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Big River Gold LimitedWESTGOLD RESOURCES LIMITED
Annual Report
2020
Corporate Directory
Directors
Peter G Cook (Executive Chairman)
Peter B Schwann (Independent Non-Executive Director)
Fiona J Van Maanen (Independent Non-Executive Director)
Wayne C Bramwell (Independent Non-Executive Director) (appointed 3 February 2020)
Company Secretary
Lisa Smith (appointed 19 December 2019)
Key Management
Debra A Fullarton (Chief Executive Officer) (appointed 1 July 2020)
Anthony Buckingham (Chief Operating Officer - Gold Operations)
Peter M Storey (General Manager - Meekatharra Gold Operations)
Phillip W Wilding (General Manager - Cue Gold Operations)
Registered Office
Level 6, 197 St Georges Terrace
Perth WA 6000
Phone: +61 8 9462 3400
+61 8 9462 3499
Fax:
reception@westgold.com.au
Email:
Website: www.westgold.com.au
Postal Address
PO Box 7068
Cloisters Square
WA 6850
Securities Exchange
Listed on the Australian Securities Exchange
ASX Code: WGX
Share Registry
Computershare Investors Services Pty Ltd
Level 11, 172 St Georges Terrace
PERTH WA 6000
Phone: 61-3-9415,4000
61-3-6473 2500
Fax:
Website: www.computershare.com
Domicile and Country of Incorporation
Australia
b
Westgold Resources Limited Annual Report 2020
Emerging as a
leading Australian
Gold Miner
Westgold is a Western Australian focussed explorer, developer
and miner of gold and the dominant miner in the Central
Murchison region.
Westgold has re-established this region to become a thriving
hub of gold production with long term sustainable output.
Westgold operates several open pits and multiple
underground mines which service three process plants over
250km of regional strike in the Central Murchison goldfields.
Westgold employs over 900 people and plays a critical role in
the economic growth and sustainability of the regional towns
and communities in which it operates.
Westgold owns vast infrastructure and a procession of growth
projects that provides jobs, prosperity and hope for all its
stakeholders.
Contents
2
4
7
Our Purpose & Values
Chairman’s Letter
Financial Results
8 Our Annual Outputs
10 The Measure of Our Sustainability Footprint
12 Our Operations
18 Mineral Resources & Ore Reserves
24 Director’s Report
36 Remuneration Report (Audited)
52 Auditors Independence Declaration
53 Consolidated Statement of Comprehensive Income
54 Consolidated Statement of Financial Position
55 Consolidated Statement of Cash Flows
56 Consolidated Statement of Changes in Equity
57 Notes to the Consolidated Financial Statements
106 Directors’ Declaration
107
Independent Auditor’s Report
113 Shareholder Information
Westgold Resources Limited Annual Report 2020
1
Our Purpose
& Values
Our core values define our culture, our behaviour, our actions and the
demeanour we are expected to portray in every activity our employees
and stakeholders perform under our company name.
DO THE RIGHT THING
Be honest, dependable and loyal. Accept responsibility for our actions.
Make and support business decisions through experience and good
judgement.
BE PASSIONATE
Show pride, enthusiasm and dedication in everything we do.
TAKE ACTION
Be proactive, be bold and decisive. Act before there is a problem, and
if you find one, run to it – do not try and solve it from a distance.
GET RESULTS
Deliver on our commitments, demonstrate leadership and have
the courage to speak up and challenge the status quo.
NO HARM
Home without harm, everyone, every day. The health, safety and
wellbeing of our people, the community and the environment is
paramount. Take ownership of preserving and promoting a safe
and productive workplace.
2
Westgold Resources Limited Annual Report 2020
Westgold Resources Limited Annual Report 2020
3
Chairman’s Letter
Dedicated explorer
and developer of gold
Peter Cook
Chairman
Dear Shareholders,
It is with pleasure that I present you the Westgold
Resources Limited (Westgold or the Group) Annual
Report for the year ended 30 June 2020.
It has been a pleasing year as it is whenever Westgold can
create wealth for our shareholders. For the 12 months
ended 30 June 2020 the share price has risen a modest
13% which at the time of writing this report has increased
to 34%. Share price appreciation, I believe is the key
performance indicator of the Board and management
whom as custodians of the Company’s funds and assets,
the shareholders entrust to build wealth.
I am also immensely proud of our physical achievements
in regards to establishing Westgold as a long-term
sustainable gold producer in the Central Murchison
and doing so in a manner that has no material adverse
impact on the regions, environment and communities
in which we operate.
Westgold’s market capitalisation increased by 22% to
$878 million over the year and has now joined the All
Australian ASX200. Commensurate with this elevation
and in line with the expectations of our investors and
stakeholders we have re-organised our Board to now
be comprised of predominantly independent and non-
executive directors with an aggregate skill-set aligned
with our specialist industry.
Westgold’s commitment to our workforce and
communities is significant. We are pleased to issue our
inaugural sustainability report on ESG (Environmental,
Social and Governance) matters which measures
our footprint and impacts on the regions in which
we operate.
During the year Westgold has continued to focus on its
core Central Murchison gold assets where it is in the
business of exploring, developing and mining of gold.
The Group is unique in the Australian gold sector in being
the owner operator of all our underground and open
pit mines through our internally owned mining service
division. This makes Westgold a vertically integrated
company with an extensive mining fleet and a direct
payroll of over 900 people. With this scale comes great
responsibility knowing that directly and indirectly we
have an estimated employment multiplier of 7-8x,
seeing Westgold contributing to the livelihoods of
over 6,000 people.
The realities of the scale of our operations and size of
our workforce was bought into clear focus with the
COVID-19 pandemic potentially threatening our staff,
contractors and operations. Proactive management and
rigidly complying with health advice to lessen the risk
of spread ensured Westgold could maintain operations
during early 2020. To date we have been successful and
we will continue to do our best with a balanced level of
control to ensure we protect and manage the assets,
health and wealth of our shareholders, our employees
and all stakeholders involved in our business.
COVID-19 crystallised the Board to further focus
on our fiscal strength and increasing resilience to
potential economic shocks triggered by the crisis.
To build resilience the Group continued to divest its
non-core assets and topped up its cash reserves to
ensure Westgold could continue to advance its business
objectives during a period of economic uncertainty,
without eroding our shareholders wealth.
4
Westgold Resources Limited Annual Report 2020
Westgold is fortunate, that it is in gold, as it is “in gold we
trust” in times of economic calamity. We are operating
in times of rising gold prices, which augurs well for the
Group’s future.
We live in uncertain times and the coming economic
hit to global economies and forecast period of low or
negative real interest rates is expected to be positive for
gold prices into the future. Westgold has a large resource
of 8.8 million ounces and a reserve base of 2.5 million
ounces, which collectively underwrite long mine lives
from our three key mining hubs in the Murchison region.
We fully repaid our gold-loan debt and significantly
improved our gold book, lifting its average price from
$1,827/oz to $2,062/oz and reducing our hedge position
to a modest 8% of its ore reserves, granting us great
leverage to higher gold prices in the long term.
Operationally it has been a building year for Westgold.
Our Fortnum Gold Operations and Meekatharra
Gold Operations delivered gold output just short of
expectations but within their cost guidance. Our Cue
Gold Operations failed to meet expectations in terms
of output and cost guidance but those results must
be tempered by delays associated with the mammoth
task in re-establishing cave mining at Big Bell. The
development expectations for a re-start of sub-level
cave mining at Big Bell have proven to be ambitious
and consequently it has taken longer to commence
ore stoping/caving. These delays significantly impacted
gold output and combined with a much slower ramp-
up planned in the last quarter of FY2020, had a large
negative impact on expected Group outputs.
As much as this is disappointing to our operating
teams and shareholders there has been no place
for complacency and the Company is not prepared
to compromise the safety of its employees nor the
long-term efficacy of the Big Bell mine to achieve
targets. I am pleased that these latent conditions are
now vastly behind us and the ramp-up to full scale
production for the initial 10-year profile is underway.
From a fiscal perspective Westgold had a solid close to
the year. The Group’s cash balance increased by 105%
to $138 million whilst at the same time the gold pre-pay
(unearned income) debt was repaid in full. Net Assets
grew by 18% to $522 million and net profit after tax grew
by 145% to $35 million leaving the Company in a very
strong position going into the 2021 financial year.
Peter Cook
Executive Chairman
Westgold Resources Limited Annual Report 2020
5
Sound long-term growth projects
in prolific mining regions
FGO
FORTNUM GOLD OPERATIONS (FGO)
– A centralised processing hub of 900,000tpa.
– The Starlight Underground mine.
– Multiple surface and open pit mines.
– 7-10 year visible mine life.
– 150 person village.
All of our operations
are steeped in the
mining history that
built Western Australia.
The towns that have
survived 125 years on
are testament to the
sustainability that gold
mining creates
Purely
Western
Australian
WA
FGO
MGO
CGO
Kalgoorlie
Perth
NT
SA
QLD
NSW
VIC
MGO
CGO
CENTRAL MURCHISON PROJECTS
– Combining the Meekatharra and Cue Gold Operations
– Two process plants – 2.8 million tonnes per annum.
– 6 Underground mines, multiple open pits.
– 10 year + visible mine life.
– 3 villages 600-person capacity.
6
Westgold Resources Limited Annual Report 2020
Financial Results
Y/E 30 June 2020
Y/E 30 June 2019
Change
Gold sales
Revenue
235,196
220,705
$492.3m
$418.3m
Net cash flow
from operations
$155.7m
$81.2m
7%
18%
92%
Net profit before tax
$43.9m
$12.7m
246%
Net profit after tax
$34.6m
$14.1m
145%
Closing cash &
cash equivalents
$137.6m
$67.2m
105%
Profit per share
8.65c
3.74c
131%
Dividends paid
(Demerger of Castile)
$13.1m
$0
100%
Gold loan debt
at year end
$0.0m
$25.5m
repaid
Net assets
$521.9m
$443.5m
Hedges ounces
200,000oz
183,500oz
Average hedge price
$2,062/oz
$1,827/oz
18%
9%
13%
Westgold Resources Limited Annual Report 2020
7
The Measure of Our Footprint
Our Annual
Outputs
GOLD
SALES
Meekatharra Gold
Operations
103,095oz
Cue Gold
Operations
70,893oz
Fortnum Gold
Operations
61,208oz
CASH COST
(C1)
Meekatharra Gold
Operations
A$1,171/oz
Cue Gold
Operations
A$1,549/oz
Fortnum Gold
Operations
A$1,077/oz
ALL IN
SUSTAINING COSTS
Meekatharra Gold
Operations
A$1,496/oz
Cue Gold
Operations
A$1,729/oz
Fortnum Gold
Operations
A$1,308/oz
Total Gold Sales
235,196oz
Group
A$1,260/oz
Group
A$1,518/oz
Total Revenue
$492.3 million
Net Cash Flow From
Operating Activities
$155.7 million
Net Profit Before Tax
From Operations
$43.9 million
8
Westgold Resources Limited Annual Report 2020
Westgold Resources Limited Annual Report 2020
9
The Measure of Our Footprint
The Measure of Our
Sustainability Footprint
OPERATING
RESPONSIBLY
CREATING
ECONOMIC BENEFIT
A SAFE & DIVERSE
WORKPLACE
Co2 Emissions
Scope 1 – 126Kt kt
Scope 2 – 16 kt
Energy Used
Diesel – 2,354 Tj
Gas 2 – 65 Tj
Water Usage
9.99GL
Progressive
Rehabilitation
108 Ha
Material Environ
Incidents
0
Regulatory
Non-compliances
0
Gross Regional Product
$490 million
State Govt Royalties
$13.37 million
Payroll Tax
$8.48 million
Mining Tenement
Rents & Rates
$3.93 million
Mineral Resource
Fund
$0.72 million
Mine Safety Levy
$0.57 million
Local Procurement
~ 95%
Native Title Payments
$2.1 million
Mine Fatalities
0
Lost Time Injury
Frequency Rate
6.3
Medically Treated
Injury Frequency Rate
20.9
Total Women
in Workforce
13.6%
Total Women in
Senior Management
63%
Total Women
Job Applicants
3.9%
New Employees
who are Women
10.7%
Total Employees
~900
10
Westgold Resources Limited Annual Report 2020
Our major
investment and
activity in regional
Western Australia
creates prosperity
for all.
Westgold Resources Limited Annual Report 2020
11
Our Operations
Fortnum Gold Operations
7,200,000 mN
FORTNUM
MINING AREA
Fortnum Processing
Plant - 0.9Mtpa
7,180,000 mN
Starlight Mine
Yarlarweelor Mine
HORSESHOE
MINING AREA
0
6
12
kilometres
Horseshoe - Cassidy Mine
Peak Hill Mine
7,160,000 mN
E
m
0
0
0
,
0
2
6
E
m
0
0
0
,
0
4
6
Great Northern
Highway 32km
PEAK HILL
MINING AREA
E
m
0
0
0
,
0
8
6
The Fortnum Gold Operations (FGO) are located in the
proterozoic age Bryah Basin stratigraphy approximately
150 km northwest of Meekatharra. FGO is the Group’s
northernmost mining hub of its Murchison Projects. FGO
encapsulates the historic mining centres of Labouchere,
Fortnum, Horseshoe and Peak Hill where aggregated
gold production of approximately 2 million ounces
has occurred.
FGO has been a solid low cost performer for Westgold
with expected annual output of 60-75,000oz per annum
over the longer term.
FGO has a number of exploration targets in addition
to its current ore resource and reserves which should
underwrite sustainable gold production at the operations.
These include:
The core of the FGO is a 0.9 million tonne-per-annum
carbon-in-leach (CIL) plant, a 175-person village and
all the typical plant and infrastructure required to
operate a remote FIFO site.
FGO mining output is currently dominated by the
Starlight underground mine which produces at a rate of
approximately 600,000 tonnes per annum. This ore is
blended with low grade stocks sitting free on surface to
make up a blended plant feedstock. A procession of open
pit mines sit ready to replace the low grade feedstock
with the site having a visible mine life expectation in
excess of 6 years.
For the FY 2020 year FGO sold 61,208 oz at a cash
cost (C1) of A$1,077/oz and an AISC of A$1,308/oz and
generated an overall segment profit of $33 million.
1.
2.
3.
Extensions to the Starlight underground mine where
a structural geology study undertaken by industry-
leading structural geology experts are defining the
keys controls driving Starlight mineralisation and
a number of new targets with it.
Resource development work in the Fortnum Mining
Centre to support the return of open pit mining
in the area in subsequent years. This will include
final definition works on extensions to the major
past producers of Yarlarweelor, Nathan’s and
Labouchere, as well as pre-grade control works
on the new Regent and Messiah deposits.
Conceptual exploration at Peak Hill with a view
to proving an alternative ore sources that can
be trucked to either the Fortnum or Bluebird
(MGO) processing plants.
12
Westgold Resources Limited Annual Report 2020
Fortnum Processing Plant
FGO Gold Production & A$ Cost of Sales
20,000
15,000
10,000
5,000
0
’
I
S
Z
O
N
O
T
C
U
D
O
R
P
D
L
O
G
R
T
Q
Gold Sales
Cash Cost/oz
AISC/oz
1,800
1,500
1,200
900
600
300
0
C
O
S
T
P
E
R
O
Z
Sep Q
2019
13,242
1,139
1,354
Dec Q
2019
17,307
805
935
Mar Q
2020
15,146
1,321
1,607
Jun Q
2020
15,513
1,171
1,499
Gold Sales
Cash Cost/oz
ASIC/oz
Westgold Resources Limited Annual Report 2020
13
Our Operations
Meekatharra Gold Operations
The Meekatharra Gold Operations
(MGO) are located around the
regional towns of Meekatharra. MGO
have consolidated the considerable
historic gold mining centres of
Meekatharra North, Paddy’s Flat,
Yaloginda, Nannine and Reedy’s.
MGO comprises the Bluebird CIP
processing plant (approx. 1.6 million
tpa on blended feedstock) and
associated infrastructure including
a 350 person workers village.
Bluebird is located in the centre of
the Group’s Murchison holdings, is
the largest and lowest cost of the
Group’s processing facilities and
can take ore feed from any of the
region’s mines.
At the core of the MGO output
is the Paddy’s Flat underground
mine which the company has now
been operating for four years. Two
other underground mines operate
at MGO being the South Emu-
Triton underground mine at the
Reedy’s gold mining centre and
the Bluebird underground mine
at Yaloginda just 1km south of the
Bluebird Plant. South Emu is now
in a steady state of production, the
Triton underground lodes are just
being developed and the Bluebird
underground mine has just hit its
first ore and continues to be in a
development phase. These three
underground mines will combine
to deliver more than 105,000oz per
annum to the Bluebird processing
plant over the long term.
Underground ores are supplemented
by a procession of smaller open
pits, primarily cut-backs which have
become economically viable as the
gold price has risen. In the FY 2021
open pit mining will occur at the Five
Mile Well, Maid Marion, Albury Heath
and Aladdin open pits.
Westgold’s strategy at MGO is
focussed on the higher grade
underground ore sources. As such
Westgold’s primary exploration
focus in the Meekatharra area is the
continual definition of extensions to
these mines, as well as the testing
of the next round of underground
projects to be developed such as
E
m
0
0
0
,
5
2
6
7,075,000 mN
0
5
10
kilometres
E
m
0
0
0
,
0
5
6
MEEKATHARRA NORTH
MINING AREA
7,050,000 mN
YALOGINDA
MINING AREA
Bluebird Mine
Paddy's Flat Mine
MEEKATHARRA
Wiluna
PADDY'S FLAT
MINING AREA
Bluebird Processing
Plant 1.6 - 1.8Mtpa
GABANINTHA
MINING AREA
NANNINE
MINING AREA
7,025,000 mN
Great Northern Highway
7,000,000 mN
REEDY
MINING AREA
Triton-Sth Emu Mine
Aladdin (at Nannine), Boomerang
and Rand mines (at Reedy’s) which
could add another 3 modest
underground mines to the Group’s
output. All of these additions
are high-quality underground
exploration targets proximal to
existing historic mining centres and
provide the options of leveraging the
benefits of existing infrastructure.
Westgold has been blessed with
defined targets to date and has until
now focussed its efforts to their
development. Westgold is now
beginning to re-visit conceptual
exploration over the significant
land package associated with the
Meekatharra Gold Project. Focus in
the coming year in this sphere will
rest upon the newly acquire Banjo
14
Westgold Resources Limited Annual Report 2020
Bore Project north of Meekatharra
as well as the Nannine Project
proximal to Lake Annean, where a
trial pit at Aladdin in 2019 produced
encouraging results, prompting
a plan for returning to full-scale
surface mining in the area in 2021.
During the FY2020 there was a
consistent performance at MGO
with gold sales totalling 103,95oz at
an average cash cost (C1) of A$1,171/
oz .and an all in sustaining cost of
A$1,496/oz . An overall segment
profit of $8.38 million.
MGO has been the base-load gold
output for Westgold over the past
4 years averaging about 105,000oz
per annum. Going forward
expected long-term output of 105 –
120,000oz per annum is planned.
Bluebird Processing Plant
MGO Gold Production & A$ Cost of Sales
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
’
I
S
Z
O
N
O
T
C
U
D
O
R
P
D
L
O
G
R
T
Q
Gold Sales
Cash Cost/oz
AISC/oz
1,800
1,500
1,200
900
600
300
0
C
O
S
T
P
E
R
O
Z
Sep Q
2019
23,360
1,037
1,360
Dec Q
2019
26,677
1,202
1,551
Mar Q
2020
22,740
1,208
1,500
Jun Q
2020
30,318
1,249
1,587
Gold Sales
Cash Cost/oz
ASIC/oz
Westgold Resources Limited Annual Report 2020
15
Our Operations
Cue Gold Operations
The Cue Gold Operations (CGO) are located around the
regional town of Cue and is the groups southernmost
group of assets in the Central Murchison region. The
processing hub in this region is the 1.2 – 1.4 mtpa
Tuckabianna Plant.
CGO as a regional project covers the historic
mining centres of Big Bell, Cuddingwarra, DayDawn,
Tuckabianna and Pinnacles and includes two of Australia’s
most prolific past producers in the Big Bell mine (2.6
million oz) and the Great Fingall mine (1.2 million oz).
Westgold’s strategy in this region has been heavily
focussed on the re-start of the long-life Big Bell mine.
After 3 years of de-watering, mine rehabilitation and
refurbishment, ore has begun to flow from Big Bell.
Over FY20-21 this will build to steady state output and
dominate ore feed for the Tuckabianna plant. Whilst Big
Bell builds to full production, the Tuckabianna plant has
been filled with various minor ore sources from small
open pits at Day Dawn, low grade stockpiles and the
small Comet underground mine at Pinnacles.
During FY2020, the majority of output has come mainly
from smaller open pits and the small Comet underground
which have served as stepping stones awaiting the ramp
of the dominating Big Bell mine.
Total gold sales from CGO have been 70,893 ounces at
a cash cost (C1) of A$1,549/oz and an AISC of A$1,729/
oz and generated a segment loss of $13 million which
reflects the phase of heavy capital investment in the
establishment of the Big Bell mine during the year.
CGO is expected to produce 100-110,000oz per annum
for Westgold over the long-term which is essentially
underwritten by output from the Big Bell mine.
Exploration and resource development work at Cue has
two separate thrusts;
1.
2.
An emphasis on developing high grade ore
sources which can offset a small volume of Big Bell
production whilst materially improving the grade
profile through the Tuckabianna mill. In particular
there is a focus on high-grade quartz reef-hosted
mineralisation in the Day Dawn region, which has
hosted the significant past producers of Great Fingall
and Golden Crown (head grades of 19.5g/t and 14g/t
respectively). Great Fingall is expected to become
Westgold’s latest underground mine adding to the
regions overall gold output
A focus on the Tuckabianna and Cuddingwarra
mining centres which are dominated by more
recent shallow open pit mining. These areas can
support a renewed open pit mining phase and
eventual underground extraction. Whilst spatially
these areas are adjacent to the Tuckabianna mill, the
inherent flexibility offered by the owner - operator
mining model and multiple processing hubs in the
district means that futures mines in either of these
centres can be directed to the most commercially
attractive of either the Tuckabianna or Bluebird
processing plants.
16
Westgold Resources Limited Annual Report 2020
Great Fingall Mine
Great Fingall – Golden Crown
Mining Centre Schematic
CGO Gold Production & A$ Cost of Sales
25,000
20,000
15,000
10,000
5,000
0
’
I
S
Z
O
N
O
T
C
U
D
O
R
P
D
L
O
G
R
T
Q
Gold Sales
Cash Cost/oz
AISC/oz
2,500
2,000
1,500
1,000
500
0
C
O
S
T
P
E
R
O
Z
Sep Q
2019
17,063
1,397
1,524
Dec Q
2019
18,048
1,965
2,207
Mar Q
2020
15,379
1,345
1,501
Jun Q
2020
20,403
1,477
1,825
Gold Sales
Cash Cost/oz
ASIC/oz
Westgold Resources Limited Annual Report 2020
17
Our Operations
Mineral Resources
& Ore Reserves
Westgold released its annual update of Mineral Resource and Ore Reserve Estimates on the ASX on 13 August 2020.
Shareholders should refer to that announcement for full detail including JORC 2012 appendices. The tables below
summarise them by Operational area and Mining Centre location:
Mineral Resource Statement – 30/06/2020 by Project Area
Project
Measured
CMGP (MGO + CGO)
FGO
Sub-Total
Indicated
CMGP (MGO + CGO)
FGO
Sub-Total
Inferred
CMGP (MGO + CGO)
FGO
Sub-Total
Total
CMGP (MGO + CGO)
FGO
Grand Total
Tonnes (‘000s)
Grade (g/t)
Ounces Au (‘000s)
5,545
740
6,285
59,317
15,155
74,472
41,472
5,400
46,872
106,335
21,295
127,629
3.27
3.57
3.31
2.22
1.82
2.14
1.99
1.98
1.99
2.19
1.92
2.14
583
85
668
4,243
889
5,132
2,656
343
2,999
7,482
1,317
8,799
Ore Reserve Statement – 30/06/2020 by Project Area
Project
Proven
CMGP (MGO + CGO)
FGO
Sub-Total
Probable
CMGP (MGO + CGO)
FGO
Sub-Total
Total
CMGP (MGO + CGO)
FGO
Grand Total
Tonnes (‘000s)
Grade (g/t)
Ounces Au (‘000s)
3,467
655
4,122
22,147
5,817
27,964
25,615
6,471
32,086
2.64
2.59
2.64
2.62
1.83
2.45
2.62
1.91
2.48
295
55
349
1,863
343
2,206
2,158
398
2,555
Glossary:
CMGP is the Central Murchison Gold Project (MGO + CGO consolidated);
MGO is the Meekatharra Gold Operations;
CGO is the Cue Gold Operations; and
FGO is the Fortnum Gold Operations.
