depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided
to the customer such as discounts, rebates and refunds, any potential bonuses receivable
from the customer and any other contingent events. Such estimates are determined
using either the ‘expected value’ or ‘most likely amount’ method. The measurement of
variable consideration is subject to a constraining principle whereby revenue will only be
recognised to the extent that it is highly probable that a significant reversal in the amount
of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved.
Amounts received that are subject to the constraining principle are initially recognised as
deferred revenue in the form of a separate refund liability.
Gold Sales
Revenue from the sale of goods is recognised at the point in time when the customer
obtains control of the goods. Control is generally considered to have passed when:
• physical possession and risk of goods are transferred;
• determination of accuracy of the metal content of the goods delivered; and,
• the refiner has no practical ability to reject the goods where it is within contractually
specified terms.
Notes to the Consolidated Financial Statements
63
2. COST OF GOODS SOLD
Cost of Goods Sold
Costs of production
Royalties
Depreciation of mine plant and equipment
Amortisation of mine properties
Open pit waste removal movements
Underground costs capitalised
Stockpile movements
Gold in circuit movements
Total
Accounting Policies
Consolidated
2020
$’000
2019
$’000
86,666
8,179
12,024
16,517
(599)
(155)
870
1,567
125,069
102,053
6,747
2,347
11,730
(339)
(574)
(3,043)
(1,385)
117,536
Costs of Production
Cash costs of production include direct costs incurred for mining, processing and mine site
administration, net of costs capitalised to pre-strip and production stripping assets.
Royalties
Royalty expenses under existing royalty regimes are payable on sales and are therefore
recognised as the sale occurs.
Depreciation
Depreciation of mine specific plant and equipment and buildings and infrastructure is
charged to the statement of comprehensive income on a unit-of-production basis over the
mine inventory of the mine concerned (consistent with the Life of Mine plan), except in
the case of assets whose useful life is shorter than the life of the mine, in which case the
straight-line method is used. The unit of account is ounces of gold produced.
Depreciation of non-mine specific plant and equipment is calculated using the straight line
method to allocate their cost or revalued amounts, net of their residual values, over their
estimated useful lives as follows.
- Plant and equipment
- Motor vehicles
- Office furniture and equipment
10% to 33%
6% to 33%
6% to 50%
- Buildings and infrastructure
4%
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
Amortisation
Mine properties are amortised on a unit-of-production basis over the mine inventory of
the mine concerned (consistent with the Life of Mine plan). The unit of account is ounces of
gold produced.
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Wiluna Mining | Annual Report 2020
2. Cost of Goods Sold (continued)
Key Judgments
Unit-of-production method of depreciation/amortisation
The Group uses the unit-of-production basis when depreciating/amortising life of mine specific assets
which results in a depreciation/amortisation charge proportionate to the depletion of the anticipated
remaining life of mine production. Each asset’s economic life, which is assessed annually, has due
regard for both its physical life limitations and to present assessments of economically recoverable
mine plan of the mine property at which it is located. These calculations require the use of estimates
and assumptions.
3. EXPENSES
Share-Based Payments Expense
Employees/service providers
Directors
Share-Based Payments Expense Recognised in the
Statement of Comprehensive Income
Consolidated
2020
$’000
303
153
456
2019
$’000
115
17
132
Share-Based Payments
Equity-settled share-based compensation benefits are provided to employees and
consultants. Equity-settled transactions are awards of shares, or options over shares,
that are provided to employees and consultants in exchange for the rendering of services
under an employee share plan.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value
is determined using an option pricing model that takes into account the exercise price, the
term of the option, the impact of dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and the risk free interest rate
for the term of the option, together with non-vesting conditions that do not determine
whether The Group receives the services that entitle the employees to receive payment.
No account is taken of any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding
increase in equity over the vesting period. The cumulative charge to profit or loss is
calculated based on the grant date fair value of the award, the best estimate of the
number of awards that are likely to vest and the expired portion of the vesting period.
Note
Finance Costs
Interest
Borrowing costs
Unwinding on discount of rehabilitation provision
27
Interest on lease liability
Total
Consolidated
2020
$’000
1,749
5,245
283
2,001
9,278
2019
$’000
4,080
4,294
710
-
9,084
Notes to the Consolidated Financial Statements
65
3. Expenses (continued)
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of
a qualifying asset (i.e. an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale) are capitalised as part of the cost of that asset. All other
borrowing costs are expensed as part of finance costs in the period incurred. Borrowing
costs consist of interest and other costs that an entity incurs in connection with the
borrowing of funds.
Unwinding of Discount on Provisions
The unwinding of discount on provisions represents the cost associated with the passage
of time. Rehabilitation provisions are recognised at the discounted value of the present
obligation to restore, dismantle and rehabilitate each mine site with the increase in the
provision due to the passage of time being recognised as a finance cost in accordance with
the policy described in Note 27.
4. OTHER INCOME
Other Income
- sale of non-core assets(i)
- other income
- interest revenue
- toll treatment revenue
Total
Consolidated
2020
$’000
21,655
2,367
29
-
24,051
2019
$’000
3,350
55
52
3,125
6,582
(i) Relates to income generated from the sale of non-core assets and includes proceeds from the Lakeway
Transaction completed during the year, as well as the sale of the Company’s Calcine Tailings.
Accounting Policies
Other Income
Interest revenue is recognised as it accrues using the effective interest rate method.
Other revenue is recognised when it is received or when the right to receive payment
is established.
5. TREASURY GAINS AND (LOSSES)
Note
Treasury – Realised Gain
- foreign exchange (loss)/gain
- hedge premium income
Total
Treasury – Unrealised Loss
Unrealised gain/(loss) on forward contracts
8
Gain/(loss) on financial assets
Total
Note: Gold forward contracts have been marked to market at 30 June 2020, as per Note 8.
Consolidated
2020
$’000
(13)
-
(13)
3,535
582
4,117
2019
$’000
-
2,126
2,126
(4,841)
(1,010)
(5,851)
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Wiluna Mining | Annual Report 2020
6. INCOME TAX
Components of the Tax Expense/Income
Current tax
Deferred tax
Total
Consolidated
2020
$’000
2019
$’000
-
-
-
-
-
-
(a) The prima facie tax on profit/(loss) before income tax is reconciled to the
income tax as follows
Net profit/(loss) before income tax
Prima facie tax on profit/(loss) from ordinary activities before
income tax at 30% (2019: 30%)
14,250
(73,161)
4,275
(21,948)
Add the Tax Effect of:
Permanent differences
Effect of current year temporary differences not recognised
Effect of current year tax losses (utilised)/not recognised
Income Tax Expense
(b) Unrecognised Deferred Tax Assets and (Liabilities)
Trade and other receivables
Financial assets and liabilities
Right-of-use assets
Plant and equipment
Exploration and development expenditure
Mine properties
Trade and other payables
Interest-bearing liabilities
Lease liabilities
Provisions
Equity
(Deferred tax assets which have not been recognised) /
tax losses recognised to offset deferred tax liabilities
Balance at the End of the Year
1,757
-
(6,032)
-
Consolidated
2020
$’000
(87)
145
(2,938)
4,145
(3,886)
(18,604)
141
103
3,127
9,845
900
7,109
-
94
15,238
6,616
-
2019
$’000
(39)
1,379
-
1,373
(1,557)
(8,545)
131
124
-
7,953
1,643
(2,462)
-
The Directors have considered it prudent not to bring to account the deferred tax asset of income tax
losses until it is probable of deriving assessable income of a nature and amount to enable such benefit
to be realised.
Notes to the Consolidated Financial Statements
67
6. Income Tax (continued)
(c) Tax Losses
Consolidated
2020
$’000
2019
$’000
The Group has estimated carried forward tax losses which are available indefinitely for
offset against future taxable income, subject to meeting the relevant statutory tests.
Revenue Losses
Income tax losses
Losses used against deferred tax liabilities
Gross tax losses for which no deferred tax asset has been recognised
Tax effected at 30%
Capital Losses
157,353
(23,692)
133,661
40,098
135,927
-
135,927
40,778
Estimated capital losses for which no deferred tax asset is
recognised
-
-
Accounting Policies
Income Tax
The income tax expense/benefit for the year comprises current income tax expense/benefit
and deferred tax expense/benefit.
Current income tax expense charged to profit or loss is the tax payable on taxable income.
Current tax liabilities are measured at the amounts expected to be paid to the relevant
taxation authority.
Deferred income tax expense/benefit reflects movements in deferred tax asset and
deferred tax liability balances during the year as well as unused tax losses.
Current and deferred income tax expense/benefit is charged or credited outside profit or
loss when the tax relates to items that are recognised outside profit or loss.
Except for business combinations, no deferred income tax is recognised from the initial
recognition of an asset or liability, where there is no effect on accounting or taxable profit
or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply
to the period when the asset is realised or the liability is settled and their measurement also
reflects the manner in which management expects to recover or settle the carrying amount
of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised
only to the extent that it is probable that future taxable profit will be available against
which the benefits of the deferred tax asset can be utilised.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists
and it is intended that net settlement or simultaneous realisation and settlement of the
respective asset and liability will occur. Deferred tax assets and liabilities are offset where:
(a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities
relate to income taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where it is intended that net settlement or simultaneous
realisation and settlement of the respective asset and liability will occur in future periods in
which significant amounts of deferred tax assets or liabilities are expected to be recovered
or settled.
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Wiluna Mining | Annual Report 2020
7. EARNINGS PER SHARE
(a) Profit/(loss) after income tax for the year
(b) Weighted average number of ordinary shares outstanding
during the year used in the calculation of basic EPS
(c) Weighted average number of ordinary shares outstanding
during the year used in the calculation of diluted EPS
Accounting Policies
Earnings Per Share
Basic Earnings Per Share
Consolidated
2020
$’000
14,250
2019
$’000
(73,161)
No. of Shares
(‘000s)
No. of Shares
(‘000s)
58,334
17,051
59,314
17,051
Basic earnings per share is calculated by dividing the profit attributable to the owners of
the Company, excluding any costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during the financial year, adjusted
for bonus elements in ordinary shares issued during the financial year.