18
Westgold Resources Limited Annual Report 2020
The Mineral Resources by mining project are tabulated below:
Mineral Resource Statement – 30/06/2020 by Mining Centre
Measured
Indicated
Inferred
Total
Tonnes
(‘000s)
Grade
(g/t)
Ounces
Au
(‘000s)
Tonnes
(‘000s)
Grade
(g/t)
Ounces
Au
(‘000s)
Tonnes
(‘000s)
Grade
(g/t)
Ounces
Au
(‘000s)
Tonnes
(‘000s)
Grade
(g/t)
Project
Big Bell
Cuddingwarra
Day Dawn
Tuckabianna
Stockpiles
CGO Total
Meekatharra North
Nannine
Paddy’s Flat
Reedy’s
Yaloginda
Stockpiles
MGO Total
Fortnum
Horseshoe
Peak Hill
Stockpiles
FGO Total
2,018
0
81
275
67
2,441
0
48
1,737
275
15
1,029
3,104
520
0
0
220
740
3.48
0.00
1.85
5.88
3.04
3.68
0.00
3.09
3.79
4.07
2.26
1.23
2.95
4.63
0.00
0.00
1.06
3.57
Ounces
Au
(‘000s)
2,352
229
767
759
92
226
20,136
0
5
52
7
2,913
3,812
3,212
3,756
2.63
1.84
4.19
2.71
0.71
1,701
5,444
173
514
280
85
1,137
2,891
5,753
10
2.43
1.53
2.67
2.31
0.76
425
56
248
427
0
27,598
4,050
6,784
9,240
3,833
2.65
1.76
3.52
2.56
0.75
289
33,829
2.53
2,753
15,236
2.36
1,157
51,506
2.54
4,199
0
5
419
906
212
12,749
36
1
41
3,052
8,363
0
294
25,488
77
0
0
7
5,217
1,266
7,547
1,124
85
15,155
1.78
2.32
1.63
2.54
1.79
0.00
1.82
2.36
2.09
1.55
0.87
1.82
24
68
668
249
481
0
154
299
10,015
8,775
6,993
0
1,490
26,236
396
85
376
32
889
3,363
183
1,838
16
5,400
1.74
2.75
1.43
2.40
1.45
0.00
1.78
2.12
1.43
1.78
0.54
1.98
9
26
461
677
325
0
573
1,253
24,501
12,101
15,371
1,029
1.77
2.45
1.70
2.47
1.63
1.23
33
99
1,340
963
808
41
1,499
54,829
1.86
3,283
229
8
105
0
9,100
1,449
9,385
1,360
343
21,295
2.40
2.01
1.60
0.90
1.92
703
93
481
39
1,317
Grand Total
6,285
3.31
668
74,472
2.14
5,132
46,872
1.99
2,999
127,629
2.14
8,799
Westgold Resources Limited Annual Report 2020
19
Our Operations
Mineral Resources & Ore Reserves
(continued)
The Ore Reserves by mining project are tabulated below:
Ore Reserve Statement – 30/06/2020 by Mining Centre
Proven
Probable
Grade
(g/t)
Ounces Au
(‘000s)
Grade
(g/t)
Ounces Au
(‘000s)
Tonnes
(‘000s)
Total
Grade
(g/t)
Ounces Au
(‘000s)
Project
Big Bell
Cuddingwarra
Day Dawn
Tuckabianna
Stockpiles
CGO Total
Meekatharra North
Nannine
Paddy's Flat
Reedy's
Yaloginda
Stockpiles
MGO Total
Fortnum
Horseshoe
Peak Hill
Stockpiles
FGO Total
Tonnes
(‘000s)
1,874
0
0
23
67
1,963
0
0
426
49
0
1,029
1,504
435
0
0
220
655
3.06
0.00
0.00
4.12
3.04
3.07
0.00
0.00
3.60
6.92
0.00
1.23
2.08
3.37
0.00
0.00
1.06
2.59
Tonnes
(‘000s)
11,846
814
1,398
863
3,756
184
0
0
3
7
194
18,677
0
0
49
11
0
41
263
550
1,199
740
718
0
101
3,471
47
0
0
7
55
2,991
579
1,122
1,124
5,817
2.71
1.92
6.55
2.39
0.71
2.55
1.66
1.99
3.30
3.73
2.98
0.00
3.00
2.11
2.06
1.95
0.87
1.83
1,032
13,719
50
294
66
85
814
1,398
886
3,823
1,529
20,640
14
35
127
89
69
0
334
203
38
70
32
343
263
550
1,625
789
718
1,029
4,975
3,426
579
1,122
1,344
6,471
2.76
1.92
6.55
2.43
0.75
2.60
1.66
1.99
3.38
3.93
2.98
1.23
2.72
2.27
2.06
1.95
0.91
1.91
1,217
50
294
69
92
1,722
14
35
177
100
69
41
435
250
38
70
39
398
Grand Total
4,122
2.64
349
27,964
2.45
2,206
32,086
2.48
2,555
20
Westgold Resources Limited Annual Report 2020
The movement in Mineral Resource estimates over the past year are tabulated below:
Mineral Resource Statement – Comparison to Previous Year 30/06/2020
2019 Mineral Resource
2020 Mineral Resource
Change
Project
Big Bell
Cuddingwarra
Day Dawn
Tuckabianna
Stockpiles
CGO Total
Meekatharra North
Nannine
Paddy's Flat
Reedy's
Yaloginda
Stockpiles
MGO Total
Fortnum
Horseshoe
Peak Hill
Stockpiles
FGO Total
Tonnes
(‘000s)
23,861
8,490
7,790
9,928
3,768
53,838
653
1,247
24,582
12,448
15,304
719
54,953
10,271
612
6,496
1,749
19,129
Grade
(g/t)
Ounces Au
(‘000s)
Tonnes
(‘000s)
Grade
(g/t)
Ounces Au
(‘000s)
Tonnes
(‘000s)
Grade
(g/t)
Ounces Au
(‘000s)
2.75
2.17
3.26
2.63
0.75
2.57
1.94
2.17
1.69
2.48
1.62
1.15
1.85
2.47
2.09
1.77
1.01
2.08
2,108
27,598
591
817
840
91
4,050
6,784
9,240
3,833
4,447
51,506
41
87
1,335
992
797
27
573
1,253
24,501
12,101
15,371
1,029
3,277
54,829
814
41
369
57
9,100
1,449
9,385
1,360
1,282
21,295
2.65
1.76
3.52
2.56
0.75
2.54
1.77
2.45
1.70
2.47
1.63
1.23
1.86
2.40
2.01
1.60
0.90
1.92
2,352
229
767
759
92
3,737
-4,440
-1,006
-688
65
4,199
-2,332
33
99
1,340
963
808
41
3,283
703
93
481
39
1,317
-80
6
-81
-347
67
310
-125
-1,171
837
2,889
-389
2,165
-0.10
-0.41
0.25
-0.08
-0.01
-0.03
-0.17
0.28
0.01
0.00
0.02
0.08
0.01
-0.06
-0.08
-0.17
-0.11
-0.16
245
-362
-50
-81
1
-248
-8
12
6
-29
11
14
6
-112
52
112
-18
35
Grand Total
127,920
2.19
9,006
127,629
2.14
8,799
-291
-0.05
-207
Westgold Resources Limited Annual Report 2020
21
Our Operations
Mineral Resources & Ore Reserves
(continued)
The movement in Ore Reserves over the past year are tabulated below:
Ore Reserve Statement – Comparison to Previous Year 30/06/2020
2019 Ore Reserve
2020 Ore Reserve
Change
Project
Big Bell
Cuddingwarra
Day Dawn
Tuckabianna
Stockpiles
CGO Total
Meekatharra North
Nannine
Paddy's Flat
Reedy's
Yaloginda
Stockpiles
MGO Total
Fortnum
Horseshoe
Peak Hill
Stockpiles
FGO Total
Tonnes
(‘000s)
11,829
865
1,947
1,774
3,768
20,183
346
389
1,762
1,170
624
719
5,010
2,929
579
1,122
1,733
6,364
Grade
(g/t)
Ounces Au
(‘000s)
Tonnes
(‘000s)
Grade
(g/t)
Ounces Au
(‘000s)
Tonnes
(‘000s)
Grade
(g/t)
Ounces Au
(‘000s)
2.88
2.21
5.61
2.49
0.75
2.68
1.87
2.30
3.33
3.31
3.20
1.19
2.82
2.74
2.06
1.95
1.02
2.07
1,096
13,719
61
351
142
91
814
1,398
886
3,823
1,742
20,640
21
29
189
125
64
27
454
258
38
70
57
423
263
550
1,625
789
718
1,029
4,975
3,426
579
1,122
1,344
6,471
2.76
1.92
6.55
2.43
0.75
2.60
1.66
1.99
3.38
3.93
2.98
1.23
2.72
2.27
2.06
1.95
0.91
1.91
1,217
50
294
69
92
1,722
14
35
177
100
69
41
435
250
38
70
39
398
1,890
-51
-549
-888
55
457
-84
161
-137
-381
94
310
-35
497
0
0
-389
107
-0.12
-0.28
0.94
-0.06
-0.01
-0.09
-0.21
-0.32
0.05
0.62
-0.22
0.04
-0.10
-0.47
0.00
0.00
-0.11
-0.16
121
-11
-57
-73
1
-19
-7
6
-12
-25
5
13
-19
-8
0
0
-18
-26
Grand Total
31,558
2.58
2,620
32,086
2.48
2,555
529
-0.10
-64
22
Westgold Resources Limited Annual Report 2020
Competent Person Statements
Mineral Resources Estimates
The information in this report that relates to Mineral Resource Estimates is compiled by Westgold technical employees
and contractors under the supervision of Mr. Jake Russell B.Sc. (Hons), who is a member of the Australian Institute of
Geoscientists. Mr Russell is a full time employee to the company, and has sufficient experience which is relevant to
the styles of mineralisation and types of deposit under consideration and to the activities which he is undertaking to
qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves. Mr Russell consents to the inclusion in this report of the matters based on
his information in the form and context in which it appears. Mr Russell is eligible to participate in short and long term
incentive plans of the company.
Ore Reserve Estimates
The information in this report that relates to Ore Reserve Estimates is based on information compiled by Mr. Anthony
Buckingham B.Eng (Mining Engineering) MAusIMM. Mr. Buckingham has sufficient experience which is relevant to the
styles of mineralisation and types of deposit under consideration and to the activities which they are undertaking to
qualify as a Competent Person as defined in the 2012 Editions of the “Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC 2012)”. Mr. Buckingham consents to the inclusion in this report of
the matters based on his information in the form and context in which it appears. Mr. Buckingham is a full time senior
executive of the Company and is eligible to, and may participate in short-term and long-term incentive plans of the
Company as disclosed in its annual reports and disclosure documents.
Forward Looking Statements
Certain statements in this report relate to the future, including forward looking statements relating to Westgold’s
financial position and strategy. These forward-looking statements involve known and unknown risks, uncertainties,
assumptions and other important factors that could cause the actual results, performance or achievements of
Westgold to be materially different from future results, performance or achievements expressed or implied by such
statements. Actual events or results may differ materially from the events or results expressed or implied in any
forward-looking statement and deviations are both normal and to be expected. Other than required by law, neither
Westgold, their officers nor any other person gives any representation, assurance or guarantee that the occurrence of
the events expressed or implied in any forward-looking statements will actually occur. You are cautioned not to place
undue reliance on those statements.
Westgold Resources Limited Annual Report 2020
23
Financial Report
Director’s Report
The Directors submit their report together with the
financial report of Westgold Resources Limited (Westgold
or the Company) and of the Consolidated Entity, being
the Company and its controlled entities (the Group), for
the year ended 30 June 2020.
DIRECTORS
The names and details of the Company’s Directors in
office during the financial year and until the date of this
report are as follows. Directors were in office for this
entire period unless otherwise stated.
Names, qualifications, experience and special
responsibilities
Peter Newton - Non-Executive Chairman
(Retired 25 November 2019)
Mr Newton was a highly successful stockbroker
for 25 years before shifting his hand to corporate
management of resource companies, participating in the
Australian resource industry as an investor, non-executive
director, Chairman and mentor in a number of listed and
successful companies.
During the past three years, he had served as a director
of the following public listed company:
– Metals X Limited (Appointed 14 December 2012 -
Resigned 24 October 2019)
Peter Cook - Executive Chairman
(Appointed 19 March 2007)
Mr Cook (BSc (Applied Geology), MSc (Min.Econ.) WASM
MAusIMM) has over 35 years of experience in the fields
of exploration, project, operational and corporate
management of mining companies.
During the past three years, he has also served as
a director of the following public listed companies:
Peter Schwann - Independent Non-Executive Director
(Appointed 2 February 2017)
Mr Schwann (Assoc. in Applied Geology, FAusIMM, FAIG,
MSEG) is a highly experienced, internationally recognised
geologist and mining executive. Mr Schwann has broad
experience across multiple commodities with extensive
geological capability as well as significant operational
management. Mr Schwann serves on the Company’s
Audit, Risk & Compliance Committee and Remuneration
& Nomination Committee.
During the past three years, he has served as a director
of the following public listed company:
– Aruma Resources Limited.*
Suresh Shet - Non-Executive Director
(Appointed 18 December 2017, Resigned
26 February 2020)
Mr Shet was a nominee director of Golden and Energy
Resources Ltd (GEAR) who is a significant shareholder
in the Company. Mr Shet held no public company
directorships in the past three years.
Fiona Van Maanen - Non-Executive Director
(Appointed 6 October 2016)
Mrs Van Maanen is a CPA, holds a Bachelor of Business
(Accounting) degree and a Graduate Diploma in
Company Secretarial Practice. Mrs Van Maanen has
over 25 years’ experience in accounting and financial
management in the mining and resources industry.
Mrs Van Maanen serves on the Company’s Audit,
Risk & Compliance Committee and Remuneration
& Nomination Committee.
During the past three years, she has served as a director
of the following public listed company:
– Pantoro Limited (Appointed 4 August 2020).*
– Nelson Resources Limited (Appointed 4 June 2013 -
Resigned 1 February 2019); and
Wayne Bramwell - Non-Executive Director
(Appointed 3 February 2020)
– Castile Resources Limited (Appointed 7 June 2011).*
Johannes Norregaard - Executive Director
(Appointed 29 December 2016, Resigned 22 June 2020)
Mr Norregaard (B.Eng (Mining) WASM, MAusIMM) has
over 30 years of corporate and mine management
experience in base metal and gold operations across
Australia, Canada and South East Asia. Mr Norregaard
has held no public company directorships in the past
three years.
Mr Bramwell (BSc (Extractive Metallurgy), Grad Dip
Bus, MSc (Min.Econ.) has over 26 years of international
and Australian project evaluation and development
expertise across the base metals, precious metals and
bulk commodity sectors. Mr Bramwell serves on the
Company’s Audit, Risk & Compliance Committee and
Remuneration & Nomination Committee.
During the past three years, he has served as a director
of the following public listed company:
– Ardea Resources Limited (Resigned 3 July 2020).
* Denotes current directorship
24
Westgold Resources Limited Annual Report 2020
for the year ended 30 June 2020 COMPANY SECRETARY
Lisa Smith (Appointed 19 December 2019)
Ms Smith holds a Bachelor of Laws and a Bachelor of Commerce and brings over 15 years legal experience across a
broad range of practice areas including commercial and corporate, regulation and compliance as well as experience
with secretarial duties. Ms Smith has previously acted as principal lawyer for a private resources industry services firm
and has substantial policy and advocacy experience.
David Okeby (Appointed 1 December 2016, Resigned 30 December 2019)
Mr Okeby has significant compliance, contractual, administrative and corporate experience in the mining industry. Mr
Okeby brought skills in governance, stakeholder relations and corporate activities including mergers, acquisitions and
disposals.
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
As at the date of this report, the interests of the Directors in the shares and options of the Company were:
Director
PG Cook
PB Schwann
FJ Van Maanen
WC Bramwell
Total
Fully Paid
Ordinary
Shares
Options
10,762,922
1,639,682
–
435,521
–
–
–
–
11,198,443
1,639,682
PRINCIPAL ACTIVITIES
The principal activities during the year of the Group were the exploration, development and operation of gold mines,
primarily in Western Australia.
EMPLOYEES
The Group had 934 employees at 30 June 2020 (2019: 808).
CORPORATE OVERVIEW
Westgold is a top-10 Australian gold producer with gold operations in the Central Murchison region of Western
Australia.
Western Australia is a low sovereign risk, premier destination for gold production and gold exploration prospectivity.
Westgold’s operations encapsulate the vast majority of historic and proven gold mining centres in the Central
Murchison region which to date has already produced more than 10 million ounces of gold. The gold inventory of
Westgold has a total mineral resource (JORC 2012) of more than 9 million ounces (refer to resource and reserves
estimates tab for detail) aggregating to give Westgold control over substantial gold mining province.
Over the past four years Westgold has invested heavily and has commenced or recommenced gold production from
seven underground mines and numerous open pits to produce between 250,000 and 300,000oz per annum. The
Company has three processing plants spread across its tenure with an aggregate milling capacity of approximately
3.5 million tonnes per annum.
Westgold’s operations are split into three regional operating hubs:
– The northernmost operating hub is referred to as the Fortnum Gold Operations (FGO)
– The central operating hub is referred to as the Meekatharra Gold Operations (MGO)
– The southernmost operating hub is referred to as the Cue Gold Operations (CGO)
Westgold Resources Limited Annual Report 2020
25
CORPORATE STRUCTURE
Westgold operates a corporate structure that places its operations with wholly owned subsidiaries as depicted in the
following corporate organisational structure:
Westgold Resources Limited
ACN 009 260 306
100%
100%
Minterra Pty Ltd
ACN 080 756 172
Contract Mining
Services
(MPL)
100%
100%
100%
100%
100%
100%
Aragon Resources Pty Ltd
ACN 114 714 662
Big Bell Gold Operations Pty Ltd
ACN 090 642 809
Location 53 Pty Ltd
ACN 618 320 773
Fortnum Gold
Fortnum Gold
Operations
Operations
(FGO)
(FGO)
Cue Gold
Cue Gold
Operations
Operations
(CGO)
(CGO)
Meekatharra Gold
Meekatharra Gold
Operations
Operations
(MGO)
(MGO)
OPERATING AND FINANCIAL REVIEW
IMPACT OF COVID-19
The onset of the COVID-19 pandemic was rapid and dramatic both on a corporate and personal level for employees,
the Company, our stakeholders and the communities within which we operate and live.
Westgold took immediate action to protect the integrity of the Company’s business interests and the safety and well-
being of its employees and stakeholders.
Prompt implementation and affirmative compliance with government and health bodies forced quick change to
operating processes.
Westgold operates a number of isolated and remote mining operations and fortunately with the positive protection
measures and support of governments and employees all our operations continued to function close to normal levels
though travel restrictions, social distancing and isolation practices had some impacts on the Group. For instance, the
demographic of our direct mining workforce operations was such that approximately 18% of our workforce commuted
from outside of the state and 8% from overseas. The closure of borders required immediate action to manage these
impacts on our labour force.
Roster changes, changed travel and commuting schedules, changed camp operations including dining and enhanced
hygiene practices created potential social and mental health impacts. The Company has taken a considerate approach
to the hidden consequences of such changes and continues to work with its employees to lessen the impact. The over-
arching objective of the Group has been to keep all its employees and stakeholders safe and free from infection and/or
spread, and importantly to keep people employed during these uncertain times.
Though difficult to isolate, the net impact of the pandemic was estimated to be minor on the Group’s operating outputs.
26
Westgold Resources Limited Annual Report 2020
Financial Report Director’s Report for the year ended 30 June 2020
OPERATING RESULTS
The Group’s operating results improved substantially over the previous year with increased profitability resulting in a net
profit after income tax of $34,607,315 (2019: $14,130,064).
The results also reflect the continued rationalisation of non-core assets and expansion of the Group’s activities in the
Murchison Region. These actions over the year are reflected in the following key measures:
– Consolidated revenue increased by 18% over the prior year to $492,268,271 (2019: $418,317,447);
– Consolidated total cost of sales increased by 13% over the prior year to $462,752,732 (2019: $408,078,123);
– The Group repaid the gold loan repayment facility $25,938,399 (2019: $16,011,946); and
– Profit after income tax increased to $34,607,315 (2019: $14,130,064).
REVIEW OF FINANCIAL CONDITION
The Consolidated Statement of Cash Flows reflects a closing cash and cash equivalents of $137,564,914
(2019: $67,196,289).
OPERATING ACTIVITIES
Group cash flow generated by operating activities increased on that of the previous year with a total inflow of
$155,731,640 (2019: $81,231,882).
Investing Activities
Cash flows used in investing activities across the Group increased on that of the previous year with a total outflow of
$122,278,247 (2019: $109,806,561).
Cash flow applied to investing activities in the current year relate to key growth capital at the Big Bell underground mine
(CGO) and the South Emu underground mine (MGO) as well as major capital works on plant and equipment such as the
new airstrip and village upgrade at Fortnum (FGO), a new village at Big Bell (CGO) and a new secondary crushing circuit
at the Bluebird Plant (MGO). Other capital investment was sustaining capital in all of the operating underground mines
to maintain developed tonnes and production output at similar levels.
Total capital investment in mine properties and development, exploration and evaluation expenditure and property,
plant and equipment during the year was $210,949,085 (2019: $157,065,263), broken into key operations as follows:
– MGO $82,842,250 (2019: $52,958,698);
– CGO $99,721,650 (2019: $81,401,015);
– FGO $27,391,009 (2019: $21,699,381); and
– Other $994,176 (2019: $1,006,168).
Capital commitments of $10,098,601 (2019: $8,996,852) existed at the reporting date, principally relating to the
purchase of plant and equipment.
Exploration activities continued at all operations during the year with $14,049,293 (2019: $16,411,426) expended.
A review of accumulated land titles was completed resulting in a write-off of $356,317 (2019: $5,471,706) of carrying
values.
Financing Activities
External financing requirements increased to $36,915,232 (2019: $22,324,215) reflecting an increase in external sourced
financing of growth activities.
– The Group received $66,542,506 from the placement of 20,000,000 ordinary shares at $2.25per share, the
conversion of 10,315,603 listed options at $2.02 and the conversion of 230,000 listed options at $2.31;
– The Group repaid the gold prepay facility in full (2019: drew on $20,853,550); and
– The Group’s interest bearing loans and borrowings increased to $37,826,450 (2019: $36,736,877) with marginal
additions to the mobile mining fleet with the expanded growth activities.
Westgold Resources Limited Annual Report 2020
27
SHARE ISSUES DURING THE YEAR
The following share issues have been undertaken during the year:
Date
4 July 2019
4 September 2019
17 September 2019
18 September 2019
25 September 2019
5 December 2019
24 February 2020
8 May 2020
25 May 2020
Total
Number of
shares
Purpose
15,603
Issued on conversion of options
9,700,000
Issued on conversion of options
300,000
216,450
83,550
200,000
230,000
330,313
20,000,000
31,075,916
Issued on conversion of options
Issued on conversion of options
Issued on conversion of options
Purchase consideration for Peak Hill Royalty
Issued on conversion of options
Purchase consideration for Albury Heath Prospect
Placement to supplement working capital
DIVIDENDS
The Company’s dividend policy is to deliver superior shareholder value through the return of capital in the form
of a reasonable dividend. Premised upon this objective, the Directors have set a discretionary target of 30% of net
profit after tax as the maximum annual dividend with this target to be reviewed on an annual basis. During FY2020,
the Directors acknowledge that the operations were transitioning from a development phase towards steady state
operations and in combination with the uncertainties created by the COVD-19 pandemic, believed it was prudent to
maintain balance sheet strength and elected not to distribute a dividend for this period.
The Directors note however that during the year shareholders have received a demerger dividend of $13,051,549
in respect of the in specie distribution of shares in Castile Resources Limited, which held the Northern Territory
polymetallic assets (Refer to Note 38). By coincidence, this demerger dividend was approximately equivalent to the
expected yield under the dividend policy, supporting the bona fide intent of the Directors to reward shareholders.
No dividends were paid to members for the 30 June 2019 financial year.
REVIEW OF OPERATIONS
Westgold remained the dominant gold company in the Central Murchison region and has aggregated approximately
350 mining titles covering 124,000 hectares in the region.
Westgold demerged Castile Resources Ltd from the Group via a 1:4 in-specie distribution to its shareholders on
3 December 2019. Castile was a subsidiary that had held the Northern Territory exploration assets.
Westgold owned numerous shareholding in unrelated entities which were liquidated during the year as a proactive
measure to ensure fiscal strength as the uncertainty of the impacts of COVID-19 unraveled. As a result, Westgold now
has substantial funds at its disposal to facilitate the expansion and integration of its Murchison assets. This will include
future investment in both existing internal growth opportunities and further asset acquisitions.
Fortnum Gold Operations (FGO)
FGO is located in the Proterozoic age Bryah Basin stratigraphy approximately 150 km northwest of Meekatharra and
and represents the northernmost group of assets in the Central Murchison region. These encapsulate the historic
mining centres of Labouchere, Fortnum, Horseshoe and Peak Hill where aggregated gold production of approximately
2 million ounces has occurred.
FGO comprises the Fortnum Plant, a 0.9 million tonne-per-annum carbon-in-leach (CIL) plant, a 175-person village
and all the typical plant and infrastructure required to operate a remote FIFO site.
28
Westgold Resources Limited Annual Report 2020
Financial Report Director’s Report for the year ended 30 June 2020 Mining output is currently dominated by the Starlight underground mine which produces at a rate of approximately
600,000 tonnes per annum. This ore is blended with low grade stocks sitting free on surface to make up a blended
plant feedstock. A procession of open pit mines sit ready to replace the low grade feedstock with the site having a
visible mine life expectation in excess of 6 years.
The increase in the gold output and associated increase in the gold price resulted in an increase in revenue to
$130,688,889 (2019: $103,989,696). Segment profits also increased to $33,236,970 (2019: $15,722,413).
Gold output for the year was 60,839 oz at a C1 Cash Cost of $1,077 per ounce and an all-in sustaining cost (AISC)
of $1,308 per ounce as disclosed in the table on page 31.
FGO has a number of exploration targets in addition to its current ore resource and reserves which should underwrite
sustainable gold production at the operations, including:
– Extensions to the Starlight underground mine where a structural geology study undertaken by industry-leading
structural geology experts are defining the keys controls driving Starlight mineralisation and associated targets.
– Resource development work to support the return of open pit mining in the area in subsequent years. This will
include final definition works on extensions to the major past producers of Yarlarweelor, Nathan’s and Labouchere,
as well as pre-grade control works on the new Regent and Messiah deposits.
– Conceptual exploration at Peak Hill with a view to proving an alternative ore sources that can be trucked to either
the Fortnum or Bluebird (MGO) processing plants.
Meekatharra Gold Operations (MGO)
MGO is located around the regional towns of Meekatharra and represents the central group of assets in the Central
Murchison region. These consolidate the considerable historic gold mining centres of Meekatharra North, Paddy’s Flat,
Yaloginda, Nannine and Reedy’s.
MGO hosts the Bluebird CIP processing hub (approx. 1.6 million tpa on blended feedstock) and associated
infrastructure including a 350 person workers village. Bluebird is located at the center of the Group’s overall Murchison
tenure and is the largest and lowest cost of the Group’s processing plants and consequently can accommodate ore
feed from any of the region’s mines.
The main mine within the MGO output is the Paddy’s Flat underground mine which the Company has now been
operating for four years. The smaller South Emu-Triton underground mine at the Reedy’s gold mining center and the
newly started Bluebird underground mine at Yaloginda just 1km south of the Bluebird Plant provide supplementary mill
feed. These three underground mines combine to deliver more than 100,000oz per annum to the Bluebird processing
plant over the long term.
Underground ores are supplemented by a procession of smaller open pits, primarily cut-backs which have become
economically viable as the gold price has risen. In FY2021 open pit mining will occur at the Five Mile Well, Maid Marion,
Albury Heath and Aladdin open pits.
Gold output increased and revenue improved to $211,570,622 (2019: $167,960,218). Segment profits increased to
$8,379,385 (2019: Loss of $20,392,555).
Gold output from the operation for the year was 104,088 ounces at a C1 Cash Cost of $1,171 per ounce and an all-in
sustaining cost of $1,496 per ounce as disclosed in the table on page 31.
The primary exploration focus in the region is the continual definition of extensions to these mines, as well as the
progression of the next round of underground projects to be developed including the Aladdin mine (at Nannine), and
Boomerang and Rand mines (at Reedy’s) which could add significantly to the Group’s output. They are high-quality
underground exploration targets proximal to existing historic mining centers and provide the option of leveraging
the benefits of existing infrastructure.
Westgold Resources Limited Annual Report 2020
29
Cue Gold Operations (CGO)
CGO is located around the regional town of Cue and, represents the southern-most group of assets in the
Central Murchison region. Regionally the project covers the historic mining centres of Big Bell, Cuddingwarra, Day
Dawn, Tuckabianna and Pinnacles and include two of Australia’s most prolific past producers in the Big Bell mine
(2.6 million oz) and the Great Fingall mine (1.2 million oz).
CGO has been heavily focused on the re-start of the long-life Big Bell mine. After 3 years of de-watering, mine
rehabilitation and refurbishment ore has begun to flow from Big Bell. Over FY2021 this will build to steady state output
and dominate ore feed for the Tuckabianna plant, a 1.2 - 1.4 mtpa processing plant. Whilst Big Bell builds to full
production, the plant has been filled with various ore sources from small open pits at Day Dawn, low grade stockpiles
and the small Comet underground mine at Pinnacles.
CGO is expected to produce 100,000 - 110,000oz per annum for Westgold over the long-term which is essentially
underwritten by output from the Big Bell mine.
During the year gold output remained stable and revenue increased to $148,830,137 (2019: $120,694,689). Gold output
was focused on minor short-term open pit mines to build capacity, whilst the major Big Bell mine rehabilitation and
development works were completed, resulting in a segment loss of $12,641,721 (2019: $1,047,700).
Gold output for CGO was 70,223 ounces at a C1 Cash Cost of $1,549 per ounce and an all-in sustaining cost of
$1,729 per ounce as disclosed in the table on page 31.
Exploration and resource development work at Cue has two separate thrusts;
– An emphasis on developing high grade ore sources which can offset a small volume of Big Bell production whilst
materially improving the grade profile through the Tuckabianna mill. In particular there is a focus on high-grade
quartz reef-hosted mineralisation in the Day Dawn region, which have hosted the significant past producers of
Great Fingall and Golden Crown (head grades of 19.5g/t and 14g/t respectively). Great Fingall is expected to become
Westgold’s latest underground mine adding to the regions overall gold output
– A focus on the Tuckabianna and Cuddingwarra mining centers which are dominated by more recent shallow open
pit mining. These area can support a renewed open pit mining phase and eventual underground extraction. Whilst
spatially these areas are adjacent to the Tuckabianna mill, the inherent flexibility offered by the owner - operator
mining model and multiple processing hubs in the district means that futures mines in either of these centers can
be directed to the most commercially attractive of either the Tuckabianna or Bluebird processing plants.
30
Westgold Resources Limited Annual Report 2020
Financial Report Director’s Report for the year ended 30 June 2020 Westgold Operating Performance by Operation
Year Ended 30 June 2020
MGO
CGO
FGO
Group
Achieved Gold Price
$/oz
2,052
Physical Summary
UG Ore Mined
UG Grade Mined
OP Ore Mined
OP Grade Mined
Ore Processed
Head Grade
Recovery
Gold Produced
Gold Sold
Units
t
g/t
t
g/t
t
g/t
%
oz
oz
Cost Summary
Mining
Processing
Admin
Stockpile Adjustments
C1 Cash Cost (produced) oz)1
Royalties
Sustaining Capital
Corporate Costs
All-in Sustaining Costs2
Project Startup Capital
Exploration Holding Cost
All-in Cost3
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
898,911
462,479
497,578
1,858,968
3.60
2.99
3.18
3.34
379,909
563,329
1.55
1.34
–
–
943,238
1.42
1,508,812
1,270,953
865,254
3,645,019
2.62
81.90
104,088
103,095
746
344
61
20
1.89
90.75
70,223
70,893
2,099
985
480
78
6
2.29
95.56
60,839
61,208
2,135
568
360
63
86
2.29
88.23
235,150
235,196
2,088
771
389
67
33
1,171
1,549
1,077
1,260
122
193
10
1,496
412
64
1,972
58
107
15
1,729
988
63
2,780
67
142
22
1,308
164
52
1,524
89
154
15
1,518
520
60
2,098
Westgold Resources Limited Annual Report 2020
31
Year Ended 30 June 2019
MGO
CGO
FGO
Group
Physical Summary
UG Ore Mined
UG Grade Mined
OP Ore Mined
OP Grade Mined
Ore Processed
Head Grade
Recovery
Gold Produced
Gold Sold
Achieved Gold Price
Cost Summary
Mining
Processing
Admin
Stockpile Adjustments
C1 Cash Cost (produced) oz)
Royalties
Sustaining Capital
Corporate Costs
All-in Sustaining Costs
Project Startup Capital
Exploration Holding Cost
All-in Cost
Units
t
g/t
t
g/t
t
g/t
%
oz
oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
$/oz
669,201
256,446
398,810
1,324,457
3.82
3.94
2.90
3.57
452,734
535,036
469,335
1,457,105
1.49
1.77
1.68
1.65
1,310,499
1,169,527
849,853
3,329,879
2.64
84.8
94,280
94,544
1,758
744
385
77
58
1.99
90.4
68,255
67,576
1,776
750
537
69
(18)
2.23
95.7
58,308
58,585
1,775
2.31
89.55
220,843
220,705
1,768
688
390
75
(88)
731
433
74
(4)
1,264
1,338
1,065
1,234
94
85
8
1,451
241
91
1,783
44
60
6
53
89
19
68
78
10
1,448
1,226
1,390
855
44
2,347
155
29
408
60
1,410
1,858
1. C1 Cash Cost (C1): represents the cost for mining, processing and administration after accounting for movements in inventory
(predominantly ore stockpiles). It includes net proceeds from by-product credits, but excludes the cost of royalties and capital costs for
exploration, mine development and plant and equipment.
2. All-in Sustaining Cost (AISC): is made up of the C1 cash cost plus royalty expense, sustaining capital expense and general corporate and
administration expenses.
3. All-in Cost (AIC): is made up of the AISC plus growth (major project) capital and discovery expenditure.
C1, AISC and AIC are non-IFRS measures and have not been audited.
Mining and Services Division (MPL)
Westgold is unique in the WA Australian mining sector in that it is dominantly an owner-operator of its mines. The
contracting and underground mining services division was rebadged as Minterra Pty Ltd in April 2020, to focus on
fulfilling Westgold’s internal contracting requirements. These services were provided on a cost re-imbursement
basis. The refocus on internal services resulted in a significant reduction in external revenue of $1,178,623 (2019:
$25,672,844).
32
Westgold Resources Limited Annual Report 2020
Financial Report Director’s Report for the year ended 30 June 2020 CORPORATE
Lithium Royalties
Westgold still retains the Mount Marion Lithium Royalty which is likely to provide an income stream in future financial
years.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Total equity increased to $521,860,827 (2019: $443,485,911), representing 20,530,313 shares issued at $46,102,000 less
capital raising costs of $2,270,000; the conversion of 10,545,603 listed options at $21,542,506 less costs of $171,700
and a reduction in share capital of $8,803,840 upon the demerger of Castile Resources Pty Ltd.
Castile Resources Ltd (Castile) demerged from the Westgold Group on 3 December 2019 with the in-specie distribution
of Castile shares to Westgold shareholders on a one for four basis, post approval from shareholders at the Annual
General Meeting on 25 November 2019. Castile successfully listed on the ASX on 14 February 2020 and is now an
independent company trading under ASX code: CST.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
There have been no significant events after the balance date.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Group is expected to continue exploration, mining, processing, production and marketing of gold bullion in
Australia, and will continue the development of its gold exploration projects.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group’s operations are subject to the relevant environmental protection legislation (Commonwealth and State
legislation). The Group holds various environmental licenses issued under these laws, to regulate its mining and
exploration activities in Australia. These licenses include conditions and regulations in relation to specifying limits on
discharges into the air, surface water and groundwater, rehabilitation of areas disturbed during the course of mining and
exploration activities and the storage of hazardous substances.
The board of directors monitors all environmental performance obligations. The operations are subjected to
Government agency audits and site inspections from time to time. There have been no material breaches of the
Group’s licenses and all mining and exploration activities have been undertaken in compliance with the relevant
environmental regulations.
SHARE OPTIONS
Employee options
On 7 May 2020, the Company granted 684,141 unlisted employee options (WGXO) to senior management under the
Employee Share Option Plan. Included in this issue are 153,810 options granted to the Executive Chairman which are
subject to shareholder approval.
The principle terms being:
– The Employee Options have been issued for nil consideration;
– Each Employee Option carries an entitlement to one fully paid ordinary share in the Company for each Employee
Option vested;
– Vesting only occurs after the end of the Performance Periods (30 June 2022) and the number of Employee Options
that vest (if any) will depend on:
– Growth in Return on Capital Employed over the Performance Periods; and
– Total shareholder return relative to the S&P/All Ordinaries Gold Index over the Performance Periods.
– Employee Options that vest will expire if not exercised on the vesting date;
– Unvested Employee Options lapse on cessation of a holder’s employment with Westgold;
– Any Employee Options that do not vest after the end of the Performance Periods will automatically lapse; and
– No amount is payable by a holder of Employee Options in respect of the shares allocated upon vesting of the
Employee Option.
Westgold Resources Limited Annual Report 2020
33
Unissued shares
As at the date of this report, unissued ordinary shares under option relating to unlisted options are:
Premium Exercise Price Options (PEPOs) /
Zero Exercise Price Options (ZEPOs)
Number of
shares
Exercise
Price
Expiry Date
PEPOs - Directors and Employees
ZEPOs - Tranche 2 - Directors
ZEPOs - Tranche 2 - Employees
ZEPOs - Tranche 3 - Directors
ZEPOs - Tranche 3 - Employees
Total
3,625,000
$2.31
24 November 2020
230,307
568,250
153,810
530,331
5,107,698
Zero
Zero
Zero
Zero
30 June 2021
30 June 2023
30 June 2022
30 June 2022
Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any
related body corporate.
Shares issued as a result of exercising options
During the financial year 10,545,603 listed options were converted to acquire fully paid ordinary shares in the Company,
refer to Note 26 for further details.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, the Company paid a premium in respect of a contract of insurance to insure Directors and
Officers of the Company and related bodies corporate against those liabilities for which insurance is permitted under
section 199B of the Corporations Act 2001. Disclosure of the nature of the liabilities and the amount of the premium is
prohibited under the conditions of the contract of insurance.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms
of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No
payment has been made to indemnify Ernst & Young during or since the financial year.
34
Westgold Resources Limited Annual Report 2020
Financial Report Director’s Report for the year ended 30 June 2020 DIRECTORS’ MEETINGS
The number of meetings of Directors (including meetings of committees of Directors held during the year and the
number of meetings attended by each Director was as follows:
PG Cook
PJ Newton
JS Norregaard
PB Schwann
SV Shet
FJ Van Maanen
WC Bramwell
Directors
Audit, Risk & Compliance
Committee
Remuneration & Nomination
Committee
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
17
4
17
17
8
17
10
17
4
17
17
8
17
10
–
1
–
2
–
2
2
–
1
–
2
–
2
2
–
–
–
1
–
1
1
–
–
–
1
–
1
1
Committee Membership
As at the date of this report, the Company had an Audit, Risk & Compliance Committee and a Remuneration and
Nomination Committee of the Board of Directors. Members acting on these committees during the year were:
Audit, Risk & Compliance Committee
Remuneration and Nomination Committee
PJ Newton * (resigned)
PJ Newton * (resigned)
FJ Van Maanen *
PB Schwann
WC Bramwell
* Designates the Chairperson of the Committee.
WC Bramwell *
PB Schwann
FJ Van Maanen
Westgold Resources Limited Annual Report 2020
35
Financial Report
Remuneration Report (Audited)
CONTENTS
1. Remuneration report overview
2. Remuneration and Nomination Committee responsibilities
3. Remuneration governance
4. Non-Executive Director remuneration
5. Executive remuneration
6. Performance and executive remuneration outcomes
7. Executive employment arrangements
8. Additional statutory disclosure
1. REMUNERATION REPORT OVERVIEW
The Directors of Westgold Resources Limited present the Remuneration Report (the Report) for the Group for the year
ended 30 June 2020 (FY2020). This Report forms part of the Directors Report and has been audited in accordance with
section 300A of the Corporations Act 2001 and its regulations.
The Report details the remuneration arrangements for Key Management Personnel (KMP) being the:
– Non-Executive Directors (NEDs); and
– Executive Chairman, executive directors and senior executives (collectively “the executives”).
KMP are those who directly, or indirectly, have authority and responsibility for planning, directing and controlling the
major activities of the Group.
Details of KMP of the Group are set out below:
Name
(i)
Non-Executive
Directors
PJ Newton
PB Schwann
Position
Appointed
Resigned
Non-Executive Chairman
6 October 2016
25 November 2019
Independent Non-Executive Director
2 February 2017
FJ Van Maanen
Independent Non-Executive Director
6 October 2016
WC Bramwell
Independent Non-Executive Director
3 February 2020
SV Shet
Non-Executive Director
18 December 2017
26 February 2020
(ii)
Executive Directors
PG Cook
Executive Chairman
19 March 2007
–
JS Norregaard
Executive Director
29 December 2016
22 June 2020
(iii)
Senior Executives
DA Fullarton
JS Norregaard
A Buckingham
PM Storey
PW Wilding
DP Stuart
L Smith
Chief Financial Officer1
21 May 2018
–
Chief Executive Officer (MPL)
22 June 2020
14 August 2020
Chief Operating Officer
1 October 2019
General Manager (MGO)
General Manager (CGO)
General Manager (FGO)
23 July 2018
1 July 2018
7 October 2019
14 August 2020
Company Secretary & General Counsel
19 December 2019
–
–
–
–
–
–
–
RB Armstrong
General Manager (FGO)
1 July 2018
31 August 2019
DJ Noort
DW Okeby
General Manager (MPL)
20 August 2018
3 January 2020
Company Secretary & Legal Manager
1 December 2016
19 December 2019
1. DA Fullarton was promoted to Chief Executive Officer with effect from 1 July 2020.
36
Westgold Resources Limited Annual Report 2020
2.
REMUNERATION AND NOMINATION COMMITTEE RESPONSIBILITY
Remuneration and nomination committee duties
The remuneration and nomination committee is a subcommittee of the Board and are chartered to:
– Oversee formulation and review of the Company’s organisational development, succession planning for the Group’s
Executive Directors and senior executives;
– Approve, review and refer to the Board matters relating to the appointment and the removal of executives who
report directly to the Managing Director and or Executive Directors to ensure that an appropriate Board succession
plan is in place;
– Ensure that the performance of the Board and its members is regularly reviewed; and
– Assist the Chairman in advising Directors about their performance and possible retirement.
Remuneration report at FY2019 AGM
The FY2019 remuneration report received positive shareholder support at the FY2019 AGM with a vote of 99% in favour.
Director succession planning
The Remuneration and Nomination Committee continually considers the changing needs of the Group with the aim
to maintain consistent governance over all activities.
During the financial year Westgold flagged pending changes to its Board structure at its AGM in November, 2019
following the retirement of the Chairman, Mr Peter Newton with short notice. Further, the Board noted advice from
proxy advisors voting at the AGM on the balance of executive and non-executive directors as well as independence.
This set-forth a number of changes within the Group to align the corporate and executive management structure
whilst maintaining the consistency and integrity of the Group’s operating performance.
The immediate move by the Board to replace the retiring Chairman at the 2019 AGM was to appoint the existing
Managing Director, Peter Cook to the interim position of Executive Chairman. Mr Cook accepted this position as an
interim solution to overall restructuring of the Board to fulfil corporate governance objectives as well as to facilitate
management and organisational succession planning. Mr Cook also advised of his intention to transition to a non-
executive role during the ensuring year.
The Company has further re-aligned the structure of the Board with the addition of another independent non-
executive director and the resignation of a nominee director. Further, the Board executives were reduced from two
to one with the resignation of Mr Norregaard from the Board and Mr Cook standing back from day to day operational
responsibilities. Due to the instability caused by COVID-19, Mr Cook has however agreed to defer his transition to a
non-executive role until the new management structure at Westgold is fully embedded.
The current Board structure is as follows:
Name
PG Cook
PB Schwann
FJ Van Maanen
WC Bramwell
Position
Executive Chairman
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Westgold Resources Limited Annual Report 2020
37
3. REMUNERATION GOVERNANCE
The Remuneration and Nomination Committee makes recommendations to the Board on:
– Non-Executive Director fees;
– Executive remuneration (Directors and senior executives); and
– The executive remuneration framework and incentive plan policies.
The remuneration and nomination committee assess the appropriateness of the nature and amount of remuneration
of non-executive directors and executives on a periodic basis by reference to relevant employment market conditions
with the overall objective of ensuring maximum stakeholder benefit from the retention of a high performing directors
and executive team. The composition of the remuneration and nomination committee is set out on page 35 of this
financial report.
Use of remuneration advisors
The Remuneration and Nomination Committee did not engage with any remuneration advisors during the current year
but continued to apply the previous recommendations provided by BDO Remuneration and Reward Pty Ltd in FY2018
on the Group’s executive remuneration framework and policies.
Recommendations applied
A short-term incentive (STI) policy that has the objective of linking executive remuneration with the achievement of
the Group’s key operational and financial targets. The STI will be an annual “at risk” component of remuneration for
executives that is payable in cash based on performance against key performance indicators (refer to section 4).
A long-term incentive (LTI) policy focussing on the efforts of executives on long-term value creation to further
align management’s interests with those of the shareholders. The LTI is considered to be an “at risk” component of
remuneration for executives that is payable in zero exercise price options (ZEPOs) (being an option to acquire an
ordinary share in Westgold for nil consideration).
The Executive Chairman has a maximum LTI opportunity of 80% of fixed remuneration and other executives have a
maximum LTI opportunity of 60% of fixed remuneration. The number of options granted is determined by dividing the
LTI remuneration dollar amount by the volume weighted average price of Westgold shares traded on the ASX during
the 5-day trading period prior to the day of the grant.
Options are granted with a three-year performance period. Any options that do not vest will lapse after testing.
Options will be subject to the following performance conditions:
– Relative Total Shareholder Return (RTSR) (50%); and
– Return on Capital Employed (ROCE) (50%).
The Board considers that RTSR is an appropriate performance hurdle because it ensures that a proportion of each
participant’s remuneration is explicitly linked to shareholder value and ensures that participants only receive a benefit
where there is a corresponding direct benefit to shareholders.
The Board considers ROCE as an appropriate measure as it focuses executives on generating earnings that efficiently
use shareholder capital as the reinvestment of earnings. The LTI structure will be revisited in FY2021.
4. NON-EXECUTIVE DIRECTOR REMUNERATION
NED Remuneration Policy
The NED fee policy is designed to attract and retain high calibre directors who can discharge the roles and
responsibilities required in terms of good governance, strong oversight, independence and objectivity.
The Company’s constitution and the ASX listing rules specify that the NED fee pool limit, shall be approved periodically
by shareholders. The last determination was on listing of the Company was approved at the Extraordinary General
Meeting of shareholders on 24 November 2016 with an aggregate fee pool of $500,000 per year. The amount of the
aggregate remuneration sought to be approved by shareholders and the manner in which it is paid to NEDs is reviewed
annually against comparable companies. The Board also considers advice from external advisors when undertaking
the review.
Non-executive directors are encouraged to hold shares in the Company and align their interests with the Company’s
shareholders. The shares are purchased by the directors at the prevailing market share price.
38
Westgold Resources Limited Annual Report 2020
Financial Report Remuneration Report (Audited)continued NED Remuneration Structure
The remuneration of NEDs consists of director’s fees. There is no scheme to provide retirement benefits to NEDs
other than statutory superannuation. NEDs do not participate in any performance-related incentive programs. Fees
paid to NEDs cover all activities associated with their role on the Board and any sub-committees. Additional fees will
be paid to NEDs in FY2021 for being a Chair of a sub-committee. NEDs are entitled to fees or other amounts as the
Board determines where they perform special duties or otherwise perform extra services on behalf of the Company.
They may also be reimbursed for out-of- pocket expenses incurred as a result of their directorships.
5. EXECUTIVE REMUNERATION
Executive Remuneration Policy
In determining executive remuneration, the Board aims to ensure that remuneration practices are:
– competitive and reasonable, enabling the Company to attract and retain high calibre talent;
– aligned to the Company’s strategic and business objectives and the creation of shareholder value;
– transparent and easily understood; and
– acceptable to shareholders.
The Company’s approach to remuneration ensures that remuneration is competitive, performance-focused, clearly
links appropriate reward with desired business performance and is simple to administer and understand by executives
and shareholders.
In line with the remuneration policy, remuneration levels are reviewed annually to ensure alignment to the market and
the Company’s stated objectives to provide a base level of remuneration which is both appropriate to the position and
is competitive in the market.
Executive Remuneration Structure
The Company’s remuneration structure provides for a combination of fixed and variable pay with the following
components:
– fixed remuneration;
– short-term incentives (STI); and
– long-term incentives (LTI).
In accordance with the Company’s objective to ensure that executive remuneration is aligned to Company
performance, a portion of executives’ remuneration is placed “at risk”. The relative proportion of FY2020 potential total
remuneration packages split between the fixed and variable remuneration is shown below:
Executive
Executive Chairman
Other Executives
Elements of remuneration
Fixed
remuneration
50%
65%
STI
25%
19%
LTI
25%
16%
Fixed remuneration
Fixed remuneration consists of base salary, superannuation and other non-monetary benefits and is designed to
reward for:
– the scope of the executive’s role;
– the executive’s skills, experience and qualifications; and
– individual performance.
Westgold Resources Limited Annual Report 2020
39
Short Term Incentive (STI) arrangements
Under the STI, all executives have the opportunity to earn an annual incentive award which is delivered in cash. The STI
recognises and rewards annual performance.
How is it paid?
Any STI award is paid in cash after the assessment of annual performance.
How much can executives earn?
How is performance measured?
In FY2020, the STI dollar values that executives are entitled to receive as a
percentage of their fixed remuneration would not exceed 50% for the Executive
Chairman and 40% for the other executives.
A combination of specific Company Key Performance Indicators (KPIs) are chosen
to reflect the core drivers of short-term performance and provide a framework for
delivering sustainable value to the Group and its shareholders.
These measures have been selected as they can be reliably measured, are key
drivers of value for shareholders and encourage behaviours in line with the
Company’s core values.
What KPIs were chosen?
The following KPIs were chosen for the 2020 financial year:
When is it paid?
What happens if an
executive leaves?
– KPI 1: Safety & Environmental Performance Targets (25%);
– KPI 2: All-in Sustaining Cost (AISC) relative to budget (25%);
– KPI 3: Gold production relative to budget (25%); and
– KPI 4: Personal KPI reviewed by the Remuneration Committee (25%).
The STI award is determined after the end of the financial year following a review
of performance over the year against the STI performance measures by the
Remuneration and Nomination Committee. The Board approves the final STI award
based on this assessment of performance and the award is paid in cash up to three
months after the end of the performance period.
Where executives cease to be an employee of the Group:
– due to resignation or termination for cause, before the end of the financial year,
no STI is awarded for that year; or
– due to redundancy, ill health, death or other circumstances approved by the
Board, the executive will be entitled to a pro-rata cash payment based on
assessment of performance up to the date of ceasing employment for that year;
– unless the Board determines otherwise.
What happens if there
is a change of control?
In the event of a change of control, a pro-rata cash payment will be made based
on assessment of performance up to the date of the change of control (subject to
Board discretion).
40
Westgold Resources Limited Annual Report 2020
Financial Report Remuneration Report (Audited)continued A combination of financial and non-financial measures were used to measure performance for STI rewards, with a
score being calculated on the following measures:
Metric
Weighting
Targets
Safety - Medically Treated
Injury Frequency Rate (MTIFR)
Safety - Lost Time Injury
Frequency Rate (LTIFR)
Annual MTIFR decreases by 25% or more
10
Annual MTIFR stays within ±25%
Annual MTIFR increases by 25% or more
Annual LTIFR decreases by 25% or more
10
Annual LTIFR stays within ±25%
Annual LTIFR increases by 25% or more
Exceptional environmental management performance
Score
10
5
0
10
5
0
5
Environmental
5
No serious breaches of environmental management
2.5
AISC relative to budget
25
Gold Production relative to
budget
25
Serious breach of environmental management
Actual costs below budget by 10%
Actual costs below budget by between 5% and 10%
Actual costs below budget by less than 5%
Actual costs above budget by less than 5%
Actual costs above budget by between 5% & 10%
Actual costs above budget by more than 10%
Actual production above budget by 10%
Actual production above budget by between 5% and 10%
Actual production above budget by less than 5%
Actual production equals to budget
Actual production below budget by less than 5%
Underperforms budget by between 5% & 10%
Exceptional Effort and Exceptional Achievement
Exceptional Effort and Good Achievement
Personal performance
25
Good Effort and Good Achievement
Good Effort and Average Achievement
Average Effort and Average Achievement
Total
100
0
25
20
15
10
5
0
25
20
15
10
5
0
25
20
15
10
5
Westgold Resources Limited Annual Report 2020
41
STI outcomes
Performance against those measure is as follows for FY2020:
Name
PG Cook
Position
Executive Chairman
DA Fullarton
Chief Financial Officer
A Buckingham
Chief Operating Officer
PM Storey
PW Wilding
L Smith
Total
General Manager (MGO)(i)
General Manager (CGO)(i)
Company Secretary & General Counsel
Achieved STI
%
STI
Awarded(ii)
$
Maximum
potential
award
$
33
28
28
43
28
28
94,250
290,000
20,625
75,000
30,921
112,438
38,250
90,000
24,750
90,000
11,132
219,928
40,479
697,917
(i)
(ii)
Performance is measured based on a combination of the operational segment performance as well as overall Group performance.
The FY2020 STI awards were paid in August 2020.
Long Term Incentive (LTI) arrangements
Under the LTI plan, annual grants of options are made to executives to align remuneration with the creation of
shareholder value over the long-term. The following structures will be reviewed during FY2021.
How is it paid?
Executives are eligible to receive options.
In FY2020 Zero Exercise Price Options (ZEPOs) were issued, being an option to
acquire an ordinary share in Westgold for a zero exercise price.
Are options eligible for dividends? Executives are not eligible to receive dividends on unvested options.
How much can executives earn? The LTI dollar values that executives are entitled to receive as a percentage of
their fixed remuneration would not exceed 50% (FY2019: 100%) for the Executive
Chairman and 40% (FY2019: 80%) for the other executives.
The number of options granted were determined using the fair value at the date
of grant using a Black and Scholes or Monte Carlo valuation model as appropriate,
taking into account the terms and conditions upon which the options were granted.
How is performance measured?
Tranche 3 options will vest and become exercisable subject to the following
conditions:
A service condition which requires:
– Continued employment for the three-year period from 1 July 2019 to
30 June 2022.
A performance condition which comprises the following:
– Relative Total Shareholder Returns (50%); and
– Return on Capital Employed (50%).
42
Westgold Resources Limited Annual Report 2020
Financial Report Remuneration Report (Audited)continued How is performance measured? Relative Total Shareholder Return Performance Condition
Total Shareholder Return (TSR) is the percentage growth in shareholder value,
which takes into account factors such as changes in share price and dividends paid.
The Relative TSR performance condition measures Westgold’s ability to deliver
superior shareholder returns relative to its peer companies by comparing the TSR
performance of Westgold against the performance of the S&P/All Ordinaries Gold
Index. The vesting schedule for the Relative TSR measure is as follows:
Relative TSR Performance
Below Index
Equal to the Index
% Contribution to the
Number of Employee Options to Vest
0%
50%
Above Index and below 15% above the Index
Pro-rata from 50% to 100%
15% above the Index
100%
Return on Capital Employed Performance Condition
Return on Capital Employed (ROCE) measures the efficiency with which
management uses capital in seeking to increase shareholder value. The vesting
schedule for the ROCE measure is as follows:
ROCE Performance
% Contribution to the Number of
Employee Options to Vest
Less than or equal to the average annual weighted
average cost of capital (WACC)
WACC (calculated as above) + 3%
0%
50%
WACC (calculated as above) + between 3% and 6%
Pro-rata from 50% to 100%
WACC (calculated as above) + 6%
100%
When is performance measured? Tranche 3
What happens if an executive
leaves?
The measurement date is 31 March 2022 unless otherwise determined by the Board.
Executives must exercise the options on the vesting date.
Where executives cease to be an employee of the Group:
– due to resignation or termination for cause, then any unvested options will
automatically lapse on the date of the cessation of employment; or
– due to redundancy, ill health, death or other circumstances approved by
the Board, the executive will generally be entitled to a pro-rata number of
unvested options based on achievement of the performance measures over the
performance period up to the date of cessation of employment; and
– where an employee ceases employment after the vesting of their options, the
options automatically lapse after three months of cessation of employment.
unless the Board determines otherwise on compassionate grounds.
What happens if there is a change
of control?
In the event of a change of control, the performance-period end date will be
brought forward to the date of the change of control and ZEPO’s will vest based on
performance over the shortened period (subject to board discretion).
Westgold Resources Limited Annual Report 2020
43
6. PERFORMANCE AND EXECUTIVE REMUNERATION OUTCOMES
Remuneration earned by executives in 2020
The actual remuneration earned by executives in the year ended 30 June 2020 is set out in the Table on page 46.
This provides shareholders with a view of the remuneration paid to executives for performance in FY2020 year.
Use of board discretion over remuneration outcomes
During the year the Remuneration and Nomination Committee
– Considered the appropriateness of awarding STI in relation to performance outcomes and market conditions;
– Reviewed the personal KPIs for all senior executives in line with the short term incentive arrangements; and
– Determined the appropriate total remuneration packages for new appointments of senior executives to ensure
alignment to the market and the Company’s stated objectives.
STI performance and outcomes
A combination of financial and non-financial measures were used to measure performance for STI rewards. As a result
of the Group’s performance against those measures STIs rewarded for the FY2020 as disclosed in the Table on page 42,
were paid in August 2020.