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.
8. PHYSICAL GOLD DELIVERY COMMITMENTS
Open Contracts
Within One Year
- Fixed forward contracts
Gold for
Physical Delivery
Contracted Gold
Sale Price
Value of
Committed Sales
Mark-to-Market(i)
2020
2019
Ounces
Ounces
2020
$/oz
2019
$/oz
2020
$’000
2019
$’000
2020
$’000
2019
$’000
4,720
4,720
18,500
2,504
1,805
11,817
33,393
(363)
(3,898)
18,500
11,817
33,393
(363)
(3,898)
(i) Mark-to-market represents the value of the open contracts at balance date, calculated with reference to
the gold spot price at that date. A negative amount reflects a valuation in the counterparty’s favour.
Accounting Policies
Gold Forward Contracts
As part of the risk management policy, the Group enters into gold forward contracts to
manage the gold price of a proportion of anticipated gold sales. The counterparty of the
gold forward contracts is MKS (Switzerland) S.A.
Notes to the Consolidated Financial Statements
69
9. OPERATING SEGMENT INFORMATION
The Group has one reportable segment which is gold production for the years ended
30 June 2020 and 30 June 2019. The Chief Operating Decision Maker (CODM) is the Board of
Directors and the Executives. There is currently one operating segment identified, being the
operating of the of the Matilda-Wiluna Gold Operation based on internal reports reviewed
by the Chief Operating Decision Maker in assessing performance and allocation
of resources.
Major Customers
During the year ended 30 June 2020, the Group’s external revenue was predominantly
derived from sales to MKS and the Perth Mint through the Matilda-Wiluna Gold Operation
operating segment.
Accounting Policies
Operating Segments
Operating segments are presented using the ‘management approach’, where the
information presented is on the same basis as the internal reports provided to the CODM.
The CODM is responsible for the allocation of resources to operating segments and
assessing their performance.
10. DIVIDENDS PAID OR PROVIDED FOR
There were no dividends paid or provided for during the year (2019: Nil).
Accounting Policies
Dividends
Dividends are recognised when declared during the financial year and no longer at the
discretion of the Company.
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Production and Growth Assets
Included in this section is relevant information about recognition, measurement, depreciation,
amortisation and impairment considerations of the core producing and growth (exploration and
evaluation) assets of the Group.
11. PLANT AND EQUIPMENT
Consolidated
Plant &
Equipment
Motor
Vehicles
Furniture &
Equipment
Buildings &
Infrastructure
Tails
Dam
Capital
WIP
$’000
$’000
$’000
$’000
$’000
$’000
Total
$’000
Net carrying amount at
1 July 2019
Additions
25,186
3,234
476
267
Depreciation expense
(3,777)
(137)
Transfers between classes
1,277
Disposals
-
-
-
714
87
(185)
1
-
7,557
9,884
1,349
45,166
18
-
20,278
23,884
(669)
(699)
-
(5,467)
-
-
-
-
(1,278)
-
-
-
Accumulated depreciation
(17,438)
Net Carrying Amount
25,920
Net Carrying Amount at
30 June 2020
At 30 June 2020
Cost
Net carrying amount at
1 July 2018
Additions
Depreciation expense
Transfers between classes
Impaired during the year
Disposals
Net Carrying Amount at
30 June 2019
25,920
606
617
6,906
9,185
20,349
63,583
43,358
34,389
426
(1,645)
1,344
(9,328)
-
1,308
(702)
606
591
-
(157)
224
(167)
(15)
1,641
(1,024)
617
1,004
-
(227)
188
(251)
-
11,191
13,902
20,348
91,748
(4,285)
(4,717)
-
(28,165)
6,906
9,185
20,349
63,583
8,732
3,969
6,579
55,264
-
(369)
1,850
-
8,012
8,438
(246)
-
(2,644)
9,636 (13,242)
-
(2,656)
(3,475)
-
-
-
-
(15,877)
(15)
25,186
476
714
7,557
9,884
1,349
45,166
At 30 June 2019
Cost
38,902
Accumulated depreciation
(13,716)
Net Carrying Amount
25,186
1,057
(581)
476
1,552
(838)
714
11,173
13,902
1,349
67,935
(3,616)
(4,018)
-
(22,769)
7,557
9,884
1,349
45,166
Plant and Equipment Secured Under Finance Leases
Refer to Note 18 for further information on plant and equipment secured under finance leases.
Accounting Policies
Plant and Equipment
Plant and equipment is carried at historical cost less accumulated depreciation and any accumulated
impairment. In the event the carrying amount of plant and equipment is greater than the estimated
recoverable amount, the carrying amount is written down immediately to the estimated recoverable
amount and impairment losses are recognised in profit or loss. A formal assessment of recoverable
amount is made when impairment indicators are present.
Gains and losses on disposals of plant and equipment are determined by comparing proceeds with
the carrying amount. These gains and losses are included in profit or loss.
Notes to the Consolidated Financial Statements
71
12. MINE PROPERTIES – AREAS IN PRODUCTION
2020
Balance at 1 July
Transferred from mine properties –
areas in development
Additions
Rehabilitation provision adjustment
Amortisation included in costs of production
Amortisation during production
Balance at 30 June 2020
2019
Balance at 1 July
Transferred from mine properties –
areas in development
Additions
Transferred from exploration and
evaluation expenditure
Rehabilitation provision adjustment
Amortisation included in costs of production
Amortisation during production
Impaired during the year
Balance at 30 June 2019
Accounting Policies
Note
13
27
2
Note
13
14
27
2
Consolidated
Stripping
Activity Asset
$’000
928
-
1,528
-
(928)
-
1,528
Consolidated
Stripping
Activity Asset
$’000
Total
$’000
69,780
30,963
2,724
5,620
(928)
(16,517)
91,642
Total
$’000
589
77,508
-
5,240
-
-
-
-
14,131
7,115
15,417
(1,400)
(4,901)
(11,730)
(26,360)
928
69,780
-
(4,901)
Mine
Properties
$’000
68,852
30,963
1,196
5,620
-
(16,517)
90,114
Mine
Properties
$’000
76,919
14,131
1,875
15,417
(1,400)
(11,730)
(26,360)
68,852
Mine Properties – Areas in Production
Mine development expenditure incurred by, or on behalf of, the Group is accumulated
separately for each area of interest in which economically recoverable resources have been
identified. Such expenditure comprises cost directly attributable to the construction of a
mine and the related infrastructure.
A development property is reclassified as a mining property in this category at the end of
the commissioning phase, when the property is capable of operating in the manner intended
by management.
Amortisation is charged using the units-of-production method, with separate calculations
being made for each area of interest. The units-of-production basis results in an
amortisation charge proportional to the estimated mine inventory (consistent with the
Life of Mine plan). Development properties are tested for impairment in accordance with
the policy on impairment of assets.
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Wiluna Mining | Annual Report 2020
12. Mine Properties – Areas in Production (continued)
Stripping Activity Asset
Once access to the ore is attained, all waste that is removed from that point forward is
considered production stripping activity. The amount of production stripping costs deferred
is based on the extent to which the current strip ratio of ore mined exceeds the life of mine
strip ratio of the identified component. A component is defined as a specific volume of the
ore body that is made more accessible by the stripping activity and is identified based on the
mine plan.
The stripping activity asset is initially measured at cost, which is the accumulation of costs
directly incurred to perform the stripping activity that improves access to the identified
component of the ore body. The production stripping asset is then carried at cost less
accumulated amortisation and any impairment losses.
The production stripping asset is amortised over the expected useful life of the identified
component (determined based on economically recoverable mine plan), on a unit-of-
production basis. The unit of account is tonnes of ore mined.
Key Judgments
Unit-of-Production Method of Depreciation/Amortisation
The Group uses the unit-of-production basis when depreciating/amortising life of mine specific assets
which results in a depreciation/amortisation charge proportionate to the depletion of the anticipated
remaining life of mine production. Each asset’s economic life, which is assessed annually, has due
regard for both its physical life limitations and to present assessments of economically recoverable
mine plan of the mine property at which it is located. These calculations require the use of estimates
and assumptions.
Determination of Mineral Resources, Ore Reserves and Mine Plan
The determination of mineral resources and ore reserves impacts the accounting for asset carrying
values. The Group estimates its mineral resources and ore reserves in accordance with the Australian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 (the JORC
Code). The information on mineral resources and ore reserves was prepared by or under the
supervision of Competent Persons as defined in the JORC Code. The amounts presented are based
on the mineral resources and ore reserves determined under the JORC Code.
There are numerous uncertainties inherent in estimating mineral resources and ore reserves, and
assumptions that are valid at the time of estimation may change significantly when new information
becomes available.
Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates
may change the economic status of reserves and the mine plan and may ultimately result in reserves
and mine plan being restated.
Stripping Asset
The Group capitalises stripping costs incurred during the development and production phase of
mining. As a result, the Group distinguishes between the production stripping that relates to the
extraction of inventory and that which relates to the stripping asset.
The Group has identified its production stripping for each surface mining operation it identifies the
separate components of the ore bodies for each of its mining operations. An identifiable component
is a specific volume of the ore body that is made more accessible by the stripping activity. Judgement
is required to identify and define these components, and also to determine the expected volumes of
waste to be stripped and ore to be mined in each of these identified components.
These assessments are undertaken for each individual identified component based on life of mine
strip ratio. Judgement is also required to identify a suitable production measure to be used to
allocate production stripping costs between inventory and any stripping activity asset(s) for each
identified component. Changes in the expected strip ratio is accounted for prospectively from the
date of change.