LTI performance and outcomes
ZEPO’s have been granted in Tranches during FY2019 (Tranche 1 and 2) and FY2020 (Tranche 3) and are subject to
performance hurdles.
– Tranche 1 did not meet the required vesting conditions and have therefore lapsed.
– Tranche 2 has a three-year vesting period ending in June 2021.
– Tranche 3 has a three-year vesting period ending in June 2022.
The 153,810 Tranche 3 ZEPO’s granted to the Executive Chairman in May 2020 are still subject to shareholder approval
at the upcoming AGM.
Other Executive were granted a total 530,331 Tranche 3 ZEPO’s in May 2020 under the ESOP.
For further details of options granted and vested refer to Table 3 below.
Overview of Company performance
The table below sets out information about Westgold’s earnings and movements in shareholder wealth for the past five
years up to and including the current financial year.
Closing share price
Profit (loss) per share (cents)
Net tangible assets per share
Dividend paid per shares (cents)
30 June 16 *
30 June 17 *
30 June 18 *
30 June 19 *
30 June 20
N/A
(6.75)
$0.34
–
$1.84
5.18
$0.98
–
$1.85
(0.34)
$1.12
–
$1.88
3.74
$1.14
–
$2.09
8.65
$1.24
–
* The comparatives have not been adjusted for changes due to the adoption of AASB 15, AASB 16 and AASB 9.
Clawback of remuneration
In the event of serious misconduct or material misstatement in the Group’s financial statements, the Board has the
discretion to reduce, cancel or clawback any unvested short-term incentives or long-term incentives.
Share trading policy
The Westgold trading policy applies to all non-executive directors and executives. The policy prohibits employees from
dealing in Westgold securities while in possession of material non-public information relevant to the Group. Executives
must not enter into any hedging arrangements over unvested long-term incentives under the Group’s long-term
incentive plan. The Group would consider a breach of this policy as gross misconduct, which may lead to disciplinary
action and potentially dismissal.
44
Westgold Resources Limited Annual Report 2020
Financial Report Remuneration Report (Audited)continued 7. EXECUTIVE EMPLOYMENT ARRANGEMENTS
A summary of the key terms of employment agreements for executives is set out below. There is no fixed term for
executive service agreements and all executives are entitled to participate in the Company’s STI and LTI plans. The
Company may terminate employment agreements immediately for cause, in which the executive is not entitled to any
payment other than the value of fixed remuneration and accrued leave entitlements up to the termination date.
Name
PG Cook (Executive Chairman)
DA Fullarton (Chief Financial Officer)1
JS Norregaard (Chief Executive Officer - MPL)2
A Buckingham (Chief Operating Officer)
PM Storey (General Manager MGO)
PW Wilding (General Manager CGO)
DP Stuart (General Manager FGO)2
Base Salary $ Superannuation
Notice
Period
Termination Payment
580,000
250,000
500,000
400,000
300,000
300,000
300,000
9.5%
9.5%
9.5%
9.5%
9.5%
9.5%
9.5%
9.5%
3 months
6 months base salary
3 months
Per NES3
3 months
6 months base salary
3 months
3 months
3 months
3 months
3 months
Per NES3
Per NES3
Per NES3
Per NES3
Per NES3
L Smith (Company Secretary & General Counsel)
250,000
1.
2.
3.
DA Fullarton was promoted to the position of Chief Executive Officer with effect from 1 July 2020.
JS Norregaard and DP Stuart departed on 14 August 2020.
NES are NES are National Employment Standards as defined in the Fair Work Act 2009 (Cth), which outline the minimum termination
benefits based on years of service.
Westgold Resources Limited Annual Report 2020
45
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48
Westgold Resources Limited Annual Report 2020
Financial Report Remuneration Report (Audited)continued
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Westgold Resources Limited Annual Report 2020
49
Table 2: Shareholdings of key management personnel (including nominees)
Directors
PG Cook
PB Schwann
FJ Van Maanen
WC Bramwell
Executives
DA Fullarton
JS Norregaard
A Buckingham
PM Storey
PW Wilding
DP Stuart
L Smith
Total
Balance
held at
1 July 2019
On exercise
of options
Net change
other1
Balance
held at
30 June 2020
10,779,066
2,250,000
(2,266,144)
10,762,922
–
435,521
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
435,521
–
5,000
5,000
–
–
–
–
–
–
–
–
–
–
–
–
11,214,587
2,250,000
(2,261,144)
11,203,443
1.
Represents acquisition or disposal of shares on market.
Table 3: Option holdings of key management personnel (including nominees)
Options
Directors
PG Cook
PB Schwann
FJ Van Maanen
WC Bramwell
Executives
DA Fullarton
JS Norregaard
A Buckingham
PM Storey
PW Wilding
DP Stuart
L Smith
Total
Balance at
beginning of
year 1 July
2019
Granted as
remuneration
Exercised
Lapsed
Balance at
end of year
30 June
2020
Not vested
and not
exercisable
Vested and
exercisable
3,929,744
153,810
(2,250,000)
(139,872)
1,693,682
293,682
1,400,000
–
–
–
–
–
–
90,446
39,778
1,180,869
106,076
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(45,223)
85,001
85,001
–
–
–
–
(90,435)
1,196,510
196,510
1,000,000
885,670
47,734
(650,000)
(67,835)
215,569
115,569
100,000
108,536
108,536
–
–
47,734
47,734
–
–
–
–
–
–
(54,268)
102,002
102,002
(54,268)
102,002
102,002
–
–
–
–
–
–
–
–
–
–
6,303,801
442,866
(2,900,000)
(451,901)
3,394,766
894,766
2,500,000
50
Westgold Resources Limited Annual Report 2020
Financial Report Remuneration Report (Audited)continued Loans to key management personnel and their related parties
There were no loans to key management personnel during the years ended 30 June 2020 and 30 June 2019.
Other transactions to key management personnel and their related parties
There are no other transactions with key management personnel during the years ended 30 June 2020 and
30 June 2019.
End of Audited Remuneration Report.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of the
Company support and have adhered to the principles of Corporate Governance. The Company’s corporate governance
key statements, frameworks, policies and charters are all available on the Company’s website at:
www.westgold.com.au/site/about-us/corporate-governance
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) REPORTING
The Company released an inaugural ESG report outlining the impacts, footprint and achievements of the Group on
19 August 2020.
Westgold has made significant corporate governance changes during the year to address perceived deficiencies in
its disclosure and transparency of its activity in regard to ESG. Apart from actively addressing matters which lead to
previous low ratings there have been no discussion of any ESG controversies or criticisms in the public domain.
AUDITOR’S INDEPENDENCE AND NON-AUDIT SERVICES
Auditor’s independence declaration
The Directors received the Auditor’s Independence Declaration, as set out on page 52, from Ernst & Young.
Non-audit services
The following non-audit services were provided by the entity’s auditor, Ernst & Young. The Directors are satisfied
that the provision of non-audit is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor
independence was not compromised.
Ernst & Young received or are due to receive the following amounts for the provision of non-audit services (refer to
Note 32):
Tax compliance services
$
208,409
Signed in accordance with a resolution of the Directors.
PG Cook
Executive Chairman
Perth, 28 August 2020
Westgold Resources Limited Annual Report 2020
51
Financial Report
Auditors Independence Declaration
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s independence declaration to the directors of Westgold
Resources Limited
As lead auditor for the audit of Westgold Resources Limited for the financial year ended 30 June
2020, I declare to the best of my knowledge and belief, there have been:
a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Westgold Resources Limited and the entities it controlled during the
financial year.
Ernst & Young
Philip Teale
Partner
Perth
28 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:DA:WGX:047
52
Westgold Resources Limited Annual Report 2020
Financial Report
Consolidated Statement of Comprehensive Income
Continuing operations
Revenue
Cost of sales
Gross profit
Other income
Gain on demerger of subsidiary
Finance costs
Other expenses
Accumulated mill scats written off
Net gain on fair value changes of financial assets
Exploration and evaluation expenditure written off
Profit before income tax from continuing operations
Income tax (expense) benefit
Profit for the year from continuing operations
Discontinued operations
Profit from discontinued operations after tax
Net profit for the year
Other comprehensive profit for the year, net of tax
Total comprehensive profit for the year
Total comprehensive profit attributable to:
members of the parent entity
Earnings per share attributable to the ordinary equity holders of the
parent (cents per share)
Basic profit per share
Continuing operations
Discontinued operations
Total operations
Diluted profit per share
Continuing operations
Discontinued operations
Total operations
Notes
2020
2019
5
7(a)
6
38
7(b)
7(c)
15
18
8
39
9
9
9
9
492,268,271
418,317,447
(462,752,732)
(408,078,123)
29,515,539
10,239,324
5,921,274
8,727,618
5,519,887
–
(918,881)
(1,325,025)
(7,915,557)
(9,129,172)
–
(11,628,184)
8,888,756
24,474,899
(356,317)
(5,471,706)
43,862,432
12,680,023
(9,255,117)
807,116
34,607,315
13,487,139
–
642,925
34,607,315
14,130,064
–
–
34,607,315
14,130,064
34,607,315
14,130,064
34,607,315
14,130,064
8.65
–
8.65
8.65
–
8.65
3.57
0.17
3.74
3.57
0.17
3.74
Westgold Resources Limited Annual Report 2020
53
for the year ended 30 June 2020 Financial Report
Consolidated Statement of Financial Position
Notes
2020
2019
10
11
12
13
14
15
16
17
18
19
20
21
23
25
22
24
8
26
27
28
28
137,564,914
67,196,289
7,231,137
6,992,121
43,948,165
45,502,914
3,369,998
1,336,486
1,149,449
1,427,836
193,263,663
122,455,646
13,000,000
56,210,813
161,893,032
175,572,503
298,513,129
218,207,334
78,874,701
104,276,449
11,942,577
–
564,223,439
554,267,099
757,487,102
676,722,745
69,664,918
57,741,966
9,786,926
7,963,523
23,734,814
18,271,020
198,841
25,470,487
103,385,499
109,446,996
78,490,073
70,323,565
14,091,636
18,465,857
39,659,067
35,000,416
132,240,776
123,789,838
235,626,275
233,236,834
521,860,827
443,485,911
356,130,055
299,494,861
(30,229,223)
(51,784,989)
14,466,364
14,282,408
181,493,631
181,493,631
521,860,827
443,485,911
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Other financial assets
Total current assets
NON-CURRENT ASSETS
Financial assets at fair value through profit and loss
Property, plant and equipment
Mine properties and development
Exploration and evaluation expenditure
Right-of-use assets
Total non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Interest-bearing loans and borrowings
Unearned income
Total current liabilities
NON-CURRENT LIABILITIES
Provisions
Interest-bearing loans and borrowings
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
Share-based payments reserve
Other reserves
TOTAL EQUITY
54
Westgold Resources Limited Annual Report 2020
as at 30 June 2020 Financial Report
Consolidated Statement of Cash Flows
OPERATING ACTIVITIES
Receipts from customers
Interest received
Receipts from other income
Payments to suppliers and employees
Interest paid
Income tax (paid) refunded
Notes
2020
2019
466,596,319
478,864,463
691,995
4,387,876
2,603,081
5,940,455
(311,533,581)
(406,035,568)
(2,293,877)
(2,038,023)
(332,297)
112,679
Net cash flows from operating activities
10
155,731,640
81,231,882
INVESTING ACTIVITIES
Payments for property, plant and equipment
Payments for mine properties and development
Payments for exploration and evaluation
Payment for financial assets
Proceeds from sale of financial assets
Proceeds from sale of property, plant and equipment
Proceeds from disposal of a subsidiary
(31,486,090)
(34,096,282)
(132,909,127)
(89,329,478)
(14,049,293)
(16,411,426)
(2,057,789)
(138,153)
15
56,113,502
5,798,098
1,939,129
2,197,033
–
22,314,937
(86,966)
258,387
–
(141,290)
(122,278,247)
(109,806,561)
Cash relinquished on disposal of a subsidiary
38
Proceeds from (payments for) performance bond facility
Net cash flows used in investing activities
FINANCING ACTIVITIES
Payment of hire purchase arrangements
4(g)
(19,331,761)
(20,848,905)
Payment for lease liabilities
Proceeds from gold prepayment
Proceeds from share issue
Payments for share issue costs
Net cash flows from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
25
26(b)
(7,753,813)
–
–
20,853,550
66,542,506
23,489,570
(2,541,700)
(1,170,000)
36,915,232
22,324,215
70,368,625
(6,250,464)
67,196,289
73,446,753
Cash and cash equivalents at the end of the year
10
137,564,914
67,196,289
Westgold Resources Limited Annual Report 2020
55
for the year ended 30 June 2020 Financial Report
Consolidated Statement of Changes in Equity
2019
At 1 July 2019
Profit for the year
Other comprehensive income, net of tax
Total comprehensive profit for the year net
of tax
Transactions with owners in their capacity
as owners
Share-based payments
Capital reduction via share distribution
Issue of share capital
Share issue costs, net of tax
Demerger dividend (Note 38)
At 30 June 2020
2019
At 1 July 2018
Profit for the year
Other comprehensive income, net of tax
Total comprehensive profit for the year net
of tax
Transactions with owners in their capacity
as owners
Issued capital
Accumulated
losses
Share-based
payments
reserve
Equity
reserve
Total Equity
299,494,861
(51,784,989) 14,282,408 181,493,631 443,485,911
–
–
34,607,315
–
–
34,607,315
–
–
–
–
–
34,607,315
–
–
34,607,315
–
(8,803,840)
67,644,506
(2,205,472)
–
–
–
–
(13,051,549)
183,956
–
183,956
–
–
–
– (8,803,840)
– 67,644,506
–
(2,205,472)
(13,051,549)
355,103,055 (30,229,223) 14,466,364 181,493,631 521,860,827
276,976,897
(65,915,053)
13,260,686 181,493,631 405,816,161
– 14,130,064
–
–
– 14,130,064
–
–
–
– 14,130,064
–
–
– 14,130,064
Share-based payments
Issue of share capital
Share issue costs, net of tax
At 30 June 2019
–
23,489,570
(971,606)
–
–
–
1,021,722
–
–
–
1,021,722
– 23,489,570
–
(971,606)
299,494,861
(51,784,989)
14,282,408 181,493,631 443,485,911
56
Westgold Resources Limited Annual Report 2020
for the year ended 30 June 2020 Financial Report
Notes to the Consolidated Financial Statements
1. CORPORATE INFORMATION
The financial report of Westgold Resources Limited for
the year ended 30 June 2020 was authorised for issue
in accordance with a resolution of the Directors on
28 August 2020.
Westgold Resources Limited (the Company or the Parent)
is a for profit company limited by shares incorporated
in Australia whose shares are publicly traded on the
Australian Securities Exchange.
The nature of the operations and principal activities
of the Group are described in the Directors Report.
The address of the registered office is Level 6,
197 St Georges Tce, Perth WA 6000.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) Basis of preparation
The financial report is a general-purpose financial
report, which has been prepared in accordance with
the requirements of the Corporations Act 2001 and
Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting
Standards Board.
The financial report has been prepared on a historical
cost basis, except for certain financial assets, which
have been measured at fair value through profit or loss.
The financial report is presented in Australian dollars.
(b) Statement of compliance
The financial report complies with Australian Accounting
Standards as issued by the Australian Accounting
Standards Board and also International Financial
Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
Adoption of new accounting standards
In the current year, the Group has adopted all of the new
and revised Standards and Interpretations issued by the
Australian Accounting Standards Board (the AASB) that are
relevant to its operations and effective for annual reporting
periods beginning on 1 July 2019. Other than the changes
described in Note 40, the accounting policies adopted are
consistent with those of the previous financial year.
(c) Basis of consolidation
The consolidated financial statements comprise
the financial statements of the parent entity and its
subsidiaries (the Group) as at 30 June each year. Control
is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee
and has the ability to affect those returns through its
power over the investee. Specifically, the Group controls
an investee if and only if the Group has:
– Power over the investee (existing rights that give it the
current ability to direct the relevant activities of the
investee);
– Exposure, or rights, to variable returns from its
involvement with the investee; and
– The ability to use its power over the investee to affect
its returns.
When the Group has less than a majority of the voting
or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether
it has power over an investee, including:
– The contractual arrangement with the other vote
holders of the investee;
– Rights arising from other contractual arrangements; and
– The Group’s voting rights and potential voting rights.
The Group re-assesses whether it controls an investee
if facts and circumstances indicate that there are
changes to one or more of the three elements of
control. Consolidation of a subsidiary begins when the
Group obtains control over the subsidiary and ceases
when the Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired
or disposed of during the year are included in the
Consolidated Statement of Comprehensive Income from
the date the Group gains control until the date the Group
ceases to control the subsidiary.
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
All intercompany transactions between members of the
Group are eliminated in full on consolidation.
(d) Foreign currency translation
Functional and presentation currency
Both the functional and presentation currency of the
Group is Australian dollars (A$).
Transactions and balances
Transactions in foreign currencies are initially recorded
in the functional currency by applying the exchange rates
ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are
translated at the rate of exchange at the reporting date.
All exchange differences are taken to the profit or loss.
(e) Operating segments
An operating segment is a component of an entity that
engages in business activities from which it may earn
revenues and incur expenses (including revenues and
expenses relating to transactions with other components
of the same entity), whose operating results are regularly
reviewed by management to make decisions about
resources to be allocated to the segment and assess its
performance and for which discrete financial information
is available. This includes start-up operations which are
yet to earn revenues. Management will also consider
other factors in determining operating segments such as
the existence of a line manager and the level of segment
information presented to the board of directors.
Westgold Resources Limited Annual Report 2020
57
for the year ended 30 June 2020 2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
(e) Operating segments (continued)
Operating segments have been identified based on
the information provided by management to the Board
of Directors. The Group aggregates two or more
operating segments when they have similar economic
characteristics. Operating segments that meet the
quantitative criteria as prescribed by AASB 8 are reported
separately. However, an operating segment that does not
meet the quantitative criteria is still reported separately
where information about the segment would be useful
to users of the financial statements.
Information about other business activities and operating
segments that are below the quantitative criteria are
combined and disclosed in a separate category for
“all other segments”.
(f) Cash and cash equivalents
Cash and cash equivalents in the consolidated statement
of financial position comprise cash at bank and in hand
and short-term deposits that are readily convertible to
known amounts of cash and which are subject to an
insignificant risk of changes in value.
(g) Financial Instruments
Financial instruments - initial recognition and
subsequent measurement
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity. Certain commodity
contracts are accounted for as executory contracts
and not recognised as financial instruments as these
contracts were entered into and continue to be held for
the purpose of the delivery of gold bullion in accordance
with the Group’s expected sale requirements (see Note 5).
Financial assets
Initial recognition and measurement
Financial assets are classified at initial recognition, and
subsequently measured at amortised cost, or fair value
through profit or loss or fair value through OCI.
The classification of financial assets at initial recognition
that are debt instruments depends on the financial
asset’s contractual cash flow characteristics and the
Group’s business model for managing them. With
the exception of trade receivables, the Group initially
measures a financial asset at its fair value plus, in the
case of a financial asset not at fair value through profit
or loss, transaction costs. In order for a financial asset to
be classified and measured at amortised cost, it needs
to give rise to cash flows that are ‘solely payments of
principal and interest (SPPI)’ on the principal amount
outstanding. This assessment is referred to as the SPPI
test and is performed at an instrument level.
Trade receivable that do not contain a significant
financing component or for which the Group has applied
the practical expedient for contracts that have a maturity
of one year or less, are measured at the transaction price
determined under AASB 15.
The Group’s business model for managing financial assets
refers to how it manages its financial assets in order to
generate cash flows. The business model determines
whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, the Group’s
financial assets are classified in these categories:
– Financial assets at amortised cost (debt instruments)
– Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
The Group’s financial assets at amortised cost include
cash, short-term deposits, and trade and other
receivables. The Group measures financial assets at
amortised cost if both of the following conditions
are met:
– The financial asset is held within a business model
with the objective to hold financial assets in order
to collect contractual cash flows, and
– The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding
Financial assets at amortised cost are subsequently
measured using the effective interest rate (EIR) method
and are subject to impairment. Interest received is
recognised as part of other income in the Consolidated
Statement of Comprehensive Income. Gains and
losses are recognised in profit or loss when the asset is
derecognised, modified or impaired.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
include financial assets held for trading, financial assets
designated upon initial recognition at fair value through
profit or loss, or financial assets mandatorily required
to be measured at fair value, i.e., where they fail the
SPPI test. Financial assets are classified as held for
trading if they are acquired for the purpose of selling
or repurchasing in the near term. Derivatives, including
separated embedded derivatives, are also classified as
held for trading unless they are designated as effective
hedging instruments. Financial assets with cash flows that
do not pass the SPPI test are required to be classified, and
measured at fair value through profit or loss, irrespective
of the business model.
58
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
(g) Financial Instruments (continued)
Notwithstanding the criteria for debt instruments to be
classified at amortised cost or at fair value through OCI,
as described above, debt instruments may be designated
at fair value through profit or loss on initial recognition
if doing so eliminates, or significantly reduces, an
accounting mismatch.
Financial assets at fair value through profit or loss are
carried in the statement of financial position at fair value
with net changes in fair value recognised in profit or loss.
Impairment of financial assets
The Group recognises an allowance for ECLs for all
debt instruments not held at fair value through profit
or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to
receive, discounted at an approximation of the original
EIR. The expected cash flows will include cash flows from
the sale of collateral held or other credit enhancements
that are integral to the contractual terms. ECLs are
recognised in two stages. For credit exposures for which
there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit
losses that result from default events that are possible
within the next 12-months (a 12-month ECL).
For those credit exposures for which there has been a
significant increase in credit risk since initial recognition,
a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of
the timing of the default (a lifetime ECL).
For trade receivables, the Group applies the simplified
approach in calculating ECLs, as permitted by AASB 9.
Therefore, the Group does not track changes in credit
risk, but instead, recognises a loss allowance based on
the financial asset’s lifetime ECL at each reporting date
(see Note 3). For any other financial assets carried at
amortised cost (which are due in more than 12 months),
the ECL is based on the 12-month ECL.
The 12-month ECL is the proportion of lifetime ECLs that
results from default events on a financial instrument that
are possible within 12 months after the reporting date.
However, when there has been a significant increase in
credit risk since origination, the allowance will be based
on the lifetime ECL. When determining whether the credit
risk of a financial asset has increased significantly since
initial recognition and when estimating ECLs, the Group
considers reasonable and supportable information that is
relevant and available without undue cost or effort.
This includes both quantitative and qualitative
information and analysis, based on the Group’s historical
experience and informed credit assessment including
forward-looking information.
The Group considers a financial asset in default when
contractual payments are 90 days past due. However,
in certain cases, the Group may also consider a
financial asset to be in default when internal or external
information indicates that the Group is unlikely to receive
the outstanding contractual amounts in full before
taking into account any credit enhancements held by
the Group. A financial asset is written off when there is
no reasonable expectation of recovering the contractual
cash flows and usually occurs when past due for more
than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether
financial assets carried at amortised cost are credit-
impaired. A financial asset is credit-impaired when one
or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have
occurred.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, and payables as appropriate.
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other
payables, loans and borrowings.
Subsequent measurement
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair
value through profit or loss.
Financial liabilities are classified as held for trading if
they are incurred for the purpose of repurchasing in
the near term. This category also includes derivative
financial instruments entered into by the Group that
are not designated as hedging instruments in hedge
relationships.
Gains or losses on liabilities held for trading are
recognised in the statement of profit or loss and other
comprehensive income.
Loans, borrowings, and trade and other payables
After initial recognition, interest-bearing loans
and borrowings and trade and other payables are
subsequently measured at amortised cost using
the EIR method. Gains and losses are recognised in
the statement of comprehensive income when the
liabilities are derecognised, as well as through the EIR
amortisation process.
Westgold Resources Limited Annual Report 2020
59
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
(g) Financial Instruments (continued)
Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation
is included as finance costs in the statement of
comprehensive income.
This category generally applies to interest-bearing loans
and borrowings and trade and other payables.
(h) Inventories
Inventories are valued at the lower of cost and net
realisable value.
Cost includes expenditure incurred in acquiring and
bringing the inventories to their existing condition and
location and is determined using the weighted average
cost method.
(i) 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 in the period they occur. Borrowing costs
consist of interest and other costs that an entity incurs
in connection with the borrowing of funds.
(j) Rehabilitation costs
The Group is required to decommission and rehabilitate
mines and processing sites at the end of their producing
lives to a condition acceptable to the relevant authorities.
The expected cost of any approved decommissioning or
rehabilitation programme, discounted to its net present
value, is provided when the related environmental
disturbance occurs. The cost is capitalised when it gives
rise to future benefits, whether the rehabilitation activity
is expected to occur over the life of the operation or at
the time of closure. The capitalised cost is amortised
over the life of the operation and the increase in the net
present value of the provision for the expected cost is
included in financing expenses.
Expected decommissioning and rehabilitation costs are
based on the discounted value of the estimated future
cost of detailed plans prepared for each site. Where
there is a change in the expected decommissioning and
restoration costs, the value of the provision and any
related asset are adjusted and the effect is recognised
in profit or loss on a prospective basis over the
remaining life of the operation.
The estimated costs of rehabilitation are reviewed
annually and adjusted as appropriate for changes in
legislation, technology or other circumstances. Cost
estimates are not reduced by potential proceeds from
the sale of assets or from plant clean up at closure.
(k) Property, plant and equipment
Property, plant and equipment is stated at historical cost
less accumulated depreciation and any impairment in value.
Capital work-in-progress is stated at cost and comprises
all costs directly attributable to bringing the assets under
construction ready to their intended use. Capital work-in-
progress is transferred to property, plant and equipment
at cost on completion.
Depreciation is calculated on a straight-line basis
over the estimated useful life of the asset, or where
appropriate, over the estimated life of the mine.
Major depreciation periods are:
– Mine specific plant and equipment is depreciated
using – the shorter of life of mine and useful life.
Useful life ranges from 2 to 25 years.
– Buildings – the shorter of life of mine and useful life.
Useful life ranges from 5 to 40 years.
– Office plant and equipment is depreciated at 33% per
annum for computers and office machines and 20%
per annum for other office equipment and furniture.
Impairment
The carrying values of property, plant and equipment
are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be
recoverable.
For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for
the cash-generating unit to which the asset belongs.
If any such indication exists and where the carrying
values exceed the estimated recoverable amount, the
assets or cash-generating units are written down to
their recoverable amount. Refer to Note 2(o) for further
discussion on impairment testing performed by the
Group.
Derecognition
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the item) is
included in the profit and loss in the period the item
is derecognised.
(l) Exploration and evaluation expenditure
Expenditure on acquisition, exploration and evaluation
relating to an area of interest is carried forward at
cost where rights to tenure of the area of interest are
current and:
– it is expected that expenditure will be recouped
through successful development and exploitation of
the area of interest or alternatively by its sale; and/or
60
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 2.
(l)
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Exploration and evaluation expenditure
(continued)
– exploration and evaluation activities are continuing
in an area of interest but at reporting date have not
yet reached a stage which permits a reasonable
assessment of the existence or otherwise of
economically recoverable reserves.
A regular review is undertaken of each area of interest
to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest. Where
uncertainty exists as to the future viability of certain
areas, the value of the area of interest is written off to
the profit and loss or provided against.
Impairment
The carrying value of capitalised exploration and
evaluation expenditure is assessed for impairment on
a regular basis or whenever impairment indicators are
present. When information becomes available suggesting
that the recovery of expenditure which had previously
been capitalised is unlikely or that the Group no longer
holds tenure, the relevant capitalised amount is written
off to the profit or loss in the period when the new
information becomes available.
(m) Mine properties and development
Expenditure on the acquisition and development of
mine properties within an area of interest are carried
forward at cost separately for each area of interest.
This includes the costs associated with waste removal
(stripping costs) in the creation of improved access and
mining flexibility in relation to the ore to be mined in the
future. Accumulated expenditure is amortised over the
life of the area of interest to which such costs relate on
a production output basis.
A regular review is undertaken of each area of interest
to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest.
Impairment
The carrying value of capitalised mine properties and
development expenditure is assessed for impairment
whenever facts and circumstances suggest that
the carrying amount of the asset may exceed its
recoverable amount.
Recoverable amount is determined for an individual asset,
unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups
of assets. When the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount.
Refer to Note 2(o) for further discussion on impairment
testing performed by the Group.
Stripping (waste removal) costs
As part of its mining operations, the Group incurs
stripping (waste removal) costs both during the
development phase and production phase of its
operations. Stripping costs incurred in the development
phase of a mine, before the production phase
commences (development stripping), are capitalised
as part of the cost of constructing the mine and
subsequently amortised over its useful life using a unit
of production (“UOP”) method. The capitalisation of
development stripping costs ceases when the mine/
component is commissioned and ready for use as
intended by management.
Stripping activities undertaken during the production
phase of a surface mine (production stripping)
are accounted for as set out below. After the
commencement of production, further development of
the mine may require a phase of unusually high stripping
that is similar in nature to development phase stripping.
The cost of such stripping is accounted for in the same
way as development stripping (as outlined above).
Production stripping is generally considered to create
two benefits, being either the production of inventory
or improved access to the ore to be mined in the future.
Where the benefits are realised in the form of inventory
produced in the period, the production stripping costs
are accounted for as part of the cost of producing those
inventories.
Where the benefits are realised in the form of improved
access to ore to be mined in the future, the costs are
recognised as a non-current asset, referred to as a
‘stripping activity asset’, if the following criteria are met:
– Future economic benefits (being improved access
to the ore body) are probable
– The component of the ore body for which access
will be improved can be accurately identified
– The costs associated with the improved access can
be reliably measured
If any of the criteria are not met, the production stripping
costs are charged to profit or loss as operating costs as
they are incurred.
In identifying components of the ore body, the Group
works closely with the mining operations personnel for
each mining operation to analyse each of the mine plans.
Generally, a component will be a subset of the total
ore body, and a mine may have several components.
The mine plans, and therefore the identification of
components, can vary between mines for a number
of reasons.
These include, but are not limited to the type of
commodity, the geological characteristics of the ore
body, the geographical location, and/or financial
considerations. Given the nature of the Group’s
operations, components are generally either major
pushbacks or phases and they generally form part
of a larger investment decision which requires
board approval.
Westgold Resources Limited Annual Report 2020
61
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
(m) Mine properties and development (continued)
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 ore, plus an allocation of directly
attributable overhead costs.
If incidental operations are occurring at the same time
as the production stripping activity, but are not necessary
for the production stripping activity to continue as
planned, these costs are not included in the cost of
the stripping activity asset.
A gain or loss not previously recognised by the date of
the sale of the non-current asset (or disposal group) is
recognised as the date of de-recognition.
A discontinued operation is a component of the Group
that has been disposed of or is classified as held for sale
and that represents a separate major line of business
or geographical area of operations, is part of a single
coordinated plan to dispose of such a line of business or
area of operations, or is a subsidiary acquired exclusively
with a view to resale. The results of discontinued
operations are presented separately on the face of the
Consolidated Statement of Comprehensive Income and
the assets and liabilities are presented separately on the
face of the Consolidated Statement of Financial Position.
If the costs of the inventory produced and the stripping
activity asset are not separately identifiable, a relevant
production measure is used to allocate the production
stripping costs between the inventory produced and
the stripping activity asset. This production measure is
calculated for the identified component of the ore body
and is used as a benchmark to identify the extent to
which the additional activity of creating a future benefit
has taken place. The Group uses the expected volume
of waste extracted compared with the actual volume for
a given volume of ore production of each component.
The stripping activity asset is accounted for as an addition
to, or an enhancement of, an existing asset, being the
mine asset, and is presented as part of ’Mine properties’ in
the statement of financial position. This forms part of the
total investment in the relevant cash generating unit(s),
which is reviewed for impairment if events or changes of
circumstances indicate that the carrying value may not
be recoverable.
The stripping activity asset is subsequently depreciated
using the UOP method over the life of the identified
component of the ore body that became more accessible
as a result of the stripping activity. Economically
recoverable reserves, which comprise proven and
probable reserves, are used to determine the expected
useful life of the identified component of the ore body.
The stripping activity asset is then carried at cost less
depreciation and any impairment losses.
(n) Non-current assets and disposal groups held for
sale and discontinued operations
Non-current assets and disposal groups are classified as
held for sale and measured at the lower of their carrying
amount and fair value less costs of disposal if their
carrying amount will be recovered principally through a
sale transaction. They are not depreciated or amortised.
For an asset or disposal group to be classified as held for
sale it must be available for immediate sale in its present
condition and its sale must be highly probable.
An impairment loss is recognised for any initial or
subsequent write-down of the asset (or disposal group)
to fair value less costs to sell. A gain is recognised for
any subsequent increases in fair value less costs to sell
of an asset (or disposal group), but is not in excess of
any cumulative impairment loss previously recognised.
62
Westgold Resources Limited Annual Report 2020
(o) Impairment of non-financial assets
The Group assesses, at each reporting date, whether
there is an indication that an asset may be impaired. If
any indication exists, or when annual impairment testing
for an asset is required, the Group estimates the asset’s
recoverable amount. An asset’s recoverable amount is
the higher of an asset’s or cash-generating unit’s (CGU)
fair value less costs of disposal (FVLCD) and its value in
use (VIU).
Recoverable amount is determined for an individual asset,
unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups
of assets. When the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount.
In assessing VIU, the estimated future cash flows are
discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time
value of money and the risks specific to the asset or
CGU. In determining FVLCD, recent market transactions
are taken into account. If no such transactions can be
identified, an appropriate valuation model is used.
The Group bases its impairment calculation on detailed
budgets and forecasts, which are prepared separately
for each of the Group’s CGUs to which the individual
assets are allocated, based on the life-of-mine plans.
The estimated cash flows are based on expected future
production, metal selling prices, operating costs and
forecast capital expenditure based on life-of-mine plans.
VIU does not reflect future cash flows associated with
improving or enhancing an asset’s performance, whereas
anticipated enhancements to assets are included in
FVLCD calculations.
Impairment losses of continuing operations, including
impairment on inventories, are recognised in the
profit and loss. For such properties, the impairment is
recognised in other comprehensive income up to the
amount of any previous revaluation.
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
(o) Impairment of non-financial assets (continued)
For assets, an assessment is made at each reporting
date to determine whether there is an indication that
previously recognised impairment losses no longer exist
or have decreased. If such indication exists, the Group
estimates the asset’s or CGU’s recoverable amount. A
previously recognised impairment loss is reversed only
if there has been a change in the assumptions used to
determine the asset’s recoverable amount since the last
impairment loss was recognised. The reversal is limited
so that the carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying amount
that would have been determined, net of depreciation,
had no impairment loss been recognised for the asset in
prior years. Such reversal is recognised in profit or loss.
(p) Provisions
Provisions are recognised when the Group has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the
amount of the obligation.
Provisions are measured at the present value of
management’s best estimate of the expenditure required
to settle the present obligation at the reporting date.
The discount rate used to determine the present value
reflects current market assessments of the time value of
money and the risks specific to the liability. The increase
in the provision resulting from the passage of time is
recognised in finance costs.
(q) Lease liabilities
The Group has lease contracts for various items of
mining equipment, motor vehicles and buildings used
in its operations. Upon adoption of AASB 16, all leases
with the exception of short term (under 12 months) and
low value leases, are recognised on the balance sheet
as a right-of-use asset and a corresponding interest
bearing liability. Lease costs are recognized in the income
statement over the lease term in the form of depreciation
on the right-of-use asset and finance charges
representing the unwinding of the discount on the lease
liability. The Group recognises leases entered into after
1 July 2019 using the interest rate implicit in the lease
(refer to Note 40 for the accounting policy).
Interest revenue
(r)
Revenue is recognised using the effective interest
method. This is a method of calculating the amortised
cost of a financial asset and allocating the interest
income over the relevant period using the effective
interest rate, which is the rate that exactly discounts
estimated future cash receipts through the expected
life of the financial asset to the net carrying amount
of the financial asset.
Revenue from contracts with customers
(s)
Revenue from contracts with customers is recognised
when control of the goods or services are transferred
to the customer at an amount that reflects the
consideration to which the Group expects to be entitled
in exchange for those goods or services. The Group has
concluded that it is the principal in its revenue contracts
because it typically controls the goods or services before
transferring them to the customer.
Gold bullion sales
For bullion sales, most of this is sold under a long-term
sales contract with the refiner, forward sale agreements
with various banks or a pre-pay facility with Citibank N.A..
The only performance obligation under the contract is
the sale of gold bullion. Revenue from bullion sales is
recognised at a point in time when control passes to the
buyer. This generally occurs after the unrefined doré is
outturned and the Group either instructs the refiner to
purchase the outturned fine metal or advises the refiner
to transfer the gold to the bank by crediting the metal
account of the bank. As all performance obligations are
satisfied at that time, there are no remaining performance
obligations under the contract. The transaction price is
determined at transaction date and there are no further
adjustments to this price.
A contract liability is the obligation to transfer goods
or services to a customer for which the Group has
received consideration from the customer. If a customer
pays consideration before the Group transfers goods
or services to the customer, a contract liability is
recognised when the payment is made or the payment
is due (whichever is earlier). Contract liabilities are
recognised as revenue when the Group performs under
the contract. The Group applies the practical expedient
to not adjust the promised consideration for the effects
of a significant financing component where the period
between the transfer of the refined gold to a customer
and the receipt of the advance is one year or less. For
long-term advances from customers the transaction
price is discounted, using the rate that would be
reflected in a separate transaction between the Group
and its customers at contract inception, to take into
consideration the significant financing component.
Mining and contracting services.
Mining and contracting services is the provision of
equipment and personnel to carry out mining activities
on behalf of the customer.
These contracts are assessed to have multiple
performance obligation as each equipment and service
are capable of being distinct and separately identifiable.
Revenue is recognised over time as the customer
simultaneously receives and consumes the benefits
provided by the Group as the services are rendered.
The transaction price for each contract is based on an
agreed schedule of rates to which the Group is entitled.
Westgold Resources Limited Annual Report 2020
63
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
(t) Earnings per share
Basic earnings per share is calculated as net profit
attributable to members of the parent, adjusted to
exclude any costs of servicing equity (other than
dividends) and preference share dividends, divided
by the weighted average number of ordinary shares,
adjusted for any bonus element.
Diluted earnings per share is calculated as net profit
attributable to members of the parent adjusted for:
– cost of servicing equity (other than dividends) and
preference share dividends;
– the after-tax effect of dividends and interest
associated with dilutive potential ordinary shares
that have been recognised; and
– other non-discriminatory changes in revenues or
expenses during the period that would result from
the dilution of potential ordinary shares divided by
the weighted average number of ordinary shares and
dilutive potential ordinary shares; adjusted for any
bonus element.
(u) Issued capital
Issued and paid up capital is recognised at the fair
value of the consideration received by the Group. Any
transaction costs arising on the issue of ordinary shares
are recognised directly in equity as a reduction in the
proceeds received.
(v) Share-based payment transactions
The Group provides benefits to employees (including
Directors) in the form of share-based payment
transactions, whereby employees render services in
exchange for shares or rights over shares (equity-settled
transactions). The Group has one plan in place that
provides these benefits. It is the Long-Term Incentive
Plan (LTIP) which provides benefits to all employees
including Directors.
In valuing equity-settled transactions, no account is taken
of any vesting conditions (such as service conditions),
other than conditions linked to the price of the shares
of Westgold Resources Limited (market conditions) if
applicable.
The cost of these equity-settled transactions with
employees is measured by reference to the fair value
at the date at which they are granted. The fair value is
determined by using either a Black & Scholes or a Monte
Carlo model as appropriate. Further details of which are
given in Note 29.
The cost of equity-settled transactions is recognised,
together with a corresponding increase in equity, over
the period in which the performance and/or service
conditions are fulfilled (the vesting period), ending on
the date on which the relevant employees become
fully entitled to the award (the vesting date).
At each subsequent reporting date until vesting, the
cumulative charge to the consolidated statement of
comprehensive income is the product of (i) the grant date
fair value of the award; (ii) the current best estimate of the
number of awards that will vest, taking into account such
factors as the likelihood of employee turnover during
the vesting period and the likelihood of non-market
performance conditions being met; and (iii) the expired
portion of the vesting period.
The charge to profit and loss for the period is the
cumulative amount as calculated above, less the
amounts already charged in previous periods. There
is a corresponding credit to equity.
Until an award has vested, any amounts recorded are
contingent and will be adjusted if more or fewer awards
vest than were originally anticipated to do so. Any award
subject to a market condition is considered to vest
irrespective of whether or not the market condition is
fulfilled, provided that all other conditions are satisfied.
If a non-vesting condition is within the control of the
Group, Company or the employee, the failure to satisfy
the condition is treated as a cancellation. If a non-
vesting condition within the control of neither the Group,
Company nor employee is not satisfied during the
vesting period, any expense for the award not previously
recognised is recognised over the remaining vesting
period, unless the award is forfeited.
If the terms of an equity-settled award are modified, as
a minimum an expense is recognised as if the terms had
not been modified. An additional expense is recognised
for any modification that increases the total fair value of
the share-based payment arrangement, or is otherwise
beneficial to the employee, as measured at the date of
modification.
If an equity-settled award is cancelled, it is treated
as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is
recognised immediately.
However, if a new award is substituted for the cancelled
award and designated as a replacement award on
the date that it is granted, the cancelled and new
award are treated as if they were a modification of the
original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is
reflected as additional share dilution in the computation
of dilutive earnings per share.
(w) Employee benefits
Wages, salaries, sick leave and other short-term
benefits
Liabilities for wages and salaries, including non-monetary
benefits, accumulating sick leave and other short-term
benefits expected to be settled wholly within 12 months
of the reporting date are recognised in respect of
employees’ services up to the reporting date. They are
measured at the amounts expected to be paid when
the liabilities are settled.
64
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
(w) Employee benefits (continued)
Long service leave
The liability for long service leave is recognised and
measured as the present value of expected future
payments to be made in respect of services provided by
employees up to the reporting date using the projected
unit credit method. Consideration is given to the
expected future wage and salary levels, experience of
employee departure and periods of service. Expected
future payments are discounted using market yields at
the reporting date on high quality corporate bonds with
terms to maturity and currencies that match, as closely
as possible, the estimated future cash outflows.
Superannuation
Contributions made by the Group to employee
superannuation funds, which are defined contribution
plans, are charged as an expense when incurred.
(x) Other taxes
Revenues, expenses and assets are recognised net of
the amount of GST except:
– when the GST incurred on purchase of goods or
services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost
of acquisition of the asset or as part of the expense
item as applicable; and
– receivables and payables, which are stated with the
amount of GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables in the Consolidated Statement of Financial
Position.
Cash flows are included in the Consolidated Statement of
Cash Flows on a gross basis and the GST component of
cash flows arising from investing and financing activities,
which is recoverable from, or payable to, the taxation
authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of
amounts of GST recoverable from, or payable to, the
taxation authority.
(y) Income tax
Current income tax assets and liabilities for the current
and prior periods are measured at the amount expected
to be recovered from, or paid to, the taxation authorities.
The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted at the
reporting date in the countries where the Group operates
and generates taxable income.
Current income tax relating to items recognised directly
in other comprehensive income or equity is recognised in
other comprehensive income or equity and not in profit
or loss. Management periodically evaluates positions
taken in the tax returns with respect to situations where
applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.
Deferred tax is provided for using the full liability balance
sheet approach.
The tax rates and tax laws used to compute the amount
of deferred tax assets and liabilities are those that are
enacted or substantively enacted at the reporting date
in the countries where the Group operates and generates
taxable profits.
Deferred tax liabilities are recognised for all taxable
temporary differences except to the extent that the
deferred tax liability arises from:
– the initial recognition of goodwill;
– the initial recognition of an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting profit nor taxable profit (or tax loss); and
– taxable temporary differences associated with
investments in subsidiaries, associates and interests in
joint ventures when the timing of the reversal of the
temporary differences can be controlled by the Group
and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences, including carry-forward tax
losses and tax credits, to the extent that it is probable
that taxable profit will be available against which the
deductible temporary differences can be utilised
except when:
– the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition
of an asset or liability in a transaction that is not
a business combination and, at the time of the
transaction, affects neither the accounting profit nor
taxable profit (or tax loss); and
– the deductible temporary difference is associated with
investments in subsidiaries, associates and interests in
joint ventures and it is not probable that the temporary
difference will reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to
be utilised.
Unrecognised deferred tax assets and deferred tax
liabilities are reassessed at each reporting date and
are recognised to the extent that they satisfy the
requirements for recognition.
Westgold Resources Limited Annual Report 2020
65
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
(y) Income tax (continued)
Deferred tax assets and deferred tax liabilities are offset
only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred
tax assets and deferred tax liabilities relate to income
taxes levied by the same taxation authority on the same
taxable entity.
Income taxes relating to transactions recognised
outside profit and loss (for example, directly in other
comprehensive income or directly in equity) are also
recognised outside profit and loss.
Tax consolidation
Westgold Resources Limited and its wholly owned
Australian resident subsidiaries formed a tax consolidated
group (the Tax Group) with effect from 1 December
2016. Members of the Tax Group have entered into a tax
sharing agreement, which provides for the allocation of
income tax liabilities between members of the Tax Group
should the parent, Westgold Resources Limited, default
on its tax payments obligations.
The Group has applied the group allocation approach
in determining the appropriate amount of current taxes
and deferred taxes to allocate to members of the tax
consolidated group. Members of the tax consolidated
group have entered into a tax funding agreement. The tax
funding agreement provides for the allocation of current
taxes to members of the tax consolidated group.
The allocation of taxes under the tax funding agreement
is recognised as an increase/decrease in the controlled
entities intercompany accounts with the tax consolidated
group head company, Westgold Resources Limited. The
nature of the tax funding agreement is such that no tax
consolidation adjustments are required.
3.
SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
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.
Management bases its judgements and estimates on
historical experience and on other various factors it
believes to be reasonable under the circumstances,
the result of which form the basis of the carrying values
of assets and liabilities that are not readily apparent
from other sources.
Management has identified the following critical
accounting policies for which significant judgements
have been made as well as the following key
estimates and assumptions that have the most
significant impact on the financial statements.
Actual results may differ from these estimates under
different assumptions and conditions and may materially
affect financial results or the financial position reported in
future periods.
Further details of the nature of these assumptions and
conditions may be found in the relevant notes to the
financial statements.
Significant judgements
– Revenue from contracts with customers
Judgement is required to determine the point at
which the customer obtains control of gold. Factors
including transfer of legal title, transfer of significant
risks and rewards of ownership and the existence of
a present right to payment for the gold typically result
in control transferring upon allocation of the gold to
the customers’ account.
– Financing component relating to unearned income
In determining the finance component related to
unearned income for a facility which extends beyond
12 months, the Group concluded that the interest
rate implicit in the contract (i.e. the interest rate that
discounts the cash selling price of the gold bullion,
being the spot price at contract inception, to the
amount paid in advance) is appropriate because it is
commensurate with the rate that would be reflected
in a separate financing transaction between the
Group and its customer at contract inception.
– Mine properties and development - stripping costs
Significant judgement is required to distinguish
between development stripping and production
stripping and to distinguish between the production
stripping that relates to the extraction of inventory
and that which relates to the creation of a stripping
activity asset.
Once 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. Significant
judgement is required to identify and define these
components, and also to determine the expected
volumes (e.g., in tonnes) of waste to be stripped and
ore to be mined in each of these components.
These assessments are undertaken for each individual
mining operation based on the information available
in the mine plan. The mine plans and, therefore,
the identification of components, will vary between
mines for a number of reasons. These include, but are
not limited to, the type of commodity, the geological
characteristics of the ore body, the geographical
location and/or financial considerations.
66
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020
3.
SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
(CONTINUED)
Significant judgements (continued)
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 component.
The Group considers that the ratio of the expected
volume (e.g., in tonnes) of waste to be stripped for
an expected volume (e.g., in tonnes) of ore to be
mined for a specific component of the ore body, is
the most suitable production measure. Furthermore,
judgements and estimates are also used to apply the
UOP method in determining the depreciable lives of
the stripping activity asset(s).
There are a number of uncertainties inherent in
estimating the carrying value of mine properties and
development and assumptions that are valid at the
time of estimation may change significantly when
new information becomes available. Changes in
the forecast price of commodities, exchange rates,
production costs or recovery rates may change the
economic status of reserves and may ultimately,
result in the requirement to restate the carrying value.
Significant accounting estimates and assumptions
Determination of mineral resources and ore reserves
The determination of reserves impacts the accounting
for asset carrying values, depreciation and amortisation
rates and provisions for mine rehabilitation. The Group
estimates its mineral resource and 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 were 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 may
ultimately, result in the reserves being restated.
Mine rehabilitation provision
The Group assesses its mine rehabilitation provision
on an annual basis in accordance with the accounting
policy stated in Note 2(j). In determining an
appropriate level of provision consideration is given
to the expected future costs to be incurred, the
timing of those future costs (largely dependent on
the life of mine) and the estimated level of inflation.
The ultimate rehabilitation costs are uncertain, and cost
estimates can vary in response to many factors, including
estimates of the extent and costs of rehabilitation
activities, technological changes, regulatory changes,
timing, cost increases as compared to the inflation rate
of 2.2% (2019: 1.6%), and changes in discount rates. The
applicable discount rates are based on the expected life
of mine for each operation.
The expected timing of expenditure can also change,
for example in response to changes in reserves or
production rates. These uncertainties may result in
future actual expenditure differing from the amounts
currently provided. Therefore, significant estimates and
assumptions are made in determining the provision for
mine rehabilitation. As a result, there could be significant
adjustments to the provisions established which would
affect future financial result. The provision at reporting
date represents management’s best estimate of the
present value of the future rehabilitation costs required.
Impairment of capitalised exploration and evaluation
expenditure
The future recoverability of capitalised exploration
and evaluation expenditure is dependent on various
factors, including whether the Group decides to
exploit the related area interest itself or, if not, whether
it successfully recovers the related exploration and
evaluation asset through sale.
Factors that could impact the future recoverability
include the level of reserves and 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, profits and net assets will be reduced 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 that permits a reasonable assessment of
the existence or otherwise of economically recoverable
reserves. To the extent it is determined in the future that
this capitalised expenditure should be written off, profits
and net assets will be reduced in the period in which this
determination is made.
Life of mine method of amortisation and depreciation
Estimated economically recoverable reserves are used
in determining the depreciation of mine-specific assets.
This results in a depreciation charge proportional to
the depletion of the anticipated remaining life-of-mine
production. The life of each item, which is assessed
at least annually, has regard to both its physical life
limitations and present assessments of economically
recoverable reserves of the mine property at which the
asset is located. Changes in estimates are accounted
for prospectively.
Westgold Resources Limited Annual Report 2020
67
Cash flow scenarios for a range of commodity prices
and foreign exchange rates are assessed using internal
and external market forecasts, and the present value of
the forecast cash flows is determined utilising a pre-tax
discount rate.
The Group’s cash flows are most sensitive to movements
in commodity price, expected quantities of ore reserves
and mineral resources and key operating costs. In
particular, CGO, MGO and FGO are most sensitive
to expected quantities of ore reserves and mineral
resources to be extracted and therefore the estimated
future cash inflows resulting from the sale of product
produced is dependent on these assumptions. Variations
to the expected cash flows, and the timing thereof, could
result in significant changes to any impairment losses
recognised, if any, which in turn could impact future
financial results.
To the extent that capitalised mine development
expenditure is determined not to be recoverable in
the future, this will reduce profit in the period in which
the Group makes this determination. Capitalised mine
development expenditure is assessed for recoverability
in a manner consistent with property, plant and
equipment as described below.
Refer to Note 2(o) for further discussion on the
impairment assessment process undertaken by
the Group.
Provision for expected credit losses (ECLs) on trade
receivables and other short-term receivables carried
at amortised cost
The Group uses a provision matrix to calculate ECLs
for trade and other short-term receivables carried
at amortised cost. The provision rates are based on
days past due.
The provision matrix is initially based on the Group’s
historical observed default rates. The Group calibrates the
matrix to adjust the historical credit loss experience with
forward-looking information. For instance, if forecast
economic conditions are expected to deteriorate over
the next year, which can lead to an increased number of
defaults, the historical default rates are adjusted. At every
reporting date, the historical observed default rates are
updated and changes in the forward-looking estimates
are analysed.
The assessment of the correlation between historical
observed default rates, forecast economic conditions and
ECLs is a key estimate. The amount of ECLs is sensitive
to changes in circumstances and of forecast economic
conditions. The Group’s historical credit loss experience
and forecast of economic conditions may also not be
representative of customer’s actual default in the future.
3.
SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
(CONTINUED)
Significant accounting estimates and assumptions
(continued)
These calculations require the use of estimates and
assumptions, including the amount of recoverable
reserves and estimates of future capital expenditure.
The calculation of the UOP rate of depreciation could
be impacted to the extent that actual production in the
future is different from current forecast production based
on economically recoverable reserves, or if future capital
expenditure estimates change. Changes to economically
recoverable reserves could arise due to changes in the
factors or assumptions used in estimating reserves,
including:
– The effect on economically recoverable reserves
for differences between actual commodity prices
and commodity price assumptions
– Unforeseen operational issues
Impairment of capitalised mine development
expenditure, property, plant and equipment
The future recoverability of capitalised mine development
expenditure, property, plant and equipment is dependent
on a number of factors, including the level of proved
and probable reserves, and the likelihood of progressive
upgrade of mineral resources in to reserves over time. In
addition, consideration is given to future technological
changes, which could impact the cost, future legal
changes (including changes to environmental restoration
obligations), and changes in commodity prices. Non-
financial assets are reviewed for impairment if there
is any indication that the carrying amount may not
be recoverable.
When applicable, FVLCD is estimated based on
discounted cash flows using market based commodity
prices and foreign exchange rate assumptions, estimated
quantities of recoverable minerals, production levels,
operating costs and capital requirements, based on the
relevant CGU’s life of mine (LOM) plans.
Consideration is also given to analysts’ valuations. The
fair value methodology adopted is categorised as Level 3
in the fair value hierarchy.
In determining the VIU, future cash flows for each CGU
(i.e. each mine site) are prepared utilising management’s
latest estimates of:
– the quantities of ore reserves and mineral resources
for which there is a high degree of confidence of
economic extraction;
– royalties and taxation;
– future production levels;
– future commodity prices;
– future cash costs of production and development
expenditure; and
– other relevant cash inflows and outflows.
68
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 3.
SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
(CONTINUED)
Significant accounting estimates and assumptions
(continued)
4.
FINANCIAL RISK MANAGEMENT OBJECTIVES
AND POLICIES
The Group’s principal financial instruments comprise
receivables, trade and other payables, finance lease and
hire purchase contracts, cash and cash equivalents,
deposits and equity investments.
Share-based payment transactions
The Group measures the cost of equity-settled
transactions with employees by reference to the fair
value of the equity instruments at the date at which they
are granted. The fair value is determined by using an
appropriate valuation, using the assumptions as discussed
in Note 29. The accounting estimates and assumptions
relating to equity-settled share-based payments would
have no impact on the carrying amounts of assets and
liabilities in the next annual reporting period but may
impact expenses and equity.
Estimating the incremental borrowing rate
Where the Group cannot readily determine the interest
rate implicit in its leases, it uses the relevant incremental
borrowing rate (IBR) to measure lease liabilities. The IBR
is the rate of interest that the Group would have to pay to
borrow over a similar term, and with a similar security, the
funds necessary to obtain an asset of a similar value to
the right-of-use asset in a similar economic environment.