Notes to the Consolidated Financial Statements
73
13. MINE PROPERTIES – AREAS IN DEVELOPMENT
Balance at 1 July
Pre-production expenditure capitalised, net of gold sales
Transferred to mine properties – areas in production
12
Note
Expansion study costs
Impaired during the year
Balance at 30 June
Accounting Policies
Consolidated
2020
$’000
3,581
30,963
(30,963)
1,096
-
4,677
2019
$’000
3,348
14,087
(14,131)
1,536
(1,259)
3,581
Mine Properties – Areas in Development
Mine properties under development represent the costs incurred in preparing mines for
production and includes plant and equipment under construction and operating costs
incurred before production commences. These costs are capitalised to the extent they are
expected to be recouped through the successful exploitation of the related mining leases.
Once production commences, these costs are transferred to property, plant and equipment
and mine properties, as relevant, and are depreciated and amortised using the units-of-
production method based on the mine inventory to which they relate or are written off if
the mine property is abandoned.
Key Judgments
Production Start Date
The Group assesses the stage of each mine under construction to determine when a mine moves
into the production stage. The criteria used to assess the start date are determined based on the
unique nature of each mine construction project, such as the complexity of a plant and its location.
The Group considers various relevant criteria to assess when the mine and the processing plant is
substantially complete and ready for its intended use. At this time, any costs capitalised to ‘mine
properties – areas in development’ are reclassified to ‘mine properties – areas in production’ and
‘property, plant and equipment’. Some of the criteria will include, but are not limited to the following;
• availability of the plant;
• completion of a reasonable period of testing of the mine plant and equipment;
• ability to produce metal in saleable form (within specifications); and,
• ability to sustain ongoing production of metal at commercial rates of production.
When a mine construction project moves into the production stage, the capitalisation of certain mine
construction costs ceases and costs are either regarded as inventory or expensed, except for costs
that qualify for capitalisation relating to mine asset additions or improvements, mine development
or mineable reserve development. It is also at this point that depreciation/amortisation commences.
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Wiluna Mining | Annual Report 2020
14. EXPLORATION AND EVALUATION EXPENDITURE
Reconciliation of Movements During the Year
Balance at 1 July
Exploration expenditure incurred during the year
Transferred to mine properties – areas in production
12
Note
Expensed during the year
Balance at 30 June
Accounting Policies
Consolidated
2020
$’000
5,209
8,999
-
(1,234)
12,974
2019
$’000
15,733
5,392
(15,417)
(499)
5,209
Exploration and Evaluation Expenditure
Exploration and evaluation expenditure in relation to separate areas of interest for which
rights of tenure are current is carried forward as an asset in the statement of financial
position where it is expected that the expenditure will be recovered through the successful
development and exploitation of an area of interest, or by its sale; or exploration activities
are continuing in an area and activities have not reached a stage which permits a reasonable
estimate of the existence or otherwise of economically recoverable reserves. Where a project
or an area of interest has been abandoned, the expenditure incurred thereon is written off in
the year in which the decision is made.
Once a development decision has been taken, the carrying amount of the exploration
and evaluation expenditure in respect of the area of interest is aggregated with the mine
development expenditure and classified under non-current assets as development properties.
The value of the Groups interest in exploration expenditure is dependent upon;
• the continuance of the Group’s rights to tenure of the areas of interest;
• the results of future exploration; and,
• the recoupment of costs through successful development and exploitation of the areas of
interest, or alternatively, by their sale.
Key Judgments
Exploration and Evaluation Expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a
number of factors, including whether the Group decides to exploit the related lease itself or, if not,
whether it successfully recovers the related exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the level of proved, probable and
inferred mineral resources, future technological changes which could impact the cost of mining,
future legal changes (including changes to environmental restoration obligations) and changes to
commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to
be recoverable in the future, this will reduce profits and net assets in the period in which this
determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest
have not yet reached a stage which permits a reasonable assessment of the existence or otherwise
of economically recoverable reserves. To the extent that it is determined in the future that this
capitalised expenditure should be written off, this will reduce profits and net assets in the period
in which this determination is made.
Notes to the Consolidated Financial Statements
75
14. Exploration and Evaluation Expenditure (continued)
Exploration Expenditure Commitments
In order to maintain current rights of tenure to mining tenements, the Group has the
following exploration expenditure requirements up until expiry of leases. These obligations,
which are subject to renegotiation upon expiry of the leases, are not provided for in the
financial statements and are payable as follows.
Within one year
Consolidated
2020
$’000
3,284
2019
$’000
1,803
15. IMPAIRMENT OF ASSETS
The carrying values of non-current assets are reviewed for impairment when indicators
of impairment exist or changes in circumstances indicate the carrying value may not be
recoverable. When an indicator of impairment does exist, the below process is followed.
For an asset that does not generate largely independent cash inflows, the recoverable
amount is determined for the cash-generating unit (CGU) to which the asset belongs and
where the carrying values exceed the estimated recoverable amount, the assets or CGU are
written down to their recoverable amount.
The recoverable amount of an asset is the greater of the fair value less costs to sell and value
in use. In assessing value in use, the estimated future cash flows are discounted to their
present value using a discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset.
The relevant CGU for Wiluna Mining Corporation Limited is the Matilda-Wiluna Gold Mine.
Determination of Mineral Resources and Ore Reserves
The determination of reserves impacts the accounting for asset carrying values, depreciation
and amortisation rates, deferred stripping costs and provisions for decommissioning and
restoration. The information in this report as it relates to ore reserves, mineral resources or
mineralisation is reported in accordance with the AusIMM ‘Australian Code for reporting of
Identified Mineral Resources and Ore Reserves’. The information has been prepared by or
under supervision of competent persons as identified by the Code.
There are numerous uncertainties inherent in estimating mineral resources and ore reserves
and assumptions that are valid at the time of estimation which may change significantly
when new information becomes available. Changes in the forecast prices of commodities,
exchange rates, production costs, ore grades and/or recovery rates may change the
economic status of reserves and may, ultimately, result in the reserves being restated.
Impairment of Mine Properties, Plant and Equipment
The future recoverability of capitalised mine properties and plant and equipment is
dependent on a number of key factors including; gold price, discount rates used in
determining the estimated discounted cash flows of CGUs, foreign exchange rates, the level
of proved and probable reserves and measured, indicated and inferred mineral resources,
the estimated value of unmined inferred mineral properties included in the determination
of fair value less cost to dispose (fair value), future technological changes which could
impact the cost of mining, and future legal changes (including changes to environmental
restoration obligations).
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Wiluna Mining | Annual Report 2020
15. Impairment of Assets (continued)
Fair value is estimated based on discounted cash flows using market based commodity
price and exchange assumptions, estimated quantities of recoverable minerals, production
levels, operating costs and capital requirements, based on CGU life of mine (LOM) plans.
Consideration is also given to analysts’ valuations, and the market value of the Company’s
securities. The fair value methodology adopted is categorised as Level 3 in the fair value
hierarchy. When LOM plans do not fully utilise existing mineral properties for a CGU, and
options exist for the future extraction and processing of all or part of those resources, an
estimate of the value of mineral properties is included in the determination of fair value.
The Group considers this valuation approach to be consistent with the approach taken by
market participants.
The Group has estimated its unmined resource values based on a dollar value per gold
equivalent ounce basis, taking into account a range of factors although principally the
current market rate for similar resources. However, where the value per ounce from the
reserves/resources included in the CGU’s discounted cash flow model (i.e. in the LOM) is less
than this market rate determination, the lower value per ounce from the CGU’s discounted
cash flow model is used when calculating that CGU’s value of unmined ounces. Where
appropriate, the value per ounce is also discounted accordingly for any future costs which
would be required to exploit the in-situ resources.
In determining the fair value of CGUs, future cash flows were discounted using rates
based on the Group’s estimated weighted average cost of capital. When it is considered
appropriate to do so, an additional premium is applied with regard to the geographic
location and nature of the CGU. Life of mine operating and capital cost assumptions are
based on the Group’s latest budget and LOM plans. Operating cost assumptions reflect the
expectation that costs will, over the long term, have a degree of positive correlation to the
prevailing commodity price and exchange rate assumptions.
No impairment triggers occurred for the year ended 30 June 2020, and as such, no further
impairment testing was performed.
Notes to the Consolidated Financial Statements
77
Cash, Debt and Capital
This section outlines how the Group manages its cash, capital, related financing costs and
its exposure to various financial risks. It explains how these risks affect the Group’s financial
position and performance and what the Group does to manage these risks.
16. CASH AND CASH EQUIVALENTS
Accounting Policies
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks and
other short-term highly liquid investments with original maturities of three months or less.
Cash and Cash Equivalents in the Statement of Financial Position and Statement of Cash Flows
Consolidated
2020
$’000
Cash at bank and on hand
Total
8,904
8,904
Consolidated
2020
$’000
Reconciliation of Loss after Income Tax to the Net Cash Flow from Operating Activities
2019
$’000
693
693
2019
$’000
Profit/(Loss) After Income Tax
Adjustments for
Depreciation and amortisation relating to gold sales
Depreciation of non-mine site assets
Asset impairment charges
Equity based payments
Treasury – unrealised loss/(gain)
Williamson pre-strip contribution
Non-capital exploration expenditure
Unwinding of discount on rehabilitation provision
Finance costs
Sale of non-core assets, net of costs
Other
Changes in Net Assets and Liabilities
Receivables
Inventories
Payables
Net Cash Inflows from Operating Activities
14,250
(73,161)
28,541
63
-
530
(4,117)
(10,155)
42
283
5,225
(10,335)
573
(3,599)
529
(7,477)
14,353
14,308
65
45,002
273
5,851
-
1,293
710
4,267
(2,850)
(371)
(689)
(4,439)
9,980
239
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Wiluna Mining | Annual Report 2020
17. GOLD BULLION AWAITING SETTLEMENT
Current
Gold bullion awaiting settlement
Accounting Policies
Consolidated
2020
$’000
2019
$’000
1,887
2,939
Gold Bullion Awaiting Settlement
Bullion awaiting settlement comprises gold that has been received by the refiner prior to
period end but which has not yet been delivered into a sale contract. Gold bullion awaiting
settlement is initially recognised at the expected selling price and adjustments for variations
in the gold price are made at the time of final settlement, which is within a matter of days.