Significant judgement in determining the lease term
of contracts with renewal options
The Group determines the lease term as the non-
cancellable term of the lease, together with any
periods covered by an option to extend the lease if it
is reasonably certain to be exercised, or any periods
covered by an option to terminate the lease, if it is
reasonably certain not to be exercised.
Significant judgement in relation to future cash flow
The Group has several lease contracts relating to
premises and power stations that include extension
and termination options. These options are negotiated
by management to provide flexibility in managing the
leased-asset portfolio and align with the Group’s business
needs. Management exercises significant judgement in
determining whether these extension and termination
options are reasonably certain to be exercised. For
renewal options that were reasonably certain to be
exercised, these have been included in the calculation
of right-of-use assets and lease liabilities.
Risk exposures and responses
The Group manages its exposure to key financial risks in
accordance with the Group’s financial risk management
policy. The objective of the policy is to support the
delivery of the Group’s financial targets while protecting
future financial security.
The main risks arising from the Group’s financial
instruments are interest rate risk, credit risk, equity price
risk and liquidity risk. The Group uses different methods
to measure and manage different types of risks to which
it is exposed. These include monitoring levels of exposure
to interest rate, foreign exchange risk and assessments of
market forecasts for interest rate, foreign exchange and
commodity prices. Ageing analysis and monitoring of
receivables are undertaken to manage credit risk, liquidity
risk is monitored through the development of future
rolling cash flow forecasts.
The board reviews and agrees policies for managing
each of these risks as summarised below.
Primary responsibility for identification and control of
financial risks rests with the Board. The Board reviews
and agrees policies for managing each of the risks
identified below, including for interest rate risk, credit
allowances and cash flow forecast projections.
Details of the significant accounting policies and
methods adopted, including the criteria for recognition,
the basis of measurement and the basis on which income
and expenses are recognised, in respect of each class of
financial asset, financial liability and equity instrument
are disclosed in Note 2 to the financial statements.
(a) Interest rate risk
The Group’s exposure to risks of changes in market
interest rates relate primarily to the Group’s interest-
bearing liabilities and cash balances. The level of debt
is disclosed in Notes 23 and 24. The Group’s policy is to
manage its interest cost using fixed rate debt. Therefore,
the Group does not have any variable interest rate risk
on its debt. The Group constantly analyses its interest
rate exposure. Within this analysis, consideration is given
to potential renewals of existing positions, alternative
financing positions and the mix of fixed and variable
interest rates. There is no significant exposure to
changes in market interest rates at the reporting date.
Westgold Resources Limited Annual Report 2020
69
4.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Risk exposures and responses (continued)
At the reporting date the Group’s exposure to interest rate risk for classes of financial assets and financial liabilities is set
out below.
2020
Financial assets
Cash and cash equivalents
Trade and other receivables
Royalties receivable
Other financial assets
Financial liabilities
Trade and other payables
Lease liabilities
Interest-bearing liabilities
Net financial assets
2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Royalties receivable
Other financial assets
Financial liabilities
Trade and other payables
Interest-bearing liabilities
Net financial liabilities
Interest rate risk exposure
Judgements of reasonably possible movements:
+ 0.5% (50 basis points)
- 0.5% (50 basis points)
70
Westgold Resources Limited Annual Report 2020
Floating
interest rate Fixed interest
Non-interest
bearing
Total
carrying
amount
137,218,827
346,087
– 137,564,914
–
–
–
–
7,231,137
7,231,137
– 13,000,000 13,000,000
1,149,449
–
1,149,449
137,218,827
1,495,536
7,231,137 158,945,500
–
– (69,664,918)
(69,664,918)
– (12,222,659)
– (12,222,659)
– (25,603,791)
– (25,603,791)
– (37,826,450)
(69,024,918) (107,491,368)
–
67,196,289
–
–
–
–
–
–
–
51,454,132
–
67,196,289
6,992,121
6,992,121
– 15,000,000 15,000,000
1,427,836
–
1,427,836
67,196,289
1,427,836
6,992,121
90,616,246
–
– (57,741,966)
(57,741,966)
– (36,736,877)
– (36,736,877)
– (36,736,877)
(57,491,966)
(94,478,843)
(3,862,597)
Post tax profit higher (lower)
Other Comprehensive
Income higher (lower)
30 June 2020 30 June 2019 30 June 2020 30 June 2019
481,477
235,187
(481,477)
(235,187)
–
–
–
–
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 4.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Interest rate risk exposure (continued)
(b) Credit risk
Credit risk arises from the financial assets of the Group, which comprises cash and cash equivalents, trade and other
receivables and other financial assets held as security and loans. Cash and cash equivalents are held with National
Australia Bank, which is an Australian Bank with an AA- credit rating (Standard & Poor’s).
The Group’s exposure to credit risk arises from potential default of the counter party, with the maximum exposure equal
to the carrying amount of the financial assets (as outlined in each applicable note).
The Group does not hold any credit derivatives to offset its credit exposure.
The Group trades only with recognised, creditworthy third parties and as such collateral is not requested nor is it the
Group’s policy to securitise its trade and other receivables.
Receivable balances are monitored on an ongoing basis with the result that the Group does not have a significant
exposure to bad debts.
Significant concentrations of credit risk are in relation to cash and cash equivalents with Australian banks.
(c) Price risk
Equity Security Price Risk
The Group’s operations were exposed to equity security price fluctuations arising from investments in equity securities.
The Group however disposed of all security holdings at 30 June 2020. Refer to Note 15 for details of equity investments
at fair value through profit or loss held at 30 June 2020.
(d) Commodity price risk
The Group’s operations are exposed to commodity price fluctuations. The Group has a commodity risk management
hedging policy that authorises management to enter into price protection contracts to ensure revenue streams up to
60% of gold sales for up to three years of forecast production.
At the end of the financial year, the Group had unrecognised sales contracts for 200,000 ounces at an average price
of $2,062 per ounce ending in February 2022, which the Group will deliver physical gold to settle. There was therefore
no exposure on recognised financial instruments at the balance sheet date other than the lithium royalty that has been
valued by reference to the expected commodity price (refer to Note 4(f)).
(e) Liquidity risk
Liquidity risk arises from the financial liabilities of the Group and the subsequent ability to meet the obligations to repay
the financial liabilities as and when they fall due.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of hire
purchase arrangements.
The table below reflects all contractually fixed payables for settlement, repayment and interest resulting from
recognised financial liabilities as of 30 June 2020. Cash flows for financial liabilities without fixed amount or timing are
based on the conditions existing as 30 June.
The remaining contractual maturities of the Group’s financial liabilities are:
6 months or less
6 - 12 months
1 - 5 years
Over 5 years
2020
2019
(83,348,476)
(67,993,428)
(11,222,942)
(9,104,584)
(14,542,416)
(19,562,452)
–
–
(109,113,834) (96,660,464)
Westgold Resources Limited Annual Report 2020
71
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Risk exposures and responses (continued)
Maturity analysis of financial assets and liabilities based on management’s expectation
The risk implied from the values shown in the table below reflects a balanced view of cash inflows and outflows.
Leasing obligations, trade payables and other financial liabilities mainly originate from the financing of assets used in
our ongoing operations such as property, plant, equipment and investments of working capital e.g. inventories and
trade receivables. To monitor existing financial assets and liabilities, as well as to enable effective controlling of future
risks, management monitors its Group’s expected settlement of financial assets and liabilities on an ongoing basis.
<6 months 6-12 months
1-5 years
>5 years
Total
2020
Financial assets
Cash and equivalents
Trade and other receivables
Royalties receivable
Other financial assets
Financial liabilities
Trade and other payables
Lease liabilities
Interest-bearing loans
138,486,771
7,231,137
–
1,149,449
146,867,357
(69,664,918)
–
–
–
–
–
–
–
–
– 138,486,771
–
7,231,137
3,795,334
9,204,666 13,000,000
–
–
1,149,449
3,795,334
9,204,666 159,867,357
–
– (69,664,918)
(4,448,934)
(3,306,613)
(4,982,152)
– (12,737,699)
(9,234,624)
(7,916,329)
(9,560,264)
– (26,711,217)
(83,348,476)
(11,222,942)
(14,542,416)
– (109,113,834)
Net inflow/(outflow)
63,518,881
(11,222,942)
(10,747,082)
9,204,666
50,753,523
2019
Financial assets
Cash and equivalents
Trade and other receivables
Royalties receivable
Other financial assets
Financial liabilities
Trade and other payables
Interest-bearing loans
67,982,985
6,992,121
–
–
–
–
–
–
67,982,985
6,992,121
–
– 15,000,000
– 15,000,000
1,427,836
76,402,942
–
–
– 15,000,000
–
1,427,836
– 91,402,942
(57,741,966)
–
–
– (57,741,966)
(10,251,462)
(9,104,584)
(19,562,452)
– (38,918,498)
(67,993,428)
(9,104,584)
(19,562,452)
– (96,660,464)
Net inflow/(outflow)
8,409,514
(9,104,584)
(4,562,452)
–
(5,257,522)
(f) Fair values
For all financial assets and liabilities recognised in the Consolidated Statement of Financial Position, carrying amount
approximates fair value unless otherwise stated in the applicable notes.
The methods for estimating fair value are outlined in the relevant notes to the financial statements.
72
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Risk exposures and responses (continued)
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from price).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the
table below.
2020
Financial assets
Instruments carried at fair value
Royalties receivable
2019
Financial assets
Instruments carried at fair value
Listed investments
Royalties receivable
Sensitivity Analysis
Significant unobservable input
Ore Processing
Lithium price
Discount rate
Valuation
technique
market
observable
inputs
(Level 2)
Valuation
technique
non-market
observable
inputs
(Level 3)
Quoted
market price
(Level 1)
Total
–
–
– 13,000,000 13,000,000
– 13,000,000 13,000,000
41,210,813
–
–
41,210,813
–
– 15,000,000 15,000,000
41,210,813
– 15,000,000
56,210,813
Estimated
increase /
(decrease) in
fair value
Estimated
fair value
Estimated
fair value
699,572
13,699,572
12,300,428
1,665,314
14,665,314
11,334,686
Variance
+/- 5%
+/- 20%
100 basis points
(846,516)
12,153,484
13,846,516
Quoted market price represents the fair value of listed investments determined based on quoted prices on active
markets as at the reporting date without any deduction for transaction costs.
The fair value of royalties’ receivable is valued based on discounted cash flow model.
The fair value of long-term borrowings is based on fixed lease interest rates.
Transfer between categories
There were no transfers between Level 1 and Level 2, and no transfers into and out of Level 3 fair value measurement.
Westgold Resources Limited Annual Report 2020
73
4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Risk exposures and responses (continued)
(g) Changes in liabilities arising from financing activities
Lease liability
2020
Current obligations
Non-current obligations
Total liabilities
Interest bearing liability
2020
Current obligations
Non-current obligations
Total liabilities
2019
Current obligations
Non-current obligations
Total liabilities
5. REVENUE
Transitional
adjustment
Cash flows
New leases
Reclassi-
fication
adjustment
Closing
6,031,093
(7,753,813)
1,722,720
7,425,093
7,425,093
6,935,551
–
5,287,108
(7,425,093)
4,797,566
12,966,644
(7,753,813)
7,009,828
– 12,222,659
Opening
Cash flows
Additions
Reclassi-
fication
adjustment
Closing
18,271,020
(19,331,761)
1,060,741
16,309,721
16,309,721
18,465,857
–
7,137,934 (16,309,721)
9,294,070
36,736,877
(19,331,761)
8,198,675
– 25,603,791
16,819,651 (20,848,905)
4,029,254
18,271,020
18,271,020
13,828,667
– 22,908,210 (18,271,020)
18,465,857
30,648,318 (20,848,905)
26,937,464
– 36,736,877
Sale of gold at spot
Sale of gold under forward contracts
Sale of gold under a prepay facility (refer Note 25)
Mining and contracting services
Total revenue from contracts with customers
2020
2019
264,025,099 160,727,868
201,126,150 215,904,789
25,938,399
16,011,946
1,178,623
25,672,844
492,268,271 418,317,447
Disaggregated revenue per segment has been disclosed in Note 33.
No revenue was recognised during the year for performance obligations satisfied in previous periods.
The transaction price allocated to remaining performance obligations under forward contracts not recognised at the
balance sheet date at 30 June 2020 is as follows:
Gold forward contracts
- Within 1 year
- 1 to 2 years
The amounts due are for delivery of gold which will be paid within 3 days of delivery.
74
Westgold Resources Limited Annual Report 2020
2020
2019
247,470,000 247,844,578
164,980,000 113,322,000
412,450,000 361,166,578
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 6. OTHER INCOME
Interest income calculated using the effective interest rate method
Net gain on sale of assets
Other income
Total other income
7. EXPENSES
(a) Cost of sales
Gold production
Salaries, wages expense and other employee benefits
Operating lease rentals
Other production costs
Write down in value of inventories to estimated net realisable value
Royalty expense
Contract mining services
Salaries, wages expense and other employee benefits
Superannuation expense
Mining and contracting service costs
Depreciation and amortisation expense
Depreciation of non-current assets:
Property, plant and equipment
Buildings
Right-of-use assets
Amortisation of non-current assets:
Mine properties and development costs
Total cost of sales
(b) Finance costs
Interest expense
Capitalised borrowing costs to qualifying asset
Unwinding of rehabilitation provision discount
Total finance costs
2020
2019
286,620
308,101
3,031,573
139,435
2,603,081
5,072,351
5,921,274
5,519,887
2020
2019
133,259,379
118,157,970
–
5,065,998
167,889,923 148,191,774
1,005,487
–
20,901,094
14,982,184
632,015
7,787,879
–
739,849
308,958
13,754,669
43,275,574
38,488,019
1,827,771
1,351,598
7,531,333
–
86,121,198
59,558,183
462,752,732 408,078,123
2,694,183
4,579,327
(2,694,183)
(4,579,327)
918,881
1,325,025
918,881
1,325,025
The development of the Big Bell Underground Mine is deemed to be a qualifying asset and interest expenses of
$2,694,183(2019: $4,579,327) have therefore been capitalised to the underlying qualifying asset. The rate used to
determine the amount of borrowing costs eligible for capitalisation was 4.60% (2019: 6.22%).
Westgold Resources Limited Annual Report 2020
75
7. EXPENSES (CONTINUED)
(c) Other expenses
Administration expenses
Employee benefits expense
Salaries and wages expense
Directors' fees and other benefits
Other employee benefits
Share-based payments expense
Other administration expenses
Consulting expenses
Travel and accommodation expenses
Other costs
Operating lease rentals
Depreciation expense
Property plant and equipment
Right-of-use assets
Total administration expenses
Total other expenses
8. INCOME TAX
(a) Major components of income tax expense:
Income Statement
Current income tax expense
Current income tax benefit
Adjustment in respect of current income tax of previous years
Deferred income tax
Relating to origination and reversal of temporary differences
Relating to temporary difference recognised
Adjustment in respect of prior year tax losses / DTA
Income tax for continuing and discontinuing operations
(b) Amounts charged or credited directly to equity
Share issue costs
76
Westgold Resources Limited Annual Report 2020
2020
2019
4,343,331
4,379,074
288,200
320,000
95,295
76,046
183,956
1,021,722
4,910,782
5,796,842
1,359,535
1,112,868
191,333
185,768
606,845
1,357,964
–
367,526
2,157,713
3,024,126
344,501
308,204
502,561
–
847,062
308,204
7,915,557
9,129,172
7,915,557
9,129,172
2020
2019
7,140,285
(2,984,035)
332,296
–
3,040,207
(4,137,750)
–
3,857,859
(1,257,671)
–
9,255,117
(3,263,926)
(336,228)
(198,394)
(336,228)
(198,394)
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020
8. INCOME TAX (CONTINUED)
(c) A reconciliation of income tax benefit and the product of accounting loss before
income tax multiplied by the Group's applicable income tax rate is as follows:
Accounting profit (loss) before tax from continuing operations
Accounting profit (loss) before tax from discontinuing operations
Total accounting profit before income tax
At statutory income tax rate of 30% (2019: 30%)
Non-deductible (non-assessable) items
Under/over in respect of prior years
Income tax expense (benefit) reported in the income statement
Tax expense from continuing operations
Tax (benefit) expense from discontinued operations
Income tax expense (benefit) reported in the income statement
(d) Deferred income tax at 30 June relates to the following:
2020
2019
43,862,432
12,680,022
–
(1,813,885)
43,862,432
10,866,137
13,158,730
3,259,841
(2,978,238)
(3,820,162)
(925,375)
(2,703,605)
9,255,117
(3,263,926)
9,255,117
(807,116)
–
(2,456,810)
9,255,117
(3,263,926)
Deferred tax liabilities
Exploration
Consolidated Statement of
Financial Position
Consolidated Statement of
Comprehensive Income
2020
2019
2020
2019
(7,823,986)
(20,510,089)
(12,686,103)
(19,034,322)
Trade and other receivables
(608,739)
(658,745)
(50,006)
127,935
Net gain on financial assets AFVTP
(3,900,000)
(6,414,195)
(2,514,195)
6,414,195
Prepayments
Deferred mining
Inventories
(18,830)
(13,510)
5,320
13,510
(60,595,582) (32,846,809)
27,748,773
(9,297,893)
(5,691,339)
(4,384,707)
1,306,632
692,722
Property plant and equipment
291,063
(1,857,819)
(2,148,882)
(3,941,116)
Gross deferred tax liabilities
(78,347,413)
(66,685,874)
Deferred tax assets
Financial assets at FVTPL
Accrued expenses
–
–
–
742,758
534,117
524,056
(10,061)
(211,596)
Provision for employee entitlements
3,487,834
2,780,744
(707,090)
(738,524)
Provision for rehabilitation
Business related costs
Capital raising costs
Recognised tax losses
Gross deferred tax assets
Net deferred tax liabilities
Deferred tax expense (income)
(e) Unrecognised losses
16,643,909
8,996,764
(7,647,145) 20,688,073
83,205
46,920
(36,285)
(46,920)
1,227,768
891,540
–
(198,394)
16,711,513
18,445,434
1,733,921
(2,530,605)
38,688,346
31,685,458
(39,659,067)
(35,000,416)
4,994,879
(7,320,177)
At 30 June 2020, there are no unrecognised losses for the Group (2019: nil).
Westgold Resources Limited Annual Report 2020
77
9. EARNINGS PER SHARE
The following reflects the data used in the basic and diluted earnings per share computations.
(a) Earnings used in calculating earnings per share
Net profit attributable to ordinary equity holders of the parent
Profit attributable to discontinued operations
Net profit attributable to ordinary equity holders of the parent
Basic earnings per share (cents)
Continuing operations
Discontinued operations
Earnings used in calculating earnings per share
For diluted earnings per share:
Net profit attributable to ordinary equity holders of the parent (from basic EPS)
Profit attributable to discontinued operations
Net profit attributable to ordinary equity holders of the parent
Diluted profit per share (cents)
Continuing operations
Discontinued operations
(b) Weighted average number of shares
2020
2019
34,607,315
13,487,139
–
642,925
34,607,315
14,130,064
8.65
–
8.65
3.57
0.17
3.74
34,607,315
13,487,139
–
642,925
34,607,315
14,130,064
8.65
–
8.65
3.57
0.17
3.74
Weighted average number of ordinary shares for basic earnings per share
399,990,790 377,428,117
Effect of dilution:
Share options
–
–
Weighted average number of ordinary shares adjusted for the effect of dilution
399,990,790 377,428,117
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year. Diluted EPS is calculated by dividing the profit
attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding
during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the
dilutive potential ordinary shares into ordinary shares.
The Company had 5,107,698 (2019: 16,999,600) share options on issue that are excluded from the calculation of
diluted earnings per share for the current financial period because they are considered anti-dilutive or are contingently
issuable.
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting
date and the date of authorisation of these financial statements.
78
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020
10. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Cash at bank and in hand
CASH FLOW RECONCILIATION
Reconciliation of net profit after income tax to net cash flows from operating activities
Profit (loss) after income tax
Amortisation and depreciation
Gold prepayment physical deliveries (refer to Note 25)
Income tax expense (benefit)
Share based payments
Unwinding of rehabilitation provision discount
Accumulated mill scats written off
Net profit on disposal of property, plant and equipment
Re-measurement of lithium rights (refer to Note 15)
Fair value change in financial instruments (refer to Note 15)
Mining rights received in financial instruments
Exploration and evaluation expenditure written off (refer to Note 18)
Profit on demerger of a subsidiary (refer to Note 38)
Profit on disposal of a subsidiary (refer to Note 39)
Changes in assets and liabilities
Decrease (increase) in inventories
(Increase) decrease in trade and other receivables and prepayments
Increase (decrease) in trade and other creditors
Increase in provisions
Net cash flows from operating activities
11. TRADE AND OTHER RECEIVABLES (current)
Statutory receivables
Other debtors
Total trade and other receivables
2020
2019
137,218,827
67,196,289
346,087
–
137,564,914
67,196,289
34,607,315
14,130,064
139,602,938 123,059,758
(25,470,487)
(13,458,438)
9,255,117
(3,263,926)
183,956
1,021,722
918,881
1,809,538
–
11,628,184
(3,031,573)
(104,568)
– (15,000,000)
(8,888,756)
(9,384,589)
–
(238,000)
356,317
6,165,134
(8,727,618)
–
– (16,435,747)
138,806,090
99,929,132
1,554,748
(11,546,974)
(2,272,566)
12,319,400
15,617,527
(21,343,789)
2,025,841
1,874,113
155,731,640
81,231,882
2020
2019
5,364,679
4,299,560
1,866,458
2,692,561
7,231,137
6,992,121
Statutory receivables comprises of GST input tax credits and diesel fuel rebates.
Other debtors are non-interest bearing and generally have a 30-60 day term.
All trade and other receivables are classed as recoverable in full. The carrying amount of other debtors approximate
their fair value. Refer Note 4(b) for credit risk disclosures.
Westgold Resources Limited Annual Report 2020
79
12. INVENTORIES (current)
Ore stocks at net realisable value
Gold in circuit at cost
Gold metal at cost
Stores and spares at cost
Provision for obsolete stores and spares
Total inventories at lower of cost and net realisable value
2020
2019
9,421,255
17,081,112
15,326,412
13,773,228
197,885
–
22,561,112
17,099,860
(3,558,469)
(2,451,286)
43,948,165
45,502,914
During the year there were write-downs in inventories of $1,005,487 (2019: nil) from continuing operations for the
Group. This is included in cost of sales refer to Note 7(a).
13. PREPAYMENTS (current)
Prepayments
14. OTHER FINANCIAL ASSETS (current)
Cash on deposit
The cash on deposit is interest bearing and is used as security for bank guarantees.
15. FINANCIAL ASSETS
Listed shares - Australian and Canadian
Royalties receivable - Lithium rights
Movement in Listed Shares
At 1 July
Additions of listed shares
Proceeds on disposal of financial assets
Net gain on fair value changes of financial assets
Loss on sale of financial assets - discontinued operations (Note 39)
At 30 June
Movement in Royalties Receivable
At 1 July
Re-measurement of receivable
Settlement of Buldania royalty
At 30 June
80
Westgold Resources Limited Annual Report 2020
2020
2019
3,369,998
1,336,486
3,369,998
1,336,486
2020
2019
1,149,449
1,427,836
1,149,449
1,427,836
2020
2019
–
41,210,813
13,000,000 15,000,000
13,000,000
56,210,813
41,210,813
6,267,158
4,263,933
31,357,163
(54,363,502)
(5,798,098)
8,888,756
9,474,899
–
–
(90,309)
41,210,813
15,000,000
–
– 15,000,000
(2,000,000)
–
13,000,000 15,000,000
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020
15. FINANCIAL ASSETS (CONTINUED)
Listed shares
These financial assets consist of investments in ordinary shares. The fair value of equity investments at fair value
through profit or loss has been determined directly by reference to published price quotations in an active market.
Movement in investments during the year ended 30 June 2020 are as follows:
– disposed of its total investment in Aruma Resources Limited, Auris Minerals Limited and Royal Nickel Corporation;
– acquired shares in Galena Mining Limited on the disposal of the paste plant and subsequently disposed of its total
investment; and
– acquired additional shares in Musgrave Minerals Limited by participating in a placement and subsequently disposed
of its total investment.
Royalties Receivable
These financial assets consist of Lithium royalty rights. The fair value of royalties receivable at fair value through profit
or loss has been determined using a discounted cash flow model.
(a) The Buldania Lithium Royalty Rights
Agreement was reached to divest the Buldania Lithium Royalty to Liontown Resources Limited under a pre-emptive
arrangement for $2 million in cash with a $250,000 prepayment being received during June 2019 with final settlement
occurring on 29 July 2019.
(b) The Mount Marion Lithium Royalty Rights
Westgold had previously reached agreement to divest its Mt Marion Royalty to Silverstream SZ for a gross amount of
$13 million in cash. They failed to complete the deal in a timely fashion and Westgold has therefore decided to retain the
rights for the expected future income stream. The royalties represented a 1.5% gross revenue royalty and a production
royalty of $2 per tonne of ore mined and/or processed from a 30 hectare area of Location 53 which it held for a 20 year
period from 2016. There was no production from area during the year but production is expected for the ensuing years.
16. PROPERTY, PLANT & EQUIPMENT
Plant and equipment
Gross carrying amount at cost
Accumulated depreciation and impairment
Net carrying amount
Land and buildings
Gross carrying amount at cost
Accumulated depreciation and impairment
Net carrying amount
Capital work in progress at cost
Total property, plant and equipment
Movement in property, plant and equipment
Plant and equipment
At 1 July net of accumulated depreciation
Transfer from capital work in progress
Disposals
Disposal of subsidiary
Depreciation charge for the year
At 30 June net of accumulated depreciation
2020
2019
306,397,153 287,780,355
(170,981,154) (150,613,499)
135,415,999 137,166,856
23,053,950
19,158,851
(5,142,462)
(3,503,451)
17,911,488
15,655,400
8,565,545
22,750,247
161,893,032 175,572,503
137,166,856 120,764,353
43,117,946
70,509,158
(1,157,556)
(2,219,062)
(91,173)
(9,428,372)
(43,620,074)
(42,459,221)
135,415,999 137,166,856
Westgold Resources Limited Annual Report 2020
81
16. PROPERTY, PLANT & EQUIPMENT (CONTINUED)
Land and buildings
At 1 July net of accumulated depreciation
Transfer from capital works in progress
Disposal of subsidiary
Depreciation charge for the year
At 30 June net of accumulated depreciation
Capital work in progress
At 1 July
Additions
Transfer to mine properties (refer to Note 17)
Transfer to mine capital development (refer to Note 17)
Transfer to plant and equipment
Transfer to property
At 30 June
2020
2019
15,655,400 13,200,044
4,257,657
3,840,684
(173,797)
102,764
(1,827,772)
(1,488,092)
17,911,488
15,655,400
22,750,247
47,445,443
36,684,765
60,352,877
(2,179,429)
(7,740,341)
(1,314,436)
(2,957,890)
(43,117,945)
(70,509,158)
(4,257,657)
(3,840,684)
8,565,545
22,750,247
The carrying value of plant and equipment purchase under financing arrangements at 30 June 2020 is $40,034,638
(2019: $42,714,688).
Assets under hire purchase contracts are pledged as security for the related interest bearing liabilities (refer to
Notes 23 and 24).