Due to the short-term nature of the bullion awaiting settlement, the carrying value is
assumed to approximate fair value. The maximum exposure to credit risk is the fair value.
18. INTEREST-BEARING LIABILITIES
Current Interest-Bearing Liabilities
Secured loan – MACA
Convertible note, net of fees & collateral shares
Finance lease liabilities
Total
Non-Current Interest-Bearing Liabilities
Finance lease liabilities
Total
Accounting Policies
Consolidated
2020
$’000
-
-
168
168
125
125
2019
$’000
7,506
4,277
150
11,933
207
207
Borrowings and Borrowing Costs
Loans and borrowings are initially recognised at the fair value of the consideration received.
Where there is an unconditional right to defer settlement of the liability for at least
12 months after the reporting date, the loans or borrowings are classified as non-current.
Borrowing costs are expensed as incurred. Borrowing costs consist of interest and other
costs that the Group incurs in connection with the borrowing of funds.
Notes to the Consolidated Financial Statements
79
18. Interest-bearing Liabilities (continued)
Interest-bearing Liabilities
Secured Loans – MACA Limited (MACA)
On 22 April 2020, the Group fully extinguished all loan amounts outstanding with MACA
Mining Limited. Consequently, MACA released its security over the Group’s assets.
Secured Convertible Note – Lind Partners (Lind)
In order to simplify its capital structure, Wiluna finalised the process to repay and discharge its
funding facility with an entity managed by The Lind Partners (Lind). The outstanding balance of
A$2,925,000 on 2 September 2019 was settled through a cash payment of A$1,625,000 and the
issue of 144,444,445 fully paid ordinary shares in Wiluna. Lind released its security over
the Group’s assets.
Finance Lease Liabilities
The Group holds hire purchase agreements for the acquisition of mobile equipment.
The agreements incorporate fixed rates between 2% and 12%, monthly repayments and
expiry dates between June 2020 and June 2023. Finance lease liabilities are effectively
secured as the rights to the leased assets revert to the lessor in the event of default.
19. FINANCIAL ASSETS AND LIABILITIES
Financial Assets
Other
Total
Financial Liabilities
Derivative financial liability
Embedded derivative
Total
Consolidated
2020
$’000
8
8
363
-
363
2019
$’000
10
10
3,898
580
4,478
Gold forward contracts have been marked-to-market at 30 June 2020 as per Note 8.
Accounting Policies
Financial Assets
Financial assets are initially recognised at fair value, plus transaction costs that are directly
attributable to its acquisition and subsequently measured at amortised costs or fair value
depending on the business model for those assets and the contractual cash flow characteristics.
Derivative Financial Instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered
into and are subsequently remeasured to their fair value at each reporting date. The accounting
for subsequent changes in fair value depends on the nature of the derivative.
Derivatives are classified as current or non-current depending on the expected period
of realisation.
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Wiluna Mining | Annual Report 2020
20. LEASES
This note provides information for leases where the Group is a lessee.
Amounts Recognised in Statement of Financial Position
Right-of-Use Assets
Buildings
Plant & equipment
Less: Accumulated depreciation
Total Right-of-Use Assets
Lease Liabilities
Current
Non-current
Total Lease Liabilities
As at
As at
30 June 2020
30 June 2019
$’000
$’000
617
16,040
(6,865)
9,792
6,196
4,229
10,425
-
-
-
-
-
-
-
Amounts Recognised in Statement of Profit or Loss and Other Comprehensive Income
Depreciation of right-of-use assets
Interest expense (included in finance costs)
Accounting Policies
Right-of-use Assets and Lease Liabilities
Right-of-Use Assets
30 June 2020
30 June 2019
$’000
6,865
2,001
$’000
-
-
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use
asset is measured at cost, which comprises the initial amount of the lease liability, adjusted
for, as applicable, any lease payments made at or before the commencement date net of
any lease incentives received, any initial direct costs incurred, and, except where included
in the cost of inventories, an estimate of costs expected to be incurred for dismantling and
removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of
the lease or the estimated useful life of the asset, whichever is the shorter. Where the
consolidated entity expects to obtain ownership of the leased asset at the end of the lease
term, the depreciation is over its estimated useful life. Right-of use assets are subject to
impairment or adjusted for any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding
lease liability for short-term leases with terms of 12 months or less and leases of low-value
assets. Lease payments on these assets are expensed to profit or loss as incurred.
Lease Liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability
is initially recognised at the present value of the lease payments to be made over the
term of the lease, discounted using the interest rate implicit in the lease or, if that rate
cannot be readily determined, the consolidated entity’s incremental borrowing rate.
Lease payments comprise of fixed payments less any lease incentives receivable, variable
lease payments that depend on an index or a rate, amounts expected to be paid under
residual value guarantees, exercise price of a purchase option when the exercise of the
Notes to the Consolidated Financial Statements
81
20. Leases (continued)
option is reasonably certain to occur, and any anticipated termination penalties. The variable
lease payments that do not depend on an index or a rate are expensed in the period in which
they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method.
The carrying amounts are remeasured if there is a change in the following: future lease
payments arising from a change in an index or a rate used; residual guarantee; lease
term; certainty of a purchase option and termination penalties. When a lease liability is
remeasured, an adjustment is made to the corresponding right-of use asset, or to profit
or loss if the carrying amount of the right-of-use asset is fully written down.
21. FINANCIAL RISK MANAGEMENT
The Group’s principal financial instruments comprise receivables, payables, held-for-trading
investments, derivative financial instruments, cash and short-term deposits.
The Board of Directors has overall responsibility for the oversight and management of
the Group’s exposure to a variety of financial risks (including market 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.
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 Group’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.
Gold Price Volatility and Exchange Rate Risks
Any revenue the Group derives from the sale of gold is exposed to commodity price and
exchange rate risks. Commodity prices fluctuate and are affected by many factors beyond
the control of the Company. Such factors include supply and demand fluctuations for gold,
technological advancements, forward selling activities, financial investment and speculation
and other macro-economic factors.
Interest Rate Risks
The Group’s exposure to market interest rates relates to cash deposits held at variable rates.
The Board regularly analyses its interest rate exposure. Within this analysis consideration is
given to potential renewals of existing positions.
Sensitivity Analysis
The Company has performed sensitivity analysis relating to its exposure to interest rate risk
at balance date. This sensitivity analysis demonstrates the effect on the current year results
and equity which could result from a change in these risks.
Interest Rate Sensitivity Analysis
At 30 June 2020, the effect on loss as a result of changes in the interest rate, with all other
variables remaining constant, would be as follows.
Change in Loss/Equity
Increase in interest rate by 100 basis points
Decrease in interest rate by 100 basis points
Consolidated
2020
$’000
86
(86)
2019
$’000
4
(4)
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82
Wiluna Mining | Annual Report 2020
21. Financial Risk Management (continued)
Credit Risk
The maximum exposure to credit risk at reporting date is the carrying amount of those
assets as disclosed in the statement of financial position and notes to the financial
statements. The Group has adopted a policy of only dealing with credit-worthy
counterparties and obtaining sufficient collateral where appropriate, as a means of
mitigating the risk of financial loss from defaults. The Group’s exposure and the credit
ratings of its counterparties are continuously monitored and the aggregate value of
transactions concluded is spread amongst approved counterparties.
The consolidated entity has adopted a lifetime expected loss allowance in estimating
expected credit losses to trade receivables through the use of a provisions matrix using
fixed rates of credit loss provisioning. These provisions are considered representative
across all customers of the consolidated entity based on recent sales experience, historical
collection rates and forward-looking information that is available.
Credit risk related to balances with banks and other financial institutions is managed by the
Board. The Board’s policy requires that surplus funds are only invested with counterparties
with a Standard & Poor’s rating of at least A+. All of the Group’s surplus funds are invested
with AA and A+ Rated financial institutions.
Liquidity Risk
The responsibility for liquidity risk management rests with the Board. The Group manages
liquidity risk by maintaining sufficient cash or credit facilities to meet the operating
requirements of the business and investing excess funds in highly liquid short-term
investments.
Financing Arrangements
Refer to Note 18 for unused borrowing facilities at reporting date.
Remaining Contractual Maturities
The following tables detail the Group’s remaining contractual maturity for its financial
instrument liabilities. The tables have been drawn up based on the undiscounted cash flows
of financial liabilities based on the earliest date on which the financial liabilities are required
to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in
the statement of financial position.
Weighted
Average
Interest Rate
One Year
or Less
Between
One and
Two Years
Between
Two and
Five Years
Over
Five Years
Remaining
Contractual
Maturities
%
$’000
$’000
$’000
$’000
$’000
Non-Derivatives
2020
Non-Interest Bearing
Trade and other
payables
Interest-Bearing – Fixed Rate
Finance lease liability
Lease liabilities
Total Non-Derivatives
-
5
15.5
34,456
-
-
168
6,196
40,820
105
1,715
1,820
20
2,514
2,534
-
-
-
-
34,456
293
10,425
45,174
21. Financial Risk Management (continued)
Notes to the Consolidated Financial Statements
83
Weighted
Average
Interest Rate
One Year
or Less
Between
One and
Two Years
Between
Two and
Five Years
Over
Five Years
Remaining
Contractual
Maturities
%
$’000
$’000
$’000
$’000
$’000
Non-Derivatives
2019
Non-Interest Bearing
Trade and other
payables
-
41,375
Interest-Bearing – Fixed Rate
Secured loan – MACA
12.50
Secured loan – Orion
Finance lease liability
Total Non-Derivatives
20
3
7,506
4,277
150
53,308
-
-
-
150
150
-
-
-
57
57
-
-
-
-
41,375
7,506
4,277
357
53,515
Fair Value of Financial Instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Fair Value Measurements
The Company measures and recognises the following assets and liabilities at fair value on
a recurring basis after initial recognition;
• Financial assets held for trading; and,
• Derivative financial instrument – receivable in relation to equity swap.
The Company does not subsequently measure any liabilities at fair value on a non-recurring basis.
Fair Value Hierarchy
AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of
the fair value hierarchy, which categorises fair value measurements into one of three possible
levels based on the lowest level that an input that is significant to the measurement can be
categorised into as follows.
• Level 1
Measurements based on quoted prices (unadjusted) in active markets for identical assets
or liabilities that the entity can access at the measurement date.
• Level 2
Measurements based on inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly or indirectly.
• Level 3
Measurements based on unobservable inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined
using one or more valuation techniques. These valuation techniques maximise, to the extent
possible, the use of observable market data. If all significant inputs required to measure fair
value are observable, the asset or liability is included in Level 2. If one or more significant inputs
are not based on observable market data, the asset or liability is included in Level 3.
Valuation Techniques
The Company selects a valuation technique that is appropriate in the circumstances and for
which sufficient data is available to measure fair value. The availability of sufficient and relevant
data primarily depends on the specific characteristics of the asset or liability being measured.
The valuation technique selected by the Company is as follows.
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84
Wiluna Mining | Annual Report 2020
21. Financial Risk Management (continued)
Market Approach
Valuation techniques that use prices and other relevant information generated by market
transactions for identical or similar assets or liabilities.
When selecting a valuation technique, the Company gives priority to those techniques that
maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs
that are developed using market data (such as publicly available information on actual
transactions) and reflect the assumptions that buyers and sellers would generally use when
pricing the asset or liability are considered observable, whereas inputs for which market
data is not available and therefore are developed using the best information available about
such assumptions are considered unobservable.
The following table provides the fair values of the Company’s assets and liabilities measured
and recognised on a recurring basis after initial recognition and their categorisation within
the fair value hierarchy.
Recurring Fair Value Measurements
Financial Assets at Fair Falue Through Profit or Loss
30 June 2020
Level 1
$’000
Level 2
$’000
Level 3
$’000
- held-for-trading Australian listed shares
- gold forward contracts
8
-
-
(363)
-
-
Total
$’000
8
(363)
Recurring Fair Value Measurements
30 June 2019
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
Financial Assets at Fair Value Through Profit or Loss
- held-for-trading Australian listed shares
- convertible note embedded derivative
- gold forward contracts
10
-
-
-
(580)
(3,898)
-
-
-
10
(580)
(3,898)
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are
assumed to approximate their fair values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual
maturities at the current market interest rate that is available for similar financial liabilities.
Accounting Policies
Fair Value Measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition
or disclosure purposes, the fair value is based on the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming they act in their economic best interests. For non-
financial assets, the fair value measurement is based on its highest and best use. Valuation
techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.
Notes to the Consolidated Financial Statements
85
21. Financial Risk Management (continued)
Assets and liabilities measured at fair value are classified, into three levels, using a fair value
hierarchy that reflects the significance of the inputs used in making the measurements.
Classifications are reviewed at each reporting date and transfers between levels are
determined based on a reassessment of the lowest level of input that is significant to the
fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when
internal expertise is either not available or when the valuation is deemed to be significant.
External valuers are selected based on market knowledge and reputation. Where there is a
significant change in fair value of an asset or liability from one period to another, an analysis
is undertaken, which includes a verification of the major inputs applied in the latest valuation
and a comparison, where applicable, with external sources of data.
Investment and Other Financial Assets
Investments and other financial assets are initially measured at fair value. Transaction costs
are included as part of the initial measurement, except for financial assets at fair value
through profit or loss. Such assets are subsequently measured at either amortised cost or
fair value depending on their classification. Classification is determined based on both the
business model within which such assets are held and the contractual cash flow characteristics
of the financial asset unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have
been transferred and the Group has transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation of recovering part or all of a financial
asset, it’s carrying value is written off.
Financial Assets at Fair Value Through Profit or Loss
Financial assets not measured at amortised cost or at fair value through other comprehensive
income are classified as financial assets at fair value through profit or loss. Typically, such
financial assets will be either: (i) held for trading, where they are acquired for the purpose of
selling in the short term with an intention of making a profit, or a derivative; or (ii) designated
as such upon initial recognition where permitted. Fair value movements are recognised in
profit or loss.
Financial Assets at Fair Value Through Other Comprehensive Income
Financial assets at fair value through other comprehensive income include equity investments
which the Group intends to hold for the foreseeable future and has irrevocably elected to
classify them as such upon initial recognition.
Impairment of Financial Assets
The Group recognises a loss allowance for expected credit losses on financial assets which
are either measured at amortised cost or fair value through other comprehensive income.
The measurement of the loss allowance depends upon the Group’s assessment at the end
of each reporting period as to whether the financial instrument’s credit risk has increased
significantly since initial recognition, based on reasonable and supportable information that
is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial
recognition, a 12-month expected credit loss allowance is estimated. This represents a portion
of the asset’s lifetime expected credit losses that is attributable to a default event that is
possible within the next 12 months. Where a financial asset has become credit impaired or
where it is determined that credit risk has increased significantly, the loss allowance is based
on the asset’s lifetime expected credit losses. The amount of expected credit loss recognised
is measured on the basis of the probability weighted present value of anticipated cash
shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss
allowance is recognised within other comprehensive income. In all other cases, the loss
allowance is recognised in profit or loss.
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86
Wiluna Mining | Annual Report 2020
22. ISSUED CAPITAL
Ordinary shares – issued and fully paid
Movement in Ordinary Shares on iIsue
At 1 July 2018
Issued on exercise of options
Issued on conversion of performance rights
Placement
Issued in lieu of payment
Transaction costs
On Issue at 30 June 2019
At 1 July 2019
Placement
Issued in lieu of payment
Transaction costs
Share consolidation (100:1) on 25 May 2020
On Issue at 30 June 2020
Accounting Policies
Consolidated
2020
$’000
2019
$’000
236,865
175,285
Number
(‘000s)
$’000
1,265,519
145,459
3,188
-
1,727,340
444,599
-
3,440,646
3,440,646
5,926,005
661,608
-
(9,927,975)
1
-
26,076
5,992
(2,243)
175,285
175,285
59,260
5,980
(3,660)
-
100,284
236,865
Issued Capital
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.
Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding
up of the Company in proportion to the number of and amounts paid on the shares held.
The fully paid ordinary shares have no par value and the Company does not have a limited
amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one
vote and upon a poll each share shall have one vote.
Capital Risk Management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going
concern, so that it can provide returns for shareholders and benefits for other stakeholders and to
maintain an optimum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net
debt. Net debt is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group is subject to certain financing arrangement covenants and meeting these is given
priority in all capital risk management decisions. There have been no events of default on the
financing arrangements during the financial year.
Notes to the Consolidated Financial Statements
87
23. RESERVES
Share-Based Payments Reserve Consists of:
Share options
Performance rights
Balance at 1 July 2018
Options expired
Options issued
Options exercised
Options forfeited
Balance at 30 June 2019
Balance at 1 July 2019
Options expired
Options issued
Options forfeited
Consolidated (100:1)
Balance at 30 June 2020
Accounting Policies
Consolidated
Number
(‘000s)
8,444
-
8,444
589,627
(535,819)
745,639
(3,188)
(29,582)
766,677
766,677
(2,200)
100,951
(21,036)
(835,948)
8,444
$’000
4,767
1,410
6,177
4,621
(1,360)
2,386
-
-
5,647
5,647
-
1,312
(782)
-
6,177
Share-Based Payment Reserves
Options and performance rights are issued to suppliers, directors, employees and consultants.
The options and performance rights issued may be subject to performance criteria and are
issued to directors and employees of the Company to increase goal congruence between
executives, directors and shareholders. Options and performance rights granted carry no
dividend or voting rights.
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88
Wiluna Mining | Annual Report 2020
Operating Assets and Liabilities
This section shows the assets used to generate the Group’s trading performance and the
liabilities incurred as a result. Liabilities relating to the Group’s financing activities are
addressed in the capital structure and finance costs section.
Accounting Policies
Current and Non-Current Classification
Assets and liabilities are presented in the statement of financial position based on current
and non-current classification.
An asset is current when;
• it is expected to be realised or intended to be sold or consumed in a normal operating cycle;
• it is held primarily for the purpose of trading; it is expected to be realised within 12 months
after the reporting period; or
• the asset is cash or cash equivalent unless restricted from being exchanged or used to
settle a liability for at least 12 months after the reporting period.
All other assets are classified as non-current.
A liability is current when;
• it is expected to be settled in a normal operating cycle;
• it is held primarily for the purpose of trading;
• it is due to be settled within 12 months after the reporting period; or
• there is no unconditional right to defer the settlement of the liability for at least 12 months
after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities, when recognised, are classified as non-current.
Notes to the Consolidated Financial Statements
89
24. TRADE AND OTHER RECEIVABLES
Current
GST receivable
Fuel tax credit receivable
Trade debtors
Other debtors
Total
Non-Current
Bank guarantees (restricted cash)
Total
Accounting Policies
Consolidated
2020
$’000
1,412
290
349
5,024
7,075
570
570
2019
$’000
723
121
407
1,343
2,594
400
400
Trade and Other Receivables
Trade receivables are initially recognised at fair value and subsequently measured at
amortised cost using the effective interest method, less any allowance for expected credit
losses. Trade receivables are generally due for settlement within 30 days.
The Group has applied the simplified approach to measuring expected credit losses, which
uses a lifetime expected loss allowance. To measure the expected credit losses, trade
receivables have been grouped based on days overdue. Other receivables are recognised at
amortised cost, less any allowance for expected credit losses.
Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the
amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).
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 ATO is included with other
receivables or payables in the statement of financial position.
Commitments and contingencies are disclosed net of the amount of GST recoverable from,
or payable to, the tax authority.
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Wiluna Mining | Annual Report 2020
25. INVENTORIES
Current
Consumable stores
Ore stockpiles – at cost
Ore stockpiles – at net realisable value
Gold in circuit – at net realisable value
Total Current
Non-Current
Ore stockpiles – at cost
Asset impairment charges
Total Non-Current
(a) Amounts recognised in profit or loss.
Consolidated
2020
$’000
3,751
6,726
2,980
2,322
2019
$’000
3,036
1,636
7,747
3,889
15,779
16,308
-
-
-
1,504
(1,504)
-
Write-ups of inventories on hand at 30 June 2020 to net realisable value amounted to
A$1,187,718 (2019: Write-down of A$2,354,000). Net realisable value changes to inventories
during the year are recognised in profit and loss.
Accounting Policies
Inventory
Gold bullion, gold in circuit and ore stockpiles are physically measured or estimated and
valued at the lower of cost and net realisable value. Cost is determined by the weighted
average method and comprises direct purchase costs and an appropriate portion of fixed
and variable overhead costs, including depreciation and amortisation, incurred in converting
ore into gold bullion. Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and costs of selling the final product,
including royalties.
Consumable stores are valued at the lower of cost and net realisable value. The cost of
consumable stores is measured on an average basis.
Inventories expected to be sold (or consumed in the case of stores) within 12 months after
the reporting date are classified as current assets, all other inventories are classified as
non-current.
Key Judgments
Inventories
Ore stockpiles are measured by estimating the number of tonnes added and removed from the
stockpile, the number of contained gold ounces based on assay data, and the estimated processing
plant metal recovery percentage. Stockpile tonnages are verified by periodic surveys.
Notes to the Consolidated Financial Statements
91
26. TRADE AND OTHER PAYABLES
Current
Trade payables
Accrued expenses
Other creditors
Total
Accounting Policies
Consolidated
2020
$’000
17,992
15,206
1,258
2019
$’000
28,215
11,421
1,739
34,456
41,375
Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Group prior to
the end of the financial year and which are unpaid. Due to their short-term nature they are
measured at amortised cost and are not discounted.
Annual Leave
A liability is recognised for the amount expected to be paid to an employee for annual leave
they are presently entitled to as a result of past service. The liability includes allowances
for on-costs such as superannuation and payroll taxes, as well as any future salary and wage
increases that the employee may be reasonably entitled to.
Defined Contribution Superannuation Expense
Contributions to defined contribution superannuation plans are expensed in the period in
which they are incurred.
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Wiluna Mining | Annual Report 2020
27. PROVISIONS
Current
Rehabilitation
Annual leave payable
Balance at 30 June
Non-Current
Long service leave
Rehabilitation
Balance at 30 June
Provision for Rehabilitation
Balance at 1 July
Provisions re-measured during the year
Provision used during the year
Unwinding of discount
Balance at 30 June
Note
12
3
Consolidated
2020
$’000
-
1,443
1,443
136
31,238
31,374
25,349
5,620
(14)
283
2019
$’000
261
1,081
1,342
80
25,088
25,168
26,060
(1,400)
(21)
710
31,238
25,349
The provision for mine rehabilitation and closure on acquired tenements has been
recognised at each reporting date. The provision is based on the net present value of the
current life of mine model.
Accounting Policies
Provisions
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 the risks specific
to the liability. The unwinding of the discount is recognised as a finance cost.
Long Service Leave
The Group’s net obligation in respect of long-term employee benefits is the amount of
future benefit that employees have earned in return for their service up to reporting date,
plus related on costs. The benefit is discounted to determine its present value and the
discount rate is the yield at the reporting date on high-quality corporate bonds that have
maturity dates approximating the terms of the Group’s obligations.
Key Judgments
Site Rehabilitation
A provision has been made for the present value of anticipated costs for future rehabilitation of
land explored or mined. The Group’s mining and exploration activities are subject to various laws
and regulations governing the protection of the environment. The Group recognises management’s
best estimate for assets’ retirement obligations and site rehabilitations in the period in which they
are incurred. Actual costs incurred in the future periods could differ materially from the estimates.
Additionally, future changes to environmental laws and regulations, life of mine estimates and
discount rates could affect the carrying amount of this provision.
Notes to the Consolidated Financial Statements
93
Other Disclosures
28. SHARE-BASED PAYMENTS
Options and performance rights are issued to directors, employees and service providers.
The options and performance rights issued may be subject to performance criteria and are
issued to directors and employees of the Company to increase goal congruence between
employees, directors and shareholders. Options and performance rights granted carry no
dividend or voting rights.
Summary of Options Granted
The following table illustrates the number (No.) and weighted average exercise prices
(WAEP) of, and movements in, share options issued under the Employee Option Plan during
the year.
At beginning of reporting period
766,677,036
2020
No.
WAEP
$0.035
2019
No.
589,627,328
Granted During the Period
- Entitlements Offer
- Employees and service providers
Forfeited during the period
Exercised during the period
Expired during the period
Consolidation (100:1)
Balance the End of Reporting Period
Exercisable at End of Reporting Period
-
100,951,392
(21,036,347)
-
-
-
-
-
573,638,562
172,000,000
(29,581,628)
(3,188,430)
(2,200,000)
$0.332
(535,818,796)
(835,947,872)
8,444,209(i)
7,456,386(i)
-
$3.076(i)
$3.483(i)
-
766,677,036
749,188,562
$0.0360
$0.0360
WAEP
$0.076
$0.030
$0.050
$0.000
$0.000
$0.008
-
(i) Note: These figures are post-consolidation of the Company’s securities, being 100:1,
completed on 25 May 2020.
Weighted average remaining
contractual life
Range of exercise prices
Weighted average fair value of
entitlement offer options granted
during the year
Weighted average fair value of employee
and service providers’ options granted
during the year
Weighted average fair value of directors’
options granted during the year
2020(i)
0.9 years
2019
1.6 years
$0.00 – $8.00
$0.00 – $0.308
0.000
$1.300
0.000
0.000
0.003
0.000
(i) Note: These figures are post-consolidation of the Company’s securities, being 100:1,
completed on 25 May 2020.
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Wiluna Mining | Annual Report 2020
28. Share-Based Payments (continued)
Key Estimates
Equity-Based Payments
The fair value of options granted to directors, executives and contractors is recognised as an
expense with a corresponding increase in contributed equity. The fair value is measured at grant
date and recognised over the period during which the Directors, executives and contractors becomes
unconditionally entitled to the options.
The fair value at grant date is determined using an option pricing model that takes into account the
exercise price, the term of the option, the vesting and performance criteria, the impact of dilution,
the non-tradeable nature of the option, the share price at grant date and expected price volatility
of the underlying share, the expected divided yield and the risk-free interest rate for the term of
the option.
Option Pricing Model
The following table lists the inputs to the Black-Scholes & Monte Carlo pricing models used
for the year ended 30 June 2020.
Number of
Options
Fair Value
at Grant Date
per Option
Estimated
Volatility
Life of
Option
(years)
Exercise
Price
Share Price
at Grant
Date
Risk Free
Interest
Rate
824,995
137,748
$1.30
$1.30
90%
90%
4
4
$0.00
$1.30
2.16%
$0.00
$1.30
2.16%
Allottee
Directors &
Employees
Directors &
Employees
(i) Note: These figures are post-consolidation of the Company’s securities, being 100:1,
completed on 25 May 2020.
Notes to the Consolidated Financial Statements
95
29. RELATED PARTIES
Key Management Personnel Compensation
The Key Management Personnel compensation included in employee benefits expense and
share-based payments (Note 28) is as follows.
Short-term employee benefits
Long-term employee benefits
Post employment benefits
Termination benefits
Total Compensation
Consolidated
2020
$’000
2,165
335
129
-
2,629
2019
$’000
2,184
74
126
244
2,628
Controlled Entities
The Consolidated Financial Statements include the assets, liabilities and results of the
following wholly-owned subsidiaries.
Name of Controlled Entity
Scaddan Energy Pty Ltd
Zanthus Energy Pty Ltd
Lignite Pty Ltd
Wiluna Gold Pty Ltd (formerly
Matilda Gold Pty Ltd)
Country of
Incorporation
Consolidated Entity
Company Holding
the Investment
Australia
Australia
Australia
Australia
Wiluna Mining Corporation
Limited
Scaddan Energy Pty Ltd
Scaddan Energy Pty Ltd
Wiluna Mining Corporation
Limited
Kimba Resources Pty Ltd
Australia
Wiluna Gold Pty Ltd
Entity Interest
2020
100%
100%
100%
100%
100%
2019
100%
100%
100%
100%
100%
Wiluna Operations Pty Ltd
(formerly Matilda Operations
Pty Ltd)
Australia
Wiluna Gold Pty Ltd
100%
100%
Wiluna Mining Corporation Limited is the parent entity of the Group.
Transactions with Related Entities
Xavier Group Pty Ltd (Xavier)
Mr Milan Jerkovic is an officer and co-owner of Xavier, a company who provides consulting
and corporate advisory services to the Group. During the year, Xavier was paid A$318,217
(2019: A$176,030) for consulting services provided to the Group. A$40,468 (2019: A$43,290)
was outstanding at balance date.
All transactions were made on normal commercial terms and conditions, and at market rates.
Loans to / from Related Parties
There were no loans from related parties as at 30 June 2020 and 30 June 2019.