17. MINE PROPERTIES AND DEVELOPMENT
Development areas
Gross carrying amount at cost
Net carrying amount
Mine properties
Gross carrying amount at cost
Accumulated amortisation and impairment
Net carrying amount
Mine capital development
Gross carrying amount at cost
Accumulated amortisation
Net carrying amount
Total mine properties and development costs
Movement in mine properties and development
Development areas
At 1 July
Disposal of subsidiary
At 30 June
82
Westgold Resources Limited Annual Report 2020
2020
2019
–
–
756,919
756,919
219,555,904 133,131,950
(30,605,966)
(15,291,812)
188,949,938 117,840,138
303,343,786 222,583,827
(193,780,595) (122,973,550)
109,563,191
99,610,277
298,513,129 218,207,334
756,919
756,919
(756,919)
–
756,919
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020
17. MINE PROPERTIES AND DEVELOPMENT (CONTINUED)
Mine properties
At 1 July net of accumulated amortisation
Additions
Transfer from capital work in progress (refer to Note 16)
Transfer from mine capital development
Transfer from exploration (refer to Note 18)
Increase in rehabilitation provision
Disposal of subsidiary
Amortisation charge for the year
At 30 June net of accumulated amortisation
Mine capital development
At 1 July net of accumulated amortisation
Additions
Disposal of subsidiary
Transfer from capital work in progress (refer to Note 16)
Movement in rehabilitation liability (refer to Note 21)
Transfer from exploration (refer to Note 18)
Transfer to capital development
Amortisation charge for the year
At 30 June net of accumulated amortisation
18. EXPLORATION AND EVALUATION EXPENDITURE
Exploration and evaluation costs carried forward in respect of mining areas of interest
Pre-production areas
At cost less expenditure written off
Net carrying amount
Movement in deferred exploration and evaluation expenditure
At 1 July net of accumulated impairment
Additions
Disposal of subsidiary
Transferred to mine properties (refer to Note 17)
Transferred to mine capital development (refer to Note 17)
Expenditure written off - continuing operations:
Expenditure written off - discontinued operations
At 30 June net of accumulated impairment
2020
2019
117,840,138
19,678,627
58,293,797
8,497,402
2,179,429
7,740,340
726,071
88,445,597
18,510,592
4,067,124
6,714,063
–
–
(732,928)
(15,314,152)
(9,856,024)
188,949,938 117,840,138
99,610,277 155,208,641
74,615,330
80,832,077
–
(9,874,531)
1,314,436
2,957,890
–
12,527,922
5,556,265
15,660,293
(726,071)
(88,445,597)
(70,807,046)
(69,256,418)
109,563,191
99,610,277
2020
2019
78,874,701 104,276,449
78,874,701 104,276,449
104,276,449 147,262,738
15,151,294
16,411,424
(16,129,868)
(33,505,161)
(18,510,592)
(4,067,125)
(5,556,265)
(15,660,293)
(356,317)
(5,471,706)
–
(693,428)
78,874,701 104,276,449
Westgold Resources Limited Annual Report 2020
83
18. EXPLORATION AND EVALUATION EXPENDITURE (CONTINUED)
The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful
development and commercial exploitation or sale of the respective mining areas. During the year, a review was
undertaken for each area of interest to determine the appropriateness of continuing to carry forward costs in relation
to that area of interest. In assessing the carrying value of all of the Group’s projects, certain expenditure on exploration
and evaluation of mineral resources has not led to the discovery of commercially viable quantities of mineral resources.
As a result, exploration and evaluation expenditure of $356,317 (2019: $6,165,134) was written off to the profit and loss.
The amount relates to tenements which were written down to nil as the expenditure did not result in the discovery of
commercially viable quantities of mineral resources and as a result no future benefits are expected.
19. RIGHT-OF-USE ASSETS
Group as a lessee (applicable from 1 July 2019)
AASB 16 Leases requires the recognition of right-of-use assets for the remaining term of the current leases for office
premises and the warehouse facility, as well as the power stations at the various mine sites as from 1 July 2019. Refer
to Note 40 for right-of-use assets first recognised.
The Group has lease contracts for various items of mining equipment, motor vehicles and buildings used in its
operations. Leases of mining equipment generally have lease terms between three and seven years, while motor
vehicles and buildings generally have lease terms between three and five years.
The Group also has certain leases of assets with lease terms of 12 months or less and leases of office equipment with
low value. The Group applies the short-term lease and lease of low-value assets recognition exemptions for these
leases.
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
As at 1 July 2019
Additions
Depreciation expense
As at 30 June 2020
Power
Stations
Premises
Mining
Equipment
Total
9,154,480
3,812,164
– 12,966,644
6,009,296
67,335
933,196
7,009,827
(6,685,437)
(916,407)
(432,050)
(8,033,894)
8,478,339
2,963,092
501,146
11,942,577
Set out below are the carrying amounts of lease liabilities (included under interest-bearing loans and borrowings) and
the movements during the period:
As at 1 July
Additions
Accretion of interest
Payments
As at 30 June
The following are the amounts recognised in profit or loss:
Depreciation expense for right-of-use assets
Included in cost of sales
Included in admin expenses (Note 6)
Interest expense on lease liabilities
Less interest expense capitalised to qualifying asset
Total amount recognised in profit or loss
2020
2019
12,966,644
7,009,827
593,956
(8,627,850)
11,942,577
7,531,333
502,561
593,956
(593,956)
8,033,894
–
–
–
–
–
–
–
–
–
–
The interest expense of these lease liabilities has been capitalised to the qualifying assets.
84
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020
20. TRADE AND OTHER PAYABLES
Trade creditors (a)
Sundry creditors and accruals (b)
The carrying value of trade and other payables approximates the fair value.
(a)
(b)
Trade creditors are non-interest bearing and generally on 30-day terms.
Sundry creditors and accruals are non-interest bearing and generally on 30-day terms.
21. PROVISIONS (current)
Provision for annual leave
Provision for long service leave
22. PROVISIONS (non-current)
Provision for long service leave
Provision for rehabilitation (a)
2020
2019
34,521,626
27,915,244
35,143,292
29,826,722
69,664,918
57,741,966
2020
2019
7,884,585
6,201,679
1,902,341
1,761,844
9,786,926
7,963,523
2020
2019
1,839,187
1,305,623
76,650,886
69,017,942
78,490,073
70,323,565
(a) Provision for rehabilitation
The Group makes full provision for the future cost of rehabilitating mine sites and related production facilities on
a discounted basis at the time of developing the mines and installing and using those facilities. The rehabilitation
provision represents the present value of rehabilitation costs relating to mine sites, which are expected to be incurred
up to 2030, which is when the producing mine properties are expected to cease operations. These provisions have
been created based on the Group’s internal estimates. Assumptions based on the current economic environment have
been made, which management believe is a reasonable basis upon which to estimate the future liability.
These estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual
rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation works required that
will reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely to depend on when
the mines cease to produce at economically viable rates. This, in turn, will depend upon future gold prices, which are
inherently uncertain.
The discount rates used in the calculation of the provision as at 30 June 2020 range from 0.58% to 0.87% (2019: range
from 1.09% to 1.40%). Refer to Note 3) for further detail.
(b) Current and non-current movements in provision for rehabilitation
At 1 July
Disposal of subsidiary
Adjustment due to revised conditions
Unwind of discount
At 30 June
2020
2019
69,017,942
76,945,945
– (22,265,463)
6,714,063
12,527,922
918,881
1,809,538
76,650,886
69,017,942
Westgold Resources Limited Annual Report 2020
85
23. INTEREST-BEARING LOANS AND BORROWINGS (current)
Lease liabilities
Hire purchase arrangements
At 30 June
2020
7,425,093
2019
–
16,309,721
18,271,020
23,734,814
18,271,020
Represents current portion of hire purchase arrangements which have repayment terms of 36 months from inception.
24. INTEREST-BEARING LOANS AND BORROWINGS (non-current)
Lease liabilities
Hire purchase arrangements
At 30 June
2020
4,797,566
2019
–
9,294,070
18,465,857
14,091,636
18,465,857
Represents non-current portion of hire purchase arrangements which have repayment terms of 36 months from
inception.
The weighted average interest rate is 4.60% per annum (2019: 6.22%).
Assets pledged as security:
The carrying amounts of assets pledged as security for current and non-current interest-bearing liabilities:
Non-current
Hire purchase arrangements
Plant and equipment
Total non-current assets pledged as security
2020
2019
40,034,638
42,714,688
40,034,638
42,714,688
Plant and equipment assets are pledged against liabilities for the term of the arrangement.
Future commitments in respect of interest bearing loans
Hire purchase commitments
The Company has hire purchase contracts for various items of plant and machinery. The contracts do have terms
of renewal but no escalation clauses. Renewals are at the option of the specific entity that holds the asset. The hire
purchase contracts have an average term of 36 months with the right to purchase the asset at the completion of the
contract term.
Interest bearing liabilities
2020
Within one year
After one year but not more than five years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
86
Westgold Resources Limited Annual Report 2020
Minimum
lease
payments
Present value
of lease
payments
17,150,953
16,309,721
9,560,264
9,294,070
26,711,217
25,603,791
(1,107,426)
–
25,603,791
25,603,791
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 24. INTEREST-BEARING LOANS AND BORROWINGS (non-current) (CONTINUED)
Future commitments in respect of interest bearing loans (continued)
Interest bearing liabilities
2019
Within one year
After one year but not more than five years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
Minimum
lease
payments
Present value
of lease
payments
19,741,650
18,271,020
19,205,342
18,465,857
38,946,992
36,736,877
(2,210,115)
–
36,736,877
36,736,877
(a) Lease liabilities
AASB 16 Leases requires the recognition of right-of-use assets for the remaining term of the current leases for office
premises and the warehouse facility, as well as the power stations and equipment at the various mine sites.
Lease liabilities
2020
Within one year
After one year but not more than five years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
25. UNEARNED INCOME
Gold prepayment
Provisional gold sales
Movement in gold prepayment
At 1 July
Revenue recognised during the year (refer Note 5)
Fee for restructure
Additional facility
Deemed finance component
At 30 June
Minimum
lease
payments
Present value
of lease
payments
7,755,547
7,425,093
4,982,152
4,797,566
12,737,699
12,222,659
(515,040)
–
12,222,659
12,222,659
2020
2019
– 25,470,487
198,841
–
198,841
25,470,487
25,470,487
18,075,375
(25,938,399)
(16,011,946)
67,606
145,614
– 20,853,550
400,306
2,407,894
– 25,470,487
Westgold Resources Limited Annual Report 2020
87
25. UNEARNED INCOME (CONTINUED)
The gold pre-pay facility with Citibank N.A (Citi), was settled in full. The associated interest expense has been capitalised
to the qualifying assets.
Movement in provisional gold sales
At 1 July
Provisional gold sales at 30 June
At 30 June
This represents gold sold on provisional outturns on 30 June 2020.
26. ISSUED CAPITAL
(a) Ordinary Shares
Issued and fully paid
(b) Movements in ordinary shares on issue
At 1 July 2018
Issued share capital on conversion of options (f)
Issued share capital
Share issue costs, net of tax
At 30 June 2019
Capital reduction via demerger
Issued share capital (refer Note 29 (b))
Issued share capital on conversion of listed options
Issued share capital
Share issue costs, net of tax
At 30 June 2020
2020
2019
–
198,841
198,841
–
–
–
2020
2019
356,130,055 299,494,861
Number
$
363,109,569 276,976,897
44,785
89,570
26,000,000 23,400,000
–
(971,606)
389,154,354 299,494,861
– (8,803,840)
530,313
1,102,000
10,545,603
21,542,506
20,000,000 45,000,000
–
(2,205,472)
420,230,270 356,130,055
(c) Terms and conditions of contributed equity
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote
per share at shareholder meetings. In the event of winding up the Company the holders are entitled to participate in
the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par share
values. Accordingly, the Parent does not have authorised capital nor par value in respect of its issued shares.
(d) Escrow restrictions
There are no current escrow restrictions on the issued capital of the Company.
88
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020
26. ISSUED CAPITAL (CONTINUED)
(e) Options on issue
Unissued ordinary shares of the Company under option at the date of this report are as follows:
Type
Unlisted (i)
Unlisted - Tranche 2 (ii)
Unlisted - Tranche 2 (ii)
Unlisted - Tranche 3 (ii)
Unlisted - Tranche 3 (ii), (iii)
Total
Expiry Date
24 November 2020
30 June 2021
30 June 2023
30 June 2022
30 June 2022
PEPOs issued pursuant to the Westgold Resources Limited Employee Share and Option Plan.
ZEPOs issued pursuant to the Westgold Resources Limited Employee Share and Option Plan.
(i)
(ii)
(iii) ZEPOs issued are still subject to shareholder approval.
(f) Option conversions
10,545,603 listed options were exercised during the financial year (2019: 44,785).
(g) Capital management - gearing ratio
Gearing ratio
Debt
Capital
Exercise
Price
Number of
options
$2.31
3,625,000
Nil
Nil
Nil
Nil
230,307
568,250
530,331
153,810
5,107,698
2020
2019
7.25%
8.27%
37,826,450
36,736,877
521,860,827 443,968,663
Capital includes issued capital and all other equity reserves attributable to the equity holders of the parent for the
purpose of the Group’s capital management. The primary objective of the Group’s capital management is to ensure
that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise the
shareholder’s value. The Group manages its capital structure and makes adjustments in light of changes in economic
conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Group may
return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes
during the years ended 30 June 2020 and 30 June 2019. The Group monitors capital using a gearing ratio, which is
debt divided by the aggregate of equity. The Group includes in its net debt, interest bearing loans and borrowings.
The Group’s policy is to keep the gearing ratio between 5% and 20%.
27. ACCUMULATED LOSSES
At 1 July
Net profit in current year attributable to members of the parent entity
Dividend on demerger of Castile (refer to Note 38)
At 30 June
2020
2019
(51,784,989)
(65,915,053)
34,607,315
14,130,064
(13,051,549)
–
(30,229,223)
(51,784,989)
Westgold Resources Limited Annual Report 2020
89
28. RESERVES
At 30 June 2018
Share-based payments
At 30 June 2019
Share-based payments
At 30 June 2020
Share-based
payments
reserve
Equity
reserve
Total
13,260,686 181,493,631
194,754,317
1,021,722
–
1,021,722
14,282,408 181,493,631 195,776,039
183,956
–
183,956
14,466,364 181,493,631 195,959,995
Nature and purpose of reserves
Equity reserve
This reserve relates to the intercompany loans with Metals X Ltd written off on demerger of the Group and includes tax
consolidated adjustments.
Share-based payments reserve
This reserve is used to recognise the fair value of options issued to employees in relation to equity-settled share-based
payments.
29. SHARE-BASED PAYMENTS
(a) Recognised share-based payment expense
The expense recognised for services received during the year is shown in the table below:
Expense arising from equity-settled share-based payments
2020
2019
183,956
1,021,722
The share-based payment plan is described below. There have been no cancellations or modifications to the plan
during 2020 and 2019.
(b) Transactions settled using shares
– On 23 April 2020, the Company announced that it had agreed to acquire the Albury Heath project from Cervantes
Corporation Limited. Consideration for the acquisition included the issue of 303,313 fully paid ordinary shares to
the value of $700,000. Contingent consideration includes $400,000 if future production from the project exceeds
25,000 ounces and an additional $200,000 if the quantity of gold produced exceeds 35,000 ounces. The contingent
consideration is payable in cash and/or shares. The Company determined that it could not readily estimate the fair
value of the assets acquired on the basis that this was an exploration asset. The purchase was measured by reference
to the share issued measured at market value on 8 May 2020 (acquisition date) at $2.31 per share.
– On 27 November 2019, the Company announced that it had agreed to acquire the 20% free carried interest owned
by Fe Ltd in the Peak Hill JV agreement. Consideration for the acquisition included the issue of 200,000 fully paid
ordinary shares. The Company determined that it could not readily estimate the fair value of the assets acquired on
the basis that this was an exploration asset. The purchase was measured by reference to the share issued measured
at market value on 04 December 2019 (acquisition date) at $2.01 per share.
There were no transactions settled using shares in the previous financial year.
(c) Employee share and option plan
Under the Employee Share and Option Plan (ESOP), grants are made to senior executives and other staff members
who have made an impact on the Group’s performance. ESOP grants are delivered in the form of share options or
performance rights which vest over periods as determined by the Board of Directors.
90
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 29. SHARE-BASED PAYMENTS (CONTINUED)
(d) Share options
PEPOs
Share options are issued for nil consideration. The exercise price, vesting conditions and expiry date are determined
by the Board of Directors. The expiry date is not less than two years from issue date. Any options that are not exercised
by the expiry date will lapse. Upon exercise, these options will be settled in ordinary fully paid shares of the Company.
ZEPOs
Unlisted employee options are issued to senior management under the Employee Share Option Plan, the principle
terms being:
– The Employee Options have been issued for nil consideration;
– Each Employee Option carries an entitlement to one fully paid ordinary share in the Company for each Employee
Option vested;
– Vesting only occurs after the end of the Performance Periods (30 June 2020 and 30 June 2021) and the number
of Employee Options that vest (if any) will depend on:
– Growth in Return on Capital Employed over the Performance Periods; and
– Total shareholder return relative to the S&P/All Ordinaries Gold Index over the Performance Periods.
– Options issued that vest will expire if not exercised on the vesting date;
– Unvested Employee Options lapse on cessation of a holder’s employment with Westgold;
– Any Employee Options that do not vest after the end of the Performance Periods will automatically lapse; and
– No amount is payable by a holder of Employee Options in respect of the shares allocated upon vesting of the
Employee Option.
Summary of options granted under the Employee Share and Option Plan
Outstanding at the beginning of the year
16,999,600
1.87
15,000,000
2020
Number
2020
WAEP
2019
Number
Granted during the year
Exercised during the year
Lapsed/cancelled during the year
Outstanding at the year end
Exercisable at the year end
684,141
0.00
1,999,600
(10,530,000)
(2,046,043)
2.04
0.95
–
–
5,107,698
1.64
16,999,600
3,625,000
2.31
15,000,000
2019
WAEP
2.12
0.00
–
–
1.87
2.12
Westgold Resources Limited Annual Report 2020
91
–
–
–
–
–
–
29. SHARE-BASED PAYMENTS (CONTINUED)
(d) Share options (continued)
The following table represents the outstanding balance as at 30 June 2020:
Grant Date
Vesting date
Expiry date
Exercise
price
Number of
Options
Options
lapsed /
cancelled
Options
Issued /
(exercised)
Number of options
at end of the year
On issue
Vested
ZEPO - Tranche 1
28/11/2018 30/06/2020 30/06/2020
10/05/2019 30/06/2020 30/06/2022
ZEPO - Tranche 2
28/11/2018 30/06/2021 30/06/2021
10/05/2019 30/06/2021 30/06/2023
ZEPO - Tranche 3
$0.00
$0.00
$0.00
$0.00
230,307
(230,307)
769,493
(769,493)
230,307
–
769,493
(201,243)
–
–
–
–
–
–
230,307
568,250
07/05/2020 30/06/2022 30/06/2022
07/05/2020 30/06/2022 30/06/2022
$0.00
$0.00
153,810
530,331
PEPOS
22/11/2017 22/11/2018
24/11/2020
$2.31
2,400,000
–
–
–
153,810
153,810
530,331
530,331
– 2,400,000
2,400,000
23/11/2017 24/11/2018
24/11/2020
$2.31
2,900,000
(845,000)
(830,000)
1,225,000
1,225,000
24/11/2016 11/1/2018
11/1/2020
$2.02
2,250,000
– (2,250,000)
11/1/2017
11/1/2018
11/1/2020
$2.02
7,450,000
– (7,450,000)
–
–
–
–
Total
16,999,600 (2,046,043)
(9,845,859)
5,107,698
3,625,000
Weighted average remaining contractual life of share options
The weighted average remaining contractual life for the share options outstanding as at 30 June 2020 is 0.93 years
(2019: 1.06 years).
Range of exercise price of share options
The range of exercise price for options outstanding at the end of the year is $0.00 to $2.31 (2019: $0.00 to $2.31).
Weighted average fair value of share options
The weighted average fair value of options granted during the year was $0.80 (2019: $0.57).
Share option valuation
The fair value of the equity-settled share options granted under the ESOP is estimated at the date of grant using either
a Black & Scholes or a Monte Carlo model, which takes into account factors including the option’s exercise price,
the volatility of the underlying share price, the risk-free interest rate, the market price of the underlying share at grant
date, historical and expected dividends and the expected life of the option, and the probability of fulfilling the required
hurdles.
Tranche 1 options lapsed during the period.
Tranche 2 options vest subject to performance hurdles, measured for the period 1 July 2018 to 30 June 2021.
Tranche 3 options vest subject to performance hurdles, measured for the period 1 July 2019 to 30 June 2022.
The two measures are:
– Growth in Return on Capital Employed over the Performance Periods; and
– Total shareholder return relative to the S&P/All Ordinaries Gold Index over the Performance Periods.
92
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020
29. SHARE-BASED PAYMENTS (CONTINUED)
(d) Share options (continued)
The following table gives the assumptions made in determining the fair value of the options granted in Tranche 3:
Grant date
7 May 2020
7 May 2020
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Options exercise price ($)
Share price at grant date ($)
Fair value at grant date ($)
RTSR
60%
0.15%
2.0
$0.00
$2.15
$1.44
ROCE
60%
0.15%
2.0
$0.00
$2.15
$2.15
The effects of early exercise have been incorporated into the calculations by using an expected life for the option
that is shorter than the contractual life based on historical exercise behaviour, which is not necessarily indicative of
exercise patterns that may occur in the future. The expected volatility was determined using a historical sample of the
Company’s share price over a three-year period. The resulting expected volatility therefore reflects the assumptions
that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.
Tranche 3 Options issued to the Executive Chairman are subject to shareholder approval which will be sought at
the upcoming Annual General Meeting.
30. COMMITMENTS
(a) Capital commitments
At 30 June 2020, the Group has capital commitments that relate principally to the purchase and maintenance of plant
and equipment for its mining operations.
Capital expenditure commitments
- Within one year
2020
2019
10,098,601
8,996,852
(b) Mineral tenement lease commitments
The Company has commercial leases over the tenements in which the mining operations are located. These tenement
leases have a life of between six months and twenty-one years. In order to maintain current rights to explore and mine the
tenements, the Group is required to perform minimum exploration work to meet the expenditure requirements specified
by the relevant state governing body. There are no restrictions placed on the lessee by entering into these contracts.
Mineral tenement leases:
- Within one year
- After one year but not more than five years
- After more than five years
2020
2019
3,921,796
3,898,504
15,431,391
15,319,776
27,470,108
30,556,302
46,823,295
49,774,582
(c) Operating leases
Prior to the adoption of AASB16 Leases, minimum payments under lease agreements were as follows:
Within one year
After one year but not more than five years
2019
5,433,524
7,740,774
13,174,298
Westgold Resources Limited Annual Report 2020
93
30. COMMITMENTS (CONTINUED)
(d) Other commitments
The Group has obligations for various expenditures such as royalties, production-based payments and exploration
expenditure. Such expenditures are predominantly related to the earning of revenue in the ordinary course of business.
Royalties paid under contractual arrangements
31. CONTINGENT ASSETS AND LIABILITIES
2020
2019
20,901,094
14,982,184
(i) Bank guarantees and rental deposits
The Group has a number of bank guarantees and rental deposits in favour of various government authorities and
service providers. These primarily relate to office leases and environmental and rehabilitation bonds at the various
projects. The total amount of these guarantees at the reporting date is $1,149,449 (2019: $1,427,836). The bank
guarantees are fully secured by term deposits (refer to Note 14).
32. AUDITOR’S REMUNERATION
Amounts received or due and receivable by Ernst & Young (Australia) for:
Fees for auditing the statutory financial report of the parent covering the group and
auditing the statutory financial reports of any controlled entities
Fees for other services:
- tax compliance
Total auditor’s remuneration
2020
2019
245,577
312,467
208,409
116,000
453,986
428,467
33. OPERATING SEGMENTS
For management purposes, the Group is organised into operating segments determined by the location of the mineral
being mined or explored, as these are the sources of the Group’s major risks and have the most effect on rates of return.
Reportable segments
The Group comprises the following reportable segments
Reference
Segment
Nature
FGO
MGO
CGO
Fortnum Gold Operations
Mining, treatment, exploration and development of gold assets
Meekatharra Gold Operations Mining, treatment, exploration and development of gold assets
Cue Gold Operations
Mining, treatment, exploration and development of gold assets
Other
Other
Exploration and development of other mineral assets and contract
mining services
General
Executive management monitors the operating results of its operating segments separately for the purpose of making
decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating
profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. However,
certain income and expenses (see below) are managed on a consolidated basis and are not allocated to operating
segments. All other adjustments and eliminations are part of the detailed reconciliations presented further below.
Unallocated income and costs
Finance income and fair value gains and losses on financial assets are not allocated to individual segments as the
underlying instruments are managed on a Group basis.
Current taxes, deferred taxes and certain financial assets and liabilities are not allocated to those segments as they are
also managed on a Group basis. Corporate charges comprise non-segmental expenses such as head office expenses
and interest costs. Corporate charges are not allocated to operating segments. Refer to reconciliation segment results
to consolidated results.
94
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 33. OPERATING SEGMENTS (CONTINUED)
Other disclosures
Capital expenditure consists of additions of property, plant and equipment, mine properties and development and
exploration and evaluation expenditure including assets from the acquisition of subsidiaries.
The following table presents revenue and profit information for reportable segments for the years ended 30 June 2020
and 30 June 2019.
MGO
CGO
FGO
Other
Total
Year ended 30 June 2020
External revenue
Sale of gold at spot
94,889,987 85,345,963
83,789,150
– 264,025,100
Sale of gold under forward contracts
103,711,436
50,514,975
46,899,739
– 201,126,150
Sale of gold under a prepay facility
12,969,199
12,969,199
Financing component on gold sales under
prepay facility
Mining and contracting services
–
–
–
–
–
–
–
– 25,938,398
–
–
1,178,623
1,178,623
Total segment revenue
211,570,622 148,830,137 130,688,889
1,178,623 492,268,271
Results
Depreciation and amortisation
(68,288,134)
(45,259,226)
(25,155,454)
(900,123) (139,602,937)
Exploration and evaluation expenditure written off
(222,595)
(98,152)
(35,570)
–
(356,317)
Segment (loss) profit
8,379,385
(12,641,721) 33,236,970
(734,293) 28,240,341
Total assets
Total liabilities
189,724,542 301,119,381 113,175,719
13,077,793 617,097,435
(81,497,781)
(72,469,552)
(36,709,743)
(62,890) (190,739,966)
Capital expenditure
(82,842,250)
(99,721,650)
(27,391,009)
(994,176) (210,949,085)
Year ended 30 June 2019
External revenue
Sale of gold at spot
55,105,103
53,798,893
51,823,872
– 160,727,868
Sale of gold under forward contracts
98,997,256
64,741,709
52,165,824
– 215,904,789
Sale of gold under a prepayment facility
12,108,484
2,037,462
Financing component on gold sales under
prepay facility
1,749,375
116,625
–
–
–
14,145,946
–
1,866,000
Mining and contracting services
–
–
– 25,672,844
25,672,844
Total segment revenue
167,960,218 120,694,689 103,989,696
25,672,844 418,317,447
Results
Depreciation and amortisation
(51,704,059)
(24,869,912)
(20,720,491)
(2,411,541)
(99,706,003)
Exploration and evaluation expenditure written off
(2,393,064)
(497,944)
(150,864)
(2,429,834)
(5,471,706)
Accumulated mill scats written off
(11,491,150)
(9,233)
(127,801)
– (11,628,184)
Segment profit (loss)
(20,392,555)
(1,047,700)
15,722,413
(2,467,750)
(8,185,592)
Total assets
Total liabilities
Capital expenditure
178,125,218 243,187,048 112,187,209
31,216,018 564,715,493
(58,344,581) (80,098,686)
(28,359,223)
(874,484)
(167,676,974)
(52,958,699)
(81,401,015)
(21,699,381)
(1,006,168) (157,065,263)
Westgold Resources Limited Annual Report 2020
95
33. OPERATING SEGMENTS (CONTINUED)
(a) Reconciliation of profit (loss)
Segment profit (loss)
Corporate administration expenses
Corporate interest income
Corporate other income
Gain on demerger of subsidiary
Net gain on fair value changes of financial assets
Net gain on sale of financial assets
Net gain on disposal of assets
2020
2019
28,240,341
(8,185,592)
(7,915,557)
(9,129,172)
286,620
308,101
2,603,081
5,072,352
8,727,618
–
8,888,756
21,353,650
–
3,121,249
3,031,573
139,435
Total consolidated profit from continuing operations before income tax
43,862,432
12,680,023
(b) Reconciliation of assets
Segment operating assets
Unallocated corporate assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Other financial assets
Financial assets (equity investments)
Property, plant and equipment
Right-of-use assets
Total consolidated assets
(c) Reconciliation of liabilities
Segment operating liabilities
Unallocated corporate liabilities
Trade and other payables
Provision for employee benefits
Interest-bearing loans and borrowings
Deferred tax liability
Total consolidated liabilities
(d) Segment revenue from external customers
Segment revenue
Total revenue
96
Westgold Resources Limited Annual Report 2020
617,097,435 564,715,493
136,810,316
65,483,767
170,765
944,183
525,681
378,462
1,141,677
1,180,677
–
43,210,813
709,025
809,350
1,032,203
–
757,487,102 676,722,745
190,739,966 167,676,974
1,736,621
28,367,977
2,395,708
2,133,433
1,094,913
58,034
39,659,067
35,000,416
235,626,275 233,236,834
492,268,271 418,317,447
492,268,271 418,317,447
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 33. OPERATING SEGMENTS (CONTINUED)
Revenue from external customers by geographical locations is detailed below. Revenue is attributable to geographical
location based on the location of the customers. The Company does not have external revenues from external
customers that are attributable to any foreign country other than as shown.