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Wiluna Mining | Annual Report 2020
30. JOINT VENTURES AND ASSOCIATES
Joint Operation
Joint Operation Parties
Principal Activities
Interest
Interest
Wilconi JV
Wiluna
A-Cap Resources Limited
Exploration
20%
20%
30 June 2020
30 June 2019
The joint venture operations are not separate legal entities. They are contractual
arrangements between participants for the sharing of costs and outputs and do not in
themselves generate revenue and profit. The joint operations are of the type where initially
one party contributes tenements with the other party earning a specified percentage
by funding exploration activities; thereafter the parties often share exploration and
development costs and output in proportion to their ownership of joint operation assets.
31. PARENT ENTITY INFORMATION
The following information is for the parent entity, Wiluna Mining Corporation Limited,
at 30 June 2020. The information presented here has been prepared using consistent
accounting policies as detailed in the relevant notes of this report.
Current assets
Non-current assets
Total Assets
Current liabilities
Non-current liabilities
Total Liabilities
Issued capital
Reserves
Accumulated losses
Total Equity
Total Comprehensive Profit/(Loss) of the Parent
There are no contingent liabilities of the parent entity as at the reporting date.
2020
$’000
13,994
128,189
142,183
(5,973)
(72)
(6,045)
236,866
6,177
2019
$’000
1,462
81,589
83,051
(20,828)
(46)
(20,874)
175,285
5,646
(106,905)
(118,754)
136,138
11,849
62,177
(93,317)
32. COMMITMENTS
Operating Leases
Current year operating lease expenses are nil, following the adoption of AASB 16 ‘Leases’.
Refer to Note 1 for details around this change in accounting policy.
Not longer than one year
Longer than one year, but not longer than five years
Longer than five years
Total
Consolidated
2020
$’000
-
-
-
-
2019
$’000
2,274
3,588
-
5,862
Notes to the Consolidated Financial Statements
97
32. Commitments (continued)
Finance Leases
The Group holds finance leases for the acquisition of motor vehicles. The agreements
incorporate a fixed rate between of 2% and 12% (2019: 2% and 5%), monthly repayments
and expiry dates between June 2020 and June 2023.
Not longer than one year
Longer than one year, but not longer than five years
Longer than five years
Total
Consolidated
2020
$’000
168
105
20
293
2019
$’000
150
150
57
357
Contractual Commitments
On 6 January 2020, the Group re-negotiated its agreement with Synergy for the supply of
gas to the Matilda-Wiluna Gold Operation. In addition, during FY19 the Group entered into
a new gas supply contract with Kufpec Australia Pty Ltd. The terms of these agreement
commit the Group to purchasing a minimum amount of gas for the term of the contract.
As at 30 June 2020, at the current contract price, the Group had commitments to purchase
gas for the remaining term of A$1,379,000 (2019: A$1,040,000).
During FY19, the Group’s agreements with APA and Goldfields Gas Transmission Pty in
relation to gas transportation to the Matilda-Wiluna Gold Operation, were extended out to
2021 with no other amendments made to the terms. The terms of the agreements commit
the Group to transporting a minimum monthly amount of gas for the term of the contract.
As at 30 June 2020, at the current contract prices, the Group had commitments for the use
of the pipeline for the remaining term of A$710,000 (2019: A$2,273,000).
Not longer than one year
Longer than one year, but not longer than five years
Longer than five years
Total
Consolidated
2020
$’000
1,627
462
-
2,089
2019
$’000
2,521
756
-
3,277
Additionally, the Company has a limited commitment to deliver and sell 1.65% of its monthly
gold production to Osisko Bermuda Limited at a 70% discount to the prevailing spot gold
price (but limited to at a price not higher than US$600 per ounce). As at 30 June 2020, the
Company had 4,613 ounces of gold remaining to be delivered under this arrangement.
The Company pays an indefinite royalty to Franco Nevada, being 3.6% of revenue (net of
refining costs, gold freight and the 2.5% Western Australian State Government royalty).
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Wiluna Mining | Annual Report 2020
33. CONTINGENT ASSETS AND LIABILITIES
Contingent Liabilities
As part of the sale and purchase agreement of the Wiluna Gold Project from Apex Minerals
NL (Receivers and Managers Appointed)(In Liquidation) and Apex Gold Pty Ltd (Receivers
and Managers Appointed)(In Liquidation), the following deferred consideration contingent
liability existed at 30 June 2020;
• A$260,000 in cash (or shares at Wiluna Mining’s election) on production of 100,000 ounces
of gold from the Wiluna tenements.
The deferred consideration was paid on 5 August 2020 by the issue of 186,366 Company
shares. The contingent liability was then extinguished.
Contingent Assets
As part of the farm-in and Joint Venture Agreement with A-Cap Resources Limited on
the exploration tenements (project) owned by the Group, the following contingent
assets exist;
• A$500,000 in cash and incurred Exploration expenditure of not less than A$5 million on
exclusive right to earn 35% participant interest on the project by A-Cap Resources Limited
(Second Earn in Interest); and,
• A$1 million in cash and issuing A-Cap Resources Limited’ shares equal to A$1.5 million on
exclusive right to earn 20% participant interest on the project by A-Cap Resources Limited
(Third Earn in Interest).
In addition, as part of the agreement for the sale of Calcine Tailings between Wiluna
Operations Pty Ltd and Kesli Chemicals Pty Ltd which occurred on 4 November 2019,
the following contingent assets exist;
• A$1,000,000 in cash as final consideration, upon the buyer’s election to remove the
remaining Calcine Tailings from Wiluna Mining’s site, which must occur at or prior to
18 months from the settlement date.
34. AUDITOR’S REMUNERATION
Audit Services – RSM Australia Partners
- Auditing or reviewing the Financial Report
- Other services
Total
Consolidated
2020
$’000
137
3
140
2019
$’000
128
-
128
Notes to the Consolidated Financial Statements
99
35. SUBSEQUENT EVENTS
Debt Financing
On 14 August 2020, Wiluna Mining announced that all documentation concerning the
gold prepaid swap financing facility and gold hedging facility provided by Mercuria Energy
Trading Pte Ltd had been completed. The Company has executed the prepaid swap and the
hedging transactions. The A$21 million prepaid swap proceeds (Tranche 1) will be repaid in
full by delivering 699oz of gold per month over 12 months, totaling 8,388oz.
The facility gives Wiluna Mining the flexibility of drawing a further A$40 million (Tranche 2),
subject to Mercuria credit approval, to further advance the Stage 1 Expansion.
Wiluna Mining’s favorable, ongoing hedging facility with Mercuria will see 34,000oz sold
at an average price of A$2,674/oz, which is net of transaction costs, maturing over the next
12 months.
Apex Gold Share Issue
On 5 August 2020, Wiluna Mining announced the issue of 186,366 shares to RF Capital Pty
Ltd pursuant to a deferred consideration payment of A$260,000 relating to the Company’s
initial acquisition of the Wiluna Gold Project.
The milestone achieved to trigger the deferred consideration, which is the final such
performance milestone pursuant to the terms of the sale and purchase agreement, was
the production hurdle of 100,000 ounces of gold derived from the prescribed Wiluna
tenements, which was achieved in July 2020. The shares were issued at the 30-day VWAP
as at 3 August 2020 which was A$1.395.
COVID-19
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been
financially positive for the consolidated entity up to 30 June 2020, it is not practicable to
estimate the potential impact, positive or negative, after the reporting date. The situation
is rapidly developing and is dependent on measures imposed by the Australian Government
and other countries, such as maintaining social distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
Apart from the above, there are no other matters or circumstances that have arisen since
the end of the financial year which significantly affected or could significantly affect the
operations of the Group, the results of those operations, or the state of affairs of the Group
in future financial years.
36. ROUNDING
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’
Report) Instrument 2016/91 and in accordance with that class order, amounts in the
financial statements have been rounded off to the nearest thousand dollars, or in certain
cases, to the nearest dollar.
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Wiluna Mining | Annual Report 2020
ADDITIONAL
INFORMATION
Directors’ Declaration
In accordance with a resolution of the Directors of Wiluna Mining Corporation Limited,
I state that:
1. In the opinion of the Directors:
(a) The financial statements, notes and additional disclosures included in the Directors’
Report designated as audited, are 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 2020 and of its
performance for the financial year ended on that date; and,
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) There are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
2. The Directors have been given the declarations required by Section 295A of the Corporations
Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year
ended 30 June 2020.
3. The Directors draw attention to the notes to the financial statements, which includes a
statement of compliance with International Financial Reporting Standards.
Signed in accordance with a resolution of Directors made pursuant to Section 295(5)(a) of the
Corporations Act 2001.
On behalf of the board
Milan Jerkovic
Executive Chair
Perth, 28 August 2020
Independent Auditor’s Report
Independent Auditor’s Report
101
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INDEPENDENT AUDITOR’S REPORT To the Members of Wiluna Mining Corporation Limited Opinion We have audited the financial report of Wiluna Mining Corporation Limited (Company) and its subsidiaries (Group), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group's financial position as at 30 June 2020 and of its financial performance for the year then ended; and (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 auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (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. THE POWER OF BEING UNDERSTOODAUDIT | TAX | CONSULTINGRSM Australia Partnersis a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036Liability limited by a scheme approved under Professional Standards LegislationRSM Australia PartnersLevel 32, Exchange Tower 2 The Esplanade Perth WA 6000GPO Box R1253 Perth WA 6844T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111 www.rsm.com.au AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Wiluna Mining Corporation Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) Any applicable code of professional conduct in relation to the audit. DAVID WALL Partner RSM Australia Partners Perth, WA Dated: 28 August 2020 THE POWER OF BEING UNDERSTOODAUDIT | TAX | CONSULTINGRSM Australia Partnersis a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036Liability limited by a scheme approved under Professional Standards LegislationRSM Australia PartnersLevel 32, Exchange Tower 2 The Esplanade Perth WA 6000GPO Box R1253 Perth WA 6844T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111 www.rsm.com.au AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Wiluna Mining Corporation Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) Any applicable code of professional conduct in relation to the audit. DAVID WALL Partner RSM Australia Partners Perth, WA Dated: 28 August 2020
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Wiluna Mining | Annual Report 2020
Independent Auditor’s Report (continued)
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. Key audit matter How our audit addressed this matter Mine properties - Refer to Note 12 and 13 to the financial statements At 30 June 2020, the Group held mine properties with a carrying value of $96.3 million. This asset balance is considered a key audit matter due to the significant judgment involved in determining the appropriate accounting treatment. Areas of judgment include: • The transfer of the exploration and evaluation asset to mine properties during the year; • Application of the units of production method in determining the amortisation charge. This includes determining the appropriate mine reserve estimate and the cost allocation attributable to each asset; and • The recognition and measurement of the deferred stripping asset, which involves determining the date of commercial production, identifying the components within the ore body being stripped, determining the costs relating to the stripping activity and estimating the stripping ratio over the life of mine. Our audit procedures included: • Reviewing management’s amortisation models and agreeing key inputs to supporting information. This included an assessment of the work performed by management’s expert in respect of the Life of Mine model and the mine reserve estimate, including the competency and objectivity of the expert; • Testing the mathematical accuracy of the rates applied; • Reviewing management’s assessment that the technical feasibility and commercial viability of extracting a mineral resource was demonstrable, and that the existing exploration and evaluation asset should be transferred to mine properties; • Agreeing a sample of the additions, including the transfer of the exploration and evaluation asset to mine properties during the year to supporting documentation to ensure that the amounts were capital in nature; and • Assessing whether the recognition of the deferred stripping asset was consistent with the requirements of Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine, including the determination of the date of commercial production and the identification of the relevant ore body. Independent Auditor’s Report
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Independent Auditor’s Report (continued)
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Adoption of AASB 16 Leases - Refer to Note 20 and basis of preparation to the financial statements The Group adopted AASB 16 Leases on 1 July 2019, using the modified retrospective approach, which has resulted in changes to accounting policies. Under this approach, comparatives are not restated. Instead, the reclassifications and adjustments arising from the new leasing rules are recognised in the statement of financial position on 1 July 2019. At 30 June 2020, the Group recognised in the statement of financial position a right of use asset amounting to $9.8 million and an associated lease liability of $10.4 million. We determined the adoption of this standard to be key audit matter because of: • The complexity of the standard and significant of the differences to the previous standard; and • The extent of judgement required in determining the inputs into the calculations of the lease liability and right of use asset, including the applicable discount rate and the likelihood of exercise of options to extend or terminate the lease. Our audit procedures included: • Obtaining an understanding of the processes undertaken and controls implemented in adopting the standard, including the transitional decisions made and practical expedients selected on adoption; • Reviewing the lease contracts identified by the Group and ensuring lease and non-lease components have been identified appropriately and allocation of the consideration in the contracts across lease components and non-lease components; • Corroborating key inputs, including the inception date, commencement date and initial contract expense to underlying lease documentation in relation to those contracts identified as a lease; • Critically evaluating the key assumptions made in the judgemental inputs, including the likelihood of exercise of options to extend and the discount rate used for calculation of the lease liability; • Verifying the mathematical accuracy of the underlying model; and • Assessing the adequacy of the disclosures in the financial statements.
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Wiluna Mining | Annual Report 2020
Independent Auditor’s Report (continued)
Inventory valuation and existence (ore stockpiles and gold in circuit) - Refer to Note 25 to the financial statements The Group has inventories consisting mainly of gold bullion, gold in circuit and ore stockpiles. The carrying value of these inventories is $12 million as at 30 June 2020. The valuation and existence of these inventories are considered a key audit matter due to their significant balance on the statement of financial position and the significant judgments made by management to determine the appropriate carrying value at the reporting date. The significant judgements were: • Valuation of inventories is based on an inventory costing model developed by management taking into consideration direct costs (cash and non-cash) incurred at different stages of the production process; • The estimated quantity of gold contained within the ore stockpiles; • The estimated processing costs of the ore stockpiles; and • The estimated quantity of ore stockpiles based on the survey result of the management expert. Our audit procedures included: • Reviewing and assessing the methodology and key assumptions in the Group’s inventory costing model and agreeing key inputs to supporting information. This included an assessment of the work performed by the management expert in respect of the ore stockpiles quantity, including the competency and objectivity of the expert; • Critically assessing and evaluating management’s assessment of net realisable value; • Performing analytical review on cost per ton and obtaining explanation from management for any significant variance; and • Assessing the adequacy of the disclosures in the financial statements. Other information The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 30 June 2020, but does not include the financial report and the auditor's report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Independent Auditor’s Report
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Independent Auditor’s Report (continued)
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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 at: https://www.auasb.gov.au/auditors_responsibilities/ar2.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 within the Directors' Report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Wiluna Mining Corporation Limited, for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. DAVID WALL Partner RSM Australia Partners Perth, WA Dated: 28 August 2020
106
Wiluna Mining | Annual Report 2020
ASX Additional Shareholder Information
Distribution of Members
The distribution of members and their holdings of equity securities in the Company.
Number Held as at
27 August 2020
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Totals
Fully Paid
Ordinary Shares
1,062,740
3,214,783
2,754,128
13,292,496
80,145,921
100,470,068
%
1.06
3.20
2.74
13.23
79.77
100
The number of holders with less than a marketable parcel of fully paid ordinary shares
is 284,352.
Substantial Shareholders
Substantial shareholders as at 27 August 2020.
Name
DELPHI UNTERNEHMENSBERATUNG
AKTIENGESELLSCHAFT AND
ITS AFFILIATES
FRANKLIN RESOURCE, INC.
AND ITS AFFILIATES
UBS GROUP AG AND ITS RELATED BODIES
CORPORATE
Voting Rights
Ordinary Shares
Number of Fully Paid
Ordinary Shares Held
% Held of Issued
Ordinary Capital
33,248,019
33.48
6,000,000
5,733,764
5.98
5.77
In accordance with the Company’s Constitution, on a show of hands every member present
in person or by proxy or attorney or duly authorised representative has one vote. On a poll,
every member present in person or by proxy or attorney or duly authorised representative
has one vote for every fully paid ordinary share held.
ASX Additional Shareholder Information
107
Twenty Largest Shareholders
The names of the twenty largest ordinary fully paid shareholders at 27 August 2020.
Name
DELPHI UNTERNEHMENSBERATUNG
AKTIENGESELLSCHAFT
SPARTA AG
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
BRISPOT NOMINEES PTY LTD
J P MORGAN NOMINEES
AUSTRALIA PTY LIMITED
DELPHI UNTERNEHMENSBERATUNG
AKTIENGESELLSCHAFT
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED-GSCO ECA
CITICORP NOMINEES PTY LIMITED
MR SIMON CATT
MR ALBRECHT VON WITZLEBEN
MR VEIT PAAS
BNP PARIBAS NOMINEES PTY LTD
MR MILAN JERKOVIC
TAYLOR FAMILY INVESTMENTS PTY LTD
MR STEPHEN PAUL OGDEN
ARLINGTON PARTNERS FUND LTD
DELPHI UNTERNEHMENBERATUNG
MR RICHARD ARTHUR LOCKWOOD
MRS YANA DOUBINSKI
BNP PARIBAS NOMS PTY LTD
MR CLAUDE CAINERO &
MR HAK HAU KWOK
Total
Restricted Securities
The Company has no restricted securities.
Number of Fully Paid
Ordinary Shares Held
% Held of Issued
Ordinary Capital
19,668,823
19.58
8,000,000
7,290,469
5,838,942
5,333,934
4,911,112
4,212,646
3,950,419
2,013,661
2,000,000
1,549,083
1,121,946
971,581
700,000
700,000
663,460
553,974
450,000
420,000
399,408
385,576
7.96
7.26
5.81
5.31
4.89
4.19
3.93
2.00
1.99
1.54
1.12
0.97
0.70
0.70
0.66
0.55
0.45
0.42
0.40
0.38
71,135,034
70.80
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Wiluna Mining | Annual Report 2020
Twenty Largest Option Holders
The names of the twenty largest listed option holders at 27 August 2020.
Name
MACA LIMITED
TAYLOR FAMILY INVESTMENTS PTY LTD
BERNE NO 132 NOMINEES PTY LTD
ZENIX NOMINEES PTY LTD
LIND ASSET MANAGEMENT XIV, LLC
MR ADAM ANTHONY MIOCEVICH
MR MILAN JERKOVIC
BINKARRA PTY LTD
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
PATHOLD NO 77 PTY LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES
PTY LIMITED
MR ROBERT HALL
VINGO HOLDINGS LTD
J P MORGAN NOMINEES AUSTRALIA
PTY LIMITED
ROSS SUTHERLAND PROPERTIES PTY LTD
CITICORP NOMINEES PTY LIMITED
AJAVA HOLDINGS PTY LTD
DR BIJU THOMAS
SPACEFACE PTY LIMITED
BENRIE PTY LTD
MR CHE-WING FRANCIS LO
MR BIJU THOMAS
Total
Number of Fully Paid
Ordinary Shares Held
% Held of Issued
Ordinary Capital
1,288,028
800,000
500,000
500,000
429,343
274,250
192,431
150,000
125,091
115,929
103,043
100,000
85,869
67,740
65,250
61,216
61,044
47,990
41,057
40,000
40,000
38,693
19.12
11.88
7.42
7.42
6.37
4.07
2.86
2.23
1.86
1.72
1.53
1.48
1.27
1.01
0.97
0.91
0.91
0.71
0.61
0.59
0.59
0.57
5,126,974
76.11
Unlisted Options
The unlisted options on issue at 27 August 2020.
Grant Date
Grant Date
5 December 2018 – Lind Asset
Management XIV, LLC
11 May 2018
5 July 2019
26 August 2019
10 July 2020
Number of
Number of
Options Held
Options Held
720,000
120,187
729,612
137,748
811,985
Wiluna Mining Corporation Ltd
Level 3
1 Altona Street
West Perth
WA 6005
wilunamining.com.au