Australia
Total revenue
2020
2019
492,268,271 418,317,447
492,268,271 418,317,447
The Group has three customers to which it sells gold and each account for 41%, 46% and 13% of this external revenue
respectively (2019: Three customers 36%, 61% and 3%).
(e) Segment non-current assets are all located in Australia.
34. KEY MANAGEMENT PERSONNEL
(a) Details of Key Management Personnel
(i) Non-Executive Directors (NEDs)
Appointed
Resigned
Non-Executive Chairman
6 October 2016
25 November 2019
PJ Newton
PB Schwann
Non-Executive Director
FJ Van Maanen
Non-Executive Director
WC Bramwell
Non-Executive Director
2 February 2017
6 October 2016
3 February 2020
–
–
–
SV Shet
Non-Executive Director
18 December 2017
26 February 2020
(ii) Executive Directors
PG Cook
Executive Chairman
19 March 2007
–
JS Norregaard
Executive Director
29 December 2016
22 June 2020
(iii) Other Executives (KMPs)
DA Fullarton
JS Norregaard
A Buckingham
PM Storey
PW Wilding
DP Stuart
L Smith
Chief Financial Officer1
21 May 2018
–
Chief Executive Officer (MPL)2
22 June 2020
14 August 2020
Chief Operating Officer
1 October 2019
General Manager (MGO)
General Manager (CGO)
23 July 2018
1 July 2018
–
–
–
General Manager (FGO)2
7 October 2019
14 August 2020
Company Secretary & General Counsel
19 December 2019
–
RB Armstrong
General Manager (FGO)
1 July 2018
31 August 2019
DJ Noort
DW Okeby
General Manager (MPL)
20 August 2018
3 January 2020
Company Secretary & Legal Manager
1 December 2016
19 December 2019
1.
2.
3.
DA Fullarton was promoted to Chief Executive Officer with effect from 1 July 2020.
JS Norregaard and DP Stuart departed on 14 August 2020.
There are no other changes of the key management personnel after the reporting date and before the date the financial report was
authorised for issue.
Westgold Resources Limited Annual Report 2020
97
34. KEY MANAGEMENT PERSONNEL (CONTINUED)
(b) Compensation of Key Management Personnel
Short term benefits
Post-employment benefits
Other long-term benefits
Share-based payment
2020
2019
3,979,630
3,726,230
231,832
221,120
76,241
59,359
93,648
592,639
4,381,351
4,599,348
(c) Loans to Key Management Personnel
There were no loans to key management personnel during the current or previous financial year.
(d) Interest held by Key Management Personnel under the Long-Term Incentive Plan
Share options held by key management personnel under the long-term incentive plan to purchase ordinary shares:
Grant date
11/01/2020
22/11/2017
23/11/2017
28/11//2018
28/11/2018
10/05//2019
10/05//2019
07/05/2020
07/05/2020
Total
Expiry date
11/01/2020
24/11/2020
24/11/2020
30/06/2020
30/06/2021
30/06/2022
30/06/2023
30/06/2022
30/06/2022
1.
Subject to shareholder approval
Exercise price $
2020
2019
2.02
2.31
2.31
0.00
0.00
0.00
0.00
0.00
0.00
–
9,700,000
2,400,000
5,300,000
1,225,000
–
–
230,307
230,307
230,307
–
769,493
568,250
769,493
153,8101
530,331
–
–
5,107,698
16,999,600
98
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 35. RELATED PARTY DISCLOSURES
(a) Subsidiaries
The consolidated financial statements of the Group include Westgold Resources Limited and the subsidiaries listed in
the following table:
Name
Castile Resources Pty Ltd1
Aragon Resources Pty Ltd
Big Bell Gold Operations Pty Ltd
Minterra Pty Ltd2
Location 53 Pty Ltd
1.
2.
Entity disposed on demerger
Formerly Australian Contract Mining Pty Ltd
(b) Ultimate parent
Westgold Resources Limited is the ultimate parent entity.
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Ownership interest
2020
0%
100%
100%
100%
100%
2019
100%
100%
100%
100%
100%
(c) Key management personnel
Details relating to key management personnel, including remuneration paid, are included in Note 34.
(d) Transactions with related parties
Services provided by Westgold Resources Ltd to Castile Resources Ltd
Amount owing by Castile Resources Ltd at 30 June
2020
2019
395,355
7,348
–
–
PG Cook was the non-executive chairman of Castile Resources Ltd during the financial period.
There were no other related party transaction for the year ending 30 June 2020.
36. INFORMATION RELATING TO WESTGOLD RESOURCES LIMITED (THE PARENT ENTITY)
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Share-based payments reserve
Other reserves
Total Equity
Profit of the parent entity
Total comprehensive profit of the parent entity
2020
2019
138,595,311
67,933,961
389,667,260 369,646,651
4,611,826 30,469,940
5,174,113
30,506,316
356,130,056 299,494,862
9,339,943
20,806,282
14,466,365
14,282,408
4,556,783
4,556,783
384,493,147 383,140,336
1,585,208
34,116,826
1,585,208
34,116,826
Westgold Resources Limited Annual Report 2020
99
36. INFORMATION RELATING TO WESTGOLD RESOURCES LIMITED (THE PARENT ENTITY)
(CONTINUED)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries.
Pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785, Westgold and its wholly owned
subsidiaries (except Location 53 Pty Ltd) entered into a deed of cross guarantee on 28 November 2016 (the Guarantee).
The effect of the Guarantee is that Westgold has guaranteed to pay any deficiency in the event of winding up of any
controlled entity which is a party to the Guarantee or if they do not meet their obligations under the terms of any debt
subject to the Guarantee. The controlled entities which are parties to the Guarantee have given a similar guarantee
in the event that Westgold is wound up or if it does not meet its obligations under the terms of any debt subject to
the Guarantee.
The Consolidated Statement of Financial Position and Consolidated Statement of Comprehensive Income for the
closed group is not different to the Group’s Statement of Financial Position and Statement of Comprehensive Income.
Other contingent liabilities of the parent entity
Contractual commitments by the parent entity for the acquisition of property, plant or equipment
Nil
Nil
37. EVENTS AFTER THE BALANCE SHEET DATE
There are no significant events after the balance sheet date.
38. GAIN ON DEMERGER OF SUBSIDIARY
On 3 December 2019, Castile Resources Pty Ltd was demerged from the Westgold Consolidated Group, following
approval by Westgold Shareholders at the Annual General Meeting held on 25 November 2019. Existing Westgold
shareholders received shares in Castile on a 1 Castile share for every 4 Westgold shares held (in specie distribution).
The fair value of Castile at demerger was determined to be $21,855,388 being distributed as a demerger dividend of
$13,051,549 with an associated reduction in share capital of $8,803,840. The number of Castile shares on issue was
99,844,305 resulting in a market value of $0.2189 per share.
Carrying value of net assets of demerged entity
Assets
Cash and cash equivalents
Bonds
Trade and other receivables
Property, plant and equipment
Mine properties and development
Exploration and evaluation expenditure
Liabilities
Trade and other payables
Provisions
Deferred tax liabilities
Net assets and liabilities disposed of
Reduction in share capital
Demerger dividend
Gain on demerger of entity
100
Westgold Resources Limited Annual Report 2020
2020
86,966
20,000
38
264,969
756,919
16,129,868
17,258,760
(201,877)
(1,172)
(3,927,940)
(4,130,989)
13,127,771
(8,803,840)
(13,051,549)
(8,727,618)
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 39. DISCONTINUED OPERATIONS
Higginsville Gold Operations
In FY2019 Westgold sold its wholly owned subsidiaries that collectively make up HGO; namely Hill 51 Pty Ltd, Avoca
Resources Pty Ltd, Avoca Mining Pty Ltd and Polar Metals Pty Ltd to RNC Minerals Limited. The consideration for the
sale was $55 million (with working capital adjustments). The purchase consideration comprised of $24 million in cash;
$27 million in 49,811,364 fully paid ordinary shares in RNC Minerals Limited and an option fee of $4 million in 7,104,655
fully paid ordinary shares in RNC Minerals Limited.
Results of the discontinued operations:
Revenue
Cost of sales
Gross loss
Other income
Loss on sale of financial assets
Other expenses
Finance costs
Exploration and evaluation expenditure written off
Gain on disposal of controlled entities
Loss before tax
Income tax benefit
Profit (loss) for the year from discontinued operations
Cash flow information from discontinued operations:
Operating activities
Investing activities
Financing activities
Proceeds on disposal
Consideration received in cash and cash equivalents
Consideration received in shares
Fees and working capital adjustments
Less net assets disposed of
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Property, plant and equipment
Mine properties and development costs
Exploration and evaluation expenditure
2020
2019
– 76,963,348
– (95,008,018)
– (18,044,670)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,110,359
(90,309)
(34,867)
(496,717)
(693,428)
16,435,747
(1,813,885)
2,456,810
642,925
9,796,749
(9,082,668)
(247,904)
466,177
24,079,927
30,937,176
(1,150,000)
53,867,103
614,991
461,278
15,108,933
50,226
10,137,250
10,607,459
33,505,161
– 70,485,298
Westgold Resources Limited Annual Report 2020
101
39. DISCONTINUED OPERATIONS (CONTINUED)
Higginsville Gold Operations (continued)
Liabilities
Trade and other payables
Provisions
Deferred tax liabilities
Gain on disposal
40. ACCOUNTING STANDARDS
2020
2019
–
(6,170,363)
– (23,025,720)
–
(3,857,859)
– (33,053,942)
–
16,435,747
New and amended standards and interpretations
The Group has adopted all Accounting Standards and Interpretations effective from 1 July 2019. Other than the
changes described below, the accounting policies adopted are consistent with those of the previous financial year.
The Group applied AASB 16 Leases and Interpretation 23 Uncertainty over Income Tax Treatments for the first time
from 1 July 2019. The nature and effect of the adoption of these new standards are described below.
Several other new and amended Accounting Standards and Interpretations applied for the first time from 1 July 2019
but did not have an impact on the consolidated financial statements of the Group and, hence, have not been disclosed.
AASB 16 Leases
Overview
AASB 16 supersedes AASB 117 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating
Leases - Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The
standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires
lessees to recognise most leases on the balance sheet under a single on-balance sheet model.
AASB 16 also requires lessees and lessors to make more extensive disclosures than under AASB 117.
Impact
The Group has lease contracts for various items of mining equipment, motor vehicles and buildings. It does not have
any sub-leases. Before the adoption of AASB 16, the Group classified each of its leases (as lessee) at the inception date
as either a finance lease or an operating lease.
The Group adopted AASB 16 using the modified retrospective method of adoption, with the date of initial application
of 1 July 2019. On the date of initial application, the right-of-use assets were recognised based on the amount equal
to the lease liabilities. Lease liabilities were recognised based on the present value of the remaining lease payments,
discounted using the incremental borrowing rate at the date of initial application.
Upon adoption of AASB 16, the Group applied a single recognition and measurement approach for all leases except
for short-term leases and leases of low-value assets. Refer to Note 19. The standard provides specific transition
requirements and practical expedients, which have been applied by the Group, as set out below:
Leases previously accounted for as operating leases
The Group recognised right-of-use assets and lease liabilities for those leases previously classified as operating leases,
except for short-term leases with lease terms that end within 12 months of the date of initial application and leases
of low-value assets. The right-of-use assets for all leases were recognised based on the amount equal to the lease
liabilities. No adjustments were needed for any previously recognised prepaid or accrued lease expenses as there
were none. Lease liabilities were recognised based on the present value of the remaining lease, discounted using
the incremental borrowing rate at the date of initial application.
102
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020
40. ACCOUNTING STANDARDS (CONTINUED)
AASB 16 Leases (continued)
The Group also applied the available practical expedients wherein it:
– Relied on its assessment of whether leases are onerous immediately before the date of initial application,
– Included non-lease components for all classes of assets, and
– Applied the short-term leases exemptions to leases with lease terms that end within 12 months of the date of initial
application.
The Group also applied the available practical expedients wherein it:
– Relied on its assessment of whether leases are onerous immediately before the date of initial application,
– Included non-lease components for all classes of assets, and
Applied the short-term leases exemptions to leases with lease terms that end within 12 months of the date of initial
application.
The effective increase (decrease) of adoption AASB 16 at 1 July 2019 is set out below:
Assets
Right-of-use assets
Total assets
Liabilities
Interest-bearing loans and borrowing
Current
Non-current
Total liabilities
As at 1 July 2019
12,966,644
12,966,644
6,031,093
6,935,551
12,966,644
– ‘Right-of-use assets’ were recognised and presented separately in the statement of financial position,
– Additional lease liabilities were recognised and included under ‘Interest-bearing loans and borrowings’,
– Additional ‘Deferred tax assets’ and ‘Deferred tax liabilities’ were recognised because of the deferred tax impact of the
changes in recognised lease-related assets and liabilities, and
– Payment of principal for operating leases previously classified as operating activities will be classified as financing
activities in the cash flow statement.
Lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as of 30 June 2019, as follows:
Lease commitments as at 30 June 2019 (undiscounted)
Add (deduct)
Commitments relating to unrecognised leases of low-value assets
Adjustment for fixed outgoings associated with rental of premises
Effect of discounting
Discounted recognised lease liabilities as at 1 July 2019
13,174,298
(131,637)
697,041
(773,058)
12,966,644
Westgold Resources Limited Annual Report 2020
103
40. ACCOUNTING STANDARDS (CONTINUED)
(a)
As permitted by AASB 16, the Group has elected not to recognise right-of-use assets and lease liabilities relating
to short-term leases and leases of low-value assets. The lease commitments disclosed as at 30 June 2019 included
amounts in relation to such leases,
(b) An adjustment was required in order to take into account fixed outgoings associated with the rental of premises,
which had not been included as at 30 June 2019, and
(c)
The lease liabilities recognised under AASB 16 are measured on a discounted basis, whereas the lease
commitments disclosed as at 30 June 2019 were disclosed on an undiscounted basis. The discount rate used to
discount the lease payments for each lease is the incremental borrowing rate appropriate for each lease at the date
of initial application, i.e., the rate as at 1 July 2019. The discount rate used was the Group’s incremental borrowing
rate at the initial date of application.
The weighted average incremental borrowing rate at transition was 3.95% per annum.
AASB 112 Income Taxes
The amendments clarify that the income tax consequences of dividends are linked more directly to past transactions
or events that generated distributable profits than to distributions to owners. Therefore, an entity recognises the
income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where
it originally recognised those past transactions or events.
An entity applies the amendments for annual reporting periods beginning on or after 1 July 2019, with early application
permitted. When the entity first applies those amendments, it applies them to the income tax consequences of
dividends recognised on or after the beginning of the earliest comparative period.
Since the Group’s current practice is in line with these amendments, they had no impact on the consolidated financial
statements of the Group.
IFRIC 23 Uncertainty over Income Tax
The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects
the application of AASB 112 Income Taxes. It does not apply to taxes or levies outside the scope of AASB 112, nor
does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments.
The Interpretation specifically addresses the following:
– Whether an entity considers uncertain tax treatments separately,
– The assumptions an entity makes about the examination of tax treatments by taxation authorities,
– How an entity determines taxable profit (loss), tax bases, unused tax losses, unused tax credits and tax rates.
The Group determines whether to consider each uncertain tax treatment separately or together with one or more other
uncertain tax treatments and uses the approach that better predicts the resolution of the uncertainty.
Upon adoption of the Interpretation, the Group has assessed whether the Interpretation had an impact on its
consolidated financial statements and considered whether it has any uncertain tax positions.
The Group determined, based on a review of its tax compliance that it is probable that its tax treatments (including
those for its subsidiaries) will be accepted by the taxation authorities. Therefore, the Interpretation did not have an
impact on the consolidated financial statements of the Group.
AASB 123 Borrowing Costs
The amendments clarify that an entity treats, as part of general borrowings, any borrowing originally made to develop
a qualifying asset when substantially all of the activities necessary to prepare that asset for its intended use or sale are
complete.
The entity applies the amendments to borrowing costs incurred on or after the beginning of the annual reporting
period in which it first applies those amendments. The entity applies those amendments for annual reporting
periods beginning on or after 1 July 2019, with early application permitted. The amendment had no impact on
the consolidated financial statements however may increase the capitalisation of borrowings going forward.
104
Westgold Resources Limited Annual Report 2020
Financial Report Notes to the Consolidated Financial Statements for the year ended 30 June 2020 40. ACCOUNTING STANDARDS (CONTINUED)
New and amended Accounting Standards and Interpretations issued but not yet effective AASB 2019-1
Conceptual Framework for Financial Reporting
AASB 2019-1 is effective for annual periods being on or after 1 January 2020.
The revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria
for assets and liabilities and clarifies some important concepts. It is arranged in eight chapters, as follows:
– Chapter 1 – The objective of financial reporting
– Chapter 2 – Qualitative characteristics of useful financial information
– Chapter 3 – Financial statements and the reporting entity
– Chapter 4 – The elements of financial statements
– Chapter 5 – Recognition and derecognition
– Chapter 6 – Measurement
– Chapter 7 – Presentation and disclosure
– Chapter 8 – Concepts of capital and capital maintenance
New and amended Accounting Standards and Interpretations issued but not yet effective AASB 2019-1
Conceptual Framework for Financial Reporting (continued)
AASB 2019-1 has also been issued, which sets out the amendments to Australian Accounting Standards, Interpretations
and other pronouncements in order to update references to the revised Conceptual Framework. The changes to the
Conceptual Framework may affect the application of accounting standards in situations where no standard applies to
a particular transaction or event. In addition, relief has been provided in applying AASB 3 and developing accounting
policies for regulatory account balances using AASB 108, such that entities must continue to apply the definitions of
an asset and a liability (and supporting concepts) in the Framework for the Preparation and Presentation of Financial
Statements (July 2004), and not the definitions in the revised Conceptual Framework.
The Group is in the process of assessing the impact of the new Conceptual Framework.
AASB 2018-6 Definition of a Business
AASB 2018-6 is effective for annual periods being on or after 1 January 2020.
The Standard amends the definition of a business in AASB 3 Business Combinations. The amendments clarify the
minimum requirements for a business, remove the assessment of whether market participants are capable of replacing
missing elements, add guidance to help entities assess whether an acquired process is substantive, narrow the
definitions of a business and of outputs, and introduce an optional fair value concentration test.
The Group is in the process of assessing the impact of the new amendment.
AASB 2018-7 Definition of Material
AASB 2018-7 is effective for annual periods being on or after 1 January 2020.
This Standard amends AASB 101 Presentation of Financial Statements and AAS 108 Accounting Policies, Changes in
Accounting Estimates and Errors to align the definition of ‘material’ across the standards and to clarify certain aspects of
the definition. The amendments clarify that materiality will depend on the nature or magnitude of information. An entity
will need to assess whether the information, either individually or in combination with other information, is material in
the context of the financial statements. A misstatement of information is material if it could reasonably be expected to
influence decisions made by the primary users.
The Group is in the process of assessing the impact of the new amendment.
AASB 2019-5 Disclosure if the Effect of New IFRS Standards Not Yet Issued in Australia
AASB 2019-5 is effective for annual periods being on or after 1 January 2020.
This standard amends AASB 1054 by adding a disclosure requirement for an entity intend to comply with IFRS Standards
to disclose the information specified in paragraphs 30 and 31 of AASB 108 on the potential effect of an IFRS Standard
that has not yet been issued by the AASB so that such entity complying with Australian Accounting Standards can asset
compliance with IFRS standards.
The Group is in the process of assessing the impact of the new amendment.
Westgold Resources Limited Annual Report 2020
105
Financial Report
Directors’ Declaration
In accordance with a resolution of the Directors of Westgold Resources Limited, I state that:
In the opinion of the Directors:
(a) the financial statements and notes of the Company and of the Group are in accordance with the
Corporations Act 2001, including:
(i)
giving a true and fair view of the Company’s and the Group’s financial position as at 30 June 2020 and of their
performance for the year ended on that date; and
(ii) complying with the Australian Accounting Standards (including the Australian Accounting Interpretations) and
Corporations Regulations 2001; and
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in
Note 2(b) and;
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable; and
(d) this declaration has been made after receiving the declarations required to be made to the Directors in accordance
with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2020.
As at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group will
be able to meet any obligations or liabilities to which they are or may become subject, by virtue of the Deed of Cross
Guarantee identified in Note 36.
On behalf of the Board.
PG Cook
Executive Chairman
Perth, 28 August 2020
106
Westgold Resources Limited Annual Report 2020
for the year ended 30 June 2020
Financial Report
Independent Auditor’s Report
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the members of Westgold Resources
Limited
Report on the audit of the Financial Report
Opinion
We have audited the financial report of Westgold Resources Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the consolidated statement of financial position
as at 30 June 2020, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors'
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020
and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:DA:WGX:046
Westgold Resources Limited Annual Report 2020
107
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
1. Depreciation and amortisation of assets
Why significant
How our audit addressed the key audit matter
As at 30 June 2020, the Group had capitalised mine
properties and development costs, property, plant and
equipment, capitalised exploration and evaluation
expenditure and right-of-use assets totaling $551.2
million (refer to Notes 16, 17, 18 and 19 of the
financial report).
Calculating depreciation and amortisation requires
considerable judgement and estimation in relation to
reserves and resources (used as the denominator in a
“units-of-production” calculation) of the mines and the
assessment of future costs (included in the numerator
in a “units-of-production calculation) required to
extract these reserves and resources for each
underground mine.
Accordingly, this creates a risk the depreciation and
amortisation rates are inappropriate, resulting in the
expense profile that does not reflect the pattern of
consumption of the assets’ future economic benefits.
This was considered to be a key audit matter due to
the judgment and estimation involved.
We evaluated the assumptions and methodologies used by
the Group in their calculation of the depreciation and
amortisation.
Our audit procedures included the following:
• Assessed the qualifications, competence and
objectivity of the Group’s internal experts, the work of
whom, formed the basis of the Group’s estimates on
the reserves and resources and the future costs used in
the amortisation calculation.
• Assessed the application of reserves and resources in
the amortisation and depreciation model ensuring that
these are consistent with the latest published
statement.
• Assessed the reasonableness of the future costs
included in the calculation with reference to historical
costs incurred and mine plans approved by the Group’s
internal experts.
•
•
•
Evaluated the classification of costs to ensure that they
are capitalised under the correct asset class and
subsequently assigned to the appropriate amortisation
profile.
Evaluated the consistency of application of the Group’s
amortisation and depreciation methodology on its
mine properties and capital development assets across
the mine sites.
Tested the mathematical accuracy of the depreciation
and amortisation models.
• Assessed the adequacy of the Group's disclosures
relating to depreciation and amortisation.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:DA:WGX:046
108
Westgold Resources Limited Annual Report 2020
Financial Report Independent Auditor’s Report continued
2. Rehabilitation and restoration provisions
Why significant
How our audit addressed the key audit matter
As a consequence of its operations, the Group incurs
obligations to restore and rehabilitate the
environment. Rehabilitation activities are governed by
a combination of legislative requirements and Group
policies. As at 30 June 2020, the Group’s
consolidated statement of financial position includes
provisions of $76.7 million in respect of such
obligations (refer to Note 22).
Estimating the costs associated with these future
activities requires considerable judgment in relation to
factors such as timing of the rehabilitation, the costs
associated with the rehabilitation activities and
economic assumptions such as discount rates and
inflation rates.
Accordingly, this was considered to be a key audit
matter.
We evaluated the assumptions and methodologies used by
the Group in determining their rehabilitation obligations.
Our audit procedures included the following:
• Assessed the qualifications, competence and
objectivity of the Group’s internal experts, the work of
whom, formed the basis of the Group’s rehabilitation
cost estimates.
• Our rehabilitation specialists have assessed whether
the Group’s cost estimates were reasonable
considering industry benchmarks and relevant
legislative requirements. Our rehabilitation specialists
also compared the data used in calculating the
provision to the mine closure plans submitted to
Department of Mines, Industry Regulation and Safety
and the reasonableness of year-on-year changes of the
obligation.
•
Tested the Group’s calculation of the present values of
the liabilities considering the estimated timing of when
the cash flows will be incurred by reference to the most
appropriate inflation and discount rates.
• Assessed the adequacy of the Group's disclosures
relating to rehabilitation obligations.
3. Castile demerger
Why significant
How our audit addressed the key audit matter
Castile Resources Pty Ltd (“Castile”) held the Group’s
polymetallic assets in the Northern Territory and
during the period the Group distributed 100% (“the
demerger”) of its shareholding in Castile via an initial
public offering.
Demergers of this nature are not common
transactions for the Group, the accounting is complex
and resulted in a net gain within the profit and loss of
$8.7 million and a reduction in contributed equity of
$8.8 million.
Accordingly, this was considered to be a key audit
matter.
Our audit procedures included the following:
•
•
Reviewed the Implementation Deed of the Castile
Demerger (“the Deed”).
Reviewed and agreed the key conditions of the Deed to
the underlying supporting documents.
• Assessed the determination of fair value of the shares
distributed.
•
•
Tested the mathematical accuracy of the calculation of
the net gain on demerger and the split between profit
or loss and contributed equity.
Involved our tax specialists to assess the tax
implications of the demerger.
• Assessed the adequacy of the Group’s disclosure
relating to the transaction.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:DA:WGX:046
Westgold Resources Limited Annual Report 2020
109
Information other than the Financial Report and Auditor’s Report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2020 Annual Report other than the financial report and our
auditor’s report thereon. We obtained the Directors’ Report that is to be included in the Annual
Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the
Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
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 on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
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 Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
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Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
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Westgold Resources Limited Annual Report 2020
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continued
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 30
June 2020.
In our opinion, the Remuneration Report of Westgold Resources Limited for the year ended 30 June,
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.
Ernst & Young
Philip Teale
Partner
Perth
28 August 2020
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Westgold Resources Limited Annual Report 2020
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Financial Report
Shareholder Information
As at 30 September 2020
(A) TOP 20 QUOTED SHAREHOLDERS
Name
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
3 CITICORP NOMINEES PTY LIMITED
4 CS THIRD NOMINEES PTY LIMITED
